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Exhibit 1.2
EXECUTION COPY
MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and between
SEMPRA ENERGY TRADING CORP.
and
PAA/VULCAN GAS STORAGE, LLC
Dated as of August 19, 2005
TABLE OF CONTENTS
i
ii
iii
Exhibits
iv
MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of August 19, 2005 (this “ Agreement ”), is entered into by and between Sempra Energy Trading Corp., a Delaware corporation (“ Seller ”), and PAA/Vulcan Gas Storage, LLC, a Delaware limited liability company (“ Buyer ”).
RECITALS
WHEREAS, Seller owns one hundred percent (100%) of the issued and outstanding capital stock of the Company;
WHEREAS, the Company owns one hundred percent (100%) of the issued and outstanding capital stock of each of BGS Corp. and PPEC Corp.;
WHEREAS, BGS Corp. owns one hundred percent (100%) of the membership interests in Bluewater Gas Storage, LLC, a Delaware limited liability company (“ BGS LLC ”), and PPEC Corp. owns one hundred percent (100%) of the membership interests in Pine Prairie Energy Center, LLC, a Delaware limited liability company (“ PPEC LLC ”; and together with each of BGS Corp., PPEC Corp. and BGS LLC, a “ Subsidiary ” and, collectively, the “ Subsidiaries ”);
WHEREAS, BGS LLC owns and operates a natural gas storage facility located in Macombe and St. Clair Counties, Michigan, which facility includes certain buildings, equipment, compressors, structures, and pipelines located on a substantially depleted reservoir known as the Columbus III Reservoir (the “ BGS Storage Facility ”), and PPEC LLC is engaged in the development of a salt cavern natural gas storage facility located in Evangeline Parish, Louisiana (the “ Project ”); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the membership interests in the Company (the “ Membership Interests ”) which shall have been issued to Seller in exchange for, and upon the cancellation of, all of the issued and outstanding capital stock of the Company (the “ Shares ”) pursuant to the Conversion Transactions.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions . As used herein, the following terms shall have the following meanings:“ 1935 Act ” has the meaning provided such term in Section 4.21 .
“ Acquisition Agreements ” means the agreements listed on Schedule 9.5 .
“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, such specified Person through one or more intermediaries or otherwise. For the purposes of this definition, “control” means, where used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings.
“ Agreement ” has the meaning provided such term in the preamble to this Agreement.
“ Asset Acquisition Statement ” has the meaning provided such term in Section 7.1 .
“ Base Net Working Capital ” means $400,000.
“ Base Purchase Price ” has the meaning provided such term in Section 2.2 .
“ Benefit Plan ” means each (a) “employee benefit plan,” as such term is defined in Section 3(3) of ERISA, (b) plan that would be an employee benefit plan if it was subject to ERISA, including plans for directors, (c) stock bonus, stock ownership, stock option, stock purchase, stock appreciation rights, phantom stock or other stock-based plan (whether qualified or nonqualified), (d) bonus, deferred compensation or incentive compensation plan and (e) employment (including any offer letters), severance, change-in-control, or termination pay plan, program, agreement or arrangement; provided that such term shall not include (i) routine employment policies and procedures developed and applied in the ordinary course of business and consistent with past practice, including wage, vacation, holiday, and sick or other leave policies, (ii) workers compensation insurance, and (iii) directors and officers liability insurance.
“ BGS Budget ” means the descriptions and amounts set forth in Schedule 1.1 necessary for the design, construction and development of the BGS Storage Facility.
“ BGS Corp. ” means, prior to the Conversion Transactions, Bluewater Natural Gas Storage Corp., a Delaware corporation, and, from and after the Conversion Transactions, the Delaware limited liability company into which Bluewater Natural Gas Storage Corp. is converted pursuant to the Conversion Transactions.
“ BGS Dewpoint Reduction Facility ” means all equipment, including but not limited to expansion valves, heat exchangers, separation tanks, glycol reboiler, and associated piping and controls, that function to lower both the water and hydrocarbon dewpoint of the natural gas being withdrawn from storage at the BGS Storage Facility.
“ BGS Expenditure Amount ” means the aggregate amount of items of the BGS Budget which were not expended or accrued for as a current liability and reflected in the calculations of Net Working Capital in each case as of the Closing Date.
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“ BGS LLC ” has the meaning provided such term in the third recital above.
“ BGS LLC Contribution ” has the meaning provided such term in Section 6.20 .
“ BGS Storage Facility ” has the meaning provided such term in the fourth recital above.
“ Big Cap Losses ” has the meaning provided such term in Section 9.4(d) .
“ Bluewater Oil Reserves ” has the meaning provided such term in Schedule 2.6 .
“ Bluewater PSA ” means the Agreement of Purchase and Sale among Columbus III Production, L.C., Stephen D. Beauchamp and BGS LLC, executed on October 2, 2003.
“ Bluewater Reserves Agreement ” has the meaning provided such term in Section 2.6 .
“ Business Day ” means any day that is not a Saturday, Sunday or legal holiday in New York City or a federal holiday in the United States.
“ Buyer ” has the meaning provided such term in the preamble to this Agreement.
“ Buyer Approvals ” has the meaning provided such term in Section 5.3 .
“ Buyer Indemnified Parties ” has the meaning provided such term in Section 9.2(a) .
“ Buyer Savings Plan ” means any Benefit Plan sponsored or maintained by the Buyer or any of its Affiliates with a deferral account under Section 401(k) of the Code.
“ Capital Adjustment Resolution Period ” has the meaning provided such term in Section 2.5(b) .
“ Claim Notice ” has the meaning provided such term in Section 9.3(a) .
“ Closing ” has the meaning provided such term in Section 2.3(a) .
“ Closing Date ” has the meaning provided such term in Section 2.3(a) .
“ COBRA ” has the meaning provided such term in Section 6.5(g) .
“ Code ” means the Internal Revenue Code of 1986, as amended.
