Exhibit 10.2
MEMBERSHIP INTERESTS
PURCHASE AND SALE AGREEMENT between
LARAMIE ENERGY, LLC,
AS SELLER
and
PLAINS EXPLORATION & PRODUCTION COMPANY,
AS BUYER
Dated as of April 18, 2007
TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS 1 ARTICLE II PURCHASE AND SALE 3 2.1 Purchase and Sale 3 2.2 Purchase Price 3 2.3 Adjustments to Purchase Price 3 ARTICLE III SELLER' S REPRESENTATIONS AND WARRANTIES 4 3.1 Existence and Power 4 3.2 Litigation 5 3.3 Ownership Interests 5 3.4 CVGG Assets 5 3.5 Compliance with Law 5 3.6 CVGG Company Matters 6 3.7 Broker' s and Finder' s Fees 6 ARTICLE IV BUYER' S REPRESENTATIONS AND WARRANTIES 6 4.1 Existence, Power and Organization 6 4.2 Broker' s and Finder' s Fees 7 4.3 Investment Representation 7 4.4 Litigation 7 4.5 Independent Evaluation 7 4.6 No Conflicts 8 ARTICLE V CLOSING 8 5.1 Closing 8 5.2 Mutual Conditions to Closing 8 5.3 Buyer' s Conditions to Closing 9 5.4 Seller' s Conditions to Closing 9 5.5 Actions To Be Taken At Closing 10 5.6 Termination 10 ARTICLE VI OBLIGATIONS PRIOR TO CLOSING 11 6.1 Mutual Obligations of the Parties 11 6.2 HSR Act 11 6.3 Actions with Respect to CVGG Prior to Closing 11 6.4 Access; Cooperation 12 6.5 Financial Statements 12 ARTICLE VII OBLIGATIONS AFTER CLOSING 12 7.1 Indemnification 12 7.2 Limitations on Indemnification 14 7.3 Further Assurances 14
i 7.4 Survival 14 ARTICLE VIII MISCELLANEOUS 14 8.1 Exhibits and Schedules 14 8.2 Expenses 14 8.3 Notices 14 8.4 Amendment 15 8.5 Assignment 15 8.6 Announcements 15 8.7 Headings 16 8.8 Counterparts 16 8.9 References 16 8.10 Governing Law 16 8.11 Entire Agreement 16 8.12 Parties in Interest 16 8.13 Knowledge and Reasonable and Commercially Reasonable Efforts 16
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TABLE OF EXHIBITS AND SCHEDULES Exhibits Title Page A LLC Assignment 3 Schedules 2.3(a) Interim Expansion 3 2.3(b) Permanent Expansion 4 3.2(b) Litigation 5
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MEMBERSHIP INTERESTS
PURCHASE AND SALE AGREEMENT
This MEMBERSHIP INTERESTS PURCHASE AND SALE AGREEMENT (this " Agreement" ) dated as of April 18, 2007 (the " Execution Date" ), is between Laramie Energy, LLC, a Delaware limited liability company (" Seller" ) and Plains Exploration & Production Company, a Delaware corporation (" Buyer" ).
RECITALS
A. Buyer desires to purchase a membership interest in Collbran Valley Gas Gathering, LLC, a Colorado limited liability company (" CVGG" ), consisting of 25,000 Units representing 25% of the issued and outstanding membership interests in CVGG (the " LLC Interests" ).
B. Seller desires to sell the LLC Interests to Buyer on the terms and conditions set forth herein.
AGREEMENT
In consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS The following terms shall have the indicated meaning:
" Adverse Consequences" means all actions, suits, arbitrations, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages (including natural resource damages), dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, liens, losses, expenses, fees (including court costs and attorneys' , consultants' and experts' fees and expenses).
" Affiliate" means a Person that directly or indirectly controls, is controlled by or is under common control with, such Person. A Person that has a 50 percent or more interest in another Person shall be conclusively deemed to be a controlling Person. " Agreement" is defined in the introductory paragraph. " Background Materials" is defined in Section 4.5. " Buyer" is defined in the introductory paragraph. " Buyer Indemnified Parties" is defined in Section 7.1(b). " Claim Amount" is defined in Section 7.1(c)(ii).
" Claim Notice" is defined in Section 7.1(c)(ii).
" Closing" is defined in Section 5.1. " Closing Amount" is defined in Section 2.3(d). " Closing Date" is defined in Section 5.1. " CVGG" is defined in Recital A.
