<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 15, 1996 (November
1, 1996)
AQUILA GAS PIPELINE CORPORATION
-------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 1-12426 47-0731171
- ------------------------------- ---------- ----------------------
(State or other jurisdiction of Commission (I.R.S. Employer
incorporation or organization) File Number Identification Number)
100 N.E. LOOP 410, SUITE 1000, SAN ANTONIO, TEXAS 78216-4754
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (210) 342-0685
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 1, 1996 and November 1, 1996, the Company (through AQP Holdings
L.P., a 98% owned subsidiary) completed the acquisition of 15% and 25%,
respectively, of the outstanding capital stock of Oasis Pipe Line Company
(Oasis) and related transportation rights from Dow Hydrocarbons and Resources
Inc. (DHRI) for a purchase price of $47.1 and $84.0 million, respectively (in
each case subject to certain adjustments). The transportation rights related
to the 15% and 25% capital stock acquisitions of Oasis currently amount to
approximately 120 and 200 million cubic feet per day (MMcf/d), respectively, of
firm intrastate transportation between the Waha, Texas hub and the Katy, Texas
hub, plus the opportunity to utilize excess capacity on an interruptible basis.
The Company primarily funded the acquisitions utilizing its existing revolving
credit agreements, as amended.
In connection with the November 1, 1996 acquisition of 25% of the
capital stock of Oasis, AQP Holdings L.P. entered into certain option
arrangements with El Paso Natural Gas Company and a subsidiary of Tenneco
Energy (Tenneco). The option arrangements provide that, under certain
circumstances, AQP Holdings L.P. may be required to sell to a wholly-owned
subsidiary of Tenneco one-fifth of the Oasis capital stock acquired by AQP
Holdings L.P. on November 1, 1996 (or 5% of all Oasis capital stock), including
one-fifth of the related transportation rights. If the option is exercised,
the closing of the sale to the subsidiary of Tenneco will be on April 1, 1997.
The purchase price would be approximately $16.8 million, subject to certain
adjustments.
The Oasis pipeline system consists of an approximately 600-mile pipeline
system and related mainline compression which connects the Waha, Texas hub
located in the Permian Basin producing area of West Texas to major marketing
pipelines at the Katy, Texas hub near Houston, Texas. Oasis has a nominal one
(1) billion cubic feet per day of throughput capacity to move gas between West
Texas and the Katy, Texas hub.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
As of the date of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the financial
statement information required by this Item 7(a). In
accordance with Item 7(a)(4) of Form 8-K, such financial
statement information shall be filed by amendment to this
Form 8-K, no later than 60 days after date of this report.
(B) PRO FORMA FINANCIAL INFORMATION
As of the date of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the pro forma
financial information required by this Item 7(b). In
accordance with Item 7(b)(2) of Form 8-K, such pro forma
financial information shall be filed by amendment to this Form
8-K, no later than 60 days after date of this report.
(C) EXHIBITS
Incorporated herein by reference to Index to Exhibits.
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AQUILA GAS PIPELINE CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AQUILA GAS PIPELINE CORPORATION
/s/ Damon C. Button
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Date: November 15, 1996 By: Damon C. Button
Vice President, Treasurer
and Chief Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
10.1 Stock Option Agreement dated October 29, 1996 between AQP
Holdings L.P. and El Paso Natural Gas Company
10.2 Amendment No. 2 to Revolving Credit Agreement dated
September 26, 1994 between Aquila Energy Corporation and
Aquila Gas Pipeline Corporation
10.3 Amendment No. 3 to Revolving Credit Agreement dated August
1, 1992 between Aquila Southwest Energy Corporation and
Aquila Energy Corporation
</TABLE>
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Aquila Gas Pipeline Corporation
File Number 1-12426
Exhibit 10.1
Stock Option Agreement dated October 29, 1996
between AQP Holdings L.P. and El Paso Natural Gas Company
<PAGE> 2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Agreement") entered into on October 29, 1996,
by and between AQP Holdings LP, a Delaware limited partnership ("AQP"), and El
Paso Natural Gas Company, a Delaware corporation ("El Paso").
RECITALS
A. AQP entered into an Agreement, dated August 28, 1996 (the
"Purchase Agreement"), with Dow Hydrocarbons and Resources Inc. ("DHRI")
pursuant to which AQP has agreed to purchase certain assets (the "Interests")
from DHRI, subject to certain contingencies and conditions set forth in the
Purchase Agreement.
B. Tennessee Gas Pipeline Company, a Delaware corporation
("Tennessee"), holds certain preferential purchase rights in respect of the
Interests pursuant to the 1989 Capital Stock Agreement (as defined in Section
1.1).
C. El Paso has entered into an Agreement and Plan of Merger, dated
June 19, 1996 (the "Merger Agreement") by and among El Paso, El Paso Merger
Company, and Tenneco, Inc. ("Tenneco") pursuant to which El Paso Merger Company
will merge with and into Tenneco (the "Merger") thus resulting in Tenneco
becoming a subsidiary of El Paso, controlled by El Paso (with El Paso owning
all of the common stock of Tenneco; and Tenneco also having a class of voting
preferred stock held by the public).
D. In consideration of the execution of the Consent and Agreement,
attached hereto as Exhibit A, by Tennessee and the other parties to such
Consent and Agreement, AQP is willing to grant to El Paso the option to cause
Channel (as defined herein) to purchase a portion of the Interests from AQP,
all on and subject to the terms and conditions set forth in this Agreement.
Channel is an indirect, wholly-owned subsidiary of Tenneco, and will by virtue
of the Merger become a subsidiary of El Paso.
NOW, THEREFORE, in consideration of premises and the parties' respective
agreements and covenants set forth below, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 The following terms shall have the definitions set forth in the
Purchase Agreement:
(a) "Adjustment Amount"
(b) "Affiliate"
(c) "Baseline Balance Sheet"
(d) "Business Day"
(e) "1989 Capital Stock Agreement"
(f) "Channel"
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(g) "Closing"
(h) "Closing Date"
(i) "Closing Date Balance Sheet"
(j ) "Contracts" or "Other Agreements"
(k) "GAAP"
(l) "Governmental Agency"
(m) "HSR Act"
(n) "Interests"
(o) "Law"
(p) "Lien or Other Encumbrance"
(q) "Oasis"
(r) "Organizational Documents"
(s) "Other Regulatory Body"
(t) "Person"
(u) "Property"
(v) "Purchase Price"
(w) "Transportation Rights"
1.2 Additional Definitions. The following terms shall be defined as
set forth below:
(a) "Exercise Deadline Date" shall mean March 3, 1997.
(b) "Option Closing" shall have the meaning set forth in Section 3.1.
(c) "Month End Balance Sheet Date" shall mean the close of business
on March 31, 1997.
(d) "Line Pack Gas Agreement" shall have the meaning set forth in
Section 8.9.
(e) The term "person" will have the same meaning as "Person", unless
the context clearly indicates otherwise.