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“ Columbus III Reservoir ” means the partially depleted oil and natural gas Salina Niagaran reef formations underlying the producing field commonly known as the “Columbus III Field,” located in Columbus and Wales Townships, St. Clair County, Michigan.
“ Commonly Controlled Entity ” has the meaning provided such term in Section 4.10(d) .
“ Company ” means, prior to the Conversion Transactions, Energy Center Investments Corp., a Delaware corporation, and, from and after the Conversion Transactions, the Delaware limited liability company into which Energy Center Investments Corp. is converted pursuant to the Conversion Transactions.
“ Company Guarantees ” means those guaranties, bonds, sureties and other credit support or assurances (other than letters of credit) provided by Seller or its Affiliates (other than the Subsidiaries) in support of obligations of the Company or any Subsidiary that are set forth in Schedule 6.6(a) .
“ Company Plan ” means each Benefit Plan that is sponsored, maintained or contributed to by Seller, the Company or any Commonly Controlled Entity that provides benefits with respect to current or former directors, officers or employees of the Company.
“ Company Tax Refund ” has the meaning provided such term in Section 7.6 .
“ Company Tax Returns ” means Tax Returns required to be filed by the Company or any of its Subsidiaries. For the avoidance of doubt, “Company Tax Returns” does not include U.S. federal income Tax Returns or any other Tax Return filed by a consolidated, unitary, combined or similar group of which Seller Parent or any of its Affiliates (other than any of the Company or its Subsidiaries) is the common parent.
“ Company Taxes ” means Taxes required to be paid by or imposed on the Company or any of its Subsidiaries. For the avoidance of doubt, “Company Taxes” does not include U.S. federal income Taxes or any other Taxes payable by a consolidated, unitary, combined or similar group of which Seller Parent or any of its Affiliates (other than any of the Company or its Subsidiaries) is the common parent.
“ Confidentiality Agreement ” means each of (i) that certain confidentiality agreement between Vulcan Capital Private Equity Inc. and PPEC LLC dated February 16, 2005, as amended on June 15, 2005, and (ii) that certain confidentiality agreement between Plains All American Pipeline, L.P. and PPEC LLC dated March 23, 2005.
“ Continuing Employee ” means each individual who is employed by the Company or any Subsidiary after giving effect to the Closing (including each such individual who is on vacation, sick, military, disability or other leave of absence).
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“ Contract ” means any note, bond, mortgage, indenture, agreement, lease, sublease, license or contract to which a Person is a party or by which a Person or its assets or properties are bound, but excluding Benefit Plans, Permits and any lease or agreement relating to any right or interest in Real Property.
“ Conversion Transactions ” has the meaning provided such term in Section 6.18(a) .
“ Diminution in Value ” means the present value of an actual, demonstrable decrease in the enterprise value of the Company and the Subsidiaries, taken as a whole, measured as of the Closing Date, to the extent such decrease is attributable to the inaccuracy or breach (or deemed inaccuracy or breach) of any representations and warranties of Seller in Articles III or IV or any breach of any covenant of Seller in Article VI .
“ Disclosure Schedule ” has the meaning provided such term in the preamble to Article III .
“ Dollars ” and “ $ ” mean the lawful currency of the United States.
“ Due Date ” has the meaning provided such term in Section 7.3(d) .
“ Environmental Claim ” means any Litigation alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from the presence, Release or threatened Release of any Hazardous Materials at any location, whether or not owned or operated by Seller.
“ Environmental Condition ” means the presence of Hazardous Materials in the environment or building materials, or the Release or threatened Release of Hazardous Materials to the environment.
“ Environmental Fines and Penalties ” means any fines and penalties imposed before, on or after the Closing Date upon the Company or any Subsidiary by any Governmental Authority in respect of any violation of Environmental Law by Seller, the Company, any Subsidiary or any third party acting on their behalf, occurring on or prior to the Closing Date.
“ Environmental Laws ” means all Laws relating to pollution or protection of human health or the environment, including, without limitation, Laws relating to Releases or threatened Releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, Release, transport or handling of Hazardous Materials and all Laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
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“ Estimated BGS Expenditure Amount ” has the meaning provided such term in Section 2.5(a) .
“ Estimated Closing Adjustment Amount ” means an amount, which may be positive or negative, equal to (A) Month-End Net Working Capital minus Base Net Working Capital, plus (B) the Estimated PPEC Excess Expenditure Amount, minus (C) the Estimated BGS Expenditure Amount.
“ Estimated PPEC Excess Expenditure Amount ” has the meaning provided such term in Section 2.5(a) .
“ Expenditure Amount Closing Statement ” has the meaning provided such term in Section 2.5(a) .
“ Expenditure Amount Evaluation Period ” has the meaning provided such term in Section 2.5(b) .
“ Extraordinary Transaction ” has the meaning provided such term in Section 7.5 .
“ FERC ” means the United States Federal Energy Regulatory Commission.
“ Final Adjustment Amount ” has the meaning provided such term in Section 2.5(e) .
“ Financial Derivative/Hedging Agreement ” includes any transaction (including an agreement with respect thereto) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any combination of these transactions.
“ Financial Statements ” has the meaning provided such term in Section 4.5 .
“ Fines and Penalties ” means any fines and penalties imposed before, on or after the Closing Date upon the Company or any Subsidiary by any Governmental Authority in respect of any violation of Law (other than Environmental Law) by Seller, the Company, any Subsidiary or any third party acting on their behalf, occurring on or prior to the Closing Date.
“ GAAP ” means generally accepted accounting principles in the United States, consistently applied.
“ General Deductible ” has the meaning provided such term in Section 9.4(b) .
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“ Governmental Authority ” means any federal, state, local or foreign government or any subdivision, agency, instrumentality, authority, department, commission, board or bureau thereof or any federal, state, local or foreign court or tribunal or any domestic or foreign arbitrator.