" CVGG Assets" is defined in Section 3.4.
" DOJ" means the Department of Justice.
" Effective Date" means 12:00 a.m. Mountain time on January 1, 2007.
" Execution Date" is defined in the introductory paragraph.
" Encumbrance" means any charge, claim, community property interest, equitable interest, lien (for taxes or any other indebtedness or matter), option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.
" FTC" means the Federal Trade Commission.
" GAAP" means generally accepted accounting principles in the United States. " Governmental Authorities" means any of the following: (a) any nation, state, county, city, town, village, district, or other jurisdiction of any nature; (b) federal, state, tribal, local, municipal, foreign, or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (d) multi-national organization or body; or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.
" HSR Act" means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.
" Indemnity Payment Date" is defined in Section 7.1(c)(ii).
" Interim Expansion" is defined in Section 2.3(a). " Law" means any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, rule, regulation, statute or treaty.
" LLC Assignment" is defined in Section 2.1.
" LLC Interests" is defined in Recital A.
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" Loss" is defined in Section 7.1(c)(i). " On-Site Due Diligence" is defined in Section 6.4. " Outside Closing Date" is defined in Section 5.1. " Permanent Expansion" is defined in Section 2.3(b). " Permitted Encumbrances" means: (i) Liens for taxes that are not yet due and payable, (ii) materialmen' s, mechanic' s, worker' s, repairmen' s, employees' , carriers' , warehousemen' s and other like liens, so long as the same relate to amounts that are not more than 30 days past due, and (iii) Encumbrances created by the Colorado Limited Liability Company Act and the operating agreement of CVGG.
" Person" means an individual, natural person, corporation, joint venture, partnership, limited partnership, limited liability company, trust, estate, business trust, association, Governmental Authority or any other entity.
" Purchase Price" is defined in Section 2.2. " Seller" is defined in the introductory paragraph. " Seller Indemnified Parties" is defined in Section 7.1(a). " Settlement Statement" is defined in Section 2.3(d).
ARTICLE II
PURCHASE AND SALE 2.1 Purchase and Sale . Subject to the provisions of this Agreement, Seller agrees to sell and convey to Buyer, and Buyer agrees to purchase and pay for, the LLC Interests. The LLC Interests will be transferred to Buyer pursuant to an Assignment of Limited Liability Company Membership Interests in the form of Exhibit A hereto (the " LLC Assignment" ).
2.2 Purchase Price . The purchase price (the " Purchase Price" ) for the LLC Interests shall be $40,000,000.
2.3 Adjustments to Purchase Price . (a) The members of CVGG have approved an interim expansion of the processing capacity of CVGG' s gathering system to 100 Mmcf/day as described in the Interim Expansion Authorization for Expenditure dated February 27, 2007 attached hereto as Schedule 2.3(a) (the " Interim Expansion" ). Amounts paid by Seller with regard to the Interim Expansion are expense reimbursements to CVGG paid by Seller as a shipper on CVGG' s gathering system, and not capital contributions.
(b) The members of CVGG also have approved a permanent expansion of the processing capacity of CVGG' s gathering system to 120 Mmcf/day as described in the
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Permanent Expansion Authorization for Expenditure dated February 27, 2007 attached hereto as Schedule 2.3(b) (the " Permanent Expansion" ). Amounts paid by Seller with regard to the Permanent Expansion will constitute capital contributions to CVGG.
(c) The members of CVGG approved a first quarter 2007 capital call in March, 2007 to fund the final costs of the initial development project. The Seller' s 25% share of the capital call is $1,468,300.00 and has been paid in full. The Purchase Price shall not be adjusted for this capital call.
(d) The Purchase Price shall be adjusted at Closing pursuant to a settlement statement (the " Settlement Statement" ) prepared by Seller and submitted, together with reasonably detailed supporting documentation, to Buyer two days prior to Closing for Buyer' s review and comment. The Settlement Statement shall set forth the adjustments to the Purchase Price as set forth below in this Section 2.3(d) (as so adjusted, the " Closing Amount" ): (i) The Purchase Price shall be increased by the aggregate amount of any expense reimbursements or capital contributions made by Seller to CVGG with regard to the Interim Expansion, the Permanent Expansion, and any other capital contributions made by Seller to CVGG between the Effective Date and 12:00 a.m. Mountain Time on the Closing Date to the extent any such other capital contributions are attributable to the period after the Effective Date.