1.3 References. References in this Agreement to Sections or
Schedules shall be to Sections and Schedules of this Agreement, unless
expressly stated to the contrary. References in this Agreement to "hereby,"
"herein," "hereinafter," "hereinbelow," "hereof," "hereunder" and words of
similar import shall be to this Agreement in its entirety and not only to the
particular Section or Schedule in which such reference appears, unless
expressly stated to the contrary.
1.4 Enforceability. Statements in this Agreement to the effect that
an agreement or other document is "enforceable" or "binding" shall be deemed to
be made subject to the laws of general application relating to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights and to general principles of equity
(whether applied at law or in equity).
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ARTICLE 2
THE OPTION
2.1 Grant. Subject to the terms and conditions set forth in this
Agreement, AQP hereby grants to El Paso the exclusive and irrevocable option
(the "Option") to cause Channel to purchase the following: (i) three hundred
thirty three and one-half (333.5) shares of the common stock of Oasis included
in the Interests (the "Common Shares"), (ii) sixteen and one-half (16.5) shares
of the preference stock of Oasis included in the Interests (the "Preference
Shares"), and (iii) twenty percent (20%) of the Transportation Rights. The
assets to be acquired upon exercise of the Option are referred to herein
collectively as the "Subject Property."
2.2 Exercise Price. Subject to the provisions of Article 4 of this
Agreement relating to adjustments, the price for the exercise of the Option by
El Paso (the "Exercise Price") shall be the product of (x) .2 multiplied by (y)
the Purchase Price.
2.3 Exercise of the Option. The Option shall become exercisable only
upon the occurrence of each of the following: (i) the Closing of the
transactions contemplated by the Purchase Agreement shall have occurred; and
(ii) the Merger shall have been consummated and Channel shall as a result
thereof have become an indirect subsidiary of El Paso as described in
Paragraphs C and D of the "Recitals" to this Agreement (the foregoing
conditions set forth in (i) and (ii) being referred to herein as the "Exercise
Conditions"). At any time after the Exercise Conditions have occurred, and on
or prior to the Exercise Deadline Date, El Paso may exercise the Option by
delivery to AQP of written notice of exercise of the Option. Upon delivery of
such notice, AQP shall sell and El Paso shall cause Channel to purchase the
Subject Property pursuant to Article 3 of this Agreement.
2.4 Failure to Exercise. Unless El Paso exercises the Option on or
before the Exercise Deadline Date, the Option shall expire, this Agreement
shall terminate, and the parties to this Agreement shall have no further
liability hereunder.
ARTICLE 3
CLOSING
3.1 Date, Time and Place of Closing. The consummation of the sale of
the Subject Property by AQP to Channel ( the "Option Closing") shall take place
at the offices of Aquila Energy, located at 10370 Richmond Avenue, Suite 700,
Houston, Texas, commencing at 10:00 a.m., Houston time, on April 1, 1997 (the
"Option Closing Date").
3.2 Deliveries by AQP. At the Option Closing, AQP shall deliver to
Channel certificates representing the Common Shares and the Preference Shares,
duly endorsed or accompanied by duly executed stock powers, (ii) an agreement
concerning the assignment and assumption of the portion of the Transportation
Rights included in the Subject Property in the form set forth in Schedule 3.2;
and (iii) all other documents and agreements required pursuant to the terms
hereof.
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3.3 Deliveries by El Paso and Channel at Option Closing. At the
Option Closing, El Paso shall deliver to AQP, or shall cause Channel to deliver
to AQP (as appropriate) (i) the Exercise Price by wire transfer of immediately
available funds to the account or accounts specified by AQP, (ii) an agreement
concerning the assignment and assumption of the portion of the Transportation
Rights included in the Subject Property in the form set forth in Schedule 3.2;
and (iii) all other documents and agreements required pursuant to the terms
hereof.
ARTICLE 4
ADJUSTMENTS TO EXERCISE PRICE
4.1 Purchase Agreement Adjustment Amount.
(a) If, pursuant to Article 2 of the Purchase Agreement, AQP receives
payment from DHRI of an Adjustment Amount prior to the Option Closing Date, the
Exercise Price shall be reduced by an amount equal to (x) .2 multiplied by (y)
such Adjustment Amount. For purposes of this Section 4.1, the Adjustment
Amount shall not be deemed to include any interest received by AQP in respect
of such Adjustment Amount pursuant to Section 2.3(d) of the Purchase Agreement.
(b) If AQP receives payment from DHRI of an Adjustment Amount on or
after the Option Closing Date, AQP shall pay to Channel an amount equal to (x)
.2 multiplied by (y) such Adjustment Amount, together with interest on such
amount at the interest rate provided for in Section 2.3(d) of the Purchase
Agreement from the Option Closing Date until the date of payment of such amount
by AQP to Channel. AQP shall pay such amount by wire transfer of immediately
available funds to an account designated by Channel within ten (10) days
following AQP's receipt of payment from DHRI of the Adjustment Amount and the
interest due thereon.
4.2 Income or Dividend Adjustment to Exercise Price.
(a) Option Closing Balance Sheet and Option Closing Income Statement.
Within 120 days after the Option Closing Date, El Paso and AQP shall cause
Oasis to prepare a balance sheet for Oasis as of the close of business on the
Month End Balance Sheet Date (the "Option Closing Balance Sheet") and an income
statement for Oasis for the period November 1, 1996 through and including March
31, 1997 (the "Option Closing Income Statement"). The Option Closing Balance
Sheet shall be prepared in accordance with GAAP, using the same methods and
criteria employed by Oasis in connection with its preparation of the Baseline
Balance Sheet, and shall present fairly the financial position of Oasis as of
the close of business on the Month End Balance Sheet Date. The Option Closing
Income Statement shall be prepared in accordance with GAAP, on a basis
consistent with previous periods and the basis used in preparation of the
Option Closing Balance Sheet, and shall present fairly the income and expenses
of Oasis for the period covered thereby. Upon completion of the Option
Closing Balance Sheet and the Option Closing Income Statement, copies thereof
shall promptly be provided to AQP and El Paso.
