EXHIBIT 10.1
EXECUTION COPY
MEMBER INTEREST PURCHASE AGREEMENT
This Member Interest Purchase Agreement (this "Agreement") is entered into
as of April 13, 2007, by and between Navitas Assets, L.L.C., a Delaware limited
liability company ("Buyer"), Gateway Energy Corporation, a Delaware corporation
("Seller"), and Fort Xxxx Oklahoma Irrigation Fuel Authority L.L.C., an Oklahoma
limited liability company doing business as "Fort Xxxx Fuel Authority, LLC (the
"Company").
Recitals:
WHEREAS, Seller owns all of the Interests of the Company and desires to
sell the Interests to Buyer; and
WHEREAS, Buyer desires to acquire from Seller all of the Interests of the
Company;
NOW, THEREFORE, in consideration of the mutual covenants, undertakings,
representations and warranties set forth herein, the Parties agree as follows:
ARTICLE 1
Definitions
For purposes of this Agreement, the terms set forth below shall have the
following meanings:
1.1 "Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority or arbitrator.
1.2 "Adjustment Dispute Notice" shall have the meaning set forth in Section
2.4.1.
1.3 "Affiliate" means:
1.3.1 with respect to any Person which is a business entity:
(a) any Person owning or holding, directly or indirectly, 10% or
more of the equity capital in such business entity, or
(b) any Person in which such business entity owns or holds,
directly or indirectly, 10% or more of the equity capital;
1.3.2 with respect to any Person which is a trust or similar entity:
(a) any trustee or other fiduciary of such trust or similar
entity; or
(b) any direct or indirect beneficiary of such trust or similar
entity;
1.3.3 with respect to any natural Person, any spouse, parent, child,
grandchild grandparent, brother or sister of such Person.
1.4 "Agreement" means this Agreement, together with the Schedules and
Exhibits hereto.
1.5 "Assets" means the Real Property Interests, the Intellectual Property,
the Permits, the Leased Personal Property, the Material Contracts and all other
assets, rights, interests, contract rights, accounts, claims, credits,
franchises and properties of the Company, whether real, personal, tangible or
intangible.
1.6 "Asset Purchase Agreement" shall have the meaning set forth in Section
2.5.2(g).
1.7 "Baseline Balance Sheet" shall have the meaning set forth in Section
3.7.1.
1.8 "Baseline Balance Sheet Date" shall have the meaning set forth in
Section 3.7.1.
1.9 "Basket" shall have the meaning set forth in Section 10.4.1.
1.10 "Borrowed Money Indebtedness" means without duplication (i) all
obligations of the Company for borrowed money or funded indebtedness or issued
in substitution for or exchange for borrowed money or funded indebtedness, (ii)
any indebtedness evidenced by any note, bond, debenture or other similar
instrument, (iii) all obligations of the Company issued or assumed as the
deferred purchase price of property (but excluding trade accounts payable and
other accrued current liabilities arising in the ordinary course of business
consistent with past practices), (iv) all obligations of the Company for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction that has been drawn upon; (v) any indebtedness
guaranteed by the Company, (vi) any obligations under, or associated with, any
hedging, derivative or swap agreements, and (vii) all unpaid interest, premiums,
penalties, redemption costs and other charges in respect of the prepayment of
any obligations of the type described in each of the foregoing in clauses (i)
through (vi) in connection with the consummation of the transaction contemplated
by this Agreement.
1.11 "Business" means the business related to the Assets as conducted by
the Company prior to the Closing.
1.12 "Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required
to close.
1.13 "Buyer" shall have the meaning set forth in the first paragraph of
this Agreement.
1.14 "Buyer Indemnitees" shall have the meaning set forth in Section 10.1.
1.15 "Charter Documents" means, (a) with respect to any corporation, the
articles or certificate of incorporation of the entity, and its by-laws, and any
amendments to such documents, and (b) with respect to a limited liability
company, the articles or certificate of organization or formation of the entity,
and its operating or limited liability company agreement.
1.16 "Claims Period" shall have the meaning set forth in Section 10.3.4.
1.17 "Closing" means the consummation of the transactions contemplated
hereby.
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1.18 "Closing Date" shall have the meaning set forth in Section 2.5.1.
1.19 "Closing Payment Amount" shall have the meaning set forth in Section
2.4.3.
1.20 "Closing Statement" shall have the meaning set forth in Section 2.2.
1.21 "Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor law, and regulations issued thereunder.
1.22 "Company Transaction Expenses" means the expenses of the Company
related to the consummation of the transactions contemplated by this Agreement
(whether incurred prior to or after the date hereof and whether incurred in
connection with this Agreement or otherwise), including without limitation, all
amounts payable to employees, officers or directors of the Company as change in
control, closing, signing, transaction, stay or similar bonuses or payments, and
all amounts payable for legal, accounting, brokerage, regulatory or financial
advisory services.
1.23 "Consent" means a consent, approval, authorization, waiver or
notification from any Person, including any Governmental Authority.
1.24 "Consulting Agreement" shall have the meaning set forth in Section
2.5.2(h).
1.25 "Contracts" means all contracts, agreements, undertakings,
instruments, leases, licenses, commitments and arrangements, except Permits.
1.26 "Current Year Tax Adjustment Amount" means the amount of any estimated
balance owing on any Tax Return to be filed in respect of the taxation year
ending immediately prior to the Closing for the Company.
1.27 "Damages" means all losses, claims, damages, costs, fines, penalties,
obligations, payments and Liabilities (including those arising out of any
Action), together with all reasonable costs and expenses (including reasonable
outside attorneys' fees and reasonable out-of-pocket expenses) incurred in
connection with any of the foregoing.
1.28 "Dollars" or "$" means lawful currency of the United States.
1.29 "Easements" means rights-of-way, servitudes, rights of egress and
ingress and other similar rights related to the use or enjoyment of real
property.
1.30 "Employee" shall have the meaning set forth in Section 3.17.1.
1.31 "Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
1.32 "Environmental Law" means any Law pertaining to health (with respect
to exposure to Hazardous Materials) or the Environment currently in effect in
any or all jurisdictions in which the Company owns Assets or has owned assets or
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conducts or has conducted business, including the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980,
as amended, the Federal Water Pollution Control Act, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Safe Drinking Water Act,
as amended, the Toxic Substances Control Act, as amended, the Hazardous & Solid
Waste Amendments Act of 1984, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation
Act, as amended, the Oil Pollution Act of 1990, and any state and local Laws
implementing or comparable to the foregoing federal Laws.
1.33 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.34 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.35 "Extended Representations" shall have the meaning set forth in Section
10.3.4.
1.36 "GAAP" means U.S. generally accepted accounting principles at the time
in effect and applied on a basis consistent with prior periods.
1.37 "GMC" means Gateway Energy Marketing Company, a Louisiana corporation.
1.38 "Governmental Authority" means any federal, state or local government,
any of its subdivisions, agencies, authorities, commissions, boards or bureaus,
any federal, state or local court or tribunal and any arbitrator or arbitral
tribunal.
1.39 "GPC" means Gateway Pipeline Company, a Texas corporation.
1.40 "Guaranty" means the Guaranty from Xxxxxxx X. Xxxxxx and Xxxxxx X.
Xxxxxxxx to Seller, in the form attached hereto as Exhibit A.
1.41 "Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any mixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
1.42 "Knowledge" means (i) with respect to a Person other than an
individual, after due investigation or inquiry, actual knowledge of a particular
fact by a director, manager or officer (and as to Seller, including the human
resources manager, operations manager, contract administration manager,
maintenance supervisor or environmental supervisor) or by any individual serving
in a similar capacity of such Person or individuals directly reporting to such
individuals, and (ii) with respect to an individual, the actual knowledge of a
particular fact and the knowledge that a reasonably prudent individual could be
expected to discover or otherwise become aware of in the ordinary course of
business after due investigation or inquiry.
1.43 "Indebtedness" means, as of any date of determination thereof, (i)
Borrowed Money Indebtedness; and (ii) the amount of any capital lease
obligations that would be required to be reflected as a liability on the balance
sheets of the Company, prepared in accordance with GAAP.
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1.44 "Indemnitee" shall have the meaning set forth in Section 10.3.1.
1.45 "Independent Accounting Firm" means Xxxxx Xxxxxxxx LLP, Houston
office.
1.46 "Insurance Policies" shall have the meaning set forth in Section 3.20.
1.47 "Intellectual Property" means all trade names, trademarks, service
marks, patent rights, patent applications, copyrights, know-how, trade secrets,
domain names and other intellectual property rights.
1.48 "Interests" shall have the meaning set forth in Section 3.4.
1.49 "Law" means any applicable law, statute, or ordinance of any nation or
state, including the United States of America, and any political subdivision
thereof, including any state of the United States of America, any regulation,
policy, protocol, proclamation, or executive order promulgated by any
Governmental Authority, any rule or regulation of any self-regulator
organization such as a securities exchange or public utilities commission, or
any applicable judgment, order, decree, or decision of any court or other
Governmental Authority having the effect of law in any such jurisdiction.
1.50 "Lease" means any lease or sublease of real or personal property.
1.51 "Leased Personal Property" means all right, title and interest of the
Company, as lessee, in and to any personal property leased to the Company.
1.52 "Liability" means any Indebtedness, obligation, duty or liability of
any nature (including any undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, unasserted, contingent, conditional, inchoate, implied,
vicarious, joint, several or secondary liability) whether known or unknown,
whenever or wherever arising, regardless of whether such debt, obligation, duty
or liability would be required to be disclosed on a balance sheet prepared in
accordance with GAAP.
1.53 "Lien" means any lien, mortgage, deed of trust, security interest,
charge, pledge, retention of title agreement, easement, encroachment, condition,
reservation, covenant or other encumbrance affecting title or the use, benefit
or value of the asset in question.
1.54 "Material Adverse Effect" means any condition, circumstance, event,
change, or effect that (i) when used with respect to the Company or the
Business, would reasonably be expected to cause loss or liability in excess of
$125,000.00 with respect to the Company or the Business after the Closing, or
(ii) when used with respect to the ability of a Person to perform its
obligations under this Agreement, would reasonably be expected to materially and
adversely affect such ability.
1.55 "Material Contracts" shall have the meaning set forth in Section 3.12.
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1.56 "Material Lease" means a Lease relating to Leased Personal Property
involving a term of more than six (6) months or rental obligations exceeding
$5,000 per annum.
1.57 "Net Working Capital" shall mean a positive or negative number
determined as the current assets of the Company, minus the current liabilities
of the Company (excluding the current portion of Indebtedness and any Current
Year Tax Adjustment Amount and Company Transaction Expenses included in current
liabilities), determined in accordance with GAAP as consistently applied by the
Company prior to the date hereof.
1.58 "Non-Scheduled Indebtedness" means all Indebtedness of the Company on
the Closing Date, except for the Indebtedness set forth on Schedule 2.2.
1.59 "Order" means any order, judgment, injunction, decree, determination
or award of any Governmental Authority.
1.60 "Party" means each of Seller and Buyer and "Parties" means Seller and
Buyer collectively.
1.61 "Permit" means any permit, license, certificate (including a
certificate of occupancy), registration, authorization or approval issued by a
Governmental Authority.
1.62 "Permitted Liens" means (a) Liens for Taxes that are not yet due and
payable or that are being contested in good faith by appropriate proceedings and
as to which adequate reserves have been established in accordance with GAAP,
consistently applied, (b) mechanics' and materialmen's Liens not filed of record
and similar charges not delinquent or that are filed of record but are being
contested in good faith by appropriate proceedings, and (c) Liens that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect with respect to the Company or the Business.
1.63 "Person" means any natural person, corporation, partnership, limited
liability company, trust, unincorporated organization or other entity.
1.64 "Post-Closing Statement" shall have the meaning set forth in Section
2.4.1.
1.65 "Purchase Price" shall have the meaning set forth in Section 2.2.
1.66 "Real Property Interests" means the real property owned, leased, or in
which the Company has an interest, each as identified in Schedule 3.10.1,
together with all buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures, systems, equipment and
items of personal property attached or appurtenant thereto and all easements,
licenses, rights and appurtenances relating to the foregoing.
1.67 "Release of Guaranty" means the release of Xxxxxxx X. Xxxxxx and
Xxxxxx X. Xxxxxxxx from the obligations of the Guaranty in the form attached
hereto as Exhibit B.
1.68 "Required Consent" shall have the meaning set forth in Section 3.9.
1.69 "Review Period" shall have the meaning set forth in Section 2.4.1.
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1.70 "Seller" shall have the meaning set forth in the first paragraph of
this Agreement.
1.71 "Seller Indemnitees" shall have the meaning set forth in Section 10.2.
1.72 "Seller's Release" means Seller's release in the form attached hereto
as Exhibit C.
1.73 "Tax" or "Taxes" means all income, profits, franchise, gross receipts,
capital, sales, use, withholding, value added, ad valorem, transfer, employment,
social security, disability, occupation, property, severance, production, excise
and other taxes, duties and similar governmental charges and assessments imposed
by or on behalf of any Governmental Authority (including interest and penalties
thereon).
1.74 "Tax Return" means any return, report, statement, form or other
documentation (including any additional or supporting material and any
amendments or supplements) filed or maintained, or required to be filed or
maintained, with respect to or in connection with the calculation,
determination, assessment or collection of any Taxes.
1.75 "Third Party Claim" shall have the meaning set forth in Section
10.3.2.
1.76 "Update" shall have the meaning set forth in Section 5.7.
ARTICLE II
Purchase and Sale of Interests
2.1 Purchase and Sale of Interests. Subject to the terms and conditions of
this Agreement, on the Closing Date, Seller shall sell, transfer and assign to
Buyer and Buyer shall purchase from Seller, the Interests.
2.2 Purchase Price. The purchase price for the Interests shall be (i) a
base value for the Interests of $2,485,000, increased or decreased by (ii) the
Net Working Capital of the Company as of the Closing Date, decreased by (iii)
the Non-Scheduled Indebtedness, the Current Year Tax Adjustment Amount and
Company Transaction Expenses (such total, the "Purchase Price"). All debt of the
Company will remain with the Company. The Purchase Price to be paid at Closing
will be based on Seller's good faith estimate (including the calculation thereof
and supporting documentation in reasonable detail) of (i) Net Working Capital as
of the close of business on the Closing Date, (ii) the Non-Scheduled
Indebtedness, (iii) the Current Year Tax Adjustment Amount, and (iv) Company
Transaction Expenses, prepared by Seller and delivered to Buyer at least two (2)
Business Days prior to Closing (the "Closing Statement"), prepared consistently
with the statement as of December 31, 2006 attached hereto as Schedule 2.2.
