Document:

Exhibit 10.1

 

UNIT PURCHASE AGREEMENT

 

by and among

 

HILAND PARTNERS, LP

 

AND

 

HILAND PARTNERS GP, LLC

 

 

Dated May 1, 2006

 

 

UNIT PURCHASE AGREEMENT

 

THIS
UNIT PURCHASE AGREEMENT, dated May 1, 2006 (this “Agreement”), is made between Hiland Partners, LP, a limited
partnership formed under the laws of the State of Delaware (the “Partnership”) and Hiland Partners GP, LLC,
a Delaware limited liability company (referred to herein as “Purchaser”).

 

WHEREAS,
the Partnership desires to issue and sell to the Purchaser, and the Purchaser
desires to purchase common units of the Partnership (the “Common Units).

 

WHEREAS,
the Purchaser, as the general partner of the Partnership and pursuant to
Section 5.2(b) of the Amended and Restated Agreement of Limited Partnership of
the Partnership (the “Partnership Agreement”),
desires to maintain its 2% general partner interest in the Partnership
immediately following the issuance of the Common Units pursuant to this
Agreement.

 

NOW,
THEREFORE, in consideration of the premises, warranties, covenants and
agreements contained herein, the parties agree as follows:

 

1.     Purchase and Sale.

 

(a)           Subject to the terms and conditions of this
Agreement, the Partnership shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Partnership, 761,714 Common Units (the “Purchased Units”) at a per unit price
equal to $45.03 (the “Per Unit Price”).  The sale of the Purchased Units contemplated
hereby shall not be registered with the Securities and Exchange Commission (the
“Commission”) under the
Securities Act of 1933, as amended (the “Act”)
and the certificates representing such Purchased Units shall be issued bearing
a restrictive legend thereon.

 

(b)           Subject to the terms and conditions of this
Agreement, pursuant to the Purchaser’s rights under Section 5.2(b) of the
Partnership Agreement, the Partnership shall issue 15,545 general partner units
of the Partnership (the “General Partner
Units”) to Purchaser in return for a contribution by the Purchaser
to the Partnership of an amount per General Partner Unit equal to the Per Unit
Price.

 

2.     Conditions Precedent to the Purchase and Issuance.

 

(a)           The obligations of the Purchaser to
consummate the transactions contemplated hereby are subject to the accuracy of
the representations and warranties of the Partnership contained in
Section 4 hereof on the date hereof and on the Payment Date.

 

(b)           The obligations of the Partnership to
consummate the transactions contemplated hereby are subject to the accuracy of
the representations and warranties of the Purchaser contained in Section 5
hereof on the date hereof and the Payment Date.

 

 

3.     Payment and Delivery of Purchased Units.

 

(a)           Subject to the terms and conditions of this
Agreement, on May 1, 2006 (the “Payment Date”)
Purchaser shall pay to the Partnership $35,000,000 (the “Purchase Price”) in cash by wire transfer
in immediately available funds to such bank account of the Partnership
designated by the Partnership in writing no later than the Business Day
immediately preceding the Payment Date 
“Business Day” means any day other than (a) a Saturday, Sunday or legal
holiday in New York City or Enid, Oklahoma, or (b) a day on which the
commercial banks in New York City or Enid, Oklahoma are authorized or required
by law or executive order to close.

 

Subject
to the terms and conditions of this Agreement and the receipt of the Purchase
Price on the Payment Date, on May 10, 2006 (the “Issuance Date”), the Partnership shall issue to the
Purchaser the Common Units and the General Partners Units.  The issuance shall take place at the offices
of the Partnership, 205 West Maple, Suite 1100, Enid, Oklahoma 73701 at 8:00
a.m. Enid, Oklahoma time.  The Purchased
Units shall be delivered by or on behalf of the Partnership to the Purchaser in
certificated form and the General Partner Units shall be delivered by or on
behalf of the Partnership in uncertificated form.

 

4.     Representations and Warranties of Partnership.  The
Partnership represents and warrants to the Purchaser that:

 

(a)           The Partnership is an entity duly organized
and validly existing under the laws of the state of Delaware and has the
requisite power and authority, and has taken all actions necessary, to execute,
deliver and perform its obligations under this Agreement.  This Agreement is a valid and binding
obligation of the Partnership, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles.  The execution and
delivery of this Agreement, the compliance by the Partnership with all the
provisions of, and the performance by the Partnership of its obligations under,
this Agreement, and the consummation of the transactions contemplated in this
Agreement will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, (i) the
organizational documents of the Partnership, (ii) any instrument, contract or
other agreement to which the Partnership is a party or by which the Partnership
is bound or to which any of its properties or assets may be bound or subject,
in each case, the breach or violation of which or default under which would be
reasonably expected to have a material adverse effect on the ability of the
Partnership to comply with its obligations hereunder, or (iii) any law or
statute or any order, rule or regulation of any court or governmental agency or
body or any stock exchange authority or self regulatory organization (each, a “Governmental Authority”), in each case
having jurisdiction over the Partnership or any of its subsidiaries or any of
their properties; and, other than the quotation of the Purchased Units with the
NASDAQ National Market, no consent, approval, authorization, order,
registration, clearance or qualification or notification of, with or to any
Governmental Authority is required for the issuance and sale of the Purchased
Units or the General Partner Units under this Agreement.

 

(b)           The Purchaser, when the Purchased Units are
delivered as provided in this Agreement, will be entitled to the rights of a
unitholder of limited partner interests of the Partnership as conferred by the
Partnership Agreement and applicable law.

 

2

 

(c)           The Purchased Units are not subject to any
conflicting sale, transfer, assignment, or any agreement (other than this
Agreement) to assign, convey, or transfer, in whole or in part, any of the
Purchased Units, and upon consummation of the transactions contemplated hereby,
the Purchaser will receive valid title to the Purchased Units and the General
Partner Units, free and clear of any encumbrance, liens, claims, charges,
security interests, or other interests of others, except as otherwise provided
by the Partnership Agreement.

 

(d)           There are no legal or governmental
proceedings pending to which the Partnership is a party or of which any
property of the Partnership is the subject that, if determined adversely to the
Partnership, would individually or in the aggregate have a material adverse
effect on the Partnership’s ability to perform its obligations under this
Agreement, and, to the best of the Partnership’s knowledge, no such proceedings
are threatened or contemplated by any such Governmental Authority or threatened
by others.

 

5.     Representations and Warranties of the Purchasers.  The
Purchaser represents and warrants to the Partnership that:

 

(a)           The Purchaser is a limited liability company
duly organized, validly existing and in good standing under the laws of
Delaware and has the requisite power and authority, and has taken all actions
necessary, to execute, deliver and perform its obligations under this
Agreement.  This Agreement is a valid and
binding obligation of the Purchaser, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles.  The execution and
delivery of this Agreement by the Purchaser, the compliance by the Purchaser
with all of the provisions of, and the performance by the Purchaser of its
obligations under, this Agreement and the consummation of the transactions
contemplated in this Agreement will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
(i) the organizational documents of the Purchaser, (ii) any instrument,
contract or other agreement to which the Purchaser is a party or by which the
Purchaser is bound or to which any of its properties or assets may be bound or
subject, in each case, the breach or violation of which or default under which
would be reasonably expected to have a material adverse effect on the ability
of the Purchaser to comply with its obligations hereunder, or (C) any law or
statute or any order, rule or regulation of any Governmental Authority having
jurisdiction over the Purchaser or any of its subsidiaries (other than the
Partnership or any of its subsidiaries) or any of their properties and no
consent, approval, authorization, order, registration, clearance or
qualification or notification of, with or to any such Governmental Authority is
required of the Purchaser for the purchase of the Purchased Units or the
General Partner Units by the Purchaser under this Agreement.

 

(b)           There are no legal or governmental
proceedings pending to which the Purchaser is a party or of which any property
of the Purchaser is the subject that, if determined adversely to the Purchaser,
would individually or in the aggregate have a material adverse effect on the
Purchaser’s ability to perform its obligations under this Agreement, and, to
the best of the Purchaser’s knowledge, no such proceedings are threatened or
contemplated by any such Governmental Authority or threatened by others.

 

3

 

(c)           No fees or commissions are or will be payable
by the Purchaser to brokers, finders, or investment bankers with respect to the
purchase of the Purchased Units or the consummation of the transactions
contemplated by this Agreement.

 

(d)           The Purchaser is an “accredited investor” as
defined in Rule 501(a) of Regulation D promulgated under the Act.

 

(e)           The Purchaser is
acquiring the Purchased Units for its own account, and not with a view to any
distribution, resale, subdivision, or fractionalization thereof in violation of
the Act or any other applicable domestic or foreign securities law, and the
Purchaser has no present plans to enter into any contract, undertaking,
agreement or arrangement for any such distribution, resale, subdivision, or
fractionalization of the Purchased Units.

 

(f)            The Purchaser has
carefully reviewed the documents filed by the Partnership with the Commission
under the Exchange Act, including Partnership’s Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, current reports on Form 8-K and other filings
(the “Partnership Information”)
and acknowledges that the Partnership has provided to the Purchaser or its
representatives all agreements, documents, records and books that the Purchaser
or its representatives have requested relating to an investment in the
Partnership.

 

(g)           The Purchaser is able
to bear the economic risk of losing its entire investment in the Purchased Units.  The Purchaser has knowledge and experience in
financial and business matters that it is capable of evaluating the risks and
merits of this investment.

 

(h)           The Purchaser acknowledges and agrees that,
based in part upon its representations contained herein and in reliance upon
applicable exemptions, the purchase and sale of the Purchased Units has not
been registered under the Act or the securities laws of any other domestic or
foreign jurisdiction.  Accordingly, the
Purchased Units may not be offered for sale, sold, or otherwise transferred in
whole or in part except in accordance with the terms of the Partnership
Agreement and in compliance with all applicable laws, including securities
laws, except that the Purchased Units may be pledged in a bona fide
transaction.

 

6.     Further Assurances.  Each party agrees to execute,
acknowledge and deliver such further instruments and to do all such other acts
as may be necessary or appropriate to carry out the purposes and intent of this
Agreement.

 

7.     Costs and Expenses.  Each party to this Agreement
shall be responsible for such party’s own expenses in connection with this
Agreement.

 

8.     Notices.  All statements, requests,
notices and agreements hereunder shall be in writing, and shall be delivered or
sent by mail or facsimile transmission to the address or facsimile number set
forth below:

 

4

 

(a)           to the Partnership, at:

 

Hiland
Partners, LP

205
West Maple, Suite 1100

Enid,
Oklahoma 73701

Facsimile:

Attention:

 

(b)           to the Purchaser, at:

 

Hiland
Partners GP, LLC

205
West Maple, Suite 1100

Enid,
Oklahoma 73701

Facsimile:

Attention:

 

or
to such other address or facsimile number as is notified in writing by that
party to the other parties.

 

9.     Governing Law.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.

 

10.   Entire Agreement.  This Agreement shall
constitute the binding agreement of the parties with respect to the subject
matter hereof and shall constitute the entire agreement of the parties with
respect to the subject matter hereof.

 

11.   Counterparts.  This Agreement may be executed
by the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such respective counterparts shall together
constitute one and the same instrument.

 

 

[Signature page follows.]

 

5

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the date and year first above written.

 

 

	
   

  	
  HILAND PARTNERS, LP

  
	
   

  	
   

  
	
   

  	
  By:  Hiland Partners GP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Randy Moeder

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Randy
  Moeder

  
	
   

  	
   

  	
  Title:

  	
  President
  & CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HILAND PARTNERS GP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Randy Moeder

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Randy
  Moeder

  
	
   

  	
   

  	
  Title:

  	
  President,
  CEO & Manager

  
							

 

 

UNIT PURCHASE AGREEMENT

SIGNATURE PAGEExhibit 10.2

 

ASSET PURCHASE AGREEMENT

 

by and between

 

ENOGEX GAS GATHERING, L.L.C.

