EXECUTION COPY PURCHASE AND SALE AGREEMENT by and among JP MORGAN ...

136 Pages·2010·0.5 MB·English

EXECUTION COPY
PURCHASE AND SALE AGREEMENT
by and among
J.P. MORGAN VENTURES ENERGY CORPORATION,
SEMPRA ENERGY TRADING LLC,
RBS SEMPRA COMMODITIES LLP,
SEMPRA ENERGY
and
THE ROYAL BANK OF SCOTLAND PLC
Dated as of February 16, 2010
Table of Contents
Page
ARTICLE I.
DEFINITIONS AND USAGE
Section 1.1. Definitions...................................................................................................2
Section 1.2. Usage.........................................................................................................26
ARTICLE II.
PURCHASE AND SALE; CLOSING
Section 2.1. Purchase and Sale of the Transferred Equity Interests and Transferred
Assets........................................................................................................28
Section 2.2. Assumption of Assumed Liabilities; Retention of Retained Liabilities...30
Section 2.3. Payment for Combined Business..............................................................32
Section 2.4. Accounting................................................................................................32
Section 2.5. Closing......................................................................................................32
Section 2.6. Closing Obligations..................................................................................33
Section 2.7. Final Balance Sheet; Payments; Disputes.................................................35
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
Section 3.1. Organization and Good Standing..............................................................37
Section 3.2. Enforceability; Authority; No Conflict.....................................................38
Section 3.3. Transferred Equity Interests; Title; Sufficiency of Assets........................39
Section 3.4. No Combined Business Material Adverse Effect.....................................40
Section 3.5. Employee Benefits....................................................................................41
Section 3.6. Compliance with Legal Requirements; Governmental Authorizations....43
Section 3.7. Legal Proceedings; Orders........................................................................44
Section 3.8. Taxes.........................................................................................................45
Section 3.9. Brokers or Finders.....................................................................................47
Section 3.10. Environmental Compliance and Liability.................................................47
Section 3.11. Partnership Financial Statements; No Undisclosed Liabilities.................48
Section 3.12. Contracts...................................................................................................48
Section 3.13. Affiliate Agreements.................................................................................52
Section 3.14. Insurance...................................................................................................52
Section 3.15. Intellectual Property; IT Systems..............................................................53
Section 3.16. Material Financial Support Arrangements................................................54
Section 3.17. Improper Payments...................................................................................54
Section 3.18. Books and Records...................................................................................54
Section 3.19. Inventory...................................................................................................54
Section 3.20. No Other Representation...........................................................................54
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.1. Organization and Good Standing..............................................................55
Section 4.2. Enforceability; Authority; No Conflict.....................................................55
Section 4.3. Bank Holding Company Act Status..........................................................56
Section 4.4. Legal Proceedings.....................................................................................56
Section 4.5. Brokers or Finders.....................................................................................56
Section 4.6. Available Funds........................................................................................56
Section 4.7. No Other Representation...........................................................................56
ARTICLE V.
CONDITIONS PRECEDENT TO THE PURCHASER’S OBLIGATION TO CLOSE
Section 5.1. Conditions to the Obligations of the Purchaser........................................57
Section 5.2. Frustration of Closing Conditions.............................................................58
ARTICLE VI.
CONDITIONS PRECEDENT TO THE SELLER PARTIES’ OBLIGATION TO CLOSE
Section 6.1. Conditions to the Obligations of the Sellers.............................................59
Section 6.2. Frustration of Closing Conditions.............................................................60
ARTICLE VII.