“ Hazardous Materials ” means all substances defined as hazardous substances, oils, pollutants or contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law.
“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“ Indebtedness for Borrowed Money ” means all obligations to any Person for borrowed money, including (a) any obligation to reimburse any bank or other Person in respect of amounts paid or payable under a standby letter of credit or (b) any guarantee with respect to indebtedness for borrowed money of another Person.
“ Indemnified Party ” has the meaning provided such term in Section 9.3(a) .
“ Indemnifying Party ” has the meaning provided such term in Section 9.3(a) .
“ Indemnified Tax Claim ” has the meaning provided such term in Section 7.9(a) .
“ Independent Accountant ” means Ernst & Young LLP.
“ Intellectual Property ” means (a) trademarks, service marks, trade dress, slogans, logos and all goodwill associated therewith, and any applications or registrations for any of the foregoing, (b) copyrights and any related applications or registrations, (c) patents and any related applications or registrations, (d) all confidential information, know-how, trade secrets and similar proprietary rights in confidential inventions, discoveries, improvements, processes, techniques, devices, methods, patterns, formulae, specifications and lists of suppliers, vendors, customers and distributors, and (e) all other intellectual property rights, statutory or common Law, in the United States or worldwide.
“ IRS ” means the United States Internal Revenue Service.
“ Knowledge ” or “ Known ” means, with respect to Seller, the actual knowledge, after inquiry of Laura Luce, Geof Storey, John Reid and Richard Tomaski (after Seller provides such individuals with, and instructs them to review, the Disclosure Schedule), of each of Scott Werneburg, Wayne Kubicek, Eric Allison, Michael Goldstein, David Messer, Steve Prince, Limor Nissan and Michael Beaury, and, with respect to Buyer, the actual knowledge after due inquiry of each of Jim Hester, Lawrence Dreyfuss, Tom Gilbert, David Capobianco, Harry Pefanis, Greg Armstrong and Bill Egg.
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“ Known and Undisclosed Environmental Liability ” means any Losses (whether or not such Loss existed on or before the Closing Date) of the Company or any Subsidiary to the extent related to any Environmental Condition or violation of Environmental Law which (i) was Known to Seller on the date of this Agreement, (ii) Seller has not disclosed to Buyer in the Disclosure Schedule and (iii) failure by Seller to so disclose constitutes a breach (or deemed breach) of any representation or warranty in Section 4.12(a) , (b) or (c) .
“ Law ” means any applicable statute, writ, law, common law, rule, regulation, ordinance, order, judgment, injunction, award, determination or decree of a Governmental Authority, in each case as in effect on and as interpreted on the date of this Agreement or on and as of the Closing Date, as applicable, unless the context otherwise clearly requires a different date, in which case on such date.
“ Leased Real Property ” means all leasehold or subleasehold estates and other rights to use or occupy any real property (including surface and subsurface estates and storage and mineral rights) held by the Company or any Subsidiary, together with all interests in buildings, structures, improvements and fixtures located thereon and all easements, rights of way and other rights and interests appurtenant thereto and any and all amendments thereof, but excluding therefrom any Owned Real Property.
“ Leases ” means all leases, subleases, licenses or other agreements, including all amendments, extensions and renewals with respect thereto, pursuant to which the Company or any Subsidiary holds or uses any Leased Real Property.
“ Lien ” means any charge, pledge, option (other than an option to store natural gas), mortgage, deed of trust, hypothecation, security interest, royalty or similar right, warrant, purchase right (other than the right to purchase storage or related services), lease, license or other encumbrance.
“ Limited Matters ” has the meaning provided such term in Section 9.5 .
“ Litigation ” means any investigation or inquiry (with respect to which written notice has been provided), action, claim, suit, proceeding, audit, citation, summons, subpoena of any nature, civil, criminal or regulatory, in law or in equity, by or before any Governmental Authority (including worker’s compensation claims).
“ Losses ” means all liabilities, losses, damages, fines, penalties, judgments, settlements, awards, Diminution in Value, costs and expenses (including reasonable fees and expenses of counsel, consultants, experts and other professional fees); provided that Losses shall not include any special, punitive, exemplary, incidental, consequential or indirect damages or lost profits, other than any such damages to the extent (i) asserted by or awarded, paid or payable to, a third party or (ii) arising out of fraud. Notwithstanding anything in this Agreement to the contrary (including Section 9.7(b) ), exclusively for purposes of the indemnification provided in Section 7.8(a)(ii) , (iii) and (vii) , in each case solely with respect to an inaccuracy or breach of any representation, warranty or covenant of Seller contained in Sections 4.11(f) , 6.18 or 6.20 to the extent such inaccuracy or
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breach is due to a Prohibited Tax Action, “Losses” shall include the difference between the present value of (i) depreciation, amortization and depletion deductions reported (or that could have been reported in future years, but for such Prohibited Tax Action) by the Buyer Indemnified Parties, which deductions otherwise would have been realized if not for such Prohibited Tax Action and (ii) such depreciation, amortization and depletion deductions as redetermined by the IRS or applicable state income Tax Authority as a result of such Prohibited Tax Action, taking into account Buyer’s obligation to, subject to the provisions of Section 7.8(c) , take (or cause to be taken) such actions as shall maximize such deductions going forward. Solely for purposes of the immediately preceding sentence, Losses of the Buyer Indemnified Parties shall be determined as if Buyer were a U.S. taxpayer subject to federal, state and local income Tax at a combined rate of forty percent (40%).