(b) Disputes. If either party (a "Disputing Party") disputes any
matter with respect to the Option Closing Balance Sheet or the Option Closing
Income Statement, such Disputing Party will give notice to the other party
within 60 days after receipt of the Option Closing
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Balance Sheet and the Option Closing Income Statement. Any such matters (the
"Disputed Matters") shall be submitted to arbitration in Houston, Texas within
30 days after delivery of the foregoing notice of dispute from a Disputing
Party unless El Paso and AQP agree in writing to extend such 30-day period in
an attempt to negotiate or seek mediation of a settlement of the Disputed
Matters. The arbitrator (the "Arbitrator") shall be any one of the nationally
recognized independent accounting firms, which is on the date hereof among the
six largest national accounting firms (a "Big Six Accounting Firm"), mutually
agreed to by AQP and El Paso. Any reference herein to a Big Six Accounting
Firm shall be deemed to include a reference to any member or employee thereof
(who is a certified public accountant) which any such firm may designate as the
Arbitrator on its behalf. If within 20 days following the expiration of the
30-day period referred to above or any extension thereof AQP and El Paso shall
have failed to agree upon the selection of the Arbitrator or any such
Arbitrator selected by them shall not have agreed to perform the services
called for hereunder, the Arbitrator shall thereupon be selected by reference
to the Houston, Texas office of and in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, with preference
being given any one of the Big Six Accounting Firms or any member or employee
thereof (who is a certified public accountant) which or who may be willing to
perform such services, other than any such firm which is then employed by
Oasis, AQP or El Paso, or any Affiliate of any of them. The Arbitrator shall
consider only the Disputed Matters and the arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time the Disputed Matter is submitted to
arbitration. The Arbitrator shall act promptly, but in no event later than 30
days from the close of hearing, to resolve all Disputed Matters and its
decision with respect to all Disputed Matters shall be final and binding upon
the parties hereto and shall not be appealable to any court. Each party shall
bear its own expenses associated with the preparation and presentation of its
position, and all costs and expenses of the Arbitrator shall be shared equally
by AQP and El Paso.
(c) Shareholders' Equity and Net Earnings. The Exercise Price shall
be subject to adjustment pursuant to Section 4.2(d), based on Shareholders'
Equity as reflected in the Option Closing Balance Sheet ("Option Closing
Shareholders' Equity") and Shareholders' Equity as reflected in the Closing
Date Balance Sheet ("Closing Date Shareholders' Equity"), and Post Closing
Dividends and Post Closing Net Earnings (as those terms are defined below).
"Shareholders' Equity" shall mean total assets of Oasis less total liabilities
of Oasis determined in accordance with GAAP.
(d) Income or Dividend Adjustment. Following receipt of the Option
Closing Balance Sheet and the Option Closing Income Statement, the Exercise
Price shall be subject to adjustment, pursuant to (i) or (ii) of this Section
4.2(d), as follows:
(i) If Option Closing Shareholders' Equity is greater than
Closing Date Shareholders' Equity, the Exercise Price shall be increased by an
amount equal to .05 multiplied by the difference of (A) Option Closing
Shareholders' Equity minus (B) Closing Date Shareholders' Equity. The amount
of such adjustment shall be referred to as the "Income Adjustment."
(ii) If Option Closing Shareholders' Equity is less than Closing
Date Shareholders' Equity, the Exercise Price shall be reduced by an amount
equal to .05 multiplied by the lesser of (A) the difference of (1) Closing Date
Shareholders' Equity minus (2) Option Closing Shareholders' Equity; or (B) the
difference of (1) Post Closing Dividends (as defined
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below) minus (2) Post Closing Net Earnings (as defined below). The amount of
such adjustment shall be referred to as the "Dividend Adjustment." As used
herein "Post Closing Dividends" means the amount of any cash dividends
distributed to holders of Oasis Common Stock of record as of any date from
November 1, 1996 through and including March 31, 1997. As used herein "Post
Closing Net Earnings" means the net earnings of Oasis for the period November
1, 1996 through and including March 31, 1997, determined in accordance with
GAAP; provided that if such earnings are less than 0, then "Post Closing Net
Earnings" shall be deemed to be 0.
(e) Payment. Within 60 days after receipt by the parties of the
Option Closing Balance Sheet, (i) if there is an Income Adjustment pursuant to
Section 4.2(d)(i), then El Paso shall cause Channel to pay to AQP by wire
transfer of immediately available funds the Income Adjustment with interest
thereon from the Option Closing Date to the date of payment, or, (ii) if there
is a Dividend Adjustment pursuant to Section 4.2(d)(ii), then AQP shall pay to
Channel by wire transfer of immediately available funds the Dividend Adjustment
with interest thereon from the Option Closing Date to the date of payment. In
either case, interest shall be calculated at a fluctuating rate per annum which
shall be the 30-day LIBOR rate quoted from time to time by First Chicago
National Bank. If there are any Disputed Matters, the Income Adjustment or the
Dividend Adjustment finally determined to be due either by agreement of the
parties or by arbitration shall be paid by wire transfer of immediately
available funds to the party entitled to such adjustment within 10 days after
such determination, with interest as aforesaid.
(f) Offsets. Amounts determined to be due from one party pursuant to
this Agreement may be offset against amounts due from the other party pursuant
to this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF AQP
AQP hereby represents and warrants to El Paso as follows:
5.1 Corporate Organization. AQP is a limited partnership, duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and is duly qualified or licensed to do business in the state of
Texas.
5.2 Execution and Delivery. AQP has full corporate power and
authority to enter into this Agreement and all other agreements to be executed
and delivered by AQP hereunder, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
This Agreement has been duly executed and delivered on behalf of AQP and
constitutes a valid and binding obligation of AQP enforceable against AQP in
accordance with its terms.
5.3 No Conflicts. Except as set forth in Schedule 5.3, neither the
execution, delivery or performance of this Agreement and all other agreements
contemplated hereby nor the consummation of the transactions contemplated
hereby or thereby in accordance with the terms of this Agreement and such other
agreements nor compliance with the provisions hereof or thereof by AQP will,
with or without the passage of time or the giving of notice, or both (i)
require any consent or approval of the partners or other governing body of AQP
which has not already been obtained, (ii) conflict with, constitute a breach,
violation or termination of any
<PAGE> 8
provision of, or constitute a default under, any Contracts and Other Agreements
to which AQP is a party or by which AQP is bound or to which any of the
Property of AQP is subject, (iii) result in an acceleration of or increase in
any amounts due under any instrument evidencing debt of AQP, (iv) conflict with
or violate the Organizational Documents of AQP, (v) result in the creation or
imposition of any Lien or Other Encumbrance against any of the Subject
Property, or (vi) violate any Law applicable to AQP or any of its Property.
5.4 Approvals, Licenses and Authorizations; No Adverse Action.
Except as set forth on Schedule 5.4, (i) no order, license, consent, waiver,
authorization or approval of, or exemption by, or giving of notice to, or
filing or registration with or the taking of any other action by or in respect
of, any Person (including without limitation any Governmental Agency or Other
Regulatory Body), and (ii) no filing, recording, publication or registration in
any public office or any other place, is required by or on behalf of AQP in
order to (x) authorize AQP's execution, delivery, and performance of this
Agreement or any other agreement, document, or instrument contemplated hereby
to be executed and delivered by AQP and the consummation by AQP of the
transactions contemplated hereby or thereby, or (y) assure the legality,
validity, binding effect, or enforceability of this Agreement or such other
agreements, documents or instruments.
