e8vkza
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
September 26, 2008 (September 22, 2008)
Date of Report (Date of earliest event reported)
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 Avenue,
Dallas, TX 75219
(Address of principal executive offices)
(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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Explanatory Note
Energy Transfer Equity, L.P. (the Partnership) is amending its Current Report on Form 8-K filed
on September 24, 2008 to add the Contribution Agreement dated as of September 22, 2008 by and among
Energy Transfer Partners, L.P. and OGE Energy Corp. (OGE) as an exhibit.
2
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Item 1.01 |
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Entry into a Material Definitive Agreement. |
As previously reported on September 24, 2008, on September 22, 2008, Energy Transfer Partners, L.P.
entered into a Contribution Agreement with OGE Energy Corp. (OGE) pursuant to
which Energy Transfer Partners, L.P. and OGE agreed to form a joint venture company named ETP Enogex Partners LLC
(ETP Enogex). A copy of the Contribution Agreement,
including the Form of Limited Liability Company Agreement of ETP
Enogex, is attached hereto as Exhibit 2.1 and is
incorporated herein by reference.
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Item 9.01 |
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Financial Statements and Exhibits. |
(d) Exhibits.
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2.1* Contribution Agreement, dated as of September 22, 2008, by and among
Energy Transfer Partners, L.P. and OGE Energy Corp. |
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* |
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Pursuant to the rules of the Commission, the remaining schedules and similar
attachments to the agreement have not been filed herewith. The
registrant agrees to furnish supplementally a copy of any omitted
schedule to the Commission upon request. |
3
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, its general partner
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Date: September 26, 2008 |
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
Exhibits
2.1* |
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Contribution Agreement, dated as of September 22, 2008, by and among
Energy Transfer Partners, L.P. and OGE Energy Corp. |
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* |
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Pursuant to the rules of the Commission, the remaining schedules and similar
attachments to the agreement have not been filed herewith. The
registrant agrees to furnish supplementally a copy of any omitted
schedule to the Commission upon request. |
5
exv2w1
Exhibit 2.1
Execution Copy
CONTRIBUTION AGREEMENT
dated as of
September 22, 2008
by and among
ENERGY TRANSFER PARTNERS, L.P.
and
OGE ENERGY CORP.
TABLE OF CONTENTS
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ARTICLE I |
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DEFINITIONS |
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1.1 |
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Definitions |
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2 |
1.2 |
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Rules of Construction |
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11 |
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ARTICLE II |
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CONTRIBUTION AND EXCHANGE; CLOSING |
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2.1 |
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Contribution and Exchange |
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2.2 |
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Closing |
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2.3 |
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Canyon Capital Expenditure True Up |
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13 |
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ARTICLE III |
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REPRESENTATIONS AND WARRANTIES OF ETP |
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3.1 |
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Organization; Qualification |
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3.2 |
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Authority; No Violation; Consents and Approvals |
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3.3 |
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Capitalization |
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16 |
3.4 |
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Financial Statements |
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3.5 |
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Undisclosed Liabilities |
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18 |
3.6 |
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ETP SEC Reports and Compliance |
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3.7 |
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Compliance with Applicable Laws; Permits |
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3.8 |
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Certain Contracts and Arrangements |
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3.9 |
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Legal Proceedings |
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3.10 |
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Environmental Matters |
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3.11 |
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Title to Properties and Rights of Way |
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3.12 |
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Sufficiency of Assets |
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3.13 |
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Insurance |
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3.14 |
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Tax Matters |
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3.15 |
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Employment and Benefits Matters |
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3.16 |
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Books and Records |
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3.17 |
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No Changes or Material Adverse Effects |
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3.18 |
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Regulation |
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3.19 |
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Energy Regulatory Matters |
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3.20 |
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State Takeover Laws |
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3.21 |
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Brokers Fees |
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3.22 |
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Investment Intent |
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3.23 |
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Certain Business Relationships between ETIH and its Affiliates |
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3.24 |
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Limitation of Representations and Warranties |
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ARTICLE IV |
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REPRESENTATIONS AND WARRANTIES OF OGE |
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4.1 |
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Organization; Qualification |
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4.2 |
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Authority; No Violation; Consents and Approvals |
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4.3 |
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Capitalization |
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4.4 |
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Financial Statements |
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4.5 |
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Undisclosed Liabilities |
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4.6 |
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OGE SEC Reports and Compliance |
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4.7 |
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Compliance with Applicable Laws; Permits |
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4.8 |
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Certain Contracts and Arrangements |
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4.9 |
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Legal Proceedings |
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4.10 |
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Environmental Matters |
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4.11 |
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Title to Properties and Rights of Way |
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4.12 |
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Sufficiency of Assets |
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4.13 |
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Insurance |
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4.14 |
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Tax Matters |
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4.15 |
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Employment and Benefits Matters |
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4.16 |
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Books and Records |
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4.17 |
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No Changes or Material Adverse Effects |
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4.18 |
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Regulation |
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4.19 |
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Energy Regulatory Matters |
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4.20 |
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State Takeover Laws |
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4.21 |
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Brokers Fees |
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4.22 |
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Investment Intent |
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4.23 |
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Certain Business Relationships between Enogex and its Affiliates |
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4.24 |
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Limitation of Representations and Warranties |
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ARTICLE V |
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ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS |
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5.1 |
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Conduct of Business |
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5.2 |
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Access to Information; Confidentiality |
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5.3 |
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Certain Filings |
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5.4 |
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Financing; Refinancing |
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5.5 |
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Reasonable Efforts; Further Assurances |
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5.6 |
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No Public Announcement |
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5.7 |
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Expenses |
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5.8 |
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Control of Other Partys Business |
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5.9 |
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Maintenance and Enforcement of Insurance Policies |
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ARTICLE VI |
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CONDITIONS TO CLOSING |
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6.1 |
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Conditions to Each Partys Obligations |
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6.2 |
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Conditions to OGEs Obligations |
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6.3 |
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Conditions to ETPs Obligations |
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ARTICLE VII |
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[RESERVED] |
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ARTICLE VIII |
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TAX MATTERS |
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8.1 |
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ETIH Group Entity Taxes |
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8.2 |
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Enogex Group Entity Taxes |
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ARTICLE IX |
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TERMINATION |
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9.1 |
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Termination of Agreement |
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9.2 |
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Effect of Certain Terminations |
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9.3 |
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Survival |
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9.4 |
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Enforcement of this Agreement |
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ARTICLE X |
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MISCELLANEOUS |
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10.1 |
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Notices |
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10.2 |
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Governing Law; Jurisdiction; Waiver of Jury Trial |
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10.3 |
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Entire Agreement; Amendments and Waivers |
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10.4 |
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Binding Effect and Assignment |
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10.5 |
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Severability |
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10.6 |
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Execution |
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ANNEXES |
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Annex A |
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Financing Terms |
Annex B |
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Consent |
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EXHIBITS |
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Exhibit A |
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Form of LLC Agreement |
Exhibit B |
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Form of ETP Services Agreement |
Exhibit C |
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Form of Omnibus Agreement |
Exhibit D |
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Form of OGE Services Agreement |
Exhibit E |
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Form of Registration Rights Agreement |
Exhibit F |
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Form of Post-IPO LLC Agreement |
Exhibit G |
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Form of MLP Partnership Agreement |
iv
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this Agreement) dated as of September 22, 2008 (the
Execution Date), is entered into by and between Energy Transfer Partners, L.P., a
Delaware limited partnership (ETP), and OGE Energy Corp., an Oklahoma corporation
(OGE).
WITNESSETH:
WHEREAS, ETP owns, directly or indirectly, 100% of the outstanding limited liability company
interests of Energy Transfer Interstate Holdings, LLC, a Delaware limited liability company
(ETIH), and, directly or indirectly, 100% of the outstanding limited liability company
interests of ETC Canyon Pipeline, LLC, a Delaware limited liability company (Canyon).
WHEREAS, ETIH owns 100% of the outstanding limited liability company interests of Transwestern
Pipeline Company, LLC, a Delaware limited liability company (Transwestern), and 100% of
the outstanding limited liability company interests of ETC Midcontinent Express Pipeline L.L.C., a
Delaware limited liability company (ETC MEP).
WHEREAS, ETC MEP owns 50% of the outstanding limited liability company interests of
Midcontinent Express Pipeline LLC, a Delaware limited liability company (MEP).
WHEREAS, OGE owns 100% of the outstanding limited liability company interests of Enogex LLC, a
Delaware limited liability company (Enogex).
WHEREAS, OGE and ETP desire to combine their interests in Enogex, ETIH and Canyon,
respectively, in a single entity.
WHEREAS, ETP and OGE desire to enter into a series of transactions, on the terms and
conditions set forth in this Agreement, whereby:
(i) Wholly-owned subsidiaries of OGE and ETP will form ETP Enogex Partners LLC, a Delaware
limited liability company (the Company);
(ii) OGE will indirectly contribute all of its ownership interests in Enogex to the Company as
a capital contribution in exchange for a 50% limited liability company interest in the Company and
a cash payment;
(iii) ETP will indirectly contribute Canyon to ETIH; and
(v) ETP will indirectly contribute all of its ownership interests in ETIH to the Company as a
capital contribution in exchange for a 50% limited liability company interest in the Company.
WHEREAS, ETP and OGE have entered into an Employee Transition Agreement dated as of the date
of this Agreement (the Employee Transition Agreement).
NOW, THEREFORE, in consideration of the premises set forth above and the
respective representations, warranties, covenants, agreements and conditions contained in this
Agreement, as well as other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In this Agreement, unless the context otherwise requires, the following
terms shall have the following respective meanings:
Accounting Referee has the meaning set forth in Section 2.3(b).
Actual Capital Expenditure Amount has the meaning set forth in Section
2.3(b).
Affiliate has the meaning set forth in Rule 405 of the rules and regulations under
the Securities Act, unless otherwise expressly stated herein.
Agreement has the meaning set forth in the Preamble.
Business means, (a) with respect to any of the Enogex Group Entities, the business
of the Enogex Group Entities or (b) with respect to any of the ETIH Group Entities, the business of
the ETIH Group Entities.
Business Day means any day on which commercial banks are generally open for business
in New York, New York other than a Saturday, a Sunday or a day observed as a holiday in New York,
New York under the Laws of the State of New York or the federal Laws of the United States of
America.
Canyon has the meaning set forth in the Recitals.
Canyon Financial Statements has the meaning set forth in Section 3.4(c).
Closing has the meaning set forth in Section 2.2.
Closing Date has the meaning set forth in Section 2.2.
Code means the Internal Revenue Code of 1986, as amended.
Collective Bargaining Agreement shall mean any agreement between one of the Parties
and a labor organization that represents any of the Enogex Related Employees or the ETIH Related
Employees.
Company Membership Interest has the meaning set forth in Section 3.24.
Company Senior Financing has the meaning set forth in Section 5.4(d).
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Confidentiality Agreement means that certain Confidentiality Agreement dated as of
August 30, 2007 between ETP and Enogex Inc., the predecessor in interest to Enogex, as the same may
be amended from time to time.
Confidential Evaluation Material has the meaning set forth in Section 5.2(b).
Consolidated Group means (a) with respect to ETP, the ETIH Group Entities and (b)
with respect to OGE, the Enogex Group Entities. A reference to a Consolidated Group is a collective
reference to the members of such Consolidated Group.
Delaware Courts has the meaning set forth in Section 10.2.
Employee Benefit Plan means any employee benefit plan (within the meaning of
Section 3(3) of ERISA), any plans that would be employee benefit plans if they were subject to
ERISA (such as foreign plans and plans for directors), and any equity-based compensation, purchase,
option, change-in-control, incentive, employee loan, deferred compensation, pension,
profit-sharing, retirement, bonus, retention bonus, severance and other employee benefit,
compensation or fringe benefit plan, agreement, program, policy, practice, understanding or other
arrangement, regardless of whether subject to ERISA (including any funding mechanism now in effect
or required in the future), whether formal or informal, oral or written, legally binding or not,
maintained by, sponsored by or contributed to by or obligated to be contributed to by the entity in
question or with respect to which the entity in question has any obligation or liability, whether
secondary, contingent or otherwise.
Employee Transition Agreement has the meaning set forth in the Recitals.
Employment Agreement means any agreement to which any entity is a party with a
natural person (whether as an employee, director or consultant), which provides for compensation
for such persons services, other than (i) standard offer letters providing only for at-will
employment or (ii) any agreement that is terminable upon 30 days or less notice without liability
to the employer entity or any of its Affiliates.
Encumbrances means pledges, restrictions on transfer, proxies and voting or other
agreements, liens, claims, charges, mortgages, security interests or other legal or equitable
encumbrances, limitations or restrictions of any nature whatsoever.
End Date has the meaning set forth in Section 9.1(e).
Enogex has the meaning set forth in the Recitals.
Enogex Credit Facility means that certain Credit Agreement dated as of April 1, 2008
among Enogex, Wachovia Bank, National Association, as Administrative Agent, and the Lenders party
thereto.
Enogex Financial Statements has the meaning set forth in Section 4.4.
Enogex Group Entities means Enogex and the Enogex Subsidiaries.
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Enogex Independent Contractor means an individual, not a business organization,
who primarily provides services for the benefit of Enogex Group Entities.
Enogex Insurance Policy has the meaning set forth in Section 4.13.
Enogex Material Adverse Effect means a Material Adverse Effect with respect to the
Enogex Group Entities, taken as a whole, or a material adverse effect on the ability of OGE to
consummate the transactions contemplated hereby or to perform its material obligations hereunder.
Enogex Material Agreements has the meaning set forth in Section 4.8(a).
Enogex Permits has the meaning set forth in Section 4.7(b).
Enogex Plan has the meaning set forth in Section 4.15(b).
Enogex Related Employees means employees of OGE or the Enogex Group Entities that
work primarily for the benefit of the Enogex Group Entities.
Enogex Subsidiaries means the Subsidiaries of Enogex.
Environmental Laws means any applicable law (including common law) regulating or
prohibiting Releases of Hazardous Materials into any part of the workplace or the environment,
relating to the generation, manufacture, processing, distribution, use, treatment, storage,
transport, or use of Hazardous Materials, or pertaining to the prevention of pollution or
remediation of contamination or the protection of natural resources, wildlife, the environment, or
public or employee health and safety including the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) (42 U.S.C. Section 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Section 5101 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. Section 2701 et seq.), the
Atomic Energy Act of 1954 (42 U.S.C. Section 2014 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.) (OSHA) and the regulations promulgated pursuant thereto, and any
analogous international treaties, national, provincial, state or local statutes, and the
regulations promulgated pursuant thereto, as such laws have been amended as of the Closing Date.
ERISA Affiliate of an entity means a corporation, trade, business, or entity under
common control with such entity, within the meaning of Section 414(b), (c), (m) or (o) of the Code
or Section 4001 of ERISA.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Estimated Capital Expenditure Amount has the meaning set forth in Section 2.3(b).
ETC MEP has the meaning set forth in the Recitals.
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ETIH has the meaning set forth in the Recitals.
ETIH Group Entities means ETIH and the ETIH Subsidiaries and Canyon.
ETIH Independent Contractor means an individual, not a business organization, who
primarily provides services for the benefit of the ETIH Group Entities.
ETIH Insurance Policy has the meaning set forth in Section 3.13.
ETIH Material Adverse Effect means a Material Adverse Effect with respect to ETIH
Group Entities, taken as a whole, or a material adverse effect on the ability of ETP to consummate
the transactions contemplated hereby or to perform its material obligations hereunder.
ETIH Material Agreements has the meaning set forth in Section 3.8(a).
ETIH Permits has the meaning set forth in Section 3.7(b).
ETIH Plan has the meaning set forth in Section 3.15(b).
ETIH Related Employees means employees of ETP, ETIH, the ETIH Subsidiaries or La
Grange Acquisition, L.P. that work primarily for the benefit of the ETIH Group Entities.
ETIH Subsidiaries means the Subsidiaries of ETIH.
ETP has the meaning set forth in the Preamble.
ETP Board has the meaning set forth in Section 3.21.
ETP Contribution has the meaning set forth in Section 2.1(c).
ETP Disclosure Schedule means the disclosure schedule prepared and delivered by ETP
to OGE as of the Execution Date.
ETP Galaxy has the meaning set forth in Section 2.1(a)(vi).
ETP Indemnified Taxes means all federal, state and local income tax liabilities
attributable to the ownership, management and operation of the ETIH Group Entities or the ownership
and operation of the assets or Business of the ETIH Group Entities on or prior to the Closing,
including (1) any such income tax liabilities of ETP and its Affiliates (including any ETIH Group
Entity) that may result from the consummation of the transactions contemplated by this Agreement
and (2) any income tax liabilities arising under Treasury Regulation Section 1.1502-6 and any
similar provisions from state, local or foreign applicable law, by contract, as successor,
transferee or otherwise, or which income tax is attributable to having been a member of a
consolidated, combined or unitary group.
ETP SEC Reports shall mean all reports, including the Annual Reports on Form 10-K,
the Quarterly Reports on Form 10-Q and the Current Reports on Form 8-K, forms, schedules,
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statements and other documents ETP is required to file with or furnish to the
SEC, as applicable, pursuant to the Exchange Act or the Securities Act.
ETP Services Agreement has the meaning set forth in Section 6.2(d).
ETP Transitional Seconding Agreement means the Transitional Seconding Agreement
between ETP and the Company substantially in the form of Exhibit 1 to the Employee Transition
Agreement.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Execution Date has the meaning set forth in the Preamble.
FCC means the Federal Communications Commission.
FERC means the Federal Energy Regulatory Commission.
Financing has the meaning set forth in Section
5.4(a).
GAAP has the meaning set forth in Section 1.2.
Governing Documents means the following (in each case, as such documents may be
amended from time to time):
(a) with respect to ETP or any of the ETIH Group Entities, the documents listed in Section
1.1(a) of the ETP Disclosure Schedule; and
(b) with respect to OGE or any of the Enogex Group Entities, the documents listed in
Section 1.1(a) of the OGE Disclosure Schedule.
Governmental Entity means any (a) multinational, federal, national, provincial,
territorial, state, regional, municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body, commission, administrative agency, board,
bureau or agency, domestic or foreign, (b) subdivision, agent, commission, board, or authority of
any of the foregoing, or (c) quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under, or for the account of, any of the foregoing, in each case,
that has jurisdiction or authority with respect to the applicable party.
Hazardous Material means and includes any substance defined, designated or
classified as a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant or
toxic substance under any Environmental Law, including any petroleum or petroleum products that
have been Released into the environment.
Heritage has the meaning set forth in Section 2.1(a)(ii).
Heritage GP has the meaning set forth in Section 3.3(a).
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
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HSR Clearance means the expiration or termination of the applicable waiting period
under the HSR Act (including any extended waiting period arising as a result of a
request for additional information).
Indemnification Agreement has the meaning set forth in Section 5.4(h).
Knowledge means (a) with respect to ETP, the actual knowledge of each person listed
in Section 1.1(a) of the ETP Disclosure Schedule and (b) with respect to OGE, the actual
knowledge of each person listed in Section 1.1(a) of the OGE Disclosure Schedule, in each
case after due inquiry.
Laws means all statutes, regulations, statutory rules, orders, judgments, decrees
and terms and conditions of any grant of approval, permission, authority, permit or license of any
court, Governmental Entity, statutory body or self-regulatory authority (including the NYSE), but
does not include Environmental Laws or ERISA.
LLC Agreement has the meaning set forth in Section 6.1(c).
Material Adverse Effect means, with respect to any given Person, a material and
adverse effect, on the condition (financial or otherwise), properties, assets, liabilities,
obligations (whether absolute, accrued, conditional or otherwise), businesses, operations or
results of operations of such Person; provided, however, that a Material Adverse Effect shall not
include any effect on the condition (financial or otherwise), properties, assets, liabilities,
obligations (whether absolute, accrued, conditional or otherwise), businesses, operations or
results of operations of such Person directly or indirectly arising out of or attributable to (a)
any decrease in the market price of such Persons publicly-traded equity securities (but not any
change or effect underlying such decrease to the extent such change or effect would otherwise
contribute to a Material Adverse Effect), (b) changes in the general state of the industries in
which such Person operates to the extent that such changes would have the same general effect on
companies engaged in such industries, (c) changes in general economic conditions (including changes
in commodity prices or interest rates) that would have the same general effect on companies engaged
in the same lines of business as those conducted by such Person, (d) the announcement or proposed
consummation of the transactions contemplated by this Agreement (provided that the exceptions in
this clause (d) shall not apply to that portion of any representation or warranty contained in this
Agreement to the extent that the purpose of such portion of such representation or warranty is to
address the consequences resulting from the execution and delivery of this Agreement, the public
announcement or pendency of the transactions contemplated by this Agreement or the performance of
obligations or satisfaction of conditions under this Agreement), (e) changes in GAAP, (f) acts of
terrorism, war, sabotage or insurrection not directly damaging or impacting such Person, to the
extent that such acts have the same general effect on companies engaged in the same lines of
business as those conducted by such Person or (g) any delays in the construction or completion of,
any delays in the receipt of any regulatory approval relating to, or any cost overruns in
connection with the construction of, any expansion projects, including (see rules of
interpretation) the Midcontinent Express Pipeline and Transwesterns Phoenix expansion project.
7
Materiality Requirement means any requirement in a representation or warranty that a
condition, event or state of fact be material, correct or true in all material
respects, have an Enogex Material Adverse Effect or an ETIH Material Adverse Effect or be
or not be reasonably expected to have an Enogex Material Adverse Effect or reasonably expected
to have an ETIH Material Adverse Effect (or other words or phrases of similar effect or impact) in
order for such condition, event or state of facts to cause such representation or warranty to be
inaccurate.
MEP has the meaning set forth in the Recitals.
MEP Board means the Board as defined in the MEP LLC Agreements.
MEP Credit Facility means the $1.4 billion credit facility of MEP established
pursuant to the Credit Agreement, dated as of February 29, 2008, among MEP, the Royal Bank of
Scotland plc, as Administrative Agent, and the lenders party thereto.
MEP Financial Statements has the meaning set forth in Section 3.4(b).
MEP Guaranty Agreement means that certain Guaranty Agreement dated as of February
29, 2008 between ETP, as guarantor, and The Royal Bank of Scotland plc, as administrative agent.
MEP LLC Agreement means the Amended and Restated Limited Liability Company Agreement
of Midcontinent Express Pipeline LLC as of March 1, 2007 by and between Kinder Morgan Operating
Limited Partnership A and ETC Midcontinent Express Pipeline, L.L.C.
Natural Gas Act has the meaning set forth in Section 3.19(a).
NGPA has the meaning set forth in Section 3.19(a).
Notice has the meaning set forth in Section 10.1.
Notice of Disagreement has the meaning set forth in Section 2.3(b).
NYSE means the New York Stock Exchange.
OGE has the meaning set forth in the Preamble.
OGE Board has the meaning set forth in Section 4.21.
OGE Contribution has the meaning set forth in Section 2.1(b).
OGE Disclosure Schedule means the disclosure schedule prepared and delivered by OGE
to ETP as of the Execution Date.
OGE Holdings has the meaning set forth in Section 2.1(b).
OGE Indemnified Taxes means all federal, state and local income tax liabilities
attributable to the ownership, management and operation of the Enogex Group Entities or the
8
ownership and operation of the assets or Business of the Enogex Group Entities on or prior to the
Closing, including (1) any such income tax liabilities of OGE and its Affiliates (including any
Enogex Group Entity) that may result from the consummation of the
transactions contemplated by this Agreement and (2) any income tax liabilities arising under
Treasury Regulation Section 1.1502-6 and any similar provisions from state, local or foreign
applicable law, by contract, as successor, transferee or otherwise, or which income tax is
attributable to having been a member of a consolidated, combined or unitary group.
OGE SEC Reports shall mean all reports, including the Annual Reports on Form 10-K,
the Quarterly Reports on Form 10-Q and the Current Reports on Form 8-K, forms, schedules,
statements and other documents OGE is required to file with or furnish to the SEC, including the
Registration Statement on Form S-1 (File No. 333-144089) filed by OGE Enogex Partners L.P., as
applicable, pursuant to the Exchange Act or the Securities Act.
OGE Services Agreement has the meaning set forth in Section 6.3(d).
OGE Transitional Seconding Agreement means the Transitional Seconding Agreement
between OGE and the Company substantially in the form of Exhibit 2 to the Employee Transition
Agreement.
Party or Parties means each of (a) OGE and (b) ETP.
PBGC means the Pension Benefit Guaranty Corporation.
Permitted Encumbrances means (a) Encumbrances for Taxes not yet delinquent or being
contested in good faith by appropriate proceedings, (b) statutory Encumbrances (including
materialmens, warehousemens, mechanics, repairmens, landlords, and other similar liens)
arising in the ordinary course of business and securing payments not yet delinquent or being
contested in good faith by appropriate proceedings, (c) Encumbrances of public record (other than
for indebtedness for borrowed money), (d) the rights of lessors and lessees under leases, and the
rights of third parties under any agreement, executed in the ordinary course of business, (e) the
rights of licensors and licensees under licenses executed in the ordinary course of business, (f)
restrictive covenants, easements, rights of way, defects, imperfections or irregularities of title
and other similar encumbrances, which (i) do not materially detract from the value of the property,
(ii) do not materially interfere with either the present or intended use of such property and (iii)
do not individually or in the aggregate interfere with the conduct of the business of such Person,
(g) purchase money Encumbrances and Encumbrances securing rental payments under capital lease
arrangements, (h) any Encumbrances created pursuant to construction, operating, maintenance or
similar agreements, (i) Encumbrances referenced in any real property document provided or made
available in either Partys electronic or physical data room, in the ETP Disclosure Schedule or the
OGE Disclosure Schedule, as applicable, (j) Encumbrances contained in the Governing Documents of an
ETIH Group Entity or an Enogex Group Entity and (k) Encumbrances listed in Section 1.1(b) of the
ETP Disclosure Schedule or Section 1.1(b) of the OGE Disclosure Schedule, but excluding any
Encumbrances arising out of or relating to, directly or indirectly, any Employee Benefit Plan of
such Person.
9
Person includes any individual, firm, partnership, joint venture, venture capital
fund, limited liability company, association, trust, estate, group, body corporate, corporation,
unincorporated association or organization, Governmental Entity, syndicate
or other entity, regardless of whether having legal status.
Proposed Change of Control Prepayment Date has the meaning set forth in
Section 5.4(c).
Release means any depositing, spilling, leaking, pumping, pouring, placing, burying,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching,
dumping or disposing into the environment.
Rights-of-Way has the meaning set forth in Section 3.11(b).
SEC means the United States Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
Shortfall Amount has the meaning set forth in Section 2.3(b).
State Regulatory Authority means any state agency or authority having jurisdiction
over the rates or facilities of Canyon or any Enogex Group Entity, as applicable.
Subsidiary means, with respect to a specified Person, any other Person (a) that is a
subsidiary as defined in Rule 405 of the Rules and Regulations under the Securities Act of such
specified Person and (b) of which such specified Person or another of its Subsidiaries owns
beneficially 50% or more of the equity interests.
Target Capital Expenditure Amount has the meaning set forth in Section 2.3(b).
Tax or Taxes means any taxes, assessments, charges, duties, fees, levies,
imposts or other similar charges imposed by any Governmental Entity, including income, profits,
gross receipts, net proceeds, alternative or add-on minimum, ad valorem, value added, goods and
services, turnover, sales, use, property, personal property (tangible and intangible),
environmental, stamp, leasing, lease, user, excise, duty, franchise, capital stock, transfer,
registration, license, withholding, social security (or similar), unemployment, disability,
payroll, employment, fuel, excess profits, occupational, premium, windfall profit, severance,
estimated, deficiency or other charge of any kind whatsoever, including interest, penalty, or
addition thereto, whether disputed or not.
Tax Return means any return, declaration, report, election, designation, notice,
claim for refund, or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Transitional Seconding Agreements means collectively the ETP Transitional
Seconding Agreement and the OGE Transitional Seconding Agreement.
Transwestern has the meaning set forth in the Recitals.
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Transwestern Financial Statements has the meaning set forth in Section
3.4(a).
Transwestern Intercompany Loans has the meaning set forth in Section
5.4(d).
Transwestern Notes means, collectively, the 5.39% Senior Unsecured Notes due
November 17, 2014, the 5.54% Senior Unsecured Notes due November 17, 2016, the 5.64% Senior
Unsecured Notes due May 24, 2017, the 5.89% Senior Unsecured Notes due May 24, 2022 and the 6.16%
Senior Unsecured Notes due May 24, 2037.
Transwestern Notes Agreements means, collectively, the Note Purchase Agreement
between Transwestern and the initial purchasers thereto, dated November 17, 2004, and the Note
Purchase Agreement between Transwestern and the initial purchasers thereto, dated May 24, 2007.
Transwestern Notes Offer has the meaning set forth in Section 5.4(c).
Transwestern Senior Notes Offering has the meaning set forth in Section
5.4(c).
1.2 Rules of Construction.
(a) The division of this Agreement into articles, sections and other portions and the
insertion of headings are for convenience of reference only and shall not affect the construction
or interpretation hereof. Unless otherwise indicated, all references to an Article or Section
followed by a number or a letter refer to the specified Article or Section of this Agreement. The
Exhibits and Annexes attached to this Agreement are hereby incorporated by reference into this
Agreement and form part hereof. Unless otherwise indicated, all references to an Exhibit or an
Annex followed by a number or a letter refer to the specified Exhibit or Annex to this Agreement.
The terms this Agreement, hereof, herein and hereunder and similar expressions refer to
this Agreement (including the ETP Disclosure Schedule, the OGE Disclosure Schedule, the Exhibits
and Annexes) and not to any particular Article, Section or other portion hereof.
(b) The ETP Disclosure Schedule and the OGE Disclosure Schedule, as well as all other
schedules and all exhibits hereto, will be deemed part of this Agreement and included in any
reference to this Agreement. The ETP Disclosure Schedule and the OGE Disclosure Schedule set forth
items of disclosure with specific reference to the particular Section or subsection of this
Agreement to which the information in the ETP Disclosure Schedule or OGE Disclosure Schedule, as
the case may be, relates; provided, however, that any fact or item that is disclosed in any section
of the ETP Disclosure Schedule or the OGE Disclosure Schedule that is reasonably apparent on its
face to qualify another representation or warranty of ETP or OGE, as applicable, shall be deemed to
be disclosed in such other sections of the ETP Disclosure Schedule or the OGE Disclosure Schedule,
notwithstanding the omission of any appropriate cross-reference thereto. Notwithstanding anything
in this Agreement to the contrary, the inclusion of an item in either such disclosure schedule as
an exception to a representation or warranty will not be deemed an admission that such item
represents a material exception or material fact, event or circumstance or that such item has had
or could reasonably be expected to have an ETIH Material Adverse Effect or an Enogex Material
Adverse Effect, as the case may be.
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(c) Unless otherwise specifically indicated or the context otherwise requires, (i) all
references to dollars or $ mean United States dollars, (ii) words importing the singular shall
include the plural and vice versa, and words importing any gender shall include all genders, (iii)
include, includes and including shall be
deemed to be followed by the words without limitation, and (iv) all words used as accounting
terms shall have the meanings assigned to them under United States generally accepted accounting
principles applied on a consistent basis and as amended from time to time (GAAP). If any
date on which any action is required to be taken hereunder by any of the parties hereto is not a
Business Day, such action shall be required to be taken on the next succeeding day that is a
Business Day. Reference to any party hereto is also a reference to such partys permitted
successors and assigns.
(d) The parties hereto have participated jointly in the negotiation and drafting of this
Agreement. No provision of this Agreement will be interpreted in favor of, or against, any of the
parties to this Agreement by reason of the extent to which any such party or its counsel
participated in the drafting thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft of this Agreement, and no rule of strict construction will be
applied against any party hereto.
ARTICLE II
CONTRIBUTION AND EXCHANGE; CLOSING
2.1 Contribution and Exchange. On the terms and subject to the conditions set forth in this
Agreement:
(a) immediately prior to the transactions described in Sections 2.1(c) and
2.1(d), at the Closing and in the following sequence ETP will cause the following to occur:
(i) La Grange Acquisition, L.P. will distribute 0.1% of the issued and outstanding
membership interests in Canyon to LA GP, LLC;
(ii) LA GP, LLC will distribute 0.1% of the issued and outstanding membership
interests in Canyon to Heritage ETC, L.P. (Heritage);
(iii) La Grange Acquisition, L.P. will distribute 99.9% of the issued and outstanding
membership interests in Canyon to Heritage;
(iv) Heritage will transfer, assign and contribute to ETIH 100% of the issued and
outstanding membership interests in Canyon as a capital contribution;
(v) Heritage will contribute 0.1% of the issued and outstanding membership interest in
ETIH to Heritage LP, Inc.;
(vi) Heritage LP, Inc. will contribute 0.1% of the issued and outstanding membership
interests in ETIH to a limited liability company that will be formed by Heritage LP, Inc.
and Heritage prior to the Closing and in which Heritage LP, Inc. will own a 0.1% membership
interest and Heritage will own a 99.9% membership interest (ETP Galaxy); and
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(vii) Heritage will contribute 99.9% of the issued and outstanding membership
interests in ETIH to ETP Galaxy.
(b) immediately prior to the transactions described in Sections 2.1(c) and
2.1(d), at the Closing OGE will contribute 100% of the issued and outstanding membership
interests in Enogex to OGE Enogex Holdings LLC (OGE Holdings).
(c) at the Closing, OGE will cause OGE Holdings to transfer, assign and contribute to the
Company 100% of the issued and outstanding membership interests of Enogex as a capital contribution
(the OGE Contribution) in exchange for (i) a 50% membership interest in the Company and
(ii) a payment of $266 million in cash by wire transfer of immediately available funds, of which
amount (A) $4.3 million shall be treated as a reimbursement to OGE for certain costs incurred by
OGE in connection with a predecessor initial public offering transaction with respect to Enogex
that was not consummated and (B) $261.7 million shall be treated as a distribution from the Company
to OGE described in Treasury Regulation Section 1.707-4(d).
(d) at the Closing and simultaneously with the transactions described in Section
2.1(c), ETP will cause ETP Galaxy to transfer, assign and contribute to the Company 100% of the
issued and outstanding membership interests of ETIH as a capital contribution (the ETP
Contribution) in exchange for a 50% membership interest in the Company.
(e) at the Closing and simultaneously with the transactions described in Sections
2.1(c) and 2.1(d), ETP and OGE shall cause the Company to make the payments specified
in Sections 5.4(d) and 5.4(e).
2.2 Closing. Subject to the satisfaction or waiver of the conditions to closing set forth in
Article VI, the closing (the Closing) of the transactions contemplated by this
Article II shall be held at the offices of Jones Day at 717 Texas Avenue, Suite 3300,
Houston, Texas 77002 on the third Business Day following the satisfaction or waiver of all of the
conditions set forth in Article VI (other than conditions that would normally be satisfied
on the Closing Date) commencing at 9:00 a.m., Houston time, or such other place, date and time as
may be mutually agreed upon in writing by the parties hereto. The Closing Date, as
referred to herein, shall mean the date of the Closing.
2.3 Canyon Capital Expenditure True Up.
(a) Immediately prior to the transactions described in Section 2.1(c), at the Closing
ETP (i) will cause Canyon to distribute all of its and its Subsidiaries cash and cash equivalents
to ETIH, which will then in turn distribute such cash and cash equivalents to Heritage and (ii)
will use its own cash to repay all outstanding indebtedness for borrowed money of Canyon and its
Subsidiaries on behalf of Canyon and its Subsidiaries.
(b) To the extent that between June 30, 2008 and the Closing Date, Canyon and its Subsidiaries
shall have not made capital expenditures (as determined in accordance with GAAP) of at least
$27,806,000 (the Target Capital Expenditure Amount), immediately prior to the
transactions described in Section 2.1(c), ETP shall cause Heritage to contribute to ETIH an
amount in cash (the Shortfall Amount) equal to the difference between $27,806,000 and the
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amount of capital expenditures (as determined in accordance with GAAP) actually made by Canyon and
its Subsidiaries between June 30, 2008 and the Closing Date (the Actual Capital Expenditure
Amount). Within three Business Days prior to the anticipated Closing Date, ETP shall deliver ETPs good faith
estimate of the Actual Capital Expenditure Amount (the Estimated Capital Expenditure
Amount) together with such documentation to support such calculation as may be reasonably
requested by OGE. The Estimated Capital Expenditure Amount shall be used to determine the
Shortfall Amount, if any, that will be paid by ETP at Closing, but will be subject to post-Closing
adjustments as described in the remaining provisions of this Section 2.3(b). If OGE
disagrees with the Estimated Capital Expenditure Amount, OGE may, within 30 days after Closing,
deliver a notice to ETP disagreeing with the Estimated Capital Expenditure Amount and setting forth
OGEs calculation of the Actual Capital Expenditure Amount (a Notice of Disagreement).
Any such Notice of Disagreement shall specify those items or amounts as to which OGE disagrees, and
OGE shall be deemed to have agreed with all other items and amounts contained in the Estimated
Capital Expenditure Amount. If a Notice of Disagreement shall be duly delivered pursuant to the
immediately preceding sentence, ETP and OGE shall, during the 30 days following such delivery, use
reasonable efforts to reach agreement on the disputed items or amounts in order to determine the
Actual Capital Expenditure Amount. If, during such period, ETP and OGE are unable to reach such
agreement, they shall promptly thereafter jointly retain a nationally recognized accounting firm
(the Accounting Referee) other than Grant Thornton LLP or Ernst & Young LLP to promptly
review this Agreement and the disputed items or amounts for the purpose of calculating the Actual
Capital Expenditure Amount. In making any such calculation, the Accounting Referee shall consider
only those items or amounts in ETPs calculation of the Estimated Capital Expenditure Amount as to
which OGE has disagreed. The Accounting Referee shall deliver to ETP and OGE, as promptly as
practicable, a report setting forth each such calculation. Such report shall be final and binding
upon ETP and OGE. The cost of such review and report shall be borne equally by ETP and OGE. If
such Actual Capital Expenditure Amount, as finally determined pursuant to this Section
2.3(b), increases the Shortfall Amount from the amount determined using the Estimated Capital
Expenditure Amount, ETP shall, within 10 Business Days following such final determination, make a
cash payment in immediately available funds to ETIH equal to the amount by which the Shortfall
Amount so increased.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ETP
Except as disclosed in the ETP Disclosure Schedule delivered by ETP to OGE on or prior to the
execution of this Agreement (which letter sets forth items of disclosure with specific reference to
the particular Section or subsection of this Agreement to which the information in the ETP
Disclosure Schedule relates), ETP hereby represents and warrants to OGE as follows:
3.1 Organization; Qualification.
(a) Each of ETP and the ETIH Group Entities has been duly formed and is validly existing and
in good standing as a limited partnership or limited liability company, as applicable, under the
law of its jurisdiction of formation with all requisite partnership or limited liability company,
as applicable, power and authority to own, lease or otherwise hold and operate its properties and
assets and to carry on its business as presently conducted, except in each case
14
where the failure to have such power or authority could not, individually or in the aggregate, reasonably be expected to have an ETIH Material
Adverse Effect. Each of ETP and each of the ETIH Group Entities is duly qualified and in good
standing to do business as a foreign limited partnership or foreign limited liability company, as
the case may be, in each jurisdiction in which the conduct or nature of its business or the
ownership, leasing, holding or operating of its properties makes such qualification necessary,
except such jurisdictions where the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have an ETIH Material Adverse Effect.
(b) Section 3.1(b) of the ETP Disclosure Schedule sets forth a true and complete list
of each of the ETIH Group Entities, together with (i) the nature of the legal organization of such
Person, (ii) the jurisdiction of formation of such Person, (iii) the name of each ETIH Group Entity
that owns beneficially or of record any equity or similar interest in such Person and (iv) the
percentage interest owned by ETP or each such ETIH Group Entity in such Person.
(c) Each of ETP and ETIH has heretofore made available to OGE complete and correct copies of
its Governing Documents.
(d) ETP Galaxy will be formed prior to the Closing solely for the purpose of engaging in the
transactions contemplated hereby. Prior to the Closing, ETP Galaxy will have engaged in no other
business activities and will have incurred no liabilities or obligations other than as contemplated
herein, as well as other liabilities or obligations incidental to this Agreement or the
transactions contemplated by this Agreement.
3.2 Authority; No Violation; Consents and Approvals. ETP has all requisite limited partnership
power and authority to enter into this Agreement and to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and performance by ETP of
this Agreement and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite partnership action on the part of ETP, and no other partnership or
other organizational proceeding on the part of ETP or any affiliate thereof is necessary to
consummate the transactions contemplated by this Agreement. This Agreement has been duly executed
and delivered by ETP and, assuming the due authorization, execution and delivery hereof by OGE,
constitutes a legal, valid and binding agreement of ETP, enforceable against ETP in accordance with
its terms (except insofar as such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting
creditors rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law)).
Except as disclosed in Section 3.2 of the ETP Disclosure Schedule and for matters expressly contemplated by this Agreement and
matters described in clauses (b), (c), (d) or (e) below that could not, individually or in the
aggregate, reasonably be expected to have an ETIH Material Adverse Effect, neither the execution
and delivery by ETP of this Agreement, nor the consummation by ETP or any of the ETIH Group
Entities of the transactions contemplated hereby, including the execution and delivery of the LLC
Agreement, the ETP Services Agreement, the Omnibus Agreement, Employee Transition Agreement, and
the ETP Transitional Seconding Agreement on or prior to the Closing
Date, and the performance by ETP of this Agreement will (a) violate or conflict with any
provision of the Governing Documents of ETP or
15
any of the ETIH Group Entities; (b) require any consent, approval, authorization or permit of, registration, declaration or filing with, or
notification to, any Governmental Entity; (c) require any consent or approval of any counterparty
to, or result in any breach of or constitute a default (or an event that, with notice or lapse of
time or both, would become a default) under, or give to others any right of termination,
cancellation, amendment or acceleration of any obligation or the loss of any benefit under, any
agreement or instrument to which ETP or any of its Subsidiaries, including any of the ETIH Group
Entities, is a party or by or to which any of their properties are bound; (d) result in the
creation of an Encumbrance upon or require the sale or give any person the right to acquire any of
the assets of ETP or any of its Subsidiaries, including any of the ETIH Group Entities, or
restrict, hinder, impair or limit the ability of ETP or any of its Subsidiaries, including any of
the ETIH Group Entities, to carry on their businesses as and where they are now being carried on;
or (e) violate or conflict with any Law applicable to ETP or any of its Subsidiaries, including any
of the ETIH Group Entities.
3.3 Capitalization.
(a) ETP is the sole owner of 100% of the outstanding membership interests of Heritage ETC GP,
LLC (Heritage GP), the sole general partner of Heritage, and 100% of the outstanding
limited partnership interests of Heritage, and all of the outstanding membership interests of
Heritage GP and the outstanding limited partnership interests of Heritage have been duly authorized
and validly issued in accordance with applicable Laws and the Governing Documents of Heritage GP
and Heritage, respectively, and are fully paid. Heritage is the sole owner of 100% of the
outstanding membership interests of ETIH, which membership interests have been duly authorized and
validly issued in accordance with applicable Laws and the Governing Documents of ETIH and are fully
paid. Such membership interests of ETIH are owned by Heritage free and clear of any Encumbrances.
Except for the membership interests owned by Heritage, there are no other outstanding equity
interests in ETIH.
