Back to top

MEMBERSHIP INTEREST PURCHASE AGREEMENT

LLC Membership Agreement

MEMBERSHIP INTEREST PURCHASE AGREEMENT | Document Parties: American Property Investors, Inc | American Real Estate Partners, LP | Astral Gas Corp | BARBERRY CORP | Gascon Partners, Cigas Corp | HIGH COAST LIMITED PARTNERSHIP | Icahn Associates Corp | Little Meadow Corp | NEG Holding LLC You are currently viewing:
This LLC Membership Agreement involves

American Property Investors, Inc | American Real Estate Partners, LP | Astral Gas Corp | BARBERRY CORP | Gascon Partners, Cigas Corp | HIGH COAST LIMITED PARTNERSHIP | Icahn Associates Corp | Little Meadow Corp | NEG Holding LLC

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: MEMBERSHIP INTEREST PURCHASE AGREEMENT
Governing Law: New York     Date: 1/27/2005
Industry: Casinos and Gaming     Law Firm: Debevoise Plimpton LLP     Sector: Services

50 of the Top 250 law firms use our Products every day
 

EXHIBIT 99.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

Dated as of January 21, 2005

by and among

American Real Estate Partners, L.P., as Purchaser,

and

Gascon Partners, as Seller

 


 

Table of Contents

 

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

ARTICLE I

 

 

 

 

 

 

SALE OF MEMBERSHIP INTEREST AND CLOSING

 

 

 

 

 

 

 

 

 

 

 

1.1

 

Purchase and Sale

 

 

1

 

1.2

 

Purchase Price

 

 

1

 

1.3

 

Closing

 

 

2

 

1.4

 

Actions at the Closing

 

 

2

 

1.5

 

Tax Treatment

 

 

3

 

 

 

 

 

 

 

 

 

 

ARTICLE II

 

 

 

 

 

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

 

 

 

 

 

 

 

 

 

 

2.1

 

Organization of Seller

 

 

3

 

2.2

 

Partnership Authority

 

 

3

 

2.3

 

Title

 

 

3

 

2.4

 

No Conflicts

 

 

4

 

2.5

 

Consents and Approvals

 

 

4

 

2.6

 

Brokers

 

 

4

 

2.7

 

Accuracy of Statements

 

 

4

 

 

 

 

 

 

 

 

 

 

ARTICLE III

 

 

 

 

 

 

REPRESENTATIONS AND WARRANTIES OF SELLER RELATING TO THE COMPANY AND THE SUBSIDIAIRIES

 

 

 

 

 

 

 

 

 

 

 

3.1

 

Due Organization of Company and the Subsidiaries; Status

 

 

5

 

3.2

 

Capitalization

 

 

5

 

3.3

 

Subsidiaries

 

 

5

 

3.4

 

Financial Statements

 

 

6

 

3.5

 

No Adverse Effects or Changes

 

 

6

 

3.6

 

Title to Properties

 

 

6

 

3.7

 

Litigation

 

 

7

 

3.8

 

Claims Against Officers and Directors

 

 

7

 

3.9

 

Insurance

 

 

7

 

3.10

 

Compliance with Law

 

 

7

 

3.11

 

Undisclosed Liabilities

 

 

7

 

3.12

 

Related Parties

 

 

8

 

3.13

 

Intellectual Property

 

 

8

 

3.14

 

Environmental Matters

 

 

8

 

3.15

 

Employees, Labor Matters, etc.

 

 

9

 

3.16

 

Employee Benefit Plans

 

 

10

 

3.17

 

Real Property

 

 

11

 


 

 

 

 

 

 

 

 

 

 

 

 

Page

 

3.18

 

Tangible Personal Property

 

 

11

 

3.19

 

Contracts

 

 

11

 

3.20

 

Tax

 

 

12

 

3.21

 

Accuracy of Statements

 

 

13

 

3.22

 

Oil and Gas Properties

 

 

13

 

 

 

 

 

 

 

 

 

 

ARTICLE IV

 

 

 

 

 

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

 

 

 

 

 

 

 

 

 

 

4.1

 

Organization of Purchaser

 

 

14

 

4.2

 

Authority

 

 

14

 

4.3

 

No Conflicts

 

 

14

 

4.4

 

Capitalization

 

 

15

 

 

 

 

 

 

 

 

 

 

ARTICLE V

 

 

 

 

 

 

COVENANTS

 

 

 

 

 

 

 

 

 

 

 

5.1

 

Maintenance of Business Prior to Closing

 

 

15

 

5.2

 

Efforts to Consummate Transaction

 

 

16

 

 

 

 

 

 

 

 

 

 

ARTICLE VI

 

 

 

 

 

 

ASSIGNMENT AND ASSUMPTION

 

 

 

 

 

 

 

 

 

 

 

6.1

 

Assignment and Assumption

 

 

17

 

 

 

 

 

 

 

 

 

 

ARTICLE VII

 

 

 

 

 

 

CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER

 

 

 

 

 

 

 

 

 

 

 

7.1

 

Warranties True as of Both Present Date and Closing Date

 

 

18

 

7.2

 

Compliance by Seller

 