2.3 Payment of Purchase Price. The Purchase Price, as estimated pursuant to
Section 2.2, shall be paid by Buyer to Seller at Closing by wire transfer of
immediately available funds to the bank account described in wire transfer
instructions provided by Seller to Buyer at least two (2) Business Days prior to
Closing.
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2.4 Post-Closing Adjustment.
2.4.1 As promptly as practicable after the Closing Date, but not later
than sixty (60) days thereafter, Seller will deliver to Buyer a statement
(the "Post-Closing Statement") setting forth in reasonable detail Seller's
calculation of (i) Net Working Capital as of the close of business on the
Closing Date, (ii) the Non-Scheduled Indebtedness, (iii) the Current Year
Tax Adjustment Amount, and (iv) Company Transaction Expense. The Purchase
Price shall be adjusted (either positively or negatively) to reflect the
extent that the Closing Statement differs from the Post-Closing Statement.
The amounts determined by Seller as set forth in the Post-Closing Statement
will be final, binding and conclusive for all purposes, unless, and only to
the extent, that within fifteen (15) days after Seller has delivered the
Post-Closing Statement (the "Review Period") Buyer notifies Seller of any
dispute concerning matters set forth in the Post-Closing Statement (an
"Adjustment Dispute Notice"). Any such Adjustment Dispute Notice delivered
by Buyer will identify with specificity each item on the Post-Closing
Statement with respect to which Buyer disagrees, the basis of such
disagreement, and Buyer's position with respect to such disputed item. If
Buyer has not delivered to Seller an Adjustment Dispute Notice within the
time period provided herein, then within five (5) days after the expiration
of the Review Period, the adjustment to the Purchase Price required under
this Section 2.4 shall be made by payment from the appropriate Party to the
other Party by wire transfer of immediately available funds to the bank
account of such recipient Party described in wire transfer instructions
provided by such Party to the paying Party within two (2) Business Days
after the expiration of the Review Period.
2.4.2 If Buyer delivers an Adjustment Dispute Notice in compliance
with Section 2.4.1, then (a) the undisputed portion of the total proposed
adjustment amount determined from the Post-Closing Statement will be paid
to the other Party by wire transfer of immediately available funds to the
bank account of such recipient Party described in wire transfer
instructions provided by such Party to the paying Party within two (2)
Business Days after the expiration of the Review Period, and (b) Buyer and
Seller will attempt to reconcile their differences and any resolution by
them as to any disputed amounts will be final, binding and conclusive for
all purposes on the Parties. If Buyer and Seller are unable to reach a
resolution with respect to all disputed items within forty-five (45) days
of delivery of the Adjustment Dispute Notice, Buyer and Seller will submit
any items remaining in dispute for determination and resolution to the
Independent Accounting Firm, which will be instructed to determine and
report to the Parties, within thirty (30) days after such submission, upon
such remaining disputed items. The report of the Independent Accounting
Firm will be final, binding and conclusive on the Parties for all purposes.
The fees and disbursements of the Independent Accounting Firm will be
allocated between Buyer and Seller so that Buyer's share of such fees and
disbursements will be in the same proportion that the aggregate amount of
such remaining disputed items so submitted to the Independent Accounting
Firm that is unsuccessfully disputed by Buyer (as finally determined by the
Independent Accounting Firm) bears to the total amount of such remaining
disputed amounts so submitted to the Independent Accounting Firm.
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2.4.3 Within five (5) days following the final determination of the
Purchase Price pursuant to Sections 2.4.1 and 2.4.2, if the Purchase Price
is greater than the amount paid at Closing (the "Closing Payment Amount"),
Buyer will pay the difference (adjusted to reflect any payment pursuant to
Section 2.4.2 to Seller), or (b) if the Purchase Price is less than the
Closing Payment Amount, Seller will pay the difference (adjusted to reflect
any payment pursuant to Section 2.4.2 to Buyer). Any amount paid under this
Section 2.4.3 will be paid by wire transfer of immediately available funds
to the bank account of such recipient Party described in wire transfer
instructions provided by such Party to the paying Party at least two (2)
Business Days prior to the required date of payment.
2.5 Closing.
2.5.1 Time and Place. On the terms and subject to the conditions of
this Agreement, the Closing shall take place at such location or by such
means as the Parties may hereafter agree at 10:00, Central Time, on the
last day of the calendar month in which satisfaction of the last conditions
to Closing occurs (or the following month end if the last Closing condition
is satisfied within five (5) days prior to month end) (the "Closing Date").
The Closing shall be effective at 9:00 a.m., Houston, Texas time, on the
day after the Closing Date.
2.5.2 Deliveries by Seller. At the Closing, Seller shall deliver to
Buyer the following:
(a) Certificates representing all of the Interests, duly endorsed
in blank or accompanied by duly executed stock powers duly endorsed in
blank;
(b) The Regulations of the Company, the recorded Charter
Documents of the Company, recently certified by the Secretary of State
of the State of Oklahoma, the minute books and membership interest
records of the Company, and a Certificate of Good Standing of the
Company dated within ten (10) Business Days of the Closing Date issued
by the Secretary of State of the State of Oklahoma;
(c) The recorded Charter Documents of Seller, recently certified
by the Secretary of State of the State of Delaware and a Certificate
of Good Standing of Seller dated within ten (10) Business Days of the
Closing Date issued by the Secretary of State of the State of
Delaware;
(d) A certificate of the Secretary of Seller dated the Closing
Date certifying (i) the adoption of resolutions of the Board of
Directors of Seller authorizing the transactions contemplated by this
Agreement, (ii) the incumbency and signatures of those officers of
Seller that executed this Agreement and any documents or agreements
related to the Closing, and (iii) a true and correct copy of the
Charter Documents of Seller in effect on the Closing Date, all in form
and substance reasonably satisfactory to Buyer;
(e) Seller's Release;
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(f) The Release of Guaranty;
(g) The Asset Purchase Agreement, by and among Buyer, GPC and
GMC, in the form attached hereto as Exhibit D (the "Asset Purchase
Agreement"), duly executed by GPC and GMC;
(h) The Consulting Agreement, by and among Buyer and GMC, in the
form attached hereto as Exhibit E (the "Consulting Agreement"), duly
executed by GMC;
(i) A certificate of an executive officer of Seller dated the
Closing Date certifying that the conditions to Buyer's obligation to
consummate the transactions contemplated by this Agreement as set
forth in Section 8.1 have been satisfied in all respects;
(j) A statement of amounts outstanding or payoff letter, as
applicable, from Legacy Bank for each of the loans set forth on
Schedule 3.12;
(k) A release from Legacy Bank in form and substance reasonably
acceptable to Buyer, releasing the Company from any guarantee,
obligation or security agreement of Company securing or relating to
the debts or other obligation of Seller, GPC, GMC or their respective
Affiliates (other than the Company), including without limitation (a)
that certain loan from Legacy Bank to GPC in the principal amount of
$350,000, (b) that certain loan from Legacy Bank to GPC in the
principal amount of $500,000, and (c) all letters of credit issued by
Legacy Bank on behalf of Seller, GPC, GMC and their respective
Affiliates; and
(l) Such other documents, resignations, instruments and
certificates as Buyer may reasonably request in connection with the
transactions contemplated by this Agreement.
2.5.3 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller the following:
(a) The payment described in Section 2.3;
(b) The recorded Charter Documents of Buyer, recently certified
by the Secretary of State of the State of Delaware and a Certificate
of Good Standing of Buyer dated within ten (10) Business Days of the
Closing Date issued by the Secretary of State of the State of
Delaware;
(c) A certificate of the Secretary of Buyer dated the Closing
Date certifying (i) the adoption of resolutions of the Manager of
Buyer authorizing the transactions contemplated by this Agreement,
(ii) the incumbency and signatures of those officers of Buyer that
executed this Agreement and any documents or agreements related to the
Closing, and (iii) a true and correct copy of the Charter Documents of
Buyer in effect on the Closing Date, all in form and substance
reasonably satisfactory to Seller;
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(d) The Asset Purchase Agreement duly executed by Buyer;
(e) The Consulting Agreement duly executed by Buyer;
(f) A certificate of an executive officer of Buyer dated the
Closing Date certifying that the conditions to Seller's obligations to
consummate the transactions contemplated by this Agreement set forth
in Section 8.2 have been satisfied; and
(g) Such other documents, instruments and certificates as Seller
may reasonably request in connection with the transactions
contemplated by this Agreement.
2.6 Expenses. Seller and Buyer shall each pay their respective expenses
incurred in connection with the negotiation, execution, closing, and performance
of this Agreement. Without limitation of the foregoing:
2.6.1 Seller shall be responsible for and pay all stock transfer taxes
payable in connection with the sale and purchase of the Interests; and
2.6.2 Buyer shall be responsible for and pay all sales, transfer,
deed, stamp, notary public and other similar taxes, duties and transfer
fees applicable to the transactions contemplated by this Agreement (other
than stock transfer taxes), including fees to record transfer documents and
all costs, expenses and fees related to acquiring the Required Consents.
2.7 Allocation of Purchase Price. Seller and Buyer agree that the Purchase
Price and the Liabilities of the Company (plus other relevant items) will be
allocated to the Assets of the Company for Tax purposes in a manner mutually
agreed upon by the Parties. Seller and Buyer will file all Tax Returns
(including amended returns and claims for refund) and information reports in a
manner consistent with such allocation.
ARTICLE III
Representations and Warranties of Seller
Seller makes the following representations and warranties to Buyer:
3.1 Corporate Organization. The Company is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Oklahoma. The Company has all company power needed to own or lease and operate
the Assets and to conduct its business as now conducted. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. Seller has all corporate power needed to own or lease and
operate its properties and to conduct its business as now conducted. The Company
does not have any subsidiaries and does not hold any equity or other ownership
interest in any other entity.
3.2 Due Qualification. The Company is duly qualified to do business and is
in good standing under the laws of each jurisdiction in which the nature of its
Business or Assets makes such qualification necessary. The Company conducts
business only under the name "Fort Xxxx Fuel Authority, LLC."
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3.3 Corporate Documentation. Copies of the Charter Documents that have been
delivered to Buyer are complete and correct; and the minute books of the Company
shown to Buyer are complete and accurately reflect all proceedings (including
actions taken by written consent) of the members, managers, officers and
directors and all committees thereof of the Company in all material respects
since the Company's formation. The member interest transfer records of the
Company are set forth in the Regulations of the Company and in the Purchase and
Sale Agreement dated December 29, 1997, between Seller and Xxxxx-Xxxxx
Interests, Inc. ("GSI"), whereby Seller acquired all of the outstanding member
interests of the Company from GSI. Other than as set forth in such records, no
interest in the Company has been issued, sold or transferred.
3.4 Capitalization. Seller owns one hundred percent (100%) of the
outstanding member interests in the Company (the "Interests") and there are no
other debt or equity interests in the Company other than the Interests. The
Interests have been validly issued, are fully paid and nonassessable, have not
been issued in violation of any preemptive rights and are owned beneficially and
of record by Seller, free and clear of any Liens. No options, warrants or other
rights to acquire, sell, or issue any debt or equity interests of the Company
are outstanding, and between the date hereof and the Closing Date, no debt or
equity interests of the Company and no such options, warrants or rights will be
issued. None of the Interests were issued in violation of the Securities Act of
1933 or any other Law. Seller has, and on the Closing Date will have, complete
and unrestricted power and authority to sell, assign, transfer and deliver the
Interests to Buyer, and upon such sale, assignment, transfer and delivery,
Seller will transfer to Buyer good and valid title to the Interests, free and
clear of all Liens and with no proxies or restrictions on the voting or other
rights pertaining thereto.
3.5 Authorization; Execution and Validity. This Agreement constitutes the
legal, valid, and binding obligations of the Seller and the Company in
accordance with its terms. Seller and the Company each have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the documents required herein and to perform their respective
obligations under this Agreement and the documents required herein. The
execution, delivery and performance by Seller of this Agreement and the
consummation by Seller of the transactions contemplated hereby to be consummated
by it have been duly authorized by all necessary company action. This Agreement
has been duly and validly executed and delivered by Seller, constitutes a valid
and binding obligation of Seller and is enforceable against Seller in accordance
with its terms, except to the extent that the enforcement hereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws
now or hereafter in effect relating to creditors' rights generally, and (ii)
general principles of equity regardless of whether enforceability is considered
in a proceeding in equity or at law.
3.6 Officers and Directors. Schedule 3.6 sets forth a list of all of the
officers and managers of the Company who are duly elected and qualified to hold
such office on the date hereof.
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3.7 Financial Statements; Absence of Undisclosed Liabilities.
3.7.1 Financial Statements. Attached as Schedule 3.7.1 are true and
correct copies of (a) the unaudited balance sheets of the Company at
December 31, 2006 and December 31, 2005, and the related unaudited
statements of income for each of the fiscal years then ended, together with
the notes thereto, and (b) the unaudited balance sheet of the Company (the
"Baseline Balance Sheet") at February 28, 2007 (the "Baseline Balance Sheet
Date"), and the related unaudited statements of income for each of the two
(2) months then ended, together with the notes thereto. Such financial
statements present fairly, in all material respects, the financial
condition and the results of operations and cash flow of the Company as of
the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP consistently applied throughout the
periods involved, except as disclosed in notes to such financial
statements.
3.7.2 Absence of Undisclosed Liabilities. Except to the extent fully
reflected or reserved against on the Baseline Balance Sheet, the Company
had no Liabilities as of the Baseline Balance Sheet Date.
3.8 Absence of Certain Changes. Since the Baseline Balance Sheet Date, the
Company has conducted its Business in the ordinary course consistent with past
practices and there has been no (a) event or occurrence that has had or is
reasonably expected to have a Material Adverse Effect on the Company, (b)
amendment or termination of any Material Contract, Material Lease or Permit
relating to the Business, (c) destruction, damage or other loss to any of the
Assets of the Company that is not covered by insurance and that is reasonably
likely to result in a material interruption of the Company's Business, (d) sale,
lease, or other disposition of any of the Assets of the Company, other than
Assets sold, leased or otherwise disposed of in the ordinary course of business
and consistent with past practice, (e) purchase or lease of any Assets of the
Company, other than Assets purchased or leased in the ordinary course of
business and consistent with past practice, (f) increase in the compensation
payable to any of the Employees, or (g) agreement or commitment by the Company
to take any action described in this Section 3.8.