(b) ETIH is the sole owner of 100% of the outstanding membership interests of each of
Transwestern and ETC MEP, and all of the outstanding membership interests of each of Transwestern
and ETC MEP have been duly authorized and validly issued in accordance with applicable Laws and the
Governing Documents of Transwestern and ETC MEP, respectively, and are fully paid. ETIH owns such
membership interests of each of Transwestern and ETC MEP free and clear of any Encumbrances,
excluding Permitted Encumbrances. Except for the membership interests owned by ETIH, there are no
other outstanding equity interests in either Transwestern or ETC MEP.
(c) ETC MEP is the sole owner of 50% of the outstanding membership interests of MEP, which
membership interests have been duly authorized and validly issued in accordance with applicable
Laws and the Governing Documents of MEP and are fully paid and non-assessable. ETC MEP owns such
membership interests of MEP free and clear of any Encumbrances. Except for the membership
interests owned by ETC MEP and except as disclosed in Section 3.3(c) of the ETP Disclosure
Schedule, there are no other outstanding equity interests in MEP.
(d) Heritage is the sole owner of 100% of the outstanding membership interests of LA GP, LLC,
the sole general partner of La Grange Acquisition, L.P. and 100% of
16
the limited partnership interests of La Grange Acquisition, L.P. All outstanding membership interests of LA GP, LLC and all
outstanding limited partnership interests and general partner interests of La Grange Acquisition,
L.P., have been duly authorized and validly issued in accordance with applicable Laws and the
Governing Documents of LA GP, LLC and La Grange Acquisition, L.P., respectively, and are fully paid
and non-assessable. La Grange Acquisition, L.P. is the sole owner of 100% of the outstanding
membership interests of Canyon, which membership interests of Canyon have been duly authorized and
validly issued in accordance with applicable Laws and the Governing Documents of Canyon and are
fully paid. Such membership interests of Canyon are owned by La Grange Acquisition, L.P. free and
clear of any Encumbrances. Except for the membership interests owned by La Grange Acquisition,
L.P., there are no other outstanding equity interests in Canyon.
(e) Heritage is the sole owner of 100% of the outstanding capital stock of Heritage LP, Inc.
Immediately prior to the Closing, Heritage LP, Inc. will own a 0.1% membership interest in ETP
Galaxy and Heritage will own a 99.9% membership interest in ETP Galaxy. All shares of the
outstanding capital stock of Heritage LP, Inc. have been and, immediately prior to the Closing, all
of the outstanding membership interests in ETP Galaxy will have been duly authorized and validly
issued in accordance with applicable Laws and the Governing Documents of Heritage LP, Inc. and ETP
Galaxy, respectively, and are (or in the case of ETP Galaxy, will be) fully paid and, if
applicable, non-assessable. Such shares of outstanding capital stock of Heritage LP, Inc. and
membership interests of ETP Galaxy are, or will be, owned free and clear of any Encumbrances.
(f) Except as set forth in Section 3.3(f) of the ETP Disclosure Schedule, (i) there
are no outstanding options, warrants, subscriptions, puts, calls or other rights, agreements,
arrangements or commitments (pre-emptive, contingent or otherwise) obligating the ETIH Group
Entities, to offer, issue, sell, redeem, repurchase, otherwise acquire or transfer, pledge or
encumber any equity interest in any of the ETIH Group Entities; (ii) there are no outstanding
securities or obligations of any kind of any of the ETIH Group Entities that are convertible into
or exercisable or exchangeable for any equity interest in any of the ETIH Group Entities, and none
of the ETIH Group Entities has any obligation of any kind to issue any additional securities or to
pay for or repurchase any securities; (iii) there are not outstanding any equity appreciation
rights, phantom equity, profit sharing or similar rights, agreements, arrangements or commitments
based on the value of the equity, book value, income or any other attribute of any of the ETIH
Group Entities; (iv) there are no outstanding bonds, debentures or other evidence of indebtedness
of any of ETP or any of its Subsidiaries, including the ETIH Group Entities, having the right to
vote (or that are exchangeable for or convertible or exercisable into securities having the right
to vote) with the holders of equity interests in any of the ETIH Group Entities on any matter; and
(v) there are no unitholder agreements, proxies, voting trusts, rights to require registration
under securities Laws or other arrangements or commitments to which ETP or any of its Subsidiaries,
including the ETIH Group Entities, is a party or by which any of their securities are bound with
respect to the voting, disposition or registration of any outstanding securities of any of the ETIH
Group Entities.
(g) Except as set forth in Section 3.3(g) of the ETP Disclosure Schedule, all of the
outstanding equity interests of each ETIH Subsidiary (1) have been duly authorized and validly
issued and (2) are owned 100% directly or indirectly by ETIH, free and clear of any
17
Encumbrances. As of the Execution Date, there are no ETIH Subsidiaries other than those set forth
in Section 3.1(b) of the ETP Disclosure Schedule.
(h) Except with respect to the ownership of any equity or long-term debt securities between or
among the ETIH Group Entities, none of the ETIH Group Entities owns, directly or indirectly, any
equity or long-term debt securities of any corporation, partnership, limited liability company,
joint venture, association or other entity.
3.4 Financial Statements.
(a) The financial statements of Transwestern (the Transwestern Financial
Statements), including all related notes and schedules, listed in Section 3.4(a) of
the ETP Disclosure Schedule, fairly present in all material respects the consolidated financial
position of Transwestern, as of the respective dates thereof, and the consolidated results of
operations, cash flows and changes in members equity of Transwestern for the periods indicated,
have been prepared in accordance with GAAP applied on a consistent basis throughout the periods
involved and in accordance with Regulation S-X promulgated by the SEC (except as may be indicated
in the notes thereto) and subject, in the case of interim financial statements, to customary
year-end adjustments, consistent with past practice.
(b) The financial statements of MEP (the MEP Financial Statements), including all
related notes and schedules, listed in Section 3.4(b) of the ETP Disclosure Schedule,
fairly present in all material respects the consolidated financial position of MEP, as of the
respective dates thereof, and the consolidated results of operations, cash flows and changes in
members equity of MEP for the periods indicated, have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved and in accordance with Regulation S-X
promulgated by the SEC (except as may be indicated in the notes thereto) and subject, in the case
of interim financial statements, to customary year-end adjustments, consistent with past practice.
(c) The financial statements of Canyon (the Canyon Financial Statements), including
all related notes and schedules, listed in Section 3.4(c) of the ETP Disclosure Schedule,
fairly present in all material respects the consolidated financial position of Canyon, as of the
respective dates thereof, and the consolidated results of operations, cash flows and changes in
members equity of Canyon for the periods indicated, have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved and in accordance with Regulation S-X
promulgated by the SEC (except as may be indicated in the notes thereto) and subject, in the case
of interim financial statements, to customary year-end adjustments, consistent with past practice.
3.5 Undisclosed Liabilities. None of the ETIH Group Entities has any indebtedness or
liability, absolute or contingent, that is of a nature required to be reflected on the
consolidated balance sheet of Transwestern, MEP or Canyon or in the footnotes thereto, in each
case prepared in conformity with GAAP, and that is not shown on or provided for in the Transwestern
Financial Statements, the MEP Financial Statements or the Canyon Financial Statements, other than
(1) liabilities incurred or accrued in the ordinary course of business consistent with past
practice since June 30, 2008, including liens for current Taxes and assessments not in default or
18
(2) liabilities of the ETIH Group Entities that, individually or in the aggregate, are not material
to the ETIH Group Entities, taken as a whole.
3.6 ETP SEC Reports and Compliance.
(a) Since December 1, 2006, all ETP SEC Reports have been filed with or furnished to the SEC.
To the extent related to any ETIH Group Entity, all ETP SEC Reports filed since December 1, 2006
(1) complied in all material respects with the requirements of the Exchange Act and the Securities
Act and the rules and regulations thereunder, as applicable, and (2) as of its filing date in the
case of any Exchange Act report or as of its effective date in the case of any Securities Act
filing, did not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) There are no material outstanding comments from, or material unresolved issues raised by,
the SEC with respect to the ETP SEC Reports relating to any ETIH Group Entity. No enforcement
action has been initiated against ETP relating to disclosures contained in any ETP SEC Report
relating to any ETIH Group Entity.
(c) To the extent related to any ETIH Group Entity, since December 1, 2006, (1) neither ETP
nor any of the ETIH Group Entities has received any material complaint, allegation, assertion or
claim, whether written or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of ETP or any of the ETIH Group Entities or their respective internal
accounting controls, including any material complaint, allegation, assertion or claim that ETP or
any of the ETIH Group Entities has engaged in questionable accounting or auditing practices and (2)
to the Knowledge of ETP, no officer or director of ETP or any ETIH Group Entity has received any
material complaint, allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of ETP or any of the ETIH
Group Entities or their respective internal accounting controls, including any material complaint,
allegation, assertion or claim that ETP or any of the ETIH Group Entities has engaged in
questionable accounting or auditing practices, and (3) no attorney representing ETP or any of the
ETIH Group Entities, regardless of whether employed thereby, has reported evidence of a material
violation of securities Laws, breach of fiduciary duty or similar violation by ETP or any of the
ETIH Group Entities or any of their respective officers, directors, employees or agents, to the
board of directors of ETP or ETIH or any committee thereof or to any director or officer of ETP or
ETIH.
3.7 Compliance with Applicable Laws; Permits.
(a) Except as set forth in Section 3.7(a) of the ETP Disclosure Schedule,
each of the ETIH Group Entities is in compliance with all applicable Laws, other than any
noncompliance that could not, individually or in the aggregate, reasonably be expected to have an
ETIH Material Adverse Effect. Neither ETP, nor any of its Subsidiaries, including any ETIH Group
Entity, has received any written communication since December 1, 2006 from a Governmental Entity
that alleges that any ETIH Group Entity is not in compliance in any material respect with any
applicable Laws that has not been satisfactorily resolved. Notwithstanding the foregoing, the
representations made by the ETIH Group Entities in this
19
Section 3.7(a) shall not apply to any matters addressed in other representations contained
in this Article III, including representations with respect to environmental matters (which are
provided for in Section 3.10), Tax matters (which are provided for in Section 3.14)
and employment and benefits matters (which are provided for in Section 3.15).
(b) Except as set forth in Section 3.7(b) of the ETP Disclosure Schedule, the ETIH
Group Entities are in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders necessary to own,
lease and operate their properties and to lawfully carry on their businesses as they are now being
conducted (collectively, the ETIH Permits), except where the failure to be in possession
of such ETIH Permits could not, individually or in the aggregate, reasonably be expected to have an
ETIH Material Adverse Effect and except for ETIH Permits required to be obtained in connection with
the operation of the Midcontinent Express Pipeline. None of the ETIH Group Entities is in conflict
with, or in default or violation of any of the ETIH Permits, except for any such conflicts,
defaults or violations that could not, individually or in the aggregate, reasonably be expected to
have an ETIH Material Adverse Effect.
3.8 Certain Contracts and Arrangements.
(a) Section 3.8(a) of the ETP Disclosure Schedule sets forth a true and complete list,
as of the date hereof, of the following contracts, agreements or commitments (including currently
effective amendments and modifications thereto) to which any of the ETIH Group Entities is a party,
whether written or oral (collectively, the ETIH Material Agreements): (1) transportation
agreements and gathering agreements involving payments to or from any ETIH Group Entity of at least
$20,000,000 per year; (2) processing agreements and natural gas purchase agreements involving net
payments (i.e., after taking into account directly-associated cost of goods or
directly-associated revenues from the sale of goods) to or from any ETIH Group Entity of at least
$20,000,000 per year; (3) construction, interconnect, and other services agreements in each case
involving payments to or from any ETIH Group Entity in excess of $20,000,000 per year; (4)
contracts, loan agreements, letters of credit, repurchase agreements, mortgages, security
agreements, guarantees, pledge agreements, trust indentures, promissory notes, lines of credit and
similar documents in each case relating to the borrowing of money or for lines of credit, in any
case for amounts in excess of $20,000,000 (other than contracts solely between or among the ETIH
Group Entities and interest rate swap agreements); (5) all master agreements, confirmations,
schedules, cover sheets, master netting agreements and similar agreements relating to any swap
transactions, derivative transactions, options, warrants, forward purchase or sale transactions,
futures transactions, cap transactions, floor
transactions or collar transactions relating to one or more currencies, commodities, bonds,
equity securities, loans, interest rates, catastrophe events, weather-related events,
credit-related events or conditions or any indexes, or any other similar transactions (including
any option with respect to any of these transactions) or combination of any of these transactions,
including collateralized mortgage obligations or other similar instruments or any debt or equity
instruments evidencing or embedding any such types of transactions, and any credit support,
collateral (including master collateral agreements) or other similar arrangements related to such
transactions, including a listing of each outstanding commodity or financial hedging position and
the outstanding amount of the associated credit support or collateral; (6) real property leases
calling for payments by any of the ETIH Group Entities of amounts greater than $20,000,000 per year
(other than rights-of-
20
way and leases solely between or among the ETIH Group Entities); (7) partnership or joint venture agreements (which do not include joint tariff or joint operating
agreements); (8) contracts limiting the ability of any of the ETIH Group Entities to compete in any
line of business or with any Person or in any geographic area; (9) contracts relating to any
outstanding commitment for capital expenditures in excess of $50,000,000; (10) contracts with any
labor union or organization; (11) contracts not entered into in the ordinary course of the Business
of the ETIH Group Entities other than those that are not material to the Business of the ETIH Group
Entities; and (12) contracts, agreements or documents not otherwise disclosed in (1) (11) above
that are currently in effect and to which any of the ETIH Group Entities or their properties are
bound that are material to the Business or operations of the ETIH Group Entities taken as a whole.
(b) Except to the extent that enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting
creditors rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and provided that any
indemnity, contribution and exoneration provisions contained in any such ETIH Material Agreement
may be limited by applicable Laws and public policy, each of the ETIH Material Agreements (1)
constitutes the legal, valid and binding obligation of the applicable ETIH Group Entity and
constitutes the legal, valid and binding obligation of the other parties thereto, (2) is in full
force and effect as of the Execution Date, and (3) will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement, in each case unless the failure to
be so could not, individually or in the aggregate, reasonably be expected to have an ETIH Material
Adverse Effect.
(c) There is not, to the Knowledge of ETP, under any ETIH Material Agreement, any default or
event that, with notice or lapse of time or both, could reasonably be expected to constitute a
default on the part of any of the parties thereto, except such events of default and other events
as to which requisite waivers or consents have been obtained or that could not, individually or in
the aggregate, reasonably be expected to have an ETIH Material Adverse Effect.
(d) True and complete copies of all ETIH Material Agreements have been delivered or made
available to OGE by ETP to the extent permitted by applicable Law and the provisions of such
agreements. To the extent permitted by applicable Law, all ETIH Material Agreements not so
delivered or made available are listed and described on Section 3.8(d) of the ETP Disclosure Schedule.
3.9 Legal Proceedings. Except as disclosed in Section 3.9 of the ETP Disclosure
Schedule, there are no pending, or, to the Knowledge of ETP, threatened, lawsuits or claims, with
respect to which ETP or any of its Subsidiaries, including any of the ETIH Group Entities, has been
contacted in writing by counsel for the plaintiff or claimant, against or affecting ETP or any of
its Subsidiaries, including any of the ETIH Group Entities, or any of their properties, assets,
operations or Business and that could, individually or in the aggregate, reasonably be expected to
have an ETIH Material Adverse Effect. Except as could not, individually or in the aggregate,
reasonably be expected to have an ETIH Material Adverse Effect, none of ETP or any of its
Subsidiaries, including any of the ETIH Group Entities, is a party or subject to or in default
21
under any judgment, order, injunction or decree of any Governmental Entity or arbitration tribunal
applicable to it or any of its properties, assets, operations or Business. Except as could not,
individually or in the aggregate, reasonably be expected to have an ETIH Material Adverse Effect,
there is no pending or, to the Knowledge of ETP, threatened investigation of or affecting ETP or
any of its Subsidiaries, including any of the ETIH Group Entities, or any of its properties,
assets, operations or Business by any Governmental Entity.
3.10 Environmental Matters. Except as reflected in the Transwestern Financial Statements, the
MEP Financial Statements or the Canyon Financial Statements, and except for any such matter that
could not, individually or in the aggregate, reasonably be expected to have an ETIH Material
Adverse Effect:
(a) The operations of each of the ETIH Group Entities have been and, as of the Closing Date,
will be, in compliance with all Environmental Laws;
(b) Each of the ETIH Group Entities has obtained and will, as of the Closing Date, maintain in
full force and effect all permits, licenses and registrations, and has timely made and will, as of
the Closing Date, timely make all filings, permit renewal applications, reports and notices
required under applicable Environmental Law in connection with the operations of its business;
(c) None of the ETIH Group Entities is the subject of any outstanding written agreements
(including consent orders and settlement agreements) with any Governmental Entity or other Person
imposing liability or obligations with respect to any environmental matter;
(d) None of ETP or its Subsidiaries, including any ETIH Group Entities, has received any
written communication from any Governmental Entity or other Person alleging, with respect to any
such party, the violation of or liability under any Environmental Law by or of the ETIH Group
Entities or requesting, with respect to the ETIH Group Entities, information with respect to an
investigation pursuant to any Environmental Law; and
(e) There has been no Release of any Hazardous Material from or in connection with the
properties or operations of the ETIH Group Entities that has not been adequately reserved for in
the Transwestern Financial Statements, the MEP Financial Statements or the Canyon Financial
Statements and that has resulted or could reasonably
be expected to result in liability under Environmental Laws or a claim for damages or
compensation by any Person.
3.11 Title to Properties and Rights of Way.
(a) Each of the ETIH Group Entities has defensible title to all material real property and
good title to all material tangible personal property owned by the ETIH Group Entities and that is
sufficient for the operation of their respective Businesses as presently conducted, free and clear
of all Encumbrances except Permitted Encumbrances.
(b) Each of the ETIH Group Entities has such consents, easements, rights-of-way, permits or
licenses from each Person (collectively, Rights-of-Way) as are sufficient to conduct its
Business in the manner described, and subject to the limitations contained, in Section
22
3.11(b) of the ETP Disclosure Schedule, except for (1) qualifications, reservations and
encumbrances as may be set forth in Section 3.11(b) of the ETP Disclosure Schedule and (2)
such Rights-of-Way the absence of which could not, individually or in the aggregate, reasonably be
expected to result in an ETIH Material Adverse Effect. Other than as set forth in Section
3.11(b) of the ETP Disclosure Schedule, and subject to the limitations contained, in
Section 3.11(b) of the ETP Disclosure Schedule, each of the ETIH Group Entities has
fulfilled and performed all its material obligations with respect to such Rights-of-Way and no
event has occurred that allows, or after notice or lapse of time would allow, revocation or
termination thereof or would result in any impairment of the rights of the holder of any such
Rights-of-Way, except for such revocations, terminations and impairments that could not,
individually or in the aggregate, reasonably be expected to result in an ETIH Material Adverse
Effect; and, except as described in Section 3.11(b) of the ETP Disclosure Schedule, none of
such Rights-of-Way contains any restriction that is materially burdensome to the ETIH Group
Entities, taken as a whole.
3.12 Sufficiency of Assets. The assets of the ETIH Group Entities constitute all the assets,
the use or benefit of which are reasonably necessary for the operation of the Business of the ETIH
Group Entities as currently conducted. As of the Closing, all tangible and intangible assets of the
ETIH Group Entities will be in the possession, or under the control, of the ETIH Group Entities.
3.13 Insurance. None of ETP or any of its Subsidiaries, including any of the ETIH Group
Entities, has received any notice from any insurer or agent of such insurer that (i) substantial
capital improvements or other expenditures will have to be made in order to continue any insurance
policy or instrument pursuant to which any ETIH Group Entity is insured (an ETIH Insurance
Policy) or (ii) such insurer has cancelled or terminated or has initiated procedures to cancel
or terminate any ETIH Insurance Policy. All such ETIH Insurance Policies are outstanding and duly
in force on the Execution Date and will be outstanding and duly in force on the Closing Date in all
material respects. The ETIH Group Entities are in compliance with the terms of all ETIH Insurance
Policies in all material respects; and there are no material claims by ETP or any of its
Subsidiaries, including any of the ETIH Group Entities, under any such ETIH Insurance Policy as to
which any insurance company is denying liability or defending under a reservation of rights clause.
3.14 Tax Matters.
(a) Except as set forth in Section 3.14(a) of the ETP Disclosure Schedule,
(i) each of the ETIH Group Entities has filed (or joined in the filing of) when due
all material Tax Returns required by applicable Law to be filed by or with respect to it,
has obtained all required Tax permits and licenses and has satisfied all registration
requirements relating to Taxes;
(ii) all such Tax Returns were true correct and complete in all material respects as
of the time of such filing;
23
(iii) except for Taxes being contested in good faith in appropriate proceedings for which
adequate reserves have been provided, all material Taxes relating to periods ending on or before
the Closing Date owed by any of the ETIH Group Entities (regardless of whether shown on any Tax
Return) have been paid or will be timely paid;
(iv) there is no action, suit, proceeding, investigation, audit or claim now pending against,
or with respect to, any of the ETIH Group Entities in respect of any material Tax or material Tax
assessment, nor has any claim for additional material Tax or material Tax assessment been asserted
in writing or been proposed by any Tax authority;
(v) no written claim has been made by any Tax authority in a jurisdiction where any of the
ETIH Group Entities does not currently file a Tax Return that it is or may be subject to any
material Tax in such jurisdiction, nor has any such assertion been threatened or proposed in
writing;
(vi) none of the ETIH Group Entities has any outstanding request for any extension of time
within which to pay any material Taxes or file any Tax Returns with respect to any material Taxes;
(vii) there has been no waiver or extension of any applicable statute of limitations for the
assessment or collection of any material Taxes of any of the ETIH Group Entities;
(viii) none of the ETIH Group Entities has entered into any agreement or arrangement with any
Tax authority that requires any ETIH Group Entity to take any action or refrain from taking any
action;
(ix) none of the ETIH Group Entities is a party to any agreement, whether written or
unwritten, providing for the payment of Taxes, Tax losses, entitlements to Tax refunds or similar
Tax matters;
(x) each of the ETIH Group Entities has withheld and paid all material Taxes required to be
withheld in connection with any amounts paid or owing to any employee, creditor, independent
contractor or other third party;
(xi) ETP is not a foreign person within the meaning of Section 1445 of the Code;
(xii) each of the ETIH Group Entities that is classified as a partnership for U.S. federal tax
purposes has in effect an election under Section 754 of the Code;
(xiii) none of the ETIH Group Entities has been a member of an affiliated group filing a
consolidated federal income Tax Return or has any liability for the Taxes of any Person (other than
an ETIH Group Entity) under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign Law), as a transferee or successor, by contract, or otherwise; and
24
(xiv)
there are no Tax liens on any of the assets of the ETIH Group Entities, except
for liens for Taxes not yet due.
(b) Section 3.14(b) of the ETP Disclosure Schedule sets forth, with respect to each of
the ETIH Group Entities, (i) the Tax basis to ETP of each of the assets of the ETIH Group Entities,
(ii) the depreciation life, method, conventions and history applicable to each such asset in the
hands of ETP, as tax owner, (iii) which of the liabilities of the ETIH Group Entities is a
qualified liability within the meaning of Treasury Regulation Section 1.707-5(a)(6), and, for
each ETIH Group Entity, (x) the identity of any assets that were acquired with the proceeds of the
liability and (y) the identity of any assets that have been continuously secured by the liability
for more than two years as of the date of this Agreement.
(c) None of the ETIH Group Entities is classified as a corporation for U.S. federal tax
purposes.
3.15 Employment and Benefits Matters.
(a) ETP has delivered to OGE a letter dated the Execution Date and delivered from ETP to OGE
on the Execution Date sets forth complete and accurate lists of all the ETIH Related Employees and
all the ETIH Independent Contractors, specifying whether they are ETIH Related Employees or ETIH
Independent Contractors, their position, the entity by which they are employed or to which they
provide services, annual salary, hourly wages or consulting or other independent contractor fees,
as applicable, and bonus opportunities, date of hire (or entry into an independent contractor
agreement), work location, length of service, together with a notation next to the name of any
employee or independent contractor on such lists who is subject to any Employment Agreement or
Collective Bargaining Agreement.
(b) Section 3.15(b) of the ETP Disclosure Schedule sets forth a complete and accurate
list of each Employee Benefit Plan (i) that is sponsored, maintained or contributed to by any ETIH
Group Entity, or (ii) that any Affiliate or ERISA Affiliate of any ETIH Group Entity has sponsored,
maintained or contributed to, or to which any such entity is obligated to contribute since December
1, 2006 (but October 5, 2007 with respect to any Employee Benefits Plans of Canyon) that covers or
benefits any current or former ETIH Related Employees or ETIH Independent Contractors (each an
ETIH Plan). True, correct and complete copies of each ETIH Plan that has been sponsored,
maintained or contributed to, or to which there is an obligation to contribute, by any ETIH Group
Entity or Affiliate or ERISA Affiliate since December 1, 2006 (but October 5, 2007 with respect to
any Employee Benefits Plans of Canyon) and any related documents, including all
amendments thereto, and any trust, insurance or other funding arrangement, have been furnished
or made available to OGE. There has also been furnished or made available to OGE, with respect to
each such ETIH Plan, if applicable, the most recent favorable determination letters issued by the
Internal Revenue Service, the three most recently filed reports on Form 5500 (including all
schedules and attachments), the most recent actuarial report or valuation and the most recent
summary plan description and summaries of material modifications thereto.
(c) Section 3.15(c) of the ETP Disclosure Schedule sets forth a true and complete list
of all Employment Agreements of the ETIH Group Entities. As of the Execution
25
Date, there are no other agreements (other than enrollment or similar forms to commence
participation or initiate or continue coverage in an Employee Benefit Plan or standard employment
offer letters providing only for at-will employment issued by ETIH Group Entities) between any ETIH
Group Entity and any natural person that provide for (i) participation in, coverage under or
benefits from an Employee Benefit Plan, (ii) annual compensation in excess of $150,000 to such
person or (iii) change of control, termination or severance payments in excess of $150,000 to such
person. No ETIH Group Entity is subject to any legal, contractual, equitable, or other obligation
or commitment (whether legally binding or not) to enter into an Employment Agreement, establish or
contribute to an Employee Benefit Plan or modify (except to the extent required by applicable Law)
any existing Employee Benefit Plan or Employment Agreement.
(d) Except as set forth in Section 3.15(d) of the ETP Disclosure Schedule, no ETIH
Group Entity and no ERISA Affiliate of an ETIH Group Entity maintains or has an obligation to
contribute to, or has any obligation or liability (contingent, secondary or otherwise) to, based
upon or arising out of, an Employee Benefit Plan that is (1) subject to Title IV of ERISA or the
minimum funding requirements of Section 412 of the Code or Section 302 of ERISA, (2) a plan of the
type described in Section 4063 of ERISA or Section 413(c) of the Code, (3) a multiemployer plan
(as defined in Section 3(37) of ERISA) or (4) a multiple employer welfare arrangement (as defined
in Section 3(40) of ERISA).
(e) Except as set forth in Section 3.15(e) of the ETP Disclosure Schedule, the ETIH
Plans (A) are and have been maintained (in form and in operation) in all material respects in
accordance with their terms and with the applicable provisions of ERISA, the Code and all other
applicable Laws, (B) if intended to be qualified under Section 401(a) of the Code, (i) satisfy in
form the requirements of such Section except to the extent amendments are not required by Law to be
made until a date after the Closing Date, (ii) have received a favorable determination letter from
the Internal Revenue Service regarding such qualified status, (iii) have not, since receipt of the
most recent favorable determination letter, been amended in a way that would adversely affect their
qualified status, and (iv) have not been operated in a way that would adversely affect their
qualified status, (C) do not provide, and have not provided, any post-termination of employment
welfare benefits or coverage, except as required under Part 6 of Subtitle B of Title I of ERISA and
Code Section 4980B (or similar state or local Law), and (D) if they could be deemed nonqualified
deferred compensation arrangements under Section 409A of the
Code, are in good faith compliance with such section and the applicable regulations and
authoritative guidance issued thereunder or are exempt from the requirements of such section and
have not been materially modified at any time after October 3, 2004.
(f) The ETIH Group Entities are, and have been, in compliance in all material respects with
all applicable Laws relating to the employment of labor, including all such applicable Laws
relating to wages, hours, collective bargaining, discrimination, civil rights, safety and health
and workers compensation. ETIH Group Entities are not subject to a current unresolved judicial
administrative determination that it has engaged in an unfair labor practice in connection with the
ETIH Related Employees and ETIH Group Entities have not received notice of any pending NLRB
proceeding with respect to any ETIH Related Employees. No pending grievance or arbitration demand
or proceeding, whether or not filed pursuant to a collective bargaining agreement, has been
received by ETIH Group Entities with respect to the ETIH
26
Related Employees. To the Knowledge of ETP, all ETIH Related Employees are lawfully authorized to
work in the United States according to federal immigration laws.
(g) Each ETIH Plan sponsored or maintained by an ETIH Group Entity can be unilaterally amended
or terminated at any time by a ETIH Group Entity without liability other than liability for
benefits accrued to the date of such amendment or termination pursuant to the terms of the plan.
(h) No ETIH Group Entity is a party to a collective bargaining agreement. No ETIH Group Entity
has agreed to recognize any union or other collective bargaining representative. No union or other
collective bargaining representative has been certified as the exclusive bargaining representative
of any of the ETIH Related Employees. To the Knowledge of ETP, no union or other collective
bargaining representative claims to be the exclusive collective bargaining representative of any of
the ETIH Related Employees. To the Knowledge of ETP, no union organizational campaign or
representation petition is currently pending with respect to any of the ETIH Related Employees.
(i) All contributions or payments required to be made by an ETIH Group Entity to or with
respect to an ETIH Plan have been timely made and all liabilities of each ETIH Group Entity with
respect to any ETIH Plan are properly reflected in the Transwestern Financial Statements, the MEP
Financial Statements or the Canyon Financial Statements, as the case may be, in accordance with
GAAP.
(j) There are no material actions, suits, or claims pending (other than routine claims for
benefits) or, to the Knowledge of ETP, threatened against, or with respect to, any of the ETIH
Plans or their assets or Employment Agreements of the ETIH Group Entities, nor is any such ETIH
Plan or Employment Agreement under investigation or audit by any Governmental Entity. There are no
material claims, lawsuits, petitions, charges, investigations, complaints, proceedings, suits,
demands, actions or other matters (other than routine qualification determination filings) that are
pending against the ETIH Group Entities before any Governmental Entity or arbitrator, or that have
been asserted or threatened against the ETIH Group Entities, including those for: (i) wages,
salaries, commissions, bonuses, vacation pay, severance or termination pay, sick pay or other
compensation; (ii) employee benefits; (iii) any alleged unlawful, unfair, wrongful or
discriminatory employment or labor practices; (iv) any alleged breach of contract or other claim
arising under a collective bargaining or individual agreement or any other employment covenant
whether express or implied; (v) any alleged violation of any statute, ordinance, contract or
regulation relating to minimum wages or maximum hours of work; (vi) any alleged violation of
occupation safety and health standards; or (vii) any alleged violation of plant closing and mass
layoff, immigration, workers compensation, disability, unemployment compensation, whistleblower
laws, or other employment or labor relations laws; and to the Knowledge of ETP, no basis therefor
exists. To the extent that any ETIH Group Entity is obligated to develop and maintain an
affirmative action plan, no discrimination claim, show cause notice, conciliation proceeding,
sanction or debarment proceeding is pending with the Office of Federal Contract Compliance Programs
or any other federal agency or any comparable state agency and no desk audit or onsite review is in
progress with respect to any ETIH Related Employee. Within the past 90 days, ETIH Group Entities
have not taken an action that constitutes a mass layoff, mass termination or plant closing at
any
27
ETIH Group Entity facility where ETIH Related Employees work within the meaning of the Workers
Adjustment and Retraining Notification Act (WARN) or any comparable state law.
(k) No act, omission or transaction has occurred that would result, directly or indirectly, in
imposition on any ETIH Group Entity of (A) breach of fiduciary duty liability damages under Section
409 of ERISA, (B) a civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502
of ERISA, or (C) a tax imposed pursuant to Chapter 43 of Subtitle D of the Code, in each case which
would reasonably be expected to have an ETIH Material Adverse Effect.
(l) Neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby shall require any payments of money or other property or provision of benefits
or other rights to any employee, officer or director of any ETIH Group Entity to be either subject
to an excise tax or an additional tax under Section 4999 or 409A of the Code, regardless of whether
some other subsequent action or event would be required to cause such payment or benefit to be
triggered. The execution of, and performance of the transactions contemplated by, this Agreement
will not (either alone or upon the occurrence of any additional or subsequent events) constitute an
event under any ETIH Plan or Employment Agreement of the ETIH Group Entities that will or may
result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, grant of additional service credits, distribution or increase in benefits or
obligations to fund benefits with respect to any such ETIH Plan or Employment Agreement. There is
no agreement, plan, contract or arrangement by which any ETIH Group Entity is bound to compensate
or otherwise gross up any person for any state, local or federal taxes due or imposed on such
person for any reason in respect of any ETIH Plan or Employment Agreement of the ETIH Group
Entities or the benefits payable thereunder, including taxes, penalties or interest imposed, or
otherwise, due, pursuant to Sections 409A or 4999 of the Code.
(m) There is no labor strike or labor dispute, slow-down, lockout or stoppage pending or, to
the Knowledge of ETP, threatened with respect to any of the ETIH Related Employees.
(n) As to any ETIH Plan that is subject to Title IV of ERISA, there has been no event or
condition which presents the material risk of plan termination, no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of ERISA or Section 412 of the Code (as
each was in effect prior to 2008) has been incurred, no reportable event within the meaning of
Section 4043 of ERISA (for which the disclosure requirements of Regulation section 4043.1 et seq.,
promulgated by the PBGC, have not been waived) has occurred and no failure to satisfy the minimum
funding standards (as required by Section 302 of ERISA or Section 412 of the Code, as each is in
effect after 2007), has occurred, whether or not waived, no notice of intent to terminate the plan
has been given under Section 4041 of ERISA, no proceeding has been instituted under Section 4042 of
ERISA to terminate the plan, no liability to the PBGC has been incurred (other than for premium
payments paid on a timely basis), and the actuarial present value of the benefit liabilities under
Section 4001(a)(16) of ERISA does not exceed the current value of plan assets by more than
$500,000, determined, as of the beginning of the most recent plan year for which such liabilities
have been determined, in accordance with
28
the
assumptions used for funding the plan pursuant to
Section 412 or 430, as applicable, of the Code.
(o) As to any ETIH Plan intended to be qualified under Section 401(a) of the Code, there has
been no termination or partial termination of such plan within the meaning of Section 411(d)(3) of
the Code.
(p) Each trust funding an ETIH Plan that is intended to be exempt from federal income taxation
pursuant to Section 501(c)(9) of the Code satisfies the requirements of such section and has
received a favorable determination letter from the Internal Revenue Service regarding such exempt
status and has not, since receipt of the most recent favorable determination letter, been amended
or operated in a way which would adversely affect such exempt status.
(q) With respect to any Employee Benefit Plan that is not listed in Section 3.15(b) of the ETP
Disclosure Schedule but that is sponsored, maintained, or contributed to, or has been sponsored,
maintained, or contributed to by ETP, any ERISA Affiliate of ETP, any ETIH Group Entity or any
ERISA Affiliate of any ETIH Group Entity, (A) no withdrawal liability, within the meaning of
Section 4201 of ERISA, has been incurred, which withdrawal liability has not been satisfied, (B) no
liability to the PBGC has been incurred by ETP or any such ERISA Affiliate, which liability has not
been satisfied, (C) no accumulated funding deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code (as each was in effect prior to 2008) has been
incurred and no failure to satisfy the minimum funding standards (as required by Section 302 of
ERISA or Section 412 of the Code, as each is in effect after 2007) has occurred, whether or not
waived, (D) all contributions (including installments) to such plan required by Sections 302 or 303
of ERISA and Sections 412 or 430 of the Code have been timely made and (E) no circumstances exist
or in the future could exist that could subject any ETIH Group Entity or, after the consummation of
the transactions contemplated by
this Agreement, the Company or any of its Subsidiaries or ERISA Affiliates, to any liability,
including without limitation, any Tax or penalty under ERISA or the Code.
(r) No circumstance exists or future circumstance could arise that would lead any ETIH Group
Entity or, after the transaction contemplated by this Agreement, the Company, to incur any ERISA
Title IV liability or suffer the imposition of any Encumbrance on any of their assets with respect
to liabilities relating to any ETIH Plan or any employee benefit plan subject to Title IV of ERISA
that was sponsored, maintained or contributed to by (A) ETP, (B) an ERISA Affiliate of ETP, or (C)
any ERISA Affiliate of any ETIH Group Entity or to which any of them had an obligation to
contribute.
3.16 Books and Records. The minute books of each of the ETIH Group Entities contain true and
correct copies of all actions taken at all meetings of the boards of directors, members or
managers, as the case may be, of each of the ETIH Group Entities, as applicable, and all written
consents executed in lieu of such meetings. Complete copies of all such minute books for 2007 and
2008 and other records have been made available to outside counsel and other advisors to OGE.
3.17 No Changes or Material Adverse Effects.
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(a) Between January 1, 2008 and the Execution Date, the Business of the ETIH Group Entities,
taken as a whole, has been conducted in the ordinary course consistent with past practice, and none
of the ETIH Group Entities has taken any of the actions prohibited by Section 5.1(b), except in
connection with entering into this Agreement.
(b) Subsequent to January 1, 2008, there has not been any change, event or occurrence that has
had or could reasonably be expected to have an ETIH Material Adverse Effect.
3.18 Regulation. Neither ETP nor any of the ETIH Group Entities is, nor will ETP or any of the
ETIH Group Entities be following the consummation of the transactions contemplated by this
Agreement, an investment company or a company controlled by an investment company within the
meaning of the Investment Company Act of 1940, as amended.
3.19 Energy Regulatory Matters.
(a) Transwestern is a natural gas company as that term is defined in Section 2 of the
Natural Gas Act of 1938 (the Natural Gas Act) and MEP, once certificated and constructed,
will likewise be a natural gas company. Each of the ETIH Group Entities, as applicable, is in
compliance in all material respects with the provisions of the Natural Gas Act, the Natural Gas
Policy Act of 1978 (NGPA), the Pipeline Safety Improvement Act of 2002, and the rules and
regulations promulgated by FERC pursuant thereto. Each of the ETIH Group Entities, as applicable,
is in compliance in all material respects with the terms and conditions of all tariff provisions,
FERC rate and certificate orders, and other orders and authorizations issued by FERC, in each case
as applicable to any of the ETIH Group Entities. No approval by FERC under the Natural Gas Act or
the Federal Power Act is required in connection with the execution and delivery of this Agreement
by ETP or the consummation of the transactions contemplated hereby. Except as disclosed in
Section 3.19(a) of the ETP Disclosure Schedule, the Form No. 2 Annual Reports filed by any
of the ETIH Group Entities with FERC for the years ended December 31, 2006 and December 31, 2007
were true and correct in all material respects as of the dates thereof, and since December 1, 2006,
no ETIH Group Entity has become subject to any proceeding under Section 5 of the Natural Gas Act or
any general rate case proceeding commenced under Section 4 of the Natural Gas Act by reason of a
filing made with the FERC after December 1, 2006.
(b) Except as disclosed in Section 3.19(b) of the ETP Disclosure Schedule and except
for general industry proceedings, including audits or reviews of individual companies arising from
general industry proceedings, there are no pending or, to ETPs Knowledge, threatened FERC
administrative or regulatory proceedings, including without limitation any rate proceeding under
Section 4 or Section 5 of the Natural Gas Act or any Natural Gas Act Section 7 certificate
proceedings, investigations, complaints, audits or show cause proceedings to which any of the ETIH
Group Entities is a party.
(c) No approval by any State Regulatory Authority is required in connection with the execution
and delivery of this agreement by ETP or the consummation
of the transactions contemplated herein. Except as indicated in Section 4.19 of the ETP
Disclosure
30
Schedule, Canyon has not become subject to any proceeding before any State Regulatory Authorities
related to their rates or facilities.
3.20 State Takeover Laws. No approvals are required under state takeover or similar laws in
connection with the performance by ETP of its obligations under this Agreement.
3.21 Brokers Fees. Neither ETP nor any of the ETIH Group Entities, nor any of their
respective officers or directors has employed any broker, finder or other person or incurred any
liability on behalf of any ETIH Group Entity, OGE or any Enogex Group Entity or itself for any
advisory, brokerage, finder, success, deal completion or similar fees or commissions in connection
with the transactions contemplated by this Agreement, other than fees to be paid to Credit Suisse
Securities (USA) LLC.
3.22 Investment Intent. ETP is acquiring a 50% membership interest in the Company
(Company Membership Interest) pursuant to Article II for investment for its own
account and not with a view to, or for sale in connection with, any distribution thereof. ETP
(either alone or together with its advisors) has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of its investment in
such Company Membership Interest and is capable of bearing the economic risks of such investment.
ETP is aware that the Company Membership Interest has not been registered, and will not be
registered after the Closing, under the Securities Act or under any state or foreign securities
Laws.
3.23 Certain Business Relationships between ETIH and its Affiliates. Except as set forth on
Section 3.23 of the ETP Disclosure Schedule, (a) neither ETP nor any of its Subsidiaries
(excluding ETIH and its Subsidiaries) has been involved in any business arrangement or relationship
with ETIH and its Subsidiaries within the past two years, (b) neither ETP nor any of its
Subsidiaries (excluding ETIH and its Subsidiaries) owns any asset, tangible or intangible, that is
used in ETIHs or any of its Subsidiaries business and (c) neither ETP nor any of its Subsidiaries
(excluding ETIH and its Subsidiaries) is a party to any contract, commitment or agreement (whether
written or oral) with ETIH or any of its Subsidiaries or relating to the business of ETIH or its
Subsidiaries.
3.24 Limitation of Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN THIS ARTICLE III, ETP IS NOT MAKING ANY OTHER REPRESENTATIONS OR
WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING THE MEMBERSHIP INTERESTS OF
ETIH, TRANSWESTERN, ETC MEP, MEP OR CANYON, OR THE BUSINESS, ASSETS, OR LIABILITIES OF ANY ETIH
GROUP ENTITY, INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OGE
Except as disclosed in the OGE Disclosure Schedule delivered by OGE to ETP on or prior to the
execution of this Agreement (which letter sets forth items of disclosure with specific
31
reference to the particular Section or subsection of this Agreement to which the information in the OGE
Disclosure Schedule relates), OGE hereby represents and warrants to ETP as follows:
4.1 Organization; Qualification.
(a) Each of OGE and the Enogex Group Entities has been duly formed and is validly existing and
in good standing as a corporation or limited liability company, as applicable, under the law of its
jurisdiction of formation with all requisite corporate or limited liability company, as applicable,
power and authority to own, lease or otherwise hold and operate its properties and assets and to
carry on its business as presently conducted, except in each case where the failure to have such
power or authority could not, individually or in the aggregate, reasonably be expected to have an
Enogex Material Adverse Effect. Each of OGE and each of the Enogex Group Entities is duly qualified
and in good standing to do business as a foreign limited partnership, limited liability company,
corporation, unlimited liability company or otherwise, as the case may be, in each jurisdiction in
which the conduct or nature of its business or the ownership, leasing, holding or operating of its
properties makes such qualification necessary, except such jurisdictions where the failure to be so
qualified or in good standing could not, individually or in the aggregate, reasonably be expected
to have an Enogex Material Adverse Effect.