“ Material Adverse Effect ” means a material adverse effect on (a) the business, operations (including results of operation), assets, liabilities or financial condition of the Company and the Subsidiaries, taken as a whole, other than any effect resulting or arising from (i) any change generally affecting the economic conditions in the industries or markets in which the Company or the Subsidiaries operate, (ii) seasonal reductions in revenues and/or earnings of the Company or the Subsidiaries in the ordinary course of their respective businesses consistent with industry experience, (iii) national or international political conditions, including any engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack occurring prior to, on or after the date of this Agreement; provided that none of the conditions or events described in this clause (iii) results in the destruction or loss of use of any material assets of the Company or any of the Subsidiaries, (iv) proposed or adopted legislation or any other proposal or enactment by any Governmental Authority, (v) changes in Tax or accounting requirements or principles or the interpretation thereof, (vi) the announcement of this Agreement and (vii) the effect of the development, expansion or construction by another Person (other than development of a new natural gas storage facility by Seller or any of its Affiliates in the State of Louisiana originating or publicly announced on or after the date of this Agreement) of a natural gas storage facility, a liquefied natural gas receiving and regasification terminal or a natural gas pipeline (including an announcement of such other Person’s intention with respect to any of the foregoing) or (b) the ability of Seller to perform its obligations under this Agreement, including its obligation to complete the transactions contemplated herein. Any determination as to whether any circumstance, change or effect has a Material Adverse Effect shall be made only after taking into account all benefits and costs of such circumstance, change or effect.
“ Material Contracts ” has the meaning provided such term in Section 4.7(b) .
“ Member ” means a “member” as defined in section 18-101(11) of the Delaware Limited Liability Company Act.
“ Membership Interests ” has the meaning provided such term in the fifth recital above.
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“ Month-End Net Working Capital ” means a negative amount of $556,038.
“ Natural Gas Act ” has the meaning provided such term in Section 4.21 .
“ Net Working Capital ,” which may be positive or negative, means an amount equal to the total current assets of the Company and the Subsidiaries as of the Closing Date minus the total current liabilities of the Company and the Subsidiaries as of the Closing Date, determined (a) in accordance with GAAP and the methodologies set forth on Schedule 2.4 ; provided that current assets and current liabilities shall include an accrual for Installment Payments and shall not include any asset or liability related or attributable to Taxes or intercompany account balances and (b) without giving effect to the sale of the Membership Interests contemplated hereby.
“ Net Working Capital Closing Statement ” has the meaning provided such term in Section 2.4(a) .
“ Net Working Capital Evaluation Period ” has the meaning provided such term in Section 2.4(b) .
“ Net Working Capital Resolution Period ” has the meaning provided such term in Section 2.4(b) .
“ Newco ” has the meaning provided such term in Section 6.20(a) .
“ NGPA ” has the meaning provided such term in Section 4.21 .
“ NSAI ” has the meaning provided such term in Schedule 2.6 .
“ NSAI Reserve Value ” has the meaning provided such term in Schedule 2.6 .
“ Off-Site Location ” means any real property other than the Real Property.
“ Oil ” has the meaning provided such term in Schedule 2.6 .
“ Organizational Documents ” means any charter, certificate of incorporation, articles of association, limited liability company agreement, partnership agreement, membership agreement, bylaws, operating agreement or similar formation or governing documents and instruments.
“ Other Real Property ” has the meaning provided such term in Section 4.19(h) .
“ Other Real Property Documents ” has the meaning provided such term in Section 4.19(h) .
“ Owned Real Property ” means the fee interest in and to all real property (including surface and subsurface estates and storage and mineral rights) owned by the
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Company or any Subsidiary, together with all buildings, structures, improvements and fixtures located thereon and all easements, rights of way and other rights and interests appurtenant thereto and any and all amendments thereof, and specifically excluding therefrom all Leased Real Property.
“ Parties ” means Seller and Buyer.
“ Permits ” means all authorizations, licenses, identification numbers, permits, certificates, orders, consents, approvals and registrations required under Law.
“ Permitted Liens ” means (a) Liens for Taxes, impositions, assessments, fees, rents or other governmental charges levied or assessed or imposed (i) not yet delinquent as of the Closing Date or (ii) being contested in good faith by appropriate proceedings and, in the case of clause (ii), for which adequate reserves have been taken and are reflected in the Net Working Capital, (b) statutory Liens (including materialmen’s, warehousemen’s, mechanic’s, repairmen’s, landlord’s, and other similar Liens) arising in the ordinary course of business securing payments (i) not yet delinquent or (ii) being contested in good faith by appropriate proceedings and, in the case of clause (ii), for which adequate reserves have been taken and are reflected in the Net Working Capital, (c) the rights of lessors and lessees under the leases set forth on Schedule 4.19(b) , (d) the rights of licensors and licensees under the licenses set forth on Schedules 4.8(b) , 4.19(a)(i) and (b) , (e) restrictive covenants, easements, rights of way, servitudes and similar burdens and defects, imperfections or irregularities of title that do not, individually or in the aggregate, materially interfere with the use of the property burdened thereby, (f) purchase money Liens arising in the ordinary course of business where the obligation secured thereby is reflected in the Net Working Capital, (g) Liens securing rental payments under the capital leases set forth on Schedule 4.19(b) , (h) Liens set forth in Schedule 1.1(c) , (i) Liens created by Buyer, or its successors and assigns and (j) the rights of lessors under leases of personal property with respect to such leased personal property.
“ Person ” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind.
“ Physical Assets ” has the meaning provided such term in Section 4.17 .
“ Post-Closing Period ” means any taxable period that begins after the Closing Date.
“ Post-Closing Portion ” means, with respect to any Straddle Period, the portion of such Straddle Period that begins on the day after the Closing Date and ends on the last day of such Straddle Period.
“ Post-Signing Tax Returns ” has the meaning provided such term in Section 6.19 .
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“ PPEC Corp. ” means, prior to the Conversion Transactions, PPEC Corporation, a Delaware corporation, and, from and after the Conversion Transactions, the Delaware limited liability company into which PPEC Corporation is converted pursuant to the Conversion Transactions.