 

18

 

7.3

 

Seller’s Certificates

 

 

18

 

7.4

 

No Material Adverse Change

 

 

18

 

7.5

 

Actions or Proceedings

 

 

18

 

7.6

 

Reserve Reports

 

 

18

 

7.7

 

Registration Rights Agreement

 

 

18

 

 

 

 

 

 

 

 

 

 

ARTICLE VIII

 

 

 

 

 

 

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

 

 

 

 

 

 

 

 

 

 

 

8.1

 

Warranties True as of Both Present Date and Closing Date

 

 

18

 

8.2

 

Compliance by Purchaser

 

 

19

 

8.3

 

Purchaser’s Certificate

 

 

19

 

8.4

 

Consent of Required Lenders

 

 

19

 

ii 


 

 

 

 

 

 

 

 

 

 

 

 

Page

 

8.5

 

Actions or Proceedings

 

 

19

 

8.6

 

Approval

 

 

19

 

8.7

 

Registration Rights Agreement

 

 

19

 

8.8

 

Amendment to Limited Partnership Agreement

 

 

19

 

 

 

 

 

 

 

 

 

 

ARTICLE IX

 

 

 

 

 

 

TERMINATION

 

 

 

 

 

 

 

 

 

 

 

9.1

 

Termination

 

 

20

 

9.2

 

Effect of Termination

 

 

20

 

 

 

 

 

 

 

 

 

 

ARTICLE X

 

 

 

 

 

 

INDEMNIFICATION

 

 

 

 

 

 

 

 

 

 

 

10.1

 

Indemnification by Seller

 

 

20

 

10.2

 

Claims

 

 

20

 

10.3

 

Notice of Third Party Claims; Assumption of Defense

 

 

21

 

10.4

 

Settlement or Compromise

 

 

22

 

10.5

 

Failure of Indemnifying Person to Act

 

 

22

 

10.6

 

Tax Character

 

 

22

 

 

 

 

 

 

 

 

 

 

ARTICLE XI

 

 

 

 

 

 

DEFINITIONS

 

 

 

 

 

 

 

 

 

 

 

11.1

 

Defined Terms

 

 

22

 

 

 

 

 

 

 

 

 

 

ARTICLE XII

 

 

 

 

 

 

MISCELLANEOUS

 

 

 

 

 

 

 

 

 

 

 

12.1

 

Investigation

 

 

31

 

12.2

 

Survival of Representations and Warranties

 

 

31

 

12.3

 

Entire Agreement

 

 

31

 

12.4

 

Waiver

 

 

31

 

12.5

 

Amendment

 

 

31

 

12.6

 

No Third Party Beneficiary

 

 

31

 

12.7

 

Assignment; Binding Effect

 

 

32

 

12.8

 

Headings

 

 

32

 

12.9

 

Invalid Provisions

 

 

32

 

12.10

 

Governing Law

 

 

32

 

12.11

 

Counterparts

 

 

32

 

12.12

 

Waiver of Jury Trial

 

 

32

 

12.13

 

Consent to Jurisdiction

 

 

32

 

12.14

 

Expenses

 

 

33

 

12.15

 

Notices

 

 

33

 

iii 


 

 

 

 

 

 

 

 

 

 

 

 

Page

 

12.16

 

Further Assurances

 

 

34

 

iv 


 

     This MEMBERSHIP INTEREST PURCHASE AGREEMENT (the or this “Agreement”) dated as of January 21, 2005 is made and entered into by and among Gascon Partners, a New York general partnership (“Seller”), and American Real Estate Partners, L.P., a Delaware limited partnership (“Purchaser”). Capitalized terms not otherwise defined herein have the meanings set forth in Article XI.

     WHEREAS, Seller owns a membership interest (the “Membership Interest”) in NEG Holding LLC, a Delaware limited liability company (the “Company”) as described in that certain Operating Agreement for the Company dated as of May 1, 2001 (“Operating Agreement”), and Purchaser desires to purchase the Membership Interest from Seller on the terms and subject to the conditions set forth in this Agreement; and

     WHEREAS, Seller desires to sell the Membership Interest to Purchaser on the terms and subject to the conditions set forth in this Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
SALE OF MEMBERSHIP INTEREST AND CLOSING

     1.1 Purchase and Sale . Seller hereby agrees to sell to Purchaser the Membership Interest and Purchaser hereby agrees to purchase from Seller the Membership Interest at the Closing on the terms and subject to the conditions set forth in this Agreement.

     1.2 Purchase Price .

          (a) The purchase price for the Membership Interest shall be determined in accordance with Section 1.2(c) (the “Purchase Price”).

          (b) On or before the fifth Business Day prior to the anticipated Closing Date (the “Closing Statement Date”), Seller will deliver to Purchaser (i) true and correct copies of the 2004 Reserve Reports, and (ii) a statement (the “Closing Statement”), certified by the managing general partner of Seller, setting forth

     (i) A good faith estimate of the volume of any oil or natural gas production imbalance owed by the Company and the Subsidiaries as of December 31, 2004 (collectively, the “Imbalance”);

     (ii) A good faith estimate of the value of the Imbalance, net of royalties, taxes, overriding royalties and other burdens (the “Imbalance Value”); and

     (iii) a calculation of the Purchase Price determined in accordance with Section 1.2(c).