3.9 No Conflict; Seller Consents. Except as set forth on Schedule 3.9, the
execution, delivery and performance of this Agreement by each of Seller and the
Company will not (a) violate any Law to which either Seller or the Company is
subject, (b) violate any Charter Document, (c) violate any Order to which either
Seller or the Company is a party or by which either Seller or the Company is
bound, (d) require any Consent from any Person, including any Governmental
Authority (each Consent set forth in Schedule 3.9 is referred to herein as a
"Required Consent"), (e) breach any contract, agreement, or Permit of the
Company, or (f) result in the creation of any Lien on any of the Assets of the
Company.
3.10 Real Property.
3.10.1 Real Property. Schedule 3.10.1 lists all of the Real Property
Interests of the Company and the Company holds such Real Property Interests
free and clear of all Liens other than Permitted Liens. All of the Real
Property Interests (except for the Easements) are owned and the Company
does not have any leased Real Property Interests. There are no unrecorded
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Easements or encumbrances, rights to purchase or acquire or other
restrictions or limitations related to the Real Property Interests. No Real
Property Interest will be revoked, invalidated or otherwise amended as a
result of the transaction set forth in this Agreement. The Real Property
Interests include all of the real property rights necessary to conduct the
Business as it is currently being conducted by the Company. Seller has not
received any notice of any (i) plan, study or effort by any Person or
Government Authority (ii) intended or proposed Law or (iii) existing,
proposed or contemplated public improvement plan to modify or realign any
street or highway or eminent domain proceeding, in each case that may
impose a Lien upon, result in the taking of all or any part of, or
adversely affect the current or planned use of, any of the Real Property
Interests.
3.10.2 Easements. Each Easement is valid, existing and enforceable;
there has not been, and there currently is not any event (with or without
notice, lapse of time or both with respect thereto) that would result in
the termination, impairment or limitation of any Easement; no future
payments of any kind are due under any Easement in order to maintain its
existence; each Easement is perpetual; and the continuation, validity and
enforceability of each Easement will not be disturbed by the transaction
contemplated herein.
3.11 Personal Property.
3.11.1 Owned Personal Property. Subject to Permitted Liens, the
Company has good and marketable title to all personal property owned by the
Company or used in the conduct of the Business, other than (i) property
that has been disposed of in the ordinary course of business, (ii) property
that has been disposed of in transactions disclosed to Buyer prior to the
date hereof, and (iii) Leased Personal Property.
3.11.2 Leased Personal Property. Schedule 3.11 lists all of the
Company's Material Leases of Personal Property used in the Business. All
such Material Leases of Leased Personal Property are valid and binding and
in full force and effect. There has been no breach of any such Material
Lease by the Company or, to Seller's Knowledge, any other Person, which
breach has not been cured or waived.
3.12 Contracts. Schedule 3.12 lists all written Contracts and describes in
reasonable detail all unwritten Contracts to which the Company is a party or the
Assets of the Company are subject, meeting any of the following descriptions
("Material Contracts"):
3.12.1 Contracts that could, by their terms, require payment or
payments by or to the Company totaling more than Five Thousand Dollars
($5,000.00) during any twelve (12) month period;
3.12.2 Contracts relating to Borrowed Money Indebtedness or the
creation of any indemnification, guarantee or security interest affecting
the Company;
3.12.3 Contracts entered into by the Company other than in the
ordinary course of its business;
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3.12.4 Contracts that limit the freedom of the Company to compete in
any line of business or to conduct business in any geographic location;
3.12.5 Contracts relating to the purchase, sale or combination of any
business or line of business (by asset transfer, equity transfer, merger,
consolidation or otherwise);
3.12.6 Contracts relating to any joint venture, partnership or other
cooperative arrangement with any third party;
3.12.7 Contracts imposing confidentiality obligations on the Company;
3.12.8 Contracts concerning the licensing of Intellectual Property;
3.12.9 Contracts concerning any collective bargaining or similar
agreements with any union or employee group; and
3.12.10 Contracts between the Company and any Governmental Authority.
Contracts listed or described by Seller in Schedules 3.11.2, 3.17.3, 3.18, 3.20
and 3.21 will be deemed to have been listed or described in Schedule 3.12. All
Material Contracts are valid and binding and in full force and effect. There has
been no material breach of any Contract by the Company or, to Seller's
Knowledge, any other Person, which breach has not been cured or waived. Neither
the Company nor Seller has received from any other party to any Material
Contract notification that such Material Contract is not in full force and
effect, that the Company has failed to perform its obligations thereunder to
date, or that any other party thereto has not performed its obligations
thereunder to date. No event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) would reasonably be
expected to result in a breach or violation of, or a default under, the terms of
any Material Contract, and no Material Contract will be revoked, invalidated or
otherwise amended as a result of the consummation of the transaction
contemplated by this Agreement.
3.13 Litigation; Orders. Except as set forth on Schedule 3.13, there is no
Action by any Person or by or before any Governmental Authority that is pending
or, to Seller's Knowledge threatened, by, against or affecting the Company or
any of its Assets. Except as set forth on Schedule 3.13, the Company is not
subject to any Order.
3.14 Environmental Matters. With respect to the ownership and operation of
the Business: (i) the Company and all of the Assets are in compliance with all
Environmental Laws; and (ii) there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, but not limited to,
the release, emission, discharge or disposal of any Hazardous Material, that
could form the basis of any claim against, or violation by the Company pursuant
to any Environmental Law. No notice, notification, demand, request for
information, citation, summons, complaint or Order has been received by, and no
Action is pending, or to Seller's Knowledge threatened by any Person against the
Company with respect to any Environmental Law.
3.15 Compliance with Laws.
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3.15.1 Compliance. Except for matters that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect with respect to the Business or the Company, taken as a whole, (i)
the Company is in compliance with all applicable Laws, (ii) neither the
Company nor the Seller has received any notification from any applicable
Governmental Authority that it is not in compliance with any applicable
Laws, and (iii) no event has occurred, and no circumstances or condition
exists, that (with or without notice or lapse of time) would reasonably be
expected to constitute or result in a failure of the Company to comply with
the terms of any applicable Law.
3.15.2 Permits. Schedule 3.15.2 sets forth all Permits owned or held
by the Company and such Permits constitute all the authorizations that are
necessary to carry on the Business as currently conducted. No action is
pending or, to Seller's Knowledge, threatened to revoke or limit any such
Permit which, if adversely determined, would have a Material Adverse Effect
on the Company or the Business. All of the Company's Permits are valid and
in full force and effect and the Company is not in default, and no
condition exists that with notice or lapse of time or both would constitute
a default, under such Permits. Neither the Company nor the Seller has
received from any Governmental Authority notification that any Permit is
not in full force and effect, has been violated in any respect, or is
subject to any suspension, revocation, modification or cancellation. Except
as otherwise set forth on Schedule 3.15.2, no Permit will be revoked,
invalidated or otherwise amended as a result of the transaction
contemplated in this Agreement.
3.16 Intellectual Property.
3.16.1 Owned Intellectual Property. No Intellectual Property is owned
by the Company in connection with the Business. As of the date hereof, no
Action is pending or, to Sellers' Knowledge, threatened asserting any
infringement or misappropriation with respect to Intellectual Property by
the Company.
3.16.2 Licenses; Infringement. There are no licenses for Intellectual
Property used by the Company in the conduct of the Business, other than
licenses for "shrink-wrapped" software or other retail software products
that are readily available or are imbedded in computer hardware purchased
or leased by the Company.
3.17 Employees; Employment Agreements and Policies
3.17.1 Schedule 3.17.1 sets forth for each employee ("Employee") of
Administaff that is provided to the Company pursuant to the Client Service
Agreement, between the Company and Administaff, the Employee's (a) date of
employment, (b) job title or position, (c) base salary on an annualized
basis, (d) work location, (e) eligibility, if any, for any bonus payment
and (f) eligibility for or receipt of options to purchase membership
interests of the Company or capital stock of the Seller. Seller warrants
that there shall be no change in said base salary, work location or bonus
eligibility for any such Employee from the date of this Agreement until the
Closing. Seller and the Company shall use commercially reasonable efforts
to continue the employment of said Employees with the Company until the
Closing.
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3.17.2 None of the Employees is subject to a collective bargaining or
other labor union agreement. No work stoppage or labor dispute against the
Company in connection with the Business is pending or, to Seller's
Knowledge, threatened and, to Seller's Knowledge, there is no related
organizational activity by any Employees. As of the date hereof, the
Company has not received any notice of any unfair labor practice in
connection with the Business, and, to Seller's Knowledge, no such
complaints are pending before the National Labor Relations Board or other
similar Governmental Authority.
3.17.3 The Company does not have any existing or future obligation to
any past or present Employee, consultant, individual independent
contractor, director, officer or person engaged in any similar capacity
with respect to the following:
(a) Contracts between the Company and any such Employee,
consultant, individual independent contractor, director, officer or
person; or
(b) Policies, plans, terms, conditions or practices of the
Company relating to any aspect of the Company's relations with
Employees generally, or any individual or class of Employees,
consultants, individual independent contractors, directors, officers
or persons.
3.18 Benefit Plans. The Company does not have any employees. Schedule 3.18
contains a correct and complete list identifying each "employee benefit plan,"
as defined in Section 3(3) of ERISA, each employment, severance, retention or
similar contract, plan, arrangement or policy and each other plan or arrangement
(written or oral) providing for compensation, bonuses, profit-sharing, stock
option or other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension, health,
medical or life insurance benefits) that is maintained, administered or
contributed to by Administaff with respect to the Employees.
3.19 Taxes. All Tax Returns which were required to be filed by or with
respect to the Company have been duly and timely filed; all Taxes shown on each
such Tax Return have been timely paid in full; no penalty, interest, or other
charge is or will become due with respect to the late filing of any such Tax
Return or late payment of any such Tax; and all Tax withholding and deposit
requirements imposed on or with respect to the Company have been satisfied in
full in all respects. The Company is not the beneficiary of any extension of
time within which to file any Tax Return. The Company has not made any payments,
is not obligated to make any payments and is not a party to any agreement that
under certain circumstances could obligate it to make any payments that will not
be deductible under Section 280(G) of the Code. To the Knowledge of the Seller,
there are no pending written proposed deficiencies or other written claims for
unpaid Taxes of the Company, and the Company has no liability for the Taxes of
any other Person.
3.20 Insurance. Schedule 3.20 lists all of the Company's insurance policies
(including performance bonds) now in force (all of such policies, whether or not
listed, "Insurance Policies"), and for each policy states the type of policy,
17
the policy number, the limits of coverage, the carrier, the annual premium and
the expiration date. Copies of the Insurance Policies have been provided to
Buyer. Seller is not in default with respect to payment of premiums on any such
policy and the Company has not forfeited or waived any claim under any Insurance
Policy. Except as set forth in Schedule 3.20, no claim is pending under any such
policy. No notice of cancellation or termination of any Insurance Policy has
been given to the Company by the carrier of such policy. All liability insurance
policies of the Company have been and are on an "occurrences" basis, rather than
a "claims made" basis and no coverage will terminate or be limited by reason of
the execution, delivery or performance of this Agreement.
3.21 Affiliate Agreements. Schedule 3.21 lists each Contract between the
Company and (a) Seller, (b) any Affiliate of the Company or (c) any Affiliate of
Seller which is currently in effect.
3.22 Brokers. No person is or will become entitled to receive any brokerage
or finder's fee, advisory fee or other similar payment for the transactions
contemplated by this Agreement by virtue of having been engaged by or acted on
behalf of the Company or Seller.
3.23 Condition of Assets. The Seller makes no representation or warranty
regarding the condition of the buildings, plants, pipelines and related assets,
structures and equipment utilized by the Company, which assets are being
acquired "as is, where is." Notwithstanding the foregoing, the Seller represents
that the Company has good and marketable title to the Assets and that the Assets
have been operated in accordance with CFR Part 192 rules of the U.S. Department
of Transportation and applicable pipeline safety standards of the Oklahoma
Corporation Commission.
3.24 Bank Accounts and Powers of Attorney. Schedule 3.24 sets forth each
bank, savings institution and other financial institution with which the Company
has an account or safe deposit box and the names of all persons authorized to
draw thereon or to have access thereto. Except as disclosed on Schedule 3.24,
the Company has not given any revocable or irrevocable powers of attorney or
similar grant of authority to any Person relating to the Company for any purpose
whatsoever.
3.25 Books and Records. All books of account, minute books and other
records relating to the ownership and operation of the Company are complete and
correct and have been maintained in accordance with sound business practices and
the requirements of Section 13(b)(2) of the Exchange Act (regardless of whether
the Company is subject to that Section), including the maintenance of an
adequate system of internal controls. At the Closing, all of those books and
records will be in the possession of the Company.
3.26 Certain Business Practices. Neither the Company, nor to Seller's
Knowledge any director, officer, agent or employee of the Company has (a) used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (b) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, (assuming for purposes of this Section 3.26
that the Company is subject to Section 30A of the Exchange Act), or (c) made any
other unlawful payment.
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ARTICLE IV
Representations and Warranties of Buyer
Buyer makes the following representations and warranties to Seller:
4.1 Organization; Power and Authority. Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer has all corporate power needed to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby to be consummated by it.
4.2 Authorization; Execution and Validity. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby to be consummated by it have been duly
authorized by all necessary company action. This Agreement has been duly and
validly executed and delivered by Buyer, constitutes a valid and binding
obligation of Buyer and is enforceable against Buyer in accordance with its
terms, except to the extent that the enforcement hereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity regardless of whether enforceability is considered in a
proceeding in equity or at law.
4.3 No Conflict; Buyer Consents. Except as set forth on Schedule 4.3, the
execution, delivery and performance by Buyer of this Agreement will not (a)
violate any Law to which Buyer is subject, (b) violate any Charter Document of
Buyer, (c) violate any Order to which Buyer is a party or by which it is bound,
(d) require any Consent from any Governmental Authority, or (e) breach any
material Contract to which Buyer is a party or by which it is bound.
4.4 Litigation; Orders. There is no Action by any Person or by or before
any Governmental Authority that is pending or, to Buyer's Knowledge threatened
against or affecting Buyer or any of its properties, assets, operations or
business which would, if adversely determined, have a material adverse effect on
Buyer's ability to consummate the transactions contemplated by this Agreement,
nor is Buyer subject to any Order which would have any such effect.
