EXHIBIT (10)(a)
EXECUTION VERSION
Exhibit 10(a)
STOCK PURCHASE AGREEMENT
BY AND AMONG
CMS OIL AND GAS COMPANY,
CMS ENTERPRISES COMPANY,
MARATHON E.G. HOLDING LIMITED
AND
MARATHON OIL COMPANY
OCTOBER 31, 2001
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
1.01 DEFINITIONS..............................................................1
1.02 CONSTRUCTION.............................................................8
ARTICLE II
PURCHASE AND SALE
2.01 TRANSFER OF SHARES.......................................................8
2.02 PURCHASE PRICE...........................................................8
2.03 ESTIMATE OF WORKING CAPITAL..............................................9
2.04 WORKING CAPITAL AND INVENTORY ADJUSTMENTS................................9
2.05 SETTLEMENT STATEMENT.....................................................9
2.06 ADDITIONAL PURCHASE PRICE ADJUSTMENTS...................................11
ARTICLE III
CLOSING
3.01 TIME AND PLACE OF CLOSING...............................................11
3.02 DELIVERIES BY SELLER....................................................12
3.03 DELIVERIES BY BUYER.....................................................12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.01 EXISTENCE AND QUALIFICATION.............................................13
4.02 AUTHORITY, APPROVAL AND ENFORCEABILITY..................................13
4.03 CAPITALIZATION OF THE COMPANIES.........................................13
4.04 NO CONFLICTS............................................................14
4.05 FINANCIAL INFORMATION...................................................15
4.06 MATERIAL CONTRACTS......................................................15
4.07 ABSENCE OF CERTAIN CHANGES..............................................18
4.08 EMPLOYEES...............................................................18
4.09 INSURANCE...............................................................18
4.10 LITIGATION..............................................................19
4.11 LIABILITY FOR BROKERS' FEES.............................................19
4.12 COMPLIANCE WITH LAWS....................................................19
4.13 CONSENTS AND PREFERENTIAL PURCHASE RIGHTS...............................19
4.14 TAXES...................................................................19
4.15 BANK ACCOUNTS...........................................................20
4.16 INTELLECTUAL PROPERTY...................................................21
4.17 DATA ROOM AND INFORMATION...............................................21
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND MARATHON
5.01 EXISTENCE AND QUALIFICATION.............................................21
5.02 AUTHORITY, APPROVAL AND ENFORCEABILITY..................................21
5.03 NO CONFLICTS............................................................22
5.04 INVESTMENT..............................................................22
5.05 FINANCIAL CAPACITY......................................................22
5.06 LIABILITY FOR BROKERS' FEES.............................................22
5.07 NO KNOWLEDGE OF SELLER'S BREACH.........................................22
ARTICLE VI
COVENANTS OF SELLER AND BUYER
6.01 ACCESS..................................................................23
6.02 OPERATION OF BUSINESS...................................................23
6.03 REASONABLE EFFORTS......................................................25
6.04 PRESS RELEASES..........................................................25
6.05 INSURANCE...............................................................26
6.06 SATISFACTION OF SELLER'S CONDITIONS.....................................26
6.07 BREACH NOTICE...........................................................26
6.08 BALANCE SHEET ADJUSTMENTS AND OTHER PRE-CLOSING TRANSFERS...............26
6.09 CONSENTS AND PREFERENTIAL RIGHTS........................................26
6.10 PRESERVATION OF BOOKS AND RECORDS; ACCESS...............................26
6.11 FURTHER ASSURANCES......................................................27
6.12 CASUALTY LOSS...........................................................27
6.13 CHANGE OF NAME..........................................................27
6.14 NO SOLICITATION OF EMPLOYEES............................................27
6.15 ASSIGNMENT OF CONTRACTS.................................................27
6.16 BANK ACCOUNTS...........................................................27
6.17 TREATMENT OF CERTAIN CLAIMS.............................................27
6.18 NOTICES.................................................................28
6.19 HSR FILING..............................................................28
6.20 JOA ELECTION............................................................28
ARTICLE VII
TAX MATTERS
7.01 PREPARATION AND FILING OF TAX RETURNS...................................29
7.02 ACCESS TO INFORMATION...................................................30
7.03 INDEMNIFICATION BY SELLER...............................................31
7.04 BUYER TAX INDEMNIFICATION...............................................31
7.05 TAX INDEMNIFICATION PROCEDURES..........................................31
7.06 CONFLICT................................................................32
7.07 MUTUAL COOPERATION......................................................32
7.08 SURVIVAL................................................................33
7.09 WITHHOLDING.............................................................33
ARTICLE VIII
CLOSING CONDITIONS
8.01 CONDITIONS TO OBLIGATIONS OF SELLER.....................................33
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8.02 CONDITIONS TO OBLIGATIONS OF BUYER......................................34
ARTICLE IX
TERMINATION
9.01 TERMINATION.............................................................36
9.02 EFFECT OF TERMINATION...................................................36
ARTICLE X
INDEMNIFICATION; SCOPE OF REPRESENTATIONS; LIMITATIONS
10.01 INDEMNIFICATION.........................................................37
10.02 INDEMNIFICATION PROCEDURES..............................................39
10.03 ARBITRATION.............................................................40
10.04 EXCLUSIVE REMEDY........................................................40
10.05 INDEPENDENT INVESTIGATION...............................................40
10.06 SCOPE OF REPRESENTATIONS................................................41
ARTICLE XI
MISCELLANEOUS
11.01 CONFIDENTIALITY.........................................................41
11.02 BROKERS.................................................................41
11.03 EXPENSES................................................................42
11.04 NOTICES.................................................................42
11.05 GOVERNING LAW...........................................................43
11.06 WAIVER OF JURY TRIAL....................................................43
11.07 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS................................43
11.08 BINDING EFFECT AND ASSIGNMENT...........................................44
11.09 SEVERABILITY............................................................44
11.10 HEADINGS AND SCHEDULES..................................................44
11.11 SURVIVAL OF REPRESENTATIONS.............................................44
11.12 TIME OF THE ESSENCE.....................................................44
11.13 COUNTERPARTS; FACSIMILE.................................................44
11.14 NO THIRD PARTY BENEFICIARIES............................................44
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SCHEDULES
1.01(a) - Knowledge Persons of Buyer
1.01(b) - Knowledge Persons of Seller
2.02 - Designated Account
2.03(a) - Form of Estimate of Working Capital and M&S Book Value as of
December 31, 2001
2.03(b) - Estimate of the Adjusted Purchase Price as of December 31,
2001
2.03(c) - Estimate of Working Capital as of September 30, 2001
2.05 - Settlement Statement
3.02 - Summary of Indicative Terms and Conditions of the Transition
Services Agreement
4.03 - Capitalization
4.05 - Financial Statements
4.06(a)(i) - Material Contracts
4.06(a)(ii) - Pending Material Contracts
4.06(b) - Directors, Officers and Powers of Attorney
4.06(d) - Matters Relating to Material Contracts
4.06(e) - Matters Relating to Alba PSC and Block D PSC
4.06(f) - Matters Relating to Alba Plant
4.08 - Employees
4.09 - Policies of Insurance
4.10 - Claims and Litigation
4.12 - Compliance with Laws
4.13 - Consents and Preferential Purchase Rights
4.14 - Tax Matters
4.14(j) - IRS Form 8832 Filings for Companies and Alba Companies
4.15 - Bank Accounts
6.01 - Other Contracts
6.02 - Operation of Business
6.15(a) - Form of Assignment and Assumption Agreement
6.15(b) - Agreements to be Assigned
8.01(e)(i) - Legal Opinion of Buyer's Counsel
8.01(e)(ii) - Legal Opinion of Marathon's Counsel
8.01(g) - Certain Approvals (Seller's Closing Conditions)
8.02(c) - Form of Resignation
8.02(f)(i) - Legal Opinion of Seller's Cayman Islands' Counsel
8.02(f)(ii) - Legal Opinion of Seller's Counsel
8.02(f)(iii) - Legal Opinion of Enterprises' Counsel
8.02(g) - Certain Approvals (Buyer's Closing Conditions)
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT"), executed as of
October 31, 2001 (the "EXECUTION DATE"), is by and among CMS Oil and Gas
Company, a Michigan corporation ("SELLER"), CMS Enterprises Company, a Michigan
corporation ("ENTERPRISES"), Marathon E.G. Holding Limited, a company formed
under the laws of the Cayman Islands ("BUYER") and Marathon Oil Company, an Ohio
corporation ("MARATHON"). Seller and Buyer shall be referred to herein each as a
"PARTY" and collectively as the "PARTIES."
RECITALS
A. Seller is the owner of all of the issued and outstanding share
capital of CMS Oil and Gas (International) Ltd., a company formed under the laws
of the Cayman Islands ("CMS INTERNATIONAL"). CMS International is the owner of
all of the issued and outstanding share capital of CMS Oil and Gas (Alba) LDC,
an exempted limited duration company limited by shares formed under the laws of
the Cayman Islands ("CMS ALBA"), CMS Oil and Gas (E.G.) LDC, an exempted limited
duration company limited by shares formed under the laws of the Cayman Islands
("CMS EG LDC") and CMS Oil and Gas (E.G.) LTD, an exempted company limited by
shares formed under the laws of the Cayman Islands ("CMS EG LTD.", together with
CMS Alba and CMS EG LDC, the "COMPANIES").
B. Buyer desires to purchase, and Seller desires to sell to Buyer, or
cause the sale by CMS International to Buyer of, all of the outstanding share
capital of the Companies, upon the terms and subject to the conditions contained
herein.
NOW, THEREFORE, in consideration of the premises, agreements and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
agree, upon the terms and subject to the conditions contained herein, as
follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
1.01 Definitions. Capitalized terms used herein shall have the meaning
ascribed to them in this Article I unless such terms are defined elsewhere in
this Agreement.
"ACTUAL CLOSING INVENTORY VALUE" shall have the meaning ascribed to
such term in Section 2.05(c).
"ACTUAL WORKING CAPITAL AMOUNT" shall have the meaning ascribed to such
term in Section 2.05(g).
"ADJUSTED PURCHASE PRICE" shall have the meaning ascribed to such term
in Section 2.02.
"AFFILIATE" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. The term
"control" as used in the preceding sentence means, with respect to a
corporation, the right to exercise, directly or indirectly, 50% or more of the
voting rights attributable to the shares of the controlled corporation, or with
respect to any Person
other than a corporation, the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of such Person.
The Companies and the Alba Companies shall not be considered Affiliates of Buyer
(or any of its Affiliates) or Seller (or any of its Affiliates), and neither
Buyer (nor its Affiliates) nor Seller (nor its Affiliates) shall be considered
Affiliates of any of the Companies or the Alba Companies.
"AGREEMENT" shall have the meaning ascribed to such term in the
preamble.
"ALBA ASSOCIATES" shall mean Alba Associates LLC, an exempted company
formed with limited liability under the laws of the Cayman Islands.
"ALBA ASSOCIATES LLC AGREEMENT" shall mean that certain Alba Associates
Members Agreement dated January 22, 1996, by and among Alba Associates, CMS
NOMECO Alba LDC, an exempted limited duration company limited by shares
organized under the laws of the Cayman Islands, CMS NOMECO E.G. LDC, an exempted
limited duration company limited by shares organized under the laws of the
Cayman Islands, Moe Oil & Gas Ltd., a corporation organized under the laws of
the Cayman Islands, Globex Offshore Ltd., a corporation organized under the laws
of the Cayman Islands, Samedan LPG, a corporation organized under the laws of
the Cayman Islands and HG Exploration Cayman L.L.C., an exempted limited
liability company limited by shares organized under the laws of the Cayman
Islands.
"ALBA COMPANIES" shall mean Alba Associates and Alba Plant LLC.
"XXXX XXX" shall mean the Operating Agreement made and entered into as
of May 27, 1992 by and between Xxxxxx International Equatorial Guinea, Inc., a
Texas corporation; Xxxxxx Oil & Gas Corporation, a Texas corporation; General
Atlantic Equatorial Guinea Ltd., a Bermuda corporation; Globex International, a
Wyoming company; Moe Oil & Gas Ltd., a Cayman Islands corporation; Nomeco
Equatorial Guinea Oil & Gas Co., a Michigan company; and Samedan of North
Africa, Inc., a Delaware corporation, as amended.
"ALBA PLANT" shall have the meaning ascribed to such term in Section
4.06(f).
"ALBA PLANT LLC" shall mean Alba Plant LLC, an exempted company formed
with limited liability under the laws of the Cayman Islands.
"ALBA PLANT LLC AGREEMENT" shall mean that certain Alba Plant Members
Agreement dated January 22, 1996, by and among Alba Associates, Guinea
Equatorial Oil & Gas Marketing Ltd., a corporation organized under the laws of
the Republic of Equatorial Guinea, and Alba Plant LLC.
"ALBA PSC" shall mean the Production Sharing Contract (Alba), effective
May 2, 1990, by and between The Ministry of Mines and Hydrocarbons of the
Republic of Equatorial Guinea and Xxxxxx International Equatorial Guinea, Inc.,
a Texas corporation, as amended.
"APPROVAL" shall mean an authorization, consent, approval or waiver of,
clearance by, required notice to or registration or filing with, a Governmental
Authority or Person and the expiration or termination of all prescribed waiting
or review periods with respect to any of the foregoing.
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"BASE PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 2.02.
"BLOCK D JOA" shall mean the Joint Operating Agreement (Block D) dated
January 1, 1996 by and between UMC Equatorial Guinea Corporation, a Delaware
corporation, and Yukong Limited, a company incorporated under the laws of the
Republic of Korea, as amended.
"BLOCK D PSC" shall mean the Production Sharing Contract for Block D
dated effective April 17, 1995 by and between the Republic of Equatorial Guinea
and UMC Equatorial Guinea Corporation, a Delaware corporation, as amended.
"BLOCK D RIGHTS OF FIRST REFUSAL" shall have the meaning ascribed to
such term in Section 2.06(a).
"BREACH NOTICE" shall have the meaning ascribed to such term in Section
6.07.
"BUSINESS" shall mean the business and operations of the Companies and
the Alba Companies.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
United States federal or Texas state banking holiday.
"BUYER" shall have the meaning ascribed to such term in the preamble.
"BUYER INDEMNIFIED PARTIES" shall mean Buyer, its Affiliates and their
respective directors, officers, employees, agents and representatives.
"CLAIM NOTICE" shall have the meaning ascribed to such term in Section
10.01(b)(ii).
"CLOSING" shall have the meaning ascribed to such term in Section 3.01.
"CLOSING DATE" shall have the meaning ascribed to such term in Section
3.01.
"CMS ALBA" shall have the meaning ascribed to such term in Recital A.
"CMS ALBA ASSOCIATES SHARES" shall have the meaning ascribed to such
term in Section 4.03(b).
"CMS ALBA PLANT SHARES" shall have the meaning ascribed to such term in
Section 4.03(c).
"CMS EG LDC" shall have the meaning ascribed to such term in Recital A.
"CMS EG LTD." shall have the meaning ascribed to such term in Recital
A.
"CMS INTERNATIONAL" shall have the meaning ascribed to such term in the
Recital A.
"CODE" shall mean the Internal Revenue Code of 1986, and the applicable
Treasury Regulations thereunder.
"COMPANIES" shall have the meaning ascribed to such term in Recital A.
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"CONFIDENTIALITY AGREEMENT" shall have the meaning ascribed to such
term in Section 11.01.
"CREDITORS' RIGHTS" shall have the meaning ascribed to such term in
Section 4.02.
"DATA ROOM" shall mean the data rooms located at the offices of Xxxxxxx
& Xxxxx, Inc. and Seller in Houston, Texas, prepared by Seller to assist Persons
interested in acquiring the Companies with an evaluation of the Companies.
"DEDUCTIBLE" shall have the meaning ascribed to such term in Section
10.01(b)(iv).
"DESIGNATED ACCOUNT" shall have the meaning ascribed to such term in
Section 2.02.
"DOLLARS," "US$" or "$" shall mean the lawful currency of the United
States of America.
"DUE DILIGENCE PERIOD" shall have the meaning ascribed to such term in
Section 6.01.
"ENTERPRISES" shall have the meaning ascribed to such term in the
preamble.
"ENVIRONMENTAL LAW" shall mean any Law issued, promulgated or entered
into by any Governmental Authority of the Republic of Equatorial Guinea relating
to the environment or preservation or reclamation of natural resources.
"ESTIMATED CLOSING INVENTORY VALUE" shall have the meaning ascribed to
such term in Section 2.04(b).
"EXECUTION DATE" shall have the meaning ascribed to such term in the
preamble.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to such term in
Section 4.05.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States of America.
"GOVERNMENTAL AUTHORITY" means any government, governmental agency,
authority, entity or instrumentality or any court thereof.
"HOUSING PROJECT" shall mean a project for the design, fabrication,
construction and installation of 50 homes and one recreational facility,
including related utilities and infrastructure, on a site of approximately 40
acres located in the city of Malabo on Bioko Island in the Republic of
Equatorial Guinea.
"HSR ACT" shall mean the U.S. Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976.
"INDEMNIFIED LOSSES" shall mean any and all Losses reduced by the
amount of any Tax benefit actually realized and by the amount of any insurance
proceeds actually recovered from any Person that is not an Affiliate of any
Person entitled to indemnification hereunder, but only to the extent that the
Person entitled to indemnification did not negligently or intentionally take
actions that materially exacerbated such Losses; provided that Indemnified
Losses shall not include any
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Losses attributable to matters for which an adjustment to the Base Purchase
Price has been made pursuant to Section 2.04 or 2.05.
"INDEMNIFIED PARTY" shall have the meaning ascribed to such term in
Section 10.02.
"INDEMNIFYING PARTY" shall have the meaning ascribed to such term in
Section 10.02.
"INTELLECTUAL PROPERTY" shall mean all trademarks, service marks, trade
names, patents, trade secrets and copyrights, used by any of the Companies or
the Alba Companies that, in each case, is material to the Business.
"INTERCOMPANY AGREEMENTS" shall have the meaning ascribed to such term
in Section 4.06(a)(x).
"KNOWLEDGE" shall mean the actual knowledge of the persons listed in
Schedule 1.01(a), in the case of Buyer, and those listed on Schedule 1.01(b), in
the case of Seller; provided, however, that such persons shall be assumed to
have actual knowledge of items if there is persuasive evidence that such persons
must have had knowledge by virtue of their respective roles and functions.
"LAW" shall mean any constitution, statute, code, regulation, rule,
injunction, judgment, order, decree, ruling (including any agreement with a
Governmental Authority having the force of law), charge or other restriction of
any applicable Governmental Authority.
"LPG" shall mean liquefied petroleum gas.
"LOSSES" shall mean all losses, costs, and expenses, including
attorneys' fees and expenses; provided, however, for the avoidance of doubt,
that any Losses suffered (a) by Alba Associates shall only constitute Losses of
the Companies to the extent of the Companies' percentage ownership of the
outstanding equity of Alba Associates or (b) by Alba Plant LLC shall only
constitute Losses of the Companies to the extent of the Companies' percentage
ownership of the outstanding equity of Alba Associates multiplied by Alba
Associates' percentage ownership of the outstanding equity of Alba Plant LLC.
"M&S BOOK VALUE" shall have the meaning ascribed to such term in
Section 2.03.
"M&S FAIR MARKET VALUE" shall have the meaning ascribed to such term in
Section 2.05(b)).
"MARATHON" shall have the meaning ascribed to such term in the
preamble.
"MATERIAL ADVERSE EFFECT" shall mean an adverse effect on the business,
financial condition or assets of the Companies that results in Losses to Buyer
or the Companies of $2,000,000 or more, excluding any adverse effect to the
extent the same is reflected in the Settlement Statement and excluding matters
(such as, without limitation, decreases in the prices received by the Companies
for natural gas, natural gas liquids, crude oil, condensate or other natural
resources produced) that are general, regional, industry-wide or economy-wide
developments and excluding political events and conditions; provided, however,
for the avoidance of doubt, that the Companies shall only be deemed to suffer
Losses as a result of adverse effects on (a) Alba Associates to the extent of
the Companies' percentage ownership of the outstanding equity of Alba Associates
or (b) Alba Plant LLC to the
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extent of the Companies' percentage ownership of the outstanding equity of Alba
Associates multiplied by Alba Associates' percentage ownership of the
outstanding equity of Alba Plant LLC.
"MATERIAL CONTRACTS" shall have the meaning ascribed to such term in
Section 4.06(a).
"MEASUREMENT DATE" shall have the meaning ascribed to such term in
Section 2.03.
"NOTICE" shall have the meaning ascribed to such term in Section 11.04.
"NOTICE PERIOD" shall have the meaning ascribed to such term in Section
10.02.
"OTHER CONTRACTS" shall have the meaning ascribed to such term in
Section 6.01(d).
"PARTY" or "PARTIES" shall have the meaning ascribed to such term in
the preamble.
"PENDING MATERIAL CONTRACTS" shall have the meaning ascribed to such
term in Section 4.06(a).
"PERMITTED ENCUMBRANCES" shall mean (i) the terms and conditions of the
Material Contracts, the Pending Material Contracts and the Other Contracts, (ii)
matters disclosed in any Schedule to this Agreement, (iii) sales contracts
terminable without penalty upon no more than 30 days' notice to the purchaser of
production; (iv) materialman's, mechanic's, repairman's, employee's,
contractor's, operator's, tax, and other similar liens or charges arising in the
ordinary course of business for obligations that are not yet due; (v) easements,
rights-of-way, servitudes, permits, surface leases and other rights of third
parties in respect of surface operations, to the extent the same do not have a
Material Adverse Effect on any of the Alba PSC, the Block D PSC, the Housing
Project or the Alba Plant; (vi) rights reserved to or vested in a Governmental
Authority having jurisdiction to control or regulate the Alba PSC, the Block D
PSC, the Housing Project or the Alba Plant in any manner whatsoever, and all
Laws of such Governmental Authorities; and (vii) any other matters that do not
materially interfere with the ownership, operation, value or use of the Alba
PSC, the Block D PSC, the Housing Project or the Alba Plant and that would not
be considered material when applying general standards in the international oil
and gas industry.
"PERSON" shall mean an individual, partnership, corporation,
joint-venture, trust, estate, unincorporated organization or association or
other legal entity.
"PRELIMINARY WORKING CAPITAL AMOUNT" shall have the meaning ascribed to
such term in Section 2.03.
"REASONABLE EFFORTS" shall mean the taking by a Party of such action as
would be in accordance with reasonable commercial practices as applied to the
particular matter in question; provided, however, that such action shall not
include the incurrence of unreasonable expense.
"RECORDS" shall mean and include all originals and copies (except where
the context indicates that only originals or copies are being referred to) of
minute books, tax records, agreements, documents, computer files and tapes,
maps, books, records, accounts and files of the Companies relating to the
Companies and the Business.
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"SCHEDULE" shall mean any schedule attached to and made a part of this
Agreement.
"SECOND REQUEST" shall have the meaning ascribed to such term in
Section 6.19.
"SELLER" shall have the meaning ascribed to such term in the preamble.
"SELLER INDEMNIFIED PARTIES" shall mean Seller, its Affiliates and
their respective directors, officers, employees, agents and representatives.
"SETTLEMENT STATEMENT" shall have the meaning ascribed to such term in
Section 2.05(c).
"SHARES" shall have the meaning ascribed to such term in Section
4.03(a).
"TAX" or "TAXES" shall mean any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance,
premium, windfall profits, environmental, customs duties, capital stock, capital
gain, petroleum profits, value added, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, minimum, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not.
"TAX CLAIM" shall mean any Losses arising out of a breach of the
representations and warranties in Section 4.14 or any of the provisions of
Article VII.
"TAX INDEMNIFIED PARTY" shall have the meaning ascribed to such term in
Section 7.05.
"TAX INDEMNIFYING PARTY" shall have the meaning ascribed to such term
in Section 7.05.
"TAX ITEMS" shall have the meaning ascribed to such term in Section
4.14(a).
"TAX RETURN" shall have the meaning ascribed to such term in Section
4.14.
"TAX SETTLEMENT AGREEMENT" shall have the meaning ascribed to such term
in Section 8.01(f).
THIRD PARTY CLAIM" shall mean any claim, action or proceeding made or
brought by any Person who or that is not a Party or an Affiliate of the Party
seeking indemnification.
"TRANSFER TAXES" shall mean all transfer, sales, use, stamp,
registration or other similar Taxes or fees resulting from the transactions
contemplated by this Agreement.
"TRANSITION SERVICES AGREEMENT" shall have the meaning ascribed to such
term in Section 3.02.
"UNCOLLECTED ACCOUNTS RECEIVABLE" shall have the meaning ascribed to
such term in Section 2.05(d).
"WORKING CAPITAL" shall mean the combined total current assets of the
Companies, excluding (a) condensate and LPG inventory and (b) materials and
supplies inventory, less combined total
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current liabilities as defined by GAAP; provided, however, that prepaid Taxes of
the Companies shall not be included as an asset or a liability in Working
Capital.
1.02 Construction.
(a) All article, section, subsection, schedule and exhibit
references used in this Agreement are to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified.
(b) The schedules and exhibits attached to this Agreement
constitute a part of this Agreement and are incorporated herein for all
purposes.
(c) Unless the context of this Agreement clearly requires
otherwise (i) the singular shall include the plural and the plural
shall include the singular wherever and as often as may be appropriate,
(ii) the words "includes" or "including" shall mean "including without
limitation," (iii) the words "hereof," "hereby," "herein," "hereunder"
and similar terms in this Agreement shall refer to this Agreement as a
whole and not any particular section or article in which such words
appear and (iv) any reference to a statute, regulation or law shall
include any amendment thereof or any successor thereto and any rules
and regulations promulgated thereunder.
(d) Currency amounts referenced herein, unless otherwise
specified, are in United States Dollars.
(e) Whenever this Agreement refers to a number of days, such
number shall refer to calendar days unless Business Days are specified.
(f) All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP. References to
GAAP herein shall refer to such principles in effect in the United
States of America as of the date of the statement to which such phrase
refers.
ARTICLE II
PURCHASE AND SALE
2.01 Transfer of Shares. Upon the terms and subject to the conditions
of this Agreement, at the Closing, Buyer agrees to purchase the Shares and to
deliver payment for such Shares as provided in Section 2.02, and Seller agrees
to sell, assign and deliver, or cause CMS International to sell, assign and
deliver, the Shares to Buyer, subject to the receipt of payment for such Shares
as provided in Section 2.02.
2.02 Purchase Price. The consideration to be paid by Buyer to Seller
at Closing for the Shares shall be seven hundred twenty-one million, seven
hundred fifty thousand dollars (US$721,750,000) (the "BASE PURCHASE PRICE"), as
adjusted by the Preliminary Working Capital Amount and the Estimated Closing
Inventory Value according to Section 2.04, the adjustments described in Section
2.06 (the Base Purchase Price, as adjusted, shall be referred to herein as the
"ADJUSTED PURCHASE PRICE") and, if Closing occurs after January 3, 2002,
interest on the Adjusted
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Purchase Price, from and including January 3, 2002 up to but excluding the
Closing Date, calculated at a per annum interest rate of 5%. The Adjusted
Purchase Price (plus interest due thereon, if any) shall be paid by Buyer at
Closing by wire transfer of immediately available funds to the account specified
on Schedule 2.02 (the "DESIGNATED ACCOUNT").
2.03 Estimate of Working Capital. Seller shall deliver to Buyer (a) no
later than five Business Days prior to the Closing Date a statement setting
forth Seller's reasonable estimate of the Working Capital as of 7:01 a.m.
Equatorial Guinea time on January 1, 2002 (the "MEASUREMENT DATE") in the format
set forth in Schedule 2.03(a) (the "PRELIMINARY WORKING CAPITAL AMOUNT") and (b)
one day prior to the Closing Date a statement setting forth Seller's reasonable
estimate, in the format set forth in Schedule 2.03(b), of the Adjusted Purchase
Price (plus interest due thereon, if any). Also attached as Schedule 2.03(c),
for illustrative purposes only, is a completed statement setting forth Working
Capital as of September 30, 2001. The statements delivered pursuant to the first
sentence of this Section 2.03 shall be accompanied by worksheets setting forth
in reasonable detail Seller's calculations used to estimate the Preliminary
Working Capital Amount and shall also state and show the calculation in
reasonable detail of the Estimated Closing Inventory Value (including the book
value of all materials and supplies of the Companies and the Alba Companies as
of the Measurement Date (the "M&S BOOK VALUE")). Seller shall provide Buyer with
reasonable access to the data used to prepare the Preliminary Working Capital
Amount and the worksheet.
2.04 Working Capital and Inventory Adjustments.
(a) If the Preliminary Working Capital Amount is positive, Buyer
shall pay Seller, at the Closing, in addition to the Base Purchase
Price, an amount equal to such Preliminary Working Capital Amount. If
the Preliminary Working Capital Amount is negative, the Base Purchase
Price payment by Buyer to Seller pursuant to Section 2.02 shall be
reduced by the amount of such Preliminary Working Capital Amount.
(b) In addition to the adjustments to the Base Purchase Price set
forth elsewhere herein, the Base Purchase Price shall be increased by
an amount equal to the sum (the "ESTIMATED CLOSING INVENTORY VALUE") of
(i) the amounts of condensate and LPG in inventory (adjusted to account
for the Companies' direct or indirect ownership of such inventory) on
the Measurement Date, as determined pursuant to Section 2.05(a),
multiplied by the lifting price per barrel of condensate and LPG, as
applicable, paid for the last such liftings of condensate and LPG,
respectively, prior to the Measurement Date and (ii) 80% of the M&S
Book Value.
2.05 Settlement Statement.
(a) At 7:01 a.m. Equatorial Guinea time on January 1, 2002,
Seller shall measure the amounts of condensate and LPG in inventory
(adjusted to account for the Companies' direct or indirect ownership of
such inventory) in accordance with prudent practices used in the
international oil and gas industry, and Buyer shall be entitled to have
a representative present at such measurement.