     All statements, reports, materials and other supporting documentation delivered under this Section 1.2(b) shall be in form and content reasonably satisfactory to Purchaser;

1


 

          (c) the Purchase Price shall be 11,344,828 depositary units representing limited partnership interests of Purchaser (“AREP Units”), provided that:

     (i) the Purchase Price shall be decreased by a number of AREP Units equal in value to the Imbalance Value.

     (ii) If the Adjusted Purchase Amount is less than $329 million, the Purchase Price shall be decreased by a number of AREP Units equal in value to the amount of such difference; provided that if the “Adjusted Purchase Amount” pursuant to the Panaco Agreement exceeds $125 million and/or the “Adjusted Purchase Amount” pursuant to the TransTexas Agreement exceeds $180 million, the amount of such excess shall be applied to reduce the reduction of the Purchase Price hereunder except to the extent any such excess has been applied to reduce the reduction of the “Merger Price” pursuant to the Panaco Agreement or the TransTexas Agreement.

     For purposes of this Section 1.2(c), the value of an AREP Unit shall be $29.

     1.3 Closing . Upon the terms and subject to the conditions of this Agreement, the closing of the transactions contemplated hereby (the “Closing”) shall take place (a) at the offices of Purchaser, located at 100 South Bedford Road, Mt. Kisco, NY at 10:00 a. m., local time, on the second business day immediately following the day on which the last to be satisfied or waived of the conditions set forth in Articles VII and VIII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) shall be satisfied or waived in accordance herewith or (b) at such other time, date or place as Purchaser and Seller may agree. The date on which the Closing occurs is herein referred to as the “Closing Date”.

     1.4 Actions at the Closing .

          (a) At the Closing: (i) Purchaser shall deliver to Seller one or more certificates representing the AREP Units constituting the Purchase Price, (ii) Purchaser, Seller, the Company, AREH, AREP Oil and Gas and AREP/NEG MGP LLC shall enter into an Assignment Agreement in the form of Exhibit A attached hereto (the “ Assignment Agreement ”) pursuant to which Seller shall assign all of the limited liability company interests in the Company through Purchaser to AREH, from AREH to AREP Oil and Gas, and from AREP Oil and Gas to AREP/NEG MGP LLC and AREP/NEG MGP LLC shall be admitted as a member of the Company, (iii) Seller shall deliver or cause to be delivered to Purchaser the certificate described in Section 7.3, and (iv) Purchaser shall deliver or cause to be delivered to Seller the items required by Sections 8.3 and 8.6.

          (b) In the event that the parties fail to obtain the written consent of the Required Lenders (as defined in the Mizuho Pledge Agreement) with respect to the sale of the Membership Interest as set forth herein, and the parties shall not have entered into the documentation contemplated in Section 5.2(a) hereof, then Purchaser shall either (x) refinance the loans under the Mizuho Credit Documents with loans that permit such transactions and proceed to purchase the Membership Interest as contemplated herein, or (y) rather than purchasing the Membership Interest as contemplated herein, instead purchase at the Closing all of the partnership interest in Seller (the ”Alternative Transaction”) in accordance with the terms

2


 

of a purchase agreement (the “Substitute Agreement”) substantially in the same form as this Agreement, except that:

     (i) the Substitute Agreement will provide that Cigas Corp. (“Cigas”), a Delaware corporation that holds a managing general partnership interest in Seller (the “Managing GP Interest”), and Astral Gas Corp. (“Astral” and together with Cigas, the “Alternative Sellers”), a Delaware corporation that holds a general partnership interest in Seller (the “GP Interest” and together with the Managing GP Interest, the “GP Interests”), shall sell the GP Interests to Purchaser for the Purchase Price; and

     (ii) the Substitute Agreement will contain representations and warranties of the Alternative Sellers relating to themselves, Seller and the sale of the GP Interests that are appropriate for a transactions of this type; and

     (iii) this Agreement will terminate upon the closing of the transactions contemplated by the Substitute Agreement.

          (c) In the event that Purchaser determines to proceed with the Alternative Transaction, it shall provide written notice thereof to Seller on or prior to the Closing Statement Date (the “Section 1.4 Notice”).

     1.5 Tax Treatment. The Sellers and AREP agree and acknowledge that the sale of the Membership Interest to Purchaser shall qualify as a nonrecognition transaction pursuant to Section 721(a) of the Internal Revenue Code of 1986, as amended.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER

     As an inducement to Purchaser to enter into this Agreement, Seller hereby makes the following representations and warranties to Purchaser:

     2.1 Organization of Seller . Seller is a general partnership duly organized, validly existing and in good standing under the Laws of the State of New York. Seller has full organizational power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby, including without limitation, to sell and transfer (pursuant to this Agreement) the Membership Interest.

     2.2 Partnership Authority . The execution and delivery by Seller of this Agreement, and the performance by Seller of its obligations hereunder, have been duly and validly authorized by Seller’s Managing General Partner and no other action on the part of Seller or its Managing General Partner is necessary for such execution, delivery or performance. This Agreement has been duly and validly executed and delivered by Seller and constitutes a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.