(ii) The Purchase Price shall be reduced by the aggregate amount of any distributions received by Seller from CVGG between the Effective Date and 12:00 a.m. Mountain Time on the Closing Date.
ARTICLE III
SELLER' S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer as follows:
3.1 Existence and Power . (a) Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to do business in the State of Colorado.
(b) Seller has all requisite power and authority to carry on its business as presently conducted and to enter into this Agreement. The execution, delivery and performance by Seller of this Agreement and the transactions contemplated hereby are within Seller' s limited liability company powers and have been duly and validly authorized by all requisite limited liability company action.
(c) This Agreement has been duly executed and delivered on behalf of Seller, and at the Closing all documents and instruments required hereunder to be executed and delivered by Seller shall have been duly executed and delivered. This Agreement and the other documents and instruments executed at Closing to which Seller is a party do, and such documents and instruments shall, constitute legal, valid and binding obligations of Seller enforceable in accordance with their respective terms, subject, however, to the effects of
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bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect, as well as to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(d) The execution, delivery and performance by Seller of this Agreement and the other documents and instruments executed at Closing to which it is a party will not conflict with, result in a breach of, or constitute a default under any of the terms, conditions, or provisions of (i) any applicable Law, (ii) Seller' s certificate of formation, limited liability company agreement or other governing documents, (iii) the articles of organization, operating agreement or other governing documents of CVGG, (iv) any agreement or arrangement to which Seller is a party or which is binding upon Seller or any of its assets, or (v) to the knowledge of Seller, any agreement or arrangement to which CVGG is a party or which is binding upon CVGG or any of its assets.
(e) Seller has furnished to Buyer a true and correct copy of CVGG' s articles of organization and limited liability company operating agreement as amended to the date hereof and which is in full force and effect. Seller, and to Seller' s knowledge, neither CVGG nor any other member therein is in violation of any of the provisions of such articles of organization or limited liability company operating agreement.
3.2 Litigation . (a) There is no action, suit, or proceeding pending against, or to Seller' s knowledge, threatened against or affecting, Seller before any court, any arbitrator, or otherwise by or before any Person.
(b) To Seller' s knowledge, except as set forth in Schedule 3.2(b) , there is no action, suit, or proceeding pending against or threatened against or affecting CVGG before any court, any arbitrator, or otherwise by or before any Person.
3.3 Ownership Interests . Immediately prior to giving effect to the transactions contemplated by this Agreement, Seller owns of record and beneficially 25% of the issued and outstanding membership interests in CVGG free and clear of any Encumbrance, other than Permitted Encumbrances. Other than Seller, MEG Colorado Gas Service LLC and Delta Petroleum Corporation, there have been no other members in CVGG since its formation. Except as provided in this Agreement with respect to Buyer, Seller has not granted to any Person any right or has entered into any agreement or understanding (whether by option, warrant, call, commitment, conversion, plan or otherwise), fixed or contingent, with respect to the direct or indirect acquisition, purchase, sale, transfer, assignment, creation or issuance of any equity interest in CVGG.
3.4 CVGG Assets . To the knowledge of Seller, CVGG has such title to its gathering system and processing plant assets (the " CVGG Assets" ) as is normal and customary in the natural gas gathering and processing industry.
3.5 Compliance with Law . To Seller' s knowledge, CVGG is, and at all times since its formation has been, in material compliance with all Laws that are or were applicable to it or to the conduct or operation of CVGG' s business or the ownership of any of its respective assets.
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To Seller' s knowledge, CVGG has acquired and maintains, or has made proper application to obtain, from appropriate Governmental Authorities all permits necessary to conduct its operations as currently conducted and as contemplated by the Interim Expansion and the Permanent Expansion in material compliance with applicable Laws. 3.6 CVGG Company Matters .
(a) CVGG is a limited liability company duly organized, validly existing and in good standing under the law of the State of Colorado.
(b) CVGG has all requisite power and authority to carry on its business as presently conducted.
(c) The LLC Interests are not certificated.
(d) To Seller' s knowledge, (i) CVGG has conducted no business or operations other than gas gathering, processing and transportation activities in the Collbran Valley area of the Piceance Basin area of western Colorado and (ii) CVGG has no assets other than lands and such other property ancillary to such business and operations. (e) To Seller' s knowledge, CVGG does not own or hold, directly or indirectly, any equity or other ownership interest in any limited liability company, partnership, joint venture, or other Person.
(f) CVGG has no employees, and has never ...
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