(b) As soon as reasonably practicable, but in any event within 60
days after the Closing Date, Buyer and Seller shall jointly perform an
audit of the materials and supplies
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existing as of the Measurement Date of the Companies and the Alba
Companies in accordance with prudent industry practices. The results of
such audit shall be adjusted for any purchases, sales, uses, transfers
or losses of materials and supplies since the Measurement Date, and the
fair market value of such materials and supplies, as so adjusted (the
"M&S FAIR MARKET VALUE"), shall be calculated based on (i) the
condition of such materials and supplies and (ii) the purchase prices
for such types of materials and supplies at the locations purchased as
of the Measurement Date plus freight, customs charges, applicable taxes
and inspection fees as would be applicable in order to deliver such
materials and supplies to the Republic of Equatorial Guinea as of the
Measurement Date.
(c) Within 120 days following the Closing Date, Seller and Buyer
shall jointly prepare a statement (the "SETTLEMENT STATEMENT") in the
format set forth in Schedule 2.05, which shall provide (i) the Base
Purchase Price, (ii) actual Working Capital as of the Measurement Date
based on actual revenues earned and obligations incurred up to and
including the Measurement Date, subject to the adjustments in Section
2.05(d), (iii) the sum (the "ACTUAL CLOSING INVENTORY VALUE") of (x)
the amounts of condensate and LPG in inventory (adjusted to account for
the Companies' direct or indirect ownership of such inventory) as
calculated pursuant to Section 2.05(a) multiplied by the lifting price
per barrel of condensate and LPG, as applicable, paid for the first
such liftings of condensate and LPG, respectively, after the
Measurement Date, plus (y) the M&S Fair Market Value, (iv) the
Uncollected Accounts Receivable, (v) any additional adjustments
pursuant to Section 2.06 and (vi) interest due on the Adjusted Purchase
Price due pursuant to Section 2.02, if any.
(d) Except for accounts or notes receivable created as a result
of advances to APEGESA On-Offshore Services or nationals of the
Republic of Equatorial Guinea providing services, directly or
indirectly, to the Companies, any accounts or notes receivable as of
the Measurement Date that have not been collected as of the date of the
Settlement Statement (the "UNCOLLECTED ACCOUNTS RECEIVABLE") shall be
deemed to have zero value and will not be included in the Settlement
Statement; provided, however, that, in such event, Buyer shall (i)
assign, or shall cause the Companies to assign, to Seller or Seller's
designee, all rights and remedies available to Buyer or the Companies
with respect to the Uncollected Accounts Receivable in a form
reasonably acceptable to Seller, (ii) cooperate, and shall cause the
Companies to cooperate, in all reasonable collection efforts by Seller
or Seller's designee with respect to the Uncollected Accounts
Receivable and (iii) promptly transmit, or cause the Companies to
promptly transmit, to Seller any proceeds Buyer or the Companies
receive with respect to the Uncollected Accounts Receivable.
(e) If Buyer and Seller shall be unable to agree on the
Settlement Statement within 120 days after the Closing Date, the public
accounting firm of Ernst & Young, or such other nationally recognized
public accounting firm as is mutually acceptable to Buyer and Seller,
shall be engaged to make its determination of any amounts in dispute
(and only such amounts). Each Party shall bear and pay one-half of the
fees and other costs charged by such accounting firm.
(f) If any accounting firm is engaged as provided in Section
2.05(e), Seller and Buyer agree to provide such accounting firm with a
detailed statement itemizing any amounts in dispute and all books,
Records and other information relevant to the
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determination of the amounts in dispute. Each Party shall also be
permitted to provide expert testimony to such accounting firm
supporting such Party's positions, and such accounting firm shall take
such testimony into consideration. Such accounting firm shall be
instructed to use a materiality standard as such firm may determine to
be reasonable under the circumstances, in light of the cost to be
incurred and the amounts at issue. Such accounting firm shall be
instructed to make such calculations as soon as practicable. The final
determination of any of the aforesaid disputed items pursuant to this
Section 2.05(f) shall be binding on the Parties.
(g) If the sum of the actual Working Capital as of the
Measurement Date, as agreed by the Parties or determined by the
aforementioned accounting firm (the "ACTUAL WORKING CAPITAL AMOUNT"),
and the Actual Closing Inventory Value (as agreed by the Parties or
determined by the aforementioned accounting firm) differs from the sum
of the Preliminary Working Capital Amount and the Estimated Closing
Inventory Value, then Buyer shall pay Seller, or Seller shall pay
Buyer, as the case may be, by wire transfer in immediately available
funds, within five Business Days after final determination of the
Actual Working Capital Amount and the Actual Closing Inventory Value,
the sum of (i) such an amount as necessary to cause the net result of
such payment (not including interest due under Section 2.05(g)(ii)),
the Preliminary Working Capital Amount (whether positive or negative)
and the Estimated Closing Inventory Value to equal the sum of the
Actual Working Capital Amount and the Actual Closing Inventory Value
and interest on such amount at a rate of 8% per annum, compounded
monthly, from the Measurement Date to the date of payment.
2.06 Additional Purchase Price Adjustments.
(a) If the rights of first refusal described in item 1 of
Schedule 4.13 (the "BLOCK D RIGHTS OF FIRST REFUSAL") are exercised,
then the total amount otherwise payable by Buyer under Section 2.02
shall be reduced by the amount of $10 million.
(b) The total amount otherwise payable by Buyer under Section
2.02 shall be increased by the amount of any contributions by Seller or
Seller's Affiliates to the capital of the Companies on or after the
Measurement Date through the Closing Date.
ARTICLE III
CLOSING
3.01 Time and Place of Closing. Subject to fulfillment or waiver of
the conditions precedent specified in Sections 8.01 and 8.02, the consummation
of the transactions contemplated by this Agreement (the "CLOSING") shall take
place at the offices of Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxxxx, Xxxxx
commencing at 8:00 a.m. local time (a) on January 3, 2002 (provided, however,
that such date shall be extended through and including, but no later than, April
2, 2002 (i) if the Parties have complied with their obligations hereunder but
Approval under the HSR Act has not yet been received, until receipt of such
Approval or (ii) for any period of time that Seller is attempting to cure a
breach in accordance with the provisions of Section 6.07 or for any period that
the respective Affiliates of Seller are attempting to cure a breach under the
Share Purchase Agreement by and among CMS Methanol Company, Enterprises,
Marathon E.G. Methanol Limited
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and Marathon dated October 31, 2001 or under the Purchase and Sale Agreement by
and between CMS Gas Transmission Company and Marathon dated October 31, 2001),
or (b) on such other date as Buyer and Seller may mutually agree in writing. The
date upon which the Closing occurs shall be referred to herein as the "CLOSING
DATE."
3.02 Deliveries by Seller.
(a) Delivery of Documents. At the Closing, Seller shall deliver
to Buyer:
(i) With respect to the Shares, stock certificates
representing such Shares, accompanied by (A) copies of duly
executed share transfer forms for each Company, (B) copies of
duly executed resolutions of the Board of Directors of each
Company approving the transfer of the Shares, and (C) copies of
each Company's share register reflecting the transfer of the
Shares to Buyer;
(ii) An executed copy of a transition services agreement
based on the term sheet attached as Schedule 3.02 (the
"TRANSITION SERVICES AGREEMENT"); and
(iii) All other documents, instruments and writings
required to be delivered by Seller at the Closing pursuant to the
terms of this Agreement.
(b) Delivery of Records. On the Closing Date (or as soon
thereafter as practicable in the case of Records other than the minute
books and stock record books), Seller shall deliver or cause to be
delivered to Buyer minute books and stock record books of the Companies
and all Records to the extent same are not already in the possession of
the Companies, subject to the following provisions:
(i) Seller may retain the originals of all Records that
contain information relating to the Companies but principally
relate to Seller or its Affiliates (with Buyer to receive copies
thereof), and Seller may retain copies of all Records that
contain information relating to Seller or its Affiliates but
principally relate to the Companies;
(ii) Seller may retain all Records prepared in connection
with the sale of the Shares or the assets of the Companies or the
Alba Companies, including offers received from prospective
purchasers of the Shares or such assets and any information
relating to such offers, and need not deliver to Buyer or grant
Buyer access to any such Records; and
(iii) Seller may retain (with Buyer to receive copies
thereof) all consolidating and consolidated financial information
and all other accounting Records prepared or used in connection
with (A) the preparation of financial statements of the Companies
and (B) the preparation and filing of any Tax Returns.
3.03 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller:
(a) The Adjusted Purchase Price (plus any interest due thereon
under Section 2.02), no later than 1:00 p.m., Houston time, on the
Closing Date, by wire transfer of immediately available funds to the
Designated Account;
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(b) An executed copy of the Transition Services Agreement; and
(c) All other documents, instruments and writings required to be
delivered by Buyer at the Closing pursuant to the terms of this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof as
follows:
4.01 Existence and Qualification. Each of Seller, Enterprises, CMS
International, the Companies and the Alba Companies is a corporation or company
duly organized and validly existing under the laws of the jurisdiction of its
organization. Each of Seller, Enterprises, CMS International, the Companies and
the Alba Companies is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a Material
Adverse Effect. Each of Enterprises, CMS International, the Companies and the
Alba Companies has all requisite power and authority to own, operate and lease
its properties and to carry on the Business as presently conducted by it. Copies
of all of the minute books, including all minutes, consents and other records of
actions taken by the stockholders or shareholders and directors (including any
committee thereof) of the Companies and the Alba Companies, and copies of the
stock or share records of the Companies and the Alba Companies, have been made
available to Buyer for its inspection.
4.02 Authority, Approval and Enforceability. Each of Seller and
Enterprises has all requisite corporate power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement. The
execution and delivery of this Agreement by each of Seller and Enterprises and
the performance of the transactions contemplated hereby by each of Seller and
Enterprises have been duly and validly approved by the boards of directors of
Seller and Enterprises and by all other corporate action, if any, necessary on
behalf of Seller or Enterprises. As of the Closing Date, the resolutions of the
boards of directors of the Companies approving the transfer of their respective
Shares at the Closing shall have been duly and validly adopted by each such
board of directors. This Agreement has been duly executed and delivered on
behalf of each of Seller and Enterprises and constitutes the legal, valid and
binding obligation of each of Seller and Enterprises, enforceable against each
in accordance with its terms, subject to applicable bankruptcy, insolvency or
other similar laws relating to or affecting the enforcement of creditors' rights
generally and to general principles of equity ("CREDITORS' RIGHTS"). At the
Closing all documents required hereunder to be executed and delivered by Seller
will have been duly authorized, executed and delivered by Seller and will
constitute legal, valid and binding obligations of Seller, enforceable in
accordance with their terms, subject to Creditors' Rights.
4.03 Capitalization of the Companies.
(a) CMS International owns beneficially and of record the shares
of share capital of the Companies set forth in Schedule 4.03 (the
"SHARES"). The Shares represent all of the issued and outstanding share
capital of the Companies. All of the Shares are duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in
Schedule 4.03, (i) the Shares are free and clear of all mortgages,
pledges, security interests, liens or
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encumbrances of any kind and are not subject to any agreements or
understandings among any Persons with respect to the voting or transfer
thereof, and (ii) there are no outstanding subscriptions, options,
convertible securities, warrants, calls or other securities granting
rights to purchase or otherwise acquire any securities of the Companies
or any commitments or agreements of any character obligating Seller or
the Companies to issue or transfer any such securities.
(b) CMS Alba owns beneficially and of record 19.08334% of the
issued and outstanding shares of Alba Associates. CMS EG LDC owns of
record 23.45834% of the issued and outstanding shares of Alba
Associates and beneficial ownership of such shares is owned as provided
in Schedule 4.03. CMS EG LTD owns beneficially and of record 11.45833%
of the issued and outstanding shares of Alba Associates. Except as
otherwise set forth in the Alba Associates LLC Agreement, the shares of
Alba Associates owned by CMS Alba, CMS EG LDC and CMS EG LTD
(collectively, the "CMS ALBA ASSOCIATES SHARES") are duly authorized,
validly issued, fully paid and nonassessable. Except as otherwise
provided in the Alba Associates LLC Agreement or as set forth in
Schedule 4.03, (i) the CMS Alba Associates Shares are free and clear of
all mortgages, pledges, security interests, liens or encumbrances of
any kind and are not subject to any agreements or understandings among
any Persons with respect to the voting or transfer thereof and (ii)
there are no outstanding subscriptions, options, convertible
securities, warrants, calls or other securities granting rights to
purchase or otherwise acquire any of the CMS Alba Associates Shares or
any commitments or agreements of any character obligating Alba
Associates to issue or transfer any such securities.
(c) Alba Associates owns beneficially and of record 80% of the
issued and outstanding shares of Alba Plant LLC (the "CMS ALBA PLANT
SHARES"). Except as otherwise set forth in the Alba Plant LLC
Agreement, the CMS Alba Plant Shares are duly authorized, validly
issued, fully paid and nonassessable. Except as otherwise provided in
the Alba Plant LLC Agreement or as set forth in Schedule 4.03, (i) the
CMS Alba Plant Shares are free and clear of all mortgages, pledges,
security interests, liens or encumbrances of any kind and are not
subject to any agreements or understandings among any Persons with
respect to the voting or transfer thereof and (ii) there are no
outstanding subscriptions, options, convertible securities, warrants,
calls or other securities granting rights to purchase or otherwise
acquire any of the CMS Alba Plant Shares or any commitments or
agreements of any character obligating Alba Plant LLC to issue or
transfer any such securities.
4.04 No Conflicts. Except as provided in Schedule 4.13, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein will:
(a) conflict with or result in a breach, default or violation of
the articles of incorporation or other governing documents of Seller,
Enterprises, CMS International, any of the Companies or any of the Alba
Companies;
(b) conflict with or result in a breach, default or violation of,
any material agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which Seller,
Enterprises, CMS International, any of the Companies or any of the Alba
Companies is a party or is subject that would have a Material Adverse
Effect; or
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(c) result in the creation of any lien, charge or other
encumbrance upon any of the properties or assets of any of Enterprises,
CMS International, the Companies or any of the Alba Companies that
would have a Material Adverse Effect.
4.05 Financial Information. Attached as Schedule 4.05 are the
combined, unaudited statements of assets and liabilities of the Companies for
the year ending December 31, 2000 and the nine month period ending September 30,
2001, and the related statements of revenues and direct operating costs and
statements of cash flows relating to revenues and direct operating costs for the
periods then ended (collectively, the "FINANCIAL STATEMENTS"). The Financial
Statements were prepared in accordance with GAAP (except as disclosed in the
notes to the Financial Statements) and fairly present, in all material respects,
the financial condition of the Companies, subject to normal, recurring year end
adjustments and the absence of explanatory footnote disclosures required by
GAAP, and except as set forth on Schedule 4.05.
4.06 Material Contracts.
(a) Except as listed on Schedule 4.06(a)(i) (collectively, the
"MATERIAL CONTRACTS"), none of the Companies or the Alba Companies is a
party to or bound by any lease, agreement or other contract of the type
described below currently in effect (except for those entered into
after the Execution Date and prior to the Closing in accordance with
Section 6.02 and those to be assigned to the Companies or the Alba
Companies prior to Closing in accordance with Section 6.15):
(i) any agreements whereby any of the Companies or the Alba
Companies guarantees any material obligation of Seller, any of
its Affiliates or any other Person;
(ii) any employment agreement between any of the Companies or
the Alba Companies and any expatriates;
(iii) any agreement for capital expenditures or the
acquisition or construction of fixed assets that requires future
payments in excess of US $1,000,000 (or the equivalent in local
currency);
(iv) any collective bargaining agreement with any labor
union;
(v) any agreement granting to any Person a right of first
refusal, option, subscription right or other preferential right
to purchase or acquire any of the Shares;
(vi) agreements, indentures or other instruments relating to
the borrowing, or the guarantee of any borrowing, by any of the
Companies or the Alba Companies;
(vii) any agreement for the purchase or sale of natural gas,
natural gas liquids, crude oil, condensate or associated products
with a term of more than 90 days;
(viii) any agreement for the sale of any asset (other than
sales of natural gas, natural gas liquids, crude oil, condensate
or associated products in the ordinary
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course of business) of any of the Companies or the Alba Companies
for more than US $2,000,000 (or the equivalent in local
currency);
(ix) any agreement that constitutes a lease under which any
of the Companies or the Alba Companies is the lessor or lessee of
real or personal property which lease (A) cannot be terminated
without penalty upon not more than 30 days notice and (B)
involves an annual base rental in excess of US $1,000,000 (or the
equivalent in local currency) or whereby a lease constitutes a
capital lease for Tax or GAAP purposes;
(x) any agreement with Seller or its Affiliates relating to
the provision of goods or services or the payment of funds or the
advancing or borrowing of money (the "INTERCOMPANY AGREEMENTS");
(xi) any agency, consultancy or similar agreement requiring
payment in excess of US $500,000 per annum (or the equivalent in
local currency);
(xii) any agreement concerning a partnership or joint
venture;
(xiii) any commodity futures agreement;
(xiv) any other agreement that (A) involves future payment by
or to any of the Companies or the Alba Companies in excess of US
$1,000,000 (or the equivalent in local currency) and (B) is not
an agreement entered into in the ordinary course of owning,
operating and developing oil and gas properties and marketing
production therefrom;
(xv) any agreement granting or reserving a net profits
interest, overriding royalty interest, production payment, an
incentive compensation plan based on production, or similar
burden on oil and gas production that reduces the proceeds of
production that would otherwise be attributable to the Companies;
(xvi) any agreement pursuant to which the Companies have
acquired or transferred ownership interests in oil and gas
properties (including interests in production sharing contracts),
transferred an interest in the Housing Project, or subjected
interests in oil and gas properties or the Housing Project to any
liens or judgments; or
(xvii) any agreement pursuant to which Alba Plant LLC has
transferred an interest in the Alba Plant or subjected the Alba
Plant to any liens or judgments.
Attached as Schedule 4.06(a)(ii) is a listing of certain
agreements (other than the assignments contemplated by Section 6.15)
that, as of the Execution Date, have not been executed and are under
negotiation (the "PENDING MATERIAL CONTRACTS"). Recent drafts of each
Pending Material Contract have been provided to Buyer, and the draft
date of each such draft so provided is listed on Schedule 4.06(a)(ii).
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(b) Schedule 4.06(b) sets forth the directors, officers and
powers of attorney of or granted by each of the Companies.
(c) True and complete copies of each Material Contract have been
made available to Buyer; provided, however, that many of such documents
are in the Spanish language and Seller makes no representations as to
the accuracy or completeness of any English translations made available
to Buyer.
(d) To the Knowledge of Seller, except as set forth in Schedule
4.06(d), (i) each of the Material Contracts is in full force and
effect, except to the extent that the failure to be in full force and
effect would not have a Material Adverse Effect and (ii) none of the
Companies or the Alba Companies is in default with respect to any
Material Contract other than exceptions to the foregoing that would not
have a Material Adverse Effect.
(e) Except as set forth in Schedule 4.06(e), (i) through the
Execution Date, CMS EG LTD. has (x) been paid all amounts due to CMS EG
LTD. under the Alba PSC and the Block D PSC in accordance with the
percentage interests set forth in and the terms and conditions of the
Alba PSC and the Block D PSC and the other Material Contracts, and (y)
borne expenses in accordance with the percentage interests set forth in
and terms and conditions of the Alba PSC and the Block D PSC and the
other Material Contracts; (ii) to the Knowledge of Seller, except for
matters that have been resolved prior to the Execution Date, the
government of the Republic of Equatorial Guinea, as of the Execution
Date, has not threatened modification or termination of either the Alba
PSC or the Block D PSC, nor has it alleged any breaches of either such
agreement, (iii) CMS EG LTD. has not transferred any interest in either
the Alba PSC or the Block D PSC to any other party or subjected the
Alba PSC or the Block D PSC to any liens or judgments (except for the
Permitted Encumbrances), (iv) no "exclusive operations" or "sole risk
projects" under Article 12 of the Xxxx XXX or under Article 7 of the
Block D JOA have occurred, (v) except as reflected in the Material
Contacts, CMS EG LTD. is not obligated to pay a share of any costs
arising under either (x) the Alba PSC or the Xxxx XXX or (y) the Block
D PSC or the Block D JOA, that is disproportionate to its respective
percentage interests under the Alba PSC or Xxxx XXX or the Block D PSC
or Block D JOA, as applicable, (vi) to the Knowledge of Seller, the
Companies have acquired the rights required pursuant to applicable Law
to construct and operate the Housing Project, (vii) to the Knowledge of
Seller, the Government of the Republic of Equatorial Guinea, as of the
Execution Date, has not threatened termination of any of the rights of
the Companies with respect to the Housing Project and (viii) the
Companies have not transferred any interest in the Housing Project to
any other party or subjected the Housing Project to any liens or
judgments (except Permitted Encumbrances and except for the Pending
Material Contracts listed as item 9 on Schedule 4.06(a)(ii)).
(f) Except as set forth in Schedule 4.06(f), (i) to the Knowledge
of Seller, Alba Plant LLC has acquired the rights required pursuant to
applicable Law to own and operate the Alba Plant in substantially the
same manner in which it has been operated prior to the Execution Date,
(ii) to the Knowledge of Seller, the government of the Republic of
Equatorial Guinea, as of the Execution Date, has not threatened
termination of any of the rights of the Alba Companies with respect to
the LPG plant owned and operated by Alba Plant LLC (the "ALBA PLANT")
and (iii) Alba Plant LLC has not transferred any interest in the
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Alba Plant to any other party or subjected the Alba Plant to any liens
or judgments (except for Permitted Encumbrances).
4.07 Absence of Certain Changes. Since the date of the September 30,
2001 Financial Statements, none of the Companies and the Alba Companies have:
(a) transferred any of its assets, including any right under any
lease or Material Contract or any proprietary right or other intangible
asset, in each case having a value in excess of $1,000,000 except for
fair consideration and in the ordinary course of business;
(b) waived, released, canceled, settled or compromised any debt,
claim or right having a value in excess of $1,000,000 in each case
except in the ordinary course of business;
(c) suffered (i) any damage, destruction or casualty of property
if the anticipated cost to repair such property, after application of
all insurance proceeds with respect thereto, exceeds $5,000,000 in the
aggregate or (ii) any taking by condemnation or eminent domain of any
of its property or assets having a historical cost or fair market value
that exceeds $2,000,000;
(d) conducted any of its affairs in a manner that is outside the
ordinary course of business and inconsistent with its past practices
except (i) for any event described in any of Sections 4.07(a) through
(c) hereof (disregarding the applicable dollar thresholds in any of
such sections), (ii) as otherwise contemplated in this Agreement or
(iii) as results from announcement by Seller of its intention to sell
the Companies;
(e) changed any accounting methods or principles used in
recording transactions on the books of any Company or any of the Alba
Companies or in preparing the financial statements of any Company or
any of the Alba Companies other than as required by GAAP; or
(f) entered into any contract committing itself with respect to
any of the foregoing.
4.08 Employees. Except as set forth on Schedule 4.08, (a) the
Companies and the Alba Companies have no employees, and (b) the Companies and
the Alba Companies do not administer or sponsor any employee pension benefit
plan or employee welfare benefit plan. For the purposes of this Section 4.08, an
employee pension benefit plan includes any plan, fund or program providing
either retirement income to employees, former employees or their beneficiaries
or a deferral of income to employees, former employees or their beneficiaries
beyond termination of employment. Also, for purposes of this Section 4.08, an
employee welfare benefit plan includes any plan, fund or program providing
employees, former employees or their beneficiaries with health, sickness,
accident, disability, death, unemployment or other similar benefits.
4.09 Insurance. Schedule 4.09 contains a list of all material policies
of property damage, liability and other forms of insurance (other than officer's
and director's liability policies) that cover occurrences as of, or claims made
on, the date hereof and maintained by any of the Companies, any
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of the Alba Companies or by Seller or any Affiliate thereof to the extent
applicable to any of the Companies or the Alba Companies.
4.10 Litigation. Except for (a) claims listed in Schedule 4.10, (b)
claims under worker's compensation and similar Laws, (c) routine claims for
employee benefits and (d) claims for money damages alone of less than US$500,000
(or the equivalent in local currency) in respect of any claim, there are no
lawsuits, claims, arbitrative, governmental investigations or other legal
proceedings pending or, to the Knowledge of Seller, threatened against any of
the Companies or any of the Alba Companies or otherwise relating to the conduct
of the Business that would have a Material Adverse Effect.
4.11 Liability for Brokers' Fees. Buyer will not directly or
indirectly incur any liability or expense as a result of any undertakings or
agreements of Seller for brokerage fees, finder's fees, agent's commissions or
other similar forms of compensation in connection with this Agreement or any
agreement or transaction contemplated hereby.
4.12 Compliance with Laws. Except as listed in Schedule 4.12, none of
the Companies or any of the Alba Companies has received any written notice of
any violation of any applicable Law other than such violations as would not have
a Material Adverse Effect. To the Knowledge of Seller, and except as would not
have a Material Adverse Effect, or as set forth in Schedule 4.12, (a) the
Companies and the Alba Companies are in compliance with all applicable Laws and
(b) none of the Companies or any of the Alba Companies has entered into or
agreed to any court decree or order or is subject to any judgment, decree or
order relating to compliance with any applicable Laws.
4.13 Consents and Preferential Purchase Rights. Except as disclosed in
Schedule 4.13, (a) no consents are required to be obtained by Seller or any of
the Companies in connection with the transfer of the Shares to Buyer, and (b)
there are no preferential purchase rights applicable to the transfer of the
Shares to Buyer.
4.14 Taxes. Except as set forth on Schedule 4.14 or as would not have
a Material Adverse Effect:
(a) All returns, reports, and declarations of estimated tax with
respect to any Tax which are required to be filed on or before the
Closing Date by or with respect to the Companies or, to the Knowledge
of Seller, the Alba Companies (the "TAX RETURNS") have been or will be
duly and timely filed, all items of income, gain, loss, deduction,
credit or other items ("TAX ITEMS") required to be included in each
such Tax Return have been so included and all such Tax Items and any
other information provided in each such Tax Return are true, correct,
complete and in accordance with applicable Laws and all such Tax
Returns reflect all liabilities for Taxes for the periods covered by
such Tax Returns, all Taxes shown as due on each such Tax Return have
been or will be 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 or any estimate related
to such Tax, and all Tax withholding and deposit requirements imposed
on or with regard to the Companies and the Alba Companies have been
satisfied in full in all respects.
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(b) There is no investigation or other proceeding pending with
respect to the Companies or the Alba Companies for any Tax in any
jurisdiction where the Companies or the Alba Companies do not file Tax
Returns.
(c) There are no pending audits, assessments or claims for any
Tax deficiency of the Companies or the Alba Companies. There are no
pending claims for refund of any Tax for the Companies or the Alba
Companies.
(d) There are no outstanding agreements, rulings or requests for
rulings applicable to any Tax that are, or if issued would be, binding
upon the Companies or the Alba Companies for any post-Closing period.
(e) The Companies or the Alba Companies do not have in force any
waiver of any statute of limitations in respect of any Tax or any
extension of time with respect to a Tax assessment or deficiency.
(f) There are no liens for any Tax upon any of the assets of the
Companies or the Alba Companies except for liens for Taxes not yet due.
(g) Except as reflected on the Companies' or the Alba Companies'
Tax Returns, there are no elections with respect to any Tax affecting
the Companies or the Alba Companies.
(h) Any Tax required to be withheld by the Companies or the Alba
Companies and paid in connection with amounts paid or owing to any
lender, creditor, employee, contractor, service provider or any other
Person has in fact been withheld and paid in full and all Tax
withholding, reporting and payment obligations have been complied with
in accordance with applicable Law.
(i) Neither the Companies nor the Alba Companies are parties to,
bound by or have any obligation under any Tax sharing agreement, Tax
indemnification agreement, or similar agreement.
(j) The Companies are classified, and have been classified for
more than 12 months prior to the date hereof, as disregarded entities
separate from their respective owners pursuant to Treasury Regulation
Section 301.7701-3. Alba Associates and Alba Plant LLC are classified
as partnerships pursuant to Treasury Regulation Section 301.7701-3.
Copies of Internal Revenue Service Forms 8832 filed by Seller with
respect to the Companies and the Alba Companies are attached hereto as
Schedule 4.14(j).
4.15 Bank Accounts. Schedule 4.15 sets forth the name of each bank and
trust company with which each Company and Alba Company have an account, safe
deposit box or vault and the names of all Persons authorized to draw upon such
account or who have authorized access to any such safe deposit box or vault, and
Buyer acknowledges that Seller may cause these accounts to be closed prior to
Closing; provided the amounts therein are transferred to new accounts for the
applicable company established by Buyer.
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4.16 Intellectual Property. The Companies and the Alba Companies own,
or have the right or license to use, all Intellectual Property used by the
Companies or the Alba Companies in the Business and such rights shall not be
adversely affected by the transactions contemplated under this Agreement.
4.17 Data Room and Information. To Seller's Knowledge and except for
(i) the Permitted Encumbrances (excluding item (i) of the definition of
Permitted Encumbrances) and (ii) matters disclosed in any Schedule to this
Agreement:
(a) all material written data and material written information of
CMS International, the Companies or the Alba Companies relating to the
Companies, the Alba Companies or the Business in CMS International's,
the Companies' or the Alba Companies' possession was contained in the
Data Room or subsequently disclosed or made available to Buyer or
Buyer's Affiliates (excluding any information described in Section
3.02(b)(ii)); and
(b) all written data and written information given to Buyer or
Buyer's Affiliates in the Data Room or subsequently disclosed or made
available by or on behalf of Seller concerning the Companies, the Alba
Companies or the Business is believed by Seller (i) not to be
misleading in any material respect, and (ii) to be accurate in all
material respects when given and by reference to the facts existing at
the time such information or data was created; provided that no
representation or warranty is made or given as to the accuracy or
completeness of any models, projections, opinions, interpretations,
estimates or forecasts (whether contained in any third party document
or otherwise) or any information or data contained in any of the
foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND MARATHON
Buyer and Marathon represent and warrant to Seller as of the date
hereof as follows:
5.01 Existence and Qualification. Buyer is a company duly formed,
validly existing and in good standing under the laws of the Cayman Islands and
Marathon is a corporation duly incorporated, validly existing and in good
standing under the laws of Ohio. Each of Buyer and Marathon has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as presently conducted.