5.5 Title to the Subject Property. At the Option Closing, AQP shall
convey to Channel its right, title and interest in the Subject Property and
shall not warrant the title to the Subject Property in any manner except that
AQP's right, title and interest in the Subject Property is free and clear of
all liens, security interests and encumbrances created by any act of AQP other
than as set forth on Schedule 5.5.
5.6 Line Pack Gas Agreement. Any references in the representations
and warranties set forth in this Article 5 to other agreements to be executed
and delivered by AQP hereunder or to transactions contemplated thereby or other
similar references to other agreements, documents, instruments or obligations
of AQP or to be entered into or delivered by AQP, shall be deemed to include
the Line Pack Gas Agreement.
5.7 Exclusivity of Warranties and Representations. NOTWITHSTANDING
ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS AGREEMENT, AQP MAKES NO
REPRESENTATION OR WARRANTY WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT. EXCEPT FOR THE
WARRANTIES AND REPRESENTATIONS EXPRESSLY MADE BY AQP IN THIS AGREEMENT, CHANNEL
IS PURCHASING THE SUBJECT PROPERTY "AS IS" WITH ANY AND ALL LATENT AND PATENT
DEFECTS.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF EL PASO
El Paso hereby represents and warrants to AQP as follows:
6.1 Corporate Organization. El Paso is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and is duly qualified or licensed to do business as a foreign
corporation in the state of Texas.
<PAGE> 9
6.2 Execution and Delivery. El Paso has full corporate power and
authority to enter into this Agreement and all other agreements to be delivered
by El Paso hereunder, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered on behalf of El Paso and constitutes a
valid and binding obligation of El Paso enforceable against El Paso in
accordance with its terms.
6.3 No Conflicts. Except as set forth in Schedule 6.3, neither the
execution, delivery or performance of this Agreement and all other agreements
contemplated hereby nor the consummation of the transactions contemplated
hereby or thereby in accordance with the terms of this Agreement and such other
agreements nor compliance with the provisions hereof or thereof by El Paso
will, with or without the passage of time or the giving of notice, or both: (i)
require any consent or approval of the stockholders, directors or other
governing body of El Paso which has not already been obtained; (ii) conflict
with, constitute a breach, violation or termination of any provision of, or
constitute a default under, any Contracts and Other Agreements to which El Paso
is a party or by which El Paso is bound or to which any of the Property of El
Paso is subject, (iii) result in an acceleration of or increase in any amounts
due under any instrument evidencing debt of El Paso, (iv) conflict with or
violate the Organizational Documents of El Paso, or (v) violate any Law
applicable to El Paso or any of its Property.
6.4 Approvals, Licenses and Authorizations: No Adverse Action.
Except as set forth on Schedule 6.4, (i) no order, license, consent, waiver,
authorization or approval of, or exemption by, or giving of notice to, or
filing or registration with or the taking of any other action by or in respect
of, any Person (including without limitation any Governmental Agency or Other
Regulatory Body), and (ii) no filing, recording, publication or registration in
any public office or any other place, is required by or on behalf of El Paso in
order to (x) authorize El Paso's execution, delivery, and performance of this
Agreement or any other agreement, document, or instrument contemplated hereby
to be executed and delivered by El Paso and the consummation by El Paso of the
transactions contemplated hereby or thereby, or (y) assure the legality,
validity, binding effect, or enforceability of this Agreement or such other
agreements, documents or instruments.
6.5 Representations and Warranties Effective Upon Option Exercise.
Upon the exercise of the Option by El Paso, and by virtue of such exercise and
without need for further action on behalf of El Paso or any other party, El
Paso shall be deemed to have made the following additional representations and
warranties to AQP:
(a) Channel is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware, and is duly
qualified or licensed to do business as a foreign corporation in the state of
Texas. Channel is an indirect subsidiary of El Paso and is controlled by El
Paso as described in Paragraphs C and D of the "Recitals" to this Agreement..
(b) Channel has full corporate power and authority to enter into
all agreements to be delivered by Channel hereunder, to perform its obligations
thereunder and to consummate the transactions contemplated by this Agreement
and such other agreements.
<PAGE> 10
(c) Neither the execution, delivery or performance of the
agreements contemplated hereby to be executed, delivered or performed by
Channel nor the performance of Channel nor the consummation of the transactions
contemplated by this Agreement or such other agreements in accordance with the
terms of this Agreement and such other agreements nor compliance with the
provisions of any of the foregoing by Channel will, with or without the
passage of time or the giving of notice, or both: (i) require any consent or
approval of the stockholders, directors or other governing body of Channel
which has not already been obtained; (ii) conflict with, constitute a breach,
violation or termination of any provision of, or constitute a default under,
any Contracts and Other Agreements to which Channel is a party or by which
Channel is bound or to which any of the Property of Channel is subject, (iii)
result in an acceleration of or increase in any amounts due under any
instrument evidencing debt of Channel, (iv) conflict with or violate the
Organizational Documents of Channel, or (v) violate any Law applicable to
Channel or any of its Property.
(d) (i) No order, license, consent, waiver, authorization or
approval of, or exemption by, or giving of notice to, or filing or registration
with or the taking of any other action by or in respect of, any Person
(including without limitation any Governmental Agency or Other Regulatory
Body), and (ii) no filing, recording, publication or registration in any public
office or any other place, is required by or on behalf of Channel in order to
(x) authorize Channel's execution, delivery, and performance of any agreement,
document, or instrument contemplated hereby to be executed and delivered by
Channel and the performance by Channel or the consummation by Channel of the
transactions contemplated by this Agreement or such other agreements, documents
or instruments, or (y) assure the legality, validity, binding effect, or
enforceability of this Agreement or such other agreements, documents or
instruments.
6.6 Line Pack Gas Agreement. Any references in the representations
and warranties set forth in this Article 6 to other agreements to be executed
and delivered by El Paso or Channel hereunder or to transactions contemplated
thereby or other similar references to other agreements, documents, instruments
or obligations of El Paso or Channel or to be entered into or delivered by El
Paso or Channel, shall be deemed to include the Line Pack Gas Agreement.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 Further Assurances. Each party shall execute and deliver or
cause to be executed and delivered to the other party such further instruments
of transfer, assignment and conveyance as such other party reasonably may
require to more effectively carry out the transfer of the Subject Property and
the consummation of the transactions contemplated by this Agreement.
7.2 Compliance. Each of AQP and El Paso agrees to (i) use its
reasonable best efforts to cause all obligations imposed upon it under this
Agreement to be duly complied with, and to cause all conditions precedent to
its obligations under this Agreement to be satisfied prior to the Option
Closing Date, and (ii) use reasonable best efforts to obtain any and all
consents, waivers, amendments, modifications, approvals, authorizations,
novations and licenses necessary for the consummation of the transactions
contemplated by this Agreement.
<PAGE> 11
ARTICLE 8
CONDITIONS TO EL PASO'S OBLIGATIONS
The obligation of El Paso to cause Channel to consummate the
transactions contemplated hereunder is subject to the satisfaction on or prior
to the Option Closing Date of the conditions set forth below. Notwithstanding
the failure of any one or more of such conditions, El Paso may nevertheless
cause Channel to proceed with the Closing.