(b) Section 4.1(b) of the OGE Disclosure Schedule sets forth a true and complete list of each
of the Enogex Group Entities, together with (i) the nature of the legal organization of such
Person, (ii) the jurisdiction of organization or formation of such Person, (iii) the name of each
Enogex Group Entity that owns beneficially or of record any equity or similar interest in such
Person and (iv) the percentage interest owned by OGE or each such Enogex Group Entity in such
Person.
(c) Each of OGE and Enogex has heretofore made available to ETP complete and correct copies of
its Governing Documents.
(d) OGE Holdings was formed solely for the purpose of engaging in the transactions
contemplated hereby (or a similar predecessor transaction that was not consummated) and prior to
the Closing will have engaged in no other business activities and will have incurred no liabilities
or obligations other than as contemplated herein, as well as other liabilities or obligations
incidental to this Agreement or the transactions contemplated by this Agreement.
4.2 Authority; No Violation; Consents and Approvals. OGE has all requisite corporate power and
authority to enter into this Agreement and to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance by OGE of this
Agreement and the consummation of the transactions contemplated hereby have been duly authorized by
all requisite corporate action on the part of OGE, and no other corporate or other organizational
proceeding on the part of OGE or any affiliate thereof is necessary to consummate the transactions
contemplated by this Agreement. This Agreement has been duly executed and delivered by OGE and,
assuming the due authorization, execution and delivery hereof by ETP,
constitutes a legal, valid and binding agreement of OGE, enforceable against OGE in accordance
with its terms (except insofar as such
32
enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting
creditors rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law)). Except as disclosed in Section
4.2 of the OGE Disclosure Schedule and for matters expressly contemplated by this Agreement and
matters described in clauses (b), (c), (d) or (e) below that could not, individually or in the
aggregate, reasonably be expected to have an Enogex Material Adverse Effect, neither the execution
and delivery by OGE of this Agreement, nor the consummation by OGE or any of the Enogex Group
Entities of the transactions contemplated hereby, including the execution and delivery of the LLC
Agreement, the OGE Services Agreement, the Omnibus Agreement, Employee Transition Agreement and the
OGE Transitional Seconding Agreement on or prior to the Closing Date and the performance by OGE of
this Agreement will (a) violate or conflict with any provision of the Governing Documents of OGE or
the Enogex Group Entities; (b) require any consent, approval, authorization or permit of,
registration, declaration or filing with, or notification to, any Governmental Entity; (c) require
any consent or approval of any counterparty to, or result in any breach of or constitute a default
(or an event that, with notice or lapse of time or both, would become a default) under, or give to
others any right of termination, cancellation, amendment or acceleration of any obligation or the
loss of any benefit under, any agreement or instrument to which OGE or any of its Subsidiaries,
including any of the Enogex Group Entities, is a party or by or to which any of their properties
are bound; (d) result in the creation of an Encumbrance upon or require the sale or give any person
the right to acquire any of the assets of OGE or any of its Subsidiaries, including any of the
Enogex Group Entities, or restrict, hinder, impair or limit the ability of OGE or any of its
Subsidiaries, including any of the Enogex Group Entities, to carry on their businesses as and where
they are now being carried on; or (e) violate or conflict with any Law applicable to OGE or any of
its Subsidiaries, including the Enogex Group Entities.
4.3 Capitalization.
(a) OGE is the sole owner of 100% of the outstanding membership interests of OGE Holdings,
which membership interests have been duly authorized and validly issued in accordance with
applicable Laws and the Governing Documents of OGE Holdings and are fully paid. OGE is the sole
owner of 100% of the outstanding membership interests of Enogex, and all of the outstanding
membership interests of Enogex have been duly authorized and validly issued in accordance with
applicable Laws and the Governing Documents of Enogex and are fully paid. OGE owns such membership
interests of each of OGE Holdings and Enogex free and clear of any Encumbrances. Except for the
membership interests owned by OGE, there are no other outstanding equity interests in OGE Holdings
or Enogex.
(b) Except as set forth in Section 4.3(b) of the OGE Disclosure Schedule, (i) there
are no outstanding options, warrants, subscriptions, puts, calls or other rights, agreements,
arrangements or commitments (pre-emptive, contingent or otherwise) obligating the Enogex Group
Entities, to offer, issue, sell, redeem, repurchase, otherwise acquire or transfer, pledge or
encumber any equity interest in any of the Enogex Group Entities; (ii) there are no outstanding securities or obligations of any kind of the Enogex
Group Entities, that are convertible into or exercisable or exchangeable for any equity interest in
any of the Enogex Group Entities, and none of the Enogex Group Entities has any obligation of any
kind to issue any additional securities or to pay for or repurchase any securities; (iii) there are
not outstanding any equity
33
appreciation rights, phantom equity, profit sharing or similar rights,
agreements, arrangements or commitments based on the value of the equity, book value, income or any
other attribute of any of the Enogex Group Entities; (iv) there are no outstanding bonds,
debentures or other evidence of indebtedness of any of OGE or any of its Subsidiaries, including
the Enogex Group Entities, having the right to vote (or that are exchangeable for or convertible or
exercisable into securities having the right to vote) with the holders of equity interests in any
of the Enogex Group Entities on any matter; and (v) there are no unitholder agreements, proxies,
voting trusts, rights to require registration under securities Laws or other arrangements or
commitments to which OGE or any of its Subsidiaries, including the Enogex Group Entities, is a
party or by which any of their securities are bound, with respect to the voting, disposition or
registration of any outstanding securities of any of the Enogex Group Entities.
(c) Except as set forth in Section 4.3(c) of the OGE Disclosure Schedule, all of the
outstanding equity interests of each Enogex Subsidiary (1) have been duly authorized and validly
issued and (2) are owned 100% directly or indirectly by Enogex, free and clear of any Encumbrances.
As of the Execution Date, there are no Enogex Subsidiaries other than those set forth in
Section 4.1(b) of the OGE Disclosure Schedule.
(d) Except as set forth in Section 4.3(d) of the OGE Disclosure Schedule and except
with respect to the ownership of any equity or long-term debt securities between or among the
Enogex Group Entities, none of the Enogex Group Entities owns, directly or indirectly, any equity
or long-term debt securities of any corporation, partnership, limited liability company, joint
venture, association or other entity.
(e) As of the Execution Date, except in connection with the transactions contemplated hereby
(or a similar predecessor transaction that was not consummated), OGE Holdings have not engaged in
any business activities, acquired any assets, incurred any liabilities, or entered into any
contracts or binding obligations.
4.4 Financial Statements. The financial statements of Enogex (the Enogex Financial
Statements), including all related notes and schedules, listed in Section 4.4 of the
OGE Disclosure Schedule, fairly present in all material respects the consolidated financial
position of Enogex, as of the respective dates thereof, and the consolidated results of operations,
cash flows and changes in members equity of Enogex for the periods indicated, have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods involved and in
accordance Regulation S-X promulgated by the SEC (except as may be indicated in the notes thereto),
and subject, in the case of interim financial statements, to customary year-end adjustments,
consistent with past practice.
4.5 Undisclosed Liabilities. None of the Enogex Group Entities has any indebtedness or
liability, absolute or contingent, that is of a nature required to be reflected
on the consolidated balance sheet of Enogex or in the footnotes thereto, in each case prepared
in conformity with GAAP, and that is not shown on or provided for in the Enogex Financial
Statements, other than (1) liabilities incurred or accrued in the ordinary course of business
consistent with past practice since June 30, 2008, including liens for current Taxes and
assessments not in default, or (2) liabilities of the Enogex Group Entities that, individually or
in the aggregate, are not material to the Enogex Group Entities, taken as a whole.
34
4.6 OGE SEC Reports and Compliance.
(a) Since January 1, 2005, all OGE SEC Reports have been filed with or furnished to the SEC.
To the extent related to any Enogex Group Entity, all OGE SEC Reports filed since January 1, 2005
(1) complied in all material respects with the requirements of the Exchange Act and the Securities
Act and the rules and regulations thereunder, as applicable, and (2) as of its filing date in the
case of any Exchange Act report or as of its effective date in the case of any Securities Act
filing, did not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) There are no material outstanding comments from, or material unresolved issues raised by,
the SEC with respect to the OGE SEC Reports relating to any Enogex Group Entity. No enforcement
action has been initiated against OGE relating to disclosures contained in any OGE SEC Report
relating to any Enogex Group Entity.
(c) To the extent related to any Enogex Group Entity, since December 1, 2006, (1) neither OGE
nor any of the Enogex Group Entities has received any material complaint, allegation, assertion or
claim, whether written or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of OGE or any of the Enogex Group Entities or their respective internal
accounting controls, including any material complaint, allegation, assertion or claim that OGE or
any of the Enogex Group Entities has engaged in questionable accounting or auditing practices, (2)
to the Knowledge of OGE, no officer or director of OGE or any Enogex Group Entity has received any
material complaint, allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of OGE or any of the Enogex
Group Entities or their respective internal accounting controls, including any material complaint,
allegation, assertion or claim that OGE or any of the Enogex Group Entities has engaged in
questionable accounting or auditing practices, and (3) no attorney representing OGE or any of the
Enogex Group Entities, regardless of whether employed thereby, has reported evidence of a material
violation of securities Laws, breach of fiduciary duty or similar violation by OGE or any of the
Enogex Group Entities or any of their respective officers, directors, employees or agents, to the
board of directors of OGE or Enogex or any committee thereof or to any director or officer of OGE
or Enogex.
4.7 Compliance with Applicable Laws; Permits.
(a) Except as set forth in Section 4.7(a) of the OGE Disclosure Schedule, each of the
Enogex Group Entities is in compliance with all applicable Laws,
other than any noncompliance that could not, individually or in the aggregate, reasonably be
expected to have an Enogex Material Adverse Effect. Neither OGE, nor any of its Subsidiaries,
including any Enogex Group Entity, has received any written communication since December 1, 2006
from a Governmental Entity that alleges that any Enogex Group Entity is not in compliance in any
material respect with any applicable Laws that has not been satisfactorily resolved.
Notwithstanding the foregoing, the representations made by the Enogex Group Entities in this
Section 4.7(a) shall not apply to any matters addressed in other representations contained
in this Article IV, including representations with respect to environmental matters (which
are provided
35
for in Section 4.10), Tax matters (which are provided for in Section 4.14) and
employment and benefits matters (which are provided for in Section 4.15).
(b) Enogex Group Entities are in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate their properties and to lawfully carry on their businesses as
they are now being conducted (collectively, the Enogex Permits), except where the failure
to be in possession of such Enogex Permits could not, individually or in the aggregate, reasonably
be expected to have an Enogex Material Adverse Effect. None of the Enogex Group Entities is in
conflict with, or in default or violation of any of the Enogex Permits, except for any such
conflicts, defaults or violations that could not, individually or in the aggregate, reasonably be
expected to have an Enogex Material Adverse Effect.
4.8 Certain Contracts and Arrangements.
(a) Section 4.8(a) of the OGE Disclosure Schedule sets forth a true and complete list,
as of the date hereof, of the following contracts, agreements or commitments (including currently
effective amendments and modifications thereto) to which any of the Enogex Group Entities is a
party, whether written or oral (collectively, the Enogex Material Agreements): (1)
transportation agreements and gathering agreements involving payments to or from any Enogex Group
Entity of at least $20,000,000 per year; (2) processing agreements and natural gas purchase
agreements involving net payments (.i e., after taking into account directly-associated cost of
goods or directly-associated revenues from the sale of goods) to or from any Enogex Group Entity of
at least $20,000,000 per year; (3) construction, interconnect, and other services agreements in
each case involving payments to or from any Enogex Group Entity in excess of $20,000,000 per year;
(4) contracts, loan agreements, letters of credit, repurchase agreements, mortgages, security
agreements, guarantees, pledge agreements, trust indentures, promissory notes, lines of credit and
similar documents in each case relating to the borrowing of money or for lines of credit, in any
case for amounts in excess of $20,000,000 (other than contracts solely between or among the Enogex
Group Entities and interest rate swap agreements); (5) all master agreements, confirmations,
schedules, cover sheets, master netting agreements and similar agreements relating to any swap
transactions, derivative transactions, options, warrants, forward purchase or sale transactions,
futures transactions, cap transactions, floor transactions or collar transactions relating to one
or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe
events, weather-related events, credit-related events or conditions or any indexes, or any other
similar transactions (including any option with respect to any of these transactions) or
combination of any of these transactions, including collateralized mortgage obligations or other similar instruments
or any debt or equity instruments evidencing or embedding any such types of transactions, and any
credit support, collateral (including master collateral agreements) or other similar arrangements
related to such transactions, including a listing of each outstanding commodity or financial
hedging position and the outstanding amount of the associated credit support or collateral; (6)
real property leases calling for payments by any of the Enogex Group Entities of amounts greater
than $20,000,000 per year (other than rights-of-way and leases solely between or among the Enogex
Group Entities); (7) partnership or joint venture agreements (which do not include joint tariff or
joint operating agreements); (8) contracts limiting the ability of any of the Enogex Group Entities
to compete in any line of business or with any Person or in any geographic area; (9) contracts
relating to any outstanding
36
commitment for capital expenditures in excess of $50,000,000; (10)
contracts with any labor union or organization; (11) contracts not entered into in the ordinary
course of the Business of the Enogex Group Entities other than those that are not material to the
Business of the Enogex Group Entities; and (12) contracts, agreements or documents not otherwise
disclosed in (1) (11) above that are currently in effect and to which any of the Enogex Group
Entities or their properties are bound that are material to the Business or operations of the
Enogex Group Entities, taken as a whole.
(b) Except to the extent that enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting
creditors rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and provided that any indemnity,
contribution and exoneration provisions contained in any such Enogex Material Agreement may be
limited by applicable Laws and public policy, each of the Enogex Material Agreements (1)
constitutes the legal, valid and binding obligation of the applicable Enogex Group Entity and
constitutes the legal, valid and binding obligation of the other parties thereto, (2) is in full
force and effect as of the Execution Date, and (3) will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement, in each case unless the failure to
be so could not, individually or in the aggregate, reasonably be expected to have an Enogex
Material Adverse Effect.
(c) There is not, to the Knowledge of OGE, under any Enogex Material Agreement, any default or
event that, with notice or lapse of time or both, could reasonably be expected to constitute a
default on the part of any of the parties thereto, except such events of default and other events
as to which requisite waivers or consents have been obtained or that could not, individually or in
the aggregate, reasonably be expected to have an Enogex Material Adverse Effect.
(d) True and complete copies of all Enogex Material Agreements have been delivered or made
available to ETP by OGE to the extent permitted by applicable Law and the provisions of such
agreements. To the extent permitted by applicable Law, all Enogex Material Agreements not so
delivered or made available are listed and described on Section 4.8(d) of the OGE
Disclosure Schedule.
4.9 Legal Proceedings. Except as disclosed in Section 4.9 of the OGE Disclosure
Schedule, there are no pending, or, to the Knowledge of OGE, threatened, lawsuits or
claims, with respect to which OGE or any of its Subsidiaries, including any of the Enogex
Group Entities, has been contacted in writing by counsel for the plaintiff or claimant, against or
affecting OGE or any of its Subsidiaries, including any of the Enogex Group Entities, or any of
their properties, assets, operations or Business and that could, individually or in the aggregate,
reasonably be expected to have an Enogex Material Adverse Effect. Except as could not, individually
or in the aggregate, reasonably be expected to have an Enogex Material Adverse Effect, none of OGE
or any of its Subsidiaries, including any of the Enogex Group Entities, is a party or subject to or
in default under any judgment, order, injunction or decree of any Governmental Entity or
arbitration tribunal applicable to it or any of its properties, assets, operations or Business.
Except as could not, individually or in the aggregate, reasonably be expected to have an Enogex
Material Adverse Effect, there is no pending or, to the Knowledge
37
of OGE, threatened investigation
of or affecting OGE or any of its Subsidiaries, including any of the Enogex Group Entities, or any
of their properties, assets, operations or Business by any Governmental Entity.
4.10 Environmental Matters. Except as reflected in the Enogex Financial Statements and except
for any such matter that could not, individually or in the aggregate, reasonably be expected to
have an Enogex Material Adverse Effect:
(a) The operations of each of the Enogex Group Entities have been and, as of the Closing Date,
will be, in compliance with all Environmental Laws;
(b) Each of the Enogex Group Entities has obtained and will, as of the Closing Date, maintain
in full force and effect all permits, licenses and registrations, and has timely made and will, as
of the Closing Date, timely make all filings, permit renewal applications, reports and notices
required under applicable Environmental Law in connection with the operations of its business;
(c) None of the Enogex Group Entities is the subject of any outstanding written agreements
(including consent orders and settlement agreements) with any Governmental Entity or other Person
imposing liability or obligations with respect to any environmental matter;
(d) None of OGE or its Subsidiaries, including any Enogex Group Entities, has received any
written communication from any Governmental Entity or other Person alleging, with respect to any
such party, the violation of or liability under any Environmental Law by or of the Enogex Group
Entities or requesting, with respect to the Enogex Group Entities, information with respect to an
investigation pursuant to any Environmental Law; and
(e) There has been no Release of any Hazardous Material from or in connection with the
properties or operations of the Enogex Group Entities that has not been adequately reserved for in
the Enogex Financial Statements and that has resulted or could reasonably be expected to result in
liability under Environmental Laws or a claim for damages or compensation by any Person.
4.11 Title to Properties and Rights of Way.
(a) Each of the Enogex Group Entities has defensible title to all material real property and
good title to all material tangible personal property owned by the Enogex Group Entities and that
is sufficient for the operation of their respective Businesses as presently conducted, free and
clear of all Encumbrances except Permitted Encumbrances.
(b) Each of the Enogex Group Entities has Rights-of-Way as are sufficient to conduct its
Business in the manner described, and subject to the limitations contained, in Section
4.11(b) of the OGE Disclosure Schedule, except for (1) qualifications, reservations and
encumbrances as may be set forth in Section 4.11(b) of the OGE Disclosure Schedule and (2)
such Rights-of-Way the absence of which could not, individually or in the aggregate, reasonably be
expected to result in an Enogex Material Adverse Effect. Other than as set forth in Section
4.11(b) of the OGE Disclosure Schedule, and subject to the limitations contained, in
Section 4.11(b) of the OGE Disclosure Schedule, each of the Enogex Group Entities has
fulfilled
38
and performed all its material obligations with respect to such Rights-of-Way and no
event has occurred that allows, or after notice or lapse of time would allow, revocation or
termination thereof or would result in any impairment of the rights of the holder of any such
Rights-of-Way, except for such revocations, terminations and impairments that could not,
individually or in the aggregate, reasonably be expected to result in an Enogex Material Adverse
Effect; and, except as described in Section 4.11(b) of the OGE Disclosure Schedule, none of
such Rights-of-Way contains any restriction that is materially burdensome to the Enogex Group
Entities, taken as a whole.
4.12 Sufficiency of Assets. The assets of the Enogex Group Entities constitute all the assets,
the use or benefit of which are reasonably necessary for the operation of the Business of the
Enogex Group Entities as currently conducted. As of the Closing, all tangible and intangible assets
of the Enogex Group Entities will be in the possession, or under the control, of the Enogex Group
Entities.
4.13 Insurance. None of OGE or any of its Subsidiaries, including any of the Enogex Group
Entities, has received any notice from any insurer or agent of such insurer that (i) substantial
capital improvements or other expenditures will have to be made in order to continue any insurance
policy or instrument pursuant to which any Enogex Group Entity is insured (an Enogex Insurance
Policy) or (ii) such insurer has cancelled or terminated or has initiated procedures to cancel
or terminate any Enogex Insurance Policy. All such Enogex Insurance Policies are outstanding and
duly in force on the Execution Date and will be outstanding and duly in force on the Closing Date
in all material respects. The Enogex Group Entities are in compliance with the terms of all Enogex
Insurance Policies in all material respects; and there are no material claims by OGE or any of its
Subsidiaries, including any of the Enogex Group Entities, under any such Enogex Insurance Policy as
to which any insurance company is denying liability or defending under a reservation of rights
clause.
4.14 Tax Matters.
(a) Except as set forth in Section 4.14(a) of the OGE Disclosure Schedule,
(i) each of the Enogex Group Entities has filed (or joined in the
filing of) when due all material Tax Returns required by applicable Law to be filed by
or with respect to it, has obtained all required Tax permits and licenses and has satisfied
all registration requirements relating to Taxes;
(ii) all such Tax Returns were true correct and complete in all material respects as
of the time of such filing;
(iii) except for Taxes being contested in good faith in appropriate proceedings for
which adequate reserves have been provided, all material Taxes relating to periods ending
on or before the Closing Date owed by any of the Enogex Group Entities (regardless of
whether shown on any Tax Return) have been paid or will be timely paid;
(iv) there is no action, suit, proceeding, investigation, audit or claim now pending
against, or with respect to, any of the Enogex Group Entities in respect of
39
any material
Tax or material Tax assessment, nor has any claim for additional material Tax or material
Tax assessment been asserted in writing or been proposed by any Tax authority;
(v) no written claim has been made by any Tax authority in a jurisdiction where any of
the Enogex Group Entities does not currently file a Tax Return that it is or may be subject
to any material Tax in such jurisdiction, nor has any such assertion been threatened or
proposed in writing;
(vi) none of the Enogex Group Entities has any outstanding request for any extension
of time within which to pay any material Taxes or file any Tax Returns with respect to any
material Taxes;
(vii) there has been no waiver or extension of any applicable statute of limitations
for the assessment or collection of any material Taxes of any of the Enogex Group Entities;
(viii) none of the Enogex Group Entities has entered into any agreement or arrangement
with any Tax authority that requires any Enogex Group Entity to take any action or refrain
from taking any action;
(ix) none of the Enogex Group Entities is a party to any agreement, whether written or
unwritten, providing for the payment of Taxes, Tax losses, entitlements to Tax refunds or
similar Tax matters;
(x) each of the Enogex Group Entities has withheld and paid all material Taxes
required to be withheld in connection with any amounts paid or owing to any employee,
creditor, independent contractor or other third party;
(xi) OGE is not a foreign person within the meaning of Section 1445 of the Code;
(xii) each of the Enogex Group Entities that is classified as a partnership for U.S.
federal tax purposes has in effect an election under Section 754 of the Code;
(xiii) none of the Enogex Group Entities has been a member of an affiliated group
filing a consolidated federal income Tax Return or has any liability for the Taxes of any
Person (other than an Enogex Group Entity) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign Law), as a transferee or successor, by
contract, or otherwise; and
(xiv) there are no Tax liens on any of the assets of the Enogex Group Entities, except
for liens for Taxes not yet due.
(b) Section 4.14(b) of the OGE Disclosure Schedule sets forth with respect to each of
the Enogex Group Entities, (i) the Tax basis to OGE of each of the assets of the Enogex Group
Entities, (ii) the depreciation life, method, conventions and history applicable to each such
40
asset in the hands of OGE, as tax owner, (iii) which of the liabilities of the Enogex Group
Entities is a qualified liability within the meaning of Treasury Regulation Section
1.707-5(a)(6), and, for each Enogex Group Entity, (x) the identity of any assets that were acquired
with the proceeds of the liability and (y) the identity of any assets that have been continuously
secured by the liability for more than two years as of the date of this Agreement.
(c) None of the Enogex Group Entities is classified as a corporation for U.S. federal tax
purposes.
4.15 Employment and Benefits Matters.
(a) OGE has delivered to ETP a letter dated the Execution Date and delivered from OGE to ETP
on the Execution Date sets forth complete and accurate lists of all the Enogex Related Employees
and all the Enogex Independent Contractors, specifying whether they are Enogex Related Employees or
Enogex Independent Contractors, their position, the entity by which they are employed or to which
they provide services, annual salary, hourly wages or consulting or other independent contractor
fees, as applicable, and bonus opportunities, date of hire (or entry into an independent contractor
agreement), work location, length of service, together with a notation next to the name of any
employee or independent contractor on such lists who is subject to any Employment Agreement or
Collective Bargaining Agreement.
(b) Section 4.15(b) of the OGE Disclosure Schedule sets forth a complete and accurate
list of each Employee Benefit Plan (i) that is sponsored, maintained or contributed to by any
Enogex Group Entity or (ii) that any Affiliate or ERISA Affiliate of any Enogex Group Entity has
sponsored, maintained or contributed to, or to which any such entity is obligated to contribute
within six years of the Closing Date, that covers or benefits any current or former Enogex Related
Employees or Enogex Independent Contractors (each, an Enogex Plan). True, correct and
complete copies of each such Enogex Plan and any related documents, including all amendments
thereto, and any trust, insurance or other funding arrangement, have been furnished or made
available to ETP. There has also been furnished or made available to ETP, with respect to each such
Enogex Plan, if applicable, the most recent favorable determination letters issued by the Internal
Revenue Service, the three most recently filed reports on Form 5500 (including all schedules and
attachments), the most recent actuarial report or valuation and the most recent summary plan
description and summaries of material modifications thereto.
(c) Section 4.15(c) of the OGE Disclosure Schedule sets forth a true and complete list
of all Employment Agreements of the Enogex Group Entities. As of the Execution Date, there are no
other agreements (other than enrollment or similar forms to commence participation or initiate or
continue coverage in an Employee Benefit Plan or standard employment offer letters providing only
for at-will employment issued by Enogex Group Entities) between any Enogex Group Entity and any
natural person that provide for (i) participation in, coverage under or benefits from an Employee
Benefit Plan, (ii) annual compensation in excess of $150,000 to such person or (iii) change of
control, termination or severance payments in excess of $150,000 to such person. No Enogex Group
Entity is subject to any legal, contractual, equitable, or other obligation or commitment (whether
legally binding or not) to enter into an Employment Agreement, establish or contribute to an
Employee Benefit Plan or modify (except
41
to the extent required by applicable Law) any existing
Employee Benefit Plan or Employment Agreement.
(d) Except as set forth in Section 4.15(d) of the OGE Disclosure Schedule, no Enogex
Group Entity and no ERISA Affiliate of an Enogex Group Entity maintains or has an obligation to
contribute to, or has any obligation or liability (contingent, secondary or otherwise) to, based
upon or arising out of, an Employee Benefit Plan that is (1) subject to Title IV of ERISA or the
minimum funding requirements of Section 412 of the Code or Section 302 of ERISA, (2) a plan of the
type described in Section 4063 of ERISA or Section 413(c) of the Code, (3) a multiemployer plan
(as defined in Section 3(37) of ERISA) or (4) a multiple employer welfare arrangement (as defined
in Section 3(40) of ERISA).
(e) Except as set forth in Section 4.15(e) of the OGE Disclosure Schedule, the Enogex
Plans (A) are and have been maintained (in form and in operation) in all material respects in
accordance with their terms and with the applicable provisions of ERISA, the Code and all other
applicable Laws, (B) if intended to be qualified under Section 401(a) of the Code, (i) satisfy in
form the requirements of such Section except to the extent amendments are not required by Law to be
made until a date after the Closing Date, (ii) have received a favorable determination letter from
the Internal Revenue Service regarding such qualified status, (iii) have not, since receipt of the
most recent favorable determination letter, been amended in a way that would adversely affect their
qualified status, and (iv) have not been operated in a way that would adversely affect their
qualified status, (C) do not provide, and have not provided, any post-termination of employment
welfare benefits or coverage, except as required under Part 6 of Subtitle B of Title I of ERISA and
Code Section 4980B (or similar state or local Law), and (D) if they could be deemed nonqualified
deferred compensation arrangements under Section 409A of the Code, are in good faith compliance
with such section and the applicable regulations and authoritative guidance issued thereunder or
are exempt from the requirements of such section and have not been materially modified at any time
after October 3, 2004.
(f) The Enogex Group Entities are, and have been, in compliance in all material respects with
all applicable Laws relating to the employment of labor, including all such applicable Laws,
relating to wages, hours, collective bargaining, discrimination, civil rights, safety and health
and workers compensation. Enogex Group Entities are not subject to a current unresolved judicial
administrative determination that it has engaged in an unfair labor practice in connection with the
Enogex Related Employees and Enogex
Group Entities have not received notice of any pending NLRB proceeding with respect to any
Enogex Related Employees. Except as set forth in Section 4.15(f) of the OGE Disclosure
Schedule, no pending grievance or arbitration demand or proceeding, whether or not filed pursuant
to a collective bargaining agreement, has been received by Enogex Group Entities with respect to
the Enogex Related Employees. To the Knowledge of OGE, all Enogex Related Employees are lawfully
authorized to work in the United States according to federal immigration laws.
(g) Each Enogex Plan sponsored or maintained by an Enogex Group Entity can be unilaterally
amended or terminated at any time by an Enogex Group Entity without liability other than liability
for benefits accrued to the date of such amendment or termination pursuant to the terms of the
plan.
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(h) No Enogex Group Entity is a party to a collective bargaining agreement. No Enogex Group
Entity has agreed to recognize any union or other collective bargaining representative. No union or
other collective bargaining representative has been certified as the exclusive collective
bargaining representative of any of the Enogex Related Employees. To the Knowledge of OGE, no union
or other collective bargaining representative claims to be the exclusive bargaining representative
of any of the Enogex Related Employees. To the Knowledge of OGE, no union organizational campaign
or representation petition is currently pending with respect to any of the Enogex Related
Employees.
(i) All contributions or payments required to be made by an Enogex Group Entity to or with
respect to any Enogex Plan have been timely made and all liabilities of each Enogex Group Entity
with respect to any Enogex Plan are properly reflected in the Enogex Financial Statements in
accordance with GAAP.
(j) There are no material actions, suits, claims pending (other than routine claims for
benefits) or, to the Knowledge of OGE, threatened against, or with respect to, any of the Enogex
Plans or their assets or Employment Agreements of the Enogex Group Entities, nor is any such Enogex
Plan or Employment Agreement under investigation or audit by any Governmental Entity. Except as set
forth in Section 4.15(j) of the OGE Disclosure Schedule, there are no material claims,
lawsuits, petitions, charges, investigations, complaints, proceedings, suits, demands, actions or
other matters (other than routine qualification determination filings) that are pending against the
Enogex Group Entities before any Governmental Entity or arbitrator, or that have been asserted or
threatened against the Enogex Group Entities, including those for: (i) wages, salaries,
commissions, bonuses, vacation pay, severance or termination pay, sick pay or other compensation;
(ii) employee benefits; (iii) any alleged unlawful, unfair, wrongful or discriminatory employment
or labor practices; (iv) any alleged breach of contract or other claim arising under a collective
bargaining or individual agreement or any other employment covenant whether express or implied; (v)
any alleged violation of any statute, ordinance, contract or regulation relating to minimum wages
or maximum hours of work; (vi) any alleged violation of occupation safety and health standards; or
(vii) any alleged violation of plant closing and mass layoff, immigration, workers compensation,
disability, unemployment compensation, whistleblower laws, or other employment or labor relations
laws; and to the Knowledge of OGE, no basis therefor exists. To the extent that any Enogex
Group Entity is obligated to develop and maintain an affirmative action plan, no
discrimination claim, show cause notice, conciliation proceeding, sanction or debarment proceeding
is pending with the Office of Federal Contract Compliance Programs or any other federal agency or
any comparable state agency and no desk audit or onsite review is in progress with respect to any
Enogex Related Employee. Within the past 90 days, Enogex Group Entities have not taken an action
that constitutes a mass layoff, mass termination or plant closing at any Enogex Group Entity
facility where Enogex Related Employees work within the meaning of the Workers Adjustment and
Retraining Notification Act (WARN) or any comparable state law.
(k) No act, omission or transaction has occurred that would result, directly or indirectly, in
imposition on any Enogex Group Entity of (A) breach of fiduciary duty liability damages under
Section 409 of ERISA, (B) a civil penalty assessed pursuant to subsections (c), (i) or (l) of
Section 502 of ERISA, or (C) a tax imposed pursuant to Chapter 43 of Subtitle D of the
43
Code, in each case which would reasonably be expected to have an Enogex Material Adverse Effect.
(l) Neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby shall require any payments of money or other property or provision of benefits
or other rights to any employee, officer or director of any Enogex Group Entity to be either
subject to an excise tax or an additional tax under Section 4999 or 409A of the Code, regardless of
whether some other subsequent action or event would be required to cause such payment or benefit to
be triggered. The execution of, and performance of the transactions contemplated by, this Agreement
will not (either alone or upon the occurrence of any additional or subsequent events) constitute an
event under any Enogex Plan or Employment Agreement of the Enogex Group Entities that will or may
result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, grant of additional service credits, distribution or increase in benefits or
obligations to fund benefits with respect to any such Enogex Plan or Employment Agreement. There is
no agreement, plan, contract or arrangement by which any Enogex Group Entity is bound to compensate
or otherwise gross up any person for any state, local or federal taxes due or imposed on such
person for any reason in respect of any Enogex Plan or Employment Agreement of the Enogex Group
Entities or the benefits payable thereunder, including taxes, penalties or interest imposed, or
otherwise due, pursuant to Sections 409A or 4999 of the Code.
(m) There is no labor strike or labor dispute, slow-down, lockout or stoppage pending or, to
the Knowledge of OGE, threatened with respect to any of the Enogex Related Employees.
(n) As to any Enogex Plan that is subject to Title IV of ERISA, there has been no event or
condition which presents the material risk of plan termination, no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of ERISA or Section 412 of the Code (as
each was in effect prior to 2008) has been incurred, no reportable event within the meaning of
Section 4043 of ERISA (for which the disclosure requirements of Regulation section 4043.1 et seq.,
promulgated by the PBGC,
have not been waived) has occurred and no failure to satisfy the minimum funding standards (as
required by Section 302 of ERISA or Section 412 of the Code, as each is in effect after 2007), has
occurred, whether or not waived, no notice of intent to terminate the plan has been given under
Section 4041 of ERISA, no proceeding has been instituted under Section 4042 of ERISA to terminate
the plan, no liability to the PBGC has been incurred (other than for premium payments paid on a
timely basis), and the actuarial present value of the benefit liabilities under Section 4001(a)(16)
of ERISA does not exceed the current value of plan assets by more than $500,000, determined, as of
the beginning of the most recent plan year for which such liabilities have been determined, in
accordance with the assumptions used for funding the plan pursuant to Section 412 or 430, as
applicable, of the Code.
(o) As to any Enogex Plan intended to be qualified under Section 401(a) of the Code, there has
been no termination or partial termination of such plan within the meaning of Section 411(d)(3) of
the Code.
44
(p) Each trust funding an Enogex Plan that is intended to be exempt from federal income
taxation pursuant to Section 501(c)(9) of the Code satisfies the requirements of such section and
has received a favorable determination letter from the Internal Revenue Service regarding such
exempt status and has not, since receipt of the most recent favorable determination letter, been
amended or operated in a way which would adversely affect such exempt status.
(q) With respect to any Employee Benefit Plan that is not listed in Section 4.15(b) of
the OGE Disclosure Schedule but that is sponsored, maintained, or contributed to, or has been
sponsored, maintained, or contributed to by any ERISA Affiliate of any Enogex Group Entity, (A) no
withdrawal liability, within the meaning of Section 4201 of ERISA, has been incurred, which
withdrawal liability has not been satisfied, (B) no liability to the PBGC has been incurred by any
such ERISA Affiliate, which liability has not been satisfied, (C) no accumulated funding
deficiency, whether or not waived, within the meaning of Section 302 of ERISA or Section 412 of the
Code (as each was in effect prior to 2008) has been incurred and no failure to satisfy the minimum
funding standards (as required by Section 302 of ERISA or Section 412 of the Code, as each is in
effect after 2007) has occurred, whether or not waived, (D) all contributions (including
installments) to such plan required by Sections 302 or 303 of ERISA and Sections 412 or 430 of the
Code have been timely made and (E) no circumstances exist or in the future could exist that could
subject any Enogex Group Entity or, after the consummation of the transactions contemplated by this
Agreement, the Company or any of its Subsidiaries or ERISA Affiliates, to any liability, including
without limitation, any Tax or penalty under ERISA or the Code.
(r) No circumstance exists or future circumstance could arise that would lead any Enogex Group
Entity or, after the transaction contemplated by this Agreement, the Company, to incur any ERISA
Title IV liability or suffer the imposition of any Encumbrance on any of their assets with respect
to liabilities relating to any Enogex Plan or any employee benefit plan subject to Title IV of
ERISA that was sponsored, maintained or contributed to by (A) OGE, (B) an ERISA Affiliate of OGE,
or (C) any ERISA Affiliate of any Enogex Group Entity, or to which any of them had an obligation to
contribute.
4.16 Books and Records. The minute books of Enogex contain true and correct copies of all
actions taken at all meetings of the Board of Directors of Enogex and all written consents executed
in lieu of such meetings. Complete copies of all such minute books for 2007 and 2008 and other
records have been made available to outside counsel and other advisors to ETP.
4.17 No Changes or Material Adverse Effects.
(a) Except as set forth in Section 4.17(a) of the OGE Disclosure Schedule, between
January 1, 2008 and the Execution Date, the Business of the Enogex Group Entities, taken as a
whole, has been conducted in the ordinary course consistent with past practice, and none of the
Enogex Group Entities has taken any of the actions prohibited by Section 5.1(b), except in
connection with entering into this Agreement.
45
(b) Subsequent to January 1, 2008, there has not been any change, event or occurrence that has
had or could reasonably be expected to have an Enogex Material Adverse Effect.
4.18 Regulation. Neither OGE nor any of the Enogex Group Entities is, nor will OGE or any of
the Enogex Group Entities be following the consummation of the transactions contemplated by this
Agreement, an investment company or a company controlled by an investment company within the
meaning of the Investment Company Act of 1940, as amended.
4.19 Energy Regulatory Matters. Except as indicated in Section 4.19 of the OGE
Disclosure Schedule, none of the Enogex Group Entities is a natural gas company under the Natural
Gas Act and none of the Enogex Group Entities has operated or provided services in a manner that
would subject it to FERC jurisdiction over rates and terms of service pursuant to the Natural Gas
Act. With the exception of Enogex, which provides intrastate transportation services pursuant to
Section 311 of the NGPA, none of the Enogex Group Entities has performed services, or is subject to
regulation under the NGPA. No approval by any State Regulatory Authority is required in connection
with the execution and delivery of this agreement by OGE or the consummation of the transactions
contemplated herein. Except as indicated in Section 4.19 of the OGE Disclosure Schedule,
none of the Enogex Group Entities has become subject to any proceeding before any State Regulatory
Authorities relating to their rates or facilities.
4.20 State Takeover Laws. No approvals are required under state takeover or similar laws in
connection with the performance by OGE of its obligations under this Agreement.
4.21 Brokers Fees. Neither OGE nor any of the Enogex Group Entities, nor any of their
respective officers or directors has employed any broker, finder or other person or incurred any
liability on behalf of any ETIH Group Entity, ETP, any Enogex Group Entity or itself for any
advisory, brokerage, finder, success, deal completion or similar fees or commissions in connection
with the transactions contemplated by this Agreement, other than fees to be paid to UBS Securities
LLC.
4.22 Investment Intent. OGE is acquiring a 50% Company Membership Interest pursuant to
Article II for investment for its own account and not with a view to, or for sale in
connection with, any distribution thereof. OGE (either alone or together with its advisors) has
sufficient knowledge and experience in financial and business matters so as to be capable of
evaluating the merits and risks of its investment in such Company Membership Interest and is
capable of bearing the economic risks of such investment. OGE is aware that the Company Membership
Interest has not been registered, and will not be registered after the Closing, under the
Securities Act or under any state or foreign securities Laws.
4.23 Certain Business Relationships between Enogex and its Affiliates. Except as set forth on
Section 4.23 of the OGE Disclosure Schedule, (a) neither OGE nor any of its Subsidiaries
(excluding Enogex and its Subsidiaries) has been involved in any business arrangement or
relationship with Enogex and its Subsidiaries within the past two years, (b) neither OGE nor any of
its Subsidiaries (excluding the Enogex and its Subsidiaries) owns
any asset, tangible or intangible, that is used in Enogexs or any of its Subsidiaries
business and (c) neither OGE nor any of its Subsidiaries (excluding Enogex and its Subsidiaries) is
a party to any
46
contract, commitment or agreement (whether written or oral) with Enogex or any of
its Subsidiaries or relating to the business of Enogex or its Subsidiaries.
4.24 Limitation of Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN THIS ARTICLE IV, OGE IS NOT MAKING ANY OTHER REPRESENTATIONS OR
WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING THE MEMBERSHIP INTERESTS OF
ENOGEX, OR THE BUSINESS, ASSETS, OR LIABILITIES OF ANY ENOGEX GROUP ENTITY, INCLUDING, IN
PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE
HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED.
ARTICLE V
ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS
5.1 Conduct of Business. Except (i) as otherwise contemplated by this Agreement, (ii) as
otherwise required by Law or Environmental Law or ERISA, (iii) subject to applicable Laws, or (iv)
as set forth in Section 5.1 of the ETP Disclosure Schedule or in Section 5.1 of the
OGE Disclosure Schedule, without the prior written consent of the other Party hereto (which consent
will not be unreasonably withheld, delayed or conditioned), each Party agrees that from the
Execution Date through the Closing Date:
(a) Each Party, with respect to the business of its Consolidated Group, shall, except as
otherwise permitted under this Section 5.1, (i) conduct the business of such Consolidated
Group in the ordinary course consistent with past practices, (ii) use all reasonable efforts to
preserve intact the present business organizations and material rights and franchises of such
Consolidated Group, to keep available the services of and maintain positive employee relations with
the ETIH Related Employees and ETIH Independent Contractors or the Enogex Related Employees and
Enogex Independent Contractors, as applicable, and the current officers and employees of such
Consolidated Group, and to preserve the material relationships of such Consolidated Group with
customers, suppliers and others having business dealings with them, and (iii) maintain and keep the
material properties and assets of such Consolidated Group in as good repair and condition,
including any material insurance coverage thereon, as at the Execution Date, subject to ordinary
wear and tear.