5.02 Authority, Approval and Enforceability. Each of Buyer and
Marathon has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement. The execution and
delivery of this Agreement by each of Buyer and Marathon and the performance of
the transactions contemplated hereby by each of Buyer and Marathon have been
duly and validly approved by the boards of directors of Buyer and Marathon and
by all other action, if any, necessary on behalf of Buyer or Marathon. This
Agreement has been duly executed and delivered on behalf of Buyer and Marathon
and constitutes the legal, valid and binding obligation of Buyer and Marathon
enforceable in accordance with its terms, subject to Creditors' Rights. At the
Closing, all documents required hereunder to be executed and delivered by Buyer
will have been duly authorized, executed and delivered by Buyer and will
constitute legal,
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valid and binding obligations of Buyer, enforceable in accordance with their
terms, subject to Creditors' Rights.
5.03 No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein will:
(a) conflict with or result in a breach, default or violation of
the articles of incorporation or other governing documents of Buyer or
Marathon;
(b) conflict with or result in a breach, default or violation of
any material agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which Buyer or Marathon
is a party or is subject; or
(c) require Buyer or Marathon to obtain or make any waiver,
consent, action, approval clearance or authorization of, or
registration, declaration or filing with, any Governmental Authority,
except for filings under the HSR Act.
5.04 Investment. Marathon is an accredited investor as defined in
Regulation D of the United States Securities Act of 1933 and is causing Buyer to
acquire the Shares for its own account, to be held by Buyer for investment and
not with a view to, or for offer or resale in connection with, a distribution
thereof within the meaning of the Securities Act of 1933 or a distribution
thereof in violation of any applicable securities laws. Each of Buyer and
Marathon, together with its respective directors, executive officers and
advisors, are familiar with investments of the nature of the Shares and the
Business, understand that this investment involves substantial risks, have
adequately investigated the Companies and the Business and have substantial
knowledge and experience in financial and business matters and the international
oil and gas industry such that they are capable of evaluating, and have
evaluated, the merits and risks inherent in purchasing the Shares and are able
to bear the economic risks of such investment.
5.05 Financial Capacity. Marathon will cause Buyer to have cash on
hand or financing commitments that are sufficient to satisfy all of Buyer's
obligations under this Agreement to be performed at the Closing. Neither Buyer
nor Marathon is aware of any event or occurrence that would result in any of the
conditions to its right to funds under such financing commitments not to be
satisfied. Marathon will provide to Seller such documentation as Seller may
reasonably request to confirm Buyer's financial capacity.
5.06 Liability for Brokers' Fees. Seller will not directly or
indirectly incur any liability or expense as a result of any undertakings or
agreements of Buyer or Marathon for brokerage fees, finder's fees, agent's
commissions or other similar forms of compensation in connection with this
Agreement or any agreement or transaction contemplated hereby.
5.07 No Knowledge of Seller's Breach. As of the Execution Date,
neither Buyer nor Marathon has Knowledge of any breach by Seller of Seller's
representations and warranties or covenants hereunder.
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ARTICLE VI
COVENANTS OF SELLER AND BUYER
6.01 Access.
(a) During the period commencing with the Execution Date and
ending at 5:00 p.m., local time, on November 30, 2001 (the "DUE
DILIGENCE PERIOD"), Buyer shall have the right to conduct the
investigation described in Section 6.01(b).
(b) Upon reasonable notice from Buyer to Seller, Seller shall
permit, and shall cause the Companies and the Alba Companies to permit,
Buyer and its authorized employees, agents, accountants, legal counsel
and other representatives to have reasonable access, at Buyer's sole
expense, risk and cost, to the facilities, properties, personnel and
Records of the Companies and the Alba Companies (including all title,
land, geological, geophysical, seismic, engineering, production,
product sales, personnel-related documents and financial records and
data of the Companies and the Alba Companies) for the purpose of
conducting an investigation of their financial condition, corporate
status, business, properties and assets; provided however, that such
investigation shall be conducted in a manner that does not interfere
with normal operations of the Companies and the Alba Companies.
(c) Prior to Closing, (i) Buyer will not contact any Governmental
Authority of the Republic of Equatorial Guinea, or official thereof, or
any employee of Seller, the Companies, the Alba Companies or any of
their Affiliates, without, in each instance, first obtaining the
approval of an authorized representative of Seller (not to be
unreasonably withheld), and (ii) Seller will furnish, or cause the
Companies or the Alba Companies to furnish, Buyer with such additional
financial and operating data and other information pertaining to the
Companies and the Alba Companies and their assets and operations as
Buyer may reasonably request; provided however that nothing in this
Agreement shall obligate Seller to take any action that would disrupt
the normal course of its or any of its Affiliate's, or any of the
Companies' or the Alba Companies', business or violate the terms of any
applicable Law or agreement to which it or any of its Affiliates or any
Company or either Alba Company is a party or to which it or any of its
Affiliates, any Company, either Alba Company or any of their assets are
subject; and provided further, that the confidentiality of any data or
information to which Buyer is given access shall be maintained by Buyer
and its representatives in accordance with Section 11.01.
(d) Seller has made available to Buyer and Buyer shall review
prior to Closing copies of all agreements listed on Schedule 6.01 (the
"OTHER CONTRACTS").
(e) After the expiration of the Due Diligence Period and until
Closing or termination of this Agreement, Buyer shall continue to have
the right to conduct the investigation described in Section 6.01(b) to
the extent necessary for the purposes of preparing for an orderly
transition of ownership of the Companies.
6.02 Operation of Business.
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(a) Except (i) as set forth in Schedule 6.02 or as otherwise
contemplated in this Agreement, (ii) as otherwise consented to by Buyer
in writing (which consent will not be unreasonably delayed, withheld or
conditioned), (iii) as provided for in the Material Contracts, (iv) for
the negotiation and execution of any Pending Material Contract
(provided such Pending Material Contract is substantially in the form
of the draft listed on Schedule 4.06(a)(ii) and blanks are completed
with commercially reasonably terms), (v) compliance with the Block D
Rights of First Refusal and (vi) for curative actions contemplated by
the Decree 2001 listed as item 13 on Schedule 4.06(a)(ii), including
payment of commercially reasonable amounts with respect to the
acquisition of property rights, from the Execution Date through the
Closing Date, Seller will cause each of the Companies and the Alba
Companies to:
(A) conduct Business, in all material respects, in the
ordinary course of business, consistent with past practices;
(B) use its Reasonable Efforts to comply in all material
respects with all applicable Laws and use its Reasonable Efforts
to maintain compliance in all material respects with all of its
material agreements;
(C) continue its existing practices relating to the
maintenance and operation of its assets;
(D) not directly or indirectly purchase, redeem or otherwise
acquire or dispose of any share of its capital stock or any
subscriptions, warrants, options, calls or other commitments or
rights to acquire any shares of its capital stock or agree to
take any steps otherwise affecting or changing its capitalization
(except that CMS International may assign the Shares to Seller);
(E) not merge into or with or consolidate with any other
Person or acquire all or substantially all of the business or
assets of any Person;
(F) not make any change in its governing documents;
(G) not purchase any securities of any Person except for
short-term investments made in the ordinary course of business;
(H) not sell, lease or otherwise dispose of or grant rights
in respect of any of its assets or properties that have a fair
market value in excess of US $2,000,000 (or the equivalent in
local currency) (1) for less than fair market value and (2) other
than in the ordinary course of business;
(I) not create, incur, assume or guarantee any long-term debt
or capitalized lease obligation or, except in the ordinary course
of business and consistent with past practices, incur or assume
any short-term debt;
(J) not mortgage, pledge or subject to any lien, claim,
encumbrances or security interest any of its assets, tangible or
intangible, except for Permitted
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Encumbrances or other similar liens or encumbrances created in
the ordinary course of business consistent with past practices;
(K) not take any action or enter into any commitment with
respect to or in contemplation of any liquidation, dissolution,
recapitalization, reorganization or other winding up of its
Business;
(L) not grant any preferential right of purchase or similar
consent right to the transfer or assignment of the Business or
any of its assets;
(M) not take, or knowingly permit to be taken, any action in
the conduct of the Business that would be contrary to or in
breach of any of the terms or provisions of this Agreement; and
(N) not commit to do any of the foregoing.
(b) In addition to the foregoing, from the Execution Date until
the Closing or the termination of this Agreement, Seller agrees to keep
Buyer reasonably apprised, from time to time, of any significant
developments in the Business and to consult with Buyer prior to
adopting new work plans or budgets. To the extent any disruption occurs
to the Business prior to Closing as a result of the announcement by
Seller of its intention to sell the Companies, Seller agrees to use
Reasonable Efforts to minimize such disruption.
(c) Seller agrees to use Reasonable Efforts to cause Alba Plant
LLC and each of the current owners of the Xxxx XXX to enter into a Gas
Processing Agreement, substantially in the form of the agreement
executed on January 22, 1996, prior to the Closing Date; provided,
however, that the obtaining of such Gas Processing Agreement shall not
be a condition to Buyer's obligation to proceed with the Closing under
Section 8.02.
(d) Seller shall refrain and shall cause the Companies and the
Alba Companies to refrain from taking any action that would change the
classification for U.S. income tax purposes of the Companies or the
Alba Companies as described in Section 4.14(j).
(e) Seller shall cause the Companies not to dividend, loan or
otherwise distribute money to Seller at any time on or after the
Measurement Date until the earlier of termination of this Agreement and
the Closing.
6.03 Reasonable Efforts. Seller will use, and will cause the Companies
to use, their Reasonable Efforts to (i) obtain the satisfaction of the
conditions to the Closing set forth in Section 8.02 hereof and (ii) obtain the
Tax Settlement Agreement described in Section 8.01(f).
6.04 Press Releases. From the Execution Date through the Closing Date,
subject to applicable securities law or stock exchange requirements, each Party
shall promptly advise and consult with, and obtain the consent (which consent
will not be unreasonably delayed, withheld or conditioned) of, the other Party
before issuing, or permitting any of its directors, officers, employees, agents
or its Affiliates to issue, any press release with respect to this Agreement or
the transactions contemplated hereby.
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6.05 Insurance. Seller shall not voluntarily terminate and will
maintain in force and effect through the Closing Date the insurance coverages
set forth on Schedule 4.09 or will cause to be placed in force and effect
comparable insurance coverage. Buyer recognizes that the insurance coverages set
forth on Schedule 4.09 are policies covering the operations and assets of Seller
and its Affiliates and the limits of coverage available thereunder to the
Companies are subject to claims by Seller and its Affiliates. Buyer acknowledges
that no insurance coverage or policy maintained by Seller or its Affiliates will
extend beyond the Closing for the benefit of the Companies or Buyer.
6.06 Satisfaction of Seller's Conditions. Buyer will use its
Reasonable Efforts to obtain the satisfaction of the conditions to the Closing
set forth in Section 8.01 hereof (other than the condition described in Section
8.01(f)).
6.07 Breach Notice. If, prior to the Closing Date, Buyer obtains
Knowledge of a breach of any of Seller's representations and warranties or
covenants contained in this Agreement, Buyer shall notify Seller in writing of
such information (the "BREACH NOTICE") within five Business Days of such
discovery or the day prior to the Closing Date, whichever is earlier. The Breach
Notice shall contain reasonable details regarding the alleged breach and Buyer's
good faith estimate of the potential Losses associated with such breach. In the
event the breach is of a magnitude such that Losses attributable to such breach
(together with other such breaches discovered by Buyer with respect to which
Buyer has delivered the requisite Breach Notices) are reasonably likely to
exceed 5% of the Base Purchase Price and (x) Seller fails to deliver to Buyer a
written undertaking within five Business Days of receipt of such Breach Notice
that Seller intends to cure such breach within 90 days thereafter or (y) Seller
delivers such written undertaking but fails to cure such breach within such 90
days, (i) Buyer may terminate this Agreement upon written notice to Seller
(provided that Buyer has timely given Seller the requisite Breach Notices) and
(ii) Seller may terminate this Agreement upon written notice to Buyer.
6.08 Balance Sheet Adjustments and Other Pre-Closing Transfers. Prior
to the Closing Date, Seller (a) will cause all intercompany accounts (including
all receivables or payables for income tax charges) between any of the Companies
or the Alba Companies and Seller or between any of the Companies or the Alba
Companies and any of Seller's Affiliates to be eliminated without the transfer
of cash from Seller, any of the Companies or the Alba Companies and (b) will
cause all Intercompany Agreements to be terminated, except for agreements
between any of the Companies and (i) the Alba Companies or (ii) Atlantic
Methanol Company LLC or as otherwise provided in the Transition Services
Agreement.
6.09 Consents and Preferential Rights. Seller will use Reasonable
Efforts to obtain any consents listed in Schedule 4.13 prior to the Closing
Date, and Buyer agrees to use Reasonable Efforts to cooperate in such process,
as requested by Seller.
6.10 Preservation of Books and Records; Access. For a period of seven
years after the Closing Date, Buyer shall (a) preserve and retain the Records
and all other corporate, accounting, legal, auditing and other books and records
of the Companies (including any documents relating to any governmental or
non-governmental actions, suits, proceedings or investigations) relating to the
conduct of the business and operations of the Companies prior to the Closing
Date and (b) cause the Companies to permit Seller and its authorized
representatives to have reasonable access thereto on the same basis as applies
to Buyer pursuant to Section 6.01 and to meet with employees of Buyer
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and the Companies on a mutually convenient basis in order to obtain additional
information and explanations with respect to such books and records.
Notwithstanding the foregoing, during such seven-year period, Buyer may dispose
of any such Records that are offered to, but not accepted by, Seller.
6.11 Further Assurances. At and after the Closing, Seller and Buyer
will use Reasonable Efforts to take all appropriate action and execute any
documents or instruments of any kind that may be reasonably necessary to
effectuate the intent of this Agreement.
6.12 Casualty Loss. If, after the date hereof and prior to the Closing
Date, all or any part of the assets of the Companies or the Alba Companies shall
be destroyed by explosion, fire or other casualty, and if the Closing occurs,
Seller shall pay to Buyer at the Closing all sums paid to Seller or any of its
Affiliates by third parties by reason of the destruction of such assets, and in
addition, Seller shall, and shall ensure that its Affiliates shall, assign,
transfer and set over unto Buyer all of the right, title and interest of Seller
or the relevant Affiliate in and to any unpaid awards or other payments from
third parties arising out of such destruction. Seller shall not voluntarily
compromise, settle or adjust any amounts payable by reason of such destruction
without the prior written consent of Buyer. Seller shall use its Reasonable
Efforts to obtain payment from the relevant third party.
6.13 Change of Name. Within 90 days following the Closing Date, Buyer
shall cause the Companies to change their names and to cease using the letters
"CMS" in their names or in any way in connection with the business of Buyer, the
Companies or any of their Affiliates. Buyer shall protect, defend and indemnify
Seller and its Affiliates from and against any Losses arising out of the use of
the letters "CMS" as part of the name of any of the Companies or in connection
with the Business after Closing.
6.14 No Solicitation of Employees. Buyer shall, and shall cause its
Affiliates, for two years from the date hereof, not to directly or indirectly
solicit for employment or hire any employee of Seller or its Affiliates without
Seller's prior written consent.
6.15 Assignment of Contracts. On or before the Closing, Seller shall,
or, if applicable, shall cause its Affiliates to, deliver to Buyer executed
assignment and assumption agreements substantially in the form attached hereto
as Schedule 6.15(a), pursuant to which Seller or, if applicable, its Affiliates,
shall assign to the Companies all rights to the agreements listed on Schedule
6.15(b), and the Companies shall assume all obligations arising under such
agreements.
6.16 Bank Accounts. If permitted by the respective banks, on or before
the Closing, Seller shall, or, if applicable, shall cause its Affiliates to,
cause the "Authorized Drawers" to terminate their authority with respect to the
bank accounts listed on Schedule 4.15 and, to execute such documents as Buyer
may reasonably request in order to designate new Persons selected by Buyer as
"Authorized Drawers" with respect to such bank accounts.
6.17 Treatment of Certain Claims.
(a) Seller shall retain responsibility and liability for, and
shall prosecute, defend, arbitrate or otherwise pursue and resolve the
matters listed as Claims 1, 3, 4 and 7 on Schedule 4.10 and shall be
entitled to retain and receive the benefits of any counterclaims
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associated with any such claims. Furthermore, Seller shall retain
responsibility and liability for, and shall prosecute, defend,
arbitrate or otherwise pursue and resolve, the matter listed as Claim 5
on Schedule 4.10 but only to the extent claims described therein
against the Companies are attributable to periods prior to and
including the Measurement Date. After Closing, Buyer agrees to provide
Seller with full cooperation and access to documents and personnel of
the Companies and the Alba Companies as reasonably requested in
connection with any of the foregoing Claims. After Closing, Buyer shall
have the right to participate in the prosecution, defense, arbitration
or other pursuit or resolution of such matters at its own expense.
(b) Subject to Section 10.01(b)(vi), Buyer shall assume
responsibility and liability for, and shall prosecute, defend,
arbitrate or otherwise pursue and resolve, the matter listed as Claim 2
on Schedule 4.10. Seller agrees to provide Buyer with full cooperation
and access to documents and personnel as reasonably requested in
connection with such matter. Seller shall have the right to participate
in the prosecution, defense, arbitration or other pursuit or resolution
of such matters at its own expense. Buyer shall not voluntarily
compromise or settle such matter without the prior written consent of
Seller, which shall not be unreasonably withheld.
(c) Claims 5, 6 and 8 shall be handled in accordance with the
applicable provisions of Article VII.
6.18 Notices. Seller will deliver the notices described in matter 6 on
Schedule 4.13 prior to Closing.
6.19 HSR Filing. Each Party agrees to (or, if applicable, to cause its
appropriate Affiliate to), (a) make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act with respect to the transactions
contemplated by this Agreement and to pay any fees it is required to pay with
respect thereto as promptly as practicable and in any event within 10 Business
Days of the date of this Agreement, (b) if the Federal Trade Commission or the
Department of Justice, as applicable, issues a request for additional
documentary material and information pursuant to the HSR Act (a "SECOND
REQUEST") in connection with the transactions contemplated by this Agreement,
respond to the Second Request as promptly as possible and, in any event, certify
compliance with the Second Request within 60 days of the date of issue of the
Second Request and (c) complete the review process under the HSR Act to permit
the consummation of the transactions contemplated by this Agreement including
causing the expiration or termination of the applicable waiting periods under
the HSR Act as soon as possible.
6.20 JOA Election. Seller agrees to use Reasonable Efforts to obtain
consents from the current parties to the Xxxx XXX to file a protective election
(in a form to be provided by Buyer) under Section 761 of the Code, reconfirming
their intent, as expressed in the Xxxx XXX, to be excluded from the provisions
of Subchapter K of the Code; provided, however, that the obtaining of such
consents shall not be a condition to Buyer's obligation to proceed with the
Closing under Section 8.02.
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ARTICLE VII
TAX MATTERS
7.01 Preparation and Filing of Tax Returns.
(a) Seller shall prepare all Tax Returns, other than U.S. Tax
Returns, for the Companies and the Alba Companies to be filed for
calendar year 2001 in accordance with all relevant Laws, including
those Tax Returns for which the due date is after the Closing. At least
30 days prior to the due date (including extensions) of each such Tax
Return, Seller shall deliver to Buyer for Buyer's review a copy of such
Tax Return. If the amount of Tax shown to be due on such Tax Return
exceeds the amount reflected as a liability for such Tax on the
Settlement Statement, Seller shall pay to Buyer the amount of such
excess Tax not less than five days prior to the due date of such Tax
Return, or if the amount of Tax shown to be due on such Tax Return is
less than the amount reflected as a liability for such Tax on the
Settlement Statement, Buyer shall pay to Seller the difference not less
than five days prior to the due date of such Tax Return. Buyer shall
cause the Companies and the Alba Companies to file timely such Tax
Return with the appropriate Governmental Authority and to pay timely
the amount of Taxes shown to be due on such Tax Return. Buyer shall
prepare all Tax Returns of the Companies and the Alba Companies for
calendar year 2002, although it is understood that Seller shall prepare
any Tax Return required to be filed between the date of this Agreement
and Closing as necessary. Buyer shall be responsible for all Taxes of
the Companies and the Alba Companies for calendar year 2002. However,
it is expressly understood that Seller shall be liable for all Taxes
associated with the transactions contemplated by this Agreement.
(b) Any Tax Return to be prepared pursuant to the provisions of
this Article VII shall be prepared in a manner consistent with
practices followed in prior years which are in accordance with
applicable Laws, except for changes required by changes in Law.
(c) Seller shall cause the Companies and the Alba Companies not
to make, revoke or amend any Tax election that would affect the period
after the Closing (other than any election that must be made
periodically and that is made consistently with past practice) without
the prior consent of Buyer.
(d) The Buyer Indemnified Parties shall not take any action, or
allow the Companies or the Alba Companies to take any action, on or
after the Closing Date, that would increase the liability of Seller or
its direct or indirect shareholders for Taxes during the period of time
prior to or ending on the Closing Date; provided, however, that nothing
in this Section 7.01(d) shall prevent the Buyer Indemnified Parties
from making any election under Sections 754 or 761 of the Code, and
Seller shall consent to and cooperate with the Buyer Indemnified
Parties in making any such Section 754 elections for periods beginning
on or after January 1, 2002.
(e) Seller shall be responsible for any Transfer Taxes.
(f) The Adjusted Purchase Price shall be allocated among the
assets of the Companies and the Alba Companies in the manner required
by Section 1060 of the Code. To
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facilitate such allocation, Buyer shall deliver to Seller, not later
than December 1, 2001, a schedule setting forth Buyer's proposed
allocation of the Base Purchase Price. Buyer and Seller shall use
Reasonable Efforts to agree upon a final allocation of the Adjusted
Purchase Price, not later than 120 days after Closing. Buyer and Seller
shall timely file IRS Form 8594 with respect to the transactions
contemplated by this Agreement.
(g) For U.S. Tax purposes, Seller intends to effect a liquidation
or deemed liquidation of CMS International prior to the Closing Date
such that, for U.S. Tax purposes, the transactions contemplated by this
Agreement will be a sale of assets by Seller on the Closing Date. Buyer
and Seller acknowledge that, for U.S. Tax purposes, the transactions
contemplated by this Agreement are treated as closed and completed on
the Closing Date, and that all items determined by reference to dates
other than the Closing Date are for administrative convenience and
shall be treated for U.S. Tax purposes, if applicable, as adjustments
to the Purchase Price, and the Parties agree to file their respective
U.S. Tax Returns in a manner consistent with this treatment. For U.S.
Tax purposes, Buyer and Seller shall report their respective allocable
shares of the items of income, gain, loss, deduction and credit of the
Alba Companies based on an interim closing of the books as of January
3, 2002.
7.02 Access to Information.
(a) After the Closing, Seller shall grant to Buyer (or its
designees) access at all reasonable times to all of the information,
books and records relating to the Companies or the Alba Companies
within the possession of Seller (including work papers and
correspondence with taxing authorities), and shall afford Buyer (or its
designees) the right (at Buyer's expense) to take extracts therefrom
and to make copies thereof, to the extent reasonably necessary to
permit Buyer (or its designees) to prepare Tax Returns, to conduct
negotiations with Tax authorities or to defend claims made by Tax
authorities or by third parties, and to implement the provisions of, or
to investigate or defend any claims between the Parties arising under,
this Agreement.
(b) After the Closing, Buyer shall grant or cause the Companies
and the Alba Companies to grant to Seller (or its designees) access at
all reasonable times to all of the information, books and records
relating to the Companies and the Alba Companies within the possession
of Buyer, the Companies or the Alba Companies (including work papers
and correspondence with Tax authorities), and shall afford Seller (or
its designees) the right (at Seller's expense) to take extracts
therefrom and to make copies thereof, to the extent reasonably
necessary to permit Seller (or its designees) to prepare Tax Returns,
to conduct negotiations with Tax authorities, to defend claims made by
Tax authorities or third parties, and to implement the provisions of,
or to investigate or defend any claims between the Parties arising
under, this Agreement.
(c) Each of the Parties will preserve and retain all schedules,
work papers and other documents relating to any Tax Returns of or with
respect to the Companies or the Alba Companies or to any claims, audits
or other proceedings affecting the Companies or the Alba Companies
until the expiration of the statute of limitations (including
extensions) applicable to the taxable period to which such documents
relate or until the final determination of any
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controversy with respect to such taxable period, and until the final
determination of any payments that may be required with respect to such
taxable period under this Agreement.
7.03 Indemnification by Seller. Seller hereby agrees to protect,
defend, indemnify and hold harmless the Buyer Indemnified Parties, the Companies
and the Alba Companies from and against, and agrees to pay (a) any Taxes (net of
any realized Tax benefits associated therewith) of the Companies or the Alba
Companies (but only in an amount proportional to Seller's direct or indirect
interest in the relevant Alba Company for the period to which such Taxes relate)
attributable to the time period prior to January 1, 2002 (including, for the
avoidance of doubt, any Taxes of the Companies or the Alba Companies for the
period prior to January 1, 2002 that are set forth on Schedule 4.14) but only to
the extent such Taxes exceed the amount reserved for Taxes on the Settlement
Statement, (b) any Taxes arising out of the transactions contemplated by this
Agreement (including the transactions described in Section 6.08(a)), (c) any
increase in Taxes of a Buyer Indemnified Party resulting from a breach by Seller
of its representation in Section 4.14(j) or its covenant in Section 6.02(d) and
(d) any Taxes of any corporation (other than the Companies and the Alba
Companies) that is or was an Affiliate of Seller at any time prior to January 1,
2002. Notwithstanding anything to the contrary in this Agreement, no claim for
Taxes shall be permitted under this Section 7.03 unless such claim is first made
before the expiration of the statute of limitations (including applicable
extensions) for the taxable period to which the claim relates or if no such
statute of limitations exists, prior to the date on which such claim is
otherwise barred by law.
7.04 Buyer Tax Indemnification. Subject to 7.03, Buyer agrees to
protect, defend, indemnify and hold harmless the Seller Indemnified Parties from
and against, and agrees to pay (a) any Taxes of the Companies or the Alba
Companies attributable to the time period on or after January 1, 2002 excluding,
for purposes of clarification, any Taxes arising out of the transactions
contemplated by this Agreement and (b) any liability arising from a breach by
Buyer of its covenants in Article VII.
7.05 Tax Indemnification Procedures.
(a) If a claim shall be made by any Tax authority that, if
successful, would result in the indemnification of a Party under this
Agreement (referred to herein as the "TAX INDEMNIFIED PARTY"), the Tax
Indemnified Party shall promptly notify the party obligated under this
Agreement to so indemnify (referred to herein as the "TAX INDEMNIFYING
PARTY") in writing of such fact.
(b) The Tax Indemnified Party shall take such action in
connection with contesting such claim as the Tax Indemnifying Party
shall reasonably request in writing from time to time, including the
selection of counsel and experts and the execution of powers of
attorney; provided that (i) within 30 days after the notice described
in Section 7.05(a) has been delivered (or such earlier date that any
payment of Taxes is due by the Tax Indemnified Party but in no event
sooner than five days after the Tax Indemnifying Party's receipt of
such notice), the Tax Indemnifying Party requests that such claim be
contested, (ii) the Tax Indemnifying Party shall have agreed to pay to
the Tax Indemnified Party all costs and expenses that the Tax
Indemnified Party incurs in connection with contesting such claim,
including reasonable attorneys' and accountants' fees and
disbursements, and (iii) if the Tax Indemnified Party is requested by
the Tax Indemnifying Party to pay the Tax claimed and
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xxx for a refund, the Tax Indemnifying Party shall have advanced to the
Tax Indemnified Party, on an interest-free basis, the amount of such
claim. The Tax Indemnified Party shall not make any payment of such
claim for at least 30 days (or such shorter period as may be required
by applicable law) after the giving of the notice required by Section
7.05(a), shall give to the Tax Indemnifying Party any information
reasonably requested relating to such claim, and otherwise shall
cooperate with the Tax Indemnifying Party in good faith in order to
contest effectively any such claim.
(c) Subject to the provisions of Section 7.05(b), the Tax
Indemnified Party shall only enter into a settlement of such contest
with the applicable taxing authority or prosecute such contest to a
determination in a court or other tribunal of initial or appellate
jurisdiction as instructed by the Tax Indemnifying Party.
(d) If, after actual receipt by the Tax Indemnified Party of an
amount advanced by the Tax Indemnifying Party pursuant to this Section
7.05, the extent of the liability of the Tax Indemnified Party with
respect to the claim shall be established by the final judgment or
decree of a court or other tribunal or a final and binding settlement
with an administrative agency having jurisdiction thereof, the Tax
Indemnified Party shall promptly repay to the Tax Indemnifying Party
the amount advanced to the extent of any refund received by the Tax
Indemnified Party with respect to the claim together with any interest
received thereon from the applicable taxing authority and any recovery
of legal fees from such taxing authority, net of any Taxes as are
required to be paid by the Tax Indemnified Party with respect to such
refund, interest or legal fees. Notwithstanding the foregoing, the Tax
Indemnified Party shall not be required to make any payment hereunder
before such time as the Tax Indemnifying Party shall have made all
payments or indemnities then due with respect to the Tax Indemnified
Party pursuant to this Agreement.
7.06 Conflict. In the event of a conflict between the provisions of
this Article VII and any other provisions of this Agreement, this Article VII
shall control; provided, however, that any claims for indemnification for Taxes
relating to Claim No. 2 on Schedule 4.10 shall be limited by Section
10.01(b)(vi).