     2.3 Title . The delivery of the Assignment Agreement and other instruments of transfer delivered by Seller to Purchaser at the Closing will transfer to Purchaser good and valid

3


 

title to the Membership Interest, free and clear of all Liens other than Liens created by Purchaser and the Bank of Texas Lien.

     2.4 No Conflicts . Except for any conflict relating to the matters for which the Proposed Consent is being sought, the execution and delivery by Seller of this Agreement do not, and the performance by Seller of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not:

          (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the organizational documents of Seller, the Company, or any of the Subsidiaries;

          (b) conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to Seller, the Company, or any of the Subsidiaries, or any of the Assets and Properties of Seller, the Company, or any of the Subsidiaries; or

          (c) (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require Seller, the Company, or any of the Subsidiaries to obtain any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, (iv) result in or give to any Person any right of termination, cancellation, acceleration or modification in or with respect to, or (v) result in the creation or imposition of any Lien upon Seller, the Company, or any of the Subsidiaries or any of the Assets and Properties of Seller, the Company, or any of the Subsidiaries under, any Contract or License to which Seller, the Company or any of the Subsidiaries is a party or by which any of the Assets and Properties of Seller, the Company or any of the Subsidiaries, is bound.

     2.5 Consents and Approvals . Except for (i) any consent, authorization or approval relating to the matters for which the Proposed Consent is being sought, (ii) the approval of depositary unit holders of the Purchaser required by the New York Stock Exchange, and (iii) approvals to amend the Purchaser’s amended and restated agreement of limited partnership, dated as of May 12, 1987, as amended, as contemplated by Section 8.8 hereof, no consent, authorization or approval of, filing or registration with, or cooperation from, any Governmental Authority or any other Person not a party to this Agreement is necessary in connection with the execution, delivery and performance by Seller of this Agreement or the consummation of the transactions contemplated hereby.

     2.6 Brokers . Neither Seller nor the Company nor any Subsidiary has used any broker or finder in connection with the transactions contemplated hereby, and neither Purchaser nor any Affiliate of Purchaser has or shall have any liability or otherwise suffer or incur any Loss as a result of or in connection with any brokerage or finder’s fee or other commission of any Person retained or purporting to be retained by Seller or by the Company or any Subsidiary in connection with any of the transactions contemplated by this Agreement.

     2.7 Accuracy of Statements . Neither this Agreement nor any schedule, exhibit, statement, list, document, certificate or other information furnished or to be furnished by or on behalf of the Company, any Subsidiary or Seller to Purchaser or any representative or Affiliate of Purchaser in connection with this Agreement or any of the transactions contemplated hereby contains or will contain any untrue statement of a material fact or omits or will omit to state a

4


 

material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they are made, not misleading.

ARTICLE III

REPRESENTATIONS AND WARRANTIES
OF SELLER RELATING TO THE COMPANY AND THE SUBSIDIAIRIES

     As an inducement to Purchaser to enter into this Agreement, Seller hereby makes the following representations to Purchaser, except as set forth in the Disclosure Schedule attached to this Agreement (it being agreed that any exceptions to such representations and warranties shall clearly identify the sections of this Agreement to which they apply).

     3.1 Due Organization of Company and the Subsidiaries; Status .

          (a) The Company and each of the Subsidiaries is duly organized and validly existing under the laws of the state in which it is incorporated or organized, as the case may be, with all requisite power and authority to own, lease and operate its properties and to carry on its business as they are now being owned, leased, operated and conducted. The Company and each of the Subsidiaries is licensed or qualified to do business and is in good standing (where the concept of “good standing” is applicable) as a foreign corporation in each jurisdiction where the nature of the properties owned, leased or operated by it and the business transacted by it require such licensing or qualification (except, with respect to the Subsidiaries, where the failure to be so licensed or qualified or be in good standing will not in the aggregate adversely affect the validity or enforceability of this Agreement or have a Material Adverse Effect on any of the Subsidiaries).

          (b) The Seller has delivered to Purchaser true, correct and complete copies of the organizational documents of the Company and the Subsidiaries, which organizational documents are in full force and effect.

     3.2 Capitalization . Immediately prior to the Closing, the Seller will own the Membership Interest, free and clear of all Liens other than the Bank of Texas Lien. Immediately prior to the Closing, the Company will own 100% of the limited liability company interests of each of the Subsidiaries, free and clear of all Liens other than Liens existing pursuant to the Mizuho Credit Documents. No Person holds any option, warrant, convertible security or other right to acquire any interest in the Company or any of the Subsidiaries. There are no obligations, contingent or otherwise, of the Company or the Subsidiaries to repurchase, redeem or otherwise acquire any ownership interests of the Company or any Subsidiary or to provide funds to or make any material investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary or any other Person.