(b) Without limiting the generality of Section 5.1(a), except as disclosed in Section 5.1(b) of the ETP Disclosure Schedule or Section 5.1(b) of the OGE Disclosure Schedule, as
applicable, each Party agrees that it will cause its respective Consolidated Group not to:
(i) make any change in its Consolidated Groups Governing Documents;
(ii) issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, any of its equity securities or securities convertible into its
equity securities, or subscriptions, rights, warrants or options to acquire or other
agreements or commitments of any character obligating it to issue any such securities;
47
(iii) except for (A) any distributions from the ETIH Subsidiaries to ETIH or any of its
Subsidiaries, or from the Enogex Subsidiaries to Enogex and (B) any cash distributions from Canyon
to ETP or any of its Subsidiaries, declare, set aside or pay any distributions in respect of its
equity securities, or split, combine or reclassify any of its equity securities or issue or
authorize the issuance of any other securities in respect of, in lieu of or in substitution for any
of its equity securities, or purchase, redeem or otherwise acquire, directly or indirectly, any of
its equity securities;
(iv) merge into or with any other person (other than (A) mergers among wholly-owned
subsidiaries of the same Person, (B) mergers between ETIH and its wholly-owned subsidiaries, (C)
mergers between Enogex and its wholly-owned subsidiaries or (D) as permitted by clause (v));
(v) acquire, through merger, consolidation or otherwise, all or substantially all of the
business or assets of any person, or acquire any interest in or contribute any assets to any
partnership or joint venture or enter into any similar arrangement for consideration in excess of
$50,000,000 individually or $100,000,000 in the aggregate;
(vi) (A) except as permitted by exclusions under other clauses of this Section 5.1(b),
other than in the ordinary course of business consistent with past practices, enter into any
material contract or agreement or terminate or amend in any material respect any material contract
or agreement to which it is a party or waive any material rights under any material contract or
agreement to which it is a party, (B) with respect to OGE and its Consolidated Group, enter into
any contract, agreement or commitment between OGE and its Subsidiaries (excluding the Enogex Group
Entities), on the one hand, and the Enogex Group Entities, on the other hand, or terminate or waive
any existing right or claim by the Enogex Group Entities against OGE and its Subsidiaries
(excluding the Enogex Group Entities) and (C) with respect to ETP and its Consolidated Group, enter
into any contract, agreement or commitment between ETP and its Subsidiaries (excluding the ETIH
Group Entities), on the one hand, and the ETIH Group Entities, on the other hand, or terminate or
waive any existing right or claim by the ETIH Group Entities against ETP and its Subsidiaries
(excluding the ETIH Group Entities);
(vii) purchase any securities of or make any investment in any Person (other than (A)
ordinary-course overnight investments consistent with cash management practices of such Party, (B)
investments in wholly-owned subsidiaries, (C) purchases and investments in addition to those
contemplated by (A) and (B) above up to an aggregate amount of $10,000,000 for each Party and (D)
as permitted pursuant to clause (v);
(viii) incur, assume or guarantee any indebtedness for borrowed money, issue, assume or
guarantee any debt securities, grant any option, warrant or right to purchase any debt securities,
or issue any securities convertible into or exchangeable for
any debt securities other than in connection with borrowings in the ordinary course of
business by any member of its Consolidated Group under its existing bank credit facilities and
intercompany debt for existing projects under development and acquisitions and capital expenditures
permitted by this Section 5.1(b), provided that such Party shall
48
provide prior written
notice to the other Party of any such borrowing that is in excess of $50,000,000 individually or
$100,000,000 in the aggregate;
(ix) (A) sell, assign, transfer, abandon, lease or otherwise dispose of assets having a fair
market value in excess of $2,000,000 in the aggregate, except for (1) assets listed in Section
5.1(b)(ix) of the ETP Disclosure Schedule and Section 5.1(b)(ix) of the OGE Disclosure
Schedule, (2) natural gas, natural gas liquids, oil and condensate sales in the ordinary course of
business consistent with past practices, and (3) dispositions of inventory or worn-out or obsolete
equipment for fair value in the ordinary course of business consistent with past practices or (B)
other than Permitted Encumbrances, grant any security interest with respect to, pledge or otherwise
encumber any assets other than security interests granted after the Execution Date (i) with respect
to assets acquired after the Execution Date (which acquisition is otherwise permitted by this
Agreement) pursuant to related financing arrangements (which financing arrangements are otherwise
permitted by this Agreement), (ii) with respect to assets already owned prior to the Execution
Date, pursuant to the requirements of existing financial arrangements or (iii) pursuant to
financing arrangements entered into after the Execution Date in accordance with Section
5.1(b)(ix);
(x) (A) settle any claims, demands, lawsuits or state or federal regulatory proceedings for
damages to the extent such settlements in the aggregate assesses damages in excess of $5,000,000
(other than any claims, demands, lawsuits or proceedings to the extent insured (net of
deductibles), to the extent reserved against in the Transwestern Financial Statements, MEP
Financial Statements, Canyon Financial Statements or the Enogex Financial Statements, as
applicable, or to the extent covered by an indemnity obligation not subject to dispute or
adjustment from a solvent indemnitor) or (B) settle any claims, demands, lawsuits or state or
federal regulatory proceedings seeking an injunction or other equitable relief where such
settlements could reasonably be expected to have an ETIH Material Adverse Effect or an Enogex
Material Adverse Effect, as applicable;
(xi) except as set forth in Section 5.1(b)(xi) of the ETP Disclosure Schedule or in
Section 5.1(b)(xi) of the OGE Disclosure Schedule or as required on an emergency basis or
for the safety of persons or the environment, make any capital expenditure in excess of $50,000,000
in the aggregate (other than as permitted by clause (v));
(xii) make any material change in its tax methods, principles or elections;
(xiii) make any material change to its financial reporting and accounting methods other than
as required by a change in GAAP or by a change in Law;
(xiv) fail to file on a timely basis all applications and other documents necessary to
maintain, renew or extend any material permit, license, variance or any other material approval
required by any Governmental Entity for the continuing operation of its business;
49
(xv) (A) grant any increases in the compensation of any of its officers or employees
or independent contractors, except in the ordinary course of business consistent with past
practices, (B) amend any existing employment or severance or termination contract with any
officer or employee or independent contractor, (C) establish, adopt or become obligated
under any new pension plan, welfare plan, multiemployer plan, Employee Benefit Plan,
severance plan, change of control or other benefit arrangement or similar plan or
arrangement, or (D) except as required by applicable Law, amend or take any other actions
with respect to any Employee Benefit Plan of Enogex, ETIH or Canyon, as applicable, if such
amendment would have the effect of enhancing any benefits thereunder, including
acceleration of vesting and waiver of performance criteria;
(xvi) adopt or vote to adopt a plan of complete or partial dissolution or liquidation;
(xvii) make any material change to its officers and directors liability insurance as
existing on of the Execution Date; or
(xviii) agree or commit to do any of the foregoing.
Notwithstanding any provision in this Section 5.1 to the contrary, but subject to the
following proviso, to the extent that they relate to ETP, the restrictions set forth in this
Section 5.1 shall not apply to the business, operations, employees, agreements,
indebtedness and securities of, or otherwise restrict the activities of MEP and its Subsidiaries;
provided, however, that without the prior written consent of OGE, ETP will not take any action to
approve the taking by MEP or any of its Subsidiaries or any MEP Designee (as defined in the LLC
Agreement) of any of the following actions:
|
(A) |
|
any matters that require Special Consent (as defined in the
MEP LLC Agreement) pursuant to Section 6.3(b) of the
MEP LLC Agreement other than the incurrence of
indebtedness pursuant to the MEP Credit Facility in
accordance with its terms existing on the date hereof; |
|
|
(B) |
|
except as permitted by exclusions under other clauses of this
Section 5.1(b), other than in the ordinary course of
business consistent with past practices, enter into any material
contract or agreement or terminate or amend in any material
respect any material contract or agreement to which it is a party
or waive any material rights under any material contract or
agreement to which it is a party; |
|
|
(C) |
|
purchase any securities of or make any investment in any
Person (other than (1) ordinary-course overnight investments
consistent with cash management practices of such Party, (2)
investments in wholly-owned subsidiaries and (3) purchases and
investments in addition to those |
50
|
|
|
contemplated by (1) and (2)
above up to an aggregate amount of $10,000,000 for each Party; |
|
|
(D) |
|
except in accordance with the Development Plan (as defined in
the MEP LLC Agreement) set forth on Schedule 5.1(b)(D) or
in accordance with a Budget (as defined in the MEP LLC Agreement)
approved in accordance with the
MEP LLC Agreement prior to the date of this Agreement
(provided that such previously approved Budget has been
disclosed in writing to OGE) or as required on an
emergency basis or for the safety of persons or the
environment, make any capital expenditure in excess of $25
million in the aggregate; |
|
|
(E) |
|
make any material change in its tax methods, principles or
elections; or |
|
|
(F) |
|
make any material change to its financial reporting and
accounting methods other than as required by a change in GAAP or
by a change in Law; or |
|
|
(G) |
|
agree or commit to do any of the foregoing. |
(c) Notification of Certain Events. From the Execution Date until the Closing Date, each
Party shall promptly notify the other Parties in writing of (i) any event, condition or
circumstance that could reasonably be expected to result in any representation or warranty of the
notifying Party contained in this Agreement to be inaccurate in any material respect as of the
Closing Date (or, in the case of any representation or warranty made as of a specified date, as of
such specified date), (ii) any event, condition or circumstance that could reasonably be expected
to result in any of the conditions set forth in Article VI not being satisfied on or prior
to the Closing Date, (iii) any change, event or occurrence that has had or could reasonably be
expected to have an ETIH Material Adverse Effect or Enogex Material Adverse Effect, as applicable,
and (iv) any material breach by the notifying Party of any covenant, obligation or agreement
contained in this Agreement; provided, however, that the delivery of any notice pursuant to this
Section 5.1(c) shall not limit or otherwise affect the remedies available hereunder to the
notified Parties.
5.2 Access to Information; Confidentiality.
(a) Subject to Section 5.2(b) and applicable Laws, upon reasonable notice, each Party
shall (and shall cause its Consolidated Group to) afford the officers, employees, counsel,
accountants and other authorized representatives and advisors of the requesting Party reasonable
access, during normal business hours from the Execution Date until the Closing Date, to its
properties, books, contracts and records as well as to its management personnel; provided that such
access shall be provided on a basis that minimizes the disruption to the operations of the
disclosing Party and its Consolidated Group. To the fullest extent permitted by law, the
disclosing Party shall not be responsible or liable to the requesting Party for personal injuries
51
sustained by the requesting Partys officers, employees, counsel, accountants and other
representatives and advisors in connection with the access provided pursuant to this Section 5.2(a), and shall be indemnified and held harmless by the requesting Party for any losses suffered
by the disclosing Party or its officers, employees or representatives in connection with any such
personal injuries.
(b) The parties acknowledge that certain information received pursuant to Section
5.2(a) will be non-public or proprietary in nature and as such will be deemed to be
Confidential Evaluation Material for purposes of the Confidentiality Agreement. Each
Party further agrees to be bound by the terms and conditions of the Confidentiality Agreement
(except that the term of the Confidentiality Agreement shall be two years from the Execution Date)
and to maintain the confidentiality of such Confidential Evaluation Material in accordance with the
Confidentiality Agreement.
5.3 Certain Filings. As promptly as practicable following the Execution Date (and in any event
no later than 10 Business Days following the Execution Date), (i) the parties shall (A), to the
extent required, make their respective filings under the HSR Act with the Federal Trade Commission
and the Antitrust Division of the U.S. Department of Justice, which filings will include a request
for early termination of any applicable waiting period, (B) after such filings are made, make any
other required submissions under the HSR Act, (C) use all reasonable efforts to cooperate with one
another making all such filings and timely seeking all such consents, permits, authorizations,
approvals or HSR Clearance and (D) use all reasonable efforts to take, or cause to be taken, all
other actions and do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective the transactions contemplated hereby, including taking all such
further action as reasonably may be necessary to resolve such objections, if any, as the Federal
Trade Commission, the Antitrust Division of the Department of Justice, state antitrust enforcement
authorities or competition authorities of any other nation or other jurisdiction or any other
person may assert under relevant antitrust or competition laws with respect to the transactions
contemplated hereby and (ii) the parties hereto shall make all required filings or applications
necessary to obtain any consents required to be obtained from the FCC in connection with the
transactions contemplated by this Agreement. Notwithstanding the foregoing or any other provision
of this Agreement, in no event will any Party or any of their respective Affiliates be required to
enter into or offer to enter into any divestiture, hold-separate, business limitation or similar
agreement or undertaking in connection with this Agreement or the transactions contemplated by this
Agreement that could reasonably be expected to result in an OGE Material Adverse Effect or an ETP
Material Adverse Effect, as applicable. Subject to the provisions of the immediately preceding
sentence, ETP and OGE shall cooperate fully with respect to any filing, submission or communication
with a Governmental Entity having jurisdiction over the transactions contemplated by this
Agreement. The Parties hereby acknowledge and agree that the taking by any of the Parties of any
action relating to any of the transactions described on Schedule 5.3, including the
performance of due diligence and the negotiation and execution of definitive documentation relating
to, and the consummation of, any such transaction will not result in a breach or violation of the
Parties obligations under this Section 5.3.
5.4 Financing; Refinancing.
52
(a) Each of ETP and OGE shall use commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to arrange and consummate the financing described on Annex A (the
Financing). Each of the Parties hereto acknowledges and agrees that neither Party hereto
is required to accept financing terms that conflict with those terms described on Annex A.
(b) Each of ETP and OGE shall use commercially reasonable efforts to cooperate, and shall use
commercially reasonable efforts to cause its respective officers, employees and advisors, including
legal and accounting, to cooperate, with the other Party hereto and its officers, employees and
advisors, including legal and accounting, and with prospective lenders, financial advisors,
underwriters and initial purchasers as reasonably requested by the other Party hereto in connection
with the arrangement of the Financing, including (i) using commercially reasonable efforts to
participate in meetings, presentations, road shows, due diligence sessions, drafting sessions and
sessions with rating agencies, (ii) using commercially reasonable efforts to assist with the
preparation of materials for rating agency presentations, offering documents, private placement
memoranda, bank information memoranda, prospectuses and similar documents required in connection
with the Financing, (iii) executing and delivering any customary certificates, legal opinions or
documents as may be reasonably requested by the prospective lenders, initial purchasers or
underwriters involved in the Financing, (iv) using commercially reasonable efforts to furnish
prospective sources of the Financing, including initial purchasers or underwriters, as promptly as
practicable with financial and other pertinent information regarding the ETIH Group Entities or the
Enogex Group Entities, as applicable, as may be reasonably requested by such prospective lenders,
initial purchasers or underwriters, including quarterly and annual consolidated and consolidating
financial statements of the ETIH Group Entities or the Enogex Group Entities, as applicable,
prepared in accordance with GAAP (except, in the case of quarterly financial statements, for the
absence of footnotes and subject to normal year-end adjustments), and all other financial
statements and financial data of the type reasonably required by such prospective lenders, initial
purchasers or underwriters, (v) using commercially reasonable efforts to obtain accountants
comfort letters, consents, landlord, bailee or warehousemen waivers or letters, insurance
endorsements, intercreditor agreements if applicable, legal opinions, surveys, title insurance and
other third party agreements or deliverables as reasonably requested by any prospective lenders,
initial purchasers or underwriters, (vi) taking all actions reasonably necessary to facilitate the
due diligence conducted by prospective lenders, initial purchasers or underwriters, and (vii)
causing the Company to enter into one or more customary and reasonable credit or other agreements
or indentures on terms no less favorable to the Company than those described on Annex A. Any
information provided by the OGE or ETP in connection with seeking the Financing shall be prepared
in good faith and shall be free of any material misstatements or omissions.
(c) Within three Business Days after the date of this Agreement, ETP shall cause Transwestern
to give written notice of the transactions contemplated by this Agreement to each holder of the
Transwestern Notes in accordance with the terms of the Transwestern Notes Agreements. At least 30
days prior to the anticipated Closing Date, ETP shall cause Transwestern to give written notice
containing and constituting an offer to prepay the Transwestern Notes in accordance with the terms
of the Transwestern Notes Agreements (the Transwestern Notes Offer). The Transwestern
Notes Offer shall be an offer to prepay, in accordance with the terms of the Transwestern Notes
Agreements, all, but not less than all, the
53
Transwestern Notes held by each holder on a date specified in such Transwestern Notes Offer (the
Proposed Change of Control Prepayment Date). The Proposed Change of Control Prepayment
Date will be not less than 30 days and not more than 60 days after the date of such offer; provided
that such date shall be delayed in accordance with the terms of the Transwestern Notes Agreements
until the Closing Date. At the Closing, ETP shall cause Transwestern to use a portion of the
proceeds from the issuance of the Transwestern Senior Notes described on Annex A (the
Transwestern Senior Notes Offering) to repay Transwestern Notes held by any holder of the
Transwestern Notes that has accepted the Transwestern Notes Offer in accordance with the
Transwestern Notes Agreements.
(d) At the Closing, (i) ETP shall cause Transwestern to use the remaining portion of the
proceeds from the Transwestern Senior Notes Offering to repay a portion of any intercompany loans
from ETP or any of its Subsidiaries to Transwestern or any of its Subsidiaries existing as of the
Closing Date (the Transwestern Intercompany Loans) and (ii) ETP and OGE shall cause the
Company to use a portion of the proceeds from the issuance of Senior Notes (the Company Senior
Financing) of the Company described on Annex A to repay on behalf of Transwestern the
remainder of any Transwestern Intercompany Loans. For federal income tax purposes, a portion of the
proceeds received by ETP or any of its Subsidiaries from the Transwestern Senior Notes Offering and
the Company Senior Financing in repayment of the Transwestern Intercompany Loans pursuant to this
Section 5.4(d) will be treated as a reimbursement of certain capital expenditures pursuant to
Treasury Regulation Section 1.707-4(d) with respect to the assets contributed to the Company by ETP
or any of its Subsidiaries.
(e) At the Closing, ETP and OGE shall cause the Company to use a portion of the proceeds of
the Company Senior Financing to (i) repay on behalf of Enogex all amounts outstanding under the
Enogex Credit Facility and (ii) repay on behalf of Enogex any intercompany loans from OGE or any of
its Subsidiaries to Enogex or any of its Subsidiaries existing as of the Closing Date. For federal
income tax purposes, a portion of the repayments contemplated by this Section 5.4(e) will
be treated as a reimbursement of certain preformation expenditures pursuant to Treasury Regulation
Section 1.707-4(d) with respect to the assets contributed to the Company by OGE or any of its
Subsidiaries.
(f) At the Closing, ETP and OGE shall cause the Company to use a portion of the proceeds of
the Company Senior Financing to make the cash payment to OGE contemplated by Section
2.1(b). For federal income tax purposes, a portion of the proceeds received by OGE or any of
its Subsidiaries from the Company Senior Financing pursuant to this Section 5.4(f) will be
treated as a reimbursement of certain preformation expenditures pursuant to Treasury Regulation
Section 1.707-4(d) with respect to the assets contributed to the Company by OGE or any of it
Subsidiaries.
(g) ETP and OGE shall use all reasonable efforts to reduce, as of the Closing, ETPs Stated
Percentage (as defined in the MEP Guaranty Agreement) from 50% to 25%; provided, however, that ETP
shall not be obligated to enter into any agreement or amendment to any existing agreement to obtain
such reduction. In furtherance of this obligation, OGE shall enter into an Other Guaranty as
defined in and in accordance with
the terms and conditions of the MEP Guaranty Agreement with the Administrative Agent (as
defined in the MEP Guaranty
54
Agreement) for the benefit of the Lenders (as defined in the MEP Guaranty Agreement) under which
OGEs Stated Percentage would be 25%.
(h) ETP and OGE agree that, at the sole option of ETP, on or prior to the Closing, ETP Galaxy
will enter into one or more indemnification agreements with the Company and/or its Subsidiaries
(the Indemnification Agreement), pursuant to which ETP Galaxy would agree to indemnify
the Company and/or its Subsidiaries for obligations arising under the Transwestern Senior Notes
and/or the Company Senior Financing in an amount equal to the amount of the Transwestern
Intercompany Loans to the extent that the Company or its Subsidiaries was unable to satisfy such
obligations and subject to such other terms and conditions as determined by ETP, provided that the
Indemnification Agreement shall not impose any financial or other material obligation on OGE, the
Company or any of their respective Subsidiaries.
5.5 Reasonable Efforts; Further Assurances. From and after the Execution Date, upon the terms
and subject to the conditions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all appropriate action, and to do or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable; provided, however, that
this obligation shall not apply to the matters contemplated in Sections 5.3 and
5.4; provided further, that none of the Parties hereto shall be obligated to enter into any
agreement or amendment to any existing agreement to obtain the consents described in Section
6.3(h) of the ETP Disclosure Schedule. Without limiting the foregoing but subject to the other
terms of this Agreement, the parties hereto agree that, from time to time, whether before, at or
after the Closing Date, each of them will execute and deliver, or cause to be executed and
delivered, such instruments of assignment, transfer, conveyance, endorsement, direction or
authorization as may be necessary to consummate and make effective the transactions contemplated by
this Agreement.
5.6 No Public Announcement. On the Execution Date, the parties hereto shall issue a joint
press release with respect to the execution of this Agreement, which press release shall be
reasonably satisfactory to OGE and ETP. ETP and OGE shall consult with each other before issuing,
and give each other the opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement, and shall not issue any
such press release or make any such public statement prior to such consultation, except as such
party may reasonably conclude may be required by applicable Law, court process or by obligations
pursuant to any listing agreement with any national securities exchange or national securities
quotation system. The parties agree that all formal employee communication programs or
announcements with respect to the transactions contemplated by this Agreement shall be in forms
mutually agreed to by the parties (such agreement not to be unreasonably withheld, conditioned or
delayed); provided, however, that no further mutual agreement shall be required with respect to any
such programs or announcements that are consistent with prior programs or announcements made in
compliance with this Section 5.6. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement
shall be in the form heretofore agreed to by the parties.
55
5.7 Expenses. Except as provided in the immediately following sentence, regardless of whether
the transactions contemplated by this Agreement are consummated, all costs and expenses incurred in
connection with this Agreement shall be paid by the party hereto incurring such expenses.
5.8 Control of Other Partys Business. Nothing contained in this Agreement will give ETP,
directly or indirectly, the right to control or direct the operations of OGE or any of the Enogex
Group Entities prior to the Closing Date. Nothing contained in this Agreement will give OGE,
directly or indirectly, the right to control or direct the operations of ETP or any of the ETIH
Group Entities prior to the Closing Date. Prior to the Closing Date, each of ETP and OGE will
exercise, consistent with the terms and conditions of this Agreement, complete control and
supervision over its respective operations and the operations of its respective Subsidiaries.
Nothing in this Agreement, including any of the actions, rights or restrictions set forth herein,
will be interpreted in such a way as to place ETP or OGE in violation of any rule, regulation or
policy of any Governmental Entity or applicable Law.
5.9 Maintenance and Enforcement of Insurance Policies.
(a) From and after the date of this Agreement (through the Closing Date), ETP shall not, and
shall cause each of its Subsidiaries not to, take any action or fail to take any commercially
reasonable action if such action or inaction, as the case may be, would adversely affect the
applicability of any insurance in effect on the date of this Agreement that covers all or any part
of the assets or Business of the ETIH Group Entities (the Applicable ETP Insurance). ETP
agrees that, from and after the Closing Date, all proceeds from claims made on or before the
Closing Date under the Applicable ETP Insurance directly or indirectly applicable to the assets or
Business of the ETIH Group Entities shall be for the benefit of the Company. Without limiting the
generality of the foregoing, from and after the Closing Date and in any reasonable manner requested
by the Company, ETP shall use commercially reasonable efforts to ensure that all Applicable ETP
Insurance policies and arrangements are modified, amended or assigned so that the Company or one
of its Subsidiaries is a direct beneficiary of such Applicable ETP Insurance with all rights to
enforce, obtain the benefit of and take all other action in respect of such Applicable ETP
Insurance; provided, however, that if the modifications, amendments or assignments contemplated by
this Section 5.9(a) are not permissible, ETP shall, and shall cause each of its
Subsidiaries to, (i) make any claim against the Applicable ETP Insurance reasonably requested by
the Company, (ii) use its commercially reasonable efforts to collect any proceeds payable under the
Applicable ETP Insurance and (iii) deliver any such proceeds received by ETP or its Subsidiaries to
the Company.
(b) From and after the date of this Agreement (through the Closing Date), OGE shall not, and
shall cause each of its Subsidiaries not to, take any action or fail to take any commercially
reasonable action if such action or inaction, as the case may be, would adversely affect the
applicability of any insurance in effect on the date of this Agreement that covers all or any part
of the assets or Business of the Enogex Group Entities (the Applicable OGE Insurance).
OGE agrees that, from and after the Closing
Date, all proceeds from claims made on or before the Closing Date under the Applicable OGE
Insurance directly or indirectly applicable to the assets or Business of the Enogex Group Entities
shall be for the benefit of the Company. Without limiting the generality of the foregoing, from and
after the Closing Date and in any
56
reasonable manner requested by the Company, OGE shall use
commercially reasonable efforts to ensure that all Applicable OGE Insurance policies and
arrangements are modified, amended or assigned so that the Company or one of its Subsidiaries is a
direct beneficiary of such Applicable OGE Insurance with all rights to enforce, obtain the benefit
of and take all other action in respect of such Applicable OGE Insurance; provided, however, that
if the modifications, amendments or assignments contemplated by this Section 5.9(b) are not
permissible, OGE shall, and shall cause each of its Subsidiaries to, (i) make any claim against the
Applicable OGE Insurance reasonably requested by the Company, (ii) use its commercially reasonable
efforts to collect any proceeds payable under the Applicable OGE Insurance and (iii) deliver any
such proceeds received by OGE or its Subsidiaries to the Company.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Each Partys Obligations. The obligation of the Parties hereto to proceed
with the Closing is subject to the satisfaction on or prior to the Closing Date of all 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:
(a) Approvals. The applicable waiting periods under the HSR Act shall have expired or been
terminated (including any extended waiting period arising as a result of a request for additional
information), and the parties shall have received all consents required to be obtained from the FCC
in connection with the transactions contemplated by this Agreement. The parties hereto shall have
received all other third party and governmental consents and approvals, the absence of which could,
individually or in the aggregate, reasonably be expected to have an ETIH Material Adverse Effect or
an Enogex Material Adverse Effect.
(b) No Governmental Restraint. No order, decree or injunction of any Governmental Entity shall
be in effect, and no Law or Environmental Law shall have been enacted or adopted, that enjoins,
prohibits or makes illegal the consummation of any of the transactions contemplated by this
Agreement, and no action, proceeding or investigation by any Governmental Entity with respect to
the transactions contemplated by this Agreement shall be pending that seeks to restrain, enjoin,
prohibit or delay consummation of the transactions contemplated by this Agreement or to impose any
material restrictions or requirements thereon or on OGE or ETP with respect thereto.
(c) Formation of the Company. The Certificate of Formation of the Company shall have been
filed with the Secretary of State of the State of Delaware in accordance with the Delaware Limited
Liability Company Act.
(d) Financing. The Financing shall have been obtained on terms and conditions that do not
conflict with those described on Annex A.
(e) Consents. The consent described on Annex B remains effective as of the Closing.
6.2 Conditions to OGEs Obligations. The obligation of OGE to proceed with the Closing is
subject to the satisfaction on or prior to the Closing Date of all of the following
57
conditions, any one or more of which may be waived in writing, in whole or in part, by OGE (in its sole
discretion):
(a) Representations and Warranties of ETP; Performance. (i) The representations and
warranties of ETP set forth in Article III (other than those set forth in Section 3.3)
shall be true and correct in all respects as of the Execution Date and as of the Closing as if
remade on the date thereof (except for representations and warranties made as of a specific date,
which shall be true and correct as of such specific date) except for such failures to be true and
correct (ignoring and disregarding all Materiality Requirements set forth therein (other than in
Section 3.17(b)) that could not, individually or when aggregated with other such
inaccuracies of representations or warranties, reasonably be expected to have an ETIH Material
Adverse Effect, (ii) the representations and warranties of ETP set forth in Section 3.3
shall be true and correct in all material respects as of the Execution Date and as of the Closing
as if remade on the date thereof (except for representations and warranties made as of a specific
date, which shall be true and correct as of such specific date), (iii) ETP shall have performed (or
caused to have been performed) all covenants required of them by this Agreement as of the Closing,
and (iv) ETP shall have furnished OGE at the Closing with a certificate to such effect.
(b) Resignations of Directors. The directors of ETIH and the directors of such other ETIH
Group Entities designated by the Company, excluding MEP, shall tender to the Company their
resignations as such directors effective as of the Closing.
(c) Tax Opinion. OGE shall have received an opinion of Baker Botts L.L.P. or another
nationally-recognized tax counsel, dated as of the Closing Date to the effect that, for U.S.
federal income tax purposes, 90% of the gross income of the Company will constitute qualifying
income within the meaning of Section 7704(d) of the Code. In rendering such opinion, such counsel
shall be entitled to receive and rely upon representations of officers of ETP, OGE and any of their
respective Affiliates as to such matters as such counsel may reasonably request.
(d) LLC Agreement. ETP and ETP Galaxy shall have delivered to OGE executed counterparts of the
Limited Liability Company Agreement of the Company in the form attached hereto as Exhibit A (the
LLC Agreement).
(e) ETP Services Agreement. At or prior to the Closing, ETP shall have entered into a Services
Agreement substantially in the form attached hereto as Exhibit B (the ETP Services
Agreement).
(f) Omnibus Agreement. At or prior to the Closing, ETP shall have entered into an Omnibus
Agreement substantially in the form attached hereto as Exhibit C (the Omnibus
Agreement).
(g) FIRPTA Certificate. OGE shall have received a certificate of ETP Galaxy in the form
specified in Treasury Regulation Section 1.1445-2(b)(2)(iv) that ETP
Galaxy is not a foreign person within the meaning of Section 1445 of the Code.
(h) ETP Transitional Seconding Agreement. At or prior to the Closing, ETP shall have entered
into the ETP Transitional Seconding Agreement.
58
6.3 Conditions to ETPs Obligations. The obligation of ETP to proceed with the Closing is
subject to the satisfaction on or prior to the Closing Date of all of the following conditions, any
one or more of which may be waived in writing, in whole or in part, by ETP (in their sole
discretion):
(a) Representations and Warranties of OGE; Performance. (i) The representations and
warranties of OGE set forth in Article IV made to ETP (other than those set forth in
Section 4.3) shall be true and correct in all respects as of the Execution Date and as of
the Closing as if remade on the date thereof (except for representations and warranties made as of
a specific date, which shall be true and correct as of such specific date), except for such
failures to be true and correct (ignoring and disregarding all Materiality Requirements set forth therein (other than in Section 4.17(b)) that could not, individually or when aggregated with
other such inaccuracies of representations or warranties, reasonably be expected to have an Enogex
Material Adverse Effect, (ii) the representations and warranties of OGE set forth in Section
4.3 shall be true and correct in all material respects as of the Execution Date and as of the
Closing, as if remade on the date thereof (except for representations and warranties made as of a
specific date, which shall be true and correct as of such specific date), (iii) OGE shall have
performed (or caused to have been performed) all covenants required of it by this Agreement as of
the Closing and (iv) OGE shall have furnished to ETP at the Closing with a certificate to such
effect.
(b) Resignations of Directors. The directors of Enogex and the directors of such other Enogex
Group Entities designated by the Company shall tender to the Company their resignations as such
directors effective as of the Closing.
(c) Tax Opinion. ETP shall have received an opinion of Vinson & Elkins L.L.P. or another
nationally-recognized tax counsel, dated as of the Closing Date to the effect that, for U.S.
federal income tax purposes, 90% of the gross income of the Company will constitute qualifying
income within the meaning of Section 7704(d) of the Code. In rendering such opinion, such counsel
shall be entitled to receive and rely upon representations of officers of ETP, OGE and any of their
respective Affiliates as to such matters as such counsel may reasonably request.
(d) OGE Services Agreement. At or prior to the Closing, OGE shall have entered into a
Services Agreement substantially in the form attached hereto as Exhibit D (the OGE Services
Agreement).
(e) Omnibus Agreement. At or prior to the Closing, OGE shall have entered into the Omnibus
Agreement.
(f) FIRPTA Certificate. ETP shall have received a certificate of OGE Holdings in the form
specified in Treasury Regulation Section 1.1445-2(b)(2)(iv) that OGE Holdings is not a foreign
person within the meaning of Section 1445 of the Code.
(g) MEP Guaranty. The MEP Guaranty Agreement shall have been amended to reduce ETPs Stated
Percentage from 50% to 25%.
(h) Consents. The consents described on Section 6.3(h) of the ETP Disclosure Schedule
shall have been received.
59
(i) OGE Transitional Seconding Agreement. At or prior to the Closing, OGE shall have entered
into the OGE Transitional Seconding Agreement.
(j) LLC Agreement. OGE and OGE Holdings shall have delivered to ETP executed counterparts of
the LLC Agreement.
ARTICLE VII
[RESERVED]
ARTICLE VIII
TAX MATTERS
8.1 ETIH Group Entity Taxes. ETP shall be responsible for (and entitled to retain any refunds
with respect to) all ETP Indemnified Taxes, and the Company shall be responsible for (and entitled
to retain any refunds with respect to) all other Taxes of the ETIH Group Entities. Regardless of
which Party is responsible, ETP shall file, or cause the appropriate ETIH Group Entity to file (as
applicable), the Tax return and pay, or cause the appropriate ETIH Group Entity to pay (as
applicable), all Taxes with respect to the ETIH Group Entities that are required to be paid prior
to the Closing. ETP shall promptly deliver to the Company copies of all Tax returns filed by ETP
with respect to the ETIH Group Entities and any supporting documentation, excluding Tax returns, or
portions of the Tax returns, related to income, franchise or similar Taxes that are unrelated to
the ETIH Group Entities. ETP and the ETIH Group Entities shall not make any election or otherwise
take any action with respect to Taxes attributable to the ETIH Group Entities that is inconsistent
with the conventions, elections or other Tax attributes of the ETIH Group Entities (or their
assets) as described in Section 3.14(b) of the ETP Disclosure Schedule.
8.2 Enogex Group Entity Taxes. OGE shall be responsible for (and entitled to retain any
refunds with respect to) all OGE Indemnified Taxes, and the Company shall be responsible for (and
entitled to retain any refunds with respect to) all other Taxes of the Enogex Group Entities.
Regardless of which Party is responsible, OGE shall file, or cause the appropriate Enogex Group
Entity to file (as applicable), the Tax return and pay, or cause the appropriate Enogex Group
Entity to pay (as applicable), all Taxes with respect to the Enogex Group Entities that are
required to be paid prior to the Closing. OGE shall promptly deliver to the Company copies of all
Tax returns filed by OGE with respect to the Enogex Group Entities and any supporting
documentation, excluding Tax returns, or portions of the Tax returns, related to income, franchise
or similar Taxes that are unrelated to the Enogex Group Entities. OGE and the Enogex Group Entities
shall not make any election or otherwise take any action with respect to Taxes attributable to the
Enogex Group Entities that is inconsistent with the conventions, elections or other Tax attributes
of the Enogex Group Entities (or their assets) described in Section 4.14(b) of the OGE
Disclosure Schedule.
60
ARTICLE IX
TERMINATION
9.1 Termination of Agreement. Anything herein to the contrary notwithstanding, this Agreement
and the transactions contemplated hereby may be terminated at any time before the Closing as
follows:
(a) By the mutual written agreement of OGE and ETP;
(b) By either OGE or ETP if any Governmental Entity of competent jurisdiction shall have
issued a final and nonappealable order permanently enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement, except that no party may terminate
this Agreement pursuant to this Section 9.1(b) if its breach of its obligations under this
Agreement proximately contributed to the occurrence of such order;
(c) By OGE if there shall have been a breach of any of the covenants or agreements or any
inaccuracy of any of the representations or warranties set forth in this Agreement on the part of
ETP, which breach or inaccuracy, either individually or in the aggregate, would result in, if
occurring or continuing on the Closing Date, the failure of the conditions set forth in Section
6.2(a), unless such failure is reasonably capable of being cured, and ETP is using, or continuing
to use, all reasonable efforts to cure such failure by the End Date;
(d) By ETP if there shall have been a breach of any of the covenants or agreements or any
inaccuracy of any of the representations or warranties set forth in this Agreement on the part of
OGE, which breach or inaccuracy, either individually or in the aggregate, would result in, if
occurring or continuing on the Closing Date, the failure of the conditions set forth in Section
6.3(a), unless such failure is reasonably capable of being cured, and OGE is using, or continuing
to use, all reasonable efforts to cure such failure by the End Date; or
(e) By either ETP or OGE, upon written notice to the other, if the transactions contemplated
by this Agreement shall not have been consummated on or prior to March 31, 2009 (the End Date);
provided, however, that ETP may not terminate this Agreement pursuant to this Section 9.1(e) if
such failure of consummation is due to the failure of ETP or the ETIH Group Entities to perform or
observe in all material respects the covenants and agreements hereof to be performed or observed by
it and that OGE may not terminate this Agreement pursuant to this Section 9.1(e) if such failure of
consummation is due to the failure of OGE or the Enogex Group Entities to perform or observe in all
material respects the covenants and agreements hereof to be performed or observed by it.
9.2 Effect of Certain Terminations. In the event of termination of this Agreement pursuant to
this Article IX, all rights and obligations of the Parties hereto under this Agreement shall
terminate, except the provisions of Section 5.2(b), Section 5.6, Section 5.7, Article IX and
Article X shall survive such termination; provided, however, that nothing herein shall relieve any
party hereto from any liability for any intentional or willful and material breach by such party of
any of its representations, warranties, covenants or agreements set forth in this Agreement and all
rights and remedies of a non-breaching party
under this Agreement in the case of such
61
intentional or willful and material breach, at law
or in equity, shall be preserved. Except to the extent otherwise provided in the immediately
preceding sentence, ETP and OGE agree that, if this Agreement has been terminated, any amount
payable pursuant to this Section 9.2 shall be the sole and exclusive remedy of the Parties hereto.
9.3
Survival. Except as otherwise provided in
Section 5.9, Article VIII, this
Section 9.3 and
Article X, none of the representations, warranties, agreements, covenants or obligations in this
Agreement or in any certificate delivered pursuant to this Agreement shall survive the Closing.
9.4 Enforcement of this Agreement. The Parties hereto acknowledge and agree that an award of
money damages would be inadequate for any breach of this Agreement by any party and any such breach
would cause the non-breaching parties irreparable harm. Accordingly, the Parties hereto agree that
prior to the termination of this Agreement, in the event of any breach or threatened breach of this
Agreement by one of the Parties, the Parties to the fullest extent permitted by law, will also be
entitled, without the requirement of posting a bond or other security, to equitable relief,
including injunctive relief and specific performance, provided such party is not in material
default hereunder. Such remedies will not be the exclusive remedies for any breach of this
Agreement but will be in addition to all other remedies available at law or equity to each of the
Parties.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Any notice, request, instruction, correspondence or other document to be given
hereunder by any party to another party (each, a Notice) shall be in writing and delivered in
person or by courier service requiring acknowledgment of receipt of delivery or mailed by U.S.
registered or certified mail, postage prepaid and return receipt requested, or by telecopier, as
follows, provided that copies to be delivered below shall not be required for effective notice and
shall not constitute notice:
If
to ETP, addressed to:
Energy
Transfer Partners, L.P.
3738 Oak
Lawn Avenue
Dallas, Texas 75219
Attention: General Counsel
Telecopy: (214) 981-0701
with a copy to:
Vinson & Elkins L.L.P.
1001 Fannin
Street, Suite 2500
Houston, Texas
77002-6760
Attention: Douglas E. McWilliams
Telecopy: (713) 615-5725
62
If to OGE, addressed to:
OGE Energy Corp.
321
North Harvey
P.O.
Box 321
Oklahoma City, Oklahoma 73101
Attention: General Counsel
Telecopy:
(405) 553-3760
with a copy to:
Jones Day
717 Texas Avenue, Suite 3300
Houston, Texas 77002
Attention:
J. Mark Metts
Telecopy: (832)
239-3600
Notice given by personal delivery, courier service or mail shall be effective upon actual
receipt. Notice given by telecopier shall be confirmed by appropriate answer back and shall be
effective upon actual receipt if received during the recipients normal business hours, or at the
beginning of the recipients next Business Day after receipt if not received during the recipients
normal business hours. All Notices by telecopier shall be confirmed promptly after transmission in
writing by certified mail or personal delivery. Any party may change any address to which Notice is
to be given to it by giving Notice as provided above of such change of address.
10.2 Governing Law; Jurisdiction; Waiver of Jury Trial. To the maximum extent permitted by
applicable law, the provisions of this Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without regard to principles of conflict of
laws. Each of the Parties hereto agrees that this Agreement involves at least $100,000 and that
this Agreement has been entered into in express reliance upon 6 Del. C. § 2708. Each of the Parties
hereto irrevocably and unconditionally confirms and agrees (i) that it is and shall continue to be
subject to the jurisdiction of the courts of the State of Delaware and of the federal courts
sitting in the State of Delaware, and (ii)(A) to the extent that such party is not otherwise
subject to service of process in the State of Delaware, to appoint and maintain an agent in the
State of Delaware as such partys agent for acceptance of legal process and notify the other
Parties hereto of the name and address of such agent, and (B) to the fullest extent permitted by
law, that service of process may also be made on such party by prepaid certified mail with a proof
of mailing receipt validated by the U.S. Postal Service constituting evidence of valid service, and
that, to the fullest extent permitted by applicable law, service made pursuant to (ii)(A) or (B)
above shall have the same legal force and effect as if served upon such party personally within the
State of Delaware. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY (A) CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY
FEDERAL OR STATE COURT LOCATED IN THE STATE OF DELAWARE, INCLUDING THE DELAWARE COURT OF CHANCERY
IN AND FOR NEW CASTLE COUNTY (THE DELAWARE COURTS) FOR ANY ACTIONS, SUITS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE
63
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING
THERETO EXCEPT IN SUCH COURTS), (B) WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION IN THE DELAWARE COURTS AND AGREES NOT TO PLEAD OR CLAIM IN ANY DELAWARE COURT THAT SUCH
LITIGATION BROUGHT THEREIN HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM AND (C) ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.
10.3 Entire Agreement; Amendments and Waivers. Except for the Confidentiality Agreement, the
LLC Agreement, the Employee Transition Agreement, the Indemnification Agreement, the Transitional
Seconding Agreements, the OGE Services Agreement, the ETP Service Agreement and the Omnibus
Agreement, this Agreement and the exhibits and schedules hereto constitute the entire agreement
between and among the Parties hereto pertaining to the subject matter hereof and thereof and
supersede all prior agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties, and there are no warranties, representations or other agreements between
or among the Parties in connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. Except as expressly set forth in this Agreement (including the
representations and warranties set forth in Articles III and IV), (i) the Parties acknowledge and
agree that none of OGE, ETP or any other Person has made, and the Parties are not relying upon, any
covenant, representation or warranty, written or oral, statutory, expressed or implied, as to the
Enogex Group Entities or the ETIH Group Entities, as applicable, or as to the accuracy or
completeness of any information regarding any party furnished or made available to any other party
and (ii) no party shall have or be subject to any liability to any other Person, or any other
remedy in connection herewith, based upon the distribution to any other Person of, or any other
Persons use of or reliance on, any such information or any information, documents or material made
available to such Person in any data rooms, virtual data rooms, management presentations or in
any other form in expectation of, or in connection with, the transactions contemplated hereby. No
supplement, modification or waiver of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. The failure of a party to exercise any right or remedy shall not be
deemed or constitute a waiver of such right or remedy in the future. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
10.4 Binding Effect and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective permitted successors and
assigns. Nothing in this Agreement, express or implied, is intended to confer upon any Person other
than the Parties hereto and their respective permitted successors and assigns, any rights, benefits
or obligations hereunder. No party hereto may assign, transfer, dispose of or otherwise alienate
this Agreement or any of its rights, interests or obligations under this Agreement (whether by
64
operation of law or otherwise). Any attempted assignment, transfer, disposition or alienation in
violation of this Agreement shall be null, void and ineffective.
10.5 Severability. If any term or other provision of this Agreement is invalid, illegal, or
incapable of being enforced by any rule of applicable Law, or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated by this Agreement are not affected in
any manner materially adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the Parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the Parties hereto as
closely as possible in a mutually acceptable manner in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the fullest extent possible.
10.6 Execution. This Agreement may be executed in multiple counterparts each of which shall be
deemed an original and all of which shall constitute one instrument.
[Remainder of Page Blank; Signature Page Follows]
65
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed by their
respective officers hereunto duly authorized, all as of the date first written above.
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ENERGY TRANSFER PARTNERS, L.P.
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By: |
Energy Transfer Partners GP, L.P., its general partner
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By: |
Energy Transfer Partners, L.L.C., its general partner
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By: |
/s/ Martin Salinas |
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Name: |
Martin Salinas |
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Title: |
Chief Financial Officer |
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OGE ENERGY CORP.