8.1 Compliance. AQP shall, in all material respects, have performed
all of its obligations and agreements, and complied with all covenants,
warranties and conditions contained in this Agreement which are required to be
performed or complied with by AQP on or prior to the Option Closing Date.
8.2 Representations and Warranties. The representations and
warranties of AQP contained in this Agreement shall be true, complete and
correct in all material respects on and as of the Option Closing Date with the
same force and effect as though such representations and warranties had been
made or given on the Option Closing Date.
8.3 Certificate. AQP shall have delivered to El Paso a certificate
in the form attached as Schedule 8.3, dated the Option Closing Date and signed
by a duly authorized officer of AQP's general partner.
8.4 Good Standing. AQP shall have delivered to El Paso certificates
issued by appropriate governmental authorities evidencing (i) the good standing
of AQP as a limited partnership in its state of organization as of a date not
more than ten (10) days prior to the Option Closing Date, and (ii) as a limited
partnership qualified to do business in the state of Texas as of a date not
more than ten (10) days prior to the Option Closing Date.
8.5 Waiting Periods. The filing requirements of the HSR Act relating
to the transactions contemplated by this Agreement, if any, shall have been
complied with and the waiting period related thereto terminated or expired and
there shall be no action taken or instituted by the Department of Justice or
the Federal Trade Commission or any Other Regulatory Body to delay or otherwise
enjoin the transactions contemplated by this Agreement, which action has not
been settled, terminated or dismissed, that prohibits the transaction
contemplated hereby or is unduly burdensome to either AQP or El Paso.
8.6 No Prohibition. As of the Option Closing Date, there shall be no
writ, injunction, preliminary restraining order or other order of any nature
issued by a court of competent jurisdiction directing that the transactions
contemplated by this Agreement not be consummated nor shall the consummation of
the transactions contemplated hereby occur if such consummation is prohibited
by any federal, state or local laws or regulations.
8.7 No Claim Regarding the Interests. There must not have been made
or threatened by any person any claim asserting that such person is the holder
or the beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any of the Subject Property.
8.8 Receipt. AQP shall have delivered to Channel a Receipt in the
form set forth as Schedule 8.8.
<PAGE> 12
8.9 Line Pack Assignment. AQP shall have executed and delivered to
Channel the "Assignment" which is attached as Schedule 2.0(a) to the Line Pack
Gas Agreement, dated of even date herewith, by and between AQP and El Paso (the
"Line Pack Gas Agreement").
ARTICLE 9
CONDITIONS TO AQP'S OBLIGATIONS
The obligation of AQP to consummate the transactions contemplated
hereunder is subject to the satisfaction on or prior to the Option Closing Date
of the conditions set forth below. Notwithstanding the failure of any one or
more of such conditions, AQP may nevertheless proceed with the Closing.
9.1 Delivery of Notice. El Paso shall have delivered to AQP the
notice of exercise of the Option pursuant to Section 2.3 of this Agreement.
9.2 Exercise Conditions. The Exercise Conditions shall have
occurred.
9.3 Compliance With Agreement. El Paso shall, in all material
respects, have performed all of its obligations and agreements, and complied
with all covenants, warranties and conditions contained in this Agreement which
are required to be performed or complied with by El Paso on or prior to the
Option Closing Date, and El Paso shall have caused Channel to perform each of
the matters and to have taken each of the actions which are required hereunder
to be performed or taken by Channel on or prior to the Option Closing Date.
9.4 Representations and Warranties. The representations and
warranties of El Paso contained in this Agreement shall be true, complete and
correct in all material respects on and as of the Option Closing Date with the
same force and effect as though such representations and warranties had been
made or given on the Option Closing Date.
9.5 Certificate. El Paso shall have delivered to AQP a certificate
in the form attached as Schedule 9.5, dated the Option Closing Date and signed
by a duly authorized officer of El Paso.
9.6 Good Standing. Each of El Paso and Channel shall have delivered
to Seller a certificate issued by the appropriate governmental authority
evidencing (i) its good standing in its state of incorporation as of a date not
more than ten (10) days prior to the Option Closing Date, and (ii) as a
corporation qualified to do business in the state of Texas as of a date not
more than ten (10) days prior to the Option Closing Date.
9.7 Waiting Periods. The filing requirements of the HSR Act relating
to the transactions contemplated by this Agreement, if any, shall have been
complied with and the waiting period related thereto terminated or expired and
there shall be no action taken or instituted by the Department of Justice or
the Federal Trade Commission or any Other Regulatory Body to delay or otherwise
enjoin the transactions contemplated by this Agreement, which action has not
been settled, terminated or dismissed, that prohibits the transaction
contemplated hereby or is unduly burdensome to either AQP or El Paso.
<PAGE> 13
9.8 No Prohibition. As of the Option Closing Date there shall be no
writ, injunction, preliminary restraining order or other order of any nature
issued by a court of competent jurisdiction directing that the transactions
contemplated by this Agreement not be consummated nor shall the consummation of
the transactions contemplated hereby occur if such consummation is prohibited
by any laws.
9.9 No Claim Regarding the Interests. Except as provided by Article
9A, there must not have been made or threatened by any person any claim
asserting that such person is the holder or the beneficial owner of, or has the
right to acquire or to obtain beneficial ownership of, any of the Subject
Property.
9.10 Other Agreements. As to those agreements listed on Schedule
9.10(a), AQP and its Affiliates either (i) shall have been fully released from
all obligations to third parties with respect of those agreements, or (ii)
shall have received the agreement from Channel, in the form of Schedule
9.10(b). El Paso also shall have caused Channel to deliver to Texas Commerce
Bank National Association, as Trustee under a Trust Indenture dated as of
February 1, 1990, the documents required under Sections 7(ii), 7(iii), and
7(vi) of that certain Intratex Consent and Agreement dated February 1, 1990
(the "Intratex Consent"), and the approval referred to in Section 7(vii) of the
Intratex Consent shall have been obtained. El Paso shall cause Channel to pay
on behalf of AQP the fees and expenses of the Trustee and Noteholder's counsel
referred to in Section 7 of the Intratex Consent.
9.11 Receipt. Channel shall have delivered to AQP the Receipt in the
form attached as Schedule 9.11.
9.12 Guaranty. El Paso shall have delivered to AQP the Guaranty with
respect to Channel's obligations in the form attached as Schedule 9.12.
9.13 Line Pack Assignment. Channel shall have executed and delivered
to AQP the "Assignment" which is attached as Schedule 2.0(a) to the Line Pack
Gas Agreement.