ADDITIONAL COVENANTS
Section 7.1. Conduct of the Combined Business..........................................................60
Section 7.2. Information and Access............................................................................67
Section 7.3. Filings; Reasonable Best Efforts to Close................................................67
Section 7.4. Partnership Financial Statements..............................................................69
Section 7.5. Employees and Employee Benefits..........................................................69
Section 7.6. Retention of and Access to Records; Confidentiality...............................79
Section 7.7. Further Assurances....................................................................................83
Section 7.8. No Shop....................................................................................................84
Section 7.9. Commodities Trading Services Agreement..............................................84
Section 7.10. Other Agreements.....................................................................................84
Section 7.11. Transition Plans; Novation; Credit Support..............................................85
Section 7.12. Termination or Amendment of Certain Agreements................................90
Section 7.13. Use of Certain Intellectual Property.........................................................91
Section 7.14. [Intentionally left blank]...........................................................................93
Section 7.15. Distributions..............................................................................................93
Section 7.16. Non-Solicit and Non-Hire.........................................................................93
Section 7.17. Notices of Certain Events.........................................................................93
Section 7.18. Cooperation...............................................................................................94
Section 7.19. Run-Off Insurance....................................................................................95
Section 7.20. Lehman Payable........................................................................................95
Section 7.21. Freight Book Valuation.............................................................................96
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Section 7.22. Releases.....................................................................................................96
Section 7.23. Repayment of Combined Business Debt..................................................96
Section 7.24. Restricted Collateral Transactions............................................................98
ARTICLE VIII.
TERMINATION
Section 8.1. Termination...............................................................................................99
Section 8.2. Termination Awards...............................................................................100
Section 8.3. Effect of Termination..............................................................................101
ARTICLE IX.
INDEMNIFICATION
Section 9.1. Survival...................................................................................................101
Section 9.2. Indemnification and Reimbursement by the Seller Parents....................102
Section 9.3. Indemnification and Reimbursement by the Purchaser..........................104
Section 9.4. Limitations; Exclusive Remedy..............................................................105
Section 9.5. Third-Party Claims..................................................................................109
Section 9.6. Other Claims...........................................................................................111
Section 9.7. Duty to Mitigate......................................................................................111
ARTICLE X.
GENERAL PROVISIONS
Section 10.1. Expenses.................................................................................................111
Section 10.2. Public Announcements and Confidentiality...........................................111
Section 10.3. Tax Matters.............................................................................................112
Section 10.4. Notices....................................................................................................118
Section 10.5. Submission to Jurisdiction; Waiver of Jury Trial...................................120
Section 10.6. Waiver; Remedies Cumulative...............................................................121
Section 10.7. Entire Agreement and Modification.......................................................121