7.07 Mutual Cooperation. Seller on the one hand, and the Buyer and the
Companies or the Alba Companies, on the other, shall reasonably cooperate with
each other and with each other's agents, including accounting firms and legal
counsel, in connection with Tax matters relating to the Companies or the Alba
Companies, including (a) preparation and filing of Tax Returns, (b) determining
the liability and amount of any Taxes due or the right to and amount of any
refund of Taxes, (c) examinations of Tax Returns and (d) any administrative or
judicial proceedings in respect of Taxes assessed or proposed to be assessed.
Such cooperation shall include each Party's making all information and documents
in its possession relating to the Companies or the Alba Companies available to
the other Party and retaining all Tax Returns, schedules and work papers and all
material records and other documents relating thereto, until the expiration of
the applicable statute of limitations (including, to the extent notified by any
Party, any extension thereof) of the Tax period to which such Tax Returns and
other documents and information relate. Each of the Parties shall also make
available to the other Party, as reasonably requested and available, personnel
(including officers, directors, employees and agents) responsible for preparing,
maintaining, and interpreting information and documents relevant to Taxes, and
personnel reasonably required as witnesses or for
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purposes of providing information or documents in connection with any
administrative or judicial proceeding relating to Taxes. Each of the Parties
shall exert all appropriate efforts to preserve the confidentiality of all
non-public information and documents obtained or used in connection with such
cooperation or assistance. Any Party requesting any such cooperation or
assistance shall promptly reimburse any other Party providing any such
cooperation or assistance for the reasonable expenses incurred by such other
Party with respect thereto. Notwithstanding anything to the contrary in this
Agreement, neither Seller nor Buyer shall be required to provide to the other
party all or any portion of a U.S. consolidated federal income Tax Return filed
by the respective consolidated group in which Seller or Buyer is included.
7.08 Survival. The covenants of the Parties contained in this Article
VII shall survive the Closing and shall continue in full force and effect until
all applicable statutes of limitations, including waivers and extensions, have
expired with respect to the matters addressed therein, and if no statute of
limitations exists, until such matters are finally settled. Notwithstanding the
foregoing, any such covenant as to which a bona fide claim relating thereto is
asserted in writing (which states with specificity the basis therefor) during
such survival period shall, with respect only to such claim, continue in force
and effect beyond such survival period pending resolution of the claim.
7.09 Withholding. Buyer shall be entitled to withhold from any payment
made to Seller of the Adjusted Purchase Price and shall pay over to the
appropriate Governmental Authority, the amount of any Taxes specifically
required to be withheld from such payments pursuant to the Tax Settlement
Agreement, if any such agreement is obtained, with the Republic of Equatorial
Guinea.
ARTICLE VIII
CLOSING CONDITIONS
8.01 Conditions to Obligations of Seller. The obligations of Seller to
proceed with the Closing are subject to the satisfaction at or prior to the
Closing of all of the following conditions, any one or more of which may be
waived in writing in whole or in part by Seller (which waiver shall be deemed to
constitute a waiver of any liability Buyer may have under this Agreement with
respect to the event or condition causing such condition not to be satisfied at
the Closing):
(a) Compliance. Buyer and Marathon shall have complied in all
material respects with their covenants and agreements contained herein,
and Buyer's and Marathon's representations and warranties contained
herein, or in any certificate or similar instrument required to be
delivered by or on behalf of Buyer and Marathon pursuant hereto, shall
be true in all material respects on and as of the Closing Date, with
the same effect as though made at such time;
(b) Officers' Certificate. Seller shall have received
certificates dated as of the Closing Date and signed by (i) a Director,
President or Vice President of each of Buyer and Marathon, in his
representative capacity, to the effect that the conditions specified in
Section 8.01(a) have been fulfilled and (ii) the Secretary or Assistant
Secretary of each of Buyer and Marathon, in his representative
capacity, certifying the accuracy and completeness of the copies of, as
well as the current effectiveness of, the resolutions to be attached
thereto of the Board of Directors (or any committee thereof) of Buyer
or Marathon, as applicable, authorizing the execution, delivery and
performance of this Agreement and the
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consummation of the transactions contemplated herein, as well as to the
incumbency of the officers executing this Agreement on behalf of Buyer
or Marathon, as applicable, and any documents to be executed and
delivered by Buyer or Marathon, as applicable, at the Closing;
(c) No Orders. No order, writ, injunction or decree shall have
been entered and be in effect by any court of competent jurisdiction or
any governmental or regulatory instrumentality or authority, and no
statute, rule, regulation or other requirement shall have been
promulgated or enacted and be in effect, that restrains, enjoins or
invalidates the transactions contemplated hereby;
(d) No Suits. No suit or other proceeding shall be pending or
threatened by any third party before any court or governmental agency
seeking to restrain or prohibit or declare illegal, or seeking
substantial damages in connection with, the transactions contemplated
by this Agreement;
(e) Legal Opinion. Seller shall have received legal opinions
addressed to it from legal counsel of Buyer and of Marathon in the
forms attached hereto as Schedules 8.01(e)(i) and 8.01(e)(ii), to the
effect that this Agreement, and all other Closing documents, have been
duly authorized by Buyer or Marathon, as applicable;
(f) Tax Settlement Agreement. Seller shall have received from the
government of the Republic of Equatorial Guinea an executed statement
("TAX SETTLEMENT AGREEMENT") in form satisfactory to the Seller stating
that the Tax liabilities (if any) of the Seller, the Companies and the
Alba Companies with respect to the transactions contemplated by this
Agreement have been settled in full and no additional Taxes are owed
with respect to such transactions.
(g) Approvals. All Approvals (without any adverse conditions or
obligations) and waivers of preferential purchase and similar rights of
third parties in connection with the transactions contemplated by this
Agreement listed on Schedule 8.01(g) and all other Approvals required
by Law shall have been satisfied or obtained.
8.02 Conditions to Obligations of Buyer. The obligations of Buyer to
proceed with the Closing are subject to the satisfaction at or prior to the
Closing of all of the following conditions, any one or more of which may be
waived in writing in whole or in part by Buyer (which waiver shall be deemed to
constitute a waiver of any liability Seller may have under this Agreement (other
than liability for matters specified in a duly delivered Breach Notice) with
respect to the event or condition causing such condition not to be satisfied at
the Closing):
(a) Compliance. Seller and Enterprises shall have complied in all
material respects with their covenants and agreements contained herein,
and Seller's and Enterprises' representations and warranties contained
herein or in any certificate or similar instrument required to be
delivered by or on behalf of Seller and Enterprises pursuant hereto,
shall be true and correct in all material respects on and as of the
Closing Date, with the same effect as though made at such time except
to the extent Seller has been unable to cure a breach identified by
Buyer in a Breach Notice; provided that if a representation or warranty
is expressly made only as of a specific date, it need only be true and
correct in all material
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respects as of such date; provided, however, that Buyer's right not to
proceed with the Closing as a result of a breach of Seller's or
Enterprises' representations and warranties shall only arise in the
event that Buyer has a right to terminate this Agreement pursuant to
Section 6.07; and provided, further, that any failure of Seller's or
Enterprises' representations and warranties contained herein to be true
and correct or any breach of compliance by Seller or Enterprises with
its covenants herein, in either case, due solely to the exercise of the
Block D Rights of First Refusal and Seller's compliance therewith shall
be disregarded for purposes of this Section 8.02;
(b) Officers' Certificate. Buyer shall have received a
certificate dated as of the Closing Date and signed by (i) the
Director, President or Vice President of each of Seller and
Enterprises, in his representative capacity, to the effect that the
conditions specified in Section 8.02(a) have been fulfilled and (ii)
the Secretary or Assistant Secretary of each of Seller and Enterprises,
in his representative capacity, certifying the accuracy and
completeness of the copies of, as well as the current effectiveness of,
the resolutions to be attached thereto of the Board of Directors (or
any committee thereof) of Seller authorizing the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated herein, as well as to the incumbency of the
officers executing this Agreement on behalf of Seller and any documents
to be executed and delivered by Seller at the Closing;
(c) Resignations. Seller shall have delivered to Buyer (i)
resignations substantially in the form attached hereto as Schedule
8.02(c), effective as of the Closing Date, of all of the members of the
boards of directors (or similar governing bodies), all officers of the
Companies and those members of the boards of directors and officers of
the Alba Companies appointed by Seller or its Affiliates, and (ii)
appointments, in a form reasonably satisfactory to Buyer, appointing
Buyer's designees to the vacant positions created by such resignations;
(d) No Orders. No order, writ, injunction or decree shall have
been entered and be in effect by any court of competent jurisdiction or
any governmental or regulatory instrumentality or authority, and no
statute, rule, regulation or other requirement shall have been
promulgated or enacted and be in effect, that restrains, enjoins or
invalidates the transactions contemplated hereby;
(e) No Suits. No suit or other proceeding shall be pending or
threatened by any third party before any court or governmental agency
seeking to restrain or prohibit or declare illegal, or seeking
substantial damages in connection with, the transactions contemplated
by this Agreement;
(f) Legal Opinion. Buyer shall have received legal opinions
addressed to it from Seller's and Enterprises' legal counsel in the
forms attached hereto as Schedule 8.02(f)(ii) and 8.02(f)(iii), to the
effect that this Agreement, and all other Closing documents, have been
duly authorized by Seller or Enterprises, as applicable and a legal
opinion of Seller's Cayman Islands legal counsel in the form attached
hereto as Schedule 8.02(f)(i) as to the effectiveness of the transfer
of the Shares; and
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(g) Approvals. All Approvals (without any adverse conditions or
obligations) and waivers of preferential purchase and similar rights of
third parties in connection with the transactions contemplated by this
Agreement listed on Schedule 8.02(g) and all other Approvals required
by Law shall have been satisfied or obtained.
(h) Methanol Closing. The closing of the transactions
contemplated under the Share Purchase Agreement by and between CMS
Methanol Company, Marathon and an Affiliate of Marathon, dated October
31, 2001 shall have occurred.
(i) Casualty Loss. None of the Companies or the Alba Companies
shall have experienced any casualty events between the Execution Date
and the Closing Date resulting in Losses exceeding, in the aggregate,
an amount equal to 5% of the Adjusted Purchase Price.
(j) Bank Consent or Waiver. Seller shall have delivered to Buyer
(i) a copy of the written consent of its lenders under the Credit
Agreement (as defined in Schedule 4.03(a)) to the transactions
contemplated hereby, (ii) a copy of a written waiver from such lenders
of any rights with respect thereto under the Credit Agreement or (iii)
a copy of a letter from such lenders indicating that the transactions
contemplated hereby do not violate the Credit Agreement.
ARTICLE IX
TERMINATION
9.01 Termination. This Agreement may be terminated in the following
instances:
(a) by Seller, if through no fault of Seller, the Closing does
not occur on or before January 3, 2002 (or April 2, 2002, if the
Closing is extended pursuant to Section 3.01);
(b) by Buyer, if through no fault of Buyer, the Closing does not
occur on or before (i) January 3, 2002 or (ii) April 2, 2002, if Seller
has delivered the written undertaking referenced in Section 6.07 or if
the Closing is extended pursuant to Section 3.01;
(c) by Seller or Buyer, as applicable, in accordance with Section
6.07; or
(d) at any time by the mutual written agreement of Buyer and
Seller.
9.02 Effect of Termination. The following provisions shall apply in
the event of a termination of this Agreement:
(a) If this Agreement is terminated by either Party for any
reason except pursuant to an express right to do so set forth herein,
the other Party shall be entitled to exercise all rights and remedies
available at law or in equity as a result of such wrongful termination;
provided in no event shall such other Party ever be entitled to any
consequential or speculative damages including lost profits and,
provided further, that if this Agreement is terminated by either Party
due to the failure of the conditions to the obligations of such Party
to close in Article VIII to be satisfied and the other Party has
exercised Reasonable Efforts to satisfy such conditions, any recovery
for claims arising in connection therewith shall be
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limited to actual out-of-pocket expenses actually incurred by the
terminating Party in connection with this Agreement prior thereto. Upon
termination of this Agreement by Seller pursuant to an express right to
do so set forth herein, Seller shall be free to enjoy immediately all
rights of ownership of the Shares and to sell, transfer, encumber and
otherwise dispose of the Shares to any Party without any restriction
under this Agreement.
(b) Seller and Buyer hereby agree that the provisions of Sections
6.14, 9.02 and Articles X and XI shall survive any termination of this
Agreement pursuant to the provisions of this Article IX.
ARTICLE X
INDEMNIFICATION; SCOPE OF REPRESENTATIONS; LIMITATIONS
10.01 Indemnification.
(a) Subject to the limitations of this Article X, Seller agrees
to indemnify, defend and hold harmless the Buyer Indemnified Parties
from and against any and all Indemnified Losses resulting from or
arising out of any of the following:
(i) any breach of any of the representations and warranties
of Seller contained in this Agreement or in any instrument
executed pursuant hereto;
(ii) any breach of any covenant of Seller contained in this
Agreement; and
(iii) out-of-pocket costs incurred by Buyer in prosecuting,
defending, arbitrating or otherwise pursuing and resolving the
matter listed as Claim 2 on Schedule 4.10.
(b) Notwithstanding anything to the contrary in Section 10.01(a),
in no event shall any amounts be recovered from Seller or any of its
Affiliates:
(i) relating to any breach of a representation or warranty or
covenant by Seller of which Buyer had Knowledge prior to the
Closing Date and, with respect to such breach, Buyer failed to
timely provide a Breach Notice to Seller in accordance with
Section 6.07;
(ii) for any matter under Section 10.01(a) for which a
written notice of claim specifying in reasonable detail the
specific nature of and specific basis of the Losses and the
estimated amount of such Indemnified Losses ("CLAIM NOTICE") is
not delivered to Seller prior to the close of business on the day
24 months following the Closing Date, and the indemnities granted
by Seller in Section 10.01(a) shall terminate on such date;
provided, however, that such indemnities shall survive with
respect only to the specific matter that is the subject of any
Claim Notice delivered in good faith in compliance with the
requirements of this Section 10.01(b)(ii) prior to such 24 month
anniversary until the earlier to occur of (x) the date on which a
final nonappealable resolution of the matter described in such
Claim Notice has been
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reached or (y) the date on which the matter described in such
Claim Notice has otherwise reached final resolution;
(iii) under Section 10.01(a) for any Tax Claim, Buyer's
exclusive remedy for any Tax Claim being set forth in Article
VII, which shall not be subject to any Deductible or maximum
claim amount;
(iv) for any Indemnified Losses resulting from matters
described in Section 10.01(a)(i) until the aggregate amount of
Indemnified Losses incurred by the Buyer Indemnified Parties in
respect of all matters giving rise to such Indemnified Losses
exceeds US$2,000,000 (the "DEDUCTIBLE") in which event Seller
will be obligated, subject to the other provisions of this
Section 10.01(b), to indemnify the Buyer Indemnified Parties to
the extent and only to the extent such Indemnified Losses exceed
the Deductible;
(v) for any Indemnified Losses resulting from matters
described in Section 10.01(a)(i) that in the aggregate exceed an
amount equal to 20% of the Adjusted Purchase Price (including the
Deductible); provided, however, that this Section 10.01(b)(v)
shall not apply to Indemnified Losses arising from a breach of
Seller's representations or warranties set forth in Sections
4.03, 4.06(e) or 4.06(f) or to actions grounded in fraud. For the
avoidance of doubt, the limitation described in this Section
10.01(b)(v) permits a maximum possible recovery by Buyer under
Section 10.01(a)(i) (other than Indemnified Losses arising from a
breach of Seller's representations or warranties set forth in
Section 4.03, 4.06(e) or 4.06(f) or actions grounded in fraud) of
an aggregate amount equal to 20% of the Adjusted Purchase Price
minus the Deductible;
(vi) for any Indemnified Losses resulting from matters
described in Section 10.01(a)(iii) in excess of US$10,000,000;
and
(vii) due to the failure of any representation or warranty of
Seller contained herein to be true and correct or the breach by
Seller of any covenant contained herein due solely to the Block D
Rights of First Refusal or Seller's compliance therewith.
In addition to the foregoing limitations of this Section 10.01(b),
except for actions grounded in fraud, the maximum amount in the
aggregate that the Buyer Indemnified Parties shall be able to recover
from Seller or any of its Affiliates for any and all Indemnified Losses
resulting from matters described in Section 10.01(a)(i) or
10.01(a)(iii) (including with respect to Sections 4.03, 4.06(e) and
4.06(f)), shall in no event exceed an amount equal to 100% of the
Adjusted Purchase Price.
(c) Subject to the limitations of this Article X, Buyer agrees to
indemnify, defend and hold harmless the Seller Indemnified Parties from
and against any and all Indemnified Losses resulting from or arising
out of any of the following:
(i) any breach of any of the representations and warranties
of Buyer contained in this Agreement or in any instrument
executed pursuant hereto;
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(ii) any breach of any covenant of Buyer contained in this
Agreement; and
(iii) any Third Party Claim in respect of the conduct of the
Business or any part thereof, and any liability or obligation of
the Companies that arises after the Closing Date including, but
not limited to, all obligations to properly plug and abandon all
xxxxx now or hereafter located on the property subject to any
Material Contracts (regardless of whether any such obligation to
plug and abandon is attributable to periods of time prior to or
after the Closing Date) and the obligation to pay all costs and
expenses incurred with respect to the Business after the Closing
Date, but only to the extent that such Third Party Claim did not
result from the breach of a warranty or representation of Seller
made pursuant hereto.
Notwithstanding anything to the contrary contained in this Section
10.01(c), in no event shall any amounts be recovered from Buyer under
this Section 10.01(c) for any Tax Claim, Seller's exclusive remedy with
respect to Tax Claims being set forth in Article VII.
(d) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall Indemnified Losses include any exemplary,
punitive, special, indirect, consequential, remote or speculative
damages.
10.02 Indemnification Procedures. Except for claims for indemnification
pursuant to Section 10.01(a)(iii), which shall be resolved pursuant to Section
10.03, all claims for indemnification under Article X shall be asserted and
resolved pursuant to this Section 10.02. Any Person claiming indemnification
hereunder is hereinafter referred to as the "INDEMNIFIED PARTY" and any Person
against whom such claims are asserted hereunder is hereinafter referred to as
the "INDEMNIFYING PARTY." In the event that any Indemnified Losses are asserted
against or sought to be collected from an Indemnified Party by a third party,
said Indemnified Party shall with reasonable promptness provide to the
Indemnifying Party a Claim Notice. The Indemnifying Party shall have 30 days
from the personal delivery or receipt of the Claim Notice (the "NOTICE PERIOD")
to notify the Indemnified Party (a) whether or not it disputes the liability of
the Indemnifying Party to the Indemnified Party hereunder with respect to such
Losses and (b) whether or not it desires, at the sole cost and expense of the
Indemnifying Party, to defend the Indemnified Party against such Losses;
provided, however, that any Indemnified Party is hereby authorized prior to and
during the Notice Period to file any motion, answer or other pleading that it
shall deem necessary or appropriate to protect its interests or those of the
Indemnifying Party (and of which it shall have given notice and opportunity to
comment to the Indemnifying Party) and not prejudicial to the Indemnifying
Party. In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that it desires to defend the Indemnified Party against
such Losses, the Indemnifying Party shall have the right to defend all
appropriate proceedings, and with counsel of its own choosing, which proceedings
shall be promptly settled or prosecuted by them to a final conclusion. If the
Indemnified Party desires to participate in, but not control, any such defense
or settlement it may do so at its sole cost and expense. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Losses that the
Indemnifying Party elects to contest or, if appropriate and related to the claim
in question, in making any counterclaim against the person asserting the third
party Losses, or any cross-complaint against any Person. No claim may be settled
or otherwise compromised without the prior written consent of the Indemnifying
Party.
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10.03 Arbitration.
(a) Any dispute between the Parties regarding Indemnified Losses
resulting from or arising out of the matter described in Section
10.01(a)(iii) only and any claims by either Party for indemnification
with respect thereto shall be settled exclusively by arbitration in
Houston, Texas, by a sole arbitrator and in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
(b) The arbitrator in such proceeding shall be a certified public
accountant or petroleum engineer mutually agreeable to both Parties
having a minimum of 10 years of experience in the oil and gas industry.
(c) Except as otherwise provided in the second sentence of this
Section 10.03(c), the fees and expenses of the arbitrator shall be
borne equally by the Parties. Notwithstanding the foregoing, the
decision of the arbitrator may include such award of the arbitrator's
fees and expenses and of other costs and attorneys' fees as the
arbitrator determines to be appropriate.
(d) The award of the arbitrator shall be binding upon the Parties
and final and nonappealable to the maximum extent permitted by
applicable Law, and judgment thereon may be entered in a court of
competent jurisdiction and enforced by any Party as a final judgment of
such court.
10.04 Exclusive Remedy. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE
REMEDIES SET FORTH IN THIS ARTICLE X AND ARTICLE VII, INCLUDING THE DEDUCTIBLES,
LIABILITY LIMITS, SURVIVAL PERIODS, DISCLAIMERS AND LIMITATIONS ON SUCH
REMEDIES, ARE INTENDED TO BE, AND SHALL BE, THE EXCLUSIVE REMEDIES WITH RESPECT
TO ANY ASPECT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
HEREBY RELEASES, WAIVES AND DISCHARGES, AND COVENANTS NOT TO XXX WITH RESPECT
TO, ANY CAUSE OF ACTION OR CLAIM NOT EXPRESSLY PROVIDED FOR IN THIS AGREEMENT
INCLUDING CLAIMS UNDER STATE OR FEDERAL SECURITIES LAWS, AVAILABLE AT COMMON LAW
OR BY STATUTE (EXCLUDING FRAUD CLAIMS).
10.05 Independent Investigation. Buyer acknowledges and affirms that
(a) it has had full access to the Data Room and the information contained in, or
made available or provided with respect to materials contained in, the Data Room
and has been provided access to the Material Contracts and the Other Contracts,
(b) provided Seller complies with Seller's obligations pursuant to Section 6.01,
it has had access to the personnel, officers, professional advisors, operations
and Records of the Companies and (c) in making the decision to enter into this
Agreement and to consummate the transactions contemplated hereby, it has relied
on the representations, warranties, covenants and agreements of Seller set forth
in this Agreement and in the certificate provided for in Section 8.02(b), and
other than such reliance, it has relied solely on the basis of its own
independent investigation, analysis and evaluation of the Companies and their
assets (including Buyer's own estimate and appraisal of the extent and value of
the Companies' hydrocarbon reserves, pipelines and undeveloped properties),
business, financial condition, operations and prospects.
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10.06 Scope of Representations. Except to the extent expressly set
forth in this Agreement, Seller makes no representations or warranties
whatsoever and disclaims all liability and responsibility for any other
representation, warranty, statement or information made or communicated (orally
or in writing) to Buyer. Without limiting the generality of the foregoing,
except as expressly set forth in this Agreement, Seller makes no representation
or warranty as to title to any of the assets or properties of the Companies or
the Alba Companies and, with respect to any personal property and equipment
included within such assets or properties, SELLER EXPRESSLY DISCLAIMS AND
NEGATES ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, OF FITNESS FOR A
PARTICULAR PURPOSE, AND OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS.
Further, Seller makes no representations or warranties as to (i) the amounts of
or values with respect to any hydrocarbon reserves attributable to the
Companies, the Alba Companies or the Business or (ii) the results of the
drilling of any xxxxx prior to Closing.
ARTICLE XI
MISCELLANEOUS
11.01 Confidentiality.
(a) Until the Closing Date, the confidentiality of any data or
information received by Buyer, its Affiliates and representatives
regarding the Business and assets of the Companies and the Alba
Companies shall be maintained by Buyer, its Affiliates and its
representatives in accordance with the confidentiality provisions of
the confidentiality agreement dated July 20, 2001 executed by Seller,
CMS EG LTD and Buyer (the "CONFIDENTIALITY AGREEMENT"). Solely for the
purposes of this Section 11.01(a), the Parties and their Affiliates
agree to treat Seller, CMS EG LDC and CMS Alba as additional parties to
the Confidentiality Agreement. From and after the Closing, Buyer shall
have no further obligations under this Section 11.01(a) or the
Confidentiality Agreement with respect to information relating to the
Companies or the Alba Companies.
(b) From and after the Closing, any data or information received
at any time by Seller from Buyer and any data or information regarding
the Companies and the Alba Companies, including data or information
regarding their assets and operations, shall be maintained by Seller
and its representatives in confidence for a period of 24 months from
the Closing Date, except (i) to the extent necessary to resolve any
matters relating to Governmental Authorities (including Tax
controversies) or disputes with Buyer pursuant to this Agreement or
(ii) if such information (x) is already in possession of the public or
becomes available to the public, other than through the act or omission
of Seller in violation of this Agreement; (y) is required to be
disclosed under an applicable Law, order, decree, regulation or rule of
(A) a governmental entity or court or (B) any regulatory entity,
securities commission or stock exchange; or (z) is acquired
independently and without a confidential restriction from a third party
who represents that it has the right to disseminate it at the time it
is acquired by Seller.
11.02 Brokers. Regardless of whether the Closing shall occur, (a)
Seller shall indemnify and hold harmless Buyer and the Companies and their
Affiliates from and against any and all liability for any brokers' or finders'
fees (and any court costs and attorneys' fees) arising with
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respect to brokers or finders retained or engaged by Seller or any of its
Affiliates in respect of the transactions contemplated by this Agreement and (b)
Buyer shall indemnify and hold harmless Seller and its Affiliates from and
against any and all liability for any brokers' or finders' fees (and court costs
and attorneys' fees) arising with respect to brokers or finders retained or
engaged by Buyer or any of its Affiliates in respect of the transactions
contemplated by this Agreement.
11.03 Expenses. Except as specifically provided herein, each Party
hereto shall pay all legal and other costs and expenses incurred by such Party
or any of its Affiliates in connection with this Agreement and the transactions
contemplated hereby.
11.04 Notices. Any notice, request, instruction, correspondence or
other communication to be given or made hereunder by either Party to the other
(herein collectively called "NOTICE") shall be in writing and (a) delivered by
hand, (b) mailed by certified mail, postage prepaid and return receipt
requested, (c) sent by telecopier or (d) sent by Express Mail, Federal Express
or other express delivery service, as follows:
If to Seller, addressed to:
CMS Oil and Gas Company
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx III
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Enterprises, addressed to:
CMS Enterprises Company
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
If to Buyer, addressed to:
Marathon E.G. Holding Limited
c/o Caledonian Bank & Trust Limited
XX Xxx 0000
Xxxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxx Indies
Attention: Xxxxx X. Xxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
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with a copy to:
Marathon Oil Company
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Notice given by hand, Federal Express or other express delivery service or by
mail shall be effective upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next business day after receipt if
not received during the recipient's normal business hours. All Notices by
facsimile shall be confirmed promptly after transmission in writing by certified
mail or personal delivery. No Notice shall be given to or by the Companies. Any
Party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
11.05 Governing Law. THE PROVISIONS OF THIS AGREEMENT, THE SCHEDULES
HERETO AND THE DOCUMENTS DELIVERED PURSUANT HERETO SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
(EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER SUCH MATTERS
TO THE LAWS OF ANOTHER JURISDICTION), EXCEPT TO THE EXTENT THAT SUCH MATTERS ARE
MANDATORILY SUBJECT TO THE LAWS OF ANOTHER JURISDICTION PURSUANT TO THE LAWS OF
SUCH OTHER JURISDICTION. THE PARTIES IRREVOCABLY CONSENT AND SUBMIT TO THE STATE
AND FEDERAL COURTS IN THE STATE OF TEXAS AS THE EXCLUSIVE VENUE FOR ANY DISPUTE
ARISING OUT OF OR RELATING TO THIS AGREEMENT (EXCEPT FOR MATTERS SUBJECT TO
RESOLUTION BY ERNST & YOUNG UNDER SECTION 2.05 OR SUBJECT TO ARBITRATION UNDER
SECTION 10.03).
11.06 Waiver of Jury Trial. THE PARTIES VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY OF THE PARTIES HERETO.
THE PARTIES HERETO HEREBY AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH
LITIGATION WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL HAS NOT OR CANNOT BE
WAIVED. THE PROVISIONS OF THIS SECTION 11.06 HAVE BEEN FULLY NEGOTIATED BY THE
PARTIES HERETO AND SHALL BE SUBJECT TO NO EXCEPTIONS.
11.07 Entire Agreement; Amendments and Waivers. This Agreement,
together with all Schedules hereto and the Confidentiality Agreement,
constitutes the entire agreement between the Parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the Parties. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the Party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a
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waiver of any other provision hereof (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.
11.08 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective permitted
successors and assigns. Neither this Agreement nor any of the rights, benefits
or obligations hereunder shall be assigned, by operation of law or otherwise, by
any Party hereto prior to the Closing without the prior written consent of the
other Party, except that Seller may assign all of its rights, benefits and
obligations hereunder to an Affiliate without being released from its
obligations hereunder. Except as expressly provided herein, nothing in this
Agreement is intended to confer upon any Person other than the Parties and their
respective permitted successors and assigns, any rights, benefits or obligations
hereunder.
11.09 Severability. If any one or more of the provisions contained in
this Agreement or in any other document delivered pursuant hereto shall for any
reason, be held to be invalid, illegal or unenforceable in any material respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such document.
11.10 Headings and Schedules. The headings of the several Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.11 Survival of Representations. The representations and warranties
in this Agreement shall survive the Closing except for the representations and
warranties of Seller, that shall terminate 24 months after the Closing.
11.12 Time of the Essence. The Parties agree and acknowledge that time
is of the essence of this Agreement.
11.13 Counterparts; Facsimile. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute but one agreement. The Parties hereto agree that any document
or signature delivered by facsimile transmission shall be deemed an original
executed document for all purposes hereof.