 

and

 

HILAND OPERATING, LLC

 

Dated as of March 30, 2006

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS AND RULES OF CONSTRUCTION

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Rules
  of Construction

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  PURCHASE AND SALE; CLOSING

  	
  8

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Sale
  and Purchase of Assets

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Excluded
  Assets

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Assumption
  of Liabilities

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4

  	
  Retained
  Liabilities

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5

  	
  Consideration

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.6

  	
  Purchase
  Price Allocation

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.7

  	
  The
  Closing

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  REPRESENTATIONS AND WARRANTIES RELATING TO SELLER

  	
  11

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Organization
  of Seller

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Authorization;
  Enforceability

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  No
  Conflict; Consents

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Absence
  of Certain Changes

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Assumed
  Contracts

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6

  	
  Intellectual
  Property

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.7

  	
  Litigation

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.8

  	
  Brokers’
  Fees

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.9

  	
  Taxes

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.10

  	
  Environmental
  Matters

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.11

  	
  Compliance
  with Laws; Permits

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.12

  	
  Insurance

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.13

  	
  Title
  to Assets; Sufficiency

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.14

  	
  Statement
  of Revenue and Direct Costs

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.15

  	
  Employee
  Benefit Plans

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.16

  	
  Gathered
  Volumes

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS AND WARRANTIES RELATING TO BUYER

  	
  15

  

 

i

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Organization
  of Buyer

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Authorization;
  Enforceability

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  No
  Conflict; Consents

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Litigation

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Brokers’
  Fees

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6

  	
  Financial
  Ability

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  COVENANTS

  	
  16

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Conduct
  of Business

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Access

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Third
  Party Approvals

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Regulatory
  Filings

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5

  	
  Employee
  and Benefit Matters

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6

  	
  Seller
  Marks

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7

  	
  Books
  and Records; Access

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.8

  	
  Permits

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.9

  	
  Liability
  for Transfer Taxes

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.10

  	
  Cooperation

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.11

  	
  Information;
  Data; Facilities

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.12

  	
  Post-Closing
  Receipts

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.13

  	
  Gas
  Transportation Arrangements

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.14

  	
  Assumed
  Contracts

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.15

  	
  Well
  Connections

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  CONDITIONS TO CLOSING

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Conditions
  to Obligations of Buyer

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Conditions
  to the Obligations of Seller

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  INDEMNIFICATION

  	
  26

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Survival

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Indemnification

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Procedures

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Waiver
  of Other Representations

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.5

  	
  Exclusive
  Remedy and Release

  	
  29

  

 

ii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  TERMINATION

  	
  30

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Termination

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Effect
  of Termination

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  MISCELLANEOUS

  	
  31

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Notices

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Assignment

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  Like-Kind
  Exchange

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4

  	
  Rights
  of Third Parties

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5

  	
  Expenses

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6

  	
  Counterparts

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7

  	
  Entire
  Agreement

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8

  	
  Disclosure
  Schedules

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9

  	
  Acknowledgment
  by Buyer

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.10

  	
  Amendments

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.11

  	
  Publicity

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.12

  	
  Severability

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.13

  	
  Governing
  Law; Jurisdiction

  	
  33

  

 

iii

 

LIST OF EXHIBITS

 

	
  Exhibit
  A

  	
   

  	
  Form
  of Transition Services Agreement

  
	
  Exhibit
  B

  	
   

  	
  Form
  of Transportation Agreement

  

 

 

LIST OF SCHEDULES

 

 

	
  Schedule
  1.1(a)

  	
   

  	
  Knowledge

  
	
  Schedule
  1.1(b)

  	
   

  	
  Permitted
  Liens

  
	
  Schedule
  2.1(a)

  	
   

  	
  Wildlife
  Gathering System

  
	
  Schedule
  2.1(b)

  	
   

  	
  Hartshorne
  Gathering System

  
	
  Schedule
  2.1(c)

  	
   

  	
  Dog
  Creek/McFerran Gathering System

  
	
  Schedule
  2.1(d)

  	
   

  	
  Milton/South
  Bokoshe Gathering System

  
	
  Schedule
  2.1(e)

  	
   

  	
  Limestone
  Gathering System

  
	
  Schedule
  2.1(f)

  	
   

  	
  Nan
  Gathering System

  
	
  Schedule
  2.1(g)

  	
   

  	
  Assumed
  Contracts

  
	
  Schedule
  2.1(h)

  	
   

  	
  Permits

  
	
  Schedule
  2.1(i)

  	
   

  	
  Personal
  Property

  
	
  Schedule
  2.1(k)(i)

  	
   

  	
  Real
  Estate

  
	
  Schedule
  2.1(k)(ii)

  	
   

  	
  Partially
  Assigned Easements

  
	
  Schedule
  2.2

  	
   

  	
  Excluded
  Assets

  
	
  Schedule
  2.4

  	
   

  	
  Measurement
  Cases

  
	
  Schedule
  2.6

  	
   

  	
  Allocation
  of Purchase Price

  
	
  Schedule
  3.4

  	
   

  	
  Absence
  of Certain Changes

  
	
  Schedule
  3.5

  	
   

  	
  Enforceability
  of Assumed Contracts

  
	
  Schedule
  3.7

  	
   

  	
  Litigation

  
	
  Schedule
  3.9

  	
   

  	
  Taxes

  
	
  Schedule
  3.10

  	
   

  	
  Environmental
  Matters

  
	
  Schedule
  3.11(b)

  	
   

  	
  Compliance
  with Laws; Permits

  
	
  Schedule
  3.12

  	
   

  	
  Insurance

  
	
  Schedule
  3.13

  	
   

  	
  Title
  to Assets; Sufficiency

  
	
  Schedule
  3.14

  	
   

  	
  Statement
  of Revenue and Direct Costs

  
	
  Schedule
  3.15(a)

  	
   

  	
  Employee
  Benefit Plans

  
	
  Schedule
  3.15(b)

  	
   

  	
  ERISA

  
	
  Schedule
  3.16

  	
   

  	
  Gathered
  Volumes

  
	
  Schedule
  4.5

  	
   

  	
  Brokers’
  Fees

  
	
  Schedule
  4.6

  	
   

  	
  Financial
  Ability

  
	
  Schedule
  5.5(a)

  	
   

  	
  Eligible
  Employees

  
	
  Schedule
  5.13

  	
   

  	
  Specified
  Wells

  
	
  Schedule
  5.15

  	
   

  	
  Well
  Connects

  

 

iv

 

ASSET PURCHASE AGREEMENT

 

THIS
ASSET PURCHASE AGREEMENT, dated as
of March 30, 2006 (this “Agreement”),
is entered into by and between Enogex Gas Gathering, L.L.C., an Oklahoma
limited liability company (“Seller”), and Hiland Operating, LLC, a Delaware limited
liability company (“Buyer”),
and is executed at the Seller’s office located at 31038 West Mustang Fuel Road,
Kinta, Oklahoma 74552.

 

RECITALS

 

WHEREAS,
Seller is the owner of certain Assets (as defined below) located in eastern
Oklahoma; and

 

WHEREAS,
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
Assets, subject to the terms and conditions described in this Agreement;

 

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

 

1.1           Definitions.  As used herein, the following
terms shall have the following meanings:

 

“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.

 

“Assets” has the
meaning provided such term in Section 2.1.

 

“Assignment and Assumption Agreement”
has the meaning provided such term in Section 6.1(h).

 

“Assignment of Easements”
has the meaning provided such term in Section 6.1(i).

 

“Assumed Contracts”
has the meaning provided such term in Section 2.1(g).

 

“Assumed Liabilities”
has the meaning provided such term in Section 2.3.

 

“Bill of Sale” has the
meaning provided such term in Section 6.1(g).

 

1

 

“Business Day” means
any day that is not a Saturday, Sunday or legal holiday in the States of
Oklahoma and that is not otherwise a federal holiday in the United States.

 

“Buyer” has the
meaning provided such term in the preamble to this Agreement.

 

“Buyer Indemnified Parties”
has the meaning provided such term in Section 7.2(a).

 

“CERCLA” means the
Federal Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. § 9601 et seq.

 

“Claim Notice” has the
meaning provided such term in Section 7.3(a).

 

“Closing” has the
meaning provided such term in Section 2.6.

 

“Closing Date” has the
meaning provided such term in Section 2.6.

 

“Code” means the
Internal Revenue Code of 1986, as amended.

 

“Confidentiality Agreement”
means that certain confidentiality agreement, dated as of September 19, 2005,
between Buyer and Seller.

 

“Constituents of Concern”
any substance defined as a hazardous substance, hazardous waste, hazardous
material, pollutant or contaminant by any Environmental Law, any petroleum
hydrocarbon and any degradation product of a petroleum hydrocarbon, friable
asbestos, or PCBs, the handling, storage, treatment or exposure of or to which
is subject to regulation under any Environmental Law.

 

“Continuing Employee”
has the meaning provided such term in  Section
5.5(b).

 

“Contract” means any
legally binding agreement, commitment, lease, license or contract, but
excluding Plans.

 

“Direct Claim” has the
meaning provided such term in Section 7.3(d).

 

“Disclosure Schedules”
means the schedules attached hereto.

 

“Dog Creek/McFerran Gathering System”
has the meaning provided such term in Section 2.1(c).

 

“Dollars” and “$” mean the lawful
currency of the United States.

 

“Easements” all
easement rights owned or held in connection with a Gathering System, together
with any and all other rights, tenements, easements, appendages, appurtenant
rights, privileges, rights-of-way, leases, contracts and agreements related to
real property associated with such Gathering System.  

 

“Eligible Employees”
has the meaning provided such term in Section 5.5(a).

 

2

 

“Environmental Law”
means all applicable Laws and Environmental Permits of any Governmental
Authority relating to the protection of health or the environment,
including:  (a) all requirements
pertaining to liability for reporting, management, licensing, permitting,
investigation, and remediation of emissions, discharges, releases, or
threatened releases of a Constituent of Concern; and (b) all other
limitations, restrictions, conditions, standards, prohibitions, obligations,
and timetables contained therein or in any notice or demand letter issued,
entered, promulgated or approved thereunder. 
The term “Environmental
Law” includes, without limitation, CERCLA, the Federal Water
Pollution Control Act (which includes the Federal Clean Water Act), the Federal
Clean Air Act, the Federal Solid Waste Disposal Act (which includes the
Resource Conservation and Recovery Act), the Federal Toxic Substances Control
Act, and the Federal Insecticide, Fungicide and Rodenticide Act, each as
amended from time to time, any regulations promulgated pursuant thereto, and
any state or local counterparts.

 

“Environmental Permits”
all permits, licenses, registrations, authorizations, certificates and
approvals of Governmental Authorities relating to or required by Environmental
Laws and necessary for or held in connection with the conduct of the business.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.

 

“Exchange Act Rules”:  the rules and regulations promulgated under
the Securities Exchange Act of 1934, as amended.

 

“Excluded Assets” has
the meaning provided such term in Section 2.2.

 

“GAAP” means generally
accepted accounting principles of the United States, consistently applied.

 

“Gathering Systems”
means the Wildlife Gathering System, the Hartshorne Gathering System, the Dog
Creek/McFerran Gathering System, the Milton/South Bokoshe Gathering System, the
Limestone Gathering System and the Nan Gathering System.

 

“Governmental Authority”
means any federal, state, municipal, local or similar governmental authority,
regulatory or administrative agency, court or arbitral body.

 

“Hartshorne Gathering System”
has the meaning provided such term in Section 2.1(b).

 

“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 (b) any amounts under any currency,
commodity or interest rate swap, hedge or similar protection device or (c) any
guaranty with respect to indebtedness for borrowed money of another Person.

 

“Indemnified Party”
has the meaning provided such term in Section 7.3(a).

 

“Indemnifying Party”
has the meaning provided such term in Section 7.3(a).

 

3

 

“Intellectual Property”
means intellectual property rights, statutory or common law, worldwide,
including (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 applications or registrations for
any of the foregoing; and (c) patents, all confidential 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.

 

“IRS” means Internal
Revenue Service of the United States.

 

“Knowledge” as to
Seller means the actual knowledge of those persons listed on Schedule 1.1(a),
after reasonable inquiry.

 

“Law” means any
applicable statute, writ, law, common law, rule, regulation, ordinance, order,
judgment, injunction, award, determination or decree of a Governmental
Authority, or any requirement under the common law, 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 and as of such date.

 

“Lien(s)” means any
charges, pledges, options, mortgages, deeds of trust, hypothecations,
encumbrances or security interests.

 

“Limestone Gathering System”
has the meaning provided such term in Section 2.1(e).

 

“Losses” has the
meaning provided such term in Section 7.2(a).

 

“Material Adverse Effect”
means (a) with respect to the Assets, a circumstance, change or effect that is
materially adverse to the business, operations (including results of
operation), financial condition or liabilities of or related to the Assets,
taken as a whole, or (b) with respect to any Person, a circumstance, change or
effect that materially impedes the ability of such Person to complete the
transactions contemplated herein.