     3.3 Subsidiaries . The Company has no subsidiaries other than NEG Operating LLC, Shana National LLC, a Delaware limited liability company (“Shana”), NGX Energy Limited Partnership, a Delaware limited partnership, NGX GP of Delaware LLC, a Delaware limited liability company, and NGX LP of Delaware LLC, a Delaware limited liability company. NEG Operating LLC has no subsidiaries other than Shana, NGX GP of Delaware LLC and NGX LP of Delaware LLC. Shana has no subsidiaries. NGX GP of Delaware LLC is the general partner,

5


 

and NGX LP of Delaware LLC is the limited partner, of NGX Energy Limited Partnership. NGX Energy Limited Partnership has no subsidiaries. Except for its interests in the Subsidiaries, neither the Company nor any of the Subsidiaries owns directly or indirectly any ownership or other investment interest, either of record, beneficially or equitably, in any Person.

     3.4 Financial Statements .

          (a) The Seller has delivered to Purchaser true, correct and complete copies of the Audited Financial Statements. The Audited Financial Statements have been prepared in accordance with GAAP consistently applied and present fairly the financial position, assets, liabilities and retained earnings of the respective companies as of the dates thereof and the revenues, expenses, results of operations, and cash flows of the respective companies for the periods covered thereby. The Audited Financial Statements are in accordance with the books and records of the respective companies, do not reflect any transactions which are not bona fide transactions and do not contain any untrue statement of a material fact (whether or not required to be disclosed under GAAP) or omit to state any material fact necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading.

          (b) The Seller has delivered to Purchaser true and complete copies of the Interim 2004 Financial Statements. The Interim 2004 Financial Statements present fairly the financial position, assets, liabilities and retained earnings of the respective companies as of the dates thereof and the revenues, expenses, results of operations, and cash flows of the respective companies for the periods covered thereby. The Interim 2004 Financial Statements are in accordance with the books and records of the respective companies, do not reflect any transactions which are not bona fide transactions and do not contain any untrue statement of a material fact (whether or not required to be disclosed under GAAP) or omit to state any material fact necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading.

     3.5 No Adverse Effects or Changes . Since December 31, 2003, (i) neither the Company nor any of the Subsidiaries has suffered any Material Adverse Effect; (ii) there has been no change, event, development, damage or circumstance affecting the Company or the Subsidiaries that, individually or in the aggregate could reasonably be expected to have a Material Adverse Effect on the Company or any of the Subsidiaries; (iii) there has not been any change by the Company or any of the Subsidiaries in its accounting methods, principles or practices, or any revaluation by the Company or any of the Subsidiaries of any of its assets, including writing down the value of inventory or writing off notes or accounts receivable; and (iv) the Company and each of the Subsidiaries has conducted its business only in the ordinary course of business consistent with past practice.

     3.6 Title to Properties . Each of the Company and the Subsidiaries has good and marketable title to, and each Subsidiary is the lawful owner of, all of the tangible and intangible assets, properties and rights used in connection with its respective businesses and all of the tangible and intangible assets, properties and rights reflected in the Financial Statements, except for changes accruing in the ordinary course of business that would not, individually or in the aggregate, adversely affect the ability of the Company or any of the Subsidiaries to conduct its business in the ordinary course, consistent with past practice.

6


 

     3.7 Litigation . Except as disclosed in the Financial Statements, there are no actions, suits, arbitrations, regulatory proceedings or other litigation, proceedings or governmental investigations, with such exceptions as are individually, or in the aggregate, not material in nature or amount, pending or, to the Knowledge of Seller, threatened against or affecting the Company, the Subsidiaries or any of their respective officers, directors, employees or agents in their capacity as such, or any of the Company’s Assets and Properties or businesses of the Company or any of the Subsidiaries, and to Seller’s Knowledge, any facts or circumstances which may give rise to any of the foregoing. Except as disclosed in the Financial Statements,

neither the Company nor any of the Subsidiaries is subject to any order, judgment, decree, injunction, stipulation or consent order of or with any court or other Governmental Authority.

     3.8 Claims Against Officers and Directors . There are no pending or, to the Seller’s Knowledge, threatened claims against any director, officer, employee or agent of the Company, the Subsidiaries or any other Person, which could give rise to any claim for indemnification against the Company or the Subsidiaries or cause the Company or the Subsidiaries to incur any material liability or otherwise suffer or incur any material Loss.

     3.9 Insurance .

          (a) The Company and the Subsidiaries maintain insurance policies that provide adequate and suitable insurance coverage for the business of the Company and the Subsidiaries and are on such terms, cover such risks and are in such amounts as the insurance customarily carried by comparable companies of established reputation similarly situated and carrying on the same or similar business.

          (b) Prior to the date hereof, Seller has delivered to Purchaser all insurance policies (including policies providing property, casualty, liability, workers’ compensation, and bond and surety arrangements) under which the Company and the Subsidiaries are an insured, a named insured or otherwise the principal beneficiary of coverage. All insurance policies of the Company and the Subsidiaries are in full force and effect. Neither the Company nor the Subsidiaries has received notice of any refusal of coverage with respect to an existing policy. The Company and the Subsidiaries have paid all premiums due under all such policies.