11.14 No Third Party Beneficiaries. This Agreement is not intended to
and shall not confer upon any Person, other than the Parties hereto (and Persons
specifically granted indemnification rights hereunder), any rights or remedies
with respect to the subject matter or any provision hereof.
[Remainder of page intentionally left blank. Signature page follows.]
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement the
day and year first written above.
SELLER: CMS OIL AND GAS COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx III
------------------------------------
Xxxxxxx X. Xxxxxxxx III
Executive Vice President
BUYER: MARATHON E.G. HOLDING LIMITED
By: /s/ X.X. Xxxxx
------------------------------------
X.X. Xxxxx
Director
[SIGNATURE PAGE 1 TO STOCK PURCHASE AGREEMENT]
Marathon, in consideration of the premises, the agreements and the
covenants contained herein, and the benefits it is deriving from the execution
and delivery of this Agreement and the transactions contemplated hereby, the
receipt and sufficiency of which is hereby acknowledged, hereby unconditionally
and irrevocably guarantees payment to Seller and Enterprises and performance by
Buyer of the obligations of Buyer under this Agreement (the "BUYER
OBLIGATIONS"), subject to any defenses of Buyer under this Agreement (except
those enumerated hereafter), but Marathon waives (i) any defense that may arise
by reason of incapacity, lack of authority, invalidity, bankruptcy or insolvency
of Buyer, (ii) any defense based on election of remedies, (iii) any requirement
that Seller or Enterprises pursue or exhaust any remedy against Buyer or (iv)
any defense based on or any right to consent to any amendment, waiver,
modification or supplement of this Agreement or any provision hereof or of the
Buyer Obligations. Marathon acknowledges and agrees that the guaranty set forth
above is a guaranty of payment and performance and not merely a guaranty of
collection, that Marathon is liable as a primary obligor and, except as provided
in the first sentence of this paragraph, that the obligations of Marathon under
the guaranty set forth above shall not be released, discharged or in any way
affected by any circumstance or condition whatsoever that might otherwise
constitute a legal or equitable defense or discharge of a guarantor, indemnitor
or surety or that might otherwise limit recourse against Marathon under any
applicable law. Should Seller or Enterprises be obligated by an reorganization,
insolvency, bankruptcy or other law to repay to Buyer, Marathon or to any
guarantor or surety or to any trustee, receiver or other representative of any
of them, any amounts previously paid by Buyer or Marathon pursuant to this
Agreement, then the guaranty of Marathon set forth above shall be reinstated in
the amount of such repayments. Marathon consents to and agrees to be bound by
the provisions of Articles VII, X and XI (as if it were Buyer) with respect to
any claims under this guaranty.
MARATHON OIL COMPANY
By: /s/ X. X. Xxxxxx
-------------------------------------
X. X. Xxxxxx
Senior Vice President
[SIGNATURE PAGE 2 TO STOCK PURCHASE AGREEMENT]
Enterprises, in consideration of the premises, the agreements and the
covenants contained herein, and the benefits it is deriving from the execution
and delivery of this Agreement and the transactions contemplated hereby, the
receipt and sufficiency of which is hereby acknowledged, hereby unconditionally
and irrevocably guarantees payment to Buyer and Marathon and performance by
Seller of the obligations of Seller under this Agreement (the "SELLER
OBLIGATIONS"), subject to any defenses of Seller under this Agreement (except
those enumerated hereafter), but Enterprises waives (i) any defense that may
arise by reason of incapacity, lack of authority, invalidity, bankruptcy or
insolvency of Seller, (ii) any defense based on election of remedies, (iii) any
requirement that Buyer or Marathon pursue or exhaust any remedy against Seller
or (iv) any defense based on or any right to consent to any amendment, waiver,
modification or supplement of this Agreement or any provision hereof or of the
Seller Obligations. Enterprises acknowledges and agrees that the guaranty set
forth above is a guaranty of payment and performance and not merely a guaranty
of collection, that Enterprises is liable as a primary obligor and, except as
provided in the first sentence of this paragraph, that the obligations of
Enterprises under the guaranty set forth above shall not be released, discharged
or in any way affected by any circumstance or condition whatsoever that might
otherwise constitute a legal or equitable defense or discharge of a guarantor,
indemnitor or surety or that might otherwise limit recourse against Enterprises
under any applicable law. Should Buyer or Marathon be obligated by an
reorganization, insolvency, bankruptcy or other law to repay to Seller,
Enterprises or to any guarantor or surety or to any trustee, receiver or other
representative of any of them, any amounts previously paid by Seller or
Enterprises pursuant to this Agreement, then the guaranty of Enterprises set
forth above shall be reinstated in the amount of such repayments. Enterprises
consents to and agrees to be bound by the provisions of Articles VII, X and XI
(as if it were Seller) with respect to any claims under this guaranty.
CMS ENTERPRISES COMPANY
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
[SIGNATURE PAGE 3 TO STOCK PURCHASE AGREEMENT]
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
CMS GAS TRANSMISSION COMPANY
AND
MARATHON OIL COMPANY
OCTOBER 31, 2001
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION...............................1
1.01 Definitions.........................................................1
1.02 Construction........................................................6
ARTICLE II PURCHASE AND SALE..................................................6
2.01 Transfer of Ownership Interest......................................6
2.02 Purchase Price......................................................6
2.03 Estimate of Working Capital.........................................7
2.04 Working Capital Adjustments.........................................7
2.05 Settlement Statement................................................7
ARTICLE III CLOSING...........................................................8
3.01 Time and Place of Closing...........................................8
3.02 Deliveries by Seller................................................8
3.03 Deliveries by Buyer.................................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER...........................9
4.01 Existence and Qualification.........................................9
4.02 Authority, Approval and Enforceability..............................9
4.03 Capitalization of the AMPCO Companies..............................10
4.04 No Conflicts.......................................................10
4.05 Financial Statements...............................................11
4.06 Material Contracts.................................................11
4.07 Absence of Certain Changes.........................................12
4.08 Employees..........................................................13
4.09 Insurance..........................................................13
4.10 Litigation.........................................................13
4.11 Liability for Brokers' Fees........................................13
4.12 Compliance with Laws...............................................13
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4.13 Consents and Preferential Rights....................................13
4.14 Taxes...............................................................14
4.15 Intellectual Property...............................................15
4.16 Data Room and Information...........................................15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER.............................15
5.01 Corporate Existence and Qualification...............................15
5.02 Authority, Approval and Enforceability..............................15
5.03 No Default or Consents..............................................16
5.04 Investment..........................................................16
5.05 Financial Capacity..................................................16
5.06 Liability for Brokers' Fees.........................................16
5.07 No Knowledge of Seller's Breach.....................................16
ARTICLE VI COVENANTS OF SELLER AND BUYER......................................17
6.01 Access..............................................................17
6.02 Operation of Business...............................................17
6.03 Satisfaction of Buyer's Conditions..................................19
6.04 Press Releases......................................................19
6.05 Insurance...........................................................19
6.06 Satisfaction of Seller's Conditions.................................19
6.07 Breach Notice.......................................................20
6.08 Uncollected Accounts Receivable.....................................20
6.09 Consents and Preferential Rights....................................20
6.10 Preservation of Books and Records; Access...........................20
6.11 Further Assurances..................................................20
6.12 Casualty Loss.......................................................20
ARTICLE VII TAX MATTERS.......................................................21
7.01 Preparation and Filing of Tax Returns...............................21
7.02 Retention of Information............................................22
7.03 Indemnification by Seller...........................................22
7.04 Buyer Tax Indemnification...........................................22
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7.05 Tax Indemnification Procedures......................................23
7.06 Mutual Cooperation..................................................23
7.07 Survival............................................................24
7.08 Conflict............................................................24
ARTICLE VIII CLOSING CONDITIONS...............................................24
8.01 Conditions to Obligations of Seller.................................24
8.02 Conditions to Obligations of Buyer..................................25
ARTICLE IX TERMINATION........................................................27
9.01 Termination.........................................................27
9.02 Effect of Termination...............................................27
ARTICLE X INDEMNIFICATION; SCOPE OF REPRESENTATIONS; LIMITATIONS..............28
10.01 Indemnification...................................................28
10.02 Indemnification Procedures........................................29
10.03 Exclusive Remedy..................................................30
10.04 Independent Investigation.........................................30
10.05 Scope of Representations..........................................30
ARTICLE XI MISCELLANEOUS......................................................31
11.01 Confidentiality...................................................31
11.02 Brokers...........................................................31
11.03 Expenses..........................................................31
11.04 Notices...........................................................31
11.05 Governing Law.....................................................32
11.06 Waiver of Jury Trial..............................................32
11.07 Entire Agreement; Amendments and Waivers..........................33
11.08 Binding Effect and Assignment.....................................33
11.09 Severability......................................................33
11.10 Headings and Schedules............................................33
11.11 Survival of Representations.......................................33
11.12 Time of the Essence...............................................33
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11.13 Counterparts; Facsimile...........................................33
11.14 No Third Party Beneficiaries......................................33
SCHEDULES
1.01(a) - Knowledge of Persons of Buyer
1.01(b) - Knowledge of Persons of Seller
2.03(a) - Statement of Preliminary Working Capital Adjustment
2.03(b) - Estimate of Working Capital as of September 30, 2001
3.02(a)(i) - Form of Marketing Instrument of Conveyance
3.02(a)(ii) - Form of Services Instrument of Conveyance
4.05 - Financial Statements
4.06(a)(i) - Material Contracts
4.06(a)(ii) - Pending Material Contracts
4.06(c) - Matters Relating to Material Contracts
4.08 - Employees
4.09 - Policies of Insurance
4.10 - Claims and Litigation
4.12 - Compliance with Law
4.13 - Consents and Preferential Purchase Rights
4.14 - Tax Matters
8.01(e) - Certain Approvals (Seller's Closing Conditions)
8.02(c) - Form of Resignation
8.02(f) - Certain Approvals (Buyer's Closing Conditions)
-iv-
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "AGREEMENT"), executed as of
October 31, 2001 (the "EXECUTION DATE"), is by and between CMS GAS TRANSMISSION
COMPANY, a company formed under the laws of the State of Michigan ("SELLER"),
and MARATHON OIL COMPANY, a corporation formed under the laws of the State of
Ohio ("BUYER"). Seller and Buyer shall be referred to herein each as a "PARTY"
and collectively as the "PARTIES."
RECITALS
A. Seller owns fifty percent (50%) of AMPCO Marketing, L.L.C., a
limited liability company organized under the laws of the State of Michigan
("MARKETING"), and fifty percent (50%) of AMPCO Services, L.L.C., a limited
liability company organized under the laws of the State of Michigan ("SERVICES"
and, together with Marketing, the "AMPCO COMPANIES").
B. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of Seller's ownership interest in the AMPCO Companies, upon the terms
and subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the premises, agreements and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
agree, upon the terms and subject to the conditions contained herein, as
follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
1.01 Definitions. Capitalized terms used herein shall have the meaning
ascribed to them in this Article I unless such terms are defined elsewhere in
this Agreement.
"ACTUAL WORKING CAPITAL AMOUNT" shall have the meaning ascribed to such
term in Section 2.05(e).
"ADJUSTED PURCHASE PRICE" shall have the meaning ascribed to such term
in Section 2.02.
"AFFILIATE" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. The term
"control" as used in the preceding sentence means, with respect to a
corporation, the right to exercise, directly or indirectly, fifty percent (50%)
or more of the voting rights attributable to the shares of the controlled
corporation, or with respect to any Person other than a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person. The AMPCO Companies
shall not be considered Affiliates of Buyer (or any of its Affiliates) or Seller
(or any of its Affiliates), and neither Buyer (nor its Affiliates) nor Seller
(nor its Affiliates) shall be considered Affiliates of either of the AMPCO
Companies.
"AGREEMENT" shall have the meaning ascribed to such term in the
preamble.
"AMPCO COMPANIES" shall have the meaning ascribed to such term in
Recital A.
1
"APPROVAL" shall mean an authorization, consent, approval or waiver of,
clearance by, required notice to or registration or filing with, a Governmental
Authority or other Person and the expiration or termination of all prescribed
waiting or review periods with respect to any of the foregoing.
"ASSOCIATES AGREEMENT" shall mean the Share Purchase Agreement dated
October 31, 2001 pursuant to which, among other things, CMS Methanol Company has
agreed to sell, and Marathon E.G. Holding Limited has agreed to purchase, CMS
Methanol Company's right, title, and interest in and to Atlantic Methanol
Associates LLC.
"BASE PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 2.02.
"BREACH NOTICE" shall have the meaning ascribed to such term in Section
6.07.
"BUSINESS" shall mean the business and operations of the AMPCO
Companies.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
United States federal or Texas state banking holiday.
"BUYER" shall have the meaning ascribed to such term in the preamble.
"BUYER INDEMNIFIED PARTIES" shall mean Buyer, its Affiliates and their
respective directors, officers, employees, agents and representatives.
"CLAIM NOTICE" shall have the meaning ascribed to such term in Section
10.01(b)(ii).
"CLOSING" shall have the meaning ascribed to such term in Section 3.01.
"CLOSING DATE" shall have the meaning ascribed to such term in Section
3.01.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the applicable Treasury Regulations thereunder.
"CONFIDENTIALITY AGREEMENT" shall have the meaning ascribed thereto in
Section 11.01.
"CREDITORS' RIGHTS" shall have the meaning ascribed to such term in
Section 4.02.
"DATA ROOM" shall mean that data room located in Houston, Texas,
prepared by Seller to assist Persons interested in acquiring the AMPCO Companies
with an evaluation of the AMPCO Companies.
"DEDUCTIBLE" shall have the meaning ascribed to such term in Section
10.01(b)(iv).
"DOLLARS," "US$" or "$" shall mean the lawful currency of the United
States of America.
"DUE DILIGENCE PERIOD" shall have the meaning ascribed to such term in
Section 6.01.
"EXECUTION DATE" shall have the meaning ascribed to such term in the
preamble.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to such term in
Section 4.05.
2
"GAAP" shall mean generally accepted accounting principles in effect in
the United States of America.
"GOVERNMENTAL AUTHORITY" shall mean any government, governmental
agency, authority, entity or instrumentality or any court thereof.
"INDEMNIFIED LOSSES" shall mean any and all Losses reduced by any Tax
benefit actually realized and by the amount of the amount of any insurance
proceeds actually recovered from any Person that is not an Affiliate of any
Person entitled to indemnification hereunder, but only to the extent that the
Person entitled to indemnification did not negligently or intentionally take
actions that materially exacerbated such Losses, provided that Indemnified
Losses shall not include any Losses attributable to matters for which an
adjustment to the Base Purchase Price has been made pursuant to Section 2.03 or
2.05.
"INDEMNIFIED PARTY" shall have the meaning ascribed to such term in
Section 10.02.
"INDEMNIFYING PARTY" shall have the meaning ascribed to such term in
Section 10.02.
"INTELLECTUAL PROPERTY" shall mean all trademarks, service marks, trade
names, patents, trade secrets and copyrights used by either of the Companies
that, in each case, is material to the Business of either of the Companies.
"INTERCOMPANY AGREEMENTS" shall have the meaning ascribed to such term
in Section 4.06(a)(ix).
"KNOWLEDGE" shall mean the actual knowledge of the persons listed in
Schedule 1.01(a), in the case of Buyer, and those listed on Schedule 1.01(b), in
the case of Seller; provided, however, that such persons shall be assumed to
have actual knowledge of items if there is persuasive evidence that such persons
must have had knowledge by virtue of their respective roles and functions.
"LAW" shall mean any constitution, statute, code, regulation, rule,
injunction, judgment, order, decree, ruling (including any agreement with a
Governmental Authority having the force of law), charge or other restriction of
any applicable Governmental Authority.
"LOSSES" shall mean all losses, costs, and expenses, including
attorneys' fees and expenses; provided, however, that for the avoidance of
doubt, any Losses suffered by either or both of the AMPCO Companies shall only
constitute Losses to Buyer to the extent of the fifty percent (50%) ownership
interest in the AMPCO Companies.
"MARKETING" shall have the meaning given to such term in Recital A.
"MARKETING INSTRUMENT OF CONVEYANCE" shall have the meaning ascribed to
such term in Section 3.02(a)(i).
"MARKETING MEMBERS' AGREEMENT" shall mean the Members' Agreement for
Marketing effective December 22, 1998.
"MATERIAL ADVERSE EFFECT" shall mean an adverse effect on the business,
financial condition or assets of the AMPCO Companies that results in Losses to
Buyer or the AMPCO Companies of
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$1,000,000 or more, excluding matters (such as, without limitation, decreases in
the prices received by Marketing for methanol) that are general, regional,
industry-wide or economy-wide developments and excluding political events and
conditions; provided, however, that for the avoidance of doubt Buyer shall be
deemed to suffer Losses as a result of adverse effects on the AMPCO Companies to
the extent of the percentage ownership interest in such Companies that is being
acquired by Buyer.
"MATERIAL CONTRACTS" shall have the meaning ascribed to such term in
Section 4.06(a).
"MEASUREMENT DATE" shall mean 7:01 a.m. Equatorial Guinea time on
January 1, 2002.
"NOTICE" shall have the meaning ascribed to such term in Section 11.04.
"NOTICE PERIOD" shall have the meaning ascribed to such term in Section
10.02.
"PARTY" or "PARTIES" shall have the meaning ascribed to such term in
the preamble.
"PERMITTED ENCUMBRANCES" shall mean (i) the terms and conditions of the
Material Contracts and the Pending Material Contracts, (ii) matters disclosed in
any Schedule to this Agreement, (iii) sales contracts terminable without penalty
upon no more than thirty (30) days' notice to the purchaser of methanol; (iv)
materialman's, mechanic's, repairman's, employee's, contractor's, tax, and other
similar liens or charges arising in the ordinary course of business for
obligations that are not yet due; (v) easements, rights-of-way, servitudes,
permits, surface leases and other rights of third parties in respect of surface
operations, to the extent the same do not have a Material Adverse Effect on the
conduct of the Business of the AMPCO Companies; (vi) rights reserved to or
vested in a Governmental Authority having jurisdiction to control or regulate
the Business of the AMPCO Companies in any manner whatsoever, and all Laws of
such Governmental Authorities, and (vii) any other matters that do not
materially interfere with the normal and ordinary course of the Business of the
AMPCO Companies and that would not be considered material when applying general
standards in the methanol industry.
"PERSON" shall mean an individual, partnership, corporation,
joint-venture, trust, estate, unincorporated organization or association or
other legal entity.
"PRELIMINARY WORKING CAPITAL AMOUNT" shall have the meaning ascribed to
such term in Section 2.03.
"REASONABLE EFFORTS" shall mean the taking by a Party of such action as
would be in accordance with reasonable commercial practices as applied to the
particular matter in question; provided, however, that such action shall not
include the incurrence of unreasonable expense.
"RECORDS" shall mean and include all originals and copies (except where
the context indicates that only originals or copies are being referred to) of
minute books, tax records, agreements, documents, computer files and tapes,
maps, books, records, accounts and files of the AMPCO Companies relating to the
AMPCO Companies and the Business.
"SCHEDULE" shall mean any schedule attached to and made a part of this
Agreement.
"SELLER" shall have the meaning ascribed to such term in the preamble.
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"SELLER INDEMNIFIED PARTIES" shall mean Seller, its Affiliates and
their respective directors, officers, employees, agents and representatives.
"SERVICES" shall have the meaning given to such term in Recital A.
"SERVICES INSTRUMENT OF CONVEYANCE" shall have the meaning ascribed to
such term in Section 3.02(a)(ii).
"SERVICES MEMBERS' AGREEMENT" shall mean the Members' Agreement for
Services effective December 22, 1998.
"SETTLEMENT STATEMENT" shall have the meaning ascribed to such term in
Section 2.05(a).
"TAX" or "TAXES" shall mean any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance, premium
windfall profits, environmental, customs duties, capital stock, capital gain,
petroleum profits, value added, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, minimum, alternative or add-on minimum, estimated
or other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not.
"TAX CLAIM" shall mean any Losses arising out of a breach of the
representations and warranties in Section 4.14 or any of the provisions of
Article VII.
"TAX INDEMNIFIED PARTY" shall have the meaning ascribed to that term in
Section 7.05(a).
"TAX INDEMNIFYING PARTY" shall have the meaning ascribed to that term
in Section 7.05(a).
"TAX ITEMS" shall have the meaning ascribed to that term in Section
4.14(a).
"TAX RETURN" shall have the meaning ascribed to that term in Section
4.14(a).
"THIRD PARTY CLAIM" shall mean any claim, action or proceeding made or
brought by any Person who or that is not a Party or an Affiliate of the Party
seeking indemnification.
"TRANSFER TAXES" shall mean all transfer, sales, use, stamp,
registration or other similar Taxes or fees resulting from the transactions
contemplated by this Agreement.
"UNCOLLECTED ACCOUNTS RECEIVABLE" shall have the meaning ascribed to
such term in Section 2.05(b).
"UPSTREAM AGREEMENT" shall mean the Stock Purchase Agreement dated
October 31, by and between CMS Oil and Gas Company, CMS Enterprises Company,
Marathon E.G. Holding Limited and Marathon.
"WORKING CAPITAL" shall mean the combined total current assets,
including inventory, less combined total current liabilities of the AMPCO
Companies as defined by GAAP
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1.02 Construction.
(a) All article, section, subsection, schedule and exhibit
references used in this Agreement are to articles, sections, subsections,
schedules and exhibits to this Agreement unless otherwise specified.
(b) The schedules and exhibits attached to this Agreement
constitute a part of this Agreement and are incorporated herein for all
purposes.
(c) Unless the context of this Agreement clearly requires
otherwise (i) the singular shall include the plural and the plural shall
include the singular wherever and as often as may be appropriate, (ii)
the words "includes" or "including" shall mean "including without
limitation," (iii) the words "hereof," "hereby," "herein," "hereunder"
and similar terms in this Agreement shall refer to this Agreement as a
whole and not any particular section or article in which such words
appear and (iv) any reference to a statute, regulation or law shall
include any amendment thereof or any successor thereto and any rules and
regulations promulgated thereunder.
(d) Currency amounts referenced herein, unless otherwise
specified, are in United States Dollars.
(e) Whenever this Agreement refers to a number of days, such
number shall refer to calendar days unless Business Days are specified.
(f) All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP. References to
GAAP herein shall refer to such principles in effect in the United States
of America as of the date of the statement to which such phrase refers.
ARTICLE II
PURCHASE AND SALE
2.01 Transfer of Ownership Interest. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Buyer agrees to purchase all of
Seller's right, title, and interest in and to the AMPCO Companies and to deliver
payment for such interests as provided in Section 2.02, and Seller agrees to
sell, assign and deliver to Buyer all of Seller's right, title, and interest in
and to the AMPCO Companies, subject to the receipt of payment as provided in
Section 2.02.
2.02 Purchase Price. The consideration to be paid by Buyer to Seller at
Closing for interest in the AMPCO Companies shall be Ten Dollars ($10.00) (the
"BASE PURCHASE PRICE") as adjusted by fifty percent (50%) of the Preliminary
Working Capital Amount according to Section 2.04 (the Base Purchase price, as
adjusted, shall be referred to herein as the "ADJUSTED PURCHASE PRICE"). In
addition, if the Closing occurs later than January 3, 2002 pursuant to the
provisions of Section 3.01, the Adjusted Purchase Price shall be increased by an
amount equal to the capital contributions, if any, made by Seller to the AMPCO
Companies on or after the Measurement Date and interest on the Adjusted Purchase
Price from and including January 3, 2002 up to but excluding the Closing Date
calculated at a per annum interest rate of five percent (5%).
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2.03 Estimate of Working Capital. Seller shall deliver to Buyer no later
than five (5) Business Days prior to the Closing Date a statement setting forth
Seller's reasonable estimate of the Working Capital of the AMPCO Companies as of
the Measurement Date in the format set forth in Schedule 2.03(a) (the
"PRELIMINARY WORKING CAPITAL AMOUNT"). Attached as Schedule 2.03(b) for
illustrative purposes only is a completed statement setting forth the Working
Capital of AMPCO Companies as of September 30, 2001. Such statement shall be
accompanied by a worksheet setting forth in reasonable detail Seller's
calculations used to estimate the Preliminary Working Capital Amount. Seller
shall provide Buyer with reasonable access to the data used to prepare the
Preliminary Working Capital Adjustment and the worksheet.
2.04 Working Capital Adjustments. If the Preliminary Working Capital
Amount is positive, Buyer shall pay Seller, at the Closing, in addition to the
Base Purchase Price, an amount equal to fifty percent (50%) of such Preliminary
Working Capital Amount. If the Preliminary Working Capital Amount is negative,
the Base Purchase Price payment by Buyer to Seller pursuant to Section 2.02
shall be reduced by fifty percent (50%) of the amount of such Preliminary
Working Capital Amount.
2.05 Settlement Statement.
(a) Within 120 days following the Closing Date, Seller and Buyer
shall jointly prepare a statement (the "SETTLEMENT STATEMENT"), which
shall provide the actual Working Capital of the AMPCO Companies as of the
Measurement Date based on actual revenues earned and obligations incurred
up to and including the Measurement Date, subject to the adjustment
provided for in Section 2.05(b); provided, however, that for purposes of
this Section 2.05 the value of the AMPCO Companies' inventory of methanol
included in the determination of Working Capital shall be the value
determined by multiplying the volume of methanol as of the Measurement
Date as established by a review of the AMPCO Companies' records, by the
U.S. average spot price for methanol on the Measurement Date as published
in the bi-weekly XxXxxx Methanol and Derivatives newsletter. The
Settlement Statement shall also specify any adjustments to the Adjusted
Purchase Price made pursuant to the last sentence of Section 2.02 if the
Closing Date occurs after January 3, 2002.
(b) Except for accounts receivable from Atlantic Methanol
Associates LLC and Atlantic Methanol Production Company LLC or between
the AMPCO Companies, any accounts receivable as of the Measurement Date
that have not been collected (net of any payables due to any company as
to which there is such an account receivable) as of the date of the
Settlement Statement (the "UNCOLLECTED ACCOUNTS RECEIVABLE") shall be
deemed to have zero value and will not be included in the Settlement
Statement.
(c) If Buyer and Seller shall be unable to agree on the Settlement
Statement within 120 days after the Closing Date, the public accounting
firm of Ernst & Young, or such other nationally recognized public
accounting firm as is mutually acceptable to Buyer and Seller, shall be
engaged to make its determination of any amounts in dispute (and only
such amounts). Each Party shall bear and pay one-half of the fees and
other costs charged by such accounting firm.
(d) If any accounting firm is engaged as provided in Section
2.05(b), Seller and Buyer agree to provide such accounting firm with a
detailed statement itemizing any amounts in dispute and all books,
Records and other information relevant to the
7
determination of the amounts in dispute. Such accounting firm shall be
instructed to use a materiality standard as such firm may determine to be
reasonable under the circumstances, in light of the cost to be incurred
and the amounts at issue. Each Party shall each be permitted to provide
expert testimony to such accounting firm supporting such Party's
position, and such accounting firm shall take such testimony into
account. Such accounting firm shall be instructed to make such
calculations as soon as practicable. The final determination of any of
the aforesaid disputed items pursuant to this Section 2.05(d) shall be
binding on the Parties.
(e) If the actual Working Capital of the AMPCO Companies on the
Measurement Date as agreed by the Parties or determined by the
aforementioned accounting firm (the "ACTUAL WORKING CAPITAL AMOUNT")
differs from the Preliminary Working Capital Amount, then Buyer shall pay
Seller, or Seller shall pay Buyer, as the case may be, by wire transfer
in immediately available funds, within five (5) Business Days after final
determination of the Actual Working Capital Amount, the sum of (i) fifty
percent (50%) of the difference (whether positive or negative) between
the Preliminary Working Capital Amount and the Actual Working Capital
Amount and interest on such amount at a rate of eight percent (8%) per
annum, compounded monthly, from the Closing Date to the date of payment.
ARTICLE III
CLOSING
3.01 Time and Place of Closing. Subject to fulfillment or waiver of the
conditions precedent specified in Sections 8.01 and 8.02, the consummation of
the transactions contemplated by this Agreement (the "CLOSING") shall take place
at the offices of Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxxxx, Xxxxx commencing
at 8:00 a.m. local time (a) on January 3, 2002 (provided, however, that such
date shall be extended (i) for any period of time that Seller is attempting to
cure a breach in accordance with the provisions of Section 6.07 or (ii) for any
period of time that the respective Affiliate of Seller has extended the date for
closing the transactions contemplated by the Associates Agreement or the
Upstream Agreement, in each case through and including, but no later than, April
2, 2002) or (b) on such other date as Buyer and Seller may mutually agree in
writing. The date upon which the Closing occurs shall be referred to herein as
the "CLOSING DATE."
3.02 Deliveries by Seller.
(a) Delivery of Documents. At the Closing, Seller shall deliver to
Buyer:
(i) Two (2) originals of an assumption agreement duly
executed by Seller in substantially the form attached hereto
as Schedule 3.02(a)(i) with respect to the interest of Seller
in and to Marketing (the "MARKETING INSTRUMENT OF
CONVEYANCE");
(ii) Two (2) originals of an assumption agreement
duly executed by Seller in substantially the form attached
hereto as Schedule 3.02(a)(ii) with respect to the interest of
Seller in and to Services (the "SERVICES INSTRUMENT OF
CONVEYANCE"); and
(iii) All other documents, instruments and writings
required to be delivered by Seller at the Closing pursuant to
the terms of this Agreement.
8
(b) Delivery of Records. On the Closing Date (or as soon
thereafter as practicable), Seller shall deliver or cause to be delivered
to Buyer all Records of the AMPCO Companies in Seller's possession,
subject to the following provisions:
(i) Seller may retain the originals of all Records
that contain information relating to the AMPCO Companies but
principally relate to Seller or its Affiliates (with Buyer to
receive copies thereof), and Seller may retain copies of all
Records that contain information relating to Seller or its
Affiliates but principally relate to the AMPCO Companies; and;
(ii) Seller may retain all Records prepared in
connection with the sale of its interest in the AMPCO
Companies, including offers received from prospective
purchasers of such interests and any information relating to
such offers, and need not deliver to Buyer or grant Buyer
access to any such Records.