 

“Measurement Cases”
has the meaning provided such term in Section 2.4.

 

“Milton/South Bokoshe Gathering
System” has the meaning provided such term in Section 2.1(d).

 

“Nan Gathering System”
has the meaning provided such term in Section 2.1(f).

 

“Organizational Documents”
means any charter, certificate of incorporation, articles of association,
partnership agreements, limited liability company agreements, bylaws, operating
agreement or similar formation or governing documents and instruments.

 

“Parties” means Seller
and Buyer.

 

“Permits” has the meaning
provided such term in Section 2.1(h).

 

4

 

“Permitted Liens”
means (a) Liens for Taxes not yet delinquent or being contested in good faith
by appropriate proceedings, (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 to the extent related to the Assets
and securing payments not yet delinquent or being contested in good faith by
appropriate proceedings, (c) Liens of public record (other than for
Indebtedness for Borrowed Money), (d) the rights of lessors and lessees under
leases, and the rights of third parties under any agreement, executed in the
ordinary course of business, (e) the rights of licensors and licensees under
licenses executed in the ordinary course of business, (f) restrictive
covenants, easements and defects, imperfections or irregularities of title or
Liens, if any, that do not materially adversely affect the value of the Asset to
which such matters relate or materially interfere with the ownership, use or
operation of such Asset and, in any event, do not prevent or prohibit the use
of such Asset as currently used or as otherwise necessary for the conduct of
the business by Seller relating to the Assets as presently conducted or
proposed to be conducted, (g) purchase money Liens and Liens securing rental
payments under capital lease arrangements, (h) preferential purchase rights and
other similar arrangements with respect to which consents or waivers are
obtained for this transaction or as to which the time for asserting such rights
has expired at the Closing Date without an exercise of such rights,
(i) restrictions on transfer with respect to which consents or waivers are
obtained for this transaction, (j) any Liens created pursuant to operating or
similar agreements, (k) Liens entered into in the ordinary course of business
that do not secure the payment of Indebtedness for Borrowed Money and that do
not materially and adversely affect the ability of Seller to conduct its
business, (l) Liens referenced in any real property files made available
by Seller to Buyer or in the Disclosure Schedules, (m) Liens contained in the
Organizational Documents of Seller, (n) Liens listed on Schedule 1.1(b)
and (o) Liens created by Buyer, or its successors and assigns.

 

“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.

 

“Personal Property”
has the meaning provided such term in Section 2.1(i).

 

“Plans” has the
meaning provided such term in Section 3.15.

 

“Purchase Price” has
the meaning provided such term in Section 2.5.

 

“Qualified Intermediary”
has the meaning provided such term in Section 9.3.

 

“Real Estate” has the
meaning provided such term in Section 2.1(k).

 

“Reasonable Efforts”
means efforts in accordance with reasonable commercial practice and without the
incurrence of material expense.

 

“Records” has the
meaning provided such term in Section 2.1(j).

 

“Representatives”
means a Person’s directors, officers, employees, agents or advisors (including,
without limitation, attorneys, accountants, consultants, bankers, financial advisors
and any representatives of those advisors).

 

5

 

“Restricted Information”
has the meaning provided such term in Section 5.2(c).

 

“Retained Liabilities”
has the meaning provided such term in Section 2.4.

 

“SEC” means the United
States Securities and Exchange Commission, or any successor agency thereto.

 

“Seller” has the
meaning provided such term in the preamble to this Agreement.

 

“Seller Indemnified Parties”
has the meaning provided such term in Section 7.2(b).

 

“Seller Marks” has the
meaning provided such term in Section 5.6.

 

“Specified Wells”
means those oil and gas wells that produce gas that is now (or in the future
capable of being) (a) gathered on any Specified System and (b) flowing to the
Enogex Inc. intrastate transportation system. 
The term “Specified Wells” includes, without limitation, those currently
existing wells listed on Schedule 5.13.

 

“Specified Systems”
mean the Wildlife Gathering System, the Hartshorne Gathering System and the
Milton/South Bokoshe Gathering System.

 

“Statements of Revenue and Direct
Costs” has the meaning provided such term in Section 3.14.

 

“Subsidiary” means,
with respect to any Person, (a) any corporation, of which a majority of
the total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote generally in the election of directors
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof or (b) any limited liability company, partnership, association or
other business entity, of which a majority of the partnership or other similar
ownership interests thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more Subsidiaries of that Person or a
combination thereof.  For purposes of
this definition, a Person or Persons will be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons will be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses, or is or controls the managing member or general partner of
such limited liability company, partnership, association or other business
entity.

 

“Tax Returns” means
any report, return, election, document, estimated tax filing, declaration or
other filing provided to any Governmental Authority including any amendments
thereto.

 

“Taxes” means all
taxes, assessments, charges, duties, fees, levies, imposts or other similar
charges imposed by a Governmental Authority, including all income, franchise,
profits, capital gains, capital stock, transfer, gross receipts, sales, use,
transfer, service, occupation, ad valorem, property, excise, severance,
windfall profits, premium, stamp, license, payroll, employment, social
security, unemployment, disability, environmental, alternative minimum, add-on,
value-added, withholding and other taxes, assessments, charges, duties, fees,
levies,

 

6

 

imposts or other similar charges of any kind,
and all estimated taxes, deficiency assessments, additions to tax, penalties
and interest.

 

“Third Party Claim”
has the meaning provided such term in Section 7.3(a).

 

“Transition Services Agreement”
has the meaning provided such term in Section 6.1(e).

 

“Transportation Agreement”
has the meaning provides such term in Section 6.1(f).

 

“Treating Facilities”
has the meaning provided such term in Section 5.13(b).

 

“United States” means
United States of America.

 

“Wildlife Gathering System”
has the meaning provided such term in Section 2.1(a).

 

1.2           Rules of Construction.

 

(a)           All article, section, schedule and exhibit
references used in this Agreement are to articles and sections of, and
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.

 

(c)           With respect to Seller, the term “ordinary course of business” will be
deemed to refer to the ordinary conduct of business in a manner consistent with
the past practices and customs of Seller.

 

(d)           The Parties acknowledge that each Party and
its attorney have 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 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.  

 

7

 

(g)           All accounting terms used herein and not
expressly defined herein shall have the meanings given to them under GAAP.

 

ARTICLE II

PURCHASE AND SALE; CLOSING 

 

2.1           Sale and Purchase of Assets.  Upon
the terms and subject to the conditions set forth herein, Seller shall sell,
assign, transfer, convey and deliver to Buyer, and Buyer will purchase, acquire
and accept from Seller, all right, title and interest of Seller in and to the
following assets (collectively, the “Assets”):

 

(a)           that certain 2” to 16” diameter natural gas
pipeline located in Haskell, Pittsburg and Latimer Counties, Oklahoma, which is
approximately 265 miles in length, including above-ground facilities or
structures, compression equipment, and the valves, machinery, equipment,
gauges, meters, fittings, fixtures and improvements related thereto as more
particularly described on Schedule 2.1(a) attached hereto (the “Wildlife Gathering System”);

 

(b)           that certain 3” to 16” diameter natural gas
pipeline located in Pittsburg and Latimer Counties, Oklahoma, which is
approximately 97 miles in length, including above-ground facilities or
structures, compression equipment, and the valves, machinery, equipment,
gauges, meters, fittings, fixtures and improvements related thereto as more
particularly described on Schedule 2.1(b) attached hereto (the “Hartshorne Gathering System”);

 

(c)           that certain 3” to 12” diameter natural gas
pipeline located in Latimer and LeFlore Counties, Oklahoma, which is
approximately 58 miles in length, including above-ground facilities or
structures, compression equipment, and the valves, machinery, equipment,
gauges, meters, fittings, fixtures and improvements related thereto as more
particularly described on Schedule 2.1(c) attached hereto (the “Dog Creek/McFerran Gathering System”);

 

(d)           that certain 2” to 10” diameter natural gas
pipeline located in Haskell and LeFlore Counties, Oklahoma, which is
approximately 88 miles in length, including above-ground facilities or
structures, compression equipment, and the valves, machinery, equipment,
gauges, meters, fittings, fixtures and improvements related thereto as more
particularly described on Schedule 2.1(d) attached hereto (the “Milton/South Bokoshe Gathering
System”);

 

(e)           that certain 3” to 16” diameter natural gas
pipeline located in Latimer County, Oklahoma, which is approximately 55 miles
in length, including above-ground facilities or structures, compression
equipment, and the valves, machinery, equipment, gauges, meters, fittings,
fixtures and improvements related thereto as more particularly described on Schedule
2.1(e) attached hereto (the “Limestone Gathering System”);

 

(f)            that certain 4” to 12” diameter natural gas pipeline
located in Latimer County, Oklahoma, which is approximately 5 miles in length,
including above-ground

 

8

 

facilities
or structures, compression equipment, and the valves, machinery, equipment,
gauges, meters, fittings, fixtures and improvements related thereto as more
particularly described on Schedule 2.1(f) attached hereto (the “Nan Gathering System”);

 

(g)           all Contracts (including natural gas
transportation and gathering services contracts) including those listed on Schedule
2.1(g) to this Agreement (the “Assumed Contracts”);

 

(h)           all permits, licenses, certificates,
consents, approvals, waivers, authorizations and registrations issued to or
held by Seller in connection with Seller’s ownership or use of the Assets and
listed on Schedule 2.1(h) (the “Permits”);

 

(i)            the items of personal property (tangible or
intangible) listed on Schedule 2.1(i) (collectively, the “Personal Property”);

 

(j)            all records, documents, books, supplier lists
and work orders relating to and necessary to operate the Assets, and all other
documents and data relating to the Assets, including, without limitation, all
of the foregoing necessary to cause operations to remain in compliance with
applicable Law, including Environmental Law (collectively, the “Records”); and

 

(k)           all parcels of real property, which are
described on Schedule 2.1(k)(i) (collectively, the “Real Estate”), and
all appurtenances, Easements and other rights, buildings and other improvements
thereto or thereon not otherwise described in this Section 2.1; provided, however, that because Seller and
its Affiliates must retain the right to use certain Easements for natural gas
pipeline assets other than those related to the Assets, the Easements described
on Schedule 2.1(k)(ii) shall be partially assigned to Buyer to the
extent related to the Assets described in paragraphs (a) through (f) of this Section
2.1.

 

2.2           Excluded Assets.  All
assets of Seller (including, without limitation, those assets of Seller located
in Haskell, LeFlore, Pittsburg and Latimer Counties, Oklahoma) not described in
Section 2.1 will be retained by Seller and will not be included in the
Assets or sold, transferred, assigned, conveyed or delivered by Seller to Buyer
(the “Excluded Assets”),
including, without limitation, the following assets:

 

(a)           cash;

 

(b)           any Personal Property that is sold or
consumed by Seller prior to the Closing in the ordinary course of business;

 

(c)           Seller’s Organizational Documents, duplicate
copies of such records included in the Assets as are necessary to enable
Seller’s members to file their tax returns and reports, and any other records
or materials relating to Seller generally and not involving or relating to the
Assets or the business;

 

(d)           the proceeds or refunds from any insurance
policy of Seller resulting from the transactions contemplated by this
Agreement;

 

9

 

(e)           all software related to the operating of the
Assets; 

 

(f)            existing imbalances, receivables, or claims
related to under-billings in periods prior to Closing; and

 

(g)           those assets, records, documents, books,
supplier lists, work orders, documents and data listed on Schedule 2.2.

 

For
the avoidance of doubt, no assets any of Seller’s Affiliates shall be conveyed
to Buyer pursuant to the transactions contemplated by this Agreement.

 

2.3           Assumption of Liabilities.  Upon
Closing, Buyer shall assume and be responsible for the payment, performance or
discharge of all liabilities and obligations of Seller resulting from, relating
to or arising out of the ownership of the Assets, except for the Retained
Liabilities (as defined below) (the “Assumed Liabilities”).