Section 10.8. Assignments, Successors and no Third-Party Rights.............................121
Section 10.9. Severability.............................................................................................122
Section 10.10. Construction............................................................................................122
Section 10.11. Governing Law.......................................................................................123
Section 10.12. Execution of Agreement.........................................................................123
Section 10.13. Specific Performance..............................................................................123
Section 10.14. Group Relief............................................................................................123
Section 10.15. VAT........................................................................................................124
Section 10.16. Withholding Taxes..................................................................................126
Section 10.17. Regulated Utilities..................................................................................127
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Exhibits
Exhibit A - Term Sheet for Commodities Trading and Services Agreement
Exhibit B - Form of RBS/Sempra Collateralized Total Return Swap Agreement
Exhibit C - Form of RBS/Sempra Financial Assurances Reimbursement and Indemnity
Agreement
Exhibit D-I through D-V - Forms of Standard Financial Assurances

Schedules
Schedule 1 - Reorganization Plan
Schedule 1.1(a) - Relocation Costs
Schedule 1.1(b) - Tax Reserves
Schedule 1.1(c) - Freight Book Valuation Methodology
Schedule 1.1(d)(i) - Assigned Real Estate Leases
Schedule 1.1(d)(ii) - Assigned Warehouse Agreements
Schedule 1.1(e) - Accounting Principles
Schedule 1.1(f) - Assigned IP Contracts
Schedule 1.1(g) - Company Risk Policies and Limits
Schedule 1.1(h) - Indemnity Share
Schedule 1.1(i) – RBS Bilateral Facilities
Schedule 1.1(k) - Indicative Master Agreements
Schedule 1.1(l) – Lehman Receivables
Schedule 1.1(m) - Macquarie and ABN NA Power and Gas Assets
Schedule 1.1(n) – Palabora Assets
Schedule 1.1(q) - Transferred Companies
Schedule 1.1(r)(i) - Transferred Company Real Estate Leases
Schedule 1.1(r)(ii) - Transferred Company Warehouse Agreements
Schedule 1.1(s) - Transferred Holding Companies
Schedule 2.1(a) - Disclosed Encumbrances
Schedule 2.1(b)(ii)(C) - Transferred Intellectual Property
Schedule 2.1(b)(ii)(I) - IT Systems
Schedule 3.1(a) - Organization and Good Standing
Schedule 3.2(c) - Seller Party Consents
Schedule 3.3(a) - Transferred Equity Interests
Schedule 3.3(b)(ii) - No Other Equity Interest or Equity Commitments
Schedule 3.3(c) - Sufficiency of Assets
Schedule 3.4 - Material Adverse Effect Disclosures
Schedule 3.5(a)(i) - Employee Plans
Schedule 3.5(a)(ii) - Post-Employment Liabilities
Schedule 3.5(a)(iii) – Section 75 of the UK Pensions Act
Schedule 3.5(a)(iv) - Approved UK Compensation Arrangements
Schedule 3.5(b)(ii) - Employee Plan Qualifications
Schedule 3.5(c) - Employee Plan Proceedings
Schedule 3.5(d) - Employee Equity
Schedule 3.5(e) - Restricted Employee Plans
Schedule 3.5(f) - Collective Bargaining; Employee Proceedings
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Schedule 3.5(i) - Bonus, Incentive, Retention, Change-In-Control and Deferred Compensation
Awards
Schedule 3.6 - Compliance with Legal Requirements; Governmental Authorizations
Schedule 3.6(c)(i) - Governmental Authorizations
Schedule 3.6(c)(ii) - Governmental Authorizations Not Issued to a Transferred Company
Schedule 3.7(a) - Proceedings
Schedule 3.7(b) - Orders
Schedule 3.7(c) - Certain Disputes
Schedule 3.8 - Taxes
Schedule 3.10 - Environmental Compliance
Schedule 3.11(a) - Combined Business Reference Balance Sheet
Schedule 3.11(b) - Undisclosed Liabilities
Schedule 3.12(a) - Company Contracts
Schedule 3.12(b)(v) - Transferred Companies’ Third-Party IP Contracts
Schedule 3.12(c) - Company Contract Validity, Defaults and Prepayments
Schedule 3.12(c)(iv) - Real Estate Encumbrances
Schedule 3.12(d) - Company Contract Negotiation Status
Schedule 3.12(e) - Security Interests; Collateral
Schedule 3.12(f) - Sampling Methodology
Schedule 3.12(g) - Vessels
Schedule 3.13 - Affiliate Agreements
Schedule 3.14(a) - Policies
Schedule 3.14(b) - Policy Claims
Schedule 3.15(a) - Transferred Combined Business Intellectual Property
Schedule 3.15(d) - Intellectual Property Infringement Claims
Schedule 3.15(g) - IT Systems Rights
Schedule 3.16 - Financial Support Arrangements
Schedule 3.19 - Commodities Inventory Amounts
Schedule 4.2(b) - No Conflicts
Schedule 4.2(c) - Purchaser Third Party Consents