4.5 Brokers. No Person is or will become entitled to receive any brokerage
or finder's fee, advisory fee or other similar payment for the transactions
contemplated by this Agreement by virtue of having been engaged by or acted on
behalf of Buyer.
ARTICLE V
Covenants of Seller and the Company
5.1 Cooperation by Seller and the Company. From the date hereof through the
Closing Date, Seller shall, and Seller shall cause the Company to, use all
commercially reasonable efforts to take all actions and to do all things
necessary or advisable to consummate the transactions contemplated by this
Agreement and to cooperate with Buyer in connection with the foregoing,
including using commercially reasonable efforts to obtain all of the Required
19
Consents. Unless required for consummation of the transactions contemplated by
this Agreement, Seller and the Company shall have no obligation to amend, or
cause to be amended, any Contract, to change, or cause to be changed, any
Permit, or to make, or cause to be made, any payment to obtain any Required
Consent; provided, however, that Seller and the Company shall not be required to
incur unreasonable expense.
5.2 Pre-Closing Access to Information. From the date hereof through the
Closing Date, Seller and the Company shall (a) afford to Buyer, its accountants
and its counsel access, in a reasonable manner, upon reasonable notice and at
reasonable times, full and free access to each of the Company's personnel,
properties, contracts, books and records, and other documents and data, (b)
furnish Buyer, its accountants and its counsel with copies of all such
contracts, books and records, and other existing documents and data as Buyer may
reasonably request, and (c) furnish Buyer, its accountants and its counsel with
such additional financial, operating, and other data and information as Buyer
may reasonably request.
5.3 Conduct of Business. From the date hereof through the Closing Date, the
Company shall, and Seller shall cause the Company to: (a) use commercially
reasonable efforts to preserve the Company's relationships with suppliers,
customers and Employees; (b) maintain the Insurance Policies; (c) perform its
obligations under the Material Contracts and the Permits in all material
respects; (d) comply with all applicable Laws, including all Environmental Laws,
except as would not constitute a Material Adverse Effect; (f) maintain and
repair the Assets as would a prudent operator and not alter, modify or
discontinue any normal maintenance, repair or inspections relating to the Assets
(in the event of any casualty, loss, damage to, or disposal or consumption of,
any of the Assets prior to Closing, Seller shall either repair or replace such
Assets with Assets of comparable function and quality or, if Buyer agrees,
transfer to Buyer at Closing the proceeds of any insurance recovery with respect
thereto); (e) keep in full force and effect its limited liability company
existence and all rights and franchises relating to or pertaining to the
Business, (f) maintain its books, accounts and records in accordance with past
customs and practices and GAAP as applied by Seller on a consistent basis, and
(g) carry on the Business in the ordinary course and consistent with past
practice. The Company shall not, and Seller shall cause the Company to not, in
connection with the conduct of the Business, without the prior written consent
of Buyer:
5.3.1 incur any additional Borrowed Money Indebtedness;
5.3.2 sell, lease, exchange, assign or transfer, or permit the
creation of any Lien on, any of the Assets of the Company, except for any
such Assets disposed of in the ordinary course of business and consistent
with past practice;
5.3.3 enter into any Material Contract or Material Lease relating to
the Business;
5.3.4 amend or terminate any Material Contract, Material Lease or
Permit relating to the Business;
5.3.5 increase the rate of compensation or level of benefits for any
Employee or executive officer of the Company or enter into any agreement
with respect to the award of any severance or termination pay that would
reasonably be expected to become due as a result of the transactions
contemplated hereby;
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5.3.6 pay any dividend or distribution in cash or any other form to,
on behalf of, at the direction of, or for the benefit of, Seller;
5.3.7 offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant of, any equity securities of the Company;
5.3.8 issue or create any warrants, obligations, subscriptions,
options, convertible securities or other commitments under which any
additional membership interests might be directly or indirectly authorized,
issued or transferred;
5.3.9 waive any material right, forgive any material debt or release
any material claim relating to the Business;
5.3.10 accelerate or delay the sale of services or equipment
constituting the conduct of the Business or the collection of accounts
receivable of the Company in a manner that is not in the ordinary course of
business and consistent with past practice;
5.3.11 acquire, whether by merger or consolidation, by purchasing an
equity interest or otherwise, any business or any corporation, partnership,
association, or other business organization or division thereof;
5.3.12 adopt any amendments to the Company's Charter Documents;
5.3.13 make any change in any of its respective methods of accounting
in effect at December 31, 2006, except as may be required to comply with
GAAP; make or rescind any election relating to any Taxes; or settle or
compromise any Action, except for matters that would not reasonably be
expected to have a Material Adverse Effect with respect to the Company or
the Business;
5.3.14 take any action that would cause or result in, or that would
reasonably be expected to cause or result in (i) any of the representations
or warranties set forth in this Agreement not to be true and correct as of
the Closing Date, or (ii) the nonperformance of Seller's covenants set
forth in this Agreement; or
5.3.15 agree to take any of the actions described in Sections 5.3.1
through 5.3.14.
5.4 Further Assurances. Subject to the other terms and conditions of this
Agreement, at any time and from time to time, whether before or after the
Closing, Seller and the Company shall execute and deliver all instruments and
documents and take all other action that Buyer may reasonably request to
consummate or to evidence the consummation of the transactions contemplated by
this Agreement, provided that Seller and the Company shall not be required to
incur unreasonable expense in connection with its obligation under this Section
5.4.
5.5 Cooperation. Prior to the Closing, Seller and the Company shall provide
commercially reasonable cooperation to Buyer and shall take all actions that are
commercially reasonable and requested by Buyer to ensure a smooth transition of
the ownership of the Company from Seller to Buyer.
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5.6 Survey and Title Insurance. Seller shall cause a licensed surveyor to
prepare a new and updated on the ground survey of the Real Property Interests
owned by the Company in fee and shall deliver to Buyer at least ten (10)
Business Days prior to the Closing Date three survey plats and certificates
under the seal of the surveyor, which shall be in form and substance reasonably
acceptable to Buyer. On or before the Closing Date, Seller shall procure title
insurance policies from a reputable title insurance company, insuring title to
such Real Property Interests, which policies shall be in form and substance
reasonably acceptable to Buyer.
5.7 Supplements to Schedules. If any event occurs or condition changes that
causes any of its representations or warranties in this Agreement to be
inaccurate, Seller shall notify Buyer thereof in writing (an "Update"). Seller
shall supplement the Schedules to account for any such event or change. In the
event that any Update shall concern a Material Adverse Effect to the Business or
the Company, Buyer shall have ten (10) Business Days from receipt of notice of
such Update to notify Seller as to whether Buyer accepts or rejects such Update
or objects to such Material Adverse Effect. If Buyer rejects such Update or
Material Adverse Effect, Seller and Buyer shall negotiate in good faith to amend
this Agreement (including the Purchase Price and/or other appropriate terms) to
account for the Update or Material Adverse Effect in a manner mutually
acceptable to Seller and Buyer. If Buyer and Seller cannot agree on a mutually
acceptable amendment to this Agreement within ten (10) Business Days after
Buyer's notice of rejection to Seller, Buyer shall have the right to terminate
this Agreement without penalty by providing written notice of termination within
five (5) Business Days after the expiration of such period. If Buyer does not
terminate this Agreement as set forth in the preceding sentence, and the
transaction hereunder closes, then Buyer shall be deemed to have accepted the
Update or Material Adverse Effect and to have waived any rights to seek
indemnity or damages in relation thereto.
5.8 Notice of Breach. If at any time on or before the Closing Date, Seller
obtains any knowledge (whether through investigation or otherwise) of any fact,
condition or event constituting a breach of any representation or warranty of
Buyer set forth herein or any document referred to herein, then Seller shall
immediately upon obtaining such knowledge inform Buyer thereof and of such
breach.
ARTICLE VI
Covenants of Buyer
6.1 Cooperation by Buyer. From the date hereof through the Closing Date,
Buyer shall use commercially reasonable efforts to take all actions and to do
all things necessary or advisable to consummate the transactions contemplated by
this Agreement and to cooperate with Seller in connection with the foregoing,
including using commercially reasonable efforts to obtain all of the Required
Consents, provided that Buyer shall not be required to incur unreasonable
expense in connection with its obligation under this Section 6.1.
6.2 Further Assurances. Subject to the other terms and conditions of this
Agreement, at any time and from time to time, whether before or after the
Closing, Buyer shall execute and deliver all instruments and documents and take
22
all other action that Seller may reasonably request to consummate or to evidence
the consummation of the transactions contemplated by this Agreement, provided
that Buyer shall not be required to incur unreasonable expense in connection
with its obligation under this Section 6.2.
6.3 Notice of Breach. If at any time on or before the Closing Date, Buyer
obtains any knowledge (whether through investigation or otherwise) of any fact,
condition or event constituting a breach of any representation or warranty of
Seller set forth herein or any document referred to herein, then Buyer shall
immediately upon obtaining such knowledge inform Seller thereof and of such
breach.
6.4 Employee Matters. Within thirty (30) days after the date hereof, Buyer
will notify Seller as to which Employees Buyer intends to retain after Closing,
specifying which Employees, if any, are to be retained for a transition period
and which are to be retained on a non-transitional basis. Seller will be
responsible for the severance costs associated with all Employees as well as any
"stay bonuses" or "change in control" payments or benefits in effect on the
Closing Date.
ARTICLE VII
Additional Agreements
7.1 Governmental Matters.
7.1.1 Governmental Approvals. The Parties and the Company shall comply
with all Laws which are applicable to any of the transactions contemplated
hereby and pursuant to which government notification or approval of such
transaction is necessary. The Parties and the Company shall cooperate with
one another in providing any information about the Company which is
required for this purpose and in promptly filing, separately or jointly,
any applications for such government notification or approval. The Parties
and the Company shall use commercially reasonable efforts to resolve such
objections, if any, as may be asserted by any Governmental Authority with
respect to the transactions contemplated hereby.
7.1.2 No Required Dispositions or Other Adverse Actions.
Notwithstanding any other provision of this Agreement to the contrary,
neither Party nor their respective Affiliates shall be obligated, in order
to obtain any Permit or other approval by any Governmental Authority that
is necessary to consummate the transactions contemplated hereby, to hold,
separate, sell or otherwise dispose or make reductions in the scope or use
of their respective businesses, assets or properties.
7.2 Tax Information and Assistance. The Parties and the Company shall
provide each other with such commercially reasonable assistance as may be
requested by them in connection with the preparation of any Tax Return, any Tax
audit or other examination by any Governmental Authority, or any judicial or
administrative proceedings related to liability for Taxes. The Parties and the
Company shall retain and provide each other upon written request with records or
information which may be relevant to such preparation, audit, examination,
proceeding or determination. Such assistance shall include making employees
available on a mutually convenient basis to provide and explain such records and
23
information and shall include providing copies of any relevant Tax Returns and
supporting work schedules. The Party requesting assistance hereunder shall
reimburse the other for reasonable out-of-pocket expenses incurred in providing
such assistance.
7.3 Books and Records.
7.3.1 Access. For a two (2) year period ending on the second
anniversary of the Closing, each Party shall provide the other Party with
commercially reasonable access during normal business hours to its books
and records relating to the Company (other than books and records protected
by the attorney-client privilege) to the extent that they relate to the
condition or operation of the Business prior to the Closing and are
requested by such Party to prepare its Tax Returns, or to respond to Third
Party Claims (not involving the other Party). Each Party shall have the
right, at its own expense, to make copies of any such books and records.
7.3.2 Confidentiality. Each Party may take such action which it deems
to be commercially reasonable to separate or redact information unrelated
to the Business from documents and other materials requested and made
available pursuant to this Section 7.3 and may condition the other Party's
access to documents and other materials that it deems confidential to the
execution and delivery of an agreement by the other Party not to disclose
or misuse such information.
7.3.3 Assistance. Each Party shall, upon receipt of a commercially
reasonable request in writing and at the requesting Party's expense, make
personnel reasonably available to assist in locating and obtaining any
books and records relating to the Company to the extent that they relate to
the condition or operation of the Business prior to the Closing and make
personnel reasonably available whose assistance, participation or testimony
is reasonably required in anticipation of, preparation for or the
prosecution or defense of any Third Party Claim in which the other Party
does not have any adverse interest.
ARTICLE VIII
Conditions Precedent to Closing
8.1 Conditions Precedent to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction of the following conditions, any of which may be waived in
writing by Buyer.
8.1.1 Accuracy of Representations and Warranties. The representations
and warranties of Seller in this Agreement that are qualified as to
materiality shall be accurate, and any such representations and warranties
that are not so qualified shall be accurate, in all material respects, as
of the date of this Agreement and as of the Closing Date (except for
representations and warranties that address matters only as of a specific
date, in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, on and as of such earlier date).
24
8.1.2 Performance of Covenants. Seller and the Company shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed by Seller and the
Company prior to or at the Closing.
8.1.3 No Material Adverse Effect. There shall have been no change
having a Material Adverse Effect on the Company or the Business.
8.1.4 Deliveries. Seller shall have delivered to Buyer the documents
required by Section 2.5.2.
8.1.5 No Order. No Order shall be in effect forbidding or enjoining
the consummation of the transactions contemplated hereby.
8.1.6 Consents.
(a) Seller or the Company shall have obtained all Required
Consents to the consummation of the transactions contemplated by this
Agreement; and
(b) Buyer, GPC or GMC shall have obtained the consent to the
transfer of the Transportation Agreements (as such term is defined in
the Asset Purchase Agreement) from Enogex, Inc. and TRANSOK, LLC to
Buyer or its designated Affiliate.
8.1.7 Termination of Guaranty. Seller shall have terminated the
Guaranty and delivered the duly executed Release of Guaranty.
8.1.8 Cancellation of Intercompany Indebtedness. Seller shall have
released and cancelled all indebtedness of the Company to Seller, including
any amounts carried as "Advances from Parent" on the books and records of
the Company.
8.2 Conditions Precedent to Seller's Obligations. The obligation of Seller
to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction of the following conditions, any of which may be waived in
writing by Seller.
8.2.1 Accuracy of Representations and Warranties. The representations
and warranties of Buyer in this Agreement that are qualified as to
materiality shall be accurate, and any such representations and warranties
that are not so qualified shall be accurate, in all material respects, as
of the date of this Agreement and as of the Closing Date (except for
representations and warranties that address matters only as of a specific
date, in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, on and as of such earlier date).