 

2.4           Retained Liabilities.  Upon
Closing, Seller shall retain, be liable for and, if applicable in the case of
liabilities and obligations of any Affiliate of Seller, assume, the following
liabilities and obligations (without duplication, and collectively referred to
as “Retained Liabilities”):

 

(a)           all liabilities and obligations of Seller or
any Affiliate of Seller arising out of or relating to any Excluded Asset (other
than any Excluded Asset referenced in clause (b) of the definition thereof);

 

(b)           any liabilities of Seller or any Affiliates
of Seller resulting directly from the transactions contemplated by this
Agreement, including, but not limited to, Taxes and liabilities resulting from
any potential termination of any employees under employment agreements,
compensation arrangements or severance plans, but in each case only to the
extent not caused by the action of Buyer;

 

(c)           all Indebtedness for Borrowed Money incurred
by Seller or any of its Affiliates in connection with the ownership or
operation of the Assets;

 

(d)           all liabilities, costs and expenses incurred
by Seller in connection with the proposed sale of the Assets, including the
negotiation, documentation, execution and performance by Seller of its
obligations under this Agreement;

 

(e)           all trade payables incurred in the ordinary
course of business prior to the Closing Date in connection with purchasing or
receiving goods and services related to the Assets; and

 

(f)            any and all liabilities or obligations
related to the litigation described on Schedule 2.4 (the “Measurement Cases”),
solely to the extent such liabilities or obligations relate to periods prior to
the Closing Date.

 

2.5           Consideration.  In
consideration for the sale and purchase of the Assets contemplated by Section
2.1, Buyer shall pay to Seller an aggregate of $93,000,000 in cash by

 

10

 

wire
transfer of immediately available funds to an account designated by Seller (the
“Purchase Price”).

 

2.6           Purchase Price Allocation.  The
Purchase Price shall be allocated among the Assets as set forth on Schedule
2.6.  Buyer and Seller shall report
the transactions contemplated hereby on all Tax Returns (including information
returns and supplements thereto required to be filed by the parties under
Section 1060 of the Code) in a manner consistent with such allocation.

 

2.7           The Closing.  The closing of the
transactions contemplated by this Agreement (the “Closing”) shall take place at the
offices of Jones Day, 717 Texas, Houston, Texas 77002, commencing on the third
Business Day following the satisfaction or waiver of all conditions to the
obligations of the Parties set forth in Article VI or such other date as
Buyer and Seller may mutually determine (the date on which the Closing occurs
is referred to herein as the “Closing Date”).

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES RELATING TO SELLER

 

Except
as disclosed on the Disclosure Schedules, Seller hereby represents and warrants
to Buyer as follows:

 

3.1           Organization of Seller. 
Seller is a limited liability company, duly formed, validly existing and
in good standing under the laws of Oklahoma.

 

3.2           Authorization; Enforceability. 
Seller has the requisite limited liability company power and authority
to own or lease the Assets and to conduct its business as it is now being
conducted.  The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized and approved by all requisite limited
liability company action on the part of Seller. 
This Agreement has been duly and validly executed and delivered by
Seller, and this Agreement constitutes a 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.

 

3.3           No Conflict; Consents. 
Except as would not reasonably be expected to have a Material Adverse
Effect on the ability of Seller to enter into and perform its obligations under
this Agreement, the execution and delivery of this Agreement by Seller and the
consummation of the transactions contemplated hereby by Seller do not and shall
not:

 

(a)           violate any Law applicable to Seller or
require any filing with, consent, approval or authorization of, or notice to,
any Governmental Authority (other than as required by the HSR Act);

 

(b)           violate any Organizational Document of
Seller;

 

11

 

(c)           require any filing with or permit, consent or
approval of, or the giving of any notice to, any Person (other than as required
by the HSR Act); or

 

(d)           (i) breach any Assumed Contract, (ii) result
in the termination of any such Assumed Contract, (iii) result in the creation
of any Lien under any Assumed Contract or on the Assets, or (iv) constitute an
event that, after notice or lapse of time or both, would result in any such
breach, termination or creation of a Lien.

 

3.4           Absence of Certain Changes. 
Except as disclosed on Schedule 3.4, since December 31, 2005, (a)
there has not been any Material Adverse Effect on the Assets and (b) the
business of Seller related to the Assets has been conducted, in all material
respects, only in the ordinary course.

 

3.5           Assumed Contracts. 
Except as set forth on Schedule 3.5, each Assumed Contract (other
than such Assumed Contracts with respect to which all performance and payment
obligations have been fully performed or otherwise discharged by all parties
thereto prior to the Closing) (a) is in full force and effect and (b)
represents the legal, valid and binding obligation of Seller and, to the
Knowledge of Seller, represents the legal, valid and binding obligation of the
other parties thereto, in each case enforceable in accordance with its terms.  Except as set forth on Schedule 3.5,
neither Seller nor, to the Knowledge of Seller, any other party is in material
breach of any Assumed Contract, and Seller has not received any written or, to
the Knowledge of Seller, oral notice of termination or breach of any Assumed
Contract.

 

3.6           Intellectual Property. 
Except as would not reasonably be expected to have a Material Adverse
Effect on the Assets, to
the Knowledge of Seller, (a) Seller, together with its Affiliates, owns or has
the right to use pursuant to license, sublicense, agreement or otherwise all
items of Intellectual Property required in the operation or use of the Assets
as presently conducted, (b) no third party has asserted in writing against
Seller a claim that Seller is infringing on the Intellectual Property of such
third party and (c) no third party is infringing on the Intellectual Property
owned by Seller.

 

3.7           Litigation.  Except as set forth on Schedule
3.7, (a) there are no lawsuits or actions before any Governmental Authority
pending or, to the Knowledge of Seller, threatened in writing by any Person
against Seller that would reasonably be expected to have a Material Adverse
Effect on the Assets and (b) to the Knowledge of Seller, there is no order or
unsatisfied judgment from any Governmental Authority that would reasonably be
expected to have a Material Adverse Effect on the Assets.

 

3.8           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.

 

3.9           Taxes.  Except as set forth on Schedule
3.9 or as would not reasonably be expected to have a Material Adverse
Effect on the Assets, (a) all Tax Returns required to be filed by Seller
directly related to the Assets have been filed, (b) all Taxes shown as due on
such Tax Returns have been paid, (c) there are no Liens on any of the
Assets that arose in connection with

 

12

 

any
failure to pay any Tax, (d) there is no claim pending by any Governmental
Authority in connection with any Tax directly related to the Assets, (e) no Tax
Returns directly related to the Assets are under audit or examination by any
Governmental Authority, (f) there are no agreements or waivers currently in
effect that provide for an extension of time with respect to the filing of any
Tax Return directly related to the Assets or the assessment or collection of
any Tax directly related to the Assets and (g) to the Knowledge of Seller, no
written or oral claim has been made by any Governmental Authority in a
jurisdiction where Seller does not file a Tax Return directly related to the
Assets that it is or may be subject to taxation in that jurisdiction.  

 

3.10         Environmental Matters.  To
the Knowledge of Seller, except as set forth on Schedule 3.10 or as
would not reasonably be expected to have a Material Adverse Effect on the
Assets:

 

(a)           the operation of the Assets by Seller are in
compliance with all Environmental Laws, which compliance includes the
possession and maintenance of, and compliance with, all material Environmental
Permits;

 

(b)           the Assets are not subject to any outstanding
order, judgment or arbitration award from any Governmental Authority under any
Environmental Laws requiring remediation of any Constituents of Concern or the
payment of a fine or penalty; and

 

(c)           Neither Seller nor any of its Subsidiaries is
subject to any action related to the Assets that is pending or threatened in
writing, whether judicial or administrative, alleging noncompliance with or
potential liability under any Environmental Law.

 

3.11         Compliance with Laws; Permits.

 

(a)           Seller is in compliance with all applicable
Laws related to the Assets, except as otherwise disclosed in this Agreement and
for noncompliance that would not reasonably be expected to have a Material
Adverse Effect on the Assets. 
Notwithstanding any provision in this Section 3.11 (or any other
provision of this Agreement) to the contrary, Section 3.9 and Section
3.10, shall be the exclusive representations and warranties with respect to
Tax and environmental issues, as well as related matters, and no other
representations or warranties are made with respect to such matters, including
without limitation pursuant to this Section 3.11.

 

(b)           Except as disclosed on Schedule 3.11(b),
Seller possesses all Permits necessary and sufficient for it to own and
operate the Assets as currently conducted except where the failure to possess
such Permit would not reasonably be expected to have a Material Adverse Effect
on the Assets.  To the Knowledge of
Seller, (i) all such Permits are in full force and effect and (ii) there are no
lawsuits or other proceedings pending or threatened in writing before any Governmental
Authority that seek the revocation, cancellation, suspension or adverse
modification thereof, except as would not reasonably be expected have a
Material Adverse Effect on the Assets.

 

3.12         Insurance.  Schedule 3.12 contains
a summary description of all material policies of property, fire and casualty,
product liability, workers’ compensation and other insurance held by or for the
benefit of Seller and that relates to the Assets as of the date of this
Agreement, and

 

13

 

all
such policies are presently in full force and effect and shall be maintained in
full force and effect until the Closing.

 

3.13         Title to Assets; Sufficiency. 
Seller owns good title to the Assets, free and clear of all Liens other
than Permitted Liens.  Except as set
forth on Schedule 3.13, the Assets are (a) in good condition and repair
(subject to normal wear and tear) and (b) sufficient to permit Buyer to conduct
the business related to the operation of the Assets as currently conducted by
Seller.

 

3.14         Statement of Revenue and Direct Costs. 
Attached as Schedule 3.14 are true, complete and correct copies
of Seller’s statements of revenue and direct costs related to the Assets as, at
and for the periods ended December 31, 2004 and December 31, 2005
(collectively, the “Statements
of Revenue and Direct Costs”). 
The Statements of Revenue and Direct Costs fairly present the revenue
and direct costs related to the Assets as of the respective periods indicated
therein and have been prepared in accordance with the standards set forth on Schedule
3.14.

 

3.15         Employee Benefit Plans.

 

(a)           Schedule 3.15(a) sets forth a list of all material employee
benefit plans (as defined in Section 3(3) of ERISA), and all other material
compensation or benefit plans, programs, arrangements, contracts or schemes,
written, statutory or contractual, with respect to which Seller or any of its
Affiliates has any obligation or liability to contribute or that are
maintained, contributed to or sponsored by Seller or any of its Affiliates for
the benefit of any Eligible Employee, but excluding, however, any plan or
arrangement maintained by a Governmental Authority to which Seller or any of
its Affiliates is required to contribute pursuant to applicable Law (collectively,
the “Plans”).  With respect to each Plan, Seller has
delivered or made available to Buyer a true and complete copy of each such Plan
(including all amendments thereto) and any related trust agreement or insurance
contract, and (to the extent applicable) a copy of the most recent IRS
determination letter issued in respect of each Plan that is intended to meet
the requirements of Section 401(a) of the Code, each Plan’s current summary
plan description and the most recent annual report on Form 5500 series filed in
respect of each Plan.

 

(b)           Except as set forth on Schedule 3.15(b),
none of the Plans (i) is a plan that is or has ever been subject to Title IV of
ERISA, Section 302 of ERISA or Section 412 of the Code, (ii) is a
“multiemployer plan” as defined in Section 3(37) of ERISA,
(iii) is a plan maintained in connection with a trust described in
Section 501(c)(9) of the Code, (iv) provides for the payment of
separation, severance, termination or similar-type benefits to any person or (v) provides
for or promises retiree medical or life insurance benefits to any current or
former employee, officer or director of Seller or any of its Subsidiaries
except to the extent required by Law. 
Each of the Plans is subject only to the federal or state Laws of the
United States or a political subdivision thereof.

 

(c)           Each Plan is in compliance in all material
respects with, and has always been operated in all material respects in
accordance with, its terms and the requirements of all applicable Laws, and
each of Seller and its Affiliates has satisfied in all material

 

14

 

respects
all of its statutory, regulatory and contractual obligations with respect to
each such Plan, in each case except where the failure to do so would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Seller or any of its Subsidiaries.  No action, suit, claim or proceeding is
pending or, to the Knowledge of Seller, threatened with respect to any Plan
(other than claims for benefits in the ordinary course).

 

(d)           There has been no non-exempt prohibited
transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Plan.  Neither Seller nor any of its Subsidiaries
has incurred any liability for any excise tax or penalty arising under the Code
or ERISA with respect to a Plan or any other employee benefit plan maintained,
contributed to or sponsored by Seller or its Affiliates, and, to the Knowledge
of Seller, no fact or event exists that could give rise to such liability.  Neither Seller nor any of its Subsidiaries
has incurred any liability relating to Title IV of ERISA (other than for the
payment of premiums to the Pension Benefit Guaranty Corporation).

 

(e)           Each Plan intended to meet the requirements
of Section 401(a) of the Code has received a favorable determination letter
from the IRS and, to the Knowledge of Seller, nothing has occurred since the
issuance of each such letter that could reasonably affect its qualification.