     3.10 Compliance with Law . Except as set forth in the Financial Statements, the Company and the Subsidiaries are in compliance and, at all times, have been in compliance in all respects with all applicable Laws relating to the Company or the Subsidiaries or their respective Assets and Properties or businesses. Except as disclosed in the Financial Statements, no investigation or review by any governmental authority or self-regulatory authority is pending or, to Seller’s Knowledge, threatened, nor has any such authority indicated orally or in writing to the Seller, the Company or any of the Subsidiaries an intention to conduct an investigation or review of the Company or any of the Subsidiaries or, with respect to the Company or any of the Subsidiaries, or Seller.

     3.11 Undisclosed Liabilities . Except as disclosed in the Financial Statements, neither the Company nor any of the Subsidiaries has any material liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, other than liabilities and obligations incurred after September 30, 2004 in the ordinary course of business consistent with past practice (including as to amount and nature).

7


 

     3.12 Related Parties . Except as disclosed in the Financial Statements or on Schedule 3.12 and except for transactions solely between the Company and the Subsidiaries or solely between the Company’s Subsidiaries, (i) no Affiliate of the Company is a party to any Contract with the Company or any of the Subsidiaries; (ii) no Affiliate of the Company owes any material amount of money to, nor is such Affiliate owed any material amount of money by, the Company or any of the Subsidiaries, (iii) neither the Company nor any of the Subsidiaries has, directly or indirectly, guaranteed or assumed any indebtedness for borrowed money or otherwise for the benefit of an Affiliate of the Company or any of the Subsidiaries; and (iv) neither the Company nor any of the Subsidiaries has made any material payment to, or engaged in any material transaction with, an Affiliate of the Company.

     3.13 Intellectual Property .

          (a) The Company and the Subsidiaries own, or possess adequate rights to use, all material patents, trade names, trademarks, copyrights, inventions, processes, designs, formulae, trade secrets, know-how, seismic data and other intellectual property rights necessary for, used or held for use in the conduct of their businesses. All material intellectual property necessary for used or held for use in the conduct of the businesses of the Company and any of the Subsidiaries has been duly registered with, filed in or issued by the relevant filing offices, domestic or foreign, to the extent necessary or desirable to ensure full protection under any applicable Law, and such registrations, filings or issuances remain in full force and effect.

          (b) The conduct of the business of the Company and the Subsidiaries does not infringe or otherwise conflict with any rights of any Person in respect of intellectual property rights. None of the intellectual property rights owned by the Company or the Subsidiaries is being infringed or otherwise, in any way, used or available for use by any Person without a license or permission from the Company and the Subsidiaries and neither the Company nor any of the Subsidiaries has taken or omitted to take any action which would have the effect of waiving any of its rights thereunder. Neither the Company nor any of the Subsidiaries has received a claim of infringement or conflict by any third party in respect of any intellectual property used by the Company or the Subsidiaries.

     3.14 Environmental Matters . Except as set forth in the disclosure documents of NEGI filed publicly with the U.S. Securities and Exchange Commission (the “SEC”) prior to the date hereof, or as set forth in the Financial Statements:

          (a) The Company and each of the Subsidiaries have obtained all material Environmental Permits that are required with respect to their respective Assets and Properties and businesses, either owned or leased;

          (b) The Company, each of the Subsidiaries, and their respective Assets and Properties and businesses, are and have been in compliance in all material respects with all terms and conditions of all applicable Environmental Laws and Environmental Permits;

          (c) There are no Environmental Claims pending or, to the knowledge of Seller, threatened against the Company or any of the Subsidiaries. Neither the Company nor any of the Subsidiaries has received any notice from any Governmental or Regulatory Authority or any person of any violation or liability arising under any Environmental Law or Environmental Permit in connection with its Assets and Properties, businesses or operations;

8


 

          (d) Neither the Company, nor any of its Subsidiaries, nor any other Person has caused or taken any action that will result in any material liability, obligation or cost on the part of the Company or any of its Subsidiaries relating to (x) environmental conditions on, above, under or from any properties or assets currently or formerly owned, leased, operated or used by the Company or any of its Subsidiaries, or (y) the past or present use, management, transport, treatment, generation, storage, disposal, release or threatened release of Hazardous Materials.

          (e) Neither the Company nor any of the Subsidiaries owns, leases or operates or has owned, leased or operated, any property listed on the National Priorities List pursuant to

CERCLA or on the CERCLIS or on any other federal or state list as sites requiring investigation or cleanup;

          (f) Neither the Company nor any of the Subsidiaries is transporting, has transported, or is arranging for the transportation of, any Hazardous Material to any location which is listed on the National Priorities List pursuant to CERCLA, on the CERCLIS, or on any similar federal or state list or which is the subject of federal, state or local enforcement actions or other investigations that may lead to material claims against the Company or the Subsidiaries for investigative or remedial work, damage to natural resources, property damage or personal injury including claims under CERCLA;

          (g) There are no sites, locations or operations at which the Company or any of the Subsidiaries is currently undertaking, or has completed, any investigative, remedial, response or corrective action as required by Environmental Laws;

          (h) There are no physical or environmental conditions existing on any property owned or leased by the Company or the Subsidiaries resulting from their respective operations or activities, past or present, at any location, that would give rise to any material on-site or off-site investigative or remedial obligations or any corrective action under any applicable Environmental Laws; and

          (i) The Seller has provided to Purchaser all material environmental site assessments, audits, investigations and studies in its possession, custody or control.