“ PPEC Excess Expenditure Amount ” means an amount, which may be positive or negative, equal to (i) the capital contributions to the equity of PPEC LLC made directly or indirectly by Seller (including through the conversion of PPEC LLC Indebtedness for Borrowed Money into PPEC LLC equity), the proceeds of which were used by PPEC LLC prior to the Closing Date to fund the design, construction and development of the Project or that otherwise have been capitalized in accordance with GAAP consistently applied in a manner reflected on the unaudited consolidated balance sheet as of June 30, 2005 (excluding any capitalized interest expense incurred from and after May 1, 2005) minus (ii) $20,000,000.
“ PPEC LLC ” has the meaning provided such term in the third recital above.
“ Pre-Closing Off-Site Environmental Liability ” means any Loss (whether or not such Loss existed on or before the Closing Date) of the Company or any Subsidiary arising out of or relating to any (i) loss of life, injury to Persons or property or damage to the environment or natural resources (whether or not such loss, injury or damage existed on or before the Closing Date) or (ii) the remediation of Environmental Conditions required by Law, Contract or Permit (in the case of Contracts or Permits, only those entered into or obtained prior to the Closing Date, including any extension or renewal thereof; provided that the terms and provisions of such extension or renewal relating, directly or indirectly, to remediation are the same as the terms and provisions relating to remediation set forth in the Contracts and Permits as of the Closing Date), in the case of either clause (i) or (ii) above, related to Hazardous Materials that have been generated in connection with the business of the Company or any Subsidiary and on or prior to the Closing Date transported to any Off-Site Location for disposal, recycling or reuse, other than (A) Hazardous Materials transported by the Company or any Subsidiary to any Off-Site Location authorized to receive such Hazardous Materials under applicable Environmental Law or (B) Hazardous Materials transported by a Person authorized to transport such Hazardous Materials under applicable Environmental Law; provided that in the case of clause (B), to the Knowledge of Seller, such Person was to transport the Hazardous Materials to an Off-Site Location authorized to receive such Hazardous Materials; provided , further , that in the case of clauses (A) and (B), to the Knowledge of Seller, none of such Hazardous Materials have been transported to any of the facilities listed on the National Priorities List, 40 C.F.R. Part 300, Appendix B.
“ Pre-Closing On-Site Environmental Liability ” means any Loss (whether or not such Loss existed on or before the Closing Date) of the Company or any Subsidiary arising out of or relating to any loss of life or injury to any Person (whether or not such loss or injury existed on or before the Closing Date) to the extent (i) related to actual or alleged exposure to any Environmental Condition on or prior to the Closing
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Date existing at or migrating from any past or current Real Property and (ii) caused by the operations of the Company or any Subsidiary.
“ Pre-Closing Period ” has the meaning provided such term in Section 7.3(a) .
“ Pre-Closing Period Income Tax Return ” has the meaning provided such term in Section 7.3(c) .
“ Pre-Closing Period Non-Income Tax Return ” has the meaning provided such term in Section 7.3(d) .
“ Pre-Closing Period Tax Return ” has the meaning provided such term in Section 7.3(a) .
“ Pre-Closing Portion ” means, with respect to any Straddle Period, the portion of such Straddle Period that begins on the first day of such Straddle Period and ends on, and includes, the Closing Date.
“ Previous Owners ” means Columbus III Production, L.C. and Stephen D. Beauchamp.
“ Prime Rate ” means the annual prime rate of interest announced from time to time in The Wall Street Journal, Eastern Edition.
“ Prohibited Tax Action ” means (i) Seller’s failure to take (or cause to be taken) the actions described in Section 6.18(a) , (ii) Seller’s failure to take (or cause to be taken) the actions described in Section 6.20(a) , (b) , and (d) , (iii) an election by Seller or any of its Affiliates (including, on or prior to the Closing, the Company or any of its Subsidiaries) pursuant to Treasury Regulations section 301.7701-3 to change the U.S. federal income tax entity classification of any of the Company, BGS Corp., PPEC Corp., BGS LLC or PPEC LLC, (iv) any issuance or transfer of stock or, following the Conversion Transactions, membership interests, in any of the Company, BGS Corp. or PPEC Corp. that results in such entity having more than one Member on the Closing Date, and (v) any issuance or transfer of membership interests in PPEC LLC that results in such entity having more than one Member on the Closing Date.
“ Project ” has the meaning provided such term in the fourth recital above.
“ Purchase Price ” has the meaning provided such term in Section 2.2 .
“ Real Property ” means, collectively, the Owned Real Property and the Leased Real Property and all rights and interests of the Company or any Subsidiary in any real property owned by a third party (including easements, rights of way, servitudes and similar rights in favor of the Company or any Subsidiary).
“ Real Property Deductible ” has the meaning provided such term in Section 9.4(b) .
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“ Records ” means all land, title, engineering, environmental, operating, regulatory, compliance and other data, files, documents (including design documents), instruments, notes, papers, ledgers, journals, reports, abstracts, surveys, maps, books, studies and records, and accounting, legal and financing records (including FERC accounting records and original cost information and the supporting documentation) arising out of or relating to the assets, business or operations of the Company or any Subsidiary which are held by Seller or any Affiliate of Seller; provided that Seller shall be entitled to redact any information which is material to Seller’s other businesses and unrelated to the Company or any Subsidiary or privileged information to the extent relating exclusively to Seller’s other businesses.
“ Regulated Affiliate ” means San Diego Gas & Electric Company, Southern California Gas Company and any “Transmission Provider” of Seller, as that term is defined under FERC’s Standards of Conduct for Transmission Providers, 18 C.F.R. Part 358, Section 358.3(a), other than the Company or any Subsidiary.
“ Release ” means any release, spill, emission, discharge, leaking, pumping, injection (excluding the injection or withdrawal of natural gas, natural gas liquids, crude oil and other hydrocarbons into or out of the BGS Storage Facility in the ordinary course of business), deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or property.
“ Representatives ” means, as to any Person, its officers, directors, employees, counsel, accountants, financial advisers, consultants and lenders and their counsel, advisers and consultants, and with respect to Buyer, any officer, director, employee, counsel, accountant, financial adviser, consultant or lender (and their respective counsel, advisers and consultants) of Plains All American Pipeline, L.P. or Vulcan Gas Storage LLC.