 

3.16         Gathered Volumes.  Schedule
3.16 sets forth the historical throughput data and information for the
calendar years 2004 and 2005 for each Gathering System.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES RELATING TO BUYER

 

Buyer
hereby represents and warrants to Seller as follows:

 

4.1           Organization of Buyer. 
Buyer is a limited liability company, formed, validly existing and in
good standing under the laws of Delaware.

 

4.2           Authorization; Enforceability. 
Buyer has all requisite power and authority to execute and deliver this
Agreement and to perform all obligations to be performed by it hereunder.  The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized and approved by Buyer, and no other proceeding on the part
of Buyer is necessary to authorize this Agreement.  This Agreement has been duly and validly
executed and delivered by Buyer, and this Agreement constitutes a valid and
binding obligation of Buyer, enforceable against Buyer 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.

 

4.3           No Conflict; Consents. 
Except as would not reasonably be expected to have a Material Adverse
Effect on the ability of Buyer to enter into and perform its obligations under
this Agreement, the execution and delivery of this Agreement by Buyer and the
consummation of the transactions contemplated hereby by Buyer do not and shall
not:

 

15

 

(a)           violate any Law applicable to Buyer or
require any filing with, consent, approval or authorization of, or, notice to,
any Governmental Authority (other than as required by the HSR Act);

 

(b)           violate any Organizational Document of Buyer;
or

 

(c)           require any filing with or permit, consent or
approval of, or the giving of any notice to, any Person (other than as required
by the HSR Act).

 

4.4           Litigation.  There are no lawsuits or
actions before any Governmental Authority pending or threatened in writing
against Buyer that would reasonably be expected to have a Material Adverse
Effect on the ability of Buyer to perform its obligations under this Agreement
and, there are no orders or unsatisfied judgments from any Governmental
Authority binding upon Buyer that would reasonably be expected to have a
Material Adverse Effect on the ability of Buyer to perform its obligations
under this Agreement.

 

4.5           Brokers’ Fees. 
Except as disclosed on Schedule 4.5, 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 Buyer or any of its
Affiliates.  No Person other than Buyer
has any liability or obligations for any costs or expenses related to Buyer’s
engagement of the parties, if any, set forth on Schedule 4.5.

 

4.6           Financial Ability. 
Buyer has, through a combination of cash on hand and funds readily and
unconditionally available under existing lines of credit, funds sufficient to
fund the consummation of the transactions contemplated by this Agreement and
satisfy all other costs and expenses arising in connection therewith.  A true, correct and complete copy of each
such line of credit upon which Buyer is relying for such funds is attached
hereto as Schedule 4.6.

 

ARTICLE V

COVENANTS

 

5.1           Conduct of Business.  

 

(a)           From the date of this Agreement through the
Closing, Seller shall operate its business solely as it relates to the Assets
in the ordinary course consistent with past practice and, without limiting the
generality or effect of the foregoing, Seller will use its Reasonable Efforts
to preserve intact, in all material respects, its business solely as it relates
to the Assets, as well as the Assets as they exist on the date of this
Agreement.

 

(b)           Without limiting the generality or effect of Section
5.1(a), prior to the Closing, Seller shall not take any action to:

 

(i)            cause the Assets to become subject to any
Liens other than Permitted Liens; 

 

16

 

(ii)           liquidate, dissolve, recapitalize or
otherwise wind up its business solely as it relates to the Assets;

 

(iii)          except as required by Law or in the ordinary
course of business, grant or increase any bonus, salary, severance, termination
or other compensation or benefits or other enhancement to the terms and
conditions of employment to any Eligible Employee (other than bonuses granted
at or prior to the Closing Date in connection with the transactions
contemplated hereby that are paid prior to the Closing;

 

(iv)          change its accounting methods, policies or
practices, in each case solely as they relate to the Assets, except as required
by applicable Law;

 

(v)           sell, assign, transfer, lease or otherwise
dispose of any Assets other than in the ordinary course of business or personal
property that will be replaced with equivalent property prior to Closing;

 

(vi)          incur any Indebtedness for Borrowed Money for
which Buyer will have any obligation on or after the Closing, other than in
connection with the ownership or operation of the Assets in the ordinary course
of business and not otherwise prohibited or allocated to Seller hereunder; or

 

(vii)         agree, whether in writing or otherwise, to do
any of the foregoing.

 

5.2           Access.

 

(a)           From the date hereof through the Closing,
Seller shall afford to Buyer and its authorized Representatives reasonable
access, during normal business hours and in such manner as not to unreasonably
interfere with normal operation of the business, to the properties, books,
contracts, records and appropriate management and employees of Seller related
to the Assets, and shall furnish such authorized Representatives with all
financial and operating data and other information concerning the Assets as
Buyer and such Representatives may reasonably request, provided that Buyer and
its authorized Representatives will not request information, or otherwise
contact, any officer director or employee of Seller without arranging such
contact with either Patricia D. Horn or Max Myers.  Seller shall have the right to have a
Representative present at all times during any such inspections, interviews and
examinations.  Additionally, Buyer shall
hold in confidence all such information on the terms and subject to the
conditions contained in the Confidentiality Agreement.  Notwithstanding the foregoing, Buyer shall
have no right of access to, and Seller shall have no obligation to provide to
Buyer, information relating to (a) bids received from others in connection with
the transactions contemplated by this Agreement (or similar transactions) and
information and analyses (including financial analyses) relating to such bids;
(b) any information the disclosure of which would jeopardize any privilege
available to Seller or any Seller Affiliate relating to such information or
would cause Seller or any Seller Affiliate to breach a confidentiality
obligation; or (c) any information the disclosure of which would result in
a violation of Law.

 

17

 

(b)           Buyer shall indemnify the Seller Indemnified
Parties and their Representatives, and save them harmless, effective as and
from the date hereof, from and against any claims, demands, actions, causes of
action, damages, losses, costs, liabilities, or expenses that they or any of
them may suffer or incur, or that may be made or brought against any of them,
as a result of, in respect of, or arising out of any injury to the person or
property of Buyer or its Representatives as a result of, or in connection with
any site visits or inspections of the Assets or properties of any Seller
Indemnified Party.  THE INDEMNIFICATION
PROVISIONS IN THIS SECTION 5.2 SHALL BE ENFORCEABLE REGARDLESS OF
WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT)
ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE
OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT
LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.

 

(c)           From and after the Closing Date, Seller
shall, and shall cause its Affiliates and their respective Representatives to,
keep confidential and not disclose any information relating to Seller or any of
the Assets (the “Restricted
Information”), and shall not directly or indirectly use such
Restricted Information for any purpose, except as and to the extent permitted
by the terms of this Agreement or the Transition Services Agreement.  The obligation to keep such Restricted
Information confidential shall continue indefinitely from the Closing Date and
shall not apply to any information that (i) is in the public domain, (ii) is
published or otherwise becomes part of the public domain through no fault of
Seller, any of its Affiliates or any of their respective Representatives or
(iii) becomes available to Seller, any of its Affiliates or any of their
respective Representatives on a non-confidential basis from a source that did
not acquire such information (directly or indirectly) from Seller or Buyer or
any of their respective Affiliates or Representatives on a confidential
basis.  Notwithstanding the foregoing,
Seller may make disclosures required by Law and in connection with disputes
hereunder; provided, however,
that Seller, to the extent practicable, shall provide Buyer with prompt notice
thereof so that Buyer may seek a protective order or other appropriate remedy
or waive compliance with the provisions of this Section 5.2(c).  In the event that such protective order or
other remedy is not obtained or Buyer waives compliance with the provisions of
this Section 5.2(c), Seller shall or shall cause the Person required to
disclose such Restricted Information to furnish only that portion of the
information that such Person is legally required, and, to the extent
practicable, Seller shall exercise its Reasonable Efforts to obtain reliable
assurance that confidential treatment is accorded the Restricted Information so
furnished.

 

(d)           As soon as reasonably practicable following
the Closing, Seller shall, in accordance with the terms of the applicable
confidentiality agreement (or, if permitted by such confidentiality agreement,
Seller shall assign its rights under such confidentially agreement to Buyer and
Buyer shall), request from each bidder that entered into a confidentiality
agreement with Seller regarding the possible acquisition by such bidder of the
Assets, that such bidder return to Seller any and all Restricted Information
furnished to such bidder.

 

18

 

(e)           All Restricted Information shall be subject
to the terms and conditions of the Confidentiality Agreement, and the Parties
understand and agree that the terms of this Agreement shall be subject to the
Confidentiality Agreement.  Buyer agrees
to be bound by the Confidentiality Agreement as if it were an original party
thereto.  Notwithstanding the foregoing,
from and after the Closing, any restrictions contained herein or in the
Confidentiality Agreement relating to Buyer’s use or disclosure of the
Restricted Information shall be null and void.

 

5.3           Third Party Approvals. 
Buyer and Seller shall (and shall each cause their respective Affiliates
to) use Reasonable Efforts to obtain all material consents and approvals of
third parties that any of Buyer, Seller or their respective Affiliates are
required to obtain in order to consummate the transactions contemplated hereby.

 

5.4           Regulatory Filings.  From
the date of this Agreement until the Closing, each of Buyer and Seller shall,
and shall cause their respective Affiliates to (a) make or cause to be made the
filings required of such party or any of its Affiliates (and, in the case of
Seller and any of its respective Affiliates) under any Laws with respect to the
transactions contemplated by this Agreement and to pay any fees due of it in
connection with such filings, as promptly as is reasonably practicable, and in
any event within ten Business Days after the date hereof, (b) cooperate with
the other Party and furnish all information in such Party’s possession that is
necessary in connection with such other Party’s filings, (c) use Reasonable
Efforts to cause the expiration of the notice or waiting periods under the HSR
Act and, if applicable, any other Laws with respect to the transactions
contemplated by this Agreement as promptly as is reasonably practicable, (d)
promptly inform the other Party of any communication from or to, and any
proposed understanding or agreement with, any Governmental Authority in respect
of such filings, (e) consult and cooperate with the other Party in connection
with any analyses, appearances, presentations, memoranda, briefs, arguments and
opinions made or submitted by or on behalf of any Party in connection with all
meetings, actions and proceedings with Governmental Authorities relating to
such filings, (f) comply, as promptly as is reasonably practicable, with any
requests received by such Party or any of its Affiliates under the HSR Act and
any other Laws for additional information, documents or other materials, (g)
use Reasonable Efforts to resolve any objections as may be asserted by any
Governmental Authority with respect to the transactions contemplated by this
Agreement, and (h) use Reasonable Efforts to contest and resist any action or
proceeding instituted (or threatened in writing to be instituted) by any
Governmental Authority challenging the transactions contemplated by this
Agreement as in violation of any Law.  If
a Party intends to participate in any meeting with any Governmental Authority
with respect to such filings, it shall give the other Party reasonable prior
notice of such meeting.

 

5.5           Employee and Benefit Matters.

 

(a)           Schedule 5.5(a) sets forth a list of certain employees of
Seller or its Affiliates who have provided services relating to the Assets and
that Seller and such Affiliates shall make available to Buyer to discuss
potential employment with Buyer after the Closing (such employees being
collectively the “Eligible
Employees”).  Within 15
days after the date of this Agreement, Buyer shall offer employment (which
shall be contingent on the occurrence of the Closing) to each Eligible Employee
that Buyer

 

19

 

desires
to employ, and Buyer shall notify Seller in writing of the identities of the
Eligible Employees to whom Buyer has made an offer.  Each offer of employment to a Eligible
Employee shall be consistent with the provisions of this Section 5.5 and
shall remain open for a period of at least 20 days.  On or before the date that is five Business
Days prior to the Closing Date, Buyer shall notify Seller as to each Eligible
Employee who has accepted employment with Buyer and each Eligible Employee who
has rejected an offer of such employment. 
Buyer shall indemnify and hold harmless Seller and its respective
Affiliates with respect to all Losses relating to or arising out of any action
or inaction by Buyer in connection with the employee selection and employment
offer process described in the preceding provisions of this Section 5.5(a)
(including any claim of discrimination or other illegality in such selection
and offer process).  The employment with
Buyer of each Eligible Employee who accepts such employment shall be effective
as of the Closing Date.