     3.15 Employees, Labor Matters, etc . Except as set forth in the Financial Statements, neither the Company nor any of the Subsidiaries is a party to or bound by, and none of their employees is subject to, any collective bargaining agreement, and there are no labor unions or other organizations representing, purporting to represent or attempting to represent any employees employed by the Company or any of the Subsidiaries. There has not occurred or been threatened any material strike, slow down, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity with respect to any employees of the Company or any of the Subsidiaries. There are no labor disputes currently subject to any grievance procedure, arbitration or litigation and there is no representation petition pending or threatened with respect to any employee of the Company or any of the Subsidiaries. The Company and the Subsidiaries have complied with all applicable Laws pertaining to the employment or termination of employment of their respective employees, including, without limitation, all such Laws relating to labor relations, equal employment opportunities, fair employment practices, prohibited discrimination or distinction and other similar employment activities; except for any failure to

9


 

comply that, individually and in the aggregate, is not reasonably likely to result in any Company Material Adverse Effect.

     3.16 Employee Benefit Plans .

          (a) Except as set forth in the Financial Statements or accrued thereafter in accordance with the terms of the Plans as of the date hereof, neither the Company nor any of the Subsidiaries has incurred any material liability, and no event, transaction or condition has occurred or exists that could result in any material liability, on account of any Plans, including but not limited to liability for (i) additional contributions required to be made under the terms of any Plan or its related trust, insurance contract or other funding arrangement with respect to periods ending on or prior to the date hereof which are not reflected, reserved against or accrued in the Financial Statements; (ii) breaches by the Company or any of the Subsidiaries, or any of their employees, officers, directors, stockholders, or, to the knowledge of Seller, the trustees under the trusts created under the Plans, or any other Persons under ERISA or any other applicable Law; or (iii) income taxes by reason of non-qualification of the Plans. Each of the Plans has been operated and administered in all material respects in compliance with its terms, all applicable Laws and all applicable collective bargaining agreements. Since September 30, 2004, neither the Company nor any of the Subsidiaries has communicated to any current or former director, officer, employee or consultant thereof any intention or commitment to amend or modify any Plan, or to establish or implement any other employee or retiree benefit or compensation plan or arrangement, which would materially increase the cost to the Company or any Subsidiary.

          (b) Each Plan which is intended to be “qualified” within the meaning of section 401(a) of the Code, and the trust (if any) forming a part thereof has received a favorable determination letter or is covered by an opinion letter from the Internal Revenue Service and no event has occurred and no condition exists which could reasonably be expected to result in the revocation of any such determination. All amendments and actions required to bring each Plan into conformity with the applicable provisions of ERISA, the Code, and any other applicable Laws have been made or taken.

          (c) There are no pending or threatened claims (and no facts or circumstances exist that could give rise to any such claims) by or on behalf of any participant in any of the Plans, or otherwise involving any such Plan or the assets of any Plan, other than routine claims for benefits in the ordinary course. The Plans are not presently under audit or examination (nor has notice been received of a potential audit or examination) by the IRS, the Department of Labor, or any other Governmental or Regulatory Authority.

          (d) None of the Plans provides benefits of any kind with respect to current or former employees, officers, or directors (or their beneficiaries) of the Company and the Subsidiaries beyond their retirement or other termination of employment, other than ( i ) coverage for benefits mandated by Section 4980B or the Code, ( ii ) death benefits or retirement benefits under an employee pension benefit plan (as defined by section 3(2) of ERISA), or ( iii ) benefits, the full cost of which is borne by such current or former employees, officers, directors, or beneficiaries.

10


 

          (e) No Plan sponsored by the Company and the Subsidiaries is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA or a “multiple employer plan” as addressed in section 4063 or 4064 of ERISA. No Plan sponsored by the Company and the Subsidiaries is subject to Title IV of ERISA.

          (f) The consummation of the transactions contemplated by this Agreement will not (alone or in combination with any other event, including, without limitation, the passage of time) result in (i) any payment (including, without limitation, severance, unemployment compensation, golden parachute, bonus payments or otherwise) becoming due under any agreement or oral arrangement to any current or former director, officer, employee or consultant of the Company and the Subsidiaries, (ii) any increase in the amount of salary, wages or other benefits payable to any director, officer, employee or consultant of the Company and the Subsidiaries, or (iii) any acceleration of the vesting or timing of payment of any benefits or compensation (including, without limitation, any increased or accelerated funding obligation) payable to any director, officer, employee or consultant of the Company and the Subsidiaries.

     3.17 Real Property . Schedule 3.17 contains a legal description of each parcel of real property, leases in real property, or other interests in real property, (including the address thereof) and a legal description of each parcel in which the Company and any of the Subsidiaries hold a valid easement to use such parcel (the “Real Property”). The Company or a Subsidiary, as applicable, has Good and Defensible Title to, or a valid and subsisting leasehold estate, or easement, in each such parcel of Real Property, free and clear of all Liens other than Permitted Encumbrances. All of the real property leases in the Real Property are valid, binding, and enforceable in accordance with their terms, and are in full force and effect.