“ Restricted Information ” has the meaning provided such term in Section 6.12(b) .
“ Seller ” has the meaning provided such term in the preamble to this Agreement.
“ Seller Approvals ” has the meaning provided such term in Section 3.3 .
“ Seller Indemnified Parties ” has the meaning provided such term in Section 9.2(b) .
“ Seller Marks ” has the meaning provided such term in Section 6.9 .
“ Seller Parent ” means Sempra Energy.
“ Seller Savings Plan ” means any Company Plan with a deferral account under Section 401(k) of the Code.
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“ Shares ” has the meaning provided such term in the fifth recital above.
“ Small Cap Losses ” has the meaning provided such term in Section 9.4(c) .
“ Software ” means all computer programs, databases, compilations, user interfaces and tools, and data, and all documentation related to any of the foregoing.
“ Straddle Period ” has the meaning provided such term in Section 7.3(b) .
“ Straddle Period Tax Return ” has the meaning provided such term in Section 7.3(b) .
“ Subsidiary ” and “ Subsidiaries ” have the meaning provided such terms in the third recital above.
“ Tax Authority ” means any Governmental Authority having jurisdiction over the assessment, determination, collection or imposition of any Tax.
“ Tax Indemnified Party ” has the meaning provided such term in Section 7.9(a) .
“ Tax Indemnifying Party ” has the meaning provided such term in Section 7.9(a) .
“ Tax Proceeding ” means any audit, Litigation or other proceeding with respect to Taxes.
“ Tax Returns ” means any report, return, election, declaration or other filing required to be filed with any Tax Authority, including any amendments thereto.
“ Tax Sharing Agreement ” means any agreement with respect to the sharing or allocation of, or indemnification for, Taxes or similar contract or arrangement, whether written or unwritten.
“ Taxes ” means any taxes and similar government charges (including taxes on or with respect to net or gross income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, registration, capital stock, license, payroll, employment, social security, unemployment, severance, real or personal property, excise, recordation, estimated taxes, withholding and stamp), together with any interest thereon, penalties, fines and additions to tax with respect thereto, imposed by a Governmental Authority.
“ Termination ” has the meaning provided such term in Section 6.20(c) .
“ Third-Party Claim ” has the meaning provided such term in Section 9.3(a) .
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“ Title Commitments ” means one or more commitments issued in the name of Buyer to insure at the Closing Buyer’s fee title to those parcels of Owned Real Property set forth on Schedule 4.19(a) in a manner consistent with Seller’s representations and warranties in Section 4.19(a) , pursuant to and subject to the terms, conditions and exclusions of a 1992 ALTA Owner Policy of Title Insurance, as issued by a nationally recognized title insurer.
“ Transfer Taxes ” has the meaning provided such term in Section 7.2 .
“ Transition Services Agreement ” means the Transition Services Agreement among Seller, Buyer and the Company substantially in the form of Exhibit A .
“ Treasury Regulations ” means the regulations, including temporary regulations, promulgated under the Code, as the same may be amended hereafter from time to time (including corresponding provisions of succeeding regulations).
“ WARN Act ” has the meaning provided such term in Section 4.16 .
“ Welfare Benefits ” has the meaning provided such term in Section 6.5(f) .
Section 1.2 Rules of Construction .(a) All article, section, schedule and exhibit references used in this Agreement are to articles, sections, schedules and exhibits to this Agreement unless otherwise specified. The schedules and exhibits attached to this Agreement constitute a part of this Agreement and are incorporated herein for all purposes.(b) If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb). Terms defined in the singular have the corresponding meanings in the plural, and vice versa. Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender shall include the feminine and neutral genders and vice versa. The term “includes” or “including” shall mean “including without limitation.” The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular section or article in which such words appear. The phrase “the date of this Agreement,” “date hereof” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to August 19, 2005.(c) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. Whenever any action must be taken hereunder on or by a day that is not a Business Day, then such action may be validly taken on or by the next day that is a Business Day.(d) The Parties acknowledge that each Party and its attorney has reviewed this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting Party, or any similar rule operating
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against the drafter of an agreement, shall not be applicable to the construction or interpretation of this Agreement.(e) The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.(f) All references to currency herein shall be to, and all payments required hereunder shall be paid in, Dollars.(g) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.(h) In the case of PPEC LLC, the term “ordinary course” shall be deemed to mean and be limited to action or inaction reasonably expected of a Person engaged in the development of a salt cavern natural gas storage facility.ARTICLE II
PURCHASE AND SALE; CLOSING
Section 2.1 Purchase and Sale of Membership Interests . At the Closing, upon the terms and subject to the conditions set forth in this Agreement, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase and acquire from Seller, the Membership Interests, free and clear of any Liens other than transfer restrictions imposed on equity securities by securities Laws.Section 2.2 Purchase Price .(a) Subject to the terms and conditions of this Agreement, and in consideration of the transactions described in this Agreement, the purchase price for the Membership Interests shall be Two Hundred Fifty Million Dollars ($250,000,000) plus the Estimated Closing Adjustment Amount (the “ Base Purchase Price ”), subject to adjustment following the Closing as provided in Sections 2.4 , 2.5 and 2.6 (as so adjusted, the “ Purchase Price ”). For the avoidance of doubt, if the Estimated Closing Adjustment Amount is a negative amount, it will result in a lower Base Purchase Price, and if the Estimated Closing Adjustment Amount is a positive amount, it will result in a higher Base Purchase Price.(b) Notwithstanding any other provision of this Agreement, if Seller has not delivered to Buyer the certificate contemplated by Section 2.3(b)(iii) , but Buyer waives the condition related to delivery of such certificate, (i) Buyer shall be permitted to withhold from the Purchase Price the amount required to be withheld pursuant to section 1445 of the Code as calculated by Buyer in good faith, (ii) Buyer shall not be deemed to be in default of any of its obligations under this Agreement by virtue of having withheld such amount and (iii) the amount so withheld shall be deemed to have been paid to Seller on the date that any amounts not so withheld were paid for all purposes under this Agreement.