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By: |
/s/ Peter B. Delaney |
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Name: |
Peter B. Delaney |
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Title: |
Chairman, President and
Chief Executive Officer |
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Signature Page to Galaxy Contribution Agreement
Annex A
Qualifying Terms of the Transwestern Sr. Notes
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Ranking:
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Pari Passu with all existing and future unsecured senior debt |
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Security Type:
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Unsecured |
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Distribution:
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144A and Reg S1 |
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Principal Amount:
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No less than $800 million |
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Maturity:
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10 years (bullet) |
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Indicative Interest Rate:
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No more than 8.0% |
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Optional Redemption:
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Prepayable any time at par plus accrued plus a Make Whole premium (discount rate no
less than T + 15bps if investment grade and no less than T + 50bps if non-investment
grade) |
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Change of Control Put:
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At holders option at a redemption price of par plus accrued interest to the redemption date |
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Representations, warranties,
covenants and events of default:
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The representations, warranties, financial covenants and events of default shall be
substantially similar to and not materially more adverse to Transwestern than those
contained in Transwesterns Note Purchase Agreement dated May 24, 2007 (the Existing
NPA). The covenants other than financial covenants (and other covenants that establish
limitations based on meeting certain financial ratios or percentages of financial amounts
(such as consolidated tangible net worth) shall not in the aggregate be materially more
adverse to Transwestern than those contained in the Existing NPA. |
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1 |
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Potentially include registration rights based on determination of impact on pricing. |
Annex A
Qualifying Terms of the JVCo Sr. Notes
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Ranking:
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Pari Passu with all existing and future unsecured senior debt |
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Security Type:
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Unsecured |
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Distribution:
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144A and Reg S (with registration rights) |
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Principal Amount::
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No less than $700 million (with a target of $800 million) |
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Maturity:
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No less than 10 years (bullet) |
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Indicative Interest Rate:
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No more than 9.0% |
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Optional Redemption:
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Prepayable any time at par plus accrued plus a Make Whole premium (discount rate no
less than T + 50% of new issue spread) |
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Change of Control Put:
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At holders option at a redemption price of percentage not to exceed 105% of the principal
amount of the Notes redeemed plus accrued interest to the redemption date |
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Representations, warranties,
covenants and events of default:
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Shall be substantially similar to and not materially more adverse to JVCo than those
contained in indentures of similarly-rated MLPs executed within the last 12 months;
provided that (i) the limitation on liens shall allow liens securing debt not to exceed 15% of
CTNA and (ii) limitations on restricted payments shall include customary MLP friendly
exceptions. |
Annex A
Qualifying Terms of the JVCo Senior Secured Revolving Credit Facility
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Facility:
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No less than $700 million Revolving Credit Facility |
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Accordion:
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No less than $200 million |
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Security:
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Secured by substantially all assets of JVCo and a pledge of all equity interest owned by the
Borrower now and in the future, including its interest in ETIH, Canyon, Enogex, ETC MEP,
and MEP (provided that MEP interest can be pledged) |
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Ranking:
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Senior |
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Maturity:
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Not less than 3 years |
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Interest Rate:
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Facility Rating BBB- / Baa3 or higher: No more than L +275 bps |
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Otherwise: No more than L+375 bps |
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Commitment Fee:
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No more than 50 bps |
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Upfront/Participation Fees:
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No more than 125 bps |
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Optional Redemption:
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Pre-payable any time at par |
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Representations, warranties,
covenants and events of default:
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Shall be substantially similar to and not materially more adverse to JVCo than those
contained in credit agreements of similarly-rated MLPs executed within the last 12 months;
provided that (i) financial covenants shall be limited to (A) maximum total debt to
consolidated EBITDA of not less than 5.0x or 5.50x during an acquisition period and (B) a
minimum interest coverage ratio of not less than 1.75x (if the existing market requires an
interest coverage ratio), (ii) the limitation on liens shall allow liens securing debt not to
exceed 15% of CTNA and (iii) limitations on restricted payments shall include customary
MLP friendly exceptions. |
Exhibit A
LIMITED LIABILITY COMPANY AGREEMENT
OF
ETP ENOGEX PARTNERS LLC
Dated as of , 200__
[PRE-IPO VERSION]
TABLE OF CONTENTS
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Page |
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ARTICLE I DEFINITIONS |
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1 |
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Section 1.1
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Definitions
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1 |
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Section 1.2
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Terms Generally
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15 |
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ARTICLE II GENERAL PROVISIONS |
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15 |
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Section 2.1
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Formation
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15 |
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Section 2.2
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Name
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15 |
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Section 2.3
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Term
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15 |
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Section 2.4
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Purpose; Powers
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15 |
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Section 2.5
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Registered Office; Place of Business; Registered Agent
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15 |
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Section 2.6
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No State Law Partnership
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16 |
|
ARTICLE III MEMBERS AND INTERESTS |
|
|
16 |
|
Section 3.1
|
|
Members
|
|
|
16 |
|
Section 3.2
|
|
Members Under the Act
|
|
|
16 |
|
Section 3.3
|
|
Rights or Powers
|
|
|
16 |
|
Section 3.4
|
|
Membership Interests
|
|
|
16 |
|
Section 3.5
|
|
Certificates
|
|
|
16 |
|
Section 3.6
|
|
Registered Holders
|
|
|
16 |
|
Section 3.7
|
|
Security
|
|
|
17 |
|
Section 3.8
|
|
Denial of Appraisal Rights
|
|
|
17 |
|
ARTICLE IV MANAGEMENT COUNCIL |
|
|
17 |
|
Section 4.1
|
|
Generally
|
|
|
17 |
|
Section 4.2
|
|
Number; Designation of Management Council Members
|
|
|
18 |
|
Section 4.3
|
|
Resignation
|
|
|
18 |
|
Section 4.4
|
|
Removal
|
|
|
18 |
|
Section 4.5
|
|
Vacancies
|
|
|
18 |
|
Section 4.6
|
|
Loss of Rights to Designate Management Council
|
|
|
18 |
|
Section 4.7
|
|
Authority of the Management Council
|
|
|
19 |
|
Section 4.8
|
|
Voting; Quorum; Required Vote for Action
|
|
|
20 |
|
Section 4.9
|
|
Meetings of the Management Council
|
|
|
21 |
|
Section 4.10
|
|
Contracts with Members or Their Affiliates
|
|
|
21 |
|
-i-
TABLE OF CONTENTS
(continued)
|
|
|
|
|
|
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|
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|
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Page |
|
ARTICLE V OFFICERS |
|
|
22 |
|
Section 5.1
|
|
Officers
|
|
|
22 |
|
Section 5.2
|
|
Term; Removal; Resignation; Vacancies
|
|
|
22 |
|
Section 5.3
|
|
Authority
|
|
|
22 |
|
Section 5.4
|
|
Titles and Number
|
|
|
22 |
|
Section 5.5
|
|
Chief Executive Officer
|
|
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22 |
|
Section 5.6
|
|
Chief Operating Officer
|
|
|
23 |
|
Section 5.7
|
|
Chief Financial Officer
|
|
|
23 |
|
Section 5.8
|
|
Treasurer and Assistant Treasurers
|
|
|
23 |
|
Section 5.9
|
|
Vice Presidents
|
|
|
23 |
|
Section 5.10
|
|
Subsidiary COOs
|
|
|
24 |
|
Section 5.11
|
|
Secretary and Assistant Secretaries
|
|
|
24 |
|
Section 5.12
|
|
Powers of Attorney
|
|
|
24 |
|
Section 5.13
|
|
Delegation of Authority
|
|
|
24 |
|
Section 5.14
|
|
Duties of Officers
|
|
|
24 |
|
ARTICLE VI [RESERVED] |
|
|
24 |
|
ARTICLE VII LIMITATION OF LIABILITY; INDEMNIFICATION |
|
|
24 |
|
Section 7.1
|
|
Limitation of Liability; Duties
|
|
|
24 |
|
Section 7.2
|
|
Indemnification
|
|
|
25 |
|
Section 7.3
|
|
Appearance as a Witness
|
|
|
26 |
|
Section 7.4
|
|
Member Notification
|
|
|
26 |
|
Section 7.5
|
|
Indemnity for Violations of FERC Standards of Conduct,
Market Manipulation Rules, Capacity Release Rules or the
CFTC Market Rules
|
|
|
26 |
|
Section 7.6
|
|
Reliance on Reports
|
|
|
27 |
|
ARTICLE VIII BUDGET; LIMITED EXCLUSIVITY; NEW PROJECTS |
|
|
27 |
|
Section 8.1
|
|
Budget
|
|
|
27 |
|
Section 8.2
|
|
Approval of New Projects
|
|
|
27 |
|
Section 8.3
|
|
Limited Exclusivity
|
|
|
28 |
|
ARTICLE IX CAPITAL CONTRIBUTIONS |
|
|
33 |
|
Section 9.1
|
|
Initial Capital Contributions
|
|
|
33 |
|
-ii-
TABLE OF CONTENTS
(continued)
|
|
|
|
|
|
|
|
|
|
|
Page |
|
Section 9.2
|
|
Additional Capital Contributions
|
|
|
34 |
|
Section 9.3
|
|
Return of Contributions
|
|
|
34 |
|
Section 9.4
|
|
Non-Payment of Required Capital Contributions
|
|
|
34 |
|
ARTICLE X DISTRIBUTIONS AND ALLOCATIONS |
|
|
35 |
|
Section 10.1
|
|
Distributable Cash
|
|
|
35 |
|
Section 10.2
|
|
Distributions
|
|
|
35 |
|
Section 10.3
|
|
Allocations
|
|
|
36 |
|
Section 10.4
|
|
Loss Limitation
|
|
|
36 |
|
Section 10.5
|
|
Special Allocations
|
|
|
36 |
|
Section 10.6
|
|
Other Allocation Rules
|
|
|
38 |
|
Section 10.7
|
|
Tax Allocations and Certain Elections
|
|
|
39 |
|
ARTICLE XI BOOKS; REPORTS; TAX MATTERS; CAPITAL ACCOUNTS |
|
|
40 |
|
Section 11.1
|
|
General Accounting Matters; Books and Records
|
|
|
40 |
|
Section 11.2
|
|
Certain Tax Matters
|
|
|
41 |
|
Section 11.3
|
|
Capital Accounts
|
|
|
42 |
|
ARTICLE XII DISSOLUTION |
|
|
44 |
|
Section 12.1
|
|
Dissolution
|
|
|
44 |
|
Section 12.2
|
|
Winding-Up
|
|
|
44 |
|
Section 12.3
|
|
Final Distribution
|
|
|
44 |
|
ARTICLE XIII TRANSFER OF INTERESTS; ADMISSION OF MEMBERS;
WITHDRAWAL |
|
|
45 |
|
Section 13.1
|
|
General Restrictions on Membership Interests
|
|
|
45 |
|
Section 13.2
|
|
Transfer Restrictions
|
|
|
45 |
|
Section 13.3
|
|
Transfers to Wholly-Owned Affiliates
|
|
|
46 |
|
Section 13.4
|
|
Right of First Offer
|
|
|
47 |
|
Section 13.5
|
|
Right of First Refusal
|
|
|
48 |
|
Section 13.6
|
|
Pledge or Other Encumbrance
|
|
|
49 |
|
Section 13.7
|
|
Change in Control
|
|
|
50 |
|
Section 13.8
|
|
Fair Market Value
|
|
|
50 |
|
Section 13.9
|
|
Applicable Taxes
|
|
|
50 |
|
-iii-
TABLE OF CONTENTS
(continued)
|
|
|
|
|
|
|
|
|
|
|
Page |
|
Section 13.10
|
|
Governmental Consents and Approvals
|
|
|
50 |
|
Section 13.11
|
|
No Release
|
|
|
51 |
|
Section 13.12
|
|
Documentation; Validity of Transfer
|
|
|
51 |
|
Section 13.13
|
|
Possible Additional Restrictions on Transfer
|
|
|
51 |
|
Section 13.14
|
|
Additional Members; Substituted Members
|
|
|
51 |
|
Section 13.15
|
|
Withdrawal
|
|
|
52 |
|
ARTICLE XIV MERGER, CONSOLIDATION OR CONVERSION |
|
|
53 |
|
Section 14.1
|
|
Authority
|
|
|
53 |
|
Section 14.2
|
|
Procedure for Merger, Consolidation or Conversion
|
|
|
53 |
|
Section 14.3
|
|
Approval by Members of Merger or Consolidation
|
|
|
54 |
|
Section 14.4
|
|
Certificate of Merger or Conversion
|
|
|
55 |
|
Section 14.5
|
|
No Transfer or Assignment
|
|
|
56 |
|
ARTICLE XV MISCELLANEOUS |
|
|
56 |
|
Section 15.1
|
|
Accounts
|
|
|
56 |
|
Section 15.2
|
|
Equitable Relief
|
|
|
57 |
|
Section 15.3
|
|
Governing Law
|
|
|
57 |
|
Section 15.4
|
|
Dispute Resolution
|
|
|
57 |
|
Section 15.5
|
|
Successors and Assigns
|
|
|
58 |
|
Section 15.6
|
|
Information
|
|
|
59 |
|
Section 15.7
|
|
Notices
|
|
|
60 |
|
Section 15.8
|
|
Counterparts
|
|
|
60 |
|
Section 15.9
|
|
Entire Agreement
|
|
|
60 |
|
Section 15.10
|
|
Amendments
|
|
|
60 |
|
Section 15.11
|
|
Headings and Section Titles
|
|
|
60 |
|
Section 15.12
|
|
Representations and Warranties
|
|
|
60 |
|
Section 15.13
|
|
No Creation of State Law Partnership
|
|
|
61 |
|
Section 15.14
|
|
Waiver of Partition
|
|
|
61 |
|
Section 15.15
|
|
No Third Party Beneficiaries
|
|
|
61 |
|
Section 15.16
|
|
Further Assurances
|
|
|
61 |
|
Section 15.17
|
|
Notice to Members of Provisions of this Agreement
|
|
|
61 |
|
-iv-
TABLE OF CONTENTS
(continued)
|
|
|
|
|
|
|
|
|
|
|
Page |
|
Section 15.18
|
|
Attendance via Communications Equipment
|
|
|
61 |
|
Section 15.19
|
|
Checks, Notes and Contracts
|
|
|
61 |
|
Section 15.20
|
|
Member Trademarks
|
|
|
62 |
|
Section 15.21
|
|
Preparation of the IPO Registration Statement; Qualifying IPO;
Conversion to Limited Partnership
|
|
|
62 |
|
Section 15.22
|
|
Execution by OGE and ETP
|
|
|
64 |
|
-v-
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
Page |
|
|
|
|
|
|
|
LIST OF SCHEDULES |
|
|
|
|
|
|
|
|
|
Schedule 8.3(a) |
|
|
Schedule 8.3(d) |
|
|
|
|
|
|
|
|
|
LIST OF EXHIBITS |
|
|
|
|
|
|
|
|
|
EXHIBIT A
|
|
|
|
Members of the Company |
|
|
EXHIBIT B
|
|
|
|
Initial Capital Contributions |
|
|
|
|
|
|
|
|
|
LIST OF ANNEXES |
|
|
|
|
|
|
|
|
|
Annex I
|
|
|
|
Initial Approved Budget |
|
|
Annex II
|
|
|
|
Qualifying IPO Terms |
|
|
Annex III
|
|
|
|
Excess Cash Flow |
|
|
-i-
LIMITED LIABILITY COMPANY AGREEMENT
OF
ETP ENOGEX PARTNERS LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (this Agreement) of ETP Enogex Partners
LLC, a Delaware limited liability company (the Company), is made and entered into as of
, 200___(the Effective Date), by [OGE Energy GP LLC, a Delaware limited
liability company] (OGE Sub), and [ETP Galaxy, LLC], a Delaware limited liability company
(ETP Sub), and solely for the purposes set forth in Section 15.22, OGE Energy
Corp., an Oklahoma corporation (OGE) and Energy Transfer Partners, L.P., a Delaware
limited partnership (ETP). OGE Sub, ETP Sub and any other Person admitted to the Company
as an additional or substitute member of the Company in accordance with the terms of this Agreement
shall be referred to as the Members. A Member may also be referred to as a
Party, and Members as Parties.
A. Certain capitalized terms used but not defined elsewhere in the text of this Agreement are
defined in Article I below.
B. OGE Sub and ETP Sub are entering this Agreement to set forth the governance and operating
procedures of the Company.
NOW, THEREFORE, in consideration of the mutual covenants expressed herein, the Members hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Unless the context otherwise requires, the following terms
shall have the following respective meanings for purposes of this Agreement:
55% Special Distribution shall have the meaning set forth in Section
10.2(b).
55% Special Distribution Termination Date shall mean the earlier to occur of (a)
June 30, 2010 and (b) the OGE Adjustment Amount Satisfaction Date.
75% Special Distribution shall have the meaning set forth in Section
10.2(c).
75% Special Distribution Termination Date shall mean the earlier to occur of (a) the
OGE Adjustment Amount Satisfaction Date and (b) the third anniversary of the Closing Date.
Act shall mean the Delaware Limited Liability Company Act, as it may be amended
from time to time, and any successor to such statute.
Actual MEP Project Expenditures shall mean the expenditures actually made by MEP on
or prior to the MEP Project Completion Date for the construction of the MEP Pipeline.
-1-
Adjusted Capital Account shall mean a Members Capital Account as of the end of the
relevant Fiscal Year or other period after being adjusted as follows:
(a) crediting the Capital Account with:
i. any amount that such Person is obligated to restore under Treasury Regulation Section
1.704-1(b)(2)(ii)(c), and
ii. any amounts that such Person is deemed to be obligated to restore by the penultimate
sentence of Treasury Regulation Section 1.704-2(g)(1) or the penultimate sentence of Treasury
Regulation Section 1.704-2(i)(5); and
(b) debiting the Capital Account by that Persons share of the items described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
Adjusted Capital Account Deficit shall mean the deficit balance, if any, in a
Members Adjusted Capital Account. The amount of a Members Adjusted Capital Account Deficit is
intended to serve as a regulator on the amount of the debits that may be allocated to a Members
Capital Account in order to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and must be interpreted accordingly.
AFE shall have the meaning set forth in Section 9.2.
Affiliate shall mean with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is under common control
with, the Person in question. As used herein and in the definition of Change in Control, the
term control shall mean (a) the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise, (b) the ownership of 50% or more of the stock or other equity
interests of a Person, the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such Person or (c) serving as general partner of such
Person; provided, however, that notwithstanding the foregoing, officers and directors or other
individuals performing similar functions for a Person shall not be deemed to be Affiliates of such
Person solely by virtue of serving in such capacities.
Agreed Rate shall mean the lesser of (a) the rate publicly announced by JPMorgan
Chase Bank, N.A., New York, New York (or any successor bank) from time to time as its prime rate,
plus two percent (2%) and (b) the maximum rate permitted by Law.
Agreement shall have the meaning set forth in the Preamble.
Applicable Law shall mean any Law to which a specified Person or property is
subject.
Approved Budget shall mean a Budget approved by the Management Council.
Approved New Project shall mean a New Project approved by the Management Council.
-2-
Available Cash shall have the meaning set forth in Annex III.
Authorized Representative shall have the meaning set forth in Section 15.4(b).
Budget shall mean the annual budget of anticipated capital and operating costs, and
anticipated sources of funding for such capital and operating costs, of the Company described in
Section 8.1.
Business Day shall mean any day on which commercial banks are authorized to do
business and are not required by Law or executive order to close in the State of Delaware.
Capacity Release Rules shall mean 18 C.F.R. § 284.8, together with FERCs capacity
release policies, as applicable, including the shipper-must-have-title requirement, posting and
bidding requirements for released capacity, the prohibition on buy-sell transactions, and orders
related to such policies, all as and if previously or hereafter amended, and as and if previously
or hereafter interpreted by any opinion or ruling of FERC or any court of competent jurisdiction.
Capital Account shall have the meaning set forth in Section 11.3(a).
Capital Contribution shall mean any cash, cash equivalents and property contributed
by a Member to the Company. Any reference in this Agreement to the Capital Contributions of a
Member shall include any Capital Contributions of its predecessors-in-interest.
Carrying Value shall mean, with respect to any Company Asset, the assets adjusted
basis for U.S. federal income tax purposes, except (i) the initial Carrying Value of any asset
contributed to the Company shall be such assets fair market value on the date of contribution and
(ii) the Carrying Values of all Company Assets shall be adjusted to equal their respective fair
market values, in accordance with the rules set forth in Regulations Section 1.704-1(b)(2)(iv)(f),
except as otherwise provided herein, as of the date of: (a) the acquisition of any additional
Membership Interests by any new or existing Member in exchange for more than a de minimis capital
contribution, other than pursuant to the initial organization of the Company; (b) the distribution
of more than a de minimis amount of Company cash or other property to a Member; (c) the granting of
a Membership Interest in exchange for services; and (d) the Companys liquidation; provided,
however, that such adjustments shall be made only if the Tax Matters Member determines that such
adjustments are necessary or appropriate to reflect the relative economic interests of the Members.
The Carrying Value of any Company Asset distributed to any Member shall be adjusted immediately
prior to such distribution to equal its fair market value, as determined by the Members.
Certificate shall have the meaning set forth in Section 2.1.
CFTC shall mean the U.S. Commodity Futures Exchange Commission.
CFTC Market Rules shall mean Sections 6 and 9 of the Commodity Exchange
Act, together with CFTCs rules, regulations and orders related thereunder, all as and if
previously or hereafter amended, and as and if previously or hereafter interpreted by any opinion
or ruling of CFTC or any court of competent jurisdiction.
-3-
Change in Control shall mean:
(a) in respect of OGE Sub, any event upon which (i) OGE Sub ceases to be a Subsidiary of OGE,
(ii) a person or group (as such terms are used in Section 13(d) and 14(d) of the Exchange Act)
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of
all of the then outstanding Voting Securities of OGE, except in a merger or consolidation that
would not constitute a Change in Control under clause (iii) below, or (iii) OGE consolidates or
merges with another Person, other than any such consolidation or merger where (1) the outstanding
Voting Securities of OGE are changed into or exchanged for Voting Securities of the surviving
Person or its parent and (2) the holders of the Voting Securities of OGE immediately prior to such
transaction own, directly or indirectly, not less than a majority of the outstanding Voting
Securities of the surviving Person or its parent immediately after such transaction in
substantially the same proportions as their ownership of outstanding Voting Securities in OGE
immediately prior to such consolidation or merger;
(b) in respect of ETP Sub, any event upon which (i) ETP Sub ceases to be a Subsidiary of ETP,
(ii) ETP Sub ceases to be a Subsidiary of ETP Parent or (iii) any person or group (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act) other than Kelcy Warren or his Affiliates
becomes the beneficial owner of more than 50% of all of the then outstanding Voting Securities of
ETP Parent and (1) Kelcy Warren together with his Affiliates holds less than 80% of the Voting
Securities he owned in ETP Parent as of the Initial Closing Date, (2) Kelcy Warren is no longer on
the board of directors of ETP Parent or (3) Kelcy Warren no longer holds a senior management
position at ETP Parent; and
(c) in respect of any other Member, any event upon which (i) a Person who initially controls
such Member (and is itself not controlled by any other Person) (the Parent) at the time such
Member is admitted as a Member subsequently ceases to control such Member, (ii) a person or group
(as such terms are used in Section 13(d) and 14(d) of the Exchange Act) becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of all of the then
outstanding Voting Securities of the Parent, except in a merger or consolidation that would not
constitute a Change in Control under clause (iii) below, or (iii) the Parent consolidates or merges
with another Person, other than any such consolidation or merger where (1) the outstanding Voting
Securities of Parent are changed into or exchanged for Voting Securities of the surviving Person or
its parent and (2) the holders of the Voting Securities of Parent immediately prior to such
transaction own, directly or indirectly, not less than a majority of the outstanding Voting
Securities of the surviving Person or its parent immediately after such transaction in
substantially the same proportions as their ownership of outstanding Voting Securities in the
Parent immediately prior to such consolidation or merger.
Claim shall have the meaning set forth in Section 7.2(a).
Closing shall mean the closing of the transactions contemplated by the Contribution
Agreement.
Closing Date shall mean the date on which the Closing occurs.
-4-
Code shall mean the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute. Any reference herein to a particular provision of the Code shall mean,
where appropriate, the corresponding provision in any successor statute.
Company shall have the meaning set forth in the Preamble.
Company Accountant shall have the meaning set forth in Section 11.1(k).
Company Assets shall mean all right, title and interest of the Company and its
Subsidiaries in and to all or any portion of their respective assets (including the interest of the
Company in each of its Subsidiaries).
Company Business shall mean (a) operating and managing the Company Assets in
accordance with the terms of this Agreement and (b) engaging in any other activities necessary,
advisable, convenient or incidental to the foregoing.
Company Evaluation Materials shall have the meaning set forth in Section
8.2(c).
Company Group Partnerships shall mean the Company, the MLP and any subsidiaries of
the Company and the MLP classified as partnerships for federal income tax purposes.
Company Group shall mean the Company and its Subsidiaries, taken together.
Company Minimum Gain shall have the same meaning as that ascribed to partnership
minimum gain in Treasury Regulation Section 1.704-2(b)(2).
Confidential Information shall have the meaning set forth in Section
15.6(b).
Consent shall mean either the prior written consent of the indicated Person to the
action requested or the affirmative vote of the indicated Person to the action requested.
Contribution Agreement shall mean that certain Contribution Agreement by and between
ETP Sub and OGE Sub, dated as of September 22, 2008, as amended from time to time.
DA Portion shall have the meaning set forth in Section 8.3(d)(i).
Delaware General Corporation Law shall have the meaning set forth in Title 8 of the
Delaware Code, as amended from time to time.
Delinquent Member shall have the meaning set forth in Section 9.4.
Delinquent Required Funding Amount shall have the meaning set forth in Section
9.4(b)(ii).
Depreciation shall mean, for each Fiscal Year or other relevant period:
(a) an amount equal to the depreciation, amortization, or other cost recovery deduction
allowable on an asset for the period, or
-5-
(b) if the Carrying Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of the period, an amount that bears the same ratio to that beginning
Carrying Value as the federal income tax depreciation, amortization or other cost recovery
deduction for that period bears to that beginning adjusted tax basis.
Notwithstanding the foregoing, if the federal income tax depreciation, amortization, or other
cost recovery deduction for a year is zero, the Company must determine Depreciation by reference to
that beginning Carrying Value using any reasonable method selected according to this Agreement.
Designated Area shall mean the following:
(a) the State of Oklahoma; and
(b) Dallam, Sherman, Hansford, Ochiltree, Lipscomb, Hartley, Moore, Hutchinson, Roberts,
Hemphill, Oldham, Potter, Carson, Gray, Wheeler, Deaf Smith, Randall, Armstrong, Donley and
Collingsworth counties in Texas; and
(c) McKinley, Rio Arriba, Sandoval and San Juan counties in New Mexico; and
(d) Crawford, Franklin, Logan, Sebastian and Scott counties in Arkansas; and
(e) Archuleta, La Plata, Moffat, Rio Blanco, Garfield, Pitkin, Gunnison, Ouray, Montrose,
Delta, and Mesa counties in Colorado; and
(f) Sevier, Sanpete, Juab, Utah, Wasatch, Duchesne, Carbon, Uintah, Grand and Emery counties
in Utah.
Determination Date shall have the meaning set forth in Section 13.8.
Dispute Party shall have the meaning set forth in Section 15.4(a).
Dissolution Event shall mean an event causing a dissolution of the Company under Section 18-801 of the Act.
Distributable Cash shall have the meaning set forth in Section 10.1.
Distributions shall have the meaning set forth in Section 10.2.
Effective Date shall have the meaning set forth in the Preamble.
Encumbering Member shall have the meaning set forth in Section 13.6.
Enogex shall mean Enogex LLC, a Delaware limited liability company.
Enogex Cash Distributions shall have the meaning set forth in Section
10.2(b).
ETIH shall mean Energy Transfer Interstate Holdings, LLC, a Delaware limited
liability company.
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ETP shall have the meaning set forth in the Preamble.
ETP Consent Fees shall mean 50% of the aggregate amount payable by ETP or its
Affiliates in connection with obtaining the consents identified on Section 6.3(h) of the ETP
Disclosure Schedule (as defined in the Contribution Agreement) to the Contribution Agreement.
ETP Designees shall have the meaning set forth in Section 4.2.
ETP Parent shall mean LE GP, LLC.
ETP Services Agreement shall mean that certain Services Agreement by and between the
Company and ETP, dated as of , 20_.
ETP Sub shall have the meaning set forth in the Preamble.
ETP Sub Area shall mean the portions of the State of Texas not in the Designated
Area.
ETP Sub Portion shall have the meaning set forth in Section 8.3(d)(i).
Excess Cash Flow shall mean the excess, if any, for any given calendar quarter, of
(a) the actual consolidated Distributable Cash of the Company Group over (b) the amount specified
for such quarter on Annex III.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
Excluded Interstate Pipelines shall have the meaning set forth in Section
8.3(d)(i).
Existing Enogex Exclusivity Obligations shall have the meaning set forth in
Section 8.3(c)(i).
Existing MEP Exclusivity Obligations shall have the meaning set forth in Section
8.3(c)(ii).
Fair Market Value shall mean the value of any specified interest or property, which
shall not in any event be less than zero, that would be obtained in an arms length transaction for
cash between an informed and willing buyer and an informed and willing seller, neither of whom is
under any compulsion to purchase or sell, respectively, and without regard to the particular
circumstances of the buyer or seller.
FERC shall mean the Federal Energy Regulatory Commission.
FERC Standards of Conduct shall mean FERCs standards that regulate the relationship
between an interstate natural gas pipeline and its Marketing Affiliate and/or that regulate the
relationship between an interstate pipelines Transmission Function employees and such interstate
pipelines own or its affiliates Marketing Function employees (all as defined in applicable
standards of conduct adopted by FERC in FERC Standards of Conduct) or other Affiliate, together
with any other FERC rules, regulations and orders related thereto, all as and if
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previously or hereafter amended, and as and if previously or hereafter interpreted by any opinion
or ruling of FERC or any court of competent jurisdiction.
Financial Expert shall have the meaning set forth in Section 4.2.
Fiscal Year shall mean the calendar year ending on December 31 of each year, unless
a different fiscal year shall be required by the Code; provided, however, that the first Fiscal
Year of the Company shall commence on the date hereof and end on December 31, 2008.
GAAP shall mean accounting principles generally accepted in the United States,
consistently applied, as may be amended from time to time.
General Partner shall have the meaning set forth in Section 15.21(f)(i).
Governmental Entity shall mean any legislature, court, tribunal, arbitrator,
authority, agency, commission, division, board, bureau, branch, official or other instrumentality
of the U.S. or any domestic state, county, city, tribal or other political subdivision,
governmental department or similar governing entity, and including any governmental,
quasi-governmental or nongovernmental body exercising similar powers of authority.
Group Member shall mean any member of the Company Group.
Hedging Agreement shall mean any agreement with respect to swap transactions,
derivative transactions, options, warrants, forward purchase or sale transactions, futures
transactions, cap transactions, floor transactions or collar transactions relating to one or more
currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events,
weather-related events, credit-related events or conditions or any indexes, or any other similar
transactions (including any option with respect to any of these transactions) or combination of any
of these transactions,
including collateralized mortgage obligations or other similar instruments or any debt or
equity instruments evidencing or embedding any such types of transactions, and any credit support,
collateral (including master collateral agreements) or other similar arrangements related to such
transactions.
Incentive Distribution Rights shall mean the Incentive Distribution Rights (as
defined in the MLP Partnership Agreement) of the MLP that will have the rights and obligations set
forth in the MLP Partnership Agreement.
Indemnitee shall have the meaning set forth in Section 7.2(a).
Initial Approved Budget shall have the meaning set forth in Section
8.1.
Initial Capital Contribution(s) shall have the meaning set forth in
Section 9.1.
Initial Member shall mean OGE Sub or ETP Sub.
Initiating Dispute Party shall have the meaning set forth in Section 15.4(a).
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IPO Completion Date shall mean the date on which a Qualifying IPO contemplated by
Section 15.21 is consummated.
IPO Registration Statement shall mean the Registration Statement on Form S-1, as
amended from time to time, filed by the MLP with the SEC in connection with a Qualifying IPO.
Law(s) shall mean any applicable statute, law (including common law), rule,
ordinance, regulation, ruling, requirement, writ, injunction, decree, order or other official act
of or by any Governmental Entity or any arbitral tribunal, whether such Laws now exist or hereafter
come into effect.
Liquidator shall have the meaning set forth in Section 12.2.
Majority Opportunity shall have the meaning set forth in Section
8.3(d)(i).
Make-Whole Amount shall have the meaning set forth in Section 13.2(h).
Management Council shall have the meaning set forth in Section 14.1(a)
and Section 4.2.
Management Council Members shall have the meaning set forth in Section
4.1(a).
Market Manipulation Rules shall mean Section 4A of the Natural Gas Act of 1938 and
Section 222 of the Federal Power Act of 1935, together with FERCs rules, regulations and orders
adopted thereunder, including FERCs Order No. 670 and 18 C.F.R. Part 1c, all as and if previously
or hereafter amended, and as and if previously or
hereafter interpreted by any opinion or ruling of FERC or any court of competent jurisdiction.
Material Contract shall mean (1) transportation agreements and gathering agreements
involving payments to or from any Group Member of at least $20,000,000 per year; (2) processing
agreements and natural gas purchase agreements involving net payments (i.e., after taking into
account directly-associated cost of goods or directly-associated revenues from the sale of goods)
to or from any Group Member of at least $20,000,000 per year; (3) construction, interconnect, and
other services agreements in each case involving payments to or from any Group Member in excess of
$20,000,000 per year; (4) contracts, loan agreements, letters of credit, repurchase agreements,
mortgages, security agreements, guarantees, pledge agreements, trust indentures, promissory notes,
lines of credit and similar documents in each case relating to the borrowing of money or for lines
of credit, in any case for amounts in excess of $20,000,000 (other than contracts solely between or
among the Group Members and interest rate swap agreements); (5) real property leases calling for
payments by any of the Group Members of amounts greater than $20,000,000 per year (other than
rights-of-way and leases solely between or among the Group Members); (6) partnership or joint
venture agreements (which do not include joint tariff or joint operating agreements); (7) contracts
limiting the ability of any of the Group Members to compete in any line of business or with any
Person or in any geographic area; (8) contracts relating to any outstanding commitment for capital
expenditures in excess of $50,000,000; (9) contracts with any labor union or organization; and (10)
contracts not entered into in the ordinary course of the business of the Group Members other than
those that are not material to the business of the Group Members.
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Members shall have the meaning set forth in the Preamble.
Member Minimum Gain shall mean an amount, relating to each Member Nonrecourse Debt,
equal to the Company Minimum Gain that would result if that Member Nonrecourse Debt were treated as
a Nonrecourse Liability, determined according to Treasury Regulation Section 1.704-2(i)(3).
Member Nonrecourse Debt shall have the meaning ascribed to partner nonrecourse debt
in Treasury Regulation Section 1.704-2(b)(4).
Member Nonrecourse Deductions shall have the meaning ascribed to partner
nonrecourse deductions in Treasury Regulation Section 1.704-2(i)(1).
Membership Interest shall mean a limited liability company interest (on a percentage
basis) in the Company as provided in this Agreement and under the Act and includes any and all
rights and benefits to which the holder of such Membership Interest may be entitled under this
Agreement, together with all obligations of such Person to comply with the terms and provisions of
this Agreement.
Merger Agreement shall have the meaning set forth in Section 14.1.
MEP shall mean Midcontinent Express Pipeline LLC, a Delaware limited liability
company.
MEP Lateral Opportunity shall mean a Lateral Opportunity as such term is defined in
the MEP LLC Agreement.
MEP LLC Agreement shall mean the Amended and Restated Limited Liability Company
Agreement of MEP, dated as of March 1, 2007, as amended and/or restated from time to time.
MEP Pipeline shall mean the Pipeline within the meaning of the MEP LLC
Agreement.
MEP Project Completion Date shall mean the date that is the Project Completion
Date within the meaning of the MEP LLC Agreement.
MLP shall mean the limited partnership to be formed under the laws of the State of
Delaware into which the Company shall be converted pursuant to Section 15.21.
MLP Common Units shall mean the Common Units (as defined in the MLP Partnership
Agreement) of the MLP to be issued pursuant to the MLP Partnership Agreement.
MLP Partnership Agreement shall have the meaning set forth in Section
15.21.
MLP Subordinated Units shall mean the Subordinated Units (as defined in the MLP
Partnership Agreement) of the MLP issued pursuant to the MLP Partnership Agreement.
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New Project shall mean (a) any new project or expansion project, including any MEP
Lateral Opportunity and any TW Project, but excluding any projects included in an approved Budget
and any expenditures (including any capital expenditures) incurred in the ordinary course of
business, and (b) any acquisition that is a Majority Opportunity (subject, however, to Section
8.3(d)(i)).
Non-Consent Notice shall have the meaning set forth in Section 9.4(a).
Non-Delinquent Member shall have the meaning set forth in Section
9.4(b)(ii).
Nonrecourse Deductions shall have the meaning ascribed to it in Treasury Regulation
Section 1.704-2(b)(1).
Nonrecourse Liability shall have the meaning ascribed to it in Treasury Regulation
Section 1.704-2(b)(3).
Offer shall have the meaning set forth in Section 8.3(d)(iv).
Offeree shall have the meaning set forth in Section 8.3(d)(iii).
Offeror shall have the meaning set forth in Section
8.3(d)(iii).
Offer Price shall have the meaning set forth in
Section 8.3(d)(iii).
Offer Terms shall have the meaning
set forth in Section 8.3(d)(iii).
OGE shall have the
meaning set forth in the Preamble.
OGE Adjustment Amount means $56.125 million less the ETP Consent Fees; provided,
however, that if the aggregate amount of the Updated MEP Project Expenditures than $1.66 billion,
then the OGE Adjustment Amount will be equal to (x) $56.125 million minus (y) the ETP Consent Fees
minus (z) 25% of the difference between the aggregate amount of the Updated MEP Project
Expenditures and $1.66 billion.
OGE Adjustment Amount Satisfaction Date means the date that the aggregate amount of
cash received by OGE (together with its Subsidiaries other than the Company) pursuant to the 55%
Special Distribution and the 75% Special Distribution pursuant to Section 10.2 of this
Agreement is equal to the OGE Adjustment Amount.
OGE Designees shall have the meaning set forth in Section 4.2.
OGE Services Agreement shall mean that certain Services Agreement by and between the
Company and OGE, dated as of , 20_.
OGE Sub shall have the meaning set forth in the Preamble.
Opinion of Counsel shall mean a written opinion of counsel (who may be regular
counsel to the Company or any of its Affiliates) in a form acceptable to the Company.
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Parent shall have the meaning set forth in the definition of Change in Control.
Participating Members shall have the meaning set forth in Section
9.4(b)(ii)(A).
Participation Notice shall have the meaning set forth in
Section 9.4(b)(ii)(A).
Party or Parties shall have the meaning
set forth in the Preamble.
Payment Due Date shall have the meaning set forth in Section 9.4.
Person or Persons shall mean an individual, partnership, joint venture,
corporation, business trust, limited liability company, trust, estate, incorporated or
unincorporated organization, Governmental Entity, and any other legal entity of any kind.
Plan of Conversion shall have the meaning set forth in Section 14.1.
Proceeding shall have the meaning set forth in Section 7.2(a).
[Project Galaxy JV] LLC shall have the meaning set forth in Section 2.2.
Qualifying IPO shall
have the meaning set forth in Section 15.21(a).
Regulatory Allocation
shall have the meaning set forth in Section 10.5(h).
Required Funding
Amount shall have the meaning set forth in Section 9.2.
Responding
Dispute Party shall have the meaning set forth in Section 15.4(a).
Risk
Management Policy shall have the meaning set forth in Section 4.7(a)(v).
ROFO Acceptance Notice shall have the meaning set forth in Section
13.4(b).
ROFO Accepting Members shall have the meaning set forth in
Section 13.4(b).
ROFO Interests shall have the meaning set forth in
Section 13.4(a).
ROFO Non-Selling Members shall have the meaning set forth in Section
13.4(a).
ROFO Notice shall have the meaning set forth in Section 13.4(a).
ROFO Offer Notice shall have the meaning set forth in Section 13.4(b).
ROFO Price shall have the meaning set forth in Section 13.4(b).
ROFO Seller shall have the meaning set forth in Section 13.4(a).
ROFR Acceptance Notice shall have the meaning set forth in Section
13.5(a).
ROFR Accepting Members shall have the meaning set forth in Section
13.5(b).
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ROFR Interests shall have the meaning set forth in Section 13.5(a).
ROFR Non-Selling Members shall have the meaning set forth in Section
13.5(a).
ROFR Notice shall have the meaning set forth in Section 13.5(a).
ROFR Option Period shall have the meaning set forth in Section 13.5(a).
ROFR Seller shall have the meaning set forth in Section 13.5(a).
Rule or Rules shall have the meaning set forth in Section
15.4(d).
SEC shall mean the Securities and Exchange Commission.
Securities Act shall mean the Securities Act of 1933, as amended.
Security Interest shall mean any security interest, lien, mortgage, encumbrance,
hypothecation, pledge, or other obligation, whether created by operation of Law or otherwise,
created by any Person in any of its property or rights.
Senior Management Team shall have the meaning set forth in Section
5.10.
Subject Assets shall have the meaning set forth in Section
8.3(d)(iii).
Subject Interests shall have the meaning set forth in
Section 13.1(a).
Subsidiary or Subsidiaries of any Person shall mean any corporation,
partnership, limited liability company, joint venture or other legal entity of which such Person
(either alone or through or together with any other Subsidiary or Subsidiaries) directly or
indirectly, (a) owns 50% or more of the stock or other equity interests, the holders of which are
generally entitled to vote for the election of the board of directors or other governing body of
such corporation or other legal entity, or (b) serves as general partner.
Subsidiary COOs shall have the meaning set forth in Section 5.10.
Substituted Member shall mean a Person who is admitted as a Member of the Company,
at such time as such Person has complied with the requirements of Section 13.14, in place
of and with all the rights of a Transferring Member with respect to the Membership Interests
transferred and who is shown as a Member on the books and records of the Company.
Super-Majority Management Council Vote shall mean, as to any agreement, election,
vote or other action of the Management Council, the vote of at least a majority of the Management
Council Members; provided, however, that subject to Section 4.6(b), the approval of at
least one OGE Designee or one ETP Designee will be required to approve any matter requiring a
Super-Majority Management Council Vote (each of OGE Sub right to have the approval of the OGE
Designee be required and ETP Subs right to have the ETP Designee be required being referred to as
such Members Super-Majority Voting Right).
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Super-Majority Voting Right shall have the meaning set forth in the definition of
Super-Majority Management Council Vote.
Super-Majority Interest shall mean, as to any agreement, election, vote or other
action of the Members, those Members whose combined Membership Interests exceed 66 2/3% of all
outstanding Membership Interests.
Surviving Business Entity shall have the meaning set forth in Section
14.2(a)(ii).
Tax Matters Member shall have the meaning set forth in Section 11.2.
Transfer or Transferred shall mean, with respect to any Subject Interests,
a voluntary or involuntary sale, assignment, transfer, conveyance, exchange, bequest, devise, gift
or any other alienation (in each case, with or without consideration) of any rights, interests or
obligations with respect to all or any portion of such Subject Interests.
Transfer Document shall have the meaning set forth in Section 13.12.
Transferred Subject Interests shall have the meaning set forth in Section
13.2(d).
Transferring Member shall have the meaning set forth in Section 13.2(d).