ARTICLE 9A
PRECLOSING ADVERSE CLAIM
In the event that, prior to the Option Closing, there shall have been
made or threatened by any Person any claim asserting that such Person is the
holder or the beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any of the Subject Property, then El Paso shall notify
AQP of such claim as soon as possible, and El Paso shall have the right to
elect, by notice delivered to AQP at least 15 days prior to April 1, 1997 (or
if such claim is asserted within such 15 day period and on or prior to March
27, 1997, then by notice delivered to and actually received by AQP on or before
March 27, 1997), to proceed with the Option Closing (provided that all of the
conditions set forth in Article 9, other than the condition set forth in
Section 9.9, have been satisfied), and the following provisions shall apply:
(i) If the claim is based on circumstances that constitute a
breach of the representations and warranties of AQP set forth in Article 5, the
parties' respective rights and remedies shall be governed by Section 10.1;
(ii) If the claim is based on any circumstances other than those
described in Article 9A(i), above, then El Paso shall indemnify and hold
harmless AQP from and against
<PAGE> 14
any and all claims, damages, actions, demands and costs (including reasonable
attorneys' fees) arising out of or caused by the fact that AQP proceeds with
the Option Closing in accordance with this Agreement; provided that AQP shall
not be obligated to proceed with the Option Closing if outside Texas counsel to
AQP shall advise AQP that in doing so AQP shall become subject to any material
liabilities or damages (individually or in the aggregate) for which
indemnification pursuant to this Article 9A(ii) is not permitted pursuant to
applicable Law. EL PASO EXPRESSLY ACKNOWLEDGES AND AGREES THAT THE DUTY TO
INDEMNIFY, DEFEND AND HOLD HARMLESS SHALL APPLY NOTWITHSTANDING THE SOLE, JOINT
OR CONCURRENT NEGLIGENCE, GROSS NEGLIGENCE, STRICT LIABILITY, STATUTORY
LIABILITY OR OTHER FAULT OF AQP.
It is understood that nothing in this Article 9A shall be deemed to
modify the rights and obligations of the parties under Article 10.
ARTICLE 10
SURVIVAL; REMEDIES
10.1 Survival of Representations and Warranties. The representations
and warranties of the parties set forth in Articles 5 and 6 shall survive the
Option Closing for a period of four years. A party asserting a breach of such
a representation or warranty (the "Injured Party") shall be entitled to recover
from the defaulting party (the "Defaulting Party"), and the Defaulting Party
shall pay to the Injured Party, all Damages to the Injured Party as a result of
such breach. "Damages" shall mean the losses, damages and costs (including
reasonable attorney's fees) incurred or sustained by the Injured Party;
provided (i) "Damages" shall not include internal overhead and general
administrative costs of a party; and (ii) no punitive, speculative, or
consequential losses shall be included. In no event shall AQP's obligations
under this Article 10 exceed the Exercise Price (as finally adjusted).
10.2 Losses due to Inaccuracy of DHRI Representations and Warranties.
In the event that AQP shall receive payment of a Recovery (as defined below),
then (i) if such Recovery is received by AQP prior to the Option Closing Date,
then the Exercise Price shall be reduced by an amount equal to .2 multiplied by
the amount of such Recovery; and (ii) if such Recovery is received by AQP on or
after the Option Closing Date, then AQP promptly shall remit to Channel an
amount equal to .2 multiplied by the amount of such Recovery.
10.3 Section 8.5 Payments. In the event that AQP is required to make
any Covered Section 8.5 Payment (as defined below), then (i) if such Covered
Section 8.5 Payment is made by AQP prior to the Option Closing Date, then the
Exercise Price shall be increased by an amount equal to .2 multiplied by such
Covered Section 8.5 Payment; and (ii) if such Covered Section 8.5 Payment is
made by AQP on or after the Option Closing Date, then El Paso shall cause
Channel promptly to remit to AQP an amount equal to .2 multiplied by such
Covered Section 8.5 Payment.
10.4 Definitions. For purposes of this Article 10, the following
definitions shall apply:
(a) "Recovery" shall mean the net amount actually received by
AQP pursuant to Article 8 of the Purchase Agreement in respect of any Covered
Losses. In determining the amount of any Recovery, the net proceeds received
by AQP shall be reduced
<PAGE> 15
by (i) all costs and expenses (including attorney's fees and other costs of
litigation or arbitration) incurred by AQP in connection with such Recovery;
and (ii) the amount of liabilities incurred by AQP or damages or claims paid by
AQP to other Persons in connection with any matter included within the Covered
Losses for which AQP sought recovery.
(b) "Losses" shall have the meaning set forth in Article 8 of
the Purchase Agreement.
(c) "Covered Losses" shall mean Losses that are determined and
calculated with reference to all of the Interests, including the Subject
Property.
(d) A "Section 8.5 Payment" shall mean any payment that AQP
is required to make pursuant to Section 8.5 of the Purchase Agreement.
(e) A "Covered Section 8.5 Payment" shall mean any Section 8.5
Payment made by AQP with respect to a Recovery.
10.5 Examples. The following examples illustrate the application of
the provisions of Sections 10.2, 10.3 and 10.4:
(a) This example is based on the following hypothetical
situation: (i) Oasis sustains damages of $1,000,000 due to a matter which
constitutes an inaccuracy of a representation made by DHRI, and (ii) AQP's
Losses with respect to such $1,000,000 in damages are calculated by multiplying
.25 by $1,000,000. Channel would be entitled to a reduction of the Exercise
Price or a payment from AQP, in either case equal to 20% of the net amount
actually recovered by AQP in respect of the damages to Oasis. If AQP received
payment of a full $250,000 in this case, then Channel would be entitled to an
Exercise Price reduction or a payment (as the case may be) of $50,000. If AQP
expended $20,000 in attorney's fees and other costs for which it did not
recover payment in addition to the $250,000 in Losses, then the "Recovery"
would be $230,000, and the amount by which the Exercise Price is reduced or the
amount which is paid to Channel following AQP's receipt of the $250,000 payment
would be $46,000. If, in the example given in this Section 10.5(a), the
"Losses" of AQP were calculated by using a multiple other than .25, such Losses
would not be "Covered Losses", and any recovery by AQP thereof would not be a
"Recovery", because the "Losses" would not have been determined and calculated
with reference to all of the Interests, including the Subject Property.
(b) Any reduction in the Exercise Price or payment to Channel
hereunder (as the case may be) is based on the actual amount received by AQP
pursuant to Article 8 of the Purchase Agreement. Thus, any amounts of Losses
for which AQP's Recovery is reduced or eliminated pursuant to the provisions of
Article 8 of the Purchase Agreement (including without limitation Section
8.4(c) of the Purchase Agreement), shall be reduced to the actual amount
received by AQP for purposes of determining the amount of "Recovery".