8.2.2 Performance of Covenants. Buyer shall have performed and
complied in all material respects with all covenants and agreements
required by this Agreement to be performed by Buyer prior to or at the
Closing.
25
8.2.3 Deliveries. Buyer shall have delivered to Seller the payments
and documents required by Section 2.5.3.
8.2.4 No Order. No Order shall be in effect forbidding or enjoining
the consummation of the transactions contemplated hereby.
8.2.5 Consents.
(a) Seller or the Company shall have obtained all Required
Consents to the consummation of the transactions contemplated by this
Agreement; and
(b) Buyer, GPC or GMC shall have obtained the consent to the
transfer of the Transportation Agreements from Enogex, Inc. and
TRANSOK, LLC. to Buyer or its designated Affiliate.
8.2.6 Termination of Guaranties. Seller or the Company shall have
terminated the parent and other subsidiaries guaranty with Legacy Bank.
ARTICLE IX
Termination Prior to Closing Date
9.1 Termination. This Agreement may be terminated prior to the Closing Date
only as follows:
9.1.1 By either Buyer or Seller upon written notice to the other Party
if a material breach of any provision of this Agreement has been committed
by the other Party and such breach has not been waived in writing;
9.1.2 By Buyer pursuant to the terms of Section 5.7;
9.1.3 By the mutual written consent of the Buyer and Seller; or
9.1.4 By either Buyer or Seller upon written notice to the other Party
if the conditions precedent to the Closing set forth in Article 8 shall not
have occurred or been waived by the appropriate Party on or before July 31,
2007; provided, however, that the right to terminate this Agreement under
this Section shall not be available to any Party whose breach of any
obligation under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such date.
9.2 Effect of Termination. If this Agreement terminates pursuant to Section
9.1, no Party shall have any liability or obligation to the other Party
hereunder; provided, however, that no such termination shall relieve any Party
of any liability for Damages resulting from a breach of this Agreement or
liability that otherwise existed as of the date of such termination. In the
event that (i) the Parties terminate this Agreement pursuant to Section 9.1.3,
or (ii) Buyer terminates this Agreement pursuant to Section 9.1.1, 9.1.2, or
9.1.4, the Guaranty shall automatically become null and void and of no further
force or effect.
26
ARTICLE X
Indemnification
10.1 Indemnification by Seller. Subject to the other provisions of this
Article 10, from and after the Closing Date, Seller shall defend, indemnify and
hold Buyer, the Company, their Affiliates and their respective employees,
officers, directors and agents (the "Buyer Indemnitees") harmless from and
against any and all Damages suffered by any Buyer Indemnitee arising out of:
10.1.1 the breach of any representation or warranty made by Seller in
this Agreement or in any certificate required to be executed and delivered
by Seller, the Company or their respective officers at the Closing pursuant
to this Agreement;
10.1.2 the failure of Seller to perform any covenant or obligation by
Seller contained in this Agreement or any other agreement required to be
executed and delivered by Seller at the Closing pursuant to this Agreement;
and
10.1.3 any Actions against any of the Buyer Indemnitees arising out of
the actions or inactions of Seller with respect to the Company or the
operations of the Business on or prior to the Closing Date that concern or
relate to any of the following matters: Employees, Taxes, Real Property
Interests, Intellectual Property, and violations of applicable Laws, except
to the extent they constitute liabilities that are included in Net Working
Capital.
10.2 Indemnification by Buyer. Subject to the other provisions of this
Article 10, from and after the Closing Date, Buyer shall defend, indemnify and
hold Seller, its Affiliates and their respective employees, officers, directors
and agents (the "Seller Indemnitees") harmless from and against any Damages
suffered by any Seller Indemnitee arising out of:
10.2.1 the breach of any representation or warranty made by Buyer in
this Agreement or in any certificate required to be executed and delivered
by Buyer or its officers at the Closing pursuant to this Agreement;
10.2.2 the failure of Buyer to perform any covenant or obligation by
Buyer contained in this Agreement or any other agreement required to be
executed and delivered by Buyer at the Closing pursuant to this Agreement;
and
10.2.3 any Actions against any of the Seller Indemnitees arising out
of the actions or inactions of Buyer with respect to the Company or the
operation of the Business after the Closing Date.
10.3 Notice and Resolution of Claims.
10.3.1 Notice. Each person entitled to indemnification pursuant to
Section 10.1 or Section 10.2 (an "Indemnitee") shall promptly give written
notice to the indemnifying Party after obtaining knowledge of any claim
that it may have pursuant to this Article 10; provided, however, the
failure of any Indemnitee to give timely notice thereof shall not affect
any of its rights to indemnification hereunder nor relieve the indemnifying
27
Party from any of its indemnification obligations hereunder except to the
extent such failure prejudices the rights or defenses of the indemnifying
Party. Such notice shall set forth in reasonable detail the claim and the
basis for indemnification.
10.3.2 Right to Assume Defense. If such claim for indemnity shall
arise from a claim or Action involving a third party (a "Third Party
Claim"), the Indemnitee shall permit the indemnifying Party to assume its
defense. If the indemnifying Party assumes the defense of such Third Party
Claim, it shall take all steps necessary to investigate, defend or settle
such Action and shall, subject to Section 10.4, hold the Indemnitee
harmless from and against any and all Damages caused by or arising out of
any settlement approved by the indemnifying Party or any judgment in
connection with such Third Party Claim. The indemnifying Party shall keep
the Indemnitee informed of the progress of the defense of any such Third
Party Claim. Without the written consent of the Indemnitee, the
indemnifying Party shall not consent to entry of any judgment or enter into
any settlement that does not include an unconditional and complete release
of the Indemnitee by the claimant or plaintiff making the Third Party Claim
without the imposition of any injunction or other equitable relief against
the Indemnitee. The Indemnitee may participate in such defense or
settlement through its own counsel, but at its own expense provided that if
there is an actual conflict of interest between Indemnitee and the
indemnifying Party with respect to such Third Party Claim, the Indemnitee
may retain its own counsel at the indemnifying Party's expense. In the
event that the Indemnitee elects to participate in the defense of a Third
Party Claim, the indemnifying Party and the Indemnitee shall mutually
cooperate and make available to the other witnesses, records and materials
related to the matter. No Third Party Claim that is being defended in good
faith by the indemnifying party shall be settled or compromised by the
Indemnitee without the written consent of the indemnifying Party.
10.3.3 Failure to Assume Defense. Failure by the indemnifying Party to
notify the Indemnitee of its election to assume the defense of any Third
Party Claim within thirty (30) days after its receipt of notice thereof
pursuant to Section 10.3.1 shall be deemed a waiver by the indemnifying
Party of its right to assume the defense of such Third Party Claim. In such
event, the Indemnitee may defend against such Third Party Claim in any
manner it deems appropriate. The Indemnitee may settle such Third Party
Claim or consent to the entry of any judgment with respect thereto,
provided that it acts in good faith and in a commercially reasonable
manner.
10.3.4 Survival. Neither Party shall have any obligation to indemnify
any Indemnitee pursuant to Sections 10.1 or 10.2 unless such Indemnitee has
given written notice to such Party in accordance with Section 10.3.1 prior
to the expiration of twelve (12) months after the Closing Date, except in
the case of those representations and warranties set forth in Sections 3.4,
3.14 and 3.19 (the "Extended Representations") which shall survive until
the expiration of the statutory limitation periods pertaining to the
respective events which may constitute a breach of such representations and
warranties.
28
10.4 Limits on Indemnification.
10.4.1 Thresholds and Basket. Seller shall be liable to the Buyer
Indemnitees for Damages that are indemnifiable pursuant to Section 10.1,
and Buyer shall be liable to the Seller Indemnitees for Damages that are
indemnifiable pursuant to Section 10.2 (in either case, other than payment
obligations under this Agreement), only if (a) amount of Damages for each
claim exceeds a de minimus threshold of $5,000.00 (unless such claim is
part of a related series of breaches of representations and warranties)
before it may be asserted, but if that threshold is exceeded the first
dollar of the claim is applied against the Basket, and (b) the aggregate
amount of such Damages to all Buyer Indemnitees or all Seller Indemnitees,
respectively, exceeds $25,000.00 (the "Basket").
10.4.2 Limit of Liability. The total aggregate liability of Seller for
any claims for Damages arising under Section 10.1 of this Agreement
(exclusive of Damages arising from the breach of any Extended
Representation) shall not exceed the Purchase Price. For the avoidance of
doubt, the limitations of liability set forth in this Section 10.4 shall
not apply to any Extended Representation.
10.4.3 Consequential Damages; Insurance; Taxes. Neither Seller, on the
one hand, nor Buyer, on the other hand, shall have any obligation to
indemnify any Seller Indemnitee or Buyer Indemnitee for any other Damages
that are (a) recoverable by the Indemnitee from any third party (including
insurers to the extent recoverable), except to the extent of any
deductible, retention or demonstrated increase in premiums related thereto,
or (b) offset by tax savings realized on account of such Damages by the
Indemnitee or any of its Affiliates (to the extent and at the time of such
tax savings). Notwithstanding anything to the contrary contained in this
Agreement, no Party hereto shall be entitled to recover from any other
Party hereto any amount in respect of exemplary, punitive, special,
indirect, consequential, remote, or speculative damages, including lost
profits.
10.4.4 Exclusive Remedy. This Article 10 sets forth the exclusive
remedy owing from Seller to the Buyer Indemnitees and from Buyer to Seller
Indemnitees that arise from the matters described in Sections 10.1 and
10.2. Each of Seller and Buyer hereby waives any other claim or cause of
action that it might assert against the other Party with respect to the
matters described in Sections 10.1 and 10.2.
10.4.5 Indemnity Payments. All payments made pursuant to this Article
10 (other than interest payments) shall be treated by the Parties on all
Tax Returns as an additional payment or rebate, as the case may be, of the
Purchase Price.
10.4.6 Payment and Assignment of Claims. Upon final determination by
the Parties or by a court of competent jurisdiction that an Indemnitee is
entitled to indemnification under this Article 10, the indemnifying Party
shall promptly pay or reimburse, as appropriate, the Indemnitee for any
Damages to which it is entitled to be indemnified hereunder. Neither Party
nor its Affiliates shall permit any exercise of any right of set-off
against the other Party or its Affiliates until such final determination is
made.
29
10.5 Other Indemnitees. Buyer shall cause Buyer Indemnitees, and Seller
shall cause Seller Indemnitees, to comply with the provisions and to abide by
the limitations set forth in this Article 10.
ARTICLE XI
Employee Matters
11.1 Continued Use of Administaff. For the period ending twelve (12) months
after the Closing Date, the Company shall continue to contract with Administaff
for the provision of its employees under the terms of the agreement currently in
place, which agreement shall not be amended, modified or terminated during such
period without the prior written consent of Seller, which consent shall not be
unreasonably withheld.
ARTICLE XII
Miscellaneous
12.1 Severability. If any provision of this Agreement as applied to any
Party or to any circumstance shall be held invalid, illegal or unenforceable by
any court of competent jurisdiction, (i) the validity, legality and
enforceability of the remaining provisions of this Agreement will remain in full
force and effect and (ii) the application of such provision to any other part or
to any other circumstance shall not be affected or impaired thereby.
12.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the successors, whether by
merger, consolidation or otherwise, and permitted assigns of the Parties;
provided, however, that neither this Agreement nor any of the rights or
obligations thereunder may be assigned by any Party without the prior written
consent of the other Party. Any assignment in violation of this Section 11.2
shall be null and void.
12.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which, when taken together, shall constitute one and the same
agreement.
12.4 Headings. The captions and headings used in this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction or interpretation hereof.
12.5 Waiver. Any of the terms or conditions of this Agreement may be waived
in writing at any time by the Party which is entitled to the benefits thereof.
Neither the failure nor any delay by any Party in exercising any right, power or
privilege under this Agreement or the documents referred to in this Agreement
will operate as a waiver of such right, power or privilege, and no single or
partial exercise of any such right, power or privilege will preclude any other
or further exercise of such right, power or privilege or the exercise of any
other right, power or privilege.
12.6 No Third-Party Beneficiaries. Nothing in this Agreement shall create
or confer upon any Person (including but not limited to any Employees), other
than the Parties or their respective successors and permitted assigns, any legal
or equitable rights, remedies, obligations, liabilities or claims under or with
respect to this Agreement, except as expressly provided herein.
30
12.7 Notices. Unless otherwise provided, all notices and other
communications hereunder shall be in writing and shall be deemed duly given (a)
on the date of delivery if delivered personally, or by telecopy or
telefacsimile, upon confirmation of receipt, in each case, if on a Business Day,
and otherwise on the next Business Day, (b) on the fifth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid, or (c) the second Business Day if delivered by
nationally recognized overnight courier. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the Party to receive such notice:
If to Seller or the Company (prior to Closing):
Gateway Energy Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxxx Xxxxxxxx Xxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Buyer or the Company (after the Closing):
Navitas Assets, L.L.C.
00000 Xxxx XxXxxxxxx, Xxxxx X
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx and/or Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
31
with copies to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
6200 Chase Tower
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address or facsimile number for a Party as shall be specified
in writing by that Party.
12.8 Governing Law. This Agreement shall be construed in accordance with
and governed by the Laws of the State of Texas applicable to agreements made and
to be performed wholly within such jurisdiction, without regard to conflicts of
law principles.
12.9 Interpretation.
12.9.1 Unless specifically stated otherwise, references to Articles,
Sections, Exhibits and Schedules refer to Articles, Sections, Exhibits and
Schedules in this Agreement. References to "includes" and "including" mean
"includes without limitation" and "including without limitation."
12.9.2 No provision of this Agreement shall be interpreted in favor
of, or against, either of the Parties by reason of the extent to which
either such Party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
12.10 Confidentiality and Public Announcements. No public release or
announcement of the proposed transaction or related discussions or negotiations
shall be made without the advance approval thereof by Buyer and Seller, except
as may be required by Law (including Seller's reporting requirements under the
Securities Exchange Act of 1934, as amended) or legal process, in which case the
other Party shall receive prior notification and opportunity for review before
release. Seller and Buyer shall agree on the terms of any public releases or
other announcements related to this Agreement and shall consult with each other
before issuing any public releases or other announcements related to this
Agreement. In addition, the Parties agree to consult with, and provide
commercially reasonable cooperation to, each other with respect to the form and
content of any communication to Employees, customers, suppliers and others
having dealings with the Company concerning this Agreement and the transactions
contemplated thereby through the Closing Date. Notwithstanding the foregoing,
Buyer shall be permitted to discuss the proposed transaction with lenders and
investors and Governmental Authorities responsible for issuing any required
authorizations in connection with the Business.