3.03 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller:
(a) The Adjusted Purchase Price no later than 1:00 p.m., Houston
time, on the Closing Date, by wire transfer of immediately available
funds to an account designated by Seller;
(b) Two (2) originals of the Marketing Instrument of Conveyance
duly executed by Buyer;
(c) Two (2) originals of the Services Instrument of Conveyance
duly executed by Buyer; and
(d) All other documents, instruments and writings required to be
delivered by Buyer at the Closing pursuant to the terms of this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof as
follows:
4.01 Existence and Qualification. Each of Seller and the AMPCO Companies
is a corporation or company duly organized and validly existing under the laws
of the State of Michigan. Each of Seller and the AMPCO Companies is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the lack of such
qualification would not have a Material Adverse Effect. Each of the AMCPO
Companies has all requisite power and authority to own, operate and lease its
properties and to carry on the Business as presently conducted by it.
4.02 Authority, Approval and Enforceability. Seller has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement. The execution and delivery of this
Agreement by Seller and the performance of the transactions contemplated hereby
by Seller have been duly and validly approved by the Board of Directors of
Seller and by all other corporate action, if any, necessary on behalf of Seller.
This Agreement has been duly executed and delivered on behalf of Seller and
constitutes the legal, valid and binding
9
obligation of Seller, enforceable against Seller in accordance with its terms,
subject to applicable bankruptcy, insolvency or other similar laws relating to
or affecting the enforcement of creditors' rights generally and to general
principles of equity ("CREDITORS' RIGHTS"). At the Closing all documents
required hereunder to be executed and delivered by Seller will have been duly
authorized, executed and delivered by Seller and will constitute legal, valid
and binding obligations of Seller, enforceable in accordance with their terms,
subject to Creditors' Rights.
4.03 Capitalization of the AMPCO Companies.
(a) The aggregate shareholders equity in Marketing as of
September 30, 2001 was $24,982,704, as to $12,491,352 was
allocable to Seller. Seller owns beneficially and of record fifty
percent (50%) of the ownership interests in Marketing. Except as
otherwise provided in the Marketing Members' Agreement, (i) the
ownership interest of Seller in Marketing is free and clear of all
mortgages, pledges, security interests, liens or encumbrances of
any kind and are not subject to any agreements or understandings
among any Persons with respect to the voting or transfer thereof,
and (ii) there are no outstanding subscriptions, options,
convertible securities, warrants, calls or other securities
granting rights to purchase or otherwise acquire such ownership
interest or any or any commitments or agreements of any character
obligating Seller or Marketing to issue or transfer any ownership
interest in Marketing.
(b) The aggregate shareholders equity in Services as of
September 30, 2001 was $3,421,963, as to which $1,710,981.50 was
allocable to Seller. Seller owns beneficially and of record fifty
percent (50%) of the ownership interests in Services. Except as
otherwise provided in the Services Members' Agreement, (i) the
ownership interest of Seller in Services is free and clear of all
mortgages, pledges, security interests, liens or encumbrances of
any kind and are not subject to any agreements or understandings
among any Persons with respect to the voting or transfer thereof
and (ii) there are no outstanding subscriptions, options,
convertible securities, warrants, calls or other securities
granting rights to purchase or otherwise acquire such ownership
interest or any commitments or agreements of any character
obligating Seller or Services to issue or transfer any ownership
interest in Services.
4.04 No Conflicts. Except as provided in Schedule 4.13, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein will:
(a) conflict with or result in a breach, default or
violation of the articles of incorporation or other governing
documents of Seller or either of the AMPCO Companies;
(b) conflict with or result in a breach, default or
violation of, any material agreement, document, instrument,
judgment, decree, order, governmental permit, certificate or
license to which Seller or either of the AMPCO Companies is a
party or is subject that would have a Material Adverse Effect; or
(c) result in the creation of any lien, charge or other
encumbrance upon any of the properties or assets of either of the
AMPCO Companies that would have a Material Adverse Effect.
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4.05 Financial Statements.
(a) Attached as Schedule 4.05 are the unaudited balance
sheet of each of the AMPCO Companies as of September 30, 2001 and
the related statements of income for the period then ended. Such
balance sheets and statements of income fairly present in all
material respects the financial position of the AMPCO Companies as
of such date and the results of their respective operations for
such period and have been prepared in accordance with GAAP, except
that footnotes and related schedules otherwise required by GAAP
have not been included with such unaudited financial statements.
(b) The financial statements referred to in clause(a) above
are hereinafter referred to as the "FINANCIAL STATEMENTS."
4.06 Material Contracts.
(a) Except as listed on Schedule 4.06(a) (collectively, the
"MATERIAL CONTRACTS"), neither of the AMPCO Companies is a party
to or bound by any lease, agreement or other contract of the type
described below currently in effect (except for those entered into
after the Execution Date and prior to the Closing in accordance
with Section 6.02):
(i) any agreements whereby either of the AMPCO
Companies guarantees any material obligation of Seller, any
of its Affiliates, or any other Person;
(ii) any employment agreements;
(iii) any agreement for capital expenditures or the
acquisition or construction of fixed assets that requires
future payments in excess of $50,000 (or the equivalent in
local currency);
(iv) any collective bargaining agreement with any
labor union;
(v) agreements, indentures or other instruments
relating to the borrowing, or the guarantee of any
borrowing, by either of the AMPCO Companies;
(vi) any agreement for the purchase or sale of
natural gas, methanol, or associated products with a term
of more than ninety (90) days;
(vii) any agreement for the sale of any asset (other
than sales of methanol or associated products in the
ordinary course of business) of either of the AMPCO
Companies for more than $250,000 (or the equivalent in
local currency);
(viii) any agreement that constitutes a lease under
which either of the AMPCO Companies is the lessor or lessee
of real or personal property, which lease (A) cannot be
terminated without penalty upon not more than thirty (30)
days notice and (B) involves an annual base rental in
excess of $50,000 (or the equivalent in local currency) or
whereby such a lease constitutes a capital lease for Tax or
GAAP purposes;
11
(ix) any agreement with Seller or its Affiliates
relating to the provision of goods or services or the
payment of funds or the advancing or borrowing of money
(the "INTERCOMPANY AGREEMENTS");
(x) any agency, consultancy or similar agreement
requiring payment in excess of $50,000 per annum (or the
equivalent in local currency);
(xi) any agreement concerning a partnership or joint
venture; or
(xii) any commodity futures agreement.
Attached as Schedule 4.06(a)(ii) is a list of certain agreements that, as
of the Execution Date, have not been executed and are under negotiation
(the "PENDING MATERIAL CONTRACTS"). True and complete copies of each
Pending Material Contract have been made available to Buyer, and the
draft date of each such draft so made available is listed on Schedule
4.06(a)(ii).
(b) True and complete copies of each Material Contract have been
made available to Buyer.
(c) To the Knowledge of Seller, except as set forth in Schedule
4.06(c), (i) each of the Material Contracts is in full force and effect,
except to the extent that the failure to be in full force and effect
would not have a Material Adverse Effect, and (ii) neither of the AMPCO
Companies is in default with respect to any Material Contract other than
exceptions to the foregoing that would not have a Material Adverse
Effect.
4.07 Absence of Certain Changes. Since the date of the September 30, 2001
Financial Statements, neither of the AMPCO Companies has:
(a) transferred any of its assets, including any right under any
lease or Material Contract or any proprietary right or other intangible
asset, in each case having a value in excess of $100,000 except for fair
consideration and in the ordinary course of business;
(b) waived, released, canceled, settled or compromised any debt,
claim or right having a value in excess of $100,000 in each case except
in the ordinary course of business;
(c) suffered (i) any damage, destruction or casualty of property
if the anticipated cost to repair such property, after application of all
insurance proceeds with respect thereto, exceeds $100,000 in the
aggregate or (ii) any taking by condemnation or eminent domain of any of
its property or assets having a historical cost or fair market value that
exceeds $100,000;
(d) conducted any of its affairs in a manner that is outside the
ordinary course of business and inconsistent with its past practices;
except for (i) any event described in any of Sections 4.07(a) through (c)
hereof (disregarding the applicable dollar thresholds in any of such
sections), (ii) as otherwise contemplated by this Agreement, or (iii) as
results from announcements by Seller of intention to sell its ownership
interest in the AMPCO Companies;
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(e) changed any accounting methods or principles used in recording
transactions on the books of either Company or in preparing the financial
statements of either Company other than as required by GAAP; or
(f) entered into any contract committing itself with respect to
any of the foregoing.
4.08 Employees. Except as set forth on Schedule 4.08, (i) the AMPCO
Companies have no employees, and (ii) the AMPCO Companies do not administer or
sponsor any employee pension benefit plan or employee welfare benefit plan. For
the purposes of this Section 4.08, an employee pension benefit plan includes any
plan, fund or program providing either retirement income to employees, former
employees or their beneficiaries or a deferral of income to employees, former
employees or their beneficiaries beyond termination of employment. Also, for
purposes of this Section 4.08, an employee welfare benefit plan includes any
plan, fund or program providing employees, former employees or their
beneficiaries with health, sickness, accident, disability, death, unemployment
or other similar benefits.
4.09 Insurance. Schedule 4.09 contains a list of all material policies of
property damage, liability and other forms of insurance (other than officer's
and director's liability policies) that cover occurrences as of, or claims made
on, the date hereof and maintained by either of the AMPCO Companies or by Seller
or any Affiliate thereof to the extent applicable to either of the AMPCO
Companies.
4.10 Litigation. Except for (a) claims listed in Schedule 4.10, (b)
claims under worker's compensation and similar Laws, (c) routine claims for
employee benefits and (d) claims for money damages alone of less than $250,000
(or the equivalent in local currency) in respect of any claim, there are no
lawsuits, claims, arbitrative, governmental investigations or other legal
proceedings pending or, to the Knowledge of Seller, threatened against either of
the AMPCO Companies or otherwise relating to the conduct of the Business that
would have a Material Adverse Effect.
4.11 Liability for Brokers' Fees. Buyer will not directly or indirectly
incur any liability or expense as a result of any undertakings or agreements of
Seller or Seller's Affiliates for brokerage fees, finder's fees, agent's
commissions or other similar forms of compensation in connection with this
Agreement or any agreement or transaction contemplated hereby.
4.12 Compliance with Laws. Except as listed in Schedule 4.12, neither of
the AMPCO Companies has received any written notice of any violation of any
applicable Law other than such violations as would not have a Material Adverse
Effect. Except as would not have a Material Adverse Effect, (a) the AMPCO
Companies are in compliance with all applicable Laws and (b) neither of the
AMPCO Companies has entered into or agreed to any court decree or order or is
subject to any judgment, decree or order relating to compliance with any
applicable Laws.
4.13 Consents and Preferential Rights. Except as disclosed in Schedule
4.13, (i) no consents are required to be obtained by Seller or either of the
AMPCO Companies in connection with the transfer of Seller's ownership interest
in the AMPCO Companies to Buyer, and (ii) there are no preferential purchase
rights applicable to the transfer of Seller's ownership interest in the AMPCO
Companies to Buyer.
13
4.14 Taxes. Except as set forth on Schedule 4.14 or as would not
otherwise have a Material Adverse Effect,
(a) To the Knowledge of Seller, all returns, reports, declarations
of estimated Tax of or with respect to any Tax that are required to be
filed on or prior to the Closing with respect to the AMPCO Companies
("TAX RETURNS") have been or will be duly and properly filed, all items
of income, gain, loss, deduction, credit, or other items ("TAX ITEMS")
required to be included in each such Tax Return have been so included,
and all such Tax Items and any other information provided in each such
Tax Return are true, correct, complete, and in accordance with applicable
Laws, and all such Tax Returns reflect all liabilities for Taxes for the
periods covered by such returns, all Taxes shown as due on each such Tax
Return have been or will be 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 or any estimate relating
to the Tax, and all Tax withholdings and deposit requirements imposed on
or with regard to the AMPCO Companies have been satisfied in full in all
respects.
(b) There is no investigation or other proceeding pending with
respect to the Companies for any Tax in any jurisdiction where the AMPCO
Companies do not file Tax Returns.
(c) There are no pending audits, assessments or claims for any Tax
deficiency of the Companies. There are no pending claims for refund of
any Tax for the AMPCO Companies.
(d) There are no outstanding agreements, rulings, or requests for
rulings applicable to any Tax that are, or if issued would be, binding
upon the AMPCO Companies for any post-Closing period.
(e) The AMPCO Companies do not have in force any waiver of any
statute of limitations in respect of any Tax or any extension of time
with respect to a Tax assessment or deficiency.
(f) There are no liens for any Tax upon any of the assets of the
AMPCO Companies except for liens for Taxes not yet due.
(g) Except as reflected in the AMPCO Companies Tax Returns, there
are no elections with respect to any Tax affecting the AMPCO Companies.
(h) Any Tax required to be withheld by the AMPCO Companies and
paid in connection with amounts paid or owing to any lender, creditor,
employee, contractor, service provider, or any other Person has in fact
been withheld and paid in full, and all Tax withholding, reporting, and
payment obligations have been complied with in accordance with applicable
Law.
(i) Neither of the AMPCO Companies is party to, bound by, or has
any obligation under any Tax sharing agreement, Tax indemnification
agreement, or similar agreement.
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(j) Each of the AMPCO Companies is classified as a partnership
pursuant to Treasury Regulation Section 301.7701-3.
4.15 Intellectual Property. Each of the AMPCO Companies owns or has valid
rights or licenses for all Intellectual Property used by it in the conduct of
its Business and such rights shall not be adversely affected by the transactions
contemplated under this Agreement.
4.16 Data Room and Information. To Seller's Knowledge and except for (i)
the Permitted Encumbrances (excluding item (i) of the definition of Permitted
Encumbrances) and (ii) matters disclosed in any Schedule to this Agreement:
(a) all material written data and written information of Seller
the Companies relating to the Companies or the Business of the Companies
in Seller's or the Companies' possession was contained in the Data Room
or subsequently disclosed or made available to Buyer or Buyer's
Affiliates (excluding any information described in Section 3.02(b)(ii);
and
(b) all written data and written information given to Buyer or
Buyer's Affiliates in the Data Room or subsequently disclosed or made
available by or on behalf of Seller concerning the Companies or the
Business is believed by Seller (i) not to be misleading in any material
respect, and (ii) to be accurate in all material respects when given and
by reference to the facts existing at the time such information or data
was created; provided that no representation or warranty is made or given
as to the accuracy or completeness of any models, projections, opinions,
interpretations, estimates or forecasts (whether contained in any third
party document or otherwise) or any information or data contained in any
of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof as
follows:
5.01 Corporate Existence and Qualification. Buyer is a corporation duly
incorporated and validly existing under the laws of the State of Ohio, and Buyer
has all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as presently conducted.
5.02 Authority, Approval and Enforceability. Buyer has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement. The execution and delivery of this
Agreement by Buyer and the performance of the transactions contemplated hereby
by Buyer have been duly and validly approved by the Board of Directors of Buyer
and by all other corporate action, if any, necessary on behalf of Buyer. This
Agreement has been duly executed and delivered on behalf of Buyer and
constitutes the legal, valid and binding obligation of Buyer enforceable in
accordance with its terms, subject to Creditors' Rights. At the Closing, all
documents required hereunder to be executed and delivered by Buyer will have
been duly authorized, executed and delivered by Buyer and will constitute legal,
valid and binding obligations of Buyer, enforceable in accordance with their
terms, subject to Creditors' Rights.
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5.03 No Default or Consents. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein will:
(a) conflict with or result in a breach, default or violation of
the articles of incorporation or other governing documents of Buyer;
(b) conflict with or result in a breach, default or violation of
any material agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which Buyer is a party or
is subject; or
(c) require Buyer to obtain or make any waiver, consent, action,
approval clearance or authorization of, or registration, declaration or
filing with, any Governmental Authority.
5.04 Investment. Buyer is an accredited investor as defined in Regulation
D of the United States Securities Act of 1933 and is acquiring Seller's
ownership interest in the AMPCO Companies for its own account, for investment
and not with a view to, or for offer or resale in connection with, a
distribution thereof within the meaning of the Securities Act of 1933 or a
distribution thereof in violation of any applicable securities laws. Buyer,
together with its directors, executive officers and advisors, is familiar with
investments of the nature of Seller's ownership interest in the AMPCO Companies
and the Business, understands that this investment involves substantial risks,
has adequately investigated the AMPCO Companies and the Business and has
substantial knowledge and experience in financial and business matters such that
it is capable of evaluating, and has evaluated, the merits and risks inherent in
purchasing Seller's ownership interest in the AMPCO Companies and is able to
bear the economic risks of such investment.
5.05 Financial Capacity. Buyer has cash on hand or financing commitments,
copies of which are attached hereto as Schedule 5.05, that are sufficient to
satisfy all of its obligations under this Agreement to be performed at the
Closing. Buyer is not aware of any event or occurrence that would result in any
of the conditions to its right to funds under such financing commitments not to
be satisfied. Buyer will provide to Seller such documentation as Seller may
reasonably request to confirm Buyer's financial capacity.
5.06 Liability for Brokers' Fees. Seller will not directly or indirectly
incur any liability or expense as a result of any undertakings or agreements of
Buyer or Buyer's Affiliates for brokerage fees, finder's fees, agent's
commissions or other similar forms of compensation in connection with this
Agreement or any agreement or transaction contemplated hereby.
5.07 No Knowledge of Seller's Breach. As of the Execution Date, Buyer
has no Knowledge of any breach by Seller of Seller's representations and
warranties hereunder.
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ARTICLE VI
COVENANTS OF SELLER AND BUYER
6.01 Access.
(a) During the period commencing with the Execution Date and
ending at 5:00 p.m., local time, on November 30, 2001 (the "DUE DILIGENCE
PERIOD"), Buyer shall have the right to conduct the investigation
described in Section 6.01(b).
(b) Upon reasonable notice from Buyer to Seller, Seller shall
permit, and shall exercise its rights under the Marketing Members'
Agreement and the Services Members' Agreement to cause the AMPCO
Companies to permit, Buyer and its authorized employees, agents,
accountants, legal counsel and other representatives to have reasonable
access, at Buyer's sole expense, risk and cost, to the facilities,
properties, personnel and Records of the AMPCO Companies (including all
product sales, personnel-related documents and financial records and data
of the AMPCO Companies) for the purpose of conducting an investigation of
their financial condition, corporate status, business, properties and
assets; provided however, that such investigation shall be conducted in a
manner that does not interfere with normal operations of the AMPCO
Companies.
(c) Prior to Closing, (i) Buyer will not contact any employee of
Seller, either of the AMPCO Companies, or any of their Affiliates,
without first obtaining the approval of an authorized representative of
Seller (not to be unreasonably withheld), and (ii) Seller will furnish,
or exercise its rights under the Marketing Members' Agreement and the
Services Members' Agreement to cause the AMPCO Companies to furnish,
Buyer with such additional financial and operating data and other
information pertaining to the AMPCO Companies and their assets and
operations as Buyer may reasonably request; provided however that nothing
in this Agreement shall obligate Seller to take any action that would
disrupt the normal course of its or any of its Affiliate's, or either of
the AMPCO Companies', business or violate the terms of any applicable Law
or agreement to which it or any of its Affiliates or either AMPCO Company
is a party or to which it or any of its Affiliates, either AMPCO Company
or any of their assets are subject; and provided further, that the
confidentiality of any data or information to which Buyer is given access
shall be maintained by Buyer and its representatives in accordance with
Section 11.01.
(d) After the expiration of the Due Diligence Period and until
Closing or termination of this Agreement, Buyer shall continue to have
the right to conduct the investigation described in Section 6.01 to the
extent necessary for the purposes of preparing for an orderly transition
of ownership of the AMPCO Companies.
6.02 Operation of Business.
(a) Except (i) as contemplated in this Agreement, (ii) as
otherwise consented to by Buyer in writing (which consent will not be
unreasonably delayed, withheld or conditioned), (iii) as provided for in
the Material Contracts, or (iv) for the execution by the AMPCO Companies
of any Pending Material Contract (provided such Pending Material Contract
is substantially in the form of the draft listed on Schedule
4.06(a)(ii)), from the Execution Date through the Closing Date, Seller
will, to the extent of Seller's voting and other rights under the
Marketing Members' Agreement and the Services Members'
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Agreement and the participation by representatives of Seller on the
management committees of the AMPCO Companies, use Reasonable Efforts to
cause each of the AMPCO Companies to:
(A) conduct its Business, in all material respects, in the
ordinary course of business, consistent with past practices;
(B) use its Reasonable Efforts to comply in all material
respects with all applicable Laws and use its Reasonable Efforts
to maintain compliance in all material respects with all of its
material agreements;
(C) continue its existing practices relating to the
maintenance and operation of its assets;
(D) not directly or indirectly take any steps affecting or
changing its capitalization;
(E) not merge into or with or consolidate with any other
Person or acquire all or substantially all of the business or
assets of any Person;
(F) not make any change in its governing documents;
(G) not purchase any securities of any Person except for
short-term investments made in the ordinary course of business;
(H) not sell, lease or otherwise dispose of or grant rights
in respect of any of its assets or properties that have a fair
market value in excess of $1,000,000 (or the equivalent in local
currency) (1) for less than fair market value and (2) other than
in the ordinary course of business;
(I) not create, incur, assume or guarantee any long-term
debt or capitalized lease obligation or, except in the ordinary
course of business and consistent with past practices, incur or
assume any short-term debt;
(J) not mortgage, pledge or subject to any lien, claim,
encumbrances or security interest any of its assets, tangible or
intangible, except for Permitted Encumbrances or other similar
liens or encumbrances created in the ordinary course of business
consistent with past practices;
(K) not take any action or enter into any commitment with
respect to or in contemplation of any liquidation, dissolution,
recapitalization, reorganization or other winding up of its
Business;
(L) not grant any preferential right of purchase or similar
consent right to the transfer or assignment of its Business or any
of its assets;
(M) not take, or knowingly permit to be taken, any action
in the conduct of the Business that would be contrary to or in
breach of any of the terms or provisions of this Agreement; and
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(N) not commit to do any of the foregoing.
(b) In addition to the foregoing, from the Execution Date until
the Closing or the termination of this Agreement, Seller agrees to keep
Buyer reasonably apprised, from time to time, of any significant
developments in the Business of the AMPCO Companies and to consult with
Buyer with regard to such developments. To the extent any disruption
occurs to the Business of the AMPCO Companies prior to Closing as a
result of the announcement by Seller of its intention to sell its
ownership interest in the AMPCO Companies, Seller agrees to use
Reasonable Efforts to minimize such disruption.
(c) Seller shall refrain and, to the extent of Seller's voting and
other rights under the Marketing Members' Agreement and the Services
Members' Agreement and the participation by representatives of Seller on
the management committees of the AMPCO Companies, shall cause the AMPCO
Companies to refrain from taking any action that would change the
classification for U.S. income tax purposes of the AMPCO Companies as
described in Section 4.14(j).
(d) Seller shall refrain and, to the extent of Seller's voting and
other rights under the Marketing Members' Agreement and the Services
Members' Agreement and the participation by representatives of Seller on
the management committees of the AMPCO Companies, shall cause the AMPCO
Companies not to dividend, loan, or otherwise distribute money to or for
the benefit of Seller at any time on or after the Measurement Date.
6.03 Satisfaction of Buyer's Conditions. Seller will use its, and will,
to the extent of Seller's voting and other rights under the Marketing Members'
Agreement and the Services Members' Agreement and the participation by
representatives of Seller on the management committees of the AMPCO Companies,
cause each of the AMPCO Companies to use their, Reasonable Efforts to obtain the
satisfaction of the conditions to the Closing set forth in Section 8.02 hereof.
6.04 Press Releases. From the Execution Date through the Closing Date,
subject to applicable securities law or stock exchange requirements, each Party
shall promptly advise and consult with, and obtain the consent (which consent
will not be unreasonably delayed, withheld or conditioned) of, the other Party
before issuing, or permitting any of its directors, officers, employees, agents
or its Affiliates to issue, any press release with respect to this Agreement or
the transactions contemplated hereby.
6.05 Insurance. Seller shall, to the extent of Seller's voting and other
rights under the Marketing Members' Agreement and the Services Members'
Agreement and the participation by representatives of Seller on the management
committees of the AMPCO Companies, use its Reasonable Efforts to cause each of
the AMPCO Companies to not voluntarily terminate and to maintain in force and
effect through the Closing Date the insurance coverages set forth on Schedule
4.09 or to cause to be placed in force and effect comparable insurance coverage.
Buyer acknowledges that no insurance coverage or policy maintained by Seller or
its Affiliates will extend beyond the Closing for the benefit of the AMPCO
Companies or Buyer.
6.06 Satisfaction of Seller's Conditions. Buyer will use its Reasonable
Efforts to obtain the satisfaction of the conditions to the Closing set forth in
Section 8.01 hereof.
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6.07 Breach Notice. If, prior to the Closing Date, Buyer obtains
Knowledge of a breach of any of Seller's representations and warranties or of
any of Seller's covenants contained in this Agreement, Buyer shall notify Seller
in writing of such information (the "BREACH NOTICE") within five (5) Business
Days of such discovery or the day prior to the Closing Date, whichever is
earlier. The Breach Notice shall contain reasonable details regarding the
alleged breach and Buyer's good faith estimate of the potential Losses
associated with such breach. In the event the breach is of a magnitude such that
Losses attributable to such breach (together with other such breaches discovered
by Buyer with respect to which Buyer has delivered the requisite Breach Notices)
are reasonably likely to exceed $13,000,000 and (x) Seller fails to deliver to
Buyer a written undertaking within five Business Days of receipt of such Breach
Notice that Seller intends to cure such breach prior to the Closing Date or (y)
Seller delivers such written undertaking but fails to cure such breach prior to
the Closing Date, (i) Buyer may terminate this Agreement upon written notice to
Seller (provided that Buyer has timely given Seller the requisite Breach
Notices) and (ii) Seller may terminate this Agreement upon written notice to
Buyer.
6.08 Uncollected Accounts Receivable. Following the Closing Date, Buyer
will use its, and will, to the extent of Buyer's voting and other rights under
the Marketing Members' Agreement and the Services Members' Agreement and the
participation by representatives of Buyer on the management committees of the
AMPCO Companies, cause the AMPCO Companies to use their, Reasonable Efforts to
collect any Uncollected Accounts Receivable. If either of the AMPCO Companies
receives all or any portion of any Uncollected Accounts Receivable, Buyer shall
promptly pay to Seller, by wire transfer in immediately available funds to an
account designated by Seller, fifty percent (50%) of such amounts received (net
of any offsets for accounts payable used in the calculation of Uncollected
Accounts Receivable) that are allocable to either of the AMPCO Companies.
6.09 Consents and Preferential Rights. Seller will use Reasonable Efforts
to obtain any consent listed in Schedule 4.13 prior to the Closing Date, and
Buyer agrees to use Reasonable Efforts to cooperate in such process, as
requested by Seller.
6.10 Preservation of Books and Records; Access. For a period of seven (7)
years after the Closing Date, Buyer shall (a) preserve and retain the Records
and all other corporate, accounting, legal, auditing and other books and records
of the AMPCO Companies (including any documents relating to any governmental or
non-governmental actions, suits, proceedings or investigations) relating to the
conduct of the business and operations of the AMPCO Companies prior to the
Closing Date and (b) cause the AMPCO Companies to permit Seller and its
authorized representatives to have reasonable access thereto on the same basis
as applies to Buyer pursuant to Section 6.01 and to meet with employees of Buyer
and the AMPCO Companies on a mutually convenient basis in order to obtain
additional information and explanations with respect to such books and records.
Notwithstanding the foregoing, during such seven-year period, Buyer may dispose
of any such Records that are offered to, but not accepted by, Seller.
6.11 Further Assurances. At and after the Closing, Seller and Buyer will
use Reasonable Efforts to take all appropriate action and execute any documents
or instruments of any kind that may be reasonably necessary to effectuate the
intent of this Agreement.
6.12 Casualty Loss. If, after the date hereof and prior to the Closing
Date, all or any part of the assets of either of the AMPCO Companies shall be
destroyed by explosion, fire or other
20
casualty, and if the Closing occurs, Seller shall pay to Buyer at the Closing
all sums paid to Seller or any of its Affiliates by third parties by reason of
the destruction of such assets. In addition, Seller shall, and shall ensure that
its Affiliates shall, assign, transfer and set over unto Buyer all of the right,
title and interest of Seller or the relevant Affiliate in and to any unpaid
awards or other payments from third parties arising out of such destruction.
Seller shall not voluntarily compromise, settle or adjust any amounts payable by
reason of such destruction without the prior written consent of Buyer. Seller
shall use its Reasonable Efforts to obtain payment from the relevant third
party.
ARTICLE VII
TAX MATTERS
7.01 Preparation and Filing of Tax Returns.
(a) After the Closing Date, each of Seller and Buyer shall provide
each other, and Buyer, to the extent of its voting and other rights under
the Marketing Members' Agreement and the Services Members' Agreement and
the participation by its representatives on the management committees of
the AMPCO Companies, shall cause each of the AMPCO Companies to provide
to Seller, such cooperation and information relating to the AMPCO
Companies as may reasonably be requested in connection with filing any
Tax Return or refund claim, determining any Tax liability or a right to a
refund, conducting or defending any audit or other proceeding in respect
of Taxes related to the business of the AMPCO Companies, or effectuating
the terms of this Agreement. Buyer shall, to the extent of Buyer's voting
and other rights under the Marketing Members' Agreement and the Services
Members' Agreement and the participation by representatives of Buyer on
the management committees of the AMPCO Companies, cause each of the AMPCO
Companies to file timely with the appropriate taxing authority all Tax
Returns required to be filed with respect to the AMPCO Companies
following the Closing Date regardless of whether the subject of such Tax
Returns relate partially or wholly to the time period prior to the
Closing Date. Such Tax Returns shall be prepared in a manner consistent
with practices and the Laws followed in prior years with respect to
similar Tax Returns, except for changes required by changes in Law.