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Section 2.3 The Closing .(a) The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New York, 10019, at 10:00 a.m. New York time on the third (3rd) Business Day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions which by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) or such other date as Buyer and Seller may mutually agree in writing (the “ Closing Date ”); provided that in no event shall the Closing occur prior to September 9, 2005. The Closing shall be deemed to have been consummated at 5:00 p.m. New York time on the Closing Date.(b) At the Closing, Seller will deliver the following documents and deliverables to Buyer:(i) an assignment of 100% of the Membership Interests in the form attached hereto as Exhibit B ;(ii) the resignations (or evidence of removal) in form and substance reasonably acceptable to Buyer of each officer or director of the Company and each Subsidiary, effective as of the Closing;(iii) a certificate that, as of the Closing Date, Seller is not a foreign person within the meaning of section 1445 of the Code, and the Treasury Regulations thereunder, such certificate to be substantially in the form described in Treasury Regulations section 1.1445-2(b)(2)(iv)(B);(iv) the Transition Services Agreement duly executed by Seller; and(v) all other documents and instruments required to be delivered by Seller on or prior to the Closing Date pursuant to Section 8.1 .(c) At the Closing, Buyer will deliver the following documents and deliverables to Seller:(i) an amount equal to the Base Purchase Price by wire transfer of immediately available funds to an account or accounts specified by Seller in writing no less than three (3) Business Days prior to the Closing Date;(ii) the Transition Services Agreement duly executed by Buyer; and(iii) all other documents and instruments required to be delivered by Buyer on or prior to the Closing Date pursuant to Section 8.2 .
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Section 2.4 Net Working Capital Reconciliation .(a) As soon as reasonably practicable following the Closing Date, Seller shall, with the cooperation and assistance of Buyer, the Company and the Subsidiaries, prepare and deliver to Buyer a calculation of Net Working Capital, together with reasonably detailed supporting information (the “ Net Working Capital Closing Statement ”). Buyer and Seller shall use their respective reasonable efforts to cause the Net Working Capital Closing Statement to be completed within ninety (90) days following the Closing Date.(b) Within thirty (30) days after Buyer’s receipt of the Net Working Capital Closing Statement (the “ Net Working Capital Evaluation Period ”), Buyer shall notify Seller if Buyer disagrees with the Net Working Capital Closing Statement and such notice shall set forth in reasonable detail the particulars of such disagreement. If Buyer does not provide a notice of disagreement within such Net Working Capital Evaluation Period, then Buyer shall be deemed to have accepted the calculations and the amounts set forth in the Net Working Capital Closing Statement, which shall then be final, binding and conclusive for all purposes hereunder. If any such notice of disagreement is timely provided, then Seller and Buyer shall each use commercially reasonable efforts for a period of thirty (30) days thereafter (the “ Net Working Capital Resolution Period ”) to resolve any disagreements with respect to the calculations in the Net Working Capital Closing Statement.(c) Neither the PPEC Excess Expenditure Amount nor the BGS Expenditure Amount shall become final and binding until the conclusion of the Net Working Capital Resolution Period and any adjustment to the Net Working Capital pursuant to this Section 2.4 shall be reflected in the adjustment of the PPEC Excess Expenditure Amount and/or the BGS Expenditure Amount to the extent applicable.(d) If, at the end of the Net Working Capital Resolution Period, the Parties continue to disagree as to items in the Net Working Capital Closing Statement, then the Independent Accountant shall resolve such remaining disagreements. The Independent Accountant shall be charged with calculating and determining, as promptly as practicable, but in any event within thirty (30) days after the date on which such dispute is referred to the Independent Accountant, the amounts of any disputed items required to determine the Net Working Capital. The costs and expenses of the Independent Accountant shall be borne fifty percent (50%) by Seller and fifty percent (50%) by Buyer. The determination of the Independent Accountant shall be final, binding and conclusive for all purposes hereunder. Such final amounts as determined by the Independent Accountant shall be used to determine the Net Working Capital adjustment to the Base Purchase Price.Section 2.5 PPEC and BGS Expenditure Adjustments .(a) At least three (3) Business Days prior to the Closing Date, Seller shall deliver to Buyer (i) a schedule setting forth Seller’s good faith calculation of the PPEC Excess Expenditure Amount (the “ Estimated PPEC Excess Expenditure Amount ”),
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together with reasonably detailed supporting information, and (ii) a schedule setting forth Seller’s good faith calculation of the BGS Expenditure Amount (the “ Estimated BGS Expenditure Amount ”), together with reasonably detailed supporting information. As soon as reasonably practicable following the Closing Date, Seller shall, with the cooperation and assistance of Buyer, the Company and the Subsidiaries, prepare and deliver to Buyer a calculation of the PPEC Excess Expenditure Amount and the BGS Expenditure Amount, together with reasonably detailed supporting information (the “ Expenditure Amount Closing Statement ”). Buyer and Seller shall use their respective reasonable efforts to cause the Expenditure Amount Closing Statement to be completed within ninety (90) days following the Closing Date.(b) Within thirty (30) days after Buyer’s receipt of the Expenditure Amount Closing Statement (the “ Expenditure Amount Evaluation Period ”), Buyer shall notify Seller if Buyer disagrees with the Expenditure Amount Closing Statement, and such notice shall set forth in reasonable detail the particulars of such disagreement. If Buyer does not provide a notice of disagreement within such Expenditure Amount Evaluation Period, then Buyer shall be deemed to have accepted the calculations and the amounts set forth in the Expenditure Amount Closing Statement, which shall then be the final, binding and conclusive for all purposes hereunder. If any such notice of disagreement is timely provided, then Seller and Buyer shall each use commercially reasonable efforts for a period of thirty (30) days thereafter (the “ Capital Adjustment Resolution Period ”) to resolve any disagreements with respect to the Expenditure Amount Closing Statement.(c) The amount designated as the Net Working Capital shall not become final and binding until the conclusion of the Capital Adjustment Resolution Period and any adjustment to the PPEC Excess Expenditure Amount and/or the BGS Expenditure Amount pursuant to this Section 2.5 shall be reflected in the adjustment of the Net Working Capital to the extent applicable.