12.11 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, constitutes the sole understanding of the Parties with respect
to the matters contemplated hereby and thereby and supersedes and renders null
and void all prior agreements and understandings, written and oral, between the
32
Parties with respect to the subject matter hereof and thereof. No Party shall be
liable or bound to any other Party in any manner by any promises, conditions,
representations, warranties, covenants, agreements and understandings, except as
specifically set forth herein or therein.
12.12 Amendment. No amendment, modification or alteration of the terms or
provisions of this Agreement, including any Schedules and Exhibits, shall be
binding unless the same shall be in writing and duly executed by the Party
against whom such amendment, modification or alteration is sought to be
enforced.
12.13 Confidentiality. The Parties acknowledge that the Confidentiality
Agreements dated as of December 13, 2006 shall remain in full force and effect.
[The remainder of this page is intentionally left blank]
33
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the date set forth above.
GATEWAY ENERGY CORPORATION
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
Title: President
FORT XXXX OKLAHOMA IRREGATION FUEL
AUTHORITY L.L.C., dba Fort Xxxx Fuel
Authority, LLC
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
Title: President
NAVITAS ASSETS, L.L.C.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title:
--------------------
34
EXHIBIT A
FORM OF GUARANTY
GUARANTY
This Guaranty (this "Guaranty"), dated as of April __, 2007, is
executed by Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxxx (the "Guarantors") for the
benefit of Gateway Energy Corporation ("Seller").
WHEREAS, Guarantors own one hundred percent (100%) of the outstanding
member interest in Navitas Assets, L.L.C., a Delaware limited liability company
("Buyer"); and
WHEREAS, Buyer and Seller have entered into that certain Member
Interest Purchase Agreement of even date herewith (the "Agreement"); and
WHEREAS, it is a condition to Seller entering into the Agreement that
Guarantors execute and deliver this Guaranty to Seller; and
WHEREAS, capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
NOW, THEREFORE, for the consideration set forth in the Agreement, and
other good, valid and binding consideration, the receipt and sufficiency of
which are hereby acknowledged, Guarantors, intending to be legally bound, hereby
jointly and severally declare and agree as follows:
1. Guarantors hereby irrevocably guarantee to Seller the due and
punctual payment of the Purchase Price to Seller pursuant to the
terms and conditions of the Agreement. The obligation guaranteed
hereunder shall not exceed the amount of the Purchase Price.
2. Guarantors irrevocably waive, to the extent permitted by law,
acceptance hereof, and any requirement that, at any time, any
action be taken by any person against Buyer or any other person.
3. This Guaranty shall terminate and be of no further force and
effect upon the earlier of (i) Buyer's payment of the Purchase
Price to Seller, (ii) Buyer's termination of the Purchase
Agreement pursuant to Sections 9.1.1, 9.1.2, or 9.1.4 thereof, or
(iii) termination of the Agreement by mutual consent of Buyer and
Seller pursuant to Section 9.1.3 thereof.
This guaranty is a guaranty of payment, not collection, is
unconditional and absolute, except as otherwise set forth herein.
35
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the date set forth above.
-----------------------------------
Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxx
36
EXHIBIT B
FORM OF NOTICE OF RELEASE OF GURANTY
NOTICE OF RELEASE OF GURANTY
----------------------------
THIS RELEASE OF GURARANTY (this "Release") is dated effective as of
________, 2007 from Gateway Energy Corporation ("Seller") to Xxxxxxx X. Xxxxxx
and Xxxxxx X. Xxxxxxxx (collectively and individually, the "Guarantors"). All
capitalized terms used herein and not otherwise defined shall have the meanings
set forth in that certain Member Interest Purchase Agreement dated March __,
2007 (the "Agreement"), between Seller and Navitas Assets, L.L.C. ("Buyer").
WITNESSETH:
WHEREAS, Seller and Buyer entered into the Agreement for the purchase
and sale of all of the outstanding membership interests in Fort Xxxx Oklahoma
Irrigation Fuel Authority LLC, doing business as Fort Xxxx Fuel Authority,
L.L.C.;
WHEREAS, pursuant to the Agreement, the Guarantors guaranteed the
payment of the Purchase Price provided that all necessary conditions of Closing
were satisfied;
WHEREAS, on the date hereof, all the conditions of Closing have been
satisfied and Buyer has paid the Purchase Price to Seller; and
WHEREAS, Seller desires to release Guarantors from any and all
obligations under the Guaranty and terminate the effectiveness of the Guaranty;
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements, representations, warranties, provisions and covenants set
forth herein and in the Agreement, and for other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged, the undersigned does hereby release the Guarantors from any and
all liability under the Guaranty and does hereby acknowledge that the Guaranty
is void and of no further force or effect.
This Release is effective as of this __ day of _______, 2007.
GATEWAY ENERGY CORPORATION
BY: _______________________________
NAME: _______________________________
TITLE: _______________________________
37
EXHIBIT C
FORM OF RELEASE
RELEASE AGREEMENT
-----------------
This RELEASE AGREEMENT (this "Release") is dated as of ____________,
2007, from Gateway Energy Corporation, a Delaware corporation (the "Seller") to
Fort Xxxx Oklahoma Irrigation Fuel Authority LLC, an Oklahoma limited liability
company doing business as Fort Xxxx Fuel Authority, LLC (the "Company"). All
capitalized terms used herein and not otherwise defined shall have the meanings
set forth in that certain Member Interest Purchase Agreement dated April __,
2007 (the "Purchase Agreement") between Seller and Navitas Assets, L.L.C., a
Delaware limited liability company (the "Buyer").
WITNESSETH:
WHEREAS, Seller is the sole owner of all of the membership interest
(the "Membership Interest") of the Company;
WHEREAS, pursuant to the terms of the Purchase Agreement, Seller has
agreed to sell, and Buyer has agreed to purchase, all of the Membership
Interest; and
WHEREAS, the Purchase Agreement provides that, as a condition of
Closing, Seller shall deliver to Buyer a release agreement substantially in the
form set forth herein;
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements, representations, warranties, provisions and covenants set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Release of the Company. Effective as of the Closing Date, Seller (on its
behalf and on the behalf of its Affiliates, employees, agents, representatives,
successors or assigns, collectively "Seller Representatives") fully and
unconditionally and for all purposes relinquish, release and forever discharge
the Company and its Affiliates and successors and its and their respective
officers, employees, members, shareholders, partners, representatives and
directors from any and all claims, debts, damages, injuries, judgments, awards,
executions, demands, liabilities, obligations, suits, actions and causes of
action of every nature, kind and description whatsoever, in law or in equity,
whether known or unknown, contingent or fixed, liquidated or unliquidated, past,
present or future arising out of (i) Seller's ownership of the Interests, (ii)
Seller's advances to the Company, or (iii) any acts, omissions, circumstances or
conditions based on events or circumstances relating to the Company, Seller, or
Seller Representatives, and arising or occurring on or before the Closing Date.
Nothing in this Release shall effect amounts owed by the Company to GPC and GMC
pursuant to the Gateway Agreements (as such term is defined in the Asset
Purchase Agreement).
2. Further Assurances. From time to time, as and when requested by the Company
or Buyer, Seller will execute and deliver all such further documents or
instruments and will take, or cause to be taken, all such further or other
actions as the Company or Buyer may reasonably deem necessary or desirable to
fulfill and implement the terms of this Release.
38
3. Assignments. This Release shall inure to the benefit of and bind the parties
hereto and their respective successors and assigns.
4. Governing Law. This Release and the rights and obligations of the parties
hereto shall be governed by, construed and interpreted in accordance with the
laws of the State of Texas.
5. Counterparts/Facsimile Signatures. This Release may be executed in multiple
counterparts, all of which taken together shall constitute one and the same
instrument. Facsimile signatures shall be valid and binding.
6. Third Party Beneficiary. Seller and the Company agree and acknowledge that
Buyer is a third party beneficiary of this Release and Buyer's execution of this
Release is for the sole purpose of acknowledging its status as a third party
beneficiary.
[SIGNATURES NEXT PAGE]
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IN WITNESS WHEREOF, the parties have caused their duly authorize
representatives to execute this Release on their behalf as of the date first
above written.
GATEWAY ENERGY CORPORATION
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
FORT XXXX OKLAHOMA IRRIGATION FUEL
AUTHORITY, LLC, dba Fort Xxxx
Fuel Authority, LLC
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
NAVITAS ASSETS, L.L.C.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
40
EXHIBIT D
FORM OF ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT
------------------------
This Asset Purchase Agreement (this "Agreement") is entered into as of
_______________, 2007, by and between Navitas Assets, L.L.C., a Delaware limited
liability company ("Buyer"), Gateway Energy Marketing Company, a Louisiana
corporation ("GMC"), and Gateway Pipeline Company, a Texas corporation ("GPC").
GMC and GPC are collectively referred to as the "Sellers."
Recitals:
WHEREAS, Sellers own all of the Assets, which consist of certain pipeline
assets, and are parties to the Transportation Agreements and the Gateway
Agreements in place on the date hereof; and
WHEREAS, Buyer desires to acquire from Sellers all of the Assets, the
Transportation Agreeements and the Gateway Agreements;
NOW, THEREFORE, in consideration of the mutual covenants, undertakings,
representations and warranties set forth herein, the Parties agree as follows:
ARTICLE 1
Definitions
For purposes of this Agreement, the terms set forth below shall have
the following meanings:
12.14 "Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority or arbitrator.
12.15 "Affiliate" means:
12.15.1 with respect to any Person which is a business entity:
(a) any Person owning or holding, directly or indirectly, 10% or
more of the equity capital in such business entity, or
(b) any Person in which such business entity owns or holds,
directly or indirectly, 10% or more of the equity capital;
12.15.2 with respect to any Person which is a trust or similar entity:
(a) any trustee or other fiduciary of such trust or similar
entity; or
(b) any direct or indirect beneficiary of such trust or similar
entity;
41
12.15.3 with respect to any natural Person, any spouse, parent, child,
grandchild grandparent, brother or sister of such Person.
12.16 "Agreement" means this Agreement, together with the Exhibit hereto.
12.17 "Assets" means the assets described on Exhibit A attached hereto,
including the Real Property and the Plans.
12.18 "Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required
to close.
12.19 "Buyer" shall have the meaning set forth in the first paragraph of
this Agreement.
12.20 "Buyer Indemnitees" shall have the meaning set forth in Section 5.1.
12.21 "Claims Period" shall have the meaning set forth in Section 5.3.4.
12.22 "Closing" means the consummation of the transactions contemplated
hereby.
12.23 "Closing Date" shall have the meaning set forth in Section 2.4.1.
12.24 "Company" shall mean Fort Xxxx Oklahoma Irrigation Fuel Authority,
L.L.C., doing business as Fort Xxxx Fuel Authority, L.L.C.
12.25 "Consent" means a consent, approval, authorization, waiver or
notification from any Person, including any Governmental Authority.
12.26 "Damages" means all losses, claims, damages, costs, fines, penalties,
obligations, payments and Liabilities (including those arising out of any
Action), together with all reasonable costs and expenses (including reasonable
outside attorneys' fees and reasonable out-of-pocket expenses) incurred in
connection with any of the foregoing.
12.27 "Dollars" or "$" means lawful currency of the United States.
12.28 "Easements" means rights-of-way, servitudes, rights of egress and
ingress and other similar rights related to the use or enjoyment of the Assets.
12.29 "Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
12.30 "Environmental Law" means any Law pertaining to health (with respect
to exposure to Hazardous Materials) or the Environment currently in effect in
any or all jurisdictions in which the Sellers own the Assets, including the
Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended, the Federal Water Pollution
Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
42
Act, as amended, the Hazardous & Solid Waste Amendments Act of 1984, as amended,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, the Oil Pollution Act of
1990, and any state and local Laws implementing or comparable to the foregoing
federal Laws.
12.31 "Extended Representations" shall have the meaning set forth in
Section 5.3.4.
12.32 "Gateway Agreements" mean:
(a) First Amended and Restated Transportation Agreement, dated as
of December 1, 1999, by and between GPC and the Company.
(b) Gas Purchase and Sales Agreement, dated as of December 1,
1999, by and between GMC and the Company.
(c) Confirmation Letter Pursuant to Gas Purchase and Sales
Agreement, dated as of October 4, 2000, by and between GMC and the
Company.
12.33 "GMC" shall have the meaning set forth in the first paragraph of this
Agreement.
12.34 "Governmental Authority" means any federal, state or local
government, any of its subdivisions, agencies, authorities, commissions, boards
or bureaus, any federal, state or local court or tribunal and any arbitrator or
arbitral tribunal.
12.35 "GPC" shall have the meaning set forth in the first paragraph of this
Agreement.
12.36 "Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any mixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefore and asbestos or asbestos-containing materials.
12.37 "Indemnitee" shall have the meaning set forth in Section 5.3.1.
12.38 "Knowledge" means (i) with respect to a Person other than an
individual, after due investigation or inquiry, actual knowledge of a particular
fact by a director, manager or officer or by any individual serving in a similar
capacity of such Person or individuals directly reporting to such individuals,
and (ii) with respect to an individual, the actual knowledge of a particular
fact and the knowledge that a reasonably prudent individual could be expected to
discover or otherwise become aware of in the ordinary course of business after
due investigation or inquiry.
12.39 "Law" means any applicable law, statute, or ordinance of any nation
or state, including the United States of America, and any political subdivision
thereof, including any state of the United States of America, any regulation,
policy, protocol, proclamation, or executive order promulgated by any
Governmental Authority, any rule or regulation of any self-regulator
organization such as a securities exchange or public utilities commission, or
any applicable judgment, order, decree, or decision of any court or other
Governmental Authority having the effect of law in any such jurisdiction.
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12.40 "Lien" means any lien, mortgage, deed of trust, security interest,
charge, pledge, retention of title agreement, easement, encroachment, condition,
reservation, covenant or other encumbrance affecting title or the use, benefit
or value of the asset in question.
12.41 "Order" means any order, judgment, injunction, decree, determination
or award of any Governmental Authority.
12.42 "Party" means each of GPC, GMC and Buyer and "Parties" means GPC, GMC
and Buyer collectively.
12.43 "Permit" means any permit, license, certificate (including a
certificate of occupancy), registration, authorization or approval issued by a
Governmental Authority.
12.44 "Person" means any natural person, corporation, partnership, limited
liability company, trust, unincorporated organization or other entity.