(b) Buyer and Seller shall report their respective allocable
shares of the items of income, gain, loss, deduction, and credit of the
AMPCO Companies based on an interim closing of the books as of January 3,
2002.
(c) Seller shall, to the extent of its voting and other rights
under the Marketing Members' Agreement and the Services Members'
Agreement and the participation by its representatives on the management
committees of the AMPCO Companies, cause the AMPCO Companies not to make,
revoke, or amend any Tax election that would affect the period after the
Closing (other than any election that must be made periodically and that
is made consistently with past practice) without the prior consent of
Buyer.
(d) The Buyer Indemnified Parties shall not take any action, and,
to the extent of Buyer's voting and other rights under the Marketing
Members' Agreement and the Services Members' Agreement and the
participation by representatives of Buyer on the management committees of
the AMPCO Companies, shall not allow either of the AMPCO Companies to
take any action, on or after the Closing Date, that would increase the
liability of the Seller or its direct or indirect shareholders for Taxes
during the period of time prior to or ending on
21
the Closing Date; provided, however, that nothing in this Section 7.01(d)
shall prevent the Buyer Indemnified Parties from making any election
under Section 754 of the Code. Seller shall consent to, and cooperate
with the Buyer Indemnified Parties in making, any such Section 754
elections for periods beginning on or after January 1, 2002.
(e) Seller shall be responsible for any Transfer Taxes, including
the filing of any Tax Return with respect thereto.
(f) The Adjusted Purchase Price shall be allocated in the manner
required by Section 1060 of the Code. To facilitate such allocation,
Buyer shall deliver to Seller, not later than December 1, 2001, a
schedule setting forth Buyer's proposed allocation of the Base Purchase
Price. Buyer and Seller shall work in good faith to agree upon a final
allocation of the Adjusted Purchase Price not later than 120 days after
Closing. Buyer and Seller shall timely file IRS form 8594 in accordance
with such final allocation with respect to the transactions contemplated
by this Agreement.
7.02 Retention of Information. Each of the Parties will preserve and
retain all schedules, work papers and other documents relating to any Tax
Returns of or with respect to the AMPCO Companies or to any claims, audits or
other proceedings affecting the AMPCO Companies until the expiration of the
statute of limitations (including extensions) applicable to the taxable period
to which such documents relate or until the final determination of any
controversy with respect to such taxable period, and until the final
determination of any payments that may be required with respect to such taxable
period under this Agreement.
7.03 Indemnification by Seller. Seller hereby agrees to protect, defend,
indemnify and hold harmless the Buyer Indemnified Parties, and each of the AMPCO
Companies from and against, and agrees to pay (a) any Taxes (net of any realized
Tax benefits associated therewith) of the AMPCO Companies (but only in an amount
proportional to Seller's direct or indirect interest in the relevant AMPCO
Company for the period to which such Taxes relate) attributable to the time
period prior to January 1, 2002 (including for the avoidance of doubt any Taxes
of the AMPCO Companies for the period prior to January 1, 2002 that are set
forth on Schedule 4.14), but only to the extent such Taxes exceed the amount
reserved for such Taxes on the Settlement Statement, (b) any Taxes arising out
of the transactions contemplated by this Agreement, (c) any increase in Taxes of
a Buyer Indemnified Party resulting from a breach by Seller of its
representations in Section 4.14(j) or its covenant in Section 6.02(c), and (d)
any Taxes of any company (other than the AMPCO Companies) that is or was an
Affiliate of Seller at any time prior to prior to January 1, 2002.
Notwithstanding anything to the contrary in this Agreement, no claim for Taxes
shall be permitted under this Section 7.03 unless such claim is first made
before the expiration of the statute of limitations (including applicable
extensions) for the taxable period to which the claim relates or, if no such
statute of limitation exists, prior to the date on which such claim is otherwise
barred by Law.
7.04 Buyer Tax Indemnification. Buyer agrees to protect, defend,
indemnify and hold harmless the Seller Indemnified Parties from and against, and
agrees to pay (a) any Taxes of the AMPCO Companies (but only in an amount
proportional to Seller's interest in the relevant AMPCO Company for the period
to which such Taxes relate) attributable to the time period from and after
January 1, 2002, excluding for purposes of clarification any Taxes arising out
of the transactions contemplated by this Agreement, and (b) any liability
arising from a breach by Buyer of its covenants in this Article VII.
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7.05 Tax Indemnification Procedures.
(a) If a claim shall be made by any Tax authority that, if
successful, would result in the indemnification of a Party under this
Agreement (referred to herein as the "TAX INDEMNIFIED PARTY"), the Tax
Indemnified Party shall promptly notify the party obligated under this
Agreement to so indemnify (referred to herein as the "TAX INDEMNIFYING
PARTY") in writing of such fact.
(b) The Tax Indemnified Party shall take such action in connection
with contesting such claim as the Tax Indemnifying Party shall reasonably
request in writing from time to time, including the selection of counsel
and experts and the execution of powers of attorney; provided that (i)
within thirty (30) days after the notice described in Section 7.05(a) has
been delivered (or such earlier date that any payment of Taxes is due by
the Tax Indemnified Party but in no event sooner than five (5) days after
the Tax Indemnifying Party's receipt of such notice), the Tax
Indemnifying Party requests that such claim be contested, (ii) the Tax
Indemnifying Party shall have agreed to pay to the Tax Indemnified Party
all costs and expenses that the Tax Indemnified Party incurs in
connection with contesting such claim, including reasonable attorneys'
and accountants' fees and disbursements, and (iii) if the Tax Indemnified
Party is requested by the Tax Indemnifying Party to pay the Tax claimed
and xxx for a refund, the Tax Indemnifying Party shall have advanced to
the Tax Indemnified Party, on an interest-free basis, the amount of such
claim. The Tax Indemnified Party shall not make any payment of such claim
for at least thirty (30) days (or such shorter period as may be required
by applicable law) after the giving of the notice required by Section
7.05(a), shall give to the Tax Indemnifying Party any information
reasonably requested relating to such claim, and otherwise shall
cooperate with the Tax Indemnifying Party in good faith in order to
contest effectively any such claim.
(c) Subject to the provisions of Section 7.05(b), the Tax
Indemnified Party shall only enter into a settlement of such contest with
the applicable taxing authority or prosecute such contest to a
determination in a court or other tribunal of initial or appellate
jurisdiction as instructed by the Tax Indemnifying Party.
(d) If, after actual receipt by the Tax Indemnified Party of an
amount advanced by the Tax Indemnifying Party pursuant to Section
7.05(b)(iii), the extent of the liability of the Tax Indemnified Party
with respect to the claim shall be established by the final judgment or
decree of a court or other tribunal or a final and binding settlement
with an administrative agency having jurisdiction thereof, the Tax
Indemnified Party shall promptly repay to the Tax Indemnifying Party the
amount advanced to the extent of any refund received by the Tax
Indemnified Party with respect to the claim together with any interest
received thereon from the applicable taxing authority and any recovery of
legal fees from such taxing authority, net of any Taxes as are required
to be paid by the Tax Indemnified Party with respect to such refund,
interest or legal fees. Notwithstanding the foregoing, the Tax
Indemnified Party shall not be required to make any payment hereunder
before such time as the Tax Indemnifying Party shall have made all
payments or indemnities then due with respect to the Tax Indemnified
Party pursuant to this Agreement.
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7.06 Mutual Cooperation. Seller and Buyer shall reasonably cooperate with
each other and with each other's agents, including accounting firms and legal
counsel, in connection with Tax matters relating to the AMPCO Companies,
including (i) preparation and filing of Tax Returns, (ii) determining the
liability and amount of any Taxes due or the right to and amount of any refund
of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or
judicial proceedings in respect of Taxes assessed or proposed to be assessed.
Such cooperation shall include each Party's making all information and documents
in its possession relating to the AMPCO Companies available to the other Party
and retaining all Tax Returns, schedules and work papers, and all material
records and other documents relating thereto, until the expiration of the
applicable statute of limitations (including, to the extent notified by any
Party, any extension thereof) of the Tax period to which such Tax Returns and
other documents and information relate. Each of the Parties shall also make
available to the other Party, as reasonably requested and available, personnel
(including officers, directors, employees, and agents) responsible for
preparing, maintaining, and interpreting information and documents relevant to
Taxes, and personnel reasonably required as witnesses or for purposes of
providing information or documents in connection with any administrative or
judicial proceeding relating to Taxes. Each of the Parties shall exert all
appropriate efforts to preserve the confidentiality of all non-public
information and documents obtained or used in connection with such cooperation
or assistance. Any Party requesting any such cooperation or assistance shall
promptly reimburse any other Party providing any such cooperation or assistance
for the reasonable expenses incurred by such other Party with respect thereto.
Notwithstanding anything to the contrary in this Agreement, neither Seller nor
Buyer shall be required to provide to the other party all or any portion of a
U.S. consolidated federal income Tax Return filed by the respective consolidated
group in which Seller or Buyer is included.
7.07 Survival. The covenants, representations and warranties of the
Parties contained in this Article VII shall survive the Closing and shall
continue in full force and effect until all applicable statutes of limitations,
including waivers and extensions, have expired with respect to the matters
addressed therein, and if no statute of limitations exists, forever thereafter.
Notwithstanding the foregoing, any such representation or warranty as to which a
bona fide claim relating thereto is asserted in writing (which states with
specificity the basis therefor) during such survival period shall, with respect
only to such claim, continue in force and effect beyond such survival period
pending resolution of the claim.
7.08 Conflict. In the event of a conflict between the provisions of this
Article VII and any other provisions of this Agreement, this Article VII shall
control.
ARTICLE VIII
CLOSING CONDITIONS
8.01 Conditions to Obligations of Seller. The obligations of Seller to
proceed with the Closing are subject to the satisfaction at or prior to the
Closing of all of the following conditions, any one or more of which may be
waived in writing in whole or in part by Seller (which waiver shall be deemed to
constitute a waiver of any liability Buyer may have under this Agreement with
respect to the event or condition causing such condition not to be satisfied at
the Closing):
(a) Compliance. Buyer shall have complied in all material respects
with its covenants and agreements contained herein, and Buyer's
representations and warranties
24
contained herein, or in any certificate or similar instrument required to
be delivered by or on behalf of Buyer pursuant hereto, shall be true in
all material respects on and as of the Closing Date, with the same effect
as though made at such time;
(b) Officers' Certificate. Seller shall have received certificates
dated as of the Closing Date and signed by (i) the Director, President,
or Vice President of Buyer, in his or her representative capacity, to the
effect that the conditions specified in Section 8.01(a) have been
fulfilled and (ii) the Secretary or an Assistant Secretary of Buyer, in
his or her representative capacity, certifying the accuracy and
completeness of the copies of, as well as the current effectiveness of,
the resolutions to be attached thereto of the board of directors (or any
committee thereof) of Buyer authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, as well as to the incumbency of the officers
executing this Agreement on behalf of Buyer and any documents to be
executed and delivered by Buyer at the Closing;
(c) No Orders. No order, writ, injunction or decree shall have
been entered and be in effect by any court of competent jurisdiction or
any governmental or regulatory instrumentality or authority, and no
statute, rule, regulation or other requirement shall have been
promulgated or enacted and be in effect, that restrains, enjoins or
invalidates the transactions contemplated hereby;
(d) No Suits. No suit or other proceeding shall be pending or
threatened by any third party before any court or governmental agency
seeking to restrain or prohibit or declare illegal, or seeking
substantial damages in connection with, the transactions contemplated by
this Agreement; and
(e) Approvals. All Approvals (without any adverse conditions or
obligations) and waivers of preferential purchase and similar rights of
third parties in connection with the transactions contemplated by this
Agreement listed on Schedule 8.01(e) and all other Approvals required by
Law shall have been satisfied or obtained.
(f) Simultaneous Closing. The simultaneous closing of the
transactions contemplated by (i) the Associates Agreement and (ii) the
Upstream Agreement.
8.02 Conditions to Obligations of Buyer. The obligations of Buyer to
proceed with the Closing are subject to the satisfaction at or prior to the
Closing of all of the following conditions, any one or more of which may be
waived in writing in whole or in part by Buyer (which waiver shall be deemed to
constitute a waiver of any liability Seller may have under this Agreement (other
than liability for matters specified in a duly delivered Breach Notice) with
respect to the event or condition causing such condition not to be satisfied at
the Closing):
(a) Compliance. Seller shall have complied in all material
respects with its covenants and agreements contained herein, and Seller's
representations and warranties contained herein or in any certificate or
similar instrument required to be delivered by or on behalf of Seller
pursuant hereto, shall be true and correct in all material respects on
and as of the Closing Date, with the same effect as though made at such
time except to the extent Seller has been unable to cure a breach
identified by Buyer in a Breach Notice; provided that if a representation
or warranty is expressly made only as of a specific date, it need only be
true and correct in all material respects as of such date; provided,
however, that Buyer's right
25
not to proceed with the Closing as a result of a breach of Seller's
representations and warranties shall only arise in the event that Buyer
has a right to terminate this Agreement pursuant to Section 6.07.
(b) Officers' Certificate. Buyer shall have received a certificate
dated as of the Closing Date and signed by (i) a Director, President, or
Vice President of Seller, in his or her representative capacity, to the
effect that the conditions specified in Section 8.02(a) have been
fulfilled and (ii) the Secretary or an Assistant Secretary of Seller, in
his or her representative capacity, certifying the accuracy and
completeness of the copies of, as well as the current effectiveness of,
the resolutions to be attached thereto of the board of directors (or any
committee thereof) of Seller authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, as well as to the incumbency of the officers
executing this Agreement on behalf of Seller and any documents to be
executed and delivered by Seller at the Closing;
(c) Resignations. Seller shall have delivered to Buyer (i)
resignations substantially in the form attached hereto as Schedule
8.02(c), effective as of the Closing Date, of all of the members of the
management committees and officers of the AMPCO Companies nominated or
appointed by Seller, and (ii) appointments, in a form reasonably
satisfactory to Buyer, appointing Buyer's designees to the vacant
positions created by such resignations (it being acknowledged that
chairmanship of the management committees of the AMPCO Companies shall
pass to a designees of Samedan of North Africa, Inc. following
consummation of the transactions contemplated by this Agreement);
(d) No Orders. No order, writ, injunction or decree shall have
been entered and be in effect by any court of competent jurisdiction or
any governmental or regulatory instrumentality or authority, and no
statute, rule, regulation or other requirement shall have been
promulgated or enacted and be in effect, that restrains, enjoins or
invalidates the transactions contemplated hereby;
(e) No Suits. No suit or other proceeding shall be pending or
threatened by any third party before any court or governmental agency
seeking to restrain or prohibit or declare illegal, or seeking
substantial damages in connection with, the transactions contemplated by
this Agreement;
(f) Approvals. All Approvals (without any adverse conditions or
obligations) and waivers of preferential purchase and similar rights of
third parties in connection with the transactions contemplated by this
Agreement listed on Schedule 8.02(f) and all other Approvals required by
Law shall have been satisfied or obtained.
(g) Simultaneous Closing. The simultaneous closing of the
transactions contemplated by (i) the Associates Agreement and (ii) the
Upstream Agreement.
26
ARTICLE IX
TERMINATION
9.01 Termination. This Agreement may be terminated in the following
instances:
(a) by Seller, if through no fault of Seller, the Closing does not
occur on or before January 3, 2002 (or on or before such later date if
the Closing Date has been extended pursuant to Section 3.01 as a result
of Seller's attempts to cure a breach pursuant to Section 6.07);
(b) by Buyer, if through no fault of Buyer, the Closing does not
occur on or before January 3, 2002 (or on or before such later date if
the Closing Date has been extended pursuant to Section 3.01 as a result
of Seller's attempts to cure a breach pursuant to Section 6.07);
(c) by Seller or Buyer, as applicable, in accordance with Section
6.07; or
(d) at any time by the mutual written agreement of Buyer and
Seller.
9.02 Effect of Termination. The following provisions shall apply in the
event of a termination of this Agreement:
(a) If this Agreement is terminated by either Party for any reason
except pursuant to an express right to do so set forth herein, the other
Party shall be entitled to exercise all rights and remedies available at
law or in equity as a result of such wrongful termination; provided in no
event shall such other Party ever be entitled to any consequential or
speculative damages including lost profits and, provided further, that if
this Agreement is terminated by either Party due to the failure of the
conditions to the obligations of such Party to close in Article VIII to
be satisfied and the other Party has exercised Reasonable Efforts to
satisfy such conditions, any recovery for claims arising in connection
therewith shall be limited to actual out-of-pocket expenses actually
incurred by the terminating Party in connection with this Agreement prior
thereto. Upon termination of this Agreement by Seller pursuant to an
express right to do so set forth herein, Seller shall be free to enjoy
immediately all rights of ownership in the AMPCO Companies and to sell,
transfer, encumber and otherwise dispose of its ownership interest in the
AMPCO Companies to any Party without any restriction under this
Agreement.
(b) Seller and Buyer hereby agree that the provisions of Section
9.02 and Articles X and XI shall survive any termination of this
Agreement pursuant to the provisions of this Article IX.
27
ARTICLE X
INDEMNIFICATION; SCOPE OF REPRESENTATIONS; LIMITATIONS
10.01 Indemnification.
(a) Subject to the limitations of this Article X, Seller agrees to
indemnify, defend and hold harmless the Buyer Indemnified Parties from
and against any and all Indemnified Losses resulting from or arising out
of any of the following:
(i) any breach of any of the representations and warranties
of Seller contained in this Agreement or in any instrument
executed pursuant hereto; and
(ii) any breach of any covenant of Seller contained in this
Agreement.
(b) Notwithstanding anything to the contrary in Section 10.01(a),
in no event shall any amounts be recovered from Seller or any of its
Affiliates:
(i) relating to any breach of a representation or warranty
by Seller or a covenant of Seller of which Buyer had Knowledge
prior to the Closing Date and, with respect to such breach, Buyer
failed to timely provide a Breach Notice to Seller in accordance
with Section 6.07;
(ii) for any matter under Section 10.01(a) for which a
written notice of claim specifying in reasonable detail the
specific nature of and specific basis of the Losses and the
estimated amount of such Indemnified Losses ("CLAIM NOTICE") is
not delivered to Seller prior to the close of business on the day
twenty-four (24) months following the Closing Date, and the
indemnities granted by Seller in Section 10.01(a) shall terminate
on such date; provided, however, that such indemnities shall
survive with respect only to the specific matter that is the
subject of any Claim Notice delivered in good faith in compliance
with the requirements of this Section 10.01(b)(ii) prior to such
twenty-four (24) month anniversary until the earlier to occur of
(x) the date on which a final nonappealable resolution of the
matter described in such Claim Notice has been reached or (y) the
date on which the matter described in such Claim Notice has
otherwise reached final resolution;
(iii) under Section 10.01(a) for any Tax Claim, Buyer's
exclusive remedy for any Tax Claim being set forth in Article VII,
which shall not be subject to any Deductible or maximum claim
amount;
(iv) for any Indemnified Losses resulting from matters
described in Section 10.01(a)(i) until the aggregate amount of
Indemnified Losses incurred by the Buyer Indemnified Parties in
respect of all matters giving rise to such Indemnified Losses
exceeds $1,000,000 (the "DEDUCTIBLE") in which event Seller will
be obligated, subject to the other provisions of this Section
10.01(b), to indemnify the Buyer Indemnified Parties to the extent
and only to the extent such Indemnified Losses exceed the
Deductible; and
(v) for any Indemnified Losses resulting from matters
described in Section 10.01(a)(i) that in the aggregate exceed
twenty percent (20%) of the
28
Adjusted Purchase Price (including the Deductible); provided,
however, that this Section 10.01(b)(v) shall not apply to
Indemnified Losses arising from a breach of Seller's
representations or warranties set forth in Section 4.03 or to
actions grounded in fraud. For the avoidance of doubt, the
limitation described in this Section 10.01(b)(v) permits a maximum
possible recovery by Buyer under Section 10.01(a)(i) (other than
Indemnified Losses arising from a breach of Seller's
representations or warranties set forth in Section 4.03 or actions
grounded in fraud) of an aggregate amount equal to twenty percent
(20%) of the Adjusted Purchase Price minus the Deductible.
In addition to the foregoing limitations of this Section 10.01(b), except
for actions grounded in fraud, the maximum amount in the aggregate that
the Buyer Indemnified Parties shall be able to recover from Seller or any
of its Affiliates for any and all Indemnified Losses resulting from
matters described in Section 10.01(a)(i) (including with respect to
Sections 4.03) shall in no event exceed an amount equal to 100% of the
Adjusted Purchase Price.
(c) Subject to the limitations of this Article X, Buyer agrees to
indemnify, defend and hold harmless the Seller Indemnified Parties from
and against any and all Indemnified Losses resulting from or arising out
of any of the following:
(i) any breach of any of the representations and warranties
of Buyer contained in this Agreement or in any instrument executed
pursuant hereto;
(ii) any breach of any covenant of Buyer contained in this
Agreement; and
(iii) any Third Party Claim in respect of the conduct of
the Business or any part thereof, and any liability or obligation
of either of the AMPCO Companies that arises after the Closing
Date, including, but not limited to, the obligation to pay all
costs and expenses incurred with respect to the Business after the
Closing Date, but only to the extent that such Third Party Claim
did not result from the breach of a representation or warranty of
Seller made pursuant hereto.
Notwithstanding anything to the contrary contained in this Section
10.01(c), in no event shall any amounts be recovered from Buyer under
this Section 10.01(c) for any Tax Claim, Seller's exclusive remedy with
respect to Tax Claims being set forth in Article VII.
(d) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall Indemnified Losses include any exemplary,
punitive, special, indirect, consequential, remote or speculative
damages.
10.02 Indemnification Procedures. All claims for indemnification under
this Section 10.02 shall be asserted and resolved pursuant to this Section
10.02. Any Person claiming indemnification hereunder is hereinafter referred to
as the "INDEMNIFIED PARTY" and any Person against whom such claims are asserted
hereunder is hereinafter referred to as the "INDEMNIFYING PARTY." In the event
that any Indemnified Losses are asserted against or sought to be collected from
an Indemnified Party by a third party, said Indemnified Party shall with
reasonable promptness provide to the Indemnifying Party a Claim Notice. The
Indemnifying Party shall have thirty (30) days from the
29
personal delivery or receipt of the Claim Notice (the "NOTICE PERIOD") to notify
the Indemnified Party (a) whether or not it disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such
Losses and (b) whether or not it desires, at the sole cost and expense of the
Indemnifying Party, to defend the Indemnified Party against such Losses;
provided, however, that any Indemnified Party is hereby authorized prior to and
during the Notice Period to file any motion, answer or other pleading that it
shall deem necessary or appropriate to protect its interests or those of the
Indemnifying Party (and of which it shall have given notice and opportunity to
comment to the Indemnifying Party) and not prejudicial to the Indemnifying
Party. In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that it desires to defend the Indemnified Party against
such Losses, the Indemnifying Party shall have the right to defend all
appropriate proceedings, and with counsel of its own choosing, which proceedings
shall be promptly settled or prosecuted by them to a final conclusion. If the
Indemnified Party desires to participate in, but not control, any such defense
or settlement it may do so at its sole cost and expense. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Losses that the
Indemnifying Party elects to contest or, if appropriate and related to the claim
in question, in making any counterclaim against the person asserting the third
party Losses, or any cross-complaint against any Person. No claim may be settled
or otherwise compromised without the prior written consent of the Indemnifying
Party.
10.03 Exclusive Remedy. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE
REMEDIES SET FORTH IN ARTICLE VII AND ARTICLE X, INCLUDING THE DEDUCTIBLES,
LIABILITY LIMITS, SURVIVAL PERIODS, DISCLAIMERS AND LIMITATIONS ON SUCH
REMEDIES, ARE INTENDED TO BE, AND SHALL BE, THE EXCLUSIVE REMEDIES WITH RESPECT
TO ANY ASPECT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
HEREBY RELEASES, WAIVES AND DISCHARGES, AND COVENANTS NOT TO XXX WITH RESPECT
TO, ANY CAUSE OF ACTION OR CLAIM NOT EXPRESSLY PROVIDED FOR IN THIS AGREEMENT
INCLUDING CLAIMS UNDER STATE OR FEDERAL SECURITIES LAWS, AVAILABLE AT COMMON LAW
OR BY STATUTE (EXCLUDING FRAUD CLAIMS).
10.04 Independent Investigation. Buyer acknowledges and affirms that (a)
it has had full access to the Data Room and the information contained in, or
made available or provided with respect to materials contained in, the Data
Room, (b) provided Seller complies with Seller's obligations pursuant to Section
6.01, it has had access to the personnel, officers, professional advisors,
operations and Records of the AMPCO Companies and (c) in making the decision to
enter into this Agreement and to consummate the transactions contemplated
hereby, it has relied on the representations, warranties, covenants and
agreements of Seller set forth in this Agreement and in the certificate provided
for in Section 8.02(b), and other than such reliance, it has relied solely on
the basis of its own independent investigation, analysis and evaluation of the
AMPCO Companies and their assets, business, financial condition, operations and
prospects.
10.05 Scope of Representations. Except to the extent expressly set forth
in this Agreement, Seller makes no representations or warranties whatsoever and
disclaims all liability and responsibility for any other representation,
warranty, statement or information made or communicated (orally or in writing)
to Buyer. Without limiting the generality of the foregoing, except as expressly
set forth in this Agreement, Seller makes no representation or warranty as to
title to any of the assets or properties of the AMPCO Companies and, with
respect to any personal
30
property and equipment included within such assets or properties, SELLER
EXPRESSLY DISCLAIMS AND NEGATES ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, AND OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS.
ARTICLE XI
MISCELLANEOUS
11.01 Confidentiality.
(a) Until the Closing Date, all data or information received by
Buyer or its Affiliates pursuant to this Agreement or in connection with
the transactions contemplated thereby shall be subject to that certain
confidentiality agreement countersigned on July 20, 2001 between the
Buyer and Seller (the "CONFIDENTIALITY AGREEMENT"), the terms and
conditions of which are hereby incorporated by reference as if Buyer were
party to such agreement.
(b) From and after the Closing, any data or information received
at any time by Seller from Buyer and any data or information regarding
the AMPCO Companies, including data or information regarding their assets
and operations, shall be maintained by Seller and its representatives in
confidence for a period of twenty-four (24) months from the Closing Date,
except (i) to the extent necessary to resolve any matters relating to
Governmental Authorities (including Tax controversies) or disputes with
Buyer pursuant to this Agreement or (ii) if such information (x) is
already in possession of the public or becomes available to the public,
other than through the act or omission of Seller in violation of this
Agreement; (y) is required to be disclosed under any applicable Law,
order, decree, regulation or rule of (A) a Governmental Authority or
court or (B) any regulatory entity, securities commission or stock
exchange; or (z) is acquired independently and without a confidential
restriction from a third party who represents that it has the right to
disseminate it at the time it is acquired by Seller.
11.02 Brokers. Regardless of whether the Closing shall occur, (a) Seller
shall indemnify and hold harmless Buyer and each of the AMPCO Companies and
their Affiliates from and against any and all liability for any brokers' or
finders' fees (and any court costs and attorneys' fees) arising with respect to
brokers or finders retained or engaged by Seller or any of its Affiliates in
respect of the transactions contemplated by this Agreement and (b) Buyer shall
indemnify and hold harmless Seller and its Affiliates from and against any and
all liability for any brokers' or finders' fees (and court costs and attorneys'
fees) arising with respect to brokers or finders retained or engaged by Buyer or
any of its Affiliates in respect of the transactions contemplated by this
Agreement.
11.03 Expenses. Except as specifically provided herein, each Party hereto
shall pay all legal and other costs and expenses incurred by such Party or any
of its Affiliates in connection with this Agreement and the transactions
contemplated hereby.
11.04 Notices. Any notice, request, instruction, correspondence or other
communication to be given or made hereunder by either Party to the other (herein
collectively called "NOTICE") shall be in writing and (a) delivered by hand, (b)
mailed by certified mail, postage prepaid and return receipt requested, (c) sent
by telecopier or (d) sent by Express Mail, Federal Express or other express
delivery service, as follows:
31
If to Seller, addressed to:
CMS Gas Transmission Company
Fairlane Plaza South
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Buyer, addressed to:
Marathon Oil Company
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
Telephone: (000) 000 0000
Telecopier: (000) 000-0000
Notice given by hand, Federal Express or other express delivery service or by
mail shall be effective upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next business day after receipt if
not received during the recipient's normal business hours. All Notices by
facsimile shall be confirmed promptly after transmission in writing by certified
mail or personal delivery. No Notice shall be given to or by the AMPCO
Companies. Any Party may change any address to which Notice is to be given to it
by giving Notice as provided above of such change of address.
11.05 Governing Law. THE PROVISIONS OF THIS AGREEMENT, THE SCHEDULES
HERETO AND THE DOCUMENTS DELIVERED PURSUANT HERETO SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
(EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER SUCH MATTERS
TO THE LAWS OF ANOTHER JURISDICTION), EXCEPT TO THE EXTENT THAT SUCH MATTERS ARE
MANDATORILY SUBJECT TO THE LAWS OF ANOTHER JURISDICTION PURSUANT TO THE LAWS OF
SUCH OTHER JURISDICTION. THE PARTIES IRREVOCABLY CONSENT AND SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS IN THE STATE OF TEXAS.
11.06 Waiver of Jury Trial. THE PARTIES VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY OF THE PARTIES HERETO.
THE PARTIES HERETO HEREBY AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH
LITIGATION WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL HAS NOT OR CANNOT BE
WAIVED. THE PROVISIONS OF
32
THIS SECTION 11.06 HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE
SUBJECT TO NO EXCEPTIONS.