 

(b)           Subject to the remaining paragraphs of this Section
5.5, until the earlier of (i) one year following the Closing Date and (ii)
the termination for cause of an individual employed by Seller, Buyer or any of
their respective Affiliates, Buyer shall cause each Eligible Employee who
accepts an offer of employment from Buyer as provided in Section 5.5(a),
(each, a “Continuing
Employee”), to be provided with (x) compensation (including
annual incentive compensation opportunities) on a basis substantially similar
to that provided by Seller and its Affiliates to such employee immediately
prior to the Closing and (y) benefits on a basis substantially similar to those
provided to similarly situated employees of Buyer and its Affiliates.

 

(c)           Buyer shall cause each Continuing Employee
and the Continuing Employee’s eligible dependents (including all such
Continuing Employee’s dependents covered immediately prior to the Closing Date
by a Plan that is a group health plan), to (i) be eligible for coverage under
group health, prescription drug, dental and similar type welfare benefit plans
maintained by Buyer or an Affiliate thereof or that provide benefits to the
Continuing Employee and such eligible dependents, effective immediately upon
the Closing Date and (ii) for purposes of satisfying deductibles, out-of-pocket
maximums or other similar limitations, credit such Continuing Employee, for the
year during which such coverage under such plans begins, with any deductibles,
co-insurance and co-payments already incurred during such year under Plans that
provide similar benefits.

 

(d)           Buyer shall cause the employee benefit plans
and programs maintained after the Closing by Buyer, Seller and the Affiliates
of Buyer to recognize each Continuing Employee’s years of service and level of
seniority prior to the Closing Date with Seller and its Affiliates (including
service and seniority with any other employer that was recognized by Seller or
its respective Affiliates) for purposes of terms of employment and eligibility,
vesting, benefit accrual, retirement eligibility, and benefit determination
under such plans and programs, including paid vacation, paid sick time,
severance benefits and employer contribution rates under retirement plans.  Buyer shall cause each employee welfare
benefit plan or program sponsored by Buyer or one of its Affiliates that a
Continuing Employee may be eligible to participate in on or after the Closing
Date to waive any preexisting condition exclusion or any proof of insurability

 

20

 

requirement
with respect to participation and coverage requirements applicable to such
Continuing Employee or such employee’s dependents.

 

(e)           For a period of two years after the Closing
Date, Buyer agrees not to solicit for employment any of the employees (other
than Eligible Employees who have not received and rejected an offer of employment
from Buyer or any of its Affiliates) of Seller or its Affiliates so long as
they are employed by Seller without the prior written consent of Seller; provided, however, that the foregoing
restriction shall not apply to any general solicitations not directed at the
employees of Seller or its Affiliates.

 

5.6           Seller Marks. 
Buyer shall obtain no right, title, interest, license or any other right
whatsoever to use the words “OGE” or “Enogex” or any trademarks containing or
comprising the foregoing, or any trademark confusingly similar thereto or
dilutive thereof (collectively, the “Seller Marks”).  From and after the Closing, Buyer agrees that
it shall (a) cease using the Seller Marks in any manner, directly or
indirectly, except for such limited uses as cannot be promptly terminated
(e.g., signage, e-mail addresses, and as a referral or pointer to the acquired
website), and to cease such limited usage of the Seller Marks as promptly as
possible after the Closing and in any event within 90 days following the
Closing Date and (b) remove, strike over or otherwise obliterate all Seller
Marks from all Assets and all other materials owned, possessed or used by
Seller or its Affiliates.  The Parties
agree, because damages would be an inadequate remedy, that a Party seeking to
enforce this Section 5.6 shall be entitled to seek specific performance
and injunctive relief as remedies for any breach thereof in addition to other
remedies available at law or in equity. 
This covenant shall survive indefinitely without limitation as to time.

 

5.7           Books and Records; Access.  From
and after the Closing:

 

(a)           Seller and its respective Affiliates may
retain a copy of any or all of the data room materials and other books and
records relating to the Assets on or before the Closing Date.

 

(b)           Buyer shall preserve and keep a copy of all
books and records of Seller that relate to the use or ownership of Assets on or
before the Closing Date in Buyer’s possession for a period of at least five
years after the Closing Date.  After such
five-year period, before Buyer shall dispose of any such books and records,
Buyer shall give Seller at least 90 days’ prior notice to such effect, and
Seller shall be given an opportunity, at its cost and expense, to remove and
retain all or any part of such books and records as Seller may select.  Buyer shall provide to Seller, at no cost or
expense to Seller, full access to such books and records as remain in Buyer’s
possession and full access to the properties and employees of Buyer in
connection with matters relating to the Assets of Seller on or before the
Closing Date and any disputes relating to this Agreement.

 

5.8           Permits.  Buyer shall provide all
notices and otherwise take all actions required to transfer or reissue any
Permits, including those required under Environmental Laws, as a result of or
in furtherance of the transactions contemplated by this Agreement.  Seller shall use Reasonable Efforts to
cooperate with Buyer to provide information necessary to apply for such
Permits.

 

21

 

5.9           Liability for Transfer Taxes. 
Buyer shall be responsible for and indemnify the Seller Indemnified
Parties against any state or local transfer, sales, use, stamp, registration or
other similar Taxes resulting from the transactions contemplated by this
Agreement.

 

5.10         Cooperation.  In connection with the
preparation of Tax Returns directly related to the Assets, audit examinations
directly related to the Assets, and any administrative or judicial proceedings
regarding Tax liabilities that are imposed on Seller and directly relate to the
Assets, Buyer and Seller shall cooperate fully with each other, including,
without limitation, with respect to the furnishing or making available during
normal business hours of records, personnel (as reasonably required), books of
account, powers of attorney or other materials necessary or helpful for the
preparation of such Tax Returns, the conduct of such audit examinations or the
defense of claims by Governmental Authorities as to the imposition of such
Taxes.

 

5.11         Information; Data; Facilities.

 

(a)           At or promptly after the Closing, Seller
shall furnish to Buyer all digital files, software and related information for
mapping and modeling the Gathering Systems, to the extent Seller is legally and
contractually permitted to do so.

 

(b)           At or promptly after the Closing, Seller
shall furnish to Buyer all files and information and data used by Seller in
preparing applications for, and demonstrating compliance with, environmental
and similar permits used or obtained by Seller in connection with the operation
of the Assets.

 

5.12         Post-Closing Receipts.  If,
within 180 days after the Closing, Buyer receives any funds relating to the
operation of the Assets prior to the Closing Date, or Seller receives any funds
relating to the operation of the Assets after the Closing Date, then the Party
receiving such funds shall account therefor and pay the same to the other Party
promptly after receipt thereof.  Notwithstanding
the foregoing, there shall be no accounting for amounts received that have
already been taken into account in calculating the Purchase Price.  Liability for ad valorem taxes for any Tax
period that includes but does not end on the Closing Date shall be apportioned
between Buyer and Seller on a ratable daily basis.  Seller shall be responsible for remitting
payment to the appropriate Governmental Authority for such ad valorem taxes,
and Buyer shall reimburse Seller for Buyer’s ratable portion within 30 days of
the date such ad valorem Taxes are remitted to the respective jurisdiction.

 

5.13         Gas Transportation Arrangements.  (a)
During the term of the Transportation Agreement, (i) any gas that is gathered
(or in the future capable of being gathered) by a Specified System, including
any gas produced from any Specified Well, is, effective as of the Closings
Date, hereby dedicated by Buyer and shall be delivered to the Enogex Inc.
intrastate transportation system pursuant to the Transportation Agreement, and
(ii) Buyer shall not (x) construct any pipeline to transport any gas gathered
from the Specified Systems or Specified Wells or (y) otherwise contract for the
installation or connection of the Specified Systems or Specified Wells to any
third party pipeline.  Without limiting
the generality of any other provision of this Agreement, the provisions of this
Section 5.13(a) shall be binding upon any successor of Buyer or assignee
of any of the Assets.

 

22

 

(b)           Buyer agrees that within one year after the
Closing Date, Buyer will install treating facilities (the “Treating Facilities”)
in order to enable Buyer to treat the gas to be transported on the Enogex Inc.
transportation system so that such gas meets the quality specifications set
forth in Enogex Inc.’s Standard Operating Conditions.  Until the earlier to occur of (i) one year
from the Closing Date and (ii) the installation by Buyer of the Treating
Facilities, Enogex Inc. will use Reasonable Efforts to endeavor to accept and
blend the gas delivered by Buyer at the Points of Receipt (as defined in the
Transportation Agreement), but only to the extent that such gas is of
substantially the same quality as has historically delivered by Seller at the
Points of Receipt.  Notwithstanding the
foregoing, Buyer acknowledges that Enogex Inc.’s intrastate transportation
system is subject to regulations and other Laws that, among other things,
impose significant restrictions on the acceptance into such system of
non-conforming gas.

 

5.14         Assumed Contracts.  Buyer shall be obligated to terminate or
replace each of the Assumed Contracts as soon as reasonably possible, but not
later than the later of (a) six (6) months after the Closing Date and (b) the
expiration of the Primary Term under the respective Assumed Contract.  The purpose of this Section 5.14 is to
require Buyer to cease using Seller’s contractual form and cause Buyer to
substitute such form with Buyer’s contractual form.

 

5.15         Well Connections. 
Buyer shall reimburse Seller for all out-of-pocket expenditures made or
incurred by Seller between the date of this Agreement and the Closing Date in
order to connect any Gathering System to the wells set forth on Schedule
5.15.  Buyer shall also reimburse
Seller for all out-of-pocket expenditures made or incurred by Seller between
the date of this Agreement and the Closing Date in order to connect any
Gathering System to such additional wells as shall be mutually agreed to by
Buyer and Seller.  All reimbursements for
expenditures described in this Section 5.15 shall be made by Buyer on
the Closing Date; provided, that
if the amount of any expenditure has not been determined by the Closing Date,
then the reimbursement for such expenditure shall be made by Buyer promptly
after such determination.

 

ARTICLE VI

CONDITIONS TO CLOSING

 

6.1           Conditions to Obligations of Buyer.  The
obligation of Buyer to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions, any one
or more of which may be waived in writing by Buyer:

 

(a)           Representations, Warranties and Covenants of
Seller.  (i) Each of the representations and
warranties of Seller made in this Agreement will be true and correct as of the
date of this Agreement and as of the Closing (as if made anew at and as of the
Closing), except where the breach of a representation or warranty (individually
or when aggregated with other breaches of representations and warranties) would
not reasonably be expected to have a Material Adverse Effect; (ii) Seller shall
have performed or complied with all of the covenants and agreements required by
this Agreement to be performed or complied with by Seller on or before the
Closing, except where the failure to perform or comply would not reasonably be
expected to have a Material Adverse

 

23

 

Effect;
and (iii) Seller shall have delivered to Buyer a certificate, dated the Closing
Date, certifying that the conditions specified in this Section 6.1(a)
have been fulfilled;

 

(b)           Third Party Consents; Governmental Approvals.  All
material consents, approvals or waivers, if any, disclosed on any schedule to
this Agreement or otherwise required to be obtained by Seller in connection
with the consummation of the transactions contemplated by this Agreement have
been received.  Any applicable waiting
period under the HSR Act shall have expired or been terminated and all of the
material consents, approvals, authorizations, exemptions and waivers from
Governmental Authorities that will be required to enable Buyer to consummate
the transactions contemplated by this Agreement have been obtained;

 

(c)           No Injunction, Etc.  No
provision of any applicable Law and no order will be in effect that will
prohibit or restrict the consummation of the Closing;

 

(d)           No Proceedings.  No
proceeding challenging this Agreement or the transactions contemplated hereby
or seeking to prohibit, alter, prevent or materially delay the Closing or
seeking Losses from Seller incident to this Agreement or the transactions
contemplated hereby, will have been instituted by any Person before any
Governmental Authority and be pending.

 

(e)           Transition Services Agreement. 
Seller shall have delivered to Buyer an executed counterpart of the
Transition Services Agreement, dated as of the Closing Date, substantially in
the form of Exhibit A attached hereto (the “Transition Services Agreement”);
provided, however, that the form
of Schedule A to the Transition Services Agreement shall be in a form to be
mutually agreed upon by the Parties prior to the Closing.