12.45 "Plans" means all of Sellers' right, title and interest in and to all
plans, drawing, maps, plats, specifications, surveys, engineering, inspection or
similar reports and other technical descriptions relating to the Assets.
12.46 "Purchase Price" shall have the meaning set forth in Section 2.2.
12.47 "Real Property" means the fixtures, Easements, leases of real
property and all other rights in real property owned, leased or used by Sellers
in connection with the operation of the Assets.
12.48 "Seller Indemnitees" shall have the meaning set forth in Section 5.2.
12.49 "Sellers" shall have the meaning set forth in the first paragraph of
this Agreement.
12.50 "Tax" or "Taxes" means all income, profits, franchise, gross
receipts, capital, sales, use, withholding, value added, ad valorem, transfer,
employment, social security, disability, occupation, property, severance,
production, excise and other taxes, duties and similar governmental charges and
assessments imposed by or on behalf of any Governmental Authority (including
interest and penalties thereon).
12.51 "Third Party Claim" shall have the meaning set forth in Section
5.3.2.
12.52 "Transportation Agreements" mean:
(a) the Transportation Letter Agreement, dated as of June 9,
1998, by and between GPC and Enogex Inc., and
44
(b) the Intrastate Firm Service Agreement, dated as of June 1,
1998, by and between GPC and TRANSOK, LLC.
12.53 "Transporters" shall have the meaning set forth in Section 2.6.
ARTICLE XIII
Purchase and Sale of Assets and Gateway Agreements
13.1 Purchase and Sale of Assets and Gateway Agreements. Subject to the
terms and conditions of this Agreement, Sellers hereby sell, transfer and assign
to Buyer and Buyer purchases from Sellers the Assets and assumes the
Transportation Agreements and the Gateway Agreements.
13.2 Purchase Price. The purchase price (the "Purchase Price") for the
Assets, the Transportation Agreements and the Gateway Agreements is $100,000.00.
13.3 Payment of Purchase Price. On the date hereof (the "Closing Date"),
Buyer shall pay the Purchase Price to GPC by wire transfer of immediately
available funds to the bank account described in wire transfer instructions
provided by Sellers to Buyer.
13.4 Closing.
13.4.1 Closing Date and Effective Time. The effective time of the
Closing shall be 9:00 a.m., Houston, Texas time, on the day after the
Closing Date.
13.4.2 Deliveries by Sellers. At the Closing, Sellers shall deliver to
Buyer the following:
(a) A Xxxx of Sale transferring all of GPC's right, title and
interest in the Assets to Buyer, duly executed by GPC;
(b) An Assignment Agreement transferring all of Sellers' right,
title and interest in the Transportation Agreements and the Gateway
Agreements to Buyer or its designated Affiliate, duly executed by
Sellers;
(c) Consents from the Transporters authorizing the assignment of
the Transportation Agreements to Buyer or its designated Affiliate;
(d) A release from Legacy Bank releasing its security interest in
the Assets, the Transportation Agreements and the Gateway Agreements;
and
(e) Such other documents, instruments and certificates as Buyer
may reasonably request in connection with the transactions
contemplated by this Agreement.
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13.4.3 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Sellers the following:
(a) The payment described in Section 2.3;
(b) Such other documents, instruments and certificates as
Sellers may reasonably request in connection with the transactions
contemplated by this Agreement.
13.5 Expenses. Sellers and Buyer shall each pay their respective expenses
incurred in connection with the negotiation, execution, closing and performance
of this Agreement. Without limitation of the foregoing, Buyer shall be
responsible for and pay all sales, transfer, deed, stamp, notary public and
other similar taxes, duties and transfer fees applicable to the transactions
contemplated by this Agreement (other than stock transfer taxes), including fees
to record transfer documents.
13.6 Imbalances. Within twenty (20) days after the Closing Date, Sellers
shall calculate the gas imbalances owing from or to Enogex Inc. and/or TRANSOK,
LLC ("Transporters"), which calculation shall be made by multiplying the
quantity of such gas imbalance times the Plats Gas Daily Midpoint for Panhandle,
Tx-Okla gas price as of the close of business on the Closing Date. If such
imbalance is owing to Transporters, within such period, Sellers shall deliver to
Buyer a check in the amount of such calculated imbalance plus a statement of the
calculation. If such imbalance is owed by Transporters, Sellers shall deliver to
Buyer an invoice for such amount, including a statement of the calculation and
Buyer shall pay such amount within thee (3) days of such invoice.
ARTICLE XIV
Representations and Warranties of Sellers
Sellers jointly and severally make the following representations and
warranties to Buyer:
14.1 Corporate Organization. GPC is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas. GMC is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Louisiana. Each Seller has all corporate power needed to
enter into the Gateway Agreements, and to own or lease and operate the Assets
and to conduct its business as now conducted.
14.2 Due Qualification. The Sellers are duly qualified to do business and
are in good standing under the laws of each jurisdiction in which the nature of
their respective businesses or assets makes such qualification necessary.
14.3 Authorization; Execution and Validity. This Agreement constitutes the
legal, valid, and binding obligations of each Seller in accordance with its
terms. Each Seller has the absolute and unrestricted right, power, authority,
and capacity to execute and deliver this Agreement and the documents required
herein and to perform their respective obligations under this Agreement and the
documents required herein. The execution, delivery and performance by each
Seller of this Agreement and the consummation by such Seller of the transactions
contemplated hereby to be consummated by it have been duly authorized by all
46
necessary corporate action. This Agreement has been duly and validly executed
and delivered by Sellers, constitutes a valid and binding obligation of each
Seller and is enforceable against each Seller in accordance with its terms,
except to the extent that the enforcement hereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity regardless of whether enforceability is considered in a
proceeding in equity or at law.
14.4 No Conflict; Sellers Consents. The execution, delivery and performance
of this Agreement by each Seller will not (a) violate any Law to which such
Seller is subject, (b) violate any Charter Document, (c) violate any Order to
which such Seller is a party or by which such Seller is bound, (d) other than
the consent of Enogex Inc. and TRANSOK, LLC to assign the Transportation
Agreements to Buyer, which consents have been obtained, require any Consent from
any Person, including any Governmental Authority, (e) breach any contract,
agreement, or Permit of such Seller, or (f) result in the creation of any Lien
on the Assets or the Gateway Agreements.
14.5 Litigation; Orders. There is no Action by any Person or by or before
any Governmental Authority that is pending or, to Sellers' Knowledge threatened,
by, against or affecting the Sellers or any of the Assets or the Gateway
Agreements.
14.6 Brokers. No person is or will become entitled to receive any brokerage
or finder's fee, advisory fee or other similar payment for the transactions
contemplated by this Agreement by virtue of having been engaged by or acted on
behalf of Sellers.
14.7 Condition of Assets. Except as otherwise set forth herein, the Sellers
make no representation or warranty regarding the condition of the Assets, which
Assets are being acquired "as is, where is." Notwithstanding the foregoing, the
Sellers represent that the Assets have been operated in accordance with CFR Part
192 rules of the U.S. Department of Transportation and applicable pipeline
safety standards of the Oklahoma Corporation Commission.
14.8 Title to Assets. GPC has, and at the Closing Buyer will receive, good
and marketable title to all of the Assets, free and clear of any claim or Lien,
except for the Lien, if any, of current taxes not yet due and payable. To the
extent that any of the Assets are held by Sellers under lease agreements or
Easements, Sellers enjoys peaceful and undisturbed possession of such
properties.
14.9 Gateway Agreements and Transportation Agreements. The Gateway
Agreements and the Transportation Agreements are valid and binding and in full
force and effect. There has been no breach of any of the Gateway Agreements or
the Transportation Agreements by the Sellers or, to Sellers' Knowledge, any
other Person, which breach has not been cured or waived. The Sellers have not
received from any other party to any of the Gateway Agreements or the
Transportation Agreements notification that any such agreement is not in full
force and effect, that the Sellers have failed to perform their respective
obligations thereunder to date, or that any other party thereto has not
performed its obligations thereunder to date. No event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
would reasonably be expected to result in a breach or violation of, or default
under, the terms of any of the Gateway Agreements or the Transportation
47
Agreements , and no Gateway Agreement or Transportation Agreement will be
revoked, invalidated or otherwise amended as a result of the consummation of the
transactions contemplated by this Agreement.
14.10 Environmental Matters. All of the Assets are in compliance with all
Environmental Laws and there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, but not limited to,
the release, emission, discharge or disposal of any Hazardous Material, that
could form the basis of any claim against, or violation by the Sellers with
respect to the Assets pursuant to any Environmental Law. No notice,
notification, demand, request for information, citation, summons, complaint or
Order has been received by, and no Action is pending, or to Sellers' Knowledge
threatened by any Person against Sellers with respect to any Environmental Law.
14.11 Permits. There are no Permits owned or held by the Sellers in
connection with the Assets.
14.12 Compliance with Laws. The Assets and the Gateway Agreements are in
compliance with all applicable Laws and the Sellers have not received any
notification from any applicable Governmental Authority that the Assets or the
Gateway Agreements are not in compliance with applicable Laws; and no event has
occurred, and no circumstances or condition exists, that (with or without notice
or lapse of time) would reasonably be expected to constitute or result in a
failure of the Assets or the Gateway Agreements to comply with the terms of any
applicable Laws.
14.13 Taxes. There are no Liens on any of the Assets that arose in
connection with any failure (or alleged failure) to pay any Tax that will
continue to be a Lien against the Assets after Closing.
14.14 Real Property. The only Real Property of the Sellers consists of all
of the Easements necessary for the ownership or operation of the Assets. Sellers
have not received any notice of any (i) plan, study or effort by any Person or
Governmental Authority (ii) intended or proposed Law, or (iii) existing,
proposed or contemplated public improvement plan to modify or realign any street
or highway or eminent domain proceeding, in each case that may impose a Lien
upon, result in a taking of all or any part of, or adversely affect the current
or planned use of, any of the Real Property. Each Easement included in the Real
Property is valid, existing and enforceable; there has not been, and there
currently is not any event (with or without notice, lapse of time or both with
respect thereto) that would result in the termination, impairment or limitation
of any such Easement; no future payments of any kind are due under any Easement
included in the Real Property in order to maintain its existence; each such
Easement is perpetual; and the continuation, validity and enforceability of each
Easement will not be disturbed by the transaction contemplated herein.
ARTICLE XV
Representations and Warranties of Buyer
Buyer makes the following representations and warranties to Sellers:
15.1 Organization; Power and Authority. Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. Buyer has all corporate power needed to execute, deliver
48
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby to be consummated by it.
15.2 Authorization; Execution and Validity. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby to be consummated by it have been duly
authorized by all necessary company action. This Agreement has been duly and
validly executed and delivered by Buyer, constitutes a valid and binding
obligation of Buyer and is enforceable against Buyer in accordance with its
terms, except to the extent that the enforcement hereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity regardless of whether enforceability is considered in a
proceeding in equity or at law.
15.3 No Conflict; Buyer Consents. The execution, delivery and performance
by Buyer of this Agreement will not (a) violate any Law to which Buyer is
subject, (b) violate any Charter Document of Buyer, (c) violate any Order to
which Buyer is a party or by which it is bound, (d) require any Consent from any
Governmental Authority, or (e) breach any material Contract to which Buyer is a
party or by which it is bound.
15.4 Litigation; Orders. There is no Action by any Person or by or before
any Governmental Authority that is pending or, to Buyer's Knowledge threatened
against or affecting Buyer or any of its properties, assets, operations or
business which would, if adversely determined, have a material adverse effect on
Buyer's ability to consummate the transactions contemplated by this Agreement,
nor is Buyer subject to any Order which would have any such effect.
15.5 Brokers. No Person is or will become entitled to receive any brokerage
or finder's fee, advisory fee or other similar payment for the transactions
contemplated by this Agreement by virtue of having been engaged by or acted on
behalf of Buyer.
ARTICLE XVI
INDEMNIFICATION
16.1 Indemnification by Sellers. Subject to the other provisions of this
Article 5, from and after the Closing Date, Sellers shall defend, indemnify and
hold Buyer, its Affiliates and their respective employees, officers, directors
and agents (the "Buyer Indemnitees") harmless from and against any and all
Damages suffered by any Buyer Indemnitee arising out of:
16.1.1 the breach of any representation or warranty made by Sellers in
this Agreement or in any certificate required to be executed and delivered
by Sellers or their respective officers at the Closing pursuant to this
Agreement;
16.1.2 the failure of Sellers to perform any covenant or obligation by
Sellers contained in this Agreement or any other agreement required to be
executed and delivered by Seller at the Closing pursuant to this Agreement;
and
16.1.3 any Actions against any of the Buyer Indemnitees arising out of
the actions or inactions of Sellers with respect to the Assets on or prior
to the Closing Date.
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16.2 Indemnification by Buyer. Subject to the other provisions of this
Article 5, from and after the Closing Date, Buyer shall defend, indemnify and
hold Sellers, their Affiliates and their respective employees, officers,
directors and agents (the "Seller Indemnitees") harmless from and against any
Damages suffered by any Seller Indemnitee arising out of:
16.2.1 the breach of any representation or warranty made by Buyer in
this Agreement or in any certificate required to be executed and delivered
by Buyer or its officers at the Closing pursuant to this Agreement;
16.2.2 the failure of Buyer to perform any covenant or obligation by
Buyer contained in this Agreement or any other agreement required to be
executed and delivered by Buyer at the Closing pursuant to this Agreement;
and
16.2.3 any Actions against any of the Seller Indemnitees arising out
of the actions or inactions of Buyer with respect to the operation of the
Assets or obligations under the Gateway Agreements and Transportation
Agreements after the Closing Date.
16.3 Notice and Resolution of Claims.
16.3.1 Notice. Each person entitled to indemnification pursuant to
Section 5.1 or Section 5.2 (an "Indemnitee") shall promptly give written
notice to the indemnifying Party after obtaining knowledge of any claim
that it may have pursuant to this Article 5; provided, however, the failure
of any Indemnitee to give timely notice thereof shall not affect any of its
rights to indemnification hereunder nor relieve the indemnifying Party from
any of its indemnification obligations hereunder. Such notice shall set
forth in reasonable detail the claim and the basis for indemnification.