ARTICLE 11
EXPENSES
Except as otherwise provided in this Agreement, AQP agrees to pay
without right of reimbursement from El Paso the costs incurred by AQP, and El
Paso agrees to pay and to
<PAGE> 16
cause Channel to pay, without right of reimbursement from AQP, the costs
incurred by El Paso or Channel, incident to the preparation and execution of
this Agreement and performance of their respective obligations hereunder
whether or not the transactions contemplated by this Agreement shall be
consummated, including, without limitation, the fees and disbursements of legal
counsel, accountants and consultants employed by the respective parties in
connection with the transactions contemplated by this Agreement. The
provisions of this Article 11 shall survive any termination of this Agreement.
ARTICLE 12
TERMINATION
This Agreement shall automatically terminate without further action on
the part of either party if (i) the Purchase Agreement shall be terminated,
without the Closing having occurred, for any reason; or (ii) the Option Closing
has not taken place on April 1, 1997.
ARTICLE 13
MISCELLANEOUS
13.1 Notices. Any notice, request, consent or communication under
this Agreement shall be effective only if it is in writing and personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
or by a nationally recognized overnight delivery service, with delivery
confirmed, or telexed or telecopied, with receipt confirmed, addressed to the
parties
<PAGE> 17
(a) If to AQP, to:
AQP Newco Corporation
10370 Richmond Ave., Suite 700
Houston, Texas 77042-4137
Attention: John A. Shealy
Facsimile No.: (713) 268-2102
or such other person or address as AQP shall
furnish Buyer in writing.
(b) If to El Paso, to:
El Paso Natural Gas Company
Tenneco Building
1010 Milam Street, Suite T2955
Houston, Texas 77002
Attention: Britton White, Jr.,
Senior Vice President
and General Counsel
Facsimile No.: (713) 757-1872
or to such other person or address as El Paso shall
furnish to AQP in writing.
(c) If to Channel, to the address
and person designated in writing by El Paso in a
notice to AQP meeting the requirements of this
Section 13.1.
All notices hereunder shall be deemed to have been given as of the date when so
personally delivered, three (3) days after when deposited with the United
States mail properly addressed, the next day when delivered during business
hours to such overnight delivery service properly addressed or when receipt of
a telex or telecopy is confirmed, as the case may be, unless the sending party
has actual knowledge that such notice was not received by the intended
recipient.
<PAGE> 18
13.2 Parties in Interest; Assignment. This Agreement is binding upon
and is for the benefit of the parties hereto and their respective successors
and assigns. Except as expressly provided herein, nothing in this Agreement,
express or implied, is intended to confer on any person other than the parties
hereto, or their respective successors and assigns, any rights, remedies or
obligations or liabilities under or by reason of this Agreement. Neither this
Agreement nor any of the rights or duties of any party hereto may be
transferred or assigned to any person except by a written agreement executed by
El Paso and AQP; provided, that, except as provided in Section 13.12 hereof,
AQP agrees that Channel shall be a beneficiary of the representations,
warranties and covenants of AQP herein, subject to all of AQP's defenses and
counterclaims against El Paso hereunder. It is understood that the rights of El
Paso under Section 13.12 are personal to, and go only to the benefit of, El
Paso and its Affiliates (all as set forth in Section 13.12). El Paso agrees to
cause Channel to perform each and every matter and to take each and every
action required to be performed or taken by Channel hereunder. It is further
agreed that, if the Merger shall not have been consummated on or prior to
January 1, 1997, then El Paso shall be permitted to assign its rights and
delegate its duties hereunder to Tennessee, except as provided in Section 13.12
hereof; provided that any such assignment and delegation shall be effected only
pursuant to the Agreement Concerning Assignment and Delegation in the form
attached hereto as Schedule 13.2.
13.3 Modification. This Agreement may not be amended or modified
except by a writing signed by an authorized representative of the party against
whom enforcement of the change is sought. No waiver of the performance or
breach of, or default under, any condition or obligation hereof shall be deemed
to be a waiver of any other performance, or breach of, or default under, the
same or any other condition or obligation of this Agreement.
13.4 Waiver. Either party to this Agreement may, by written notice to
the other party hereto: (a) extend the time for the performance of any of the
obligations or other actions of such other party under this Agreement; (b)
waive any inaccuracies in the representations or warranties of such other party
contained in this Agreement or in any document delivered pursuant to this
Agreement; or (c) waive compliance by such other party with any of the
conditions or covenants of the other contained in this Agreement; or (d) waive
performance of any of the obligations of such other party under this Agreement.
Except as provided in the preceding sentence, no action taken by or on behalf
of any party, including without limitation any investigation by or on behalf of
such party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement.
13.5 Entire Agreement. This Agreement embodies the entire agreement
between the parties hereto with respect to the subject matter hereof and there
are no agreements, representations or warranties between the parties other than
those set forth or provided in this Agreement.
13.6 Execution in Multiple Originals. This Agreement may be executed
in multiple originals, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
13.7 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
<PAGE> 19
13.8 Governing Law. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the state of
Texas applicable to agreements made and performed entirely within the state of
Texas without regard to principles of conflicts of law.
13.9 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement and delivered to the parties shall be considered a part of this
Agreement with the same force and effect as if the same had been specifically
set forth in this Agreement.
13.10 Negotiated Transaction. The parties hereto represent that in the
negotiation and drafting of this Agreement they have been represented by and
have relied upon the advice of counsel of their choice. The parties affirm
that their counsel have both had a substantial role in the drafting and
negotiation of this Agreement and, therefore, this Agreement shall be deemed
drafted by all of the parties hereto and the rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any Exhibit or Schedule
attached to this Agreement.
13.11 Public Announcements. The parties shall consult with each other
and cooperate with respect to any public announcement or similar publicity with
respect to this Agreement or the transactions contemplated herein. Neither of
the parties hereto nor any affiliates of the parties, shall issue or cause the
publication of any press release or other public statement or announcement with
respect to this Agreement or the transactions contemplated hereby without
consulting with the other party hereto and affording such other party a
reasonable opportunity to comment regarding the content of such disclosure,
except that each party may determine what disclosure is required by law or by
obligations pursuant to any listing agreement with a national securities
exchange (including the Nasdaq National Market).
13.12 Other Contemplated Relationships. AQP and El Paso hereby agree
to enter into good faith negotiations for the purpose of restructuring the
relationship of the shareholders and management of Oasis if and when AQP and El
Paso (and/or their respective Affiliates) each becomes the owner of 50% of the
capital stock of Oasis. Among the matters which the parties intend to include
in such an agreement of restructuring is an agreement under which El Paso or an
Affiliate of El Paso will become the operator of the pipeline system owned by
Oasis as to physical operations of the system (it being understood that if an
Affiliate of El Paso is operator, any agreement providing for such arrangement
will provide that such Affiliate may remain operator only so long as it remains
an Affiliate of El Paso). Additionally, AQP and El Paso intend, in a mutually
beneficial and equitable manner, to restructure Oasis to achieve and improve
efficiency of Oasis and the benefits to the parties of their respective
transportation rights on the system. Any such agreements shall be based on
mutually agreed upon arrangements that assure that each of the parties shall
have the same commercial benefits from ownership of Oasis and transportation
rights on the Oasis system, and the same opportunities to pursue their
commercial objectives as they relate to the transportation rights on the Oasis
system, including but not limited to the real time dissemination of gas
dispatch, nomination and gas control related information. It is understood and
agreed that the provisions of this Section 13.12 are personal to El Paso and El
Paso's Affiliates (but only so long as such other Persons are Affiliates of El
Paso) and may not be assigned or transferred to any other party by El Paso, and
that if El Paso assigns its rights and delegates its duties under this
Agreement to Tennessee in accordance with and as permitted by Section 13.2,
this Section 13.12 shall become null and void.