Transportation Pipeline shall mean any intrastate pipeline that has authority from
the FERC to transport gas pursuant to Section 311 of the Natural Gas Policy Act of 1978, as
amended, or any large diameter intrastate transmission pipeline.
Treasury Regulations shall mean the regulations, temporary and final, of the United
States Department of the Treasury, promulgated under the Code.
TW shall mean Transwestern Pipeline Company, LLC, a Delaware limited liability
company.
TW Project shall have the meaning set forth in Section 8.3(b)(v).
Unanimous Consent shall mean the Consent of all the indicated Persons entitled to
vote thereon.
Updated MEP Project Expenditures means, at any given time, (a) the most recent
budget adopted by MEPs board for expenditures to be made by MEP on or prior to the MEP Project
Completion Date for the construction of the MEP Pipeline or (b) following the MEP Project
Completion Date, the Actual MEP Project Expenditures.
Valuation Firm shall mean an investment banking firm of international recognized
standing having expertise in the valuation of companies similar to the Company and its
Subsidiaries.
Voting Securities of a Person means securities of any class of such Person entitling
the holders thereof to vote in the election of, or to appoint, members of the board of directors or
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other similar governing body of the Person; provided, that if such Person is a limited partnership,
Voting Securities of such Person shall be the general partner interest in such Person.
Waiting Period shall have the meaning set forth in Section
13.10.
SECTION 1.2 Terms Generally. The definitions in Section 1.1 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms. The words include,
includes and including shall be deemed to be followed by the phrase without limitation. The
words herein, hereby, hereof, hereunder and words of similar import refer to this Agreement
as a whole unless reference to a specific section of this Agreement is made. Any reference in this
Agreement to a section, subsection, Annex or Exhibit is to this Agreement unless otherwise
specified. Each accounting term not otherwise defined in this Agreement has the meaning commonly
applied to it in accordance with GAAP. All references to $ or dollar amounts will be to lawful
currency of the United States. To the extent the term day or days is used, it will mean
calendar days. With respect to the Company, the term ordinary course of
business will be deemed to refer to the conduct of the business in a manner consistent with
the ordinary business of the Company Group.
ARTICLE II
GENERAL PROVISIONS
SECTION 2.1 Formation. The Company was formed as of , 20___ by the filing of
the Companys Certificate of Formation (the Certificate) with the Secretary of State of
the State of Delaware. The rights and liabilities of the Members shall be determined pursuant to
the provisions of the Act and this Agreement.
SECTION 2.2 Name. The Company shall conduct its activities under the name of ETP
Enogex Partners LLC.
SECTION 2.3 Term. The term of the Company commenced , 20___ and shall
continue perpetually or unless sooner dissolved, wound up and terminated in accordance with
Article XII of this Agreement.
SECTION 2.4 Purpose; Powers.
(a) The purpose of the Company is (i) to manage the Company Business and (iii) to do any and
all things and perform any and all acts incidental to, necessary, appropriate or advisable in
connection with the foregoing.
(b) In furtherance of its purposes stated in Section 2.4(a), the Company shall have
all powers necessary, suitable or convenient for the accomplishment of its purposes, alone or with
others, as principal or agent, subject to any limitations set forth in the Act or the Certificate.
SECTION 2.5 Registered Office; Place of Business; Registered Agent. The Company shall
maintain a registered office at The Corporation Trust Company, 1209 Orange Street,
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Wilmington, County of New Castle, Delaware 19801, or such other office within the State of Delaware
as is chosen by the Board from time to time. The Company shall maintain an office and principal
place of business at such place as may from time to time be determined by the Management Council as
the Companys principal place of business.
SECTION 2.6 No State Law Partnership. It is the intent that the Company shall be a
limited liability company formed under the Laws of the State of Delaware and shall not be a
partnership (including a limited partnership) or joint venture, and that the Members not be a
partner or joint venturer of any other party for any purposes other than federal and state tax
purposes, and this Agreement may not be construed to suggest otherwise.
ARTICLE III
MEMBERS AND INTERESTS
SECTION 3.1 Members. Exhibit A attached hereto contains the name and address
of the Initial Members. Exhibit A shall be revised by the Board from time to time to
reflect the admission, resignation, expulsion, dissolution or withdrawal of a Member and the
issuance or other changes in ownership of Membership Interests in accordance with the terms of this
Agreement and other modifications to or changes in the information set forth therein.
SECTION 3.2 Members Under the Act. The Members shall be the members of the Company
under the Act.
SECTION 3.3 Rights or Powers. The Members shall possess all the rights and powers
and all of the obligations of a member under the Act, subject to the terms and conditions of the
Certificate and this Agreement. Unless otherwise provided by law or this Agreement, the
affirmative vote of the holders of a majority of the outstanding Membership Interests shall
constitute the act of the Members.
SECTION 3.4 Membership Interests. There is hereby issued to each Member the amount of
Membership Interests set forth opposite its name in Exhibit A attached hereto. Subject to
the provisions of this Agreement, including Articles IV and XIII, the Management
Council is authorized to cause the Company to issue additional Membership Interests, in each case
at any time or from time to time to existing Members or to other Persons and to admit such other
Persons as Members. The Company and its Subsidiaries shall be the owner of the Company Assets. No
Member shall have any ownership interest or right in any Company Asset, including Company Assets
conveyed by a Member to the Company, except indirectly by virtue of a Members ownership of a
Membership Interest.
SECTION 3.5 Certificates. Membership Interests will not be certificated unless
otherwise approved by, and subject to the provisions set by, the Board.
SECTION 3.6 Registered Holders. The Company shall be entitled to recognize the
exclusive right of a Person registered on its books as the owner of the indicated Membership
Interest and shall not be bound to recognize any equitable or other claim to or interest in such
Membership Interest on the part of any Person other than such registered owner, whether or not it
shall have express or other notice thereof, except as otherwise provided by Law.
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SECTION 3.7 Security. For purposes of providing for Transfer of, perfecting a
Security Interest in, and other relevant matters related to, a Membership Interest, the Membership
Interest will be deemed to be a security subject to the rules set forth in Article 9 of the
Delaware Uniform Commercial Code and any similar Uniform Commercial Code provision adopted by any
other relevant jurisdiction.
SECTION 3.8 Denial of Appraisal Rights. No Member will have any appraisal rights or
dissenters rights with respect to any merger, consolidation, conversion or dissolution of the
Company, any sale of assets by the Company or any amendment to this Agreement. Each Members
rights with respect to such matters are limited to those rights, if any, expressly set forth in
this Agreement.
ARTICLE IV
MANAGEMENT COUNCIL
SECTION 4.1 Generally.
(a) Subject to the provisions of Sections 4.7 and 4.8, all management powers
over the business and affairs of the Company shall be exclusively vested (i) in a Management
Council, consisting of the individuals appointed or designated as members of the Management Council
(Management Council Members) in accordance with Section 4.2, Section 4.5
or Section 4.6 and then serving as Management Council Members (Management
Council) and (ii) subject to the direction of the Management Council, in the officers. The
Management Council, acting as a body pursuant to this Agreement, shall constitute a manager of
the Company within the meaning of the Act. No Management Council Member, in such capacity, acting
singly or with any other Management Council Member, shall have any authority or right to act on
behalf of or bind the Company other than by exercising the Management Council Members voting power
as a member of the Management Council unless specifically authorized by the Management Council in
each instance. Each of the officers shall constitute a manager of the Company within the meaning
of the Act. Any decision or act of an officer within the scope of the officers designated or
delegated authority shall control and shall bind the Company (and any business entity for which the
Company exercises direct or indirect executory authority). Except as otherwise specifically
provided in this Agreement, no Member, by virtue of having the status of a Member, shall have or
attempt to exercise or assert any management power over the business and affairs of the Company or
shall have or attempt to exercise or assert actual or apparent authority to enter into contracts on
behalf of, or to otherwise bind, the Company. Except as otherwise specifically provided in this
Agreement, (A) the business and affairs of the Company shall be managed under the direction of the
Management Council and (B) the day-today activities of the Company shall be conducted on the
Companys behalf by the officers, each of whom shall be an agent of the Company within the scope of
his or her designated or delegated authority.
(b) Except as otherwise provided in this Agreement, the power and authority granted to the
Management Council hereunder shall include all those necessary
or convenient for the furtherance of the purposes of the Company.
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SECTION 4.2 Number; Designation of Management Council Members. Subject to adjustment
pursuant to Section 4.6, the authorized number of members of the Management Council (the
Management Council Members) shall be four, and the authorized number of Management
Council Members may only be increased or decreased with the Unanimous Consent of the Members. ETP
Sub will be entitled to designate two Management Council Members (the ETP Designees), and
OGE Sub will be entitled to designate two Management Council Members (the OGE Designees).
Each Management Council Member shall hold office until death, resignation or removal at the sole
discretion of the Member that appointed such Management Council Member.
SECTION 4.3 Resignation. Any Management Council Member may resign at any time by
giving written notice to the Board. The resignation of any Management Council Member shall take
effect upon receipt of notice thereof or at such later time as shall be specified in such notice.
Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4.4 Removal. Subject to Section 4.6, any Management Council Member
may be removed at any time, with or without cause, by the Member who appointed such Management
Council Member. The removal of a Management Council Member shall be effective only upon receipt of
notice thereof by the Board and the Members.
SECTION 4.5 Vacancies. If a vacancy occurs on the Management Council, then subject to
Section 4.6, the Member that appointed the vacating Management Council Member shall appoint
a successor. The appointment of a new Management Council Member by the Members is effective upon
receipt of notice thereof by the Company or at such other time as shall be specified in such notice
to the Members and the remaining Management Council Members.
SECTION 4.6 Loss of Rights to Designate Management Council. Notwithstanding anything
in this agreement to the contrary,
(a) ETP Sub or OGE Sub will be entitled to designate only one Management Council Member if, as
a result of a Transfer by such Member (or any of its Affiliates) of Membership Interests, such
Member (together with its Affiliates) owns less than 70% but at least 40% of the Membership
Interest it owned as of the Effective Date;
(b) ETP Sub or OGE Sub shall no longer have a Super-Majority Voting Right (but will continue
to be entitled to designate one Management Council Member) if, as a result of a Transfer by such
Member (or any of its Affiliates) of Membership Interests, such Member (together with its
affiliates) owns less than 40% but at least 10% of the Membership Interest it owned as of the
Effective Date; and
(c) ETP Sub or OGE Sub shall no longer have the right to designate
any Management Council Members if, as a result of a Transfer by such Member (or any of its
Affiliates) of Membership Interests, such Member (together with its Affiliates) owns less than 10%
of the Membership Interest it owned as of the Effective Date;
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provided, however, that if either ETP Sub or OGE Sub Transfers all, but not less than all, of its
Membership Interests then held by it and its Affiliates to a single purchaser (or single group of
purchasers in which each of the purchasers is an Affiliate with each other) in accordance with
Section 13.4 or 13.5, then ETP Sub or OGE Sub, as applicable, will be permitted to
Transfer its rights to designate Management Council Members pursuant to Section 4.2. The
number of Management Council Members on the Management Council shall be reduced to account for any
reduction in the number of Management Council Members that ETP Sub or OGE Sub is entitled to
designate pursuant to the foregoing. If a Member loses the right to designate one or more
Management Council Members pursuant to this Section 4.6, it will cause the appropriate
number of its Management Council Members to resign. Notwithstanding the foregoing, if any Member
loses its right to appoint at least one Management Council Member, (i) the Management Council shall
be deemed disbanded, (ii) any references to the Management Council in this Agreement shall be
deemed to be removed and (iii) all decisions required to be made by the Management Council will be
made by the Members holding a majority of the outstanding Membership Interests unless this
Agreement requires the approval of Members holding a greater percentage of outstanding Membership
Interests.
SECTION 4.7 Authority of the Management Council. Except as otherwise provided in this
Agreement, the management powers over the business and affairs of the Company and the Group Members
shall be vested exclusively in the Management Council. Notwithstanding the foregoing or any other
provision in this Agreement to the contrary:
(a) Without obtaining a Super-Majority Management Council Vote, the Members shall not cause
the Company to, or permit the Company or any Subsidiary of the Company to:
(i) approve each Budget (other than any portion thereof associated with an Approved New
Project);
(ii) approve a New Project;
(iii) elect or remove an officer of the Company;
(iv) designate or remove any members of the board of managers, or any similar governing body,
or any committee thereof, of MEP that any Group Member has the right to designate (the MEP
Designee); provided, however, that Mackie McCrea will serve as the initial MEP Designee unless
and until removed pursuant to this Section 4.7(b)(iv), and the Members agree to instruct
the MEP Designee to provide both Members with notice of MEP board meetings, as well as the agenda
for
such meetings, and to share any materials sent to the MEP board or given to the MEP board
members at meetings; or
(v) (A) adopt any risk management or financial crisis management plans or policies (including
a program of insurance) (each, a Risk Management Policy) and (B) except in accordance
with, and subject to any limits set forth in, Risk Management Policies approved by the Board, enter
into any Hedging Agreement.
(b) Without obtaining approval of a Super-Majority Interest, the Members shall not cause the
Company to, or permit the Company or any Subsidiary of the Company to:
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(i) make or consent to a general assignment for the benefit of the creditors of the Company or
any of its Subsidiaries;
(ii) file or consent to the filing of any bankruptcy, insolvency or reorganization petition
for relief under the United States Bankruptcy Code naming the Company or any of its Subsidiaries,
or otherwise seek, with respect to the Company or any of its Subsidiaries, relief from debts or
protection from creditors generally;
(iii) file or consent to the filing of a petition or answer seeking for the Company or any of
its Subsidiaries a liquidation, dissolution, arrangement, or similar relief under any law;
(iv) file an answer or other pleading admitting or failing to contest the material allegations
of a petition filed against the Company or any of the its Subsidiaries in a proceeding of the type
described in any of clauses (i) through (iii) of this Section 4.7(b);
(v) seek, consent to or acquiesce in the appointment of a receiver, liquidator, conservator,
assignee, trustee, sequestrator, custodian or any similar official for the Company or any of its
Subsidiaries or for all or any substantial portion of such entitys properties;
(vi) enter into a new line of business; or
(vii) amend the Certificate.
(c) Without obtaining the Unanimous Consent of the Members, the Members shall not cause the
Company to, or permit the Company or any Subsidiary to:
(i) sell all or substantially all of the assets of the Company;
(ii)
dissolve or liquidate the Company;
(iii) merge or consolidate the
Company;
(iv) except as specifically provided in Section 11.2, make (or change) any (A) tax
election, (B) allocation of a transaction for tax purposes or (C) other
material decision in respect of income taxes; or
(v) issue or repurchase any equity interests in the Company.
SECTION 4.8 Voting; Quorum; Required Vote for Action. Unless otherwise required by
the Act, other Applicable Law or the provisions hereof,
(a) each of the ETP Designees and the OGE Designees, whether acting individually, through an
alternate or by proxy, shall collectively have 50% of the aggregate voting power of the Management
Council Members; provided, however, that if either ETP Sub or OGE Sub no longer has the right to
designate two Management Council Members as provided in Section 4.6, each Management
Council Member shall thereafter have one vote;
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(b) if either the ETP Designees or the OGE Designees are unable to agree between themselves
how to vote on a given matter, then the voting power attributable to the Member that appointed them
will be divided equally among such Members designated Management Council Members who are present
at the meeting;
(c) the presence at a meeting of at least one OGE Designee and one ETP Designee shall
constitute a quorum at any such meeting for the transaction of business; and
(d) except as otherwise provided in Section 4.7, the act of the Management Council
Members holding a majority of the voting power held by (or, if either ETP Sub or OGE Sub no longer
has the right to designate two Management Council Members as provided in Section 4.6, a
majority of the number of) the Management Council Members present at a meeting duly called in
accordance with Section 4.10 at which a quorum is present shall be deemed to constitute the
act of the Management Council.
SECTION 4.9 Meetings of the Management Council.
(a) From time to time, and no less frequently than monthly, the Management Council shall meet
to review the business and activities of the Company. The Chief Executive Officer shall schedule
the time and location of each such meeting and provide at least two Business Days written notice
(or such other period as shall be agreed by all of the Management Council Members) to the
participants in such meeting; provided, however, that OGE Sub and ETP Sub shall alternate
designating the location of each meeting. In lieu of a meeting, the Management Council may act by
written consent if such written consent is signed by all Management Council Members.
(b) A special meeting of the Management Council will be held at the written request of at
least two Management Council Members.
(c) Notices of special meetings of the Management Council will state the date and hour of the
meeting and the purpose or purposes for which the meeting is
called. Special meetings will be held at the principal place of business of the Company, or
any other location agreed to by the Management Council. The notice of a special meeting will be
given in writing not less than seven nor more than 14 days before the date of the meeting to each
Management Council Member. Notwithstanding the foregoing, special meetings of the Management
Council to deal with emergencies may be called by providing at least 12 hours notice prior to the
meeting, so long as each Management Council Member provides written confirmation of receipt of
notice or waives notice (including by attending the emergency meeting).
(d) Any Management Council Member may waive in writing the requirements for notice of any
Management Council meeting, including a special meeting, before, at or after the special meeting
involved. The presence of any Management Council Member at a meeting (other than to object to the
holding of such meeting) will automatically constitute a waiver of notice by such member of the
holding of such meeting.
SECTION 4.10 Contracts with Members or Their Affiliates. All contracts or
transactions that are between the Company or any of its Subsidiaries and its Members, Management
Council Members or officers or between the Company or any of its Subsidiaries
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and another Person in which a Member, Management Council Member or officer has a financial interest
or with which a Member, Management Council Member or officer is affiliated (other than contracts or
transactions contemplated by Section 8.3(d) , which shall be governed by the provisions
thereof) are permissible if such contract or transaction, and such Members, Management Council
Members or officers interest therein, are in existence as of the Effective Date or are fully
disclosed to the Members and the Management Council and approved by the Unanimous Consent of the
Management Council.
ARTICLE V
OFFICERS
SECTION 5.1 Officers. The Management Council may appoint agents of the Company, which
agents shall be referred to as officers of the Company, having the titles, power, authority and
duties described in this Article V or as otherwise granted by the Management Council or this
Agreement.
SECTION 5.2 Term; Removal; Resignation; Vacancies. Each officer will hold office
until such officers resignation, removal or death. Any officer of the Company is subject to
removal, with or without cause, by the Management Council. Any vacancy in the position of an
officer of the Company resulting from a removal, resignation or other event may be filled by the
Management Council. The removal of an officer is without prejudice to the contract rights, if any,
of the person removed. Designation of an officer does not, in and of itself, create contract
rights. The compensation, if any, to be paid to the officers of the Company will be determined by
the Management Council in accordance with an Approved Budget.
SECTION 5.3 Authority. The authority of any officers of the Company shall be
restricted to the carrying on of day-to-day business and affairs of the Company, which will include
the general and administrative affairs of the Company and the operation and maintenance of the
Company Assets, all in accordance with this Article V, and any such authority will be
subject to the supervisory control of the Management Council or the Members, as applicable, as
provided in Article IV and Applicable Law, including the FERC Standards of Conduct. Unless
the Management Council decides otherwise, the assignment of such title shall constitute the
delegation to such officer of the authority and duties set forth in
this Article V and that are
normally associated with that office.
SECTION 5.4 Titles and Number. The officers may include a Chief Executive Officer, a
Chief Operating Officer (or Co-Chief Operating Officers), a Chief Financial Officer, one or more
Vice Presidents (including a Vice President of Business Development), a Secretary, a Treasurer, and
one or more Assistant Secretaries and Assistant Treasurers, and any other officer position or title
as the Board may approve. Any person may hold two or more offices.
SECTION 5.5 Chief Executive Officer. Subject to the limitations imposed by this
Agreement, any employment agreement or any determination of the Management Council, the Chief
Executive Officer shall (i) supervise generally the other officers, (ii) be responsible for the
management and day-to-day business and affairs of the Company, its other officers, employees and
agents and shall supervise generally the affairs of the Company, (iii) coordinate the
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Companys operations among the Senior Management Team and assist the Management Council with the
development of new projects and acquisition opportunities, (iv) have full authority to execute all
documents and take all actions that the Company may legally take and (v) have the power and
authority to delegate the Chief Executive Officers powers and authority to any proper officer.
SECTION 5.6 Chief Operating Officer. Subject to the limitations imposed by this
Agreement, any employment agreement or any determination of the Management Council, the Chief
Operating Officer (or Co-Chief Operating Officers) shall (i) be responsible for the day-today
operational aspects of the Companys business and affairs, (ii) have full authority to execute all
documents and take all actions that the Company may legally take and (iii) have the power and
authority to delegate the Chief Operating Officers powers and authority to any proper officer.
SECTION 5.7 Chief Financial Officer. The Chief Financial Officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and records of account of
the Company. He shall receive and deposit all moneys and other valuables belonging to the Company
in the name and to the credit of the Company and shall disburse the same and only in such manner as
the Management Council or the appropriate officer of the Company may from time to time determine.
He shall receive and deposit all moneys and other valuables belonging to the Company in the name
and to the credit of the Company and shall disburse the same and only in such manner as the
Management
Council, the Chief Executive Officer or the Chief Operating Officer may require. He shall
render to the Management Council, the Chief Executive Officer and the Chief Operating Officer,
whenever any of them request it, an account of all his transactions as Chief Financial Officer and
of the financial condition of the Company, and shall perform such further duties as the Management
Council, the Chief Executive Officer or the Chief Operating Officer may require. The Chief
Financial Officer shall have (i) the same power as the Chief Executive Officer and Chief Operating
Officer to execute documents on behalf of the Company and (ii) the power and authority to delegate
the Chief Financial Officers powers and authority to any proper officer as provided in this
Article V.
SECTION 5.8 Treasurer and Assistant Treasurers. The Treasurer shall have such duties
as may be specified by the Chief Financial Officer in the performance of his duties. The Assistant
Treasurers shall exercise the power of the Treasurer during that officers absence or inability or
refusal to act. Each of the Assistant Treasurers shall possess the same power as the Treasurer to
sign all certificates, contracts, obligations and other instruments of the Company. If no
Treasurer or Assistant Treasurer is appointed and serving or in the absence of the appointed
Treasurer and Assistant Treasurer, the Senior Vice President, or such other officer as the
Management Council shall select, shall have the powers and duties conferred upon the Treasurer.
SECTION 5.9 Vice Presidents. In the absence of the Chief Operating Officer, each Vice
President appointed by the Management Council shall have all of the powers and duties conferred
upon the Chief Operating Officer, including the same power as the Chief Operating Officer to
execute documents on behalf of the Company. Each such Vice President shall perform such other
duties and may exercise such other powers as may from time to time be assigned to him by the
Management Council. Vice Presidents may be designated Executive Vice Presidents, Senior Vice
Presidents, or any other title determined by the Board.
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SECTION 5.10 Subsidiary COOs. The chief operating officers of the Companys
Subsidiaries (the Subsidiary COOs and, collectively with the Chief Executive Officer, the
Chief Operating Officer and the Chief Financial Officer, the Senior Management Team) will
report to the Chief Operating Officer and shall also be responsible for the execution of the
business plan of the Company, subject to the supervision of the Chief Operating Officer. In
addition, each Subsidiary of the Company will initially be managed day-to-day by the applicable
Subsidiary COO and the Persons who were the officers and personnel managing such Subsidiary
immediately prior to the date of this Agreement; provided, however, that the Management Council and
the Senior Management Team may adjust such management responsibilities from time to time in order
to better integrate the Companys assets and maximize operating efficiency.
SECTION 5.11 Secretary and Assistant Secretaries. The Secretary shall record or cause
to be recorded in books provided for that purpose the minutes of the meetings or actions of the
Management Council (including any committee of the Management Council), shall see that all notices
are duly given in accordance with the provisions of this Agreement and as required by law, shall be
custodian of all records (other than financial),
shall see that the books, reports, statements, certificates and all other documents and
records required by law are properly kept and filed, and, in general, shall perform all duties
incident to the office of Secretary and such other duties as may, from time to time, be assigned to
him by this Agreement, the Management Council or the Chief Operating Officer. The Assistant
Secretaries shall exercise the powers of the Secretary during that officers absence or inability
or refusal to act.
SECTION 5.12 Powers of Attorney. The Company may grant powers of attorney or other
authority as appropriate to establish and evidence the authority of the officers and other persons.
SECTION 5.13 Delegation of Authority. Unless otherwise provided in this Agreement or
by resolution of the Management Council, no officer shall have the power or authority to delegate
to any person such officers rights and powers as an officer to manage the business and affairs of
the Company.
SECTION 5.14 Duties of Officers. Except as otherwise specifically provided in this
Agreement, the duties and obligations owed to the Company by the officers of the Company shall be
the same as the duties and obligations owed to a corporation organized under the Delaware General
Corporation Law by its officers.
ARTICLE VI
[RESERVED]
ARTICLE VII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 7.1 Limitation of Liability; Duties.
(a) No Management Council Member or any officer shall be personally liable for monetary
damages for breach of any duty provided for in the Act or at common law unless
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there has been a final and non-appealable judgment entered by a court of competent jurisdiction
determining that, in respect of the matter in question, Management Council Member or officer acted
in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted
with knowledge that his or her conduct was criminal. All liability other than as described above
and other than liability for any act or omission that constitutes a bad faith violation of the
implied contractual covenant of good faith and fair dealing is hereby eliminated pursuant to
Section 18-1101(e) of the Act.
(b) No Member of the Company shall be liable to any Person (including any third party, the
Company or another Member) in such capacity for a debt, obligation or liability of the Company
except to the extent expressly set forth herein or in a written instrument executed by the Member
against whom any liability is asserted in favor of the Person asserting such liability.
(c) To the extent that, at law or in equity, a Member has any fiduciary duty to the Company or
any other Member pursuant to this Agreement, such duty is hereby eliminated pursuant to Section
18-1101(c) of the Act; provided, however, that the foregoing does not eliminate the implied
contractual covenant of good faith and fair dealing or any liability of a Member for breach of its
obligations under this Agreement.
SECTION 7.2 Indemnification.
(a) The Company shall defend, indemnify and hold harmless each Member or any former Member,
each Management Council Member and any former Management Council Member and any Person that is or
was an officer, director, employee, partner, agent or trustee of the Company, any Member or any
former Member (each, an Indemnitee) against any and all losses, claims, damages,
liabilities, judgments, settlements, penalties, fines or expenses (including, without limitation,
reasonable attorneys fees), and other amounts (each, a Claim) arising from any and all
claims, demands, actions, suits or proceedings (each, a Proceeding) in which any
Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, because such
Person is or was a Member, Management Council Member, officer, director, employee, partner, agent
or trustee of the Company, any Member or any former Member of the Company (other than a Claim by
another Member of a breach of this Agreement or a bad faith violation of the contractual covenant
of good faith and fair dealing) unless, in the case of a Management Council Member or officer,
director, employee, partner, agent or trustee of the Company, there has been a final and
non-appealable judgment entered by a court of competent jurisdiction determining that, in respect
of the matter in question, the Management Council Member or officer acted in bad faith or engaged
in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that his or
her conduct was criminal. THE INDEMNIFICATION PROVISIONS SET FORTH IN THIS SECTION 7.2 ARE
INTENDED BY THE PARTIES TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF EXCULPATING THE
INDEMNITEE FROM LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF SUCH PERSONS NEGLIGENCE, FAULT OR
OTHER CONDUCT.
(b) Expenses (including reasonable attorneys fees and expenses) incurred by an Indemnitee in
defending any claim, demand, action, suit or proceeding shall, from time to
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time, be advanced by the Company prior to final disposition of such Proceeding upon receipt by the
Company of a written affirmation by such Indemnitee of his good faith belief that he has met the
requirements necessary for indemnification under this Section 7.2 and undertaking by the
Indemnitee to repay such amount if it is determined that such Indemnitee is not entitled to
indemnification under this Section 7.2. The indemnification provided in this Section
7.2 is in addition to any other rights to which an Indemnitee may be entitled to under this
Agreement, as a matter of Law or otherwise, as to actions in the Indemnitees capacity as an
Indemnitee and shall continue as to an Indemnitee who has ceased to serve in such capacity as to
actions during its
capacity as Indemnitee.
(c) The Company may purchase and maintain insurance (in such amounts and for such purposes as
the Company shall determine) on behalf of the Indemnitees against any liability that may be
asserted against or expense that may be incurred by any such Person in connection with the
Companys activities.
(d) No amendment, modification or repeal of this Section 7.2 or any other provision
hereof shall terminate, reduce or impair the right of any Indemnitee to be indemnified by the
Company or to any advancement of expenses, nor the obligation of the Company to indemnify or
advance expenses to such Indemnitee, under and in accordance with
this Section 7.2 as in effect
immediately prior to such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.
SECTION 7.3 Appearance as a Witness. Notwithstanding any other provision of this
Article VII, the Company may pay or reimburse expenses incurred by any Indemnitee in connection
with such Indemnitees appearance as a witness or other participation in a Proceeding at a time
when he is not a named defendant or respondent in the Proceeding.
SECTION 7.4 Member Notification. Any indemnification of or advance of expenses to any
Indemnitee shall be reported in writing to the Members with or before the notice or waiver of
notice of the next Members meeting or with or before the next submission to Members of a consent
to action without a meeting and, in any case, within the 12-month period immediately following the
date the indemnification or advance was made.
SECTION 7.5 Indemnity for Violations of FERC Standards of Conduct, Market Manipulation
Rules, Capacity Release Rules or the CFTC Market Rules. Notwithstanding anything to the
contrary in this Agreement, each Member hereby agrees to indemnify and hold harmless the Company
and each other Member and their respective Affiliates from and against any and all loss, claim,
liability, damage, fine, penalty, cost or expense (including attorneys and experts fees,
judgments and amounts paid in settlement to FERC, CFTC or other Persons) arising out of or related
to a violation or alleged violation by such Member, its Affiliates or their respective managers,
directors, officers, agents, representatives and employees of, or a settlement of a Claim related
to compliance by such Member, its Affiliates or their respective managers, directors, officers,
agents, representatives and employees with, FERC Standards of Conduct, the Market Manipulation
Rules, the Capacity Release Rules or the CFTC Market Rules.
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SECTION 7.6 Reliance on Reports. Each Management Council Member may
rely and shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request consent, order, bond,
debenture, or other paper or document believed by it to be genuine and to have been signed or
presented by the Management Council, as applicable. The Management Council may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers and other consultants
and advisers selected by it and any act taken or omitted in reliance upon the opinion of such
Persons as to matters that the Management Council Members, as the case may be, reasonably believe
to be within such Persons professional or expert competence shall be conclusively presumed to have
been done or omitted in good faith and in accordance with such opinion. No Management Council
Member shall have any fiduciary or quasi-fiduciary duty to the Company or the Members pursuant to
this Agreement, and all such fiduciary duties are hereby eliminated pursuant to Section 18-1101(c)
of the Act to the maximum extent permitted thereunder.
ARTICLE VIII
BUDGET; LIMITED EXCLUSIVITY; NEW PROJECTS
SECTION 8.1 Budget. The Senior Management Team shall cause to be prepared a Budget,
which Budget will be presented to the Management Council for approval in accordance with
Section 4.7(a)(iii). The Budget for each fiscal year shall set forth, on a monthly basis
for such year, the anticipated costs to be incurred in connection with the Company, including the
costs of operating and field personnel providing day-to-day operations of the Company Business, and
the anticipated capital costs to be incurred in connection with the Company Business. The initial
Approved Budget is attached hereto as Annex I (the Initial Approved Budget). The
Management Council shall cause a proposed Budget to be prepared by November 30th for each year
thereafter during the term of this Agreement. Each Budget shall be subject to the approval
requirement of Section 4.7(a)(iii). If the Budget is not approved by the Management
Council prior to the date when such Budget is to become effective, then, until such time as such
approvals are obtained, the Budget for such fiscal year shall be based on the corresponding
portions of the Approved Budget for the preceding fiscal year (excluding any unusual or
extraordinary revenues, expenses or capital expenditures that occurred during such prior Fiscal
Year), together with any additional amounts to the extent necessary, when combined with amounts
authorized to be spent in such last Approved Budget, to meet the Companys existing commitments and
obligations and to conduct and maintain the Companys operations and properties in the ordinary
course of business. With respect to non-recurring amounts and capital expenditures, if any, for
which there is no corresponding portion of the Approved Budget for the preceding Fiscal Year, only
budgeted amounts directed or approved by the Management Council on a case by case basis shall be
utilized (except as provided in Section 8.2).
SECTION 8.2 Approval of New Projects. With respect to a New Project and related
financing not included in the most recent Approved Budget:
(a) If such New Project has been approved by the Management Council, the Approved Budget will
be amended to include the New Project (and related
financing); provided, however, that any proposal with respect to a New Project must include a
related financing plan,
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which financing plan will describe, among other things and as applicable, the material terms of any
Capital Contributions required to be made by any Member.
(b) If a New Project is disapproved by the Management Council Members, then no Member may
pursue such New Project independently unless such New Project would not conflict with the
exclusivity provisions of Section 8.3, in which case any Member may pursue such New Project
independently.
(c) No Member may, in its independent pursuit of any New Project that it is permitted to
pursue under this Section 8.2 (or a substantially similar project to any such New Project),
use any written materials specifically developed by or for the Company (other than by such Member)
in connection with the evaluation of such New Project and presented to the Management Council at a
meeting of the Management Council (the Company Evaluation Materials); provided, however,
that Company Evaluation Materials shall not include any material that (i) is or becomes generally
available to the public other than as a result of disclosure by the applicable Member; (ii) was in
the applicable Members possession prior to the development or creation by or for the Company in
connection with the evaluation of a New Project, (iii) becomes available to the applicable Member
from a third party who, to the knowledge of such Member, did not receive such material from the
Company or a Member or (iv) such Member can reasonably demonstrate was independently developed by
such Member without reliance upon any material separately developed by or for the Company (other
than by such Member) in connection with a New Project (it being understood and agreed that (A) any
engineering studies and drawings developed by or for such Member shall not be considered Company
Evaluation Materials if such engineering studies and drawings were developed without reliance on
or otherwise using similar engineering studies and drawings developed by or for the Company (other
than by such Member) in connection with a New Project, and (B) neither the concept, general
location or general description of a New Project nor information provided by, or discussions with,
potential customers or vendors related to any New Project shall be considered Company Evaluation
Materials); provided further that the Members agree that no Member shall be presumed to have
misused any information contained in such written materials solely because any Management Council
Member appointed by such Member retained mental impressions of such information as a result of
attendance at any meeting at which such written materials were presented.
SECTION 8.3 Limited Exclusivity.
(a) General. Except as otherwise provided in this Section 8.3, and subject to
Applicable Law, including the FERC Standards of Conduct, the Members and their Affiliates may at
any time, and from time to time, engage in, and possess interests in, other business ventures and
activities of any and every type and description (including Transportation Pipelines, upstream
gathering or lateral pipelines or processing facilities or downstream pipelines or processing
facilities), independently or with others, regardless
of whether such ventures are competitive with the Company or any Group Member, and regardless
of whether such business ventures and activities are located inside or outside the Designated Area,
or otherwise. Notwithstanding anything to the contrary in this Agreement, the doctrine of
corporate opportunity, or any analogous doctrine, shall not apply to any Member, and each Member
shall be permitted to vote its Membership Interests (and the Management Council Members
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representing such Member shall be permitted to vote) in its own self-interest. No Member who
(directly or through an Affiliate) acquires knowledge of a potential transaction, agreement,
arrangement or other matter that may be an opportunity for any Group Member shall have any duty to
communicate or offer such opportunity to the Company or any other Member, and such Member (and its
officers and the Management Council Members representing such Member) shall not be liable to the
Company, any Member or any other Person for breach of any fiduciary or other duty by reason of the
fact that such Member pursues or acquires such opportunity for itself or its Affiliate directs
such opportunity to another Person or does not communicate such opportunity or information to the
Company; provided, however, that no Member may independently pursue any projects (regardless of
whether they are New Projects) that are specifically identified in an Approved Budget that was
approved by at least one of such Members Management Council Members or are set forth on
Schedule 8.3(a) as part of the Companys expansion or acquisition plans. Neither the
Company nor any other Member shall by virtue of this Agreement have any right, title, or interest
in or to such independent ventures and activities or to the income or profits derived therefrom,
nor shall engaging in such ventures and activities constitute a breach of a Members obligations
hereunder. Subject to the remaining provisions of this Agreement and Applicable Law, including the
FERC Standards of Conduct, any Member may, but shall not be obligated to, submit potential projects
to the Management Council for consideration in accordance with the terms of this Agreement;
provided, however, that neither the Management Council nor any Member will be under any obligation
to approve such projects, and the Company will not be under any obligation to pursue or develop
such projects. Subject to this Section 8.3, neither the Company nor any Subsidiary shall
have any right or expectation to participate in any project or acquisition. Notwithstanding the
foregoing, this Section 8.3(a) shall not be construed to authorize a Member to engage in
any activities that would result in such Member, the Company or any of the Companys Subsidiaries
not being FERC Compliant.
(b) Projects Required to be Conducted through the Company Group. Subject to the exceptions
set forth in Sections 8.3(c) and (d) and except as set forth in Section
8.2, the following projects and activities must be owned, developed, operated and conducted
through the Company or any of its Subsidiaries and may not be owned, developed, operated or
conducted by any Initial Member or any Affiliate thereof during the period that such Initial Member
(or any Affiliate thereof) remains a Member:
(i) All intrastate transportation assets, including any Transportation Pipelines, located
within the Designated Area that transport natural gas or any constituents of the natural gas
stream;
(ii) All gathering assets located within the Designated Area that gather natural gas or any
constituents of the natural gas stream;
(iii) All processing and storage assets located within the Designated Area that process or
store, respectively, natural gas or any constituents of the natural gas stream;
(iv) All interstate pipelines, if any portion is located within the Designated Area, that
transport natural gas or any constituents of the natural gas stream;
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(v) Any (A) expansion of capacity (through looping or compression) or extension of any
pipeline owned or operated by TW or (B) construction of any lateral pipeline connection to an
existing pipeline owned or operated by TW (in each case, a TW Project); and
(vi) Any MEP Lateral Opportunity permitted to be pursued by the Company pursuant to
Section 8.3(c)(ii).
(c) Existing Exclusivity Obligations. Notwithstanding anything in this Section 8.3 to the
contrary:
(i) any assets of Enogex or its Affiliates that are already subject to exclusivity obligations
pursuant to that certain Limited Liability Company Agreement of Atoka Midstream LLC, dated as of
December 22, 2006 (the Existing Enogex Exclusivity Obligations), will not be subject to
Section 8.3(b) so long as, and to the extent, the Existing Enogex Exclusivity Obligations
remain in place; and
(ii) any assets of ETIH or its Affiliates that are already subject to exclusivity obligations
pursuant to the MEP LLC Agreement (the Existing MEP Exclusivity Obligations) will not be
subject to Section 8.3(b) so long as, and to the extent, the Existing MEP Exclusivity
Obligations remain in place; provided, however, if (A) a Member proposes a New Project that is
subject to the Existing MEP Exclusivity Obligations, the Company shall propose that MEP pursue such
New Project and (B) if MEP does not approve pursuing such New Project, and as a result thereof the
Company is permitted under the terms of the Existing MEP Exclusivity Obligations to pursue such New
Project, then such New Project shall be subject to the provisions of Section 8.2.
(d) Future Acquisitions.
(i) Notwithstanding anything in this Section 8.3 to the contrary, in the case of a
proposed acquisition by the Company, an Initial Member or an Initial Members Affiliate (excluding
the Company or any of its Subsidiaries) of a business or assets of the type described in
Section 8.3(b)(i)-(iv) of which a majority of such business or assets (based on the Fair
Market Value) is located in the Designated Area (a Majority Opportunity), then such
Majority Opportunity shall be considered a New Project, and subject to the proviso set forth below,
an Initial Member must comply
with the requirements of Section 8.2 in respect of such Majority Opportunity;
provided, however, that nothing contained in this sentence shall prohibit any Initial Member or any
Affiliate of an Initial Member (excluding the Company or any of its Subsidiaries) from separately
pursuing an acquisition of the portion of such business or assets involved in the Majority
Opportunity but located outside the Designated Area. For purposes of this Section 8.3(d),
the following pipelines shall be deemed not to have a majority of their respective business or
assets located within the Designated Area: (A) the Panhandle Eastern Pipeline, (B) the Northern
Natural Gas Pipeline, (C) the Central Southern Star Pipeline and (D) the Rockies Express Pipeline
(the Excluded Interstate Pipelines). If any portion of such proposed acquisition is in
the ETP Sub Area (the ETP Sub Portion), then the Company will be required to offer (and
the Members will cause the Company to offer) the ETP Sub Portion to ETP Sub at a purchase price
equal to the Fair Market Value (as determined in good faith by the Management Council) of the ETP
Sub Portion, as increased to take into account federal and state
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taxes that the Company (or the Persons that own direct or indirect interests in the Company, in the
case of income taxes) would reasonably be expected to incur in the event the ETP Sub Portion is
transferred to ETP Sub, and on other customary and commercially reasonable terms, it being
understood that the terms on which the MLP acquired such business and assets from the seller shall
be given appropriate weight in determining what are customary and commercially reasonable terms.
In the case of a proposed acquisition by the Company, a Member or a Members Affiliate (excluding
the Company or its Subsidiaries) of a business or assets that is not a Majority Opportunity, then
each of the Company, any Member or any Members Affiliate may pursue such proposed acquisition
independently; provided, however, that if any Initial Member or its Affiliate is the acquiring
party, then such acquiring party will be required to offer to the Company the portion of such
business or assets located in the Designated Area (the DA
Portion). The offer price for the DA
Portion will be equal to the Fair Market Value (as determined in good faith by the board of
directors or similar governing body of the acquiring party) of the DA Portion, as increased to take
into account federal and state taxes that the acquiring party (or, if the acquiring party is a
partnership or other non-tax paying entity for federal income tax purposes, the Persons that own
direct or indirect interests therein, in the case of income taxes) would reasonably be expected to
incur in the event the DA Portion is transferred to the Company and on other customary and
commercially reasonable terms, it being understood that the terms on which the Initial Member or
its Affiliate acquired such business and assets from the seller shall be given appropriate weight
in determining what are customary and commercially reasonable terms. The Parties agree to work in
good faith with their respective tax advisors to structure the transactions contemplated by this
Section 8.3(b)(i) to minimize any federal and state tax impact. Notwithstanding the
foregoing, (i) if any portion of any assets acquired by an Initial Member or its Affiliate consist
of (x) any interstate natural gas pipeline owned and operated by CenterPoint Gas Transmission
Company as of the date of the Contribution Agreement (excluding the interstate natural gas pipeline
that runs from Carthage, Texas to Perryville, Louisiana) or (y) any natural gas pipeline located in
(or running through) Oklahoma that is owned and operated by ONEOK Partners, L.P. as
of the date of the Contribution Agreement and that is or later becomes an interstate natural gas
pipeline, then such interstate pipeline assets will be treated in the same manner as if they were
included in the DA Portion and (ii) neither ETP Sub nor any of its Affiliates shall be required to
offer to the MLP the assets described on Schedule 8.3(d) if such assets are acquired by any
such party.
(ii) If there is a dispute between an Initial Member and the Company as to whether a majority
of the business or assets are within or outside the Designated Area as determined pursuant to
Section 8.3(d)(i) and such dispute continues more than 10 Business Days following written
notice of such dispute, such Initial Member and the Company will engage a mutually agreed upon
investment banking firm to determine the Fair Market Value of the business and assets located
within the Designated Area and the Fair Market Value of the business and assets located outside the
Designated Area. Any such determination shall be final and binding on the Parties. The fees of the
investment banking firm will paid by the losing party. With respect to any such disputes, the
Members consent on behalf of the Company to this procedure and agree to take all steps necessary to
ensure the Company participates in and abides by such procedure.