Schedule 7.1 - Interim Operations; Combined Business Employees
Schedule 7.1(a)(vii) - Specified Amounts
Schedule 7.1(a)(vii)(3) – Bonus Confirmation Letter
Schedule 7.1(a)(xv) - VAR Limits
Schedule 7.2(b) - Secondee Rights and Limitations
Schedule 7.3(b)(iii) - Landlord Consent
Schedule 7.4 - Information Delivery
Schedule 7.5(a) - Combined Business Employees
Schedule 7.5(k)(iv) - Severance Terms
Schedule 7.5(r) - Expatriate Combined Business Employees
Schedule 7.7(c) - Transition Planning
Schedule 7.11(c) – Modifications to Form Financial Assurances
Schedule 7.12(a) - Surviving Affiliate Agreements
Schedule 7.12(b) - Certain Expiring Leases
Schedule 7.13 – Trademarks
Schedule 8.2 - Termination Award Allocation
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Schedule 9.2 - Specified Matters
Schedule 9.4(b)(iii) - Tax Allocations (Indemnity)
Schedule 10.3(a)(i) - Certain Pre-Closing Tax Returns
Schedule 10.14(c) - Group Tax Relief
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement, dated as of February 16, 2010, is entered
into by and among J.P. Morgan Ventures Energy Corporation, a Delaware corporation
(“Purchaser”), Sempra Energy, a California corporation (“Sempra Energy”), The Royal Bank of
Scotland plc, a public limited company incorporated in Scotland (“RBS,” and together with
Sempra Energy, the “Seller Parents”), Sempra Energy Trading LLC, a Delaware limited liability
company (“SET”), and RBS Sempra Commodities LLP, a limited liability partnership
constituted under the Limited Liability Partnership Act of 2000 of the United Kingdom and the
regulations made thereunder (the “Partnership” and, together with SET, the “Sellers” and each
individually a “Seller” and, together with the Seller Parents, the “Seller Parties” and each
individually, a “Seller Party”). RBS also shall be considered a “Seller” in relation to the RBS
Related Assets and Liabilities (as defined below). The Sellers, the Seller Parents and the
Purchaser each may be referred to herein individually as a “Party” and collectively as the
“Parties.”
RECITALS
WHEREAS, each of the Seller Parents is party to the Master Formation and
Equity Interest Purchase Agreement, dated as of July 9, 2007, as amended on April 1, 2008 (the
“Formation Agreement”), pursuant to which the Seller Parents and certain affiliates of Sempra
Energy collectively acquired, directly or indirectly, all of the Equity Interest in the Partnership.
WHEREAS, the Sellers directly and through certain of their direct and indirect
Subsidiaries (including the Transferred Companies) are currently engaged in the global oil
(including the related freight transactions), global metals, global coal, global emissions (other
than emissions related to North American Power) (including carbon credits and emissions
credits), global plastics, global agricultural Commodities and global concentrates Commodities
trading and marketing business (including trading in any Commodities listed on the London
Metal Exchange), the European power and gas business and the investor products business,
including the businesses of the Transferred Companies (collectively, the “Combined Business”).
WHEREAS, prior to the Closing, the Sellers intend to effect the reorganization
described on Schedule 1 (the “Reorganization”).
WHEREAS, the Sellers desire to sell (and to cause to be sold by the Subsidiaries
of the Partnership) to the Purchaser, and the Purchaser desires to purchase from the Sellers, the
Transferred Assets and the Transferred Holding Company Equity Interests (each as defined
below), and to assume the Assumed Liabilities by the Purchaser in each case upon the terms and
subject to the conditions set forth in this Agreement.
WHEREAS, concurrently with the execution of this Agreement, and as a
condition of the willingness of the Seller Parties to enter into this Agreement, JPMorgan
Chase & Co. (“Guarantor”) is entering into a guarantee in favor of the Seller Parties (the
“Guaranty”) pursuant to which the Guarantor is guaranteeing obligations of the Purchaser and/or
any of its Affiliates under this Agreement and, to the extent set forth therein, any Related
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Agreement except to the extent that the Purchaser has delegated such obligations in accordance
with, and such Guaranty is not required under, Section 10.8.
NOW, THEREFORE, the Parties, in consideration of the mutual promises and
intending to be legally bound, agree as follows:
ARTICLE I.
DEFINITIONS AND USAGE
Section 1.1. Definitions. For purposes of this Agreement, the following
terms and variations thereof have the meanings specified or referred to in this Section 1.1:
“Accounting Expert” – as defined in Section 2.7(c).