16.3.2 Right to Assume Defense. If such claim for indemnity shall
arise from a claim or Action involving a third party (a "Third Party
Claim"), the Indemnitee shall permit the indemnifying Party to assume its
defense. If the indemnifying Party assumes the defense of such Third Party
Claim, it shall take all steps necessary to investigate, defend or settle
such Action and shall, subject to Section 5.4, hold the Indemnitee harmless
from and against any and all Damages caused by or arising out of any
settlement approved by the indemnifying Party or any judgment in connection
with such Third Party Claim. The indemnifying Party shall keep the
Indemnitee informed of the progress of the defense of any such Third Party
Claim. Without the written consent of the Indemnitee, the indemnifying
Party shall not consent to entry of any judgment or enter into any
settlement that does not include an unconditional and complete release of
the Indemnitee by the claimant or plaintiff making the Third Party Claim
without the imposition of any injunction or other equitable relief against
the Indemnitee. The Indemnitee may participate in such defense or
settlement through its own counsel, but at its own expense provided that if
there is an actual conflict of interest between Indemnitee and the
indemnifying Party with respect to such Third Party Claim, the Indemnitee
may retain its own counsel at the indemnifying Party's expense. In the
event that the Indemnitee elects to participate in the defense of a Third
Party Claim, the indemnifying Party and the Indemnitee shall mutually
cooperate and make available to the other witnesses, records and materials
related to the matter. No Third Party Claim that is being defended in good
faith by the indemnifying party shall be settled or compromised by the
Indemnitee without the written consent of the indemnifying Party.
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16.3.3 Failure to Assume Defense. Failure by the indemnifying Party to
notify the Indemnitee of its election to assume the defense of any Third
Party Claim within thirty (30) days after its receipt of notice thereof
pursuant to Section 5.3.1 shall be deemed a waiver by the indemnifying
Party of its right to assume the defense of such Third Party Claim. In such
event, the Indemnitee may defend against such Third Party Claim in any
manner it deems appropriate. The Indemnitee may settle such Third Party
Claim or consent to the entry of any judgment with respect thereto,
provided that it acts in good faith and in a commercially reasonable
manner.
16.3.4 Survival. The Parties indemnity obligations shall be limited to
those claims that accrue within twelve (12) months after the Closing Date
(the "Claims Period"); provided, however, that the Claims Period for any
claim arising from a breach of the representations and warranties set forth
in Sections 3.8, 3.10 and 3.13 (the "Extended Representations") shall
terminate upon the expiration of any applicable statute of limitations
period.
16.4 Limits on Indemnification.
16.4.1 Limit of Liability. The total aggregate liability of Sellers
for any claims for Damages arising under Section 5.1 of this Agreement
(exclusive of Damages arising from the breach of any Extended
Representation) shall not exceed the Purchase Price. For the avoidance of
doubt, the limitations of liability set forth in this Section 5.4 shall not
apply to any Extended Representation.
16.4.2 Consequential Damages. Notwithstanding anything to the contrary
contained in this Agreement, no Party hereto shall be entitled to recover
from any other Party hereto any amount in respect of exemplary, punitive,
special, indirect, consequential, remote, or speculative damages, including
lost profits.
16.4.3 Exclusive Remedy. This Article 5 sets forth the exclusive
remedy owing from Sellers to the Buyer Indemnitees and from Buyer to Seller
Indemnitees that arise from the matters described in Sections 5.1 and 5.2.
Each Party hereby waives any other claim or cause of action that it might
assert against the other Party with respect to the matters described in
Sections 5.1 and 5.2.
16.4.4 Indemnity Payments. All payments made pursuant to this Article
5 (other than interest payments) shall be treated by the Parties on all Tax
Returns as an additional payment or rebate, as the case may be, of the
Purchase Price.
16.4.5 Payment and Assignment of Claims. Upon final determination by
the Parties or by a court of competent jurisdiction that an Indemnitee is
entitled to indemnification under this Article 5, the indemnifying Party
shall promptly pay or reimburse, as appropriate, the Indemnitee for any
Damages to which it is entitled to be indemnified hereunder. Neither Party
nor its Affiliates shall permit any exercise of any right of set-off
against the other Party or its Affiliates until such final determination is
made.
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16.5 Other Indemnitees. Buyer shall cause Buyer Indemnitees, and Sellers
shall cause Seller Indemnitees, to comply with the provisions and to abide by
the limitations set forth in this Article 5.
ARTICLE XVII
Miscellaneous
17.1 Severability. If any provision of this Agreement as applied to any
Party or to any circumstance shall be held invalid, illegal or unenforceable by
any court of competent jurisdiction, (i) the validity, legality and
enforceability of the remaining provisions of this Agreement will remain in full
force and effect and (ii) the application of such provision to any other part or
to any other circumstance shall not be affected or impaired thereby.
17.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the successors, whether by
merger, consolidation or otherwise, and permitted assigns of the Parties;
provided, however, that neither this Agreement nor any of the rights or
obligations thereunder may be assigned by any Party without the prior written
consent of the other Party. Any assignment in violation of this Section 6.2
shall be null and void.
17.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which, when taken together, shall constitute one and the same
agreement.
17.4 Headings. The captions and headings used in this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction or interpretation hereof.
17.5 Waiver. Any of the terms or conditions of this Agreement may be waived
in writing at any time by the Party which is entitled to the benefits thereof.
Neither the failure nor any delay by any Party in exercising any right, power or
privilege under this Agreement or the documents referred to in this Agreement
will operate as a waiver of such right, power or privilege, and no single or
partial exercise of any such right, power or privilege will preclude any other
or further exercise of such right, power or privilege or the exercise of any
other right, power or privilege.
17.6 No Third-Party Beneficiaries. Nothing in this Agreement shall create
or confer upon any Person (including but not limited to any Employees), other
than the Parties or their respective successors and permitted assigns, any legal
or equitable rights, remedies, obligations, liabilities or claims under or with
respect to this Agreement, except as expressly provided herein.
17.7 Notices. Unless otherwise provided, all notices and other
communications hereunder shall be in writing and shall be deemed duly given (a)
on the date of delivery if delivered personally, or by telecopy or
telefacsimile, upon confirmation of receipt, in each case, if on a Business Day,
and otherwise on the next Business Day, (b) on the fifth Business Day following
52
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid, or (c) the second Business Day if delivered by
nationally recognized overnight courier. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the Party to receive such notice:
If to Sellers:
Gateway Energy Marketing Company
Gateway Pipeline Company
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxxx Xxxxxxxx Xxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Buyer:
Navitas Assets, L.L.C.
00000 Xxxx XxXxxxxxx, Xxxxx X
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx and/or Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000)000-0000
with copies to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
6200 Chase Tower
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address or facsimile number for a Party as shall be specified
in writing by that Party.
53
17.8 Governing Law. This Agreement shall be construed in accordance with
and governed by the Laws of the State of Texas applicable to agreements made and
to be performed wholly within such jurisdiction, without regard to conflicts of
law principles.
17.9 Interpretation.
17.9.1 Unless specifically stated otherwise, references to Articles,
Sections and Exhibit refer to Articles, Sections and Exhibit in this
Agreement. References to "includes" and "including" mean "includes without
limitation" and "including without limitation."
17.9.2 No provision of this Agreement shall be interpreted in favor
of, or against, either of the Parties by reason of the extent to which
either such Party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
17.10 Entire Agreement. This Agreement, together with the Exhibit hereto,
constitutes the sole understanding of the Parties with respect to the matters
contemplated hereby and thereby and supersedes and renders null and void all
prior agreements and understandings, written and oral, between the Parties with
respect to the subject matter hereof and thereof. No Party shall be liable or
bound to any other Party in any manner by any promises, conditions,
representations, warranties, covenants, agreements and understandings, except as
specifically set forth herein or therein.
17.11 Amendment. No amendment, modification or alteration of the terms or
provisions of this Agreement, including the Exhibit hereto, shall be binding
unless the same shall be in writing and duly executed by the Party against whom
such amendment, modification or alteration is sought to be enforced.
54
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the date set forth above.
GATEWAY ENERGY MARKETING COMPANY
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
GATEWAY PIPELINE COMPANY
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
NAVITAS ASSETS, L.L.C.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
55
Exhibit A
to the
Asset Purchase Agreement
Pipelines
---------
1. 2 - 4" polyethylene pipelines approximately 644 feet and
related interconnect facilities located in X00, X-00-X, X00X,
Xxxxx Xxxxxx, Xxxxxxxx (Xxxxxx Xxxx Xxx)
Facilities
----------
1. 12" x 3' Peerless Vertical Separator, Model No. 11-112, S/N
6570A and related station piping located in X00, X-00-X, X00X,
Xxxxx Xxxxxx, Xxxxxxxx (Xxxxxx West Station)
2. 16" x 5' Xxxxxx Xxxxx Vertical Separator, Model No. 151, S/N
14750791 and related station piping located in X00, X-00-X,
X00X, Xxxxx Xxxxxx, Xxxxxxxx (Enogex East Station)
3. 6" x 3' Peerless Vertical Separator, Model No. 11-006, S/N
6103A, and related station piping located in X00, X-0-X, X00X,
Xxxxx Xxxxxx, Xxxxxxxx (TRANSOK Station)
56
EXHIBIT E
FORM OF CONSULTING AGREEMENT
CONSULTING AGREEMENT
--------------------
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of
_____________, 2007, by and between Navitas Utility Corporation, a Nevada
corporation (the "Company"), and Gateway Energy Marketing Company, a Louisiana
corporation (the "Consultant").
WHEREAS, the Company has acquired from the Consultant that certain Gas
Purchase and Sales Agreement, dated as of the 1st day of December, 1999, whereby
the Company will sell gas to Fort Xxxx Oklahoma Irrigation Fuel Authority,
L.L.C., doing business as Fort Xxxx Fuel Authority, L.L.C., an Oklahoma limited
liability company ("Fort Xxxx"); and
WHEREAS, the Company desires to retain the Consultant for a period of four
months from the date hereof (the "Term") to provide the Company with the
Consultant's expertise, and the Consultant desires to render such services to
the Company, all upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. Retainer of Consultant. The Company shall retain the Consultant during
the Term to render the Services (defined below) to the Company, and the
Consultant agrees that such retainer shall be subject to the terms and
conditions of this Agreement.
2. Services of Consultant. The services of the Consultant to be provided
under this Agreement (the "Services") during the Term shall be:
(a) Consulting with the Company regarding first-of-the-month
nominations;
(b) Monitoring and advising the Company regarding supply and demand
requirements of Fort Xxxx;
(c) Advising the Company regarding imbalance corrections, and
providing daily gas balancing services for the first two months of the
Term; and
(d) Training the appropriate personnel of the Company regarding the
foregoing.
57
3. Compensation.
1. (a) Billing Rate. On the last day of each month during the Term, the
Company shall pay the Consultant a fee equal to $12,500.00 for the
services performed during such month. The aggregate compensation to be
paid to Consultant during the Term shall be equal to $50,000.00.
2. (b) Expenses. The Company will reimburse the Consultant for reasonable
out-of-pocket expenses incurred in connection with Services rendered to
the Company pursuant to this Agreement, including but not limited to
any travel, lodging, meals, gratuities, transportation, courier
service, photocopying, telecopying, telephone and similar expenses.
Notwithstanding the foregoing, Consultant shall obtain the Company's
prior consent for any travel or entertainment related expenses.
4. Independent Contractor. The parties intend that the Consultant shall be
an independent contractor, and the officers and employees of the Consultant
shall not be deemed employees of the Company. The Consultant acknowledges and
agrees that Consultant shall have no authority to bind the Company to any
contract or sale, and that the Company shall have the right, in its sole
discretion, to decide whether or not to purchase or nominate any gas or take any
action binding upon the Company.
5. Company Property. The Consultant (a) agrees that all memoranda, notes,
research, strategic plans, records, drawings, artwork, or other creative
material or documentation, whether made or compiled by the Consultant alone or
with others, or made available to the Consultant, while working with the
Company, shall be and remain the property of the Company, (b) hereby grants and
assigns to the Company all right, title and interest in any and all of the
foregoing, and all goodwill of the Company's business with respect thereto, to
the Company, and (c) agrees to execute and promptly deliver to the Company such
written instruments or documents, and to do such other acts, as the Company may
request to patent, copyright or otherwise protect any and all of the foregoing
and to vest all rights, title and interest therein in the Company . All such
items shall be considered work made for hire and prepared by the Consultant
within the scope of the Consultant's duties for the Company.
6. Return of Material to Company. The Consultant will deliver to the
Company, upon termination of this Agreement, and at any other time upon the
Company's request, all memoranda, notes, research, strategic plans, records,
drawings, artwork or other creative material or documentation, whether made or
compiled by the Consultant alone or with others or made available to the
Consultant while working with the Company, pertaining to confidential customer
information, trade secrets, confidential information or other inventions and
works of the Company, and all confidential customer information, trade secrets,
confidential information and other inventions and works of the Company in the
Consultant's possession.
7. Confidentiality. Except to the extent necessary to perform the Services
in the ordinary course of business consistent, the Consultant agrees and
acknowledges that all information, whether verbal or in writing, that it
receives concerning the Company, Fort Xxxx or the business activities or either
shall be held in confidence and not disclosed to any third party without the
prior written approval of the Company.
58
8. Termination. The Company shall have the right to terminate this
Agreement and shall have no further obligation hereunder in the event that
Consultant materially fails to perform the Services or otherwise materially
breaches any of its covenants hereunder. Such termination shall be effective
upon delivery of written notice of the breach to the Consultant (specifying the
basis for such failure or breach) and the failure by the Consultant to cure such
breach within fifteen (15) days after receipt of such notice.
9. Miscellaneous Provisions. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns. This
Agreement shall be governed by the laws of the State of Texas. This Agreement
represents the entire agreement of the parties hereto and supersedes all prior
agreements, negotiations, discussions and preliminary agreements. This Agreement
shall not be amended except by written agreement signed by all of the parties
hereto. In the event one or more of the provisions contained in this Agreement
or any application thereof shall be deemed invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions of this Agreement or any other application thereof shall not in any
way be affected or impaired thereby. The application of any provision of this
Agreement may be waived by the person or persons entitled to the benefit
thereof, provided, that no delay or failure on the part of any person in
exercising any right hereunder, and any partial or single exercise thereof,
shall constitute a waiver of any other rights hereunder. Paragraph headings
herein have no legal significance. This Agreement shall not be assignable by
either party without the prior written consent of the other party, except for an
assignment by the Company to any entity to which the Company may transfer
substantially all of its assets.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
Company:
NAVITAS UTILITY CORPORATION
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Consultant :
GATEWAY ENERGY MARKETING COMPANY
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
59