(iii) For purposes of this Section 8.3(d), (1) the Person that is required pursuant to
Section 8.3(d)(i) to make an offer to another Person to purchase a business or assets
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shall be referred to as the Offeror, (2) the Person who is entitled to receive the offer
shall be referred to as the Offeree, (3) the business or assets subject to the Offer are
referred to as the Subject Assets, (4) the price at which the Offeror is required to
offer the Subject Assets to the Offeree is referred to as the Offer Price and (5) the
other terms on which the Offer offers to sell the Subject Assets are referred to as the Offer
Terms.
(iv) Within 45 days after the consummation of the proposed acquisition described in
Section 8.3(d)(i), the Offeror shall notify the Offeree in writing of such acquisition and
offer the Offeree the opportunity to purchase such Subject Assets in accordance with this
Section 8.3(b) (the Offer). The Offer shall set forth the terms relating to the
purchase of the Subject Assets and the Offeror shall provide Offeree with prompt, reasonable access
to all applicable due diligence materials relating to the Subject Assets, as well as to any
applicable employees, officers, accountants, consultants and other representatives, to facilitate
Offerees evaluation of the Offer. As soon as practicable, but in any event within 30 days after
receipt of such written notification, Offeree shall notify the Offeror in writing that either (A)
the Offeree has elected not to purchase the Subject Assets, in which event the Offeror shall be
forever free to continue to own or operate such Subject Assets, including any expansions or
enhancements thereto, or (B) the Offeree has elected to purchase the Subject Assets, in which event
the following procedures shall apply.
(v) If the Offeree, within 30 days after receipt of the Offer, agrees on the Offer Price and
the Offer Terms, the Offeree shall purchase the Subject
Assets for the agreed upon Offer Price and Offer Terms as soon as commercially practicable
(taking into account, among other things, any related securities offering or other financing
transaction), but in any event no later than 90 days from the date on which a definitive
transaction agreement is executed by the parties thereto.
(vi) If the Offeree does not agree on the Offer Price or the Offer Terms within 30 days after
receipt of the Offer, the Offeree and the Offeror will negotiate in good faith for an additional 30
days to attempt to reach agreement on the Fair Market Value of the Subject Assets and the other
terms of the Offer. If the Offeree and the Offeror agree on the Offer Price and the Offer Terms
within such 30-day period, the Offeree shall purchase the Subject Assets for the agreed upon Offer
Price and other Offer Terms as soon as commercially practicable (taking into account, among other
things, any related securities offering or other financing transaction), but in any event no later
than 90 days from the date on which a definitive transaction agreement is executed by the parties
thereto.
(vii) If the Offeree and the Offeror are unable to agree within 60 days after receipt by the
Offeree of the Offer on the Fair Market Value of the Subject Assets that are subject to the Offer
or the other terms of the Offer, the Offeree and the Offeror will engage a mutually agreed upon
investment banking firm to determine the Fair Market Value of the Subject Assets and/or the other
terms on which the Offeree and Offeror are unable to agree. Within five Business Days thereafter,
both the Offeree and the Offeror shall submit to such investment bank their respective proposals
(which proposals must be identical to the last proposal offered by each respective party to the
other party during the negotiation period described in clause (vi) above) with respect to the Fair
Market Value of the Subject Assets and/or the other terms on which the Offeree and the Offeror are
unable to agree. Such investment bank shall choose one (and only
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one) of the proposals submitted by the Offeree and the Offeror within 30 days of its engagement and
furnish the Offeree and the Offeror its determination. The fees and expenses of the investment
bank and other jointly incurred costs shall be borne 50% by each of the Offeror and the Offeree.
Once the investment banking firm has submitted its determination of the Fair Market Value of the
Subject Assets and/or the other terms on which the Offeree and the Offeror are unable to agree, the
Offeree will have the right, but not the obligation, to purchase the Subject Assets pursuant to the
Offer as modified by the determination of the investment banking firm. The Offeree will provide
written notice of its decision to Offeror within 30 days after the investment banking firm has
submitted its determination. Failure to provide such notice within such 30-day period shall be
deemed to constitute a decision not to purchase the Subject Assets. If the Offeree elects to
purchase the Subject Assets, then the Offeree shall purchase the Subject Assets pursuant to the
Offer as modified by the determination of the investment banking firm as soon as commercially
practicable (taking into account, among other things, any related securities offering or other
financing transaction), but in any event no later than 90 days from the earlier of (A) the date on
which a definitive transaction agreement is executed by the parties thereto and (B) the date of the
Parties receipt of the investment banking firms determination pursuant to this clause (vii).
(viii) Notwithstanding the provisions of Article IV, all decisions of the Company in
respect of the purchase of Subject Assets comprising a DA Portion or the sale of Subject Assets
comprising an ETP Sub Portion shall be made solely by the Management Council Members other than
those appointed by the Member who is (or whose Affiliate is) the Offeror or Offeree of such Subject
Assets.
(e) Notwithstanding anything in this Agreement to the contrary, solely for purposes of
Section 8.3(b) and (d), no Person that controls Energy Transfer Equity, L.P. shall
be deemed to be an Affiliate of ETP Sub.
ARTICLE IX
CAPITAL CONTRIBUTIONS
SECTION 9.1 Initial Capital Contributions. On the Effective Date, each Member shall
contribute to the Company, as a Capital Contribution, the assets set forth on Exhibit B (with
respect to each Member, an Initial Capital Contribution), which shall have the values set
forth on Exhibit B.1
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OGE Sub and ETP Sub will agree prior to the Effective Date to the amount of the
aggregate fair market value of all Initial Capital Contributions listed in Exhibit B. Such
aggregate fair market value shall be based on the value of the Company as a business (including
goodwill) and will be derived from (i) the aggregate fair market value determined for the assets
(including goodwill) of the Company under financial reporting principles, if the Company is
required to determine the aggregate fair market value of its assets as of the date of the Closing
in order to comply with financial reporting rules or (ii) models prepared by the financial advisors
to the Members if the Company is not required to determine the aggregate fair market value of its
assets as of the Initial Closing Date in order to comply with financial reporting rules. OGE Sub
and ETP Sub will also agree prior to the Initial Closing Date to the allocation of the aggregate
fair market value of all Initial Capital Contributions between the Members, which shall be on a
50/50 basis subject to adjustment to take proper account of (x) the $266 million distribution paid
to OGE Sub on the Effective Date following such Initial Capital Contribution as described in
Section 10.7(c) and (y) the |
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SECTION 9.2 Additional Capital Contributions. No Member will be required to
make any additional Capital Contributions to the Company, except Capital Contributions required to
fund actual costs included in the financing plans submitted with proposals for New Projects
approved by the Management Council or to fund the costs of any projects already specifically
identified in an Approved Budget that has been approved by at least one Management Council Member
appointed by such Member. The Management Council shall provide an Authorization for Expenditure
(AFE) to each Member at least 90 days prior to the date on which such funds will be
required setting forth: (a) the project(s) to which such additional Capital Contribution is related
and (B) the proportionate share of the additional Capital Contribution required from such Member
(the Required Funding Amount). Any such Capital Contributions shall be made in
proportion to the Membership Interests held by the Members that elect to make such Capital
Contributions.
SECTION 9.3 Return of Contributions. A Member is not entitled (i) to the return of
any part of any Capital Contributions or (ii) to be paid interest in respect of either its Capital
Account or its Capital Contributions. Any unrepaid Capital Contribution is not a liability of the
Company or of any Member. A Member is not required to contribute or to lend any cash or property
to the Company to enable the Company to return any other Members Capital Contributions.
SECTION 9.4 Non-Payment of Required Capital Contributions. If a Member (the
Delinquent Member) does not pay the Required Funding Amount, including any adjustments
for actual cost, within 60 days after the Delinquent Members receipt of the AFE (the Payment
Due Date), the Delinquent Members ownership of Membership Interests shall be adjusted as
follows:
(a) If the Delinquent Member has not paid the Required Funding Amount, including any
adjustments for actual costs, within 5 Business Days of the Payment Due Date, the Management
Council shall deliver a written notice of non-consent election (Non-Consent Notice) to
the Delinquent Member at any time after the expiration of 5 Business Days following the Payment Due
Date. If the Management Council fails or refuses to deliver the Non-Consent Notice, then the
Management Council Member representing any Non-Delinquent Member may cause the Non-Consent Notice
to be sent to the Delinquent Member on behalf of the Company. Until the Delinquent Member receives
the Non-Consent Notice, the Delinquent Member shall have the right to cure its default by paying
the unpaid Required Funding Amount.
(b) If at the time the Delinquent Member receives the Non-Consent Notice, the Delinquent
Member has not cured its default as provided herein:
(i) the Delinquent Member will be deemed to have elected not to participate in the project to
which the Required Funding Amount relates, regardless of any previous approval of, or election to
participate in, such project; and
special distributions from the Company expected to be payable to OGE Sub under Section
10.2(b) based on the cash flow models prepared by the financial advisors to the Members.
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(ii) the Management Council may offer to the other Members (the Non-Delinquent
Members) the right to contribute the portion of the Required Funding Amount not made by the
Delinquent Member (the Delinquent Required Funding Amount) on the following terms and
conditions:
(A) The Management Council shall immediately notify in writing, or cause the Company to notify
in writing, each Non-Delinquent Member that such Member will have the right to contribute a portion
of the Delinquent Required Funding Amount based upon such Members Membership Interest (the
Participation Notice). Each Non-Delinquent Member will have 5 Business Days from the
date it actually receives the Participation Notice to respond to the Management Council in writing
that such Member will contribute its portion of the Delinquent Required Funding Amount, and each
such Non-Delinquent Member who contributes its portion of the Delinquent Required Funding Amount
will be considered a Participating Member. The failure of a Non-Delinquent Member to
respond to the Participation Notice within 5 Business Days will be deemed to be an election by the
Non-Delinquent Member not to make its proportionate share of the Delinquent Required Funding
Amount.
(c) The portion of the Delinquent Required Funding Amount funded by each Participating Member
will be treated as a capital contribution to the Company and the Membership Interests of each
Member shall be adjusted to equal the amount (expressed as a percentage) determined by dividing the
total Capital Contributions made by such Member by the total Capital Contributions made by all
Members (except that for purposes of such calculation, (i) each Members Initial Capital
Contribution shall be deemed to have been $___2 instead of the actual amount
thereof and (ii) each dollar of the portion of the Delinquent Required Funding Amount funded by
each Participating Member will be considered to have been a Capital Contribution of two dollars).
ARTICLE X
DISTRIBUTIONS AND ALLOCATIONS
SECTION 10.1 Distributable Cash. Distributable cash (Distributable Cash)
shall mean all cash of the Company Group remaining at such time after setting aside reasonable
reserves determined by the Management Council for working capital, capital expenditures, retirement
of outstanding indebtedness and other present or future requirements of the Company Group, all in
accordance with the purposes of the Company or its Subsidiaries, as applicable.
SECTION 10.2 Distributions.
(a) Within 40 calendar days after the end of each calendar quarter, the Management Council
shall determine the amount of Distributable Cash as of the end of such calendar quarter. Subject
to the provisions of Section 12.3, the Company will make distributions
(Distributions) to the Members within 47 calendar days following the end of each calendar
quarter of all Distributable Cash for such previous calendar quarter. Except as otherwise
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This blank will be filled with the agreed dollar value of ETPs Initial
Capital Contribution. |
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provided in this Section 10.2, Section 10.7 or Section 12.3(d),
Distributions will be made to the Members in proportion to their respective Membership Interests.
(b) With respect to any calendar quarter prior to the 55% Special Distribution Termination
Date, (i) OGE Sub shall be entitled to an additional distribution from the Company equal to 5% of the amount of cash
distributions received by the Members (in each case, the 55% Special Distribution) and
(ii) the amount of distributions to ETP Sub from the Company for each such period shall be reduced
by an equal amount; provided, however, in no event shall the
aggregate amount of (x) the 55% Special
Distributions and (y) the 75% Special Distributions exceed the OGE Adjustment Amount.
(c) With
respect to any calendar quarter prior to the 75% Special Distribution Termination
Date, (i) OGE Sub shall be entitled to an additional distribution for such period from the
Company (A) during the
period prior to the 55% Special Distribution Termination Date, equal to 20% of the Excess Cash Flow
for such period and (B) during the period from and after the 55% Special Distribution Termination
Date until the 75% Special Distribution Termination Date,
equal to 25% of the Excess Cash Flow for such period (in each case, the 75% Special Distribution) and
(ii) the amount of distributions to ETP Sub from the Company for
each such period shall be reduced by an
equal amount; provided, however, in no event shall the
aggregate amount of (x) the 55% Special Distributions and
(y) the 75% Special Distributions exceed the OGE Adjustment Amount.
SECTION 10.3 Allocations. After giving effect to the special allocations in
Section 10.5, all items of income, gain, loss and deduction of the Company shall be
allocated to the Members in proportion to their respective Membership Interests; provided, however,
that with respect to any period prior to the 55% Special Distribution Termination Date, (i) OGE Sub
shall be entitled to an additional allocation of such items of the Company equal to 5% of all such
items of the Company for such period and (ii) the amount of the allocations to ETP Sub from the
Company for such period shall be reduced by an equal amount.
SECTION 10.4 Loss Limitation. The deductions and losses allocated according to
Section 10.3 may not exceed the maximum amount of deductions and losses that can be so
allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any
Fiscal Year or other relevant period. If some but not all of the Members would have Adjusted
Capital Account Deficits as a consequence of an allocation of deductions and losses according to
Section 10.3 the limitation contained in this Section 10.4 must be applied on a
Member-by-Member basis so as to allocate the maximum permissible deductions and losses to each
Member.
SECTION 10.5 Special Allocations. The following special allocations must be made in
the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulation Section
1.704-2(g), notwithstanding anything else in this Article X, if there is a net decrease in
Company Minimum Gain during any Fiscal Year, the Company must allocate to each Member, items of
Company income and gain for that period (and, if necessary, subsequent periods) in an amount equal
to that Members share of the net decrease in Company Minimum
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Gain (determined according to Treasury Regulation Section 1.704-2(g)). Allocations under the
previous sentence must be made in proportion to the respective amounts required to be allocated to
each Member under that sentence. The items to be so allocated must be determined according to
Treasury Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2). The parties intend this Section
10.5(a) to comply with the minimum gain chargeback requirement in Treasury Regulation Section
1.704-2(f), which must govern its interpretation.
(b) Member Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulation
Section 1.704-2(i)(4), notwithstanding anything else in this Article X, if there is a net
decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal Year,
the Company must specially allocate to each Member who shares the Member Minimum Gain attributable
to that Member Nonrecourse Debt (determined according to Treasury Regulation Section
1.704-2(i)(5)), items of Company income and gain for that relevant period (and, if necessary,
subsequent relevant periods) in an amount equal to that Persons share of the net decrease in
Member Minimum Gain attributable to that Member Nonrecourse Debt (determined according to Treasury
Regulation Section 1.704-2(i)(4)). Allocations under the previous sentence must be made in
proportion to the respective amounts required to be allocated to each Member under that sentence.
The items to be so allocated must be determined according to Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2). The parties intend this Section 10.5(b) to comply with the
minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(i)(4), which must govern
its interpretation.
(c) Qualified Income Offset. If any Member unexpectedly receives any adjustments, allocations,
or Distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), the Company must specially allocate items of
Company income and gain to each of those Members in an amount and manner sufficient to eliminate,
to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficits of each
of those Members as quickly as possible. Notwithstanding the foregoing, an allocation under this
Section 10.5(c) must be made if and only to the extent that each of those Persons would
have an Adjusted Capital Account Deficit after all other allocations in this Article X have been
tentatively made as if this Section 10.5(c) were not in this Agreement.
(d) Gross Income Allocation. If any Member has a deficit Capital Account at the end of any
Fiscal Year that is in excess of the amount such Member is obligated to restore pursuant to any
provision of this Agreement, or are deemed obligated to restore pursuant to the penultimate
sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), respectively, each such
Member shall be specially allocated items of Company gross income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this Section 10.5(d)
shall be made only if and to the extent that such Member would have a deficit Capital Account after
all other allocations provided for in this Article X have been made as if Section
10.5(c) and this Section 10.5(d) were not in this Agreement.
(e) Nonrecourse Deductions. The Company will specially allocate any Nonrecourse Deductions
for each Fiscal Year to the Members in proportion to their respective Membership Interests.
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(f) Member Nonrecourse Deductions. The Company will specially allocate any Member Nonrecourse
Deductions for any Fiscal Year to the Members holding the Membership Interest of each Member to the
extent such Member bears the economic risk of loss on the Member Nonrecourse Debt to which those
Member Nonrecourse Deductions are attributable, determined according to Treasury Regulation Section
1.704-2(i)(1).
(g) Code Section 754 Adjustments. To the extent Treasury Regulation Section
1.704-1(b)(2)(iv)(m) requires the Company to take into account in determining Capital Accounts an
adjustment to the adjusted tax basis of any Company Assets under Code Sections 734(b) or 743(b)
because of a distribution to a Member in complete liquidation of such Members Membership Interest,
the amount of the adjustment to the Capital Accounts must be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment decreases that basis). The
amount of that gain or loss must be specially allocated to the Members:
(i) according to their interests in the Company if Treasury Regulation Section
1.704-1(b)(2)(iv)(m)(2) applies, and
(ii) to the Member to whom the distribution was made if Treasury Regulation Section
1.704-1(b)(2)(iv)(m)(4) applies.
(h) Curative Allocations. The parties to this Agreement have included the allocations
contained in Sections 10.4, 10.5(a), 10.5(b), 10.5(c),
10.5(d), 10.5(e), 10.5(f), and 10.5(g) (each, a Regulatory
Allocation) to comply with certain requirements of the Regulations. The Members intend that,
to the extent possible, all Regulatory Allocations will be offset either with other Regulatory
Allocations or with special allocations of other items of Company income, gain, loss, or deduction
according to this Section 10.5(h) . Therefore, notwithstanding any other provision of this
Article X (other than the Regulatory Allocations), the Company will make whatever
offsetting special allocations of items of Company income, gain, loss, and deduction, in whatever
manner the Company determines appropriate, so that, after making the offsetting allocations, each
Members Capital Account balance equals the Capital Account balance the Member would have had if
the Regulatory Allocations were not part of the Agreement. In exercising its discretion to
determine the manner of making the offsetting allocations, the Company will take into account
future Regulatory Allocations under Section 10.5(a) and Section 10.5(b) that,
although not yet made, will likely offset other Regulatory Allocations already made under
Section 10.5(e) and Section 10.5(f).
SECTION 10.6 Other Allocation Rules.
(a) When determining the items of income, gain, loss and deduction allocable to any relevant
period, such items must be determined on a daily, monthly, or other basis, as determined by the
Company using any permissible method under Code Section 706 and the Treasury Regulations under that
Code section.
(b) The Members are aware of the income tax consequences of the allocations made by this
Article X and agree to be bound to the provisions of this Article X in reporting
their shares of Company income and loss for income tax purposes.
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(c) The proportionate share of the Companys excess nonrecourse liabilities (within the
meaning of Treasury Regulation Section 1.752-3(a)(3)) shall be determined based on the Membership
Interests.
(d) To the extent permitted by Treasury Regulation Section 1.704-2(h)(3), the Company must
endeavor to treat Distributable Cash as having been made from the proceeds of a Nonrecourse
Liability or a Member Nonrecourse Debt only to the extent those Distributions would cause or
increase an Adjusted Capital Account Deficit for any Member.
SECTION 10.7 Tax Allocations and Certain Elections.
(a) Elections Affecting Section 704(c) Allocations. The Company will, and will cause the
other Company Group Partnerships to, (i) elect to use the remedial allocation method under Treasury
Regulation Section 1.704-3(d) as to all of their assets that are subject to Section 704(c) of the
Code or reverse Section 704(c) allocations within the meaning of Treasury Regulation Section
1.704-3(a)(6) and (ii) to the extent possible, make elections with respect to recovery periods and
depreciation (or other cost recovery) methods pursuant to the final sentence of Treas. Reg.
1.704-3(d)(2) and, if applicable, under Section 168 of the Internal Revenue Code, to avoid any
increase in tax depreciation (net of remedial income) allocated to OGE Sub or ETP Sub, as the case
may be, from the Company relative to that which it and its Affiliates would otherwise receive in
the absence of the transactions contemplated by the Contribution Agreement from the assets
contributed to the Company by OGE Sub or ETP Sub, as the case may be, and excluding any such assets
deemed purchased by the Company for federal income tax purposes.
(b) Tax Allocation Decisions. The Members delegate to the Tax Matters Member or any officer
designated by the Tax Matters Member the discretion to make or fail to make any elections or other
decisions concerning the allocations under this Section 10.7 in any manner that reasonably
reflects the purpose and intention of this Agreement; subject, however, to the restrictions set
forth in Section 4.7(c). Allocations made under this Section 10.7 are made solely
for federal, state, and local tax purposes and may not affect, or in any way be taken into account
in computing, any Members Capital Account or share of items of income, gain, loss and deduction or
Distributions under this Agreement.
(c) Formation Distribution. On the Effective Date, the Company shall distribute $266 million
in cash to OGE Sub, of which amount (i) $4.3 million shall be treated as a reimbursement to OGE Sub
for certain costs incurred by OGE Sub or its Affiliate in connection with a predecessor initial
public offering transaction with respect to Enogex that was not consummated and (ii) $261.7 million
shall be treated as a reimbursement to OGE Sub for certain preformation expenditures qualifying
under Treasury Regulation Section 1.707-4(d). OGE Subs Capital Account will be reduced by the
aggregate amount of such distribution. In addition, the Capital Accounts of the Members will be
properly adjusted for other payments and liabilities constituting reimbursements of preformation
expenditures (as agreed by the Parties prior to Closing) under Treasury Regulation Section
1.707-4(d).
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ARTICLE XI
BOOKS; REPORTS; TAX MATTERS; CAPITAL ACCOUNTS
SECTION 11.1 General Accounting Matters; Books and Records.
(a) Allocations of items of income, gain, loss and deduction and corresponding tax allocations
pursuant to Article X shall be made by the Tax Matters Member (as defined in Section
11.2) at the end of each Fiscal Year.
(b) Except as otherwise provided herein, all determinations, valuations and other matters of
judgment required to be made for accounting and tax purposes under this Agreement shall be made by
the Tax Matters Member or any officer designated by the Tax Matters Member in a reasonable manner
in accordance with any applicable provisions of this Agreement.
(c) The Company shall, through the Companys accountants or otherwise, maintain in a manner
customary and consistent with GAAP, a comprehensive system of office records, books and accounts
(which records, books and accounts shall be and remain the property of the Company) in which shall
be entered fully and accurately each and every financial transaction with respect to the ownership
and operation of the Company Assets. The Company shall cause financial statements and income tax
returns to be prepared at the expense of the Company or its Subsidiaries as required by Section
11.1(e) below. Such books and records of account shall be prepared by the Companys
accountants (unless otherwise determined by the Management Council) and maintained at the principal
place of business of the Company or at such other place or places as may from time to time be
determined by the Management Council. Each Member or its duly authorized representative shall have
the right to inspect, examine and copy, such books and records of account at the Companys
principal office during reasonable business hours.
(d) The books of the Company shall be kept on an accrual basis in accordance with GAAP and on
a tax basis in accordance with United States tax requirements.
(e) Within 30 calendar days after the end of each fiscal quarter, the Company shall prepare
and furnish to each Member the following reports, each prepared on a GAAP basis for such fiscal
quarter and year-to-date period: (i) an unaudited consolidated balance sheet of the Company and
its consolidated Subsidiaries, (ii) an unaudited consolidated income statement of the Company and
its consolidated Subsidiaries, (iii) an unaudited consolidated statement of cash flows, (iv) an
unaudited consolidated statement of each Members Capital Account, (v) a status report of the
activities of the Company and its Subsidiaries during such fiscal quarter, including summary
descriptions of additions to and dispositions of the Company Assets during such fiscal quarter, if
any, and (vi) any Company budgets and explanations of material variances from actual results.
(f) Within 50 calendar days after the end of each fiscal year, the
Company shall prepare and furnish to each Member the following reports, each prepared on a
GAAP basis for such fiscal year period: (i) an audited consolidated balance sheet of the Company
and its
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consolidated Subsidiaries, (ii) an audited consolidated income statement of the Company and its
consolidated Subsidiaries, (iii) an audited consolidated statement of cash flows, and (iv) an
audited consolidated statement of each Members Capital Account.
(g) From time to time, the Company will provide to the Members any other financial or tax
information regarding the Company reasonably requested by a Member (or its Affiliates and
designees), including, without limitation, (A) book and tax basis information for the Companys
assets sufficient to allow a Member to satisfy its own obligations and make own computations,
allocations and adjustments under Code Sections 704(b), 704(c) and 754 and (B) access to the
service providers (including the Company Accountant) of the Company and its Subsidiaries.
(h) When requested, the Tax Matters Member or any officer designated by the Tax Matters Member
shall cause to be prepared a reasonable estimate of the taxable income of the Company. All
schedules of book income shall be prepared on a GAAP basis. As soon as practicable after the end
of each Fiscal Year, the Tax Matters Member or any officer designated by the Tax Matters Member
will cause to be prepared and delivered to each Member a report setting forth in sufficient detail
all such additional information and data with respect to business transactions effected by or
involving the Company during the Fiscal Year as will enable the Company and each Member to timely
prepare its federal, state and local income tax returns in accordance with applicable Laws, rules
and regulations.
(i) The Company may prepare such additional financial reports and other information as the
Board may determine are appropriate.
(j) Subject to the provisions of Section 4.7(a), all decisions as to accounting
principles shall be made by the Board, subject to the provisions of this Agreement, including
Section 11.2.
(k) Subject to the provisions of Section 4.7(a), the Company shall retain as the
auditor of the Company and to provide accounting services a nationally-recognized accounting firm
or firms selected by the Board (the Company Accountant). The fees and expenses of the
Company Accountant shall be an expense of the Company or its Subsidiaries.
SECTION 11.2 Certain Tax Matters. The taxable year of the Company shall be the same
as its Fiscal Year. The Tax Matters Member or any officer designated by the Tax Matters Member
shall cause to be prepared all federal, state and local, and ad valorem tax returns of the Company
for each year for which such returns are required to be filed and shall cause such returns to be
timely filed. The Tax Matters Member or any officer designated by the Tax Matters Member shall
determine the appropriate treatment of each item of income, gain, loss, deduction and credit of the
Company and the
accounting methods and conventions under the tax Laws of the United States, the several
states and other relevant jurisdictions as to the treatment of any such item or any other method or
procedure related to the preparation of such tax returns. The Tax Matters Member or any officer
designated by the Tax Matters Member shall make the election provided for in Section 754 of the
Code, if, and only if the Member who or which has acquired any Membership Interests or a
distribution of Company property with respect to which the election is made will have provided to
the Tax Matters Member or any officer designated by
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the Tax Matters Member concurrently, or within 30 calendar days after the Transfer of such
Membership Interests, its undertaking to the effect that it, and its successors in interest
hereunder, will reimburse the Company annually for its additional administrative costs incurred by
reason of such election as determined by an accountant employee of the Tax Matters Member. The Tax
Matters Member or any officer designated by the Tax Matters Member may also make any election to
deduct or amortize organizational expenses pursuant to Code Section 709 and the regulation
promulgated thereunder. It is the intention of the Parties that the Company be treated as a
partnership for tax purposes and no Member shall take an inconsistent position on any tax return or
otherwise. The tax matters partner for purposes of Section 6231(a)(7) of the Code (the Tax
Matters Member) shall be OGE Sub. If a dispute as to the content of a tax return cannot be
resolved to the reasonable satisfaction of all Members prior to the required filing date therefor,
the Tax Matters Member shall have the right to direct the accountant employee of the Tax Matters
Member to cause the Companys tax return to be filed as reasonably approved by the Tax Matters
Member. Each Member shall give prompt notice to each Member of any and all notices or other
communications it receives from the Internal Revenue Service concerning the Company, including any
notice of audit, any notice of action with respect to a revenue agents report, any notice of a
30-day appeal letter and any notice of a deficiency in tax concerning any Company tax return. Each
Member will be entitled, at its own expense, to attend all meetings with the Internal Revenue
Service and to review in advance any material written information (including without limitation any
pleadings, memoranda or similar items) to be submitted to the Internal Revenue Service. Without
first obtaining the Consent of a Member, which consent shall not be unreasonably withheld, the Tax
Matters Member will not, with respect to any proposed adjustment of a Company item which materially
and adversely affects such Member (a) enter into a settlement agreement which purports to bind
Members other than the Tax Matters Member (including without limitation, any stipulation consenting
to an entry of decision by the Tax Court) or (b) enter into an agreement or stipulation extending
the time of limitations. Upon request, the Tax Matters Member shall furnish each Member with
status reports regarding any negotiation between the Internal Revenue Service or any other taxing
authority and the Company. The Tax Matters Member shall have all of the rights, duties, powers and
obligations provided for in Sections 6221 through 6232 of the Code with respect to the Company.
SECTION 11.3 Capital Accounts.
(a) There shall be established for each Member on the books of the
Company as of the date hereof, or such later date on which such Member is admitted to the
Company, a capital account (each being a Capital Account). No Member shall have any
obligation to restore any negative balance in the Members Capital Account, whether to the Company,
any Member or any other Person. A deficit balance in any Members Capital Account shall not be
deemed to be a liability of such Member (or of such Members members, shareholders or partners) or
an asset or property of the Company (or any Member). No Member shall be entitled to withdraw all
or any part of its Capital Contributions except as expressly provided in this Agreement. No
interest shall be payable by the Company on the Capital Contributions of any Member. Each Members
Capital Account (a) shall be increased by (i) the amount of money contributed by such Member to the
Company, (ii) the fair market value of property contributed by such Member to the Company (net of
liabilities secured by the contributed property that the Company is considered to assume or take
subject to under Code Section 752) and (iii) allocations to such Member of items of income and gain
and (b) shall be decreased by (i) the amount of
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money distributed to such Member by the Company, (ii) the Carrying Value of property
distributed to such Member by the Company (net of liabilities secured by the distributed property
that such Member is considered to assume or take subject to under Code Section 752) and (iii)
allocations to such Member of items of loss and deduction. The Capital Accounts shall also be
increased or decreased to reflect a revaluation of Company property pursuant to the definition of
Carrying Value. On the transfer of all or part of a Members Membership Interest, the Capital
Account of the transferor that is attributable to the transferred interest shall carry over to the
transferee Member in accordance with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(l). The Company shall maintain the Capital Accounts of the Members in a manner
consistent with the principles and requirements set forth in Section 704(b) of the Code and
Treasury Regulation Section 1.704-1(b)(2)(iv).
(b) For purposes of computing the amount of any item of income, gain, loss or deduction which
is to be allocated pursuant to Article X and is to be reflected in the Capital Accounts,
the determination, recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes, provided, that:
(i) Any income of the Company that is exempt from federal income tax shall be added to taxable
income or loss.
(ii) Any expenses of the Company described in Code Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenses pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i) shall be
subtracted from that taxable income or loss.
(iii) If any Company Asset has its Carrying Value adjusted, there shall be added to or
subtracted from taxable income or loss the amount of the aggregate net adjustment made to the
Carrying Value.
(iv) Gain or loss resulting from any disposition of Company Assets
regarding which gain or loss is recognized for federal income tax purposes must be computed by
reference to the Carrying Value of the Company Assets disposed of, notwithstanding that the
adjusted tax basis of the Company Assets differs from its Carrying Value.
(v) In lieu of the depreciation, amortization, and other cost recovery deductions taken into
account in computing taxable income or loss, there must be taken into account Depreciation on all
Company Assets for the period.
(vi) To the extent Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4) requires any adjustments
under Code Sections 734(b) or 743(b) to the adjusted tax basis of any Company Asset to be taken
into account in determining Capital Accounts as a result of a Distribution other than in complete
liquidation of a Members Membership Interest, the amount of that adjustment must be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset) from the disposition of the asset.
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ARTICLE XII
DISSOLUTION
SECTION 12.1 Dissolution. The Company shall be dissolved and subsequently
terminated upon the occurrence of the first of the following events:
(a) upon the Members Unanimous Consent in writing to dissolve the Company; or
(b) the occurrence of a Dissolution Event, except that the Company shall not be dissolved upon
the occurrence of a Dissolution Event that terminates the continued membership of a Member in the
Company if, within 90 calendar days after the occurrence of such Dissolution Event, any remaining
Members consent to the continuation of the Company.
SECTION 12.2 Winding-Up. When the Company is dissolved, the business and property of
the Company shall be wound up and liquidated by such party appointed by the Management Council (the
party conducting the liquidation being hereinafter referred to as the Liquidator), which party
shall not receive any fee from the Company for acting as Liquidator hereunder. The Liquidator
shall use its best efforts to reduce to cash and cash equivalent items such assets of the Company
as the Liquidator shall deem it advisable to sell, subject to obtaining fair value for such assets
and any tax or other legal considerations.
SECTION 12.3 Final Distribution. Within 90 calendar days after the effective date of
dissolution of the Company, the assets of the Company shall be distributed in the following manner
and order:
(a) to the payment of the expenses of the winding-up, liquidation and dissolution of the
Company;
(b) to pay all creditors of the Company, either by the payment thereof or the making of
reasonable provision therefor;
(c) to establish reserves, in amounts reasonably established by the Liquidator, to meet other
liabilities of the Company after the date on which the liquidation is consummated; and
(d) the remaining assets of the Company, if any, shall be distributed to the Members in accordance
with, and to the extent of, the positive balances in their Capital Accounts, as determined after
taking into account all Capital Account adjustments (excluding adjustments made by reason of
distributions pursuant to this Section 12.3(d)) for the taxable year of the Company in which the
liquidation occurs (with the date of such occurrence determined pursuant to Treasury Regulation
Section 1.704-1(b)(2)(ii)(g)) and such distribution shall be made by the end of such taxable year
(or, if later, within 90 days after said date of such occurrence).
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ARTICLE XIII
TRANSFER OF INTERESTS; ADMISSION OF MEMBERS; WITHDRAWAL
SECTION 13.1 General Restrictions on Membership Interests.
(a) No Member may Transfer all or any part of its Membership Interests (Subject Interests)
to any Person, unless the action is in accordance with this Article XIII.
(b) For purposes of this Article XIII, if any wholly-owned Affiliate controlled by a
Person that is or has been a Member directly or indirectly holds Subject Interests, then the
Subject Interests held by such wholly-owned Affiliate will be aggregated with the Subject
Interests, if any, held by such current or former Member, as well as any other wholly-owned
Affiliate thereof.
SECTION 13.2 Transfer Restrictions.
(a) No Member may Transfer any Subject Interests prior to the second anniversary of the
Effective Date. On or after the second anniversary of the Effective Date, any Member may Transfer
its Subject Interests subject to the provisions of this Article XIII.
(b) The Company may not Transfer any of its ownership interests in its Subsidiaries without a
Super-Majority Management Council Vote.
(c) No Transfer of Subject Interests in violation of this Article XIII shall be made or
recorded on the books of the Company and any such purported Transfer shall be void ab initio and
of no effect.
(d) Except for Transferees with respect to Transfers made in accordance with Section 13.3,
to the extent provided in Section 13.14(a), or as otherwise provided in this Agreement, (i)
no Transferee shall have the right to become a Substituted Member and (ii) unless and until a
Transferee is admitted as a Substituted Member, (A) such Transferee shall have no right to exercise
any of the powers, rights and privileges of a Member hereunder other than to receive its share of
allocations and distributions pursuant
to this Agreement and (B) the Member (the Transferring Member) who has Transferred all or
any part of its Subject Interests (the Transferred Subject Interests) to such Transferee
shall cease, upon such Transfer, to be a Member with respect to the Transferred Subject Interests
and shall have no further powers, rights and privileges as a Member hereunder with respect to the
Transferred Subject Interests; provided, however, that unless and until otherwise relieved of such
obligations, the Transferring Member shall remain liable for all obligations and duties as a Member
with respect to the Transferred Subject Interests; provided further, that if the Transferee
reconveys the Transferred Subject Interests to the Transferring Member within ten days after the
Transferring Member becomes aware that the Transferee will not become a Substituted Member, the
Transferring Member shall once again be entitled to all of the powers, rights and privileges of a
Member hereunder.
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(e) The Company may, in its reasonable discretion, charge a Transferring Member a reasonable
fee to cover administrative expenses necessary to effect a Transfer with respect to any Transferred
Subject Interests.
(f) In the absence of a Transferee becoming a Substituted Member for a Transferring Member,
any payment by the Company to the Transferring Member shall acquit the Company and the Members of
any and all liability to any other Person who may be interested in such payment by reason of a
Transfer by such Transferring Member.
(g) A Member may effect or be the subject of a Transfer or a Change in Control (or take any
other action) that would result in a termination of the Company for purposes of Section 708 of the
Code only if the Member meets the requirements of this Section 13.2(g) and otherwise
complies with the applicable provisions of this Article XIII. Prior to such Transfer,
Change in Control or other action, the Member must offer to pay to each other Member prior to such
Transfer, Change in Control or other action an amount in cash (the Make-Whole Amount)
that is necessary to hold such other Member harmless against any deferral of state or federal
income tax depreciation or other increase in liability for such tax (including any change in the
present value of such liability) that such termination would cause. For purposes of calculating
the Make-Whole Amount, such other Member will be treated as if it is a corporation for federal and
state income tax purposes. In the case of any Transfer to which this Section 13.2(g)
applies, the Make-Whole Amount for each Member entitled to be paid such Make-Whole Amount will be
computed on a net present value basis using: (i) the Agreed Rate in effect on the date of payment
and (ii) the highest marginal applicable state and federal corporate income tax rates for the year
of payment. Using those same highest marginal rates, the amount that is determined pursuant to the
preceding sentence will be grossed up such that the increased amount (reduced by the state and
federal income taxes that are deemed paid by reason of the receipt thereof) is equal to the amount
that is determined pursuant to the preceding sentence. If the applicable state income tax is
deductible for federal income tax purposes, effect will be given to such deduction in calculating
the Make-Whole Amount. Each Member may accept this payment or, at its sole option, receive full
indemnity on an after-tax basis from the Member effecting the Transfer, Change in Control or other
action for all state and federal income tax impacts relating to such Member and directly resulting
from the Section 708 termination.
(h) Neither the Company nor any Member shall be bound or otherwise affected by any Transfer of
Subject Interests for which the Company or such Member has not received the Transfer Document under
Section 13.12.
SECTION 13.3 Transfers to Wholly-Owned Affiliates. Any Member may Transfer all or a
portion of its Subject Interests to a wholly-owned Affiliate so long as such Transfer otherwise
complies with the terms of this Agreement (including Section 13.2); provided, however, that
(a) any Transfer of such Subject Interests by such wholly-owned Affiliate shall be subject to the
requirements of this Article XIII; and (b) if any wholly-owned Affiliate controlled by a
Person that is or has been a Member directly or indirectly holds Subject Interests, then any
transaction (whether a stock or equity sale, merger, consolidation, share exchange,
recapitalization, sale of assets or otherwise) that results in such wholly-owned Affiliate no
longer being a wholly-owned Affiliate of such Member shall be deemed to be a Change in Control of
such Member that must comply with this Article XIII.
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SECTION 13.4 Right of First Offer.
(a) Subject to Sections 13.1 and 13.2, if a Member (the ROFO Seller)
wishes to solicit proposals from third parties to acquire all or a portion of the ROFO Sellers
Subject Interests (the ROFO Interests), the ROFO Seller must first notify the other
Members (the ROFO Non-Selling Members) in writing (the ROFO Notice) of its
desire to Transfer such ROFO Interests. The ROFO Notice must include (i) a description of the ROFO
Interests and (ii) a request for the ROFO Non-Selling Members to specify the purchase price and
other terms and condition on which the ROFO Non-Selling Members would purchase the ROFO Interests.
(b) Within 20 days after receiving the ROFO Notice, subject to any extensions permitted by
Section 13.4(f) , one or more ROFO Non-Selling Members (the ROFO Accepting
Members) may elect in writing (the ROFO Offer Notice) to purchase all, but not less
than all, the ROFO Interests and specify in such ROFO Offer Notice the purchase price and other
terms and condition on which the ROFO Accepting Members are willing to purchase the ROFO Interests
(the ROFO Price). If the ROFO Accepting Members offer to purchase the ROFO Interests,
the ROFO Seller will have 20 days from the date it received the ROFO Offer Notice to elect in
writing (the ROFO Acceptance Notice) to accept the ROFO Accepting Members offer to
purchase the ROFO Interests.
(c) If the ROFO Seller accepts the ROFO Non-Selling Members offer, the ROFO Accepting Members
must purchase the ROFO Interests within 90 days after receiving the ROFO Acceptance Notice. If the
ROFO Seller does not accept the ROFO Accepting Members offer or fails to make such election within
20 days after receiving the ROFO Offer Notice, the ROFO Seller may, during the next 120 days,
Transfer the ROFO Interests to a third party Transferee at a purchase price not less than 103% of
the highest offered ROFO Price and on substantially the same terms and conditions set forth in the
ROFO Notice.
(d) If more than one ROFO Accepting Member submits a ROFO Offer
Notice, and the ROFO Seller decides to accept any of such ROFO Offer Notices, then the ROFO
Seller shall be obligated to accept such ROFO Offer Notice containing the highest offered ROFO
Price, in which case each ROFO Accepting Member shall be allocated a number of ROFO Interests equal
to the aggregate number of ROFO Interests multiplied by a fraction, the numerator of which is the
aggregate number of Membership Interests held by such ROFO Accepting Member and the denominator of
which is the aggregate number of Membership Interests held by all ROFO Accepting Members, or in
such proportion as such ROFO Accepting Members shall otherwise agree.
(e) Upon consummation of any Transfer of Membership Interests in accordance with this Section
13.4 (whether to a Member or any Person) and compliance with Section 13.12, such
Transferee and all of its Membership Interests shall automatically become a party to and be bound
by this Agreement and shall thereafter have all of the rights and obligations of a Member
hereunder. Notwithstanding the foregoing, all Transfers pursuant to this Section 13.4 must
also comply with and be governed by this Agreement, including any restrictions on transfers herein
and on any Transferee becoming a Substituted Member.
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(f) In connection with the ROFO Non-Selling Members decision regarding whether to exercise
the option to purchase the ROFO Interests as described herein, the ROFO Non-Selling Members may
elect to engage a Valuation Firm to determine the current fair market value of the ROFO Interests.
The Valuation Firm shall then, within 10 days of its selection, determine in good faith the then
current fair market value in cash of the ROFO Interests and prepare and deliver to each Member a
report stating such fair market value and including a summary of the assumptions and basis for such
determination. The cost of such report shall be borne by the Company. Notwithstanding anything in
this Section 13.4 to the contrary, if the ROFO Non-Selling Members elect to engage a
Valuation Firm pursuant to this Section 13.4(f), the period of time in which the ROFO
Non-Selling Member must make a ROFR Offer Notice shall be extended by a number of days equal to the
total number of days in the period starting from the delivery of the ROFO Notice and ending on the
date on which the Members receive the Valuation Firm report.
SECTION 13.5 Right of First Refusal.