(d) If, at the end of the Capital Adjustment Resolution Period, the Parties continue to disagree as to items in the Expenditure Amount Closing Statement, then the Independent Accountant shall resolve such remaining disagreements. The Independent Accountant shall be charged with calculating and determining, as promptly as practicable, but in any event within thirty (30) days after the date on which such dispute is referred to the Independent Accountant, the amounts of any disputed items required to determine the PPEC Excess Expenditure Amount and/or the BGS Expenditure Amount. The costs and expenses of the Independent Accountant shall be borne fifty percent (50%) by Seller and fifty percent (50%) by Buyer. The determination of the Independent Accountant of such disputed items required to determine the PPEC Excess Expenditure Amount and/or the BGS Expenditure Amount, as the case may be, shall be final, binding and conclusive for all purposes hereunder.(e) Within five (5) Business Days of the date on which each of the Net Working Capital, the PPEC Excess Expenditure Amount and the BGS Expenditure Amount have become final, binding and conclusive pursuant to Section 2.4 and this Section 2.5 , Buyer or Seller will make a payment to the other as follows: (i) if the sum
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(expressed as a positive or negative number) of (A) the Month End Net Working Capital minus the Net Working Capital, (B) the Estimated PPEC Excess Expenditure Amount minus the PPEC Excess Expenditure Amount and (C) the BGS Expenditure Amount minus the Estimated BGS Expenditure Amount (collectively, the “ Final Adjustment Amount ”) is a positive number, then Seller shall pay to Buyer the Final Adjustment Amount, and (ii) if the Final Adjustment Amount is a negative amount, then Buyer shall pay to Seller the Final Adjustment Amount, in each case, together with interest accrued thereon at the Prime Rate plus two percent (2%) per annum from the Closing Date to the date such payment is made.Section 2.6 Bluewater Reserves .(a) Seller shall cause NSAI to determine the NSAI Reserve Value in accordance with the methods and procedures set forth in Schedule 2.6 . Within thirty (30) days after Buyer’s receipt of NSAI’s final determination of the NSAI Reserve Value in accordance with Schedule 2.6 , or, if the Closing Date has not occurred on or before the end of such 30-day period, within five (5) Business Days after the Closing Date, Buyer shall pay to Seller by wire transfer of immediately available funds to an account or accounts specified by Seller in writing the full amount of the NSAI Reserve Value. If the NSAI Reserve Value is a negative number neither Party shall owe to the other Party any payment in respect of the NSAI Reserve Value.(b) The Parties hereby agree that the provisions of Schedule 2.6, Section I.A. are incorporated into this Agreement by reference.ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING SELLER
Except as otherwise disclosed to Buyer in the schedule (the “ Disclosure Schedule ”) delivered to Buyer by Seller prior to the execution of this Agreement (each numbered Schedule of which qualifies only the correspondingly numbered representation, warranty or covenant to the extent specified therein and such other representations, warranties or covenants to the extent a matter in such numbered Schedule is disclosed in such a way as to make its relevance to such other representation, warranty or covenant reasonably apparent), Seller hereby represents and warrants to Buyer as follows:
Section 3.1 Organization of Seller; Authority . Seller is a corporation, duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted.Section 3.2 Authorization; Enforceability . Seller has all requisite corporate power and authority to execute and deliver this Agreement and to perform all obligations contemplated to be performed by it hereunder. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated
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hereby have been duly and validly authorized and approved by all requisite corporate action on the part of Seller, and no additional authorization on the part of Seller is necessary in connection with the execution, delivery and performance by Seller of this Agreement. This Agreement has been duly and validly executed and delivered by Seller, and this Agreement constitutes a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.Section 3.3 No Conflict . The execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereby by Seller, assuming all required filings, consents, approvals, registrations, declarations, orders, authorizations and notices set forth in Schedule 3.3 (collectively, the “ Seller Approvals ”) have been made, given or obtained, do not and shall not:(a) violate any Organizational Document of Seller or any of its Affiliates;(b) violate any Law applicable to Seller or any of its Affiliates (other than the Company and the Subsidiaries); or(c) (i) violate, conflict with, result in a breach of any provision of, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the termination of, any of the terms, conditions or provisions of any Contract to which Seller or any of its Affiliates (other than the Company and the Subsidiaries) is a party or by which any of them or any of their respective assets or properties may be bound, or (ii) result in the creation of any Lien upon any of the Shares or the Membership Interests, except in the case of clauses (a) (solely with respect to Affiliates of Seller), (b) or (c)(i) above, as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.Section 3.4 Consents and Approvals . No material filing or registration with, declaration or notification to, or order, authorization, consent or approval of, any Governmental Authority or any other Person is required in connection with the execution, delivery and performance of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby, except for (i) the Seller Approvals and (ii) such consents, approvals, orders, authorizations, notifications, registrations, declarations and filings the failure of which to be obtained or made would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.Section 3.5 Litigation . There is no Litigation pending or, to the Knowledge of Seller, threatened by any Person against Seller or any of its Affiliates (other than the Company or and the Subsidiaries) or any of their properties or assets that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and there is no order or unsatisfied judgment from any Governmental Authority binding upon or affecting Seller or any of its Affiliates (other than the Company or and the Subsidiaries) or any of their properties or assets that would
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reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.Section 3.6 Brokers’ Fees . No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by Seller or any of its Affiliates.ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING
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