<PAGE> 20
13.13 Brokers' Fees. Each party shall be solely responsible for, and
shall promptly pay and satisfy, any brokers', agents' or finders' fees or
commissions or other similar liabilities for which such party shall be
responsible in connection with the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written
AQP HOLDINGS LP
By: AQP NEWCO CORPORATION
Title: General Partner
By: /s/ John A. Shealy
Name: John A. Shealy
Title: Vice President
EL PASO NATURAL GAS COMPANY
By: /s/ Britton White, Jr.
Name: Britton White, Jr.
Title: Senior Vice President and
General Counsel
<PAGE> 1
Aquila Gas Pipeline Corporation
File Number 1-12426
Exhibit 10.2
Amendment No. 2 to Revolving Credit Agreement
dated September 26, 1994 between Aquila Energy
Corporation and Aquila Gas Pipeline Corporation
<PAGE> 2
AMENDMENT NO. 2 TO REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. 2 (the "Amendment No. 2") to that certain Revolving
Credit Agreement dated as of September 26, 1994 (the "Revolving Credit
Agreement") is entered into as of this 17th of October 1996 by and between
AQUILA ENERGY CORPORATION, a Missouri corporation ("Lender") and AQUILA GAS
PIPELINE CORPORATION, a Delaware corporation ("Borrower").
W I T N E S S E T H:
WHEREAS, Lender and Borrower have entered into the Revolving Credit
Agreement and desire to amend said agreement in order to extend its term and
duration.
NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements set forth herein, the parties agree as follows:
1. Use of Defined Terms. All terms not otherwise defined
herein shall have the meanings set forth in the Revolving Credit Agreement.
2. Increase in Advances. Paragraph 1 of the Revolving Credit
Agreement is amended by deleting the number "$100,000,000" and substituting the
number "$165,000,000" in its place.
3. New Contract Note. Borrower shall execute a new Revolving
Note in the form attached hereto in the principal amount of $165,000,000 in
substantially the form attached hereto as Exhibit A, in substitution for the
existing Revolving Note.
4. Extension of Expiry Date. Paragraph 14 of the Revolving
Credit Agreement is hereby deleted in its entirety and amended and restated as
follows:
14. Expiry Date. This Agreement shall expire on
December 13, 1997 (the "Commitment Period"). The Commitment
Period shall thereafter automatically be renewed for successive
one-year periods unless Lender shall provide notice to Borrower
of its intention not to renew this Agreement at least twelve
months in advance of nonrenewal.
5. Entire Agreement. This Amendment No. 2 constitutes the
entire amendment to the Revolving Credit Agreement agreed to by Lender and
Borrower. All other terms and conditions of the Revolving Credit Agreement not
deleted, amended, or changed herein remain in full force and effect.
<PAGE> 3
IN WITNESS WHEREOF, the parties have entered into and executed this
Amendment No. 2 as of the date first above written.
AQUILA GAS PIPELINE CORPORATION
By/s/ Damon C. Button
---------------------------------
Name: Damon C. Button
Title: Vice President
AQUILA ENERGY CORPORATION
By/s/ Lawrence Clayton
---------------------------------
Name: Lawrence Clayton
Title: Vice President
<PAGE> 1
Aquila Gas Pipeline Corporation
File Number 1-12426
Exhibit 10.3
Amendment No. 3 to Revolving Credit Agreement
dated August 1, 1992 between Aquila Southwest
Energy Corporation and Aquila Energy Corporation
<PAGE> 2
AMENDMENT NO. 3 TO REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. 3 ("Amendment No. 3") to that certain Revolving
Credit Agreement dated as of August 1, 1992 (the "Revolving Credit Agreement")
is entered into as of this 17th day of October, 1996 by and between AQUILA
SOUTHWEST ENERGY CORPORATION, a Delaware corporation ("Borrower") and AQUILA
ENERGY CORPORATION, a Missouri corporation ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender have entered into the Revolving Credit
Agreement and have amended the Revolving Credit Agreement by entering into that
certain Amendment No. 1 to the Revolving Credit Agreement dated as of August 1,
1992 ("Amendment No. 1"), and that certain Amendment to the Revolving Credit
Agreement dated as of September 1, 1995 ("Amendment No. 2"), said Amendment No.
1 and Amendment No. 2 together with the Revolving Credit Agreement being
collectively referred to herein as the "Revolving Credit Agreement"; and
WHEREAS, Borrower and Lender desire to further amend the Revolving
Credit Agreement to extend the term and duration of the Revolving Credit
Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements set forth herein, the parties agree as follows:
1. Use of Defined Terms. All terms not otherwise defined herein
shall have the meanings set forth in the Revolving Credit Agreement.
2. Extension of Commitment Period. Section 2.1 of the Revolving
Credit Agreement and is hereby deleted in its entirety and amended and restated
as follows:
2.1 The Commitment. The Lender agrees, upon the
terms and conditions contained in this Agreement, to make loans
("Loans") to the Borrower from time to time during the period from the
date hereof through and including October 15, 1997 (the "Commitment
Period"), provided that the aggregate principal amount of Loans at any
one time outstanding shall not exceed $50,000,000 (the "Commitment").
The Commitment Period shall thereafter automatically be extended for
successive one-year periods unless the Lender shall provide notice to
the Borrower of its intention not to renew this Agreement at least
twelve months in advance of nonrenewal. During the Commitment Period,
the Borrower may borrow, repay and reborrow hereunder. Each Loan
shall be in the aggregate principal amount of not less than $100,000
(or the unused balance of the Commitment if less than $100,000).
<PAGE> 3
3. Entire Agreement. This Amendment No. 3 constitutes the entire
amendment to the Revolving Credit Agreement agreed to by Lender and Borrower.
All other terms and conditions of the Revolving Credit Agreement not deleted,
amended, or changed herein remain in full force and effect.
2
<PAGE> 4
IN WITNESS WHEREOF, the parties have entered into and executed this
Amendment No. 3 as of the date first above written.
AQUILA ENERGY CORPORATION
By /s/ Lawrence Clayton
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Name: Lawrence Clayton
Title: Vice President
AQUILA SOUTHWEST ENERGY CORPORATION
By /s/ Damon C. Button
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Name: Damon C. Button
Title: Vice President
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