 

(f)            Transportation Agreement. 
Seller shall have delivered to Buyer an executed counterpart of the
Interruptible Transportation Services Agreement, dated as of the Closing Date,
substantially in the form of Exhibit B attached hereto (the “Transportation Agreement”);

 

(g)           Bill of Sale. 
Seller shall have delivered to Buyer an executed counterpart of a Bill
of Sale dated as of the Closing Date, in a form to be mutually agreed upon by
the Parties prior to the Closing (the “Bill of Sale”);

 

(h)           Assignment and Assumption Agreement. 
Seller shall have delivered to Buyer an executed counterpart of an
Assignment and Assumption Agreement, dated as of the Closing Date, in a form to
be mutually agreed upon by the Parties prior to the Closing (the “Assignment and Assumption Agreement”);

 

(i)            Assignment of Easements. 
Seller shall have delivered to Buyer an executed counterpart of an
Assignment of Easements, dated as of the Closing Date, in a form to be mutually
agreed upon by the Parties prior to the Closing 
(the “Assignment
of Easements”); and

 

24

 

(j)            Other Deliveries. 
Seller shall have delivered such other certificates, instruments of
conveyance, and documents as may be reasonably requested by Buyer and agreed to
by Seller prior to the Closing Date to carry out the intent and purposes of
this Agreement.

 

6.2           Conditions to the Obligations of Seller.  The
obligation of Seller to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions, any one
or more of which may be waived in writing by Seller:

 

(a)           Representations, Warranties and Covenants of
Buyer.  (i) Each of the representations and
warranties of Buyer made in this Agreement will be true and correct in all
respects as of the date of this Agreement and as of the Closing (as if made
anew at and as of the Closing), except where the breach of a representation or
warranty (individually or when aggregated with other breaches of
representations or warranties) would not reasonably be expected to have a
Material Adverse Effect; (ii) Buyer shall have performed or complied with all
of the covenants and agreements required by this Agreement to be performed or
complied with by Buyer on or before the Closing, except where the failure to
perform or comply would not reasonably be expected to have a Material Adverse
Effect; and (iii) Buyer shall have delivered to Seller a certificate, dated the
Closing Date, certifying that the conditions specified in this Section
6.2(a) have been fulfilled;

 

(b)           Third Party Consents; Governmental Approvals.  All
material consents, approvals or waivers, if any, disclosed on any schedule to
this Agreement or otherwise required to be obtained by Buyer in connection with
the consummation of the transactions contemplated by this Agreement have been
received.  Any applicable waiting period
under the HSR Act shall have expired or been terminated and all of the material
consents, approvals, authorizations, exemptions and waivers from Governmental
Authorities that will be required to enable Seller to consummate the
transactions contemplated by this Agreement have been obtained;

 

(c)           No Injunction, Etc.  No
provision of any applicable Law and no order will be in effect that will
prohibit or restrict the consummation of the Closing;

 

(d)           No Proceedings.  No
proceeding challenging this Agreement or the transactions contemplated hereby
or seeking to prohibit, alter, prevent or materially delay the Closing or
seeking Losses from Seller incident to this Agreement or the transactions
contemplated hereby, will have been instituted by any Person before any
Governmental Authority and be pending;

 

(e)           Transition Services Agreement. 
Buyer shall have delivered to Seller an executed counterpart of the Transition
Services Agreement;

 

(f)            Transportation Agreement. 
Buyer shall have delivered to Seller an executed counterpart of the
Transportation Agreement;

 

(g)           Sales Tax.  Without limiting the
generality of the provisions of Section 5.9, in order to permit Seller
to satisfy its collection obligations under applicable Law,

 

25

 

Buyer
shall deliver to Seller at Closing cash in an amount equal to pay the Taxes
required to be paid by Buyer reflected on Schedule 2.6;

 

(h)           Assignment and Assumption Agreement. 
Buyer shall have delivered to Seller an executed counterpart of an
Assignment and Assumption Agreement;

 

(i)            Assignment of Easements. 
Buyer shall have delivered to Buyer an executed counterpart of the
Assignment of Easements; and

 

(j)            Other Deliveries. 
Buyer shall have delivered such other certificates, instruments, and
documents as may be reasonably requested by Seller and agreed to by Buyer prior
to the Closing Date to carry out the intent and purposes of this Agreement.

 

ARTICLE VII

INDEMNIFICATION

 

7.1           Survival.  The representations and
warranties in this Agreement and all covenants contained in this Agreement
shall survive the Closing until one (1) year after the Closing Date, except
that (a) the representations and warranties in Section 3.1 (Organization
of Seller), Section 3.2 (Authorization; Enforceability), Section 3.8
(Brokers’ Fees) and Section 4.1 (Organization of Buyer) shall survive
until the fifth anniversary of the Closing Date and (b) the representations and
warranties and certifications contained in the certificates delivered under Section
6.1(a) and Section 6.2(a) will for survive for the same duration
that the representations and warranties to which they are applicable
survive.  Notwithstanding the preceding
sentence, any representation or warranty in respect of which indemnity may be
sought under this Agreement will survive the time at which it would otherwise
terminate pursuant to the preceding sentence if written notice of the
inaccuracy or breach thereof giving rise to such right of indemnity has been
given to the Party against whom such indemnification may be sought prior to
such time; provided that such
right of indemnity shall continue to survive and shall remain a basis for
indemnification hereunder only until the related claim for indemnification is
resolved or disposed of in accordance with the terms of this Article VII.

 

7.2           Indemnification.

 

(a)           From and after the Closing, Seller will
indemnify, defend and hold harmless Buyer and its officers, members, directors,
employees and Affiliates (the “Buyer  Indemnified Parties”) against any and all liabilities,
damages, losses, costs and expenses (including reasonable attorneys’ and
consultants’ fees and expenses) (“Losses”) incurred or suffered as a result of,
relating to or arising out of (i) any failure of any representation or warranty
made by Seller in this Agreement or any closing certificate delivered pursuant
to Section 6.1(a) to be true and correct as of the Closing (as if made
anew at and as of the Closing), (ii) the breach of any covenant or agreement
made or to be performed by Seller pursuant to this Agreement and (iii) any
failure by Seller to pay, perform or otherwise discharge any of the Retained
Liabilities.  Notwithstanding anything
herein to the contrary, Seller will not be liable under this Section 7.2(a)
(x)

 

26

 

except
to the extent the aggregate amount of Losses exceeds $1,500,000 or (y) for
Losses in excess of 15% of the Purchase Price.

 

(b)           From and after the Closing, Buyer will
indemnify, defend and hold harmless Seller and its officers, members,
directors, employees and Affiliates (the “Seller  Indemnified Parties”) against any and all
Losses incurred or suffered as a result of, relating to or arising out of (i)
any failure of any representation or warranty made by Buyer in this Agreement
or any closing certificate delivered pursuant to Section 6.2(a) to be
true and correct as of the Closing (as if made anew at and as of the Closing),
(ii) the breach of any covenant or agreement made or to be performed by Buyer
pursuant to this Agreement and (iii) the operation of the business related to
the Assets after the Closing Date, including, without limitation, any
involvement whatsoever by Seller or its Affiliates in any Measurement Cases.

 

(c)           For purposes of determining whether a
representation or warranty has been breached for purposes of this Article VII
and determining the amount of Losses suffered by any Buyer Indemnified Party or
Seller Indemnified Party, as the case may be, each representation and warranty
set forth in this Agreement, and any qualification with respect to any
representation or warranty set forth in any Disclosure Schedule, shall be read
without regard or giving effect to “material,” “materiality,” “Material Adverse
Effect,” “except as would not reasonably be expected to have a Material Adverse
Effect on the Assets and/or Seller” and words of similar qualification.

 

(d)           THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE
VII SHALL BE ENFORCEABLE REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE
PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE,
CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING
INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE
PERSON SEEKING INDEMNIFICATION.

 

7.3           Procedures.  Claims for indemnification
under this Agreement shall be asserted and resolved as follows:

 

(a)           If any Person who or which is entitled to
seek indemnification under Section 7.2 (an “Indemnified Party”)
receives notice of the assertion or commencement of any claim asserted against
an Indemnified Party by a third party (“Third Party Claim”) in respect of any matter
that is subject to indemnification under Section 7.2, the Indemnified
Party shall promptly (i) notify the party against whom indemnification is
sought (the “Indemnifying
Party”) of the Third Party Claim and (ii) transmit to the
Indemnifying Party a written notice (“Claim Notice”) describing in reasonable detail
the nature of the Third Party Claim, a copy of all papers served with respect
to such claim (if any), the Indemnified Party’s best estimate of the amount of
Losses attributable to the Third Party Claim and the basis of the Indemnified
Party’s request for indemnification under this Agreement.  Failure to timely provide such Claim Notice
shall not affect the right of the Indemnified Party’s indemnification
hereunder, except to the extent the Indemnifying Party is prejudiced by such
delay or omission.

 

27

 

(b)           The Indemnifying Party shall have the right
to defend the Indemnified Party against such Third Party Claim.  If the Indemnifying Party notifies the
Indemnified Party that the Indemnifying Party elects to assume the defense of
the Third Party Claim (such election to be without prejudice to the right of
the Indemnified Party to dispute whether such claim is an indemnifiable Loss
under this Article VII), then the Indemnifying Party shall have the
right to defend such Third Party Claim with counsel selected by the
Indemnifying Party (who shall be reasonably satisfactory to the Indemnified
Party), by all appropriate proceedings, to a final conclusion or settlement at
the discretion of the Indemnifying Party in accordance with this Section
7.3(b).  The Indemnifying Party shall
have full control of such defense and proceedings, including any compromise or
settlement thereof; provided that
the Indemnifying Party shall not enter into any settlement agreement without the
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld, conditioned or delayed); provided further, that such consent shall not be required if
(i) the settlement agreement contains a complete and unconditional general
release by the third party asserting the claim to all Indemnified Parties
affected by the claim and (ii) the settlement agreement does not contain any
sanction or restriction upon the conduct of any business by the Indemnified
Party or its Affiliates.  If requested by
the Indemnifying Party, the Indemnified Party agrees, at the sole cost and
expense of the Indemnifying Party, to cooperate with the Indemnifying Party and
its counsel in contesting any Third Party Claim which the Indemnifying Party
elects to contest, including the making of any related counterclaim against the
Person asserting the Third Party Claim or any cross complaint against any
Person.  The Indemnified Party may
participate in, but not control, any defense or settlement of any Third Party
Claim controlled by the Indemnifying Party pursuant to this Section 7.3(b),
and the Indemnified Party shall bear its own costs and expenses with respect to
such participation.

 

(c)           If the Indemnifying Party does not notify the
Indemnified Party that the Indemnifying Party elects to defend the Indemnified
Party pursuant to Section 7.3(b), then the Indemnified Party shall have
the right to defend, and be reimbursed for its reasonable cost and expense (but
only if the Indemnified Party is actually entitled to indemnification
hereunder) in regard to the Third Party Claim with counsel selected by the
Indemnified Party (who shall be reasonably satisfactory to the Indemnifying
Party), by all appropriate proceedings, which proceedings shall be prosecuted
diligently by the Indemnified Party.  In
such circumstances, the Indemnified Party shall defend any such Third Party
Claim in good faith and have full control of such defense and proceedings; provided, however,
that the Indemnified Party may not enter into any compromise or settlement of
such Third Party Claim if indemnification is to be sought hereunder, without
the Indemnifying Party’s consent (which consent shall not be unreasonably
withheld, conditioned or delayed).  The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section
7.3(c), and the Indemnifying Party shall bear its own costs and expenses
with respect to such participation.

 

(d)           Any claim by an Indemnified Party on account
of Losses that does not result from a Third Party Claim (a “Direct Claim”) will
be asserted by giving the Indemnifying Party reasonably prompt written notice
thereof.  Such notice by the

 

28

 

Indemnified
Party will describe the Direct Claim in reasonable detail, will include copies
of all available material written evidence thereof and will indicate the
estimated amount, if reasonably practicable, of Losses that have been or may be
sustained by the Indemnified Party.  The
Indemnifying Party will have a period of five Business Days within which to
respond in writing to such Direct Claim. 
If the Indemnifying Party does not so respond within such five Business
Day period, the Indemnifying Party will be deemed to have rejected such claim,
in which event the Indemnified Party will be free to pursue such remedies as
may be available to the Indemnified Party on the terms and subject to the
provisions of this Agreement.

 

(e)           Any indemnification payment made pursuant to
this Agreement shall be net of any insurance proceeds realized by and paid to
the Indemnified Party in respect of such claim, and the amount of any Loss
shall take into account any net Tax benefits attributable to the circumstance
or event giving rise to such Loss.