“Acquired Permits” – all permits, licenses, approvals, qualifications and other
similar Governmental Authorizations issued to any of the Seller Parties or any of their
Subsidiaries (other than the Transferred Companies) by any Governmental Body in each
case which exclusively relate to the Transferred Assets, but excluding any such permits,
licenses, approvals, qualifications or similar Governmental Authorizations if the transfer
thereof (A) is not permitted under Legal Requirements or the rules of any applicable
licensing or permitting body (whether or not such body is a Governmental Body) or (B)
would adversely affect, other than an inconsequential effect, a Seller or its ability to
perform its obligations under any Related Agreement, in each case of clauses (A) and
(B), in the reasonable judgment of the relevant Seller.
“Active Business Transferred Employees” – as defined in Section 7.5(a)(ii)(z)(A).
“Adjusted Estimated Closing RBS/SET Debt” – as defined in Section 7.23(a).
“Adjusted Final Closing RBS/SET Debt” – as defined in Section 7.23(d).
“Affiliate” – a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with, a specified
Person. A Person shall be deemed to control another Person if such first Person
possesses, directly or indirectly, the power to direct, or cause the direction of, the
management and policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise; provided, that for purposes of this Agreement, the
Transferred Companies shall not be deemed to be Affiliates of any of the Seller Parties
from and after the Closing.
“Affiliate Agreement” and “Affiliate Agreements” – as defined in Section 3.13.
“Agreed Adjustments” – the following balance sheet adjustments (to the extent
not otherwise reflected on the applicable balance sheet and without duplication):
(a) the increase of assets thereon by the aggregate amount of the costs
associated with the relocation as described on Schedule 1.1(a);
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(b) the elimination of the amount of goodwill and any other intangible assets;
(c) the elimination of any reserves in respect of Taxes reflected on
Schedule 1.1(b);
(d) if the mark to market value of the freight book as of the date of the Final
Closing Balance Sheet exceeds the mark to market value of the freight book as of the date
of the Combined Business Reference Balance Sheet as determined pursuant to Section
7.21, in each case determined in accordance with the methodology set forth in Schedule
1.1(c), an adjustment to increase the assets by 50% of such excess and, if such value as of
the date of the Final Closing Balance Sheet is less than such value as of the date of the
Combined Business Reference Balance Sheet as determined pursuant to Section 7.21, an
adjustment to reduce the assets by 50% of such difference;
(e) to the extent not otherwise required by IFRS, the accrual of any applicable
penalties, interest, fees and expenses associated with the repayment of the Combined
Business Debt; and
(f) except as contemplated by clause (e) above, the elimination of any
adjustments required under IFRS solely as a result of the transactions contemplated
hereby.
“Agreement” – this Purchase and Sale Agreement, as the same may be amended,
restated, modified or supplemented from time to time in accordance with its terms, and
the Exhibits (so long as they are Exhibits), Schedules, the Seller Disclosure Letter and the
Purchaser Disclosure Letter hereto.
“Allocation Notice of Objection” – as defined in Section 10.3(h)(ii).
“Assignment and Assumption Agreement” – the Assignment and Assumption
Agreement, to be dated as of the Closing Date, by and among the Sellers and the
Purchaser, in form and substance as reasonably agreed by the Parties prior to the Closing.
“Assigned Contracts” – (a) the SET Assigned Trading Agreements, (b) the
Assigned Real Estate Leases, (c) the Assigned Warehouse Agreements, (d) the Assigned
IP Contracts, and (e) all other Contracts (other than Trading Agreements and real
property, Intellectual Property, information technology or communication systems
Contracts) to which any SET Company (other than a Transferred Company) is a party to
the extent exclusively relating to the Combined Business.
“Assigned IP Contract” – any Intellectual Property, information technology or
communication systems Contract that is exclusively used in the Combined Business if
such Contract may be transferred to the Purchaser and/or the Transferred Companies
without any payment by the Seller Parties in excess of $5,000 per Contract, including the
Contracts set forth on Schedule 1.1(f) (or, if a greater payment is required, the Parties will
negotiate in good faith the proper allocation of payment among the Parties, and, upon the
Parties’ agreement regarding allocation, such Contract will be deemed an Assigned IP
Contract).
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