(a) Subject to Sections 13.1 and 13.2, if (i) a Member (such Member and any
other Member deemed to have made a Transfer under Sections 13.6 or 13.7, a
ROFR Seller) receives a bona fide offer from a third party for a Transfer of all or a
portion of the ROFR Sellers Subject Interests (the ROFR Interests), and the ROFR Seller
wishes to accept such offer, and (ii) the right of first offer process described in Section
13.4 has not been followed with respect to such offer, the ROFR Seller must notify the other
Members (the ROFR Non-Selling Members) in writing within 20 days of receiving such offer
(the ROFR Notice). The ROFR Notice must include (x) a complete description of the
purchase price and other terms and conditions of the transaction in which the ROFR Seller proposes
to Transfer the ROFR Interests, including the name of the proposed Transferee and other
consideration specified in the offer. The ROFR Non-Selling Members shall have, subject to any
extensions permitted pursuant to Section 13.5(e), 20 days (the ROFR Option
Period) after receiving the ROFR Notice in
which to advise the ROFR Seller in writing (the ROFR Acceptance Notice) whether or
not they will acquire all of the ROFR Interests upon the terms and conditions contained in the ROFR
Notice.
(b) If, during the ROFR Option Period, one or more ROFR Non-Selling Members (the ROFR
Accepting Members) elect to acquire the ROFR Interests at the price and subject to the terms
and conditions set forth in the ROFR Notice, then (i) each ROFR Accepting Member shall be allocated
a number of ROFR Interests equal to (A) the aggregate number of ROFR Interests multiplied by a
fraction, the numerator of which is the aggregate number of Membership Interests held by such ROFR
Accepting Member and the denominator of which is the aggregate number of Membership Interests held
by all ROFR Accepting Members, or in such proportion as such ROFR Accepting Members shall otherwise
agree, and (ii) such ROFR Accepting Member or Members shall close such transaction in accordance
with this Section 13.5(b) no later than the later to occur of (A) the closing date set
forth in the ROFR Notice and (B) 90 days after the ROFR Seller receives the ROFR Acceptance Notice.
(c) The right of first refusal created in this Section 13.5 is an option to acquire all,
but not less than all, of the ROFR Interests offered for sale by the ROFR Seller. If the ROFR
Non-Selling Members elect not to acquire the ROFR Interests or the ROFR Non-Selling Members fail to
make any election before the expiration of the ROFR Option Period, the ROFR
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Seller may Transfer the ROFR Interests to the proposed Transferee named in the ROFR Notice (or a
wholly-owned Affiliate thereof, provided that such Transferee executes a document acceptable to the
Company by which it agrees to be bound by Section 15.22 hereof in respect of such
wholly-owned Affiliate) upon the terms described in such ROFR Notice. If such Transfer does not
occur on substantially the same terms and conditions set forth in such ROFR Notice, or if such
Transfer is not consummated within 120 days after the ROFR Non-Selling Members election not to, or
failure to elect to, purchase the ROFR Interests, then such Transfer shall be null and void ab
initio and the ROFR Seller must again satisfy all of the requirements of this Section 13.5.
(d) Upon consummation of any Transfer of Membership Interests in accordance with this
Section 13.5 (whether to a Member or any other Person) and compliance with Section
13.12, such Transferee and all of its Membership Interests shall automatically become a party
to and be bound by this Agreement and shall thereafter have all of the rights and obligations of a
Member hereunder. Notwithstanding the foregoing, all Transfers pursuant to this Section
13.5 must also comply with and be governed by this Agreement, including any restrictions on
transfers herein and on any Transferee becoming a Substituted Member.
(e) In connection with the ROFR Non-Selling Members decision regarding whether to exercise
the option to purchase the ROFR Interests as described herein, the ROFR Non-Selling Members may
elect to engage (or, in the case of a proposed Transfer pursuant to Section 13.6(a) or
Section 13.7, the Non-Selling Members and the ROFR Seller shall engage) a Valuation Firm to
determine the current Fair Market Value of the ROFR Interests. If the proposed Transfer is
pursuant to Section 13.6(a) or Section 13.7, then the ROFR Non-Selling Members and the ROFR Seller shall enter into
good faith discussions to jointly select a Valuation Firm. If the ROFR Non-Selling Members and the
ROFR Seller are unable to agree on the selection of a Valuation Firm within 10 days after
delivery of the ROFR Notice, then (x) the ROFR Non-Selling Members, on one hand, and the ROFR
Seller, on the other hand, shall each select a Valuation Firm to advise them in connection with
such valuation within 15 days after the delivery of the ROFR Notice, and (y) the Valuation Firms
selected by the ROFR Non-Selling Members and the ROFR Seller, respectively, shall agree on and
select a third Valuation Firm within 20 days after the delivery of the ROFR Notice, which Valuation
Firm shall be the Valuation Firm for the purposes of this Section 13.5(e). The Valuation
Firm that is selected in accordance with procedures set forth in this Section 13.5(e) shall
then, within 10 days of its selection, determine in good faith the then current Fair Market Value
in cash of the ROFR Interests and prepare and deliver to each Member a report stating such Fair
Market Value and including a summary of the assumptions and basis for such determination. The cost
of such report shall be borne by the Company. Notwithstanding anything in this Section 13.5 to the
contrary, if a Valuation Firm is engaged pursuant to this Section 13.5(e), the ROFR Option
Period shall be extended by a number of days equal to the total number of days in the period
starting from the delivery of the ROFR Notice and ending on the date on which the Members receive
the Valuation Firm report.
SECTION 13.6 Pledge or Other Encumbrance. A Member (the Encumbering Member) may
pledge or mortgage all or a portion of its Membership Interests; provided, however, that if a
creditor or trustee-in-bankruptcy forecloses on all or any portion of the Membership Interests of
an Encumbering Member by a legal or equitable proceeding, such
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Encumbering Member shall be obligated to notify the other Members in writing (and such notice shall
be the ROFR Notice) and the foreclosure shall be deemed to be a proposed Transfer of all such
Interests. Such Interests shall be deemed ROFR Interests offered to the other Members under
Section 13.5 at a price equal to the Fair Market Value of such Interests, and if such offer
is accepted pursuant to Section 13.5, then such Encumbering Member shall be obligated to
Transfer such Membership Interests in accordance with Section 13.5 and this Section
13.6.
SECTION 13.7 Change in Control. If a Member (a) undergoes a Change in Control
(provided, however, that in the case of a Change of Control described in clause a(ii), a(iii),
(b)(ii), (b)(iii), (c)(ii) or (c)(iii) of the definition thereof, this provision shall be triggered
thereby only if such Change of Control occurs prior to the second anniversary of the Initial
Closing Date), (b) is dissolved and wound up, or (c) becomes insolvent or files for bankruptcy, the
affected Member shall be obligated to notify the other Members in writing (and such notice shall be
deemed to be the ROFR Notice) and all of the Subject Interests owned by such Member shall be deemed
to be the subject of a proposed Transfer and, therefore, ROFR Interests offered to other Members
under Section 13.5 at a price equal to the Fair Market Value of such Subject Interests, and
such affected Member shall be obligated to Transfer its Subject Interests in accordance with
Section 13.5 and this Section 13.7.
SECTION 13.8 Fair Market Value. Whenever the Fair Market Value of any Subject
Interests is determined as a result of a deemed Transfer under Sections 13.6 or
13.7, the Fair Market Value shall be determined as of the last day of the calendar month
immediately preceding the occurrence of such Encumbrance, foreclosure, Change in Control,
dissolution or bankruptcy, as applicable, that is deemed a Transfer (the Determination
Date); provided, however, that for purposes of determining the purchase price for the Subject
Interests, the Fair Market Value shall be reduced by any distributions made to the Transferring
Member attributable to the Subject Interests, and increased by any Capital Contributions made by
the Transferring Member attributable to the Subject Interests, occurring during the time period
between the Determination Date and the closing of the Transfer contemplated by Sections
13.6 and 13.7.
SECTION 13.9 Applicable Taxes. At the closing of the Transfer of a Membership
Interest pursuant to this Article XIII, the Transferee shall deliver to the Transferring
Member the full consideration agreed upon. Any membership interest transfer tax or similar taxes
involved in such sale shall be paid by the Transferring Member, and the Transferring Member shall
provide the Transferee with such evidence of the Transferring Members authority to Transfer
hereunder and such tax lien waivers and similar instruments as the Transferee may reasonably
request.
SECTION 13.10 Governmental Consents and Approvals. If the consent or approval of any
Governmental Entity is required with respect to any Transfer, the Transferee shall have a
reasonable amount of time (not to exceed 60 days from the latest date upon which such Transfer
could have otherwise been required to have been consummated in accordance with the terms of this
Agreement) (the Waiting Period) to obtain such consent or approval, and any applicable
deadline under this Agreement for consummation of such Transfer shall be extended by the amount of
the Waiting Period. All Members shall use all reasonable efforts to cooperate with the Transferee
attempting to obtain, and to assist such Transferee in timely obtaining, such consent
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or approval; provided, however, that no Member shall be required to incur any out-of-pocket costs
or additional liability in connection with such cooperation and assistance. After the expiration
of the Waiting Period, such Transferee shall be required to comply with the applicable provisions
of this Article XIII again prior to acquiring any Subject Interests.
SECTION 13.11 No Release. No Transfer of a Membership Interest shall affect a release
of the Transferring Member from any liabilities or obligations to the Company or the other Members
that accrued prior to the Transfer.
SECTION 13.12 Documentation; Validity of Transfer. The Company shall not recognize
for any purpose any purported Transfer of all or any part of a Members Subject Interests unless
and until the applicable provisions of this Article XIII have been satisfied and the
Company has received a document (the Transfer Document), in a form acceptable to the
Company, executed by both the Transferring Member (or, if the Transfer is on account of the death,
incapacity, or liquidation of the Member, its representative) and the potential Transferee. Such
Transfer Document shall (a) include the notice address of the potential Transferee and such
Persons agreement to be bound
by this Agreement with respect to the Subject Interests or part thereof being obtained, (b)
set forth the Subject Interests, after giving effect to the Transfer, of the Transferring Member
and the Person to which the Subject Interests or part thereof is Transferred (which together must
total the Subject Interests of the Transferring Member before the Transfer), (c) contain a
representation and warranty that the Transfer was made in accordance with all Laws (including state
and federal securities Laws) and the terms and conditions of this Agreement, (d) include a legally
binding agreement of the Transferee to be bound by this Agreement from and after the date such
Transferee becomes a Member and (e) if the Person to which the Subject Interests or part thereof is
Transferred is to be admitted to the Company as a Substituted Member, such Transferees
representation and warranty that the representations and warranties in Section 15.12 are true and
correct with respect to such Person. Each Transfer and, if applicable, admission complying with
the provisions of this Article XIII is effective against the Company as of the business day
that (x) the Company receives the Transfer Document and (y) the other requirements of this
Article XIII have been met.
SECTION 13.13 Possible Additional Restrictions on Transfer. Notwithstanding anything
in this Agreement to the contrary, in the event of (a) the enactment (or imminent enactment) of any
legislation, (b) the publication of any temporary or final Treasury Regulation, (c) any ruling by
the Internal Revenue Service or (d) any judicial decision that, in any case, in the opinion of
counsel to the Company, would result in the taxation of the Company for federal income tax purposes
as a corporation or otherwise subject the Company to being taxed as an entity for federal income
tax purposes, this Agreement shall be deemed to impose such restrictions on the Transfer of Subject
Interests as may be required, in the opinion of counsel to the Company, to prevent the Company from
being taxed as a corporation or otherwise being taxed as an entity for federal income tax purposes,
and the Members thereafter shall amend this Agreement as necessary or appropriate to impose such
restrictions.
SECTION 13.14 Additional Members; Substituted Members.
(a) Except as otherwise provided in this Agreement, additional Persons, including Transferees, may
be admitted to the Company as Members or Substituted Members as
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provided under the terms of this Section 13.14. Any admission of an additional Member
(including a new Member for new value provided to the Company) involving the issuance of additional
Membership Interests requires the Unanimous Consent of the Members. Any Transferee with respect to
a Transfer of Membership Interests made in accordance with Sections 13.3, 13.4 or
13.5 shall be admitted automatically as a Substitute Member upon compliance with Sections
13.12, 13.1, 13.2 and 13.3 and Section 13.4 or 13.5
with respect to such Transfer, but without the consent or approval of any other Person; provided,
however, that any Transferee that is not already a Member at the time of the Transfer and acquires
Membership Interests by foreclosure shall not be admitted as a Substituted Member without the
Unanimous Consent of the Members.
(b) If the admission of any new Member (other than a Substituted Member) pursuant to this
Section 13.14 occurs, the Membership Interests of all Members will be reduced in accordance
with their Membership Interests prior to giving effect to such admission.
(c) Upon becoming a Substituted Member, (i) such Substituted Member shall have all of the
powers, rights, privileges, duties, obligations and liabilities of a Member, except as otherwise
provided in this Agreement, to the extent of the Transferred Membership Interests and (ii) the
Transferring Member shall be relieved of all of obligations and liabilities with respect to such
Transferred Membership Interests; provided, however, that any Transferee that is not already a
Member at the time of the Transfer and acquires Membership Interests by foreclosure shall not be
admitted as a Substituted Member without the Unanimous Consent of the Members.
(d) The Members acknowledge that the relationship of each Member to the other Members is a
personal relationship and that the restrictions on the power of each Member to Transfer its
Membership Interests, and the remedies with respect thereto, that are set forth herein (i) are
necessary to preserve such personal relationship and safeguard the investment of the other Members
in the Company, (ii) were a material inducement to the other Members entering into this Agreement,
and (iii) shall be enforceable notwithstanding the bankruptcy of any Member or any applicable
prohibition against restraints on alienation.
(e) Unless and until admitted as a Substitute Member, a transferee of a Membership Interest
shall be an assignee with respect to the Transferred Membership Interest and shall not be entitled
to participate in the management of the business and affairs of the Company or to become, or to
exercise the rights of, a Member, including the right to appoint Directors or Management Council
Members, the right to vote, the right to require any information or accounting of the Companys
business, the rights under Section 13.4 or 13.5, or the right to inspect the
Companys books and records; provided, however, that the transferee shall be entitled to the rights
of a Member set forth in Section 15.10 and to the share of Net Income, Net Losses,
distributions and other economic benefits attributable to the Membership Interest Transferred to
such transferee.
SECTION 13.15 Withdrawal. No Member shall have the right to resign or otherwise
withdraw from the Company as a Member.
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ARTICLE XIV
MERGER, CONSOLIDATION OR CONVERSION
SECTION 14.1 Authority. Subject to Section 4.7 and except for the
transactions contemplated in Section 15.21 (which shall not be governed by this Article
XIV), the Company may merge, consolidate with or convert to one or more corporations, limited
liability companies, statutory trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a partnership (whether general or limited (including
a limited liability partnership)) or convert into any such entity, whether such entity is formed
under the laws of the State of Delaware or any other state of the United States of America,
pursuant to a written agreement of merger or consolidation (Merger Agreement) or a
written plan of conversion (Plan of Conversion), as the case may be, in accordance with this
Article XIV.
SECTION 14.2 Procedure for Merger, Consolidation or Conversion.
(a) Merger, consolidation or conversion of the Company pursuant to this Article XIV
requires the prior consent of the Management Council. Upon such approval, the Merger Agreement
shall set forth:
(i) The names and jurisdictions of formation or organization of each of the business entities
proposing to merge, consolidate or convert;
(ii) The name and jurisdiction of formation or organization of the business entity that is to
survive the proposed merger or consolidation (Surviving Business Entity);
(iii) The terms and conditions of the proposed merger or consolidation;
(iv) The manner and basis of exchanging or converting the equity securities of each
constituent business entity for, or into, cash, property or general or limited partnership or
limited liability company interests, rights, securities or obligations of the Surviving Business
Entity; and (x) if any general or limited partnership or limited liability company interests,
rights, securities or obligations of any constituent business entity are not to be exchanged or
converted solely for, or into, cash, property or general or limited partnership or limited
liability company interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partnership or limited liability company interests,
rights, securities or obligations of any general or limited partnership, limited liability company,
corporation, trust or other entity (other than the Surviving Business Entity) which the holders of
such interests, rights, securities or obligations of the constituent business entity are to receive
in exchange for, or upon conversion of, their interests, rights, securities or obligations and (y)
in the case of securities represented by certificates, upon the surrender of such certificates,
which cash, property or general or limited partnership or limited liability company interests,
rights, securities or obligations of the Surviving Business Entity or any general or limited
partnership, limited liability company, corporation, trust or other entity (other than the
Surviving Business Entity), or evidences thereof, are to be delivered;
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(v) A statement of any changes in the constituent documents or the adoption of new constituent
documents (the articles or certificate of incorporation, articles of trust, declaration of trust,
certificate or agreement of limited partnership or limited liability company or other similar
charter or governing document) of the Surviving Business Entity to be effected by such merger or
consolidation;
(vi) The effective time of the merger or consolidation, which may be the date of the filing of
the certificate of merger pursuant to Section 14.4 or a later date specified in or
determinable in accordance with the Merger Agreement (provided, that if the effective time of the
merger or consolidation is to be later than the date of the filing of the certificate of merger or
consolidation, the effective time shall be fixed no later than the time of the filing of the
certificate of merger or consolidation and stated therein); and
(vii) Such other provisions with respect to the proposed merger or consolidation as are deemed
necessary or appropriate by the Management Council.
(viii) If the Management Council approves the conversion, the Management Council may approve
and adopt a Plan of Conversion containing such terms and conditions that the Management Council
determine to be necessary or appropriate.
SECTION 14.3 Approval by Members of Merger or Consolidation.
(a) Except as provided in Section 14.3(d), the Management Council, upon its approval
of the Merger Agreement or Plan of Conversion, as the case may be, shall direct that the Merger
Agreement or the Plan of Conversion, as applicable, be submitted to a vote of the Members, whether
at a special meeting or by written consent, in either case in accordance with the requirements of
member approval provisions of this Agreement. A copy or a summary of the Merger Agreement or the
Plan of Conversion, as applicable, shall be included in or enclosed with the notice of a special
meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement or the Plan of
Conversion, as applicable, shall be approved upon receiving the affirmative vote or consent of the
Super-Majority Interest.
(c) Except as provided in Section 14.3(d), after such approval by vote or consent of
the Members, and at any time prior to the filing of the certificate of merger or a certificate of
conversion pursuant to Section 14.4, the merger, consolidation or conversion may be
abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement or the Plan of
Conversion, as the case may be.
(d) Notwithstanding anything else contained in this Article XIV or in this Agreement,
the Management Council is permitted without Member approval, to convert the Company into a new
limited liability entity, to merge the Company into, or convey all of the Companys assets to,
another limited liability entity which shall be newly formed and shall have no assets, liabilities
or operations at the time of such conversion, merger or conveyance other than those it receives
from the Company if (i) the Management Council has received an Opinion of Counsel that the merger
or
conveyance, as the case may be, would not result in the loss of the limited liability of any
Member or cause the Company to be treated as an association taxable as a
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corporation or otherwise to be taxed as an entity for federal income tax purposes
(to the extent not previously treated as such), (ii) the sole purpose of such conversion, merger or
conveyance is to effect a mere change in the legal form of the Company into another limited
liability entity and (iii) the governing instruments of the new entity provide the Members and the
Management Council with the same rights and obligations as are herein contained.
(e) Additionally, notwithstanding anything else contained in this Article XIV or in
this Agreement, the Management Council is permitted, without Member approval, to merge, consolidate
or convert the Company with or into another entity if (A) the Management Council has received an
Opinion of Counsel that the merger or consolidation, as the case may be, would not result in the
loss of the limited liability of any Member or cause the Company to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to
the extent not previously treated as such), (B) the merger or consolidation would not result in an
amendment to this Agreement, other than any amendments that could be adopted pursuant to
Section 15.10, (C) the Company is the Surviving Business Entity in such merger or
consolidation and (D) the Membership Interests outstanding immediately prior to the effective date
of the merger or consolidation are to be identical Membership Interests of the Company after the
effective date of the merger or consolidation.
SECTION 14.4 Certificate of Merger or Conversion.
(a) Upon the required approval, if any, by the Management Council and the Members of a Merger
Agreement or a Plan of Conversion, as the case may be, a certificate of merger or certificate of
conversion, as applicable, shall be executed and filed with the Secretary of State of the State of
Delaware in conformity with the requirements of the Delaware Act.
(b) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business entities that has merged
or consolidated, and all property, real, personal and mixed, and all debts due to any of those
business entities and all other things and causes of action belonging to each of those business
entities, shall be vested in the Surviving Business Entity and after the merger or consolidation
shall be the property of the Surviving Business Entity to the extent they were of each constituent
business entity;
(ii) the title to any real property vested by deed or otherwise in any of those constituent
business entities shall not revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security interests in property of any of
those constituent business entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity and may be enforced against it to the
same extent as if the debts, liabilities and duties had been incurred or contracted by it.
(c) At the effective time of the certificate of conversion:
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(i) the Company shall continue to exist, without interruption, but in the organizational
form of the converted entity rather than in its prior organizational form;
(ii) all rights, title, and interests to all real estate and other property owned by the
Company shall continue to be owned by the converted entity in its new organizational form without
reversion or impairment, without further act or deed, and without any transfer or assignment having
occurred, but subject to any existing liens or other encumbrances thereon;
(iii) all liabilities and obligations of the Company shall continue to be liabilities and
obligations of the converted entity in its new organizational form without impairment or
diminution by reason of the conversion;
(iv) all rights of creditors or other parties with respect to or against the prior interest
holders or other owners of the Company in their capacities as such in existence as of the effective
time of the conversion will continue in existence as to those liabilities and obligations and may
be pursued by such creditors and obligees as if the conversion did not occur;
(v) a proceeding pending by or against the Company or by or against any of Members in their
capacities as such may be continued by or against the converted entity in its new organizational
form and by or against the prior members without any need for substitution of parties; and
(vi) the Membership Interests that are to be converted into partnership interests, shares,
evidences of ownership, or other securities in the converted entity as provided in the Plan of
Conversion or certificate of conversion shall be so converted, and Members shall be entitled only
to the rights provided in the Plan of Conversion or certificate of conversion.
SECTION 14.5 No Transfer or Assignment. A merger, consolidation or conversion
effected pursuant to this Article shall not be deemed to result in a Transfer or assignment of
assets or liabilities from one entity to another.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Accounts. The officers of the Company shall establish and maintain one
or more separate bank and investment accounts and arrangements for Company funds in the Companys
name with financial institutions and firms that the
Board may determine. The Company may not commingle the Companys funds with the funds of any
other Person. All such accounts shall be and remain the property of the Company and all funds
shall be received, held and disbursed for the purposes specified in this Agreement. The officers
of the Company may invest the Company funds only in (i) readily marketable securities issued by the
United States or any agency or instrumentality thereof and backed by the full faith and credit of
the United States maturing within three months or less from the date of acquisition, (ii) readily
marketable securities issued by any state or municipality within the United States or any political
subdivision, agency or instrumentality thereof, maturing within three months or less from the date
of acquisition and rated A or better by any recognized rating agency, (iii) readily
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marketable commercial paper rated Prime 1 by Moodys or A-1 by Standard and
Poors (or comparably rated by such organizations or any successors thereto if the rating system is
changed or there are such successors) and maturing in not more than three months after the date of
acquisition or (iv) certificates of deposit or time deposits issued by any incorporated bank
organized and doing business under the Laws of the United States which is rated at least A or
A2 by Standard and Poors or Moodys, which is not in excess of federally insured amounts, and
which matures within three months or less from the date of acquisition.
SECTION 15.2 Equitable Relief. The Members hereby confirm that damages at Law may be
an inadequate remedy for a breach or threatened breach of Section 8.3, 11.1(c),
13.1, 13.2, 13.4, 13.5, 13.6, 13.7, 13.15,
15.4, 15.6, 15.14, 15.20, 15.21, or 15.22 (as it
relates to the obligations of the Members under the foregoing provisions) of this Agreement and
agree that, in the event of a breach or threatened breach of any such provision, the respective
rights and obligations hereunder shall be enforceable by specific performance, injunction or other
equitable remedy. The mention herein of any particular remedy shall not preclude a Member from any
other remedy it or he might have, either in Law or in equity.
SECTION 15.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware. In particular, the Company is formed pursuant
to the Act, and the rights and liabilities of the Members shall be as provided therein, except as
herein otherwise expressly provided.
SECTION 15.4 Dispute Resolution.
(a) Settlement by Negotiation. Subject to Section 8.1, 8.2 and 8.3,
the Members agree that any dispute or controversy arising under or relating to this Agreement shall
be resolved pursuant to the provisions of this Section 15.4. As used in this Section
15.4, the term Dispute Party shall mean a Member that is a party to the dispute. If
a controversy of claim arises under this Agreement, the Dispute Party invoking these procedures
(the Initiating Dispute Party) may request for the other Dispute Party or Dispute Parties
(the Responding Dispute Party) to refer such dispute to the Authorized Representatives as
provided in Section 15.4(b).
(b) Settlement by Authorization. If the Initiating Dispute Party makes
a request pursuant to Section 15.4(a), or upon the request of the Responding Dispute
Party, then each Dispute Party shall refer the matter to the Dispute Partys most senior executive
officer having direct responsibility for that Dispute Partys business unit and who shall have
authority to settle the dispute (the Authorized Representative). Thereupon, the Dispute
Parties shall promptly prepare and exchange memoranda (not exceeding 20 pages in length exclusive
of attachments) stating the issues in dispute and their positions, summarizing the negotiations
that have taken place, and attaching all directly relevant documents. The Authorized
Representatives will meet for negotiations within 20 Business Days after the request for such
negotiations referred to above at a mutually agreeable time. The meeting shall be held at the
principal office of the Company.
(c) Settlement by Arbitration. If the matter has not been resolved pursuant to the procedure
set forth in Section 15.4(b) within 30 Business Days of the commencement of such procedure
(which period may be extended or shortened by mutual agreement of the Dispute
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Parties), the controversy shall be settled by arbitration in accordance with the procedures set
forth in Section 15.4(d). The Dispute Parties shall meet within ten Business Days of the
commencement of the arbitration procedures by any Dispute Party and agree on three arbitrators to
act as the arbitration panel on such matters. If the Dispute Parties are unable to agree at such a
meeting to all three arbitrators, the panel will be appointed in the following manner. For
disputes involving two Dispute Parties, each Dispute Party shall within two Business Days appoint
one arbitrator, and within five Business Days of such appointment, said arbitrators shall appoint a
third arbitrator. For disputes involving more than two Dispute Parties, the panel will be
appointed in accordance with the Rules, as defined in this Section 15.4. No arbitrator
shall be a stockholder of any arbitrating Dispute Party or of any of their parent, subsidiary or
affiliated companies, nor shall any arbitrator have been employed by, or performed services for,
any of the foregoing companies within the preceding five years, nor shall the arbitrators have any
personal or financial stake in the outcome of the resolution of the disputes.
(d) Arbitration Procedures. The arbitration will be governed by the Commercial Arbitration
Rules of the American Arbitration Association (the Rules) and administered by the
American Arbitration Association. The determination by the arbitrators shall be final and binding
upon the Parties. The arbitrators shall be instructed to render their decision as soon as
practical after the submission of proposed resolutions by the Dispute Parties (and in no event
later than 60 days thereafter). The judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof, and the Dispute Parties consent to the
jurisdiction of any state or federal court in Delaware.
(e) Location and Costs. The seat of the arbitration shall be in New York, New York. The
arbitral decision shall include findings of fact, conclusions of law, and a final resolution of the
matters submitted for arbitration. Each Dispute Party shall
bear its own costs (including its own attorney and expert witness fees). The arbitrators
shall equitably apportion the fees and expenses of the arbitrators and other jointly incurred costs
(including costs of administration) between the Disputing Parties, taking into account the conduct
of the Disputing Parties during the arbitration and the extent to which each of them provided in
the arbitration. In no event shall the arbitrators have authority to award punitive damages,
exemplary damages or compensation for business interruption, loss of profits, loss of opportunity
or opportunity costs.
(f) Injunctive Relief. The arbitrators shall also have the power to enter such interim orders
as it deems necessary, including, without limitation, orders to preserve the subject matter of the
dispute or to preserve or adjust the status of the Parties pending resolution of the dispute in
arbitration. The Parties agree to accept and honor any interim orders and agree that any such
interim orders may be enforced as necessary in any court having relevant jurisdiction.
(g) Performance During Dispute. During the pendency of any dispute, the Dispute Parties shall
continue to perform their respective obligations under this Agreement.
SECTION 15.5 Successors and Assigns. Except as otherwise provided herein, this
Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, their
respective successors and permitted assigns.
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SECTION 15.6 Information.
(a) In addition to the other rights specifically set forth in this Agreement but subject to
the FERC Standards of Conduct, the Market Manipulation Rules and the CFTC Market Rules, each Member
is entitled to all information to which that Member is entitled to have access pursuant to the Act
under the circumstances and subject to the conditions therein stated.
(b) The Members acknowledge that, from time to time, they may receive information from or
regarding the Company or its Subsidiaries, the Companys customers or any other Member or its
Affiliates in the nature of trade secrets or secret or proprietary information or information that
is otherwise confidential, the release of which may be damaging to the Company, its Subsidiaries or
the Member or its Affiliates, as applicable, or Persons with which they do business (such
information referred to herein as Confidential Information). Without limiting the right
of any Member to use for its own purposes any Confidential Information that does not constitute
Company Evaluation Materials, each Member shall hold in strict confidence any Confidential
Information it receives and may not disclose Confidential Information to any Person other than
another Member, except for disclosures (i) to comply with any Laws (including applicable stock
exchange or quotation system requirements), (ii) to Affiliates, officers, directors, employees,
agents, advisers or representatives of the Member or Persons to which that
Members Membership Interest may be Transferred as permitted by this Agreement, but only if
the recipients of such information have agreed to be bound by the provisions of this Section
15.6(b), (iii) of information that a Member also has received from a source independent of the
Company and that such Member reasonably believes such source obtained without breach of any
obligation of confidentiality, (iv) of information obtained prior to the formation of the Company;
provided, however, that this clause (iv) shall not relieve any Member or any of its Affiliates from
any obligations it may have to any other Member or any of its Affiliates under any existing
confidentiality agreement, (v) to lenders, attorneys, accountants and other representatives of the
disclosing Member with a need to know such information (including a need to know for the Members
own purposes), provided, however, that the disclosing Member shall be responsible for such
representatives use and disclosure of any such information, (vi) of public information or (vii) in
connection with any proposed Transfer of all or part of a Membership Interest of a Member or the
proposed sale of all or substantially all of a Member or its direct or indirect parent, to advisers
or representatives of the Member, its direct or indirect parent or Persons to which such interest
may be Transferred as permitted by this Agreement, but only if the recipients of such information
have agreed in writing to be bound by confidentiality provisions that are no less stringent than
those set forth in this Section 15.6(b).
(c) The Members acknowledge that, from time to time, the Company may need information from any
or all of such Members for various reasons, including for complying with various federal and state
regulations. Each Member shall provide to the Company all information reasonably requested by the
Company for purposes of complying with federal or state regulations or for purposes of providing
information to federal or state regulatory authorities in connection with tariff rate regulation,
in each case within a reasonable amount of time from the date such Member receives such request;
provided, however, that no Member shall be obligated to provide such information to the Company to
the extent such disclosure (i) could reasonably be expected to result in (A) the breach or
violation of any contractual obligation (if a
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waiver of such restriction cannot reasonably be obtained) or Law or (B) the loss
of attorney-client or other privilege or (ii) involves secret, confidential or proprietary
information; provided, however, that in the alternative, any Member may provide such information
directly to such federal or state regulatory authorities.
SECTION 15.7 Notices. Whenever notice is required or permitted by this Agreement to
be given, such notice shall be in writing. Such notice shall be given to any Member at its address
or facsimile number shown in the Companys books and records (including Exhibit A attached hereto).
Each such notice shall be effective (a) if given by facsimile, upon confirmation of receipt, (b)
if given by overnight courier, the next Business Day and (c) if given by any other means, when
delivered to and receipted for at the address of such Member specified as aforesaid.
SECTION 15.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single instrument.
SECTION 15.9 Entire Agreement. This Agreement (including the Exhibits and Schedules
hereto) embodies the entire agreement and understanding of the Parties hereto in respect of the
subject matter contained herein and therein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or referred to herein
or therein. This Agreement supersedes all prior agreements and understandings between the Parties
with respect to the subject matter hereof.
SECTION 15.10 Amendments. Except as contemplated in Section 15.21, any
amendment to this Agreement must be in writing and be approved by the Unanimous Consent of the
Members, except that the consent of any transferee of a Membership Interest that has not been
admitted as a Substitute Member shall be required only for (a) any amendment to this Section
15.10, (b) any amendment that would change such transferees share of Net Income, Net Losses,
distributions or other economic benefits (except an amendment due to the admission or substitution
of a Member and (c) any amendment that would require such transferee to make any additional Capital
Contributions to the Company. Any amendment to this Agreement shall be in writing and signed by
all the Members.
SECTION 15.11 Headings and Section Titles. Headings and section titles are for
descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth
in the text hereof.
SECTION 15.12 Representations and Warranties. Each Member represents, warrants and
covenants to each other Member and to the Company, as of the date hereof, that:
(a) such Member is a corporation, limited partnership or limited liability company duly
organized or formed, validly existing and in good standing under the Law of the jurisdiction of its
organization or formation;
(b) such Member has all requisite legal power and authority to execute, deliver and perform
this Agreement;
(c) this Agreement has been duly executed and delivered by such Member and constitutes the
legal, valid and binding obligation of such Member enforceable in accordance
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with its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization moratorium or other Laws of general application affecting enforcement of
creditors rights and by principles of equity; and
(d) the execution of this Agreement will upon such delivery be, duly and validly authorized
by all requisite action, and no other proceeding on the part of such Member is necessary to
authorize the execution, delivery or performance hereof;
SECTION 15.13 No Creation of State Law Partnership. Except for federal and state tax
purposes, and only for such purposes, the Members intend that the Company not
be treated as or construed as a partnership, including a limited partnership, joint venture,
or general partnership, and that no Member be considered to be a partner or joint venturer of any
other Member, and this Agreement is not to be otherwise construed. It is further the intention of
the Members that the debts, obligations, and liabilities of the Company, whether arising in
contract, tort, or otherwise, are solely the debts, obligations and liabilities of the Company; and
that no Member is personally obligated for a debt, obligation, or liability of the Company solely
by reason of being a Member.
SECTION 15.14 Waiver of Partition. Each of the Members hereby irrevocably waive any
rights such Member may have under any applicable Law to partition.
SECTION 15.15 No Third Party Beneficiaries. Except for the beneficiaries of the
indemnification provided herein, this Agreement does not create any rights, claims or benefits
inuring to any Person that is not a Party hereto nor create or establish any third party
beneficiary hereto.
SECTION 15.16 Further Assurances. Subject to the terms and conditions set forth in
this Agreement, each of the Parties agrees to use all reasonable efforts to take, or to cause to be
taken, all actions, and to do, or to cause to be done, all things necessary, proper or advisable
under Laws and regulations to consummate and make effective the transactions contemplated by this
Agreement. In case, at any time after the execution of this Agreement, any further action is
necessary or desirable to carry out its purposes, the proper officers or Directors of the Parties
shall take or cause to be taken all such necessary action.
SECTION 15.17 Notice to Members of Provisions of this Agreement. By executing this
Agreement, each Member acknowledges that it has actual notice of all of the provisions of this
Agreement. Each Member hereby agrees that this Agreement constitutes adequate notice of all such
provisions.
SECTION 15.18 Attendance via Communications Equipment. Unless otherwise restricted by
Law or this Agreement, the Members, Board, committees or Management Council may hold meetings by
means of telephone conference or other communications equipment by means of which all Persons
participating in the meeting can effectively communicate with each other. Such participation in a
meeting shall constitute presence in person at the meeting, except where a Person participates in
the meeting for the express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
SECTION 15.19 Checks, Notes and Contracts. Checks and other orders for the payment of
money shall be signed by such Person or Persons as the Board shall from time to time by
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resolution determine. Contracts and other instruments or documents may be signed
in the name of the Company by any Person or Persons as the Board shall from time to time by
resolution determine authorized to sign such contract, instrument or document by the Company, and
such authority may be general or confined to specific instances. Checks and other orders for the
payment of money made payable to the
Company may be endorsed for deposit to the credit of the Company, with a depositary authorized by
resolution of the Board, by the Chief Financial Officer or such other Persons as the Board may from
time to time by resolution determine.
SECTION 15.20 Member Trademarks. Neither the Company nor any Member shall be
permitted to use any trademark owned by any other Member or its Affiliates without the express
written consent of such Member or its Affiliate or as otherwise required by Law.
SECTION 15.21 Preparation of the IPO Registration Statement; Qualifying IPO; Conversion to
Limited Partnership. As promptly as practicable following the Effective Date but in any event
no later than 180 days after the Effective Date, the Company shall prepare and file with the SEC
the IPO Registration Statement and the Company shall use all reasonable efforts to have the IPO
Registration Statement declared effective under the Securities Act as promptly as practicable after
such filing. The Company shall use all reasonable efforts to respond as promptly as practicable to
any comments from the SEC with respect to the IPO Registration Statement. Notwithstanding the
foregoing, prior to filing the IPO Registration Statement (or any amendment or supplement thereto)
or responding to any comments of the SEC with respect thereto, the Company (i) shall provide each
of the Members an opportunity to review and comment on such document or response (including the
proposed final version of such document or response) and (ii) shall include in such document or
response all comments reasonably proposed by the other. The Company shall advise each of the
Members, promptly after receipt of notice thereof, of the time of effectiveness of the IPO
Registration Statement, the issuance of any stop order relating thereto or the suspension of the
qualification of MLP Common Units for offering or sale in any jurisdiction, and the Company shall
use all reasonable efforts to have any such stop order or suspension lifted, reversed or otherwise
terminated. The Company shall take any other reasonable action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified) required to be taken under the
Securities Act, the Exchange Act, any applicable state securities or blue sky laws and the rules
and regulations thereunder in connection with the issuance of the MLP Common Units.
(a) OGE Sub shall use all reasonable efforts to cause to be delivered to ETP such letters of
Ernst & Young LLP, OGEs independent public accountants, in each case addressed to ETP Sub, in form
and substance reasonably satisfactory to ETP Sub and customary in scope and substance, as are
customarily obtained from independent public accountants in connection with registration statements
similar to the IPO Registration Statement.
(b) ETP Sub shall use all reasonable efforts to cause to be delivered to OGE Sub such letters
of Grant Thornton LLP, ETPs independent public accountants, in each case addressed to OGE Sub, in
form and substance reasonably satisfactory to OGE Sub and customary in scope and substance, as are
customarily obtained from independent public accountants in connection with registration statements
similar to the IPO Registration Statement.
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(c) Upon the declaration of effectiveness of the IPO Registration Statement, the Company shall
use all reasonable efforts to cause the initial public offering of the MLP Common Units on a firm
commitment basis and on the terms set forth on Annex II hereto (a
Qualifying IPO) to be
consummated.
(d) The Management Council shall select promptly after the Effective Date the managing
underwriters for the Qualifying IPO, as well as any other vendor or service provider in connection
with the Qualifying IPO; provided, however, that the parties acknowledge that under the terms of
their respective engagement letters with OGE and ETP, each of UBS Securities LLC and Credit Suisse
Securities (USA) LLC may have certain rights with respect to being a managing underwriter in
connection with the Qualifying IPO.
(e) In connection with the Qualifying IPO, the Company shall enter into an underwriting
agreement in customary form and take all such other action, if any, as the managing underwriter
shall reasonably request in order to facilitate the Qualifying IPO.
(f) In connection with the Qualifying IPO, the Company shall (i) make reasonably available for
inspection by the managing underwriter and any attorney, accountant or other agent retained by the
managing underwriter all relevant financial and other records, pertinent corporate documents and
properties of the Company and its Subsidiaries and (ii) cause the Companys officers, directors,
employees, accountants and auditors to supply all relevant information reasonably requested by the
managing underwriter and any attorney, accountant or other agent retained by the managing
underwriter in each case, as shall be reasonably necessary to enable such persons, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however,
that the foregoing inspection and information gathering shall be subject to any confidentiality
procedures reasonably instituted by the Company.
(g) In connection with the Qualifying IPO, the Company shall use reasonable efforts to cause
(i) its counsel to deliver to the managing underwriter signed opinions in the forms reasonably
acceptable to the managing underwriter and (ii) its independent public accountants to deliver to
the managing underwriter a comfort letter, in customary form, meeting the requirements as to the
substance thereof as reasonably set forth by the managing underwriter.
(h) Immediately prior to consummation of the Qualifying IPO, the Members shall cause the
following transactions to occur:
(i) OGE Sub and ETP Sub shall execute a limited liability company agreement substantially in
the form attached as Exhibit F to the Contribution Agreement and form a Delaware limited liability
company (the General Partner) to which each of OGE Sub and ETP Sub shall contribute a
portion of its Membership Interest equal to (A) 50% of the general partner interest in the MLP, (B)
50% of the MLP Common Units to be held by the General Partner and (C) 50% of the MLP Subordinated
Units to be held by the General Partner, all as determined pursuant to Section
15.21(h)(ii)(B) in exchange for a 50% membership interest in the General Partner.
(ii) OGE Sub and ETP Sub shall convert the Company into the MLP in accordance with the Act and
the Delaware Uniform Limited Partnership Act, as amended, and
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pursuant to a limited partnership agreement substantially in the form attached as
Exhibit G to the Contribution Agreement, and in connection with such conversion:
(A) the Membership Interest held by the Members shall be converted into a number of MLP
Common Units and MLP Subordinated Units to be determined by the vote of a Super-Majority Interest,
which MLP Common Units and MLP Subordinated Units will be allocated in proportion to Members
respective Membership Interests;
(B) the Membership Interest held by the General Partner shall be converted into a 2% general
partner interest in the MLP and the Incentive Distribution Rights, as well as a number of MLP
Common Units and MLP Subordinated Units to be determined by the vote of a Super-Majority
Interest; and
(C) the MLP, OGE and ETP will enter into a registration rights agreement substantially in the
form attached as Exhibit E to the Contribution Agreement.
(i) Each of OGE Sub and ETP Sub agree to use all reasonable efforts to cause the Company to
take all of the actions set forth in this Section 15.21 and to provide all information
regarding itself and its Affiliates that is necessary to prepare and file the IPO Registration
Statement (or any amendment or supplement thereto) or respond to any comments of the SEC with
respect thereto.
SECTION 15.22 Execution by OGE and ETP. OGE is executing this Agreement solely for the
purpose of guaranteeing, and OGE does hereby guarantee, the full performance of each obligation
hereunder by any Member that is a Subsidiary of OGE. ETP is executing this Agreement solely for
the purpose of guaranteeing, and ETP does hereby guarantee, the full performance of each obligation
hereunder by any Member that is a Subsidiary of ETP.
[Signature Page Follows; Remainder of page intentionally left blank]
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Exhibit A
IN WITNESS WHEREOF, the Parties have executed this Amended and Restated Limited Liability
Company Agreement as of the day and year first above written.
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OGE ENOGEX HOLDINGS LLC
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By: |
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Name: |
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Title: |
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[ETP GALAXY, LLC]
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By: |
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Name: |
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Title: |
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Executed for the purposes set forth in Section 15.22:
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OGE ENERGY CORP.
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By: |
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Name: |
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Title: |
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ENERGY TRANSFER PARTNERS, L.P.
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Energy Transfer Partners GP, L.P., its
general partner |
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By: |
Energy Transfer Partners, L.L.C.,
its general partner |
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By: |
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Name: |
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Title: |
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[Signature Page to Pre-IPO JV LLC Agreement]