 

7.4           Waiver of Other Representations.

 

(a)           EXCEPT THOSE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NEITHER SELLER NOR ANY OF ITS AFFILIATES OR
REPRESENTATIVES HAS MADE OR IS MAKING ANY REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF SELLER, ITS
BUSINESS OR ANY OF ITS ASSETS, LIABILITIES OR OPERATIONS, INCLUDING WITH
RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR WITH
RESPECT TO ANY FINANCIAL PROJECTIONS OR FORECASTS RELATING TO SELLER, AND ANY
SUCH OTHER REPRESENTATION AND WARRANTIES ARE HEREBY DISCLAIMED.

 

(b)           EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREIN, SELLER’S INTERESTS IN ITS ASSETS ARE BEING TRANSFERRED THROUGH THE SALE
“AS IS, WHERE IS, WITH ALL FAULTS,” AND SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
THE CONDITION, VALUE OR QUALITY OF SELLER AND ITS ASSETS OR THE PROSPECTS
(FINANCIAL OR OTHERWISE), RISKS AND OTHER INCIDENTS OF SELLER AND ITS ASSETS.

 

7.5           Exclusive Remedy and Release.  The
indemnification and remedies set forth in this Article VII shall, from
and after the Closing, constitute the sole and exclusive remedies of the
Parties with respect to any breach of representation or warranty or
non-performance, partial or total, of any covenant or agreement contained in
this Agreement; provided, however,
that nothing in this Section 7.5 shall prevent either Party from seeking
injunctive or equitable relief in pursuit of its indemnification claims under
this Article VII.  Except with respect to claims identified in the
previous sentence, Buyer hereby waives, releases, acquits and forever
discharges Seller, its officers, directors, partners, employees or agents, or
any other person acting on behalf of Seller, of and from any and all claims,
actions, causes of action, demands, rights, damages, costs, expenses, Losses or
compensation whatsoever, whether direct or indirect, known or unknown, foreseen
or unforeseen, which Buyer now has or

 

29

 

may have or which may arise in the future directly or
indirectly resulting from the management or operations of the Assets, including
without limitation any of the foregoing that is from or relating to the possession,
use, handling, management, disposal, investigation, remediation, cleanup or
release of any Constituents of Concern or any Environmental Law applicable
thereto.

 

ARTICLE VIII

TERMINATION

 

8.1           Termination.  At any time prior to the
Closing, this Agreement may be terminated and the transactions contemplated
hereby abandoned:

 

(a)           by the mutual consent of Buyer and Seller as
evidenced in writing signed by each of Buyer and Seller;

 

(b)           by Buyer, if there has been a material breach
by Seller of any representation, warranty or covenant contained in this
Agreement that has prevented the satisfaction of any condition to the
obligations of Buyer at the Closing and, if such breach is of a character that
it is capable of being cured, such breach has not been cured by Seller within
30 days after written notice thereof from Buyer;

 

(c)           by Seller, if there has been a material
breach by Buyer of any representation, warranty or covenant contained in this
Agreement that has prevented the satisfaction of any condition to the
obligations of Seller at the Closing and, if such breach is of a character that
it is capable of being cured, such breach has not been cured by Buyer within 30
days after written notice thereof from Seller;

 

(d)           by either Buyer or Seller if any Governmental
Authority having competent jurisdiction has issued a final, non-appealable
order, decree, ruling or injunction (other than a temporary restraining order)
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement; or

 

(e)           by either Buyer or Seller, if the
transactions contemplated hereby have not been consummated by May 31, 2006; provided, however, that neither Buyer nor
Seller will be entitled to terminate this Agreement pursuant to this Section
8.1(e) if such Person’s breach of this Agreement has prevented the
consummation of the transactions contemplated by this Agreement.

 

8.2           Effect of Termination.  If
this Agreement is terminated under Section 8.1, all further obligations
of the Parties under this Agreement will terminate without further liability or
obligation of either Party to the other Parties hereunder; provided, however, that no Party will be
released from liability hereunder if this Agreement is terminated and the
transactions abandoned by reason of (a) failure of such Party to have performed
its material obligations under this Agreement or (b) any material
misrepresentation made by such Party of any matter set forth in this Agreement.  Nothing in this Section 8.2 will
relieve any Party to this Agreement of liability for breach of this Agreement
occurring prior to any termination, or for breach of any provision of

 

30

 

this
Agreement that specifically survives termination hereunder.  The Confidentiality Agreement shall not be
affected by a termination of this Agreement.

 

ARTICLE IX

MISCELLANEOUS

 

9.1           Notices.  All notices and other
communications between the Parties shall be in writing and shall be deemed to
have been duly given when (i) delivered in person, (ii) five days after posting
in the United States mail having been sent registered or certified mail return
receipt requested or (iii) delivered by telecopy and promptly confirmed by
delivery in person or post as aforesaid in each case, with postage prepaid,
addressed as follows:

 

If to Buyer, to:

 

Hiland
Partners, L.P.

205
West Maple, Suite 105

Enid,
Oklahoma  73701

Fax:  (580) 548-5188

Attention:  Randy Moeder

 

with
a copy to:

 

McAfee
& Taft

10th
Floor, Two Leadership Square

211
N. Robinson, Suite 1000

Oklahoma
City, Oklahoma  73102

Fax:  (405) 235-0439

Attention:  David J. Ketelsleger

 

If to Seller, to:

 

Enogex
Gas Gathering, L.L.C.

515
Central Park Dr., Suite 600

Oklahoma
City, Oklahoma  73105

Fax:  (405) 558-4642

Attention:  Max J. Myers and Patricia D. Horn

 

with
a copy to:

 

Jones
Day

717
Texas, Suite 3300

Houston,
Texas 77002

Fax (832) 239-3600

Attention: 
J. Mark Metts

 

or
to such other address or addresses as the Parties may from time to time
designate in writing.

 

31

 

9.2           Assignment.  Except as provided in Section
9.3, no Party shall assign this Agreement or any part hereof without the
prior written consent of the other Party. 
Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the Parties and their respective permitted successors and
assigns.

 

9.3           Like-Kind Exchange. 
Seller may designate some or all of the Assets as “relinquished
property” in a “like-kind exchange” for purposes of Section 1031 of the Code,
in which event Seller shall assign it rights (but not its obligations) under
this Agreement to a third party acting as “qualified intermediary” for U.S.
federal income tax purposes (the “Qualified Intermediary”).  Following any such assignment, Buyer shall
act in accordance with the Qualified Intermediary’s instructions in remitting
the Purchase Price and shall otherwise reasonably cooperate with Seller and the
Qualified Intermediary to enable Seller’s sale of the Assets to qualify as part
of a like-kind exchange for tax purposes. 
Seller shall indemnify Buyer against and hold Buyer harmless from any
and all costs imposed on or incurred by Buyer as a result of its compliance
with the terms of this Section 9.3.   
This Section 9.3 does not authorize Seller to delay the Closing
Date for the purpose of qualifying a like-kind exchange under Section 1031 of
the Code.

 

9.4           Rights of Third Parties. 
Except for the provisions of Section 5.2(b), Section 5.5(b),
Section 5.9, Article VII and Section 9.3, which are
intended to be enforceable by the Persons respectively referred to therein,
nothing expressed or implied in this Agreement is intended or shall be
construed to confer upon or give any Person, other than the Parties, any right
or remedies under or by reason of this Agreement; provided, further, that the provisions of Section 5.13
may be enforced by Seller and/or Enogex Inc.

 

9.5           Expenses.  Except as otherwise expressly
provided herein, each Party shall bear its own expenses incurred in connection
with this Agreement and the transactions contemplated hereby whether or not
such transactions shall be consummated, including all fees of its legal
counsel, financial advisers and accountants.

 

9.6           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  Any facsimile copies hereof
or signature hereon shall, for all purposes, be deemed originals.

 

9.7           Entire Agreement.  This
Agreement (together with the Disclosure Schedules and exhibits to this
Agreement), the Transportation Agreement and the Confidentiality Agreement
constitute the entire agreement among the Parties and supersede any other
agreements, whether written or oral, that may have been made or entered into by
or among any of the Parties or any of their respective Affiliates relating to
the transactions contemplated hereby.

 

9.8           Disclosure Schedules. 
Unless the context otherwise requires, all capitalized terms used on the
Disclosure Schedules shall have the respective meanings assigned in this
Agreement.  No reference to or disclosure
of any item or other matter on the Disclosure Schedules shall be construed as
an admission or indication that such item or other matter is material or that
such item or other matter is required to be referred to or disclosed on the
Disclosure Schedules.  No disclosure on
the Disclosure Schedules relating to any possible breach or violation of any

 

32

 

agreement
or Law shall be construed as an admission or indication that any such breach or
violation exists or has actually occurred. 
The inclusion of any information on the Disclosure Schedules shall not
be deemed to be an admission or acknowledgment by Seller, in and of itself,
that such information is material to or outside the ordinary course of the
business of Seller or required to be disclosed on the Disclosure
Schedules.  Each disclosure on the
Disclosure Schedules shall be deemed to qualify all representations and
warranties of Seller notwithstanding the lack of a specific cross-reference.

 

9.9           Acknowledgment by Buyer. 
BUYER HAS NOT RELIED ON ANY REPRESENTATION OR WARRANTY FROM SELLER OR
ANY OF ITS RESPECTIVE AFFILIATES, EXCEPT AS SET FORTH IN THIS AGREEMENT.

 

9.10         Amendments.  This Agreement may be amended
or modified in whole or in part, and terms and conditions may be waived, only
by a duly authorized agreement in writing which makes reference to this
Agreement executed by each Party.

 

9.11         Publicity.  All press releases or other
public communications of any nature whatsoever relating to the transactions
contemplated by this Agreement, and the method of the release for publication
thereof, shall be subject to the prior written consent of Buyer and Seller,
which consent shall not be unreasonably withheld, conditioned or delayed by
such Party; provided, however,
that nothing herein shall prevent a Party from publishing such press releases
or other public communications as is necessary to satisfy such Party’s
obligations at Law or under the rules of any stock or commodities exchange
after consultation with the other Party.

 

9.12         Severability.  If
any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement shall remain
in full force and effect.  The Parties
further agree that if any provision contained herein is, to any extent, held
invalid or unenforceable in any respect under the Laws governing this
Agreement, they shall take any actions necessary to render the remaining
provisions of this Agreement valid and enforceable to the fullest extent
permitted by Law and, to the extent necessary, shall amend or otherwise modify
this Agreement to replace any provision contained herein that is held invalid
or unenforceable with a valid and enforceable provision giving effect to the
intent of the Parties to the greatest extent legally permissible.

 

9.13         Governing Law; Jurisdiction.

 

(a)           This Agreement shall be governed and
construed in accordance with the Laws of the State of Oklahoma, without regard
to the Laws that might be applicable under conflicts of laws principles.

 

(b)           The Parties agree that the appropriate,
exclusive and convenient forum for any disputes between any of the Parties
hereto arising out of this Agreement or the transactions contemplated hereby
shall be in any state or federal court in Oklahoma County, Oklahoma, and each
of the Parties hereto irrevocably submits to the jurisdiction of such courts
solely in respect of any legal proceeding arising out of or related to this
Agreement.  The Parties further agree
that the Parties shall not bring suit with respect to any disputes arising out
of this Agreement or the transactions contemplated hereby in any

 

33

 

court
or jurisdiction other than the above specified courts.  The Parties further agree, to the extent
permitted by Law, that a final and nonappealable judgment against a Party in
any action or proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and amount of such judgment.  Except to the extent that a different
determination or finding is mandated due to the applicable law being that of a
different jurisdiction, the Parties agree that all judicial determinations or findings
by a state or federal court in Oklahoma with respect to any matter under this
Agreement shall be binding.

 

(c)           To the extent that any Party hereto has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, each such party hereby irrevocably (i) waives such immunity in
respect of its obligations with respect to this Agreement and (ii) submits to
the personal jurisdiction of any court described in Section 9.13(b).

 

(d)           THE PARTIES HERETO AGREE THAT THEY HEREBY
IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION TO ENFORCE OR
INTERPRET THE PROVISIONS OF THIS AGREEMENT.

 

[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK]

 

34

 

IN
WITNESS WHEREOF this Agreement has been duly executed and delivered by each
Party as of the date first above written.

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  ENOGEX GAS GATHERING, L.L.C.

  
	
   

  	
  By:
  Enogex Inc., Its Sole Member and Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Danny P. Harris

  	
   

  
	
   

  	
   

  	
  Danny
  P. Harris

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  HILAND OPERATING, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Randy Moeder

  	
   

  
	
   

  	
   

  	
  Randy
  Moeder

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  
					

 

35

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