     3.18 Tangible Personal Property . The Company or a Subsidiary is in possession of and has good title to, or have valid leasehold interests in or valid rights under contract to use, all of the real and personal property used or held for use in the business of the Company or the Subsidiaries, including the interest of the Company or a Subsidiary in all wells, well and leasehold equipment, pipelines, platforms, facilities, improvements, goods and other personal property located on or used in connection with the Real Property (the “Fixtures and Equipment”). All the Fixtures and Equipment is in good working order and condition, ordinary wear and tear excepted, and its use complies in all material respects with all applicable Laws. All of the Fixtures and Equipment is adequate for the uses to which they are being put and are sufficient for the conduct of the business of the Company and the Subsidiaries in the manner as conducted prior to the Closing. The Company or a Subsidiary owns all of the Fixtures and Equipment free and clear of all Liens except the Permitted Encumbrances.

     3.19 Contracts .

     (a) Schedules 3.19 and 3.17 contains a true and complete list of each of the following Contracts as of the date hereof:

     (i) all Contracts providing for a commitment of employment or consultation services for a specified term and payments at any one time or in any one year in excess of $100,000;

11


 

     (ii) all Contracts with any Person containing any provision or covenant prohibiting or materially limiting the ability the Company or any of the Subsidiaries to engage in any business activity or compete with any Person;

     (iii) all Contracts relating to indebtedness of the Company or any of the Subsidiaries;

     (iv) all Contracts (other than this Agreement) providing for (i) the disposition or acquisition of any assets or properties that individually or in the aggregate are material to the business or any of the Subsidiaries or that contain continuing obligations of any of the Subsidiaries, or (ii) any merger or other business combination involving the Company or any of the Subsidiaries;

     (v) all Contracts (other than this Agreement) that limit or contain restrictions on the ability of the Company or any of the Subsidiaries to incur indebtedness or incur or suffer to exist any Lien, to purchase or sell any assets, to change the lines of business in which it participates or engages or to engage in any merger or other business combination;

     (vi) all Contracts establishing any joint venture, strategic alliance or other collaboration;

     (vii) all Contracts with any Person obligating the Company and any of the Subsidiaries to guarantee or otherwise become directly or indirectly obligated with respect to any liability or obligation in excess of $25,000 in each case or $100,000 in the aggregate at any one time outstanding;

     (viii) all Contracts for the leasing of real property by the Company and any of the Subsidiaries setting forth the address, landlord and tenant for each lease; and

     (ix) all other Contracts that (i) involve the payment, pursuant to the terms of any such Contract, by or to the Company or any of the Subsidiaries of more than $100,000 annually, (ii) cannot be terminated within 90 days after giving notice of termination without resulting in any material cost or penalty to the Company, or (iii) are material to the businesses of the Company and the Subsidiaries;

          (b) Prior to the date hereof, true, correct and complete copies of the Mizuho Credit Documents and each Contract required to be disclosed in Schedule 3.19 have been delivered to, or made available for inspection by, Purchaser. Each such Contract is in full force and effect and constitutes a legal, valid and binding agreement, enforceable in accordance with its terms, of the Company or the applicable Subsidiary and, of each other party thereto; and neither the Company nor, to the knowledge of Seller, any other party to such Contract, is in violation or breach of or default under any such Contract (or with notice or lapse of time or both, would be in violation or breach of or default under any such Contract). All conditions necessary to maintain the Contracts in force have been duly performed.

     3.20 Tax .

12


 

          (a) The Company and the Subsidiaries have duly and timely filed with the appropriate taxing authorities all material federal, state and local income Tax Returns and all other material Tax Returns required to be filed through the date hereof and will duly and timely file any such returns required to be filed on or prior to the Closing. Such Tax Returns and other information filed are (and, to the extent they will be filed prior to the Closing, will be) complete and accurate in all material respects. Neither the Company nor either of the Subsidiaries has pending any request for an extension of time within which to file federal, state or local income Tax Returns.

          (b) All Taxes of the Company and the Subsidiaries in respect of periods (or portions thereof) ending at or prior to the Closing have been paid by the Company and the Subsidiaries or such Taxes (other than income Taxes) are shown as due and payable after the Closing on the Financial Statements.

          (c) No federal, state, local or foreign audits or other administrative proceedings or court proceedings are presently pending with regard to any material Taxes or material Tax Returns of the Company or any of the Subsidiaries. Neither the Company nor any of the Subsidiaries has received a written notice of any such pending audits or proceedings. There are no outstanding waivers extending the statutory period of limitation relating to the payment of Taxes due from the Company or any of the Subsidiaries.

          (d) Neither the IRS nor any other taxing authority (whether domestic or foreign) has asserted in writing, or to the best knowledge of the Company and the Subsidiaries, is threatening to assert, against the Company or any of the Subsidiaries any material deficiency or material claim for Taxes in excess of the reserves established therefor.

          (e) There are no Liens for Taxes upon any property or assets of the Company or any o


SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Close this window