11.07 Entire Agreement; Amendments and Waivers. This Agreement, together
with all Schedules hereto, constitutes the entire agreement between the Parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the Party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.
11.08 Binding Effect and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective permitted
successors and assigns. Neither this Agreement nor any of the rights, benefits
or obligations hereunder shall be assigned, by operation of law or otherwise, by
any Party hereto prior to the Closing without the prior written consent of the
other Party, except that Seller may assign all of its rights, benefits and
obligations hereunder to an Affiliate without being released from its
obligations hereunder.
11.09 Severability. If any one or more of the provisions contained in
this Agreement or in any other document delivered pursuant hereto shall for any
reason, be held to be invalid, illegal or unenforceable in any material respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such document.
11.10 Headings and Schedules. The headings of the several Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.11 Survival of Representations. The representations and warranties in
this Agreement shall survive the Closing except for the representations and
warranties of Seller, which shall terminate twenty-four (24) months after the
Closing.
11.12 Time of the Essence. The Parties agree and acknowledge that time is
of the essence of this Agreement.
11.13 Counterparts; Facsimile. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute but one agreement. The Parties hereto agree that any
document or signature delivered by facsimile transmission shall be deemed an
original executed document for all purposes hereof.
11.14 No Third Party Beneficiaries. This Agreement is not intended to and
shall not confer upon any Person, other than the Parties hereto (and Persons
specifically granted indemnification rights hereunder), any rights or remedies
with respect to the subject matter or any provision hereof.
33
IN WITNESS WHEREOF, the Parties have duly executed this Agreement the
day and year first written above.
SELLER: CMS GAS TRANSMISSION COMPANY
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
Vice President
BUYER: MARATHON OIL COMPANY
By: /s/ X.X. Xxxxxx
---------------------------------------
X.X. Xxxxxx
Senior Vice President
SHARE PURCHASE AGREEMENT
BY AND AMONG
CMS METHANOL COMPANY,
CMS ENTERPRISES COMPANY,
MARATHON E.G. METHANOL LIMITED,
AND
MARATHON OIL COMPANY
OCTOBER 31, 2001
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION ......................... 1
1.01 Definitions ..................................................... 1
1.02 Construction .................................................... 6
ARTICLE II PURCHASE AND SALE ............................................ 7
2.01 Transfer of Shares .............................................. 7
2.02 Purchase Price .................................................. 7
2.03 Estimate of Working Capital Adjustment .......................... 7
2.04 Working Capital Adjustments ..................................... 7
2.05 Settlement Statement ............................................ 8
ARTICLE III CLOSING ..................................................... 9
3.01 Time and Place of Closing ....................................... 9
3.02 Deliveries by Seller ............................................ 9
3.03 Deliveries by Buyer ............................................. 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER AND CMS ............. 11
4.01 Existence and Qualification ..................................... 11
4.02 Authority, Approval and Enforceability .......................... 11
4.03 Capitalization of the Companies ................................. 12
4.04 No Conflicts .................................................... 12
4.05 Financial Statements ............................................ 13
4.06 Material Contracts .............................................. 13
4.07 Absence of Certain Changes ...................................... 15
4.08 Employees ....................................................... 15
4.09 Insurance ....................................................... 16
4.10 Litigation ...................................................... 16
4.11 Liability for Brokers' Fees ..................................... 16
4.12 Compliance with Laws ............................................ 16
-i-
4.13 Consents and Preferential Rights ................................ 16
4.14 Taxes ........................................................... 16
4.15 Intellectual Property ........................................... 17
4.16 Data Room and Information ....................................... 17
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND MARATHON .......... 18
5.01 Corporate Existence and Qualification ........................... 18
5.02 Authority, Approval and Enforceability .......................... 18
5.03 No Default or Consents .......................................... 18
5.04 Investment ...................................................... 18
5.05 Financial Capacity .............................................. 19
5.06 Liability for Brokers' Fees ..................................... 19
5.07 No Knowledge of Seller's Breach ................................. 19
ARTICLE VI COVENANTS OF SELLER AND BUYER ................................ 19
6.01 Access .......................................................... 19
6.02 Operation of Business ........................................... 20
6.03 Satisfaction of Buyer's Conditions .............................. 22
6.04 Press Releases .................................................. 22
6.05 Insurance ....................................................... 22
6.06 Satisfaction of Seller's Conditions ............................. 22
6.07 Breach Notice ................................................... 22
6.08 Uncollected Accounts Receivable ................................. 22
6.09 Consents and Preferential Rights ................................ 23
6.10 Release of Guaranties ........................................... 23
6.11 Preservation of Books and Records; Access ....................... 23
6.12 Further Assurances .............................................. 23
6.13 Casualty Loss ................................................... 23
ARTICLE VII TAX MATTERS ................................................. 24
7.01 Preparation and Filing of Tax Returns ........................... 24
7.02 Retention of Information ........................................ 25
7.03 Indemnification by Seller ....................................... 25
-ii-
7.04 Buyer Tax Indemnification ....................................... 25
7.05 Tax Indemnification Procedures .................................. 25
7.06 Mutual Cooperation .............................................. 26
7.07 Survival ........................................................ 27
7.08 Conflict ........................................................ 27
ARTICLE VIII CLOSING CONDITIONS ......................................... 27
8.01 Conditions to Obligations of Seller ............................. 27
8.02 Conditions to Obligations of Buyer .............................. 28
ARTICLE IX TERMINATION .................................................. 30
9.01 Termination ..................................................... 30
9.02 Effect of Termination ........................................... 31
ARTICLE X INDEMNIFICATION; SCOPE OF REPRESENTATIONS; LIMITATIONS ........ 31
10.01 Indemnification ............................................... 31
10.02 Indemnification Procedures .................................... 33
10.03 Exclusive Remedy .............................................. 33
10.04 Independent Investigation ..................................... 34
10.05 Scope of Representations ...................................... 34
ARTICLE XI MISCELLANEOUS ................................................ 34
11.01 Confidentiality ............................................... 34
11.02 Brokers ....................................................... 35
11.03 Expenses ...................................................... 35
11.04 Notices ....................................................... 35
11.05 Governing Law ................................................. 36
11.06 Waiver of Jury Trial .......................................... 37
11.07 Entire Agreement; Amendments and Waivers ...................... 37
11.08 Binding Effect and Assignment ................................. 37
11.09 Severability .................................................. 37
11.10 Headings and Schedules ........................................ 37
11.11 Survival of Representations ................................... 37
-iii-
11.12 Time of the Essence ........................................... 37
11.13 Counterparts; Facsimile ....................................... 38
11.14 No Third Party Beneficiaries .................................. 38
SCHEDULES
1.01(a) -- Knowledge Persons of Buyer
1.01(b) -- Knowledge Persons of Seller
2.03(a) -- Form of Preliminary Working Capital Adjustment Statement
2.03(b) -- Estimate of Working Capital as of September 30, 2001
3.02(a)(ii) -- Form of Instrument of Conveyance
4.05(b) -- Unaudited Financial Statements
4.06(a)(i) -- Material Contracts
4.06(a)(ii) -- Pending Material Contracts
4.06(c) -- Matters Relating to Material Contracts
4.06(d) -- Matters Relating to AMPCO Plant
4.08 -- Employees
4.09 -- Policies of Insurance
4.10 -- Claims and Litigation
4.12 -- Compliance with Laws
4.13 -- Consents and Preferential Purchase Rights
4.14 -- Tax Matters
4.14(j) -- IRS Form 8832 for the Companies
6.10 -- Guarantees to be Released
8.01(f) -- Certain Approvals (Seller's Closing Conditions)
8.02(c) -- Form of Resignation
8.02(f) -- Certain Approvals (Buyer's Closing Conditions)
-iv-
STOCK PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (this "AGREEMENT"), executed as of October
31, 2001 (the "EXECUTION DATE"), is by and among CMS METHANOL Company, a company
incorporated under the laws of the Cayman Islands ("Seller"), CMS ENTERPRISES
COMPANY, a company formed under the laws of the State of Michigan ("CMS"),
MARATHON E.G. METHANOL LIMITED, a company formed under the laws of the Cayman
Islands ("BUYER"), and MARATHON OIL COMPANY, a company formed under the laws of
the State of Ohio ("MARATHON"). Seller and Buyer shall be referred to herein
each as a "PARTY" and collectively as the "PARTIES."
RECITALS
A. Seller is the owner of 5,000 of the issued and outstanding shares (the
"SHARES") in Atlantic Methanol Associates LLC, an exempted company with limited
liability incorporated under the laws of the Cayman Islands ("ASSOCIATES"),
which Shares constitute fifty percent (50%) of the ownership interests in
Associates, with the remaining fifty percent (50%) of the shares and ownership
interest in Associates being held by Samedan Methanol, a company incorporated
under the laws of the Cayman Islands.
B. Associates is the owner of 9,000 of the issued and outstanding shares
in Atlantic Methanol Production Company LLC, an exempted company with limited
liability incorporated under the laws of the Cayman Islands ("AMPCO" and,
together with Associates, the "COMPANIES"), which shares constitute ninety
percent (90%) of the ownership interests in AMPCO, with the remaining ten
percent (10%) of the shares and ownership interest being held by Guinea
Equatorial Oil and Gas Marketing Ltd, a company organized under the laws of
Equatorial Guinea.
C. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, the Shares, upon the terms and subject to the conditions contained
herein.
NOW, THEREFORE, in consideration of the premises, agreements and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree, upon the
terms and subject to the conditions contained herein, as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
1.01 Definitions. Capitalized terms used herein shall have the meaning
ascribed to them in this Article I unless such terms are defined elsewhere in
this Agreement.
"ACTUAL WORKING CAPITAL ADJUSTMENT" shall have the meaning ascribed to
such term in Section 2.05(f).
"ADJUSTED PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 2.02.
"AFFILIATE" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. The term
"control" as used in the preceding sentence means, with respect to a
corporation, the right to exercise, directly or indirectly, fifty percent (50%)
or more of the voting rights attributable to the shares of the controlled
corporation, or with respect to any Person other than a corporation, the
possession, directly or indirectly, of the power to direct or
1
cause the direction of the management or policies of such Person. The Companies
shall not be considered Affiliates of Buyer (or any of its Affiliates) or Seller
(or any of its Affiliates), and neither Buyer (nor its Affiliates) nor Seller
(nor its Affiliates) shall be considered Affiliates of either of the Companies.
"AGREEMENT" shall have the meaning ascribed to such term in the preamble.
"AMPCO" shall have the meaning ascribed to such term in Recital B.
"AMPCO AGREEMENT" shall mean the Purchase and Sale Agreement dated October
31, 2001 pursuant to which CMS has agreed to sell, and Marathon has agreed to
purchase, all of CMS' right, title, and ownership interest in and to AMPCO
Marketing, L.L.C., and AMPCO Services, L.L.C.
"AMPCO MEMBERS' AGREEMENT" shall mean the Members' Agreement for AMPCO
dated April 21, 1998.
"AMPCO PLANT" shall have the meaning ascribed to such term in Section
4.06(d).
"AMPCO SHARES" shall have the meaning ascribed to such term in Section
4.03(b).
"APPROVAL" shall mean an authorization, consent, approval or waiver of,
clearance by, required notice to or registration or filing with, a Governmental
Authority or other Person and the expiration or termination of all prescribed
waiting or review periods with respect to any of the foregoing.
"ASSOCIATES" shall have the meaning given to such term in Recital A.
"ASSOCIATES MEMBERS' AGREEMENT" shall mean the Members' Agreement for
Associates dated April 21, 1998, as amended by the First Amendment dated August
29, 2001.
"BASE PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 2.02.
"BREACH NOTICE" shall have the meaning ascribed to such term in Section
6.07.
"BUSINESS" shall mean the business and operations of the Companies.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
United States federal or Texas state banking holiday.
"BUYER" shall have the meaning ascribed to such term in the preamble.
"BUYER INDEMNIFIED PARTIES" shall mean Buyer, its Affiliates and their
respective directors, officers, employees, agents and representatives.
"CLAIM NOTICE" shall have the meaning ascribed to such term in Section
10.01(b)(ii).
"CLOSING" shall have the meaning ascribed to such term in Section 3.01.
"CLOSING DATE" shall have the meaning ascribed to such term in Section
3.01.
"CMS" shall have the meaning ascribed to such term in the preamble.
2
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and the
applicable Treasury Regulations thereunder.
"COMPANIES" shall have the meaning ascribed to such term in Recital B.
"CONFIDENTIALITY AGREEMENT" shall have the meaning ascribed thereto in
Section 11.01.
"CREDITORS' RIGHTS" shall have the meaning ascribed to such term in
Section 4.02.
"DATA ROOM" shall mean that data room located in Houston, Texas, prepared
by Seller to assist Persons interested in acquiring the Companies with an
evaluation of the Companies.
"DEDUCTIBLE" shall have the meaning ascribed to such term in Section
10.01(b)(iv).
"DOLLARS," "US$" or "$" shall mean the lawful currency of the United
States of America.
"DUE DILIGENCE PERIOD" shall have the meaning ascribed to such term in
Section 6.01.
"EXECUTION DATE" shall have the meaning ascribed to such term in the
preamble.
"ENVIRONMENTAL LAW" shall mean any Law issued, promulgated or entered into
by any Governmental Authority of the Republic of Equatorial Guinea relating to
the environment or preservation or reclamation of natural resources.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to such term in
Section 4.05.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States of America.
"GOVERNMENTAL AUTHORITY" shall mean any government, governmental agency,
authority, entity or instrumentality or any court thereof.
"INDEMNIFIED LOSSES" shall mean any and all Losses reduced by the amount
of any Tax benefit actually realized and by the amount of any insurance proceeds
actually recovered from any Person that is not an Affiliate of any Person
entitled to indemnification hereunder, but only to the extent that the Person
entitled to indemnification did not negligently or intentionally take actions
that materially exacerbated such Losses, provided that Indemnified Losses shall
not include any Losses attributable to matters for which an adjustment to the
Base Purchase Price has been made pursuant to Section 2.03 or 2.05.
"INDEMNIFIED PARTY" shall have the meaning ascribed to such term in
Section 10.02.
"INDEMNIFYING PARTY" shall have the meaning ascribed to such term in
Section 10.02.
"INTELLECTUAL PROPERTY" shall mean all trademarks, service marks, trade
names, patents, trade secrets, and copyrights used by either of the Companies
that, in each case, is material to the Business of either of the Companies.
"INSTRUMENT OF CONVEYANCE" shall have the meaning ascribed to such term in
Section 3.02(a)(ii).
3
"INTERCOMPANY AGREEMENTS" shall have the meaning ascribed to such term in
Section 4.06(a)(x).
"KNOWLEDGE" shall mean the actual knowledge of the persons listed in
Schedule 1.01(a), in the case of Buyer, and those listed on Schedule 1.01(b), in
the case of Seller; provided, however, that such persons shall be assumed to
have actual knowledge of items if there is persuasive evidence that such persons
must have had knowledge by virtue of their respective roles and functions.
"LAW" shall mean any constitution, statute, code, regulation, rule,
injunction, judgment, order, decree, ruling (including any agreement with a
Governmental Authority having the force of law), charge or other restriction of
any applicable Governmental Authority.
"LOSSES" shall mean all losses, costs, and expenses, including attorneys'
fees and expenses; provided, however, that for the avoidance of doubt, any
Losses suffered by the Companies shall only constitute Losses to Buyer to the
extent of the fifty percent (50%) ownership interest in Associates and the
indirect forty-five percent (45%) ownership interest in AMPCO that is being
acquired by Buyer pursuant to this Agreement.
"MARATHON" shall have the meaning ascribed to such term in the preamble.
"MATERIAL ADVERSE EFFECT" shall mean an adverse effect on the business,
financial condition or assets of the Companies that results in Losses to Buyer
or the Companies of $1,000,000 or more, excluding matters (such as, without
limitation, decreases in the prices received by AMPCO for methanol produced)
that are general, regional, industry-wide or economy-wide developments and
excluding political events and conditions; provided, however, that for the
avoidance of doubt Buyer shall only be deemed to suffer Losses as a result of
adverse effects on the Companies to the extent of the fifty percent (50%)
ownership interest in Associates and the indirect forty-five percent (45%)
ownership interest in AMPCO that is being acquired by Buyer pursuant to this
Agreement.
"MATERIAL CONTRACTS" shall have the meaning ascribed to such term in
Section 4.06(a).
"MEASUREMENT DATE" shall mean 7:01 a.m. Equatorial Guinea time on January
1, 2002.
"NET METHANOL PRICE" shall mean the price per ton for methanol payable to
AMPCO for the subject methanol less the unit rates for storage and terminalling,
inspections and surveys, finance charges, commission, and shipping and any other
deductions necessary to arrive at a realized net price to AMPCO.
"NOTICE" shall have the meaning ascribed to such term in Section 11.04.
"NOTICE PERIOD" shall have the meaning ascribed to such term in Section
10.02.
"OPIC FINANCING" shall mean the limited recourse financing in the original
principal amount of $173,000,000 proposed to be provided by the United States
Overseas Private Investment Corporation to AMPCO.
"PARTY" or "PARTIES" shall have the meaning ascribed to such term in the
preamble.
"PERSON" shall mean an individual, partnership, corporation,
joint-venture, trust, estate, unincorporated organization or association or
other legal entity.
4
"PENDING MATERIAL CONTRACTS" shall have the meaning ascribed to such term
in Section 4.06(a).
"PERMITTED ENCUMBRANCES" shall mean (i) the terms and conditions of the
Material Contracts and the Pending Material Contracts, (ii) matters disclosed in
any Schedule to this Agreement, (iii) sales contracts terminable without penalty
upon no more than thirty (30) days' notice to the purchaser of methanol; (iv)
materialman's, mechanic's, repairman's, employee's, contractor's, tax, and other
similar liens or charges arising in the ordinary course of business for
obligations that are not yet due; (v) easements, rights-of-way, servitudes,
permits, surface leases and other rights of third parties in respect of surface
operations, to the extent the same do not have a Material Adverse Effect on the
conduct of the Business of the Companies; (vi) rights reserved to or vested in a
Governmental Authority having jurisdiction to control or regulate the Business
of the Companies in any manner whatsoever, and all Laws of such Governmental
Authorities, and (vii) any other matters that do not materially interfere with
the normal and ordinary course of the Business of the Companies and that would
not be considered material when applying general standards in the international
petrochemical industry.
"PRELIMINARY WORKING CAPITAL ADJUSTMENT" shall have the meaning ascribed
to such term in Section 2.03.
"REASONABLE EFFORTS" shall mean the taking by a Party of such action as
would be in accordance with reasonable commercial practices as applied to the
particular matter in question; provided, however, that such action shall not
include the incurrence of unreasonable expense.
"RECORDS" shall mean and include all originals and copies (except where
the context indicates that only originals or copies are being referred to) of
minute books, tax records, agreements, documents, computer files and tapes,
maps, books, records, accounts and files of the Companies relating to the
Companies and the Business.
"SCHEDULE" shall mean any schedule attached to and made a part of this
Agreement.
"SELLER" shall have the meaning ascribed to such term in the preamble.
"SELLER INDEMNIFIED PARTIES" shall mean Seller, its Affiliates and their
respective directors, officers, employees, agents and representatives.
"SETTLEMENT STATEMENT" shall have the meaning ascribed to such term in
Section 2.05(a).
"SHARES" shall have the meaning ascribed to such term in Recital A.
"TAX" or "TAXES" shall mean any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, premium
windfall profits, environmental, customs duties, capital stock, capital gain,
petroleum profits, value added, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, minimum, alternative or add-on minimum, estimated
or other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not.
"TAX CLAIM" shall mean any Losses arising out of a breach of the
representations and warranties in Section 4.14 or any of the provisions of
Article VII.
5
"TAX INDEMNIFIED PARTY" shall have the meaning ascribed to that term in
Section 7.05(a).
"TAX ITEMS" shall have the meaning ascribed to that term in Section
4.14(a).
"TAX INDEMNIFYING PARTY" shall have the meaning ascribed to that term in
Section 7.05(a).
"TAX RETURN" shall have the meaning ascribed to that term in Section
4.14(a).
"THIRD PARTY CLAIM" shall mean any claim, action or proceeding made or
brought by any Person who or that is not a Party or an Affiliate of the Party
seeking indemnification.
"TRANSFER TAXES" shall mean all transfer, sales, use, stamp, registration
or other similar Taxes or fees resulting from the transactions contemplated by
this Agreement.
"UNCOLLECTED ACCOUNTS RECEIVABLE" shall have the meaning ascribed to such
term in Section 2.05(c).
"UPSTREAM AGREEMENT" shall mean the Stock Purchase Agreement dated October
31, by and among CMS Oil and Gas Company, CMS, Marathon E.G. Holding Limited and
Marathon.
"WORKING CAPITAL" shall mean the combined total current assets of
Associates less combined current liabilities of Associates as defined by GAAP.
1.02 Construction.
(a) All article, section, subsection, schedule and exhibit
references used in this Agreement are to articles, sections, subsections,
schedules and exhibits to this Agreement unless otherwise specified.
(b) The schedules and exhibits attached to this Agreement constitute
a part of this Agreement and are incorporated herein for all purposes.
(c) Unless the context of this Agreement clearly requires otherwise
(i) the singular shall include the plural and the plural shall include the
singular wherever and as often as may be appropriate, (ii) the words
"includes" or "including" shall mean "including without limitation," (iii)
the words "hereof," "hereby," "herein," "hereunder" and similar terms in
this Agreement shall refer to this Agreement as a whole and not any
particular section or article in which such words appear and (iv) any
reference to a statute, regulation or law shall include any amendment
thereof or any successor thereto and any rules and regulations promulgated
thereunder.
(d) Currency amounts referenced herein, unless otherwise specified,
are in United States Dollars.
(e) Whenever this Agreement refers to a number of days, such number
shall refer to calendar days unless Business Days are specified.
(f) All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP. References to
GAAP herein shall refer to such
6
principles in effect in the United States of America as of the date of the
statement to which such phrase refers.
ARTICLE II
PURCHASE AND SALE
2.01 Transfer of Shares. Upon the terms and subject to the conditions of
this Agreement, at the Closing, Buyer agrees to purchase the Shares from Seller
and to deliver payment for such Shares as provided in Section 2.02, and Seller
agrees to sell, assign and deliver the Shares to Buyer, subject to the receipt
of payment for such Shares as provided in Section 2.02.
2.02 Purchase Price. The consideration to be paid by Buyer to Seller at
Closing for the Shares shall be Two Hundred Seventy-One Million Five Hundred
Thousand Dollars ($271,500,000) (the "BASE PURCHASE PRICE") as adjusted by
forty-five percent (45%) of the Preliminary Working Capital Adjustment according
to Section 2.04; provided, however, that, if at the Closing the OPIC Financing
has closed and funded, the Base Purchase Price shall be reduced in an amount
equal to that portion of the principal amount of the OPIC Financing actually
distributed to or otherwise received by Seller or Seller's Affiliates (the Base
Purchase price, as adjusted, shall be referred to herein as the "ADJUSTED
PURCHASE PRICE"). In addition, if the Closing occurs later than January 3, 2002
pursuant to the provisions of Section 3.01, the Adjusted Purchase Price shall be
increased by an amount equal to the capital contributions, if any, made by
Seller to Associates on or after the Measurement Date and interest on the
Adjusted Purchase Price from and including January 3, 2002 up to but excluding
the Closing Date calculated at a per annum interest rate of five percent (5%).
2.03 Estimate of Working Capital Adjustment. Seller shall deliver to Buyer
no later than five (5) Business Days prior to the Closing Date a statement in
the format set forth on Schedule 2.03(a) setting forth the amount obtained by
subtracting $15,700,000 from Seller's reasonable estimate of the Working Capital
of Associates as of the Measurement Date (such difference, the "PRELIMINARY
WORKING CAPITAL ADJUSTMENT"); provided, however, that for purposes of this
Section 2.03 the reasonable estimate of Working Capital shall be adjusted such
that (a) an amount equal to the amount of capital expenditures budgeted for
completion of the AMPCO Plant and related facilities, including the new housing,
as set forth in the approved 2002 capital budget for the Companies (currently
estimated to be approximately $8,800,000) and not otherwise included in Working
Capital, shall be treated and separately stated as a Current Liability, (b) the
value of AMPCO's inventory of methanol shall be the value determined by
multiplying the estimated volume of methanol as of the Measurement Date by the
Net Methanol Price for the last lifting of methanol prior to the date of
preparation of the Preliminary Working Capital Adjustment, (c) any prepaid
amounts relating to items that should be capitalized as fixed assets of the
Companies shall be deducted from the value for Current Assets, and (d) the value
for inventories included in the calculation of Current Assets shall include only
those items of materials and supplies having a unit value of $100 or more.
Attached as Schedule 2.03(b) for illustrative purposes only is a completed
statement setting forth the Working Capital of Associates as of September 30,
2001 (without the adjustments provided for in the proviso to the preceding
sentence). Such statement shall be accompanied by a worksheet setting forth in
reasonable detail Seller's calculations used to estimate the Preliminary Working
Capital Adjustment. Seller shall provide Buyer with reasonable access to the
data used to prepare the Preliminary Working Capital Adjustment and the
worksheet.
2.04 Working Capital Adjustments. If the Preliminary Working Capital
Adjustment is positive, Buyer shall pay Seller, at the Closing, in addition to
the Base Purchase Price, an amount
7
equal to forty-five percent (45%) of such Preliminary Working Capital
Adjustment. If the Preliminary Working Capital Adjustment is negative, the Base
Purchase Price payment by Buyer to Seller pursuant to Section 2.02 shall be
reduced by an amount equal to forty-five percent (45%) of such Preliminary
Working Capital Adjustment.
2.05 Settlement Statement.
(a) At 7:01 a.m. Equatorial Guinea time on January 1, 2002, Seller
shall measure the amount of methanol in AMPCO's inventory in accordance
with prudent practices used in the international petrochemical industry,
and Buyer shall have the right to have someone present for such
measurement.
(b) Within 120 days following the Closing Date, Seller and Buyer
shall jointly prepare a statement (the "SETTLEMENT STATEMENT"), which
shall provide the actual Working Capital as of the Measurement Date based
on actual revenues earned and obligations incurred up to and including the
Measurement Date, subject to the adjustments provided for in the proviso
to the first sentence of Section 2.03 and in Section 2.05(c); provided,
however, that for purposes of this Section 2.05 the value of AMPCO's
inventory of methanol included in the determination of Working Capital
shall be the value determined by multiplying the volume of methanol
established pursuant to Section 2.05(a) by the Net Methanol Price for the
first lifting of methanol after the Measurement Date. The Settlement
Statement shall also specify any adjustments to the Adjusted Purchase
Price made pursuant to the last sentence of Section 2.02 if the Closing
Date occurs after January 3, 2002. As part of the joint preparation of the
Settlement Statement, Seller and Buyer shall, as soon as practicable and
within sixty (60) days after the Closing Date, jointly perform an audit to
verify the existence of those materials and supplies of the Companies
having a unit value of $1,000 or higher in accordance with prudent
industry practices, including the records of the Companies with respect to
any purchases, sales, or other utilizations of such materials and supplies
from the Measurement Date to the date of the audit.
(c) Except for accounts created as a result of advances to nationals
of the Republic of Equatorial Guinea providing services directly or
indirectly to the Companies and accounts receivable from AMPCO Marketing,
L.L.C. and AMPCO Services, L.L.C., any accounts receivable as of the
Measurement Date that have not been collected (net of any payables due to
any company as to which there is such an account receivable) as of the
date of the Settlement Statement (the "UNCOLLECTED ACCOUNTS RECEIVABLE")
shall be deemed to have zero value and will not be included in the
Settlement Statement.
(d) If Buyer and Seller shall be unable to agree on the Settlement
Statement within 120 days after the Closing Date, the public accounting
firm of Ernst & Young., or such other nationally recognized public
accounting firm as is mutually acceptable to Buyer and Seller, shall be
engaged to make its determination of any amounts in dispute (and only such
amounts). Each Party shall bear and pay one-half of the fees and other
costs charged by such accounting firm.
(e) If any accounting firm is engaged as provided in Section
2.05(d), Seller and Buyer agree to provide such accounting firm with a
detailed statement itemizing any amounts in dispute and all books, Records
and other information relevant to the determination of the amounts in
dispute. Such accounting firm shall be instructed to use a
8
materiality standard as such firm may determine to be reasonable under the
circumstances, in light of the cost to be incurred and the amounts at
issue. Each Party shall each be permitted to provide expert testimony to
such accounting firm supporting such Party's position, and such accounting
firm shall take such testimony into account. Such accounting firm shall be
instructed to make such calculations as soon as practicable. The final
determination of any of the aforesaid disputed items pursuant to this
Section 2.05(e) shall be binding on the Parties.
(f) If the amount obtained by subtracting $15,700,000 from the
actual Working Capital as of the Measurement Date as agreed by the Parties
or determined by the aforementioned accounting firm (the "ACTUAL WORKING
CAPITAL ADJUSTMENT") differs from the Preliminary Working Capital
Adjustment, then Buyer shall pay Seller, or Seller shall pay Buyer, as the
case may be, by wire transfer in immediately available funds, within five
(5) Business Days after final determination of the Actual Working Capital
Adjustment, forty-five percent (45%) of the sum of (i) the difference
(whether positive or negative) between the Preliminary Working Capital
Adjustment and the Actual Working Capital Adjustment and (ii) interest on
such amount at a rate of eight percent (8%) per annum, compounded monthly,
from the Closing Date to the date of payment.
ARTICLE III
CLOSING
3.01 Time and Place of Closing. Subject to fulfillment or waiver of the
conditions precedent specified in Sections 8.01 and 8.02, the consummation of
the transactions contemplated by this Agreement (the "CLOSING") shall take place
at the offices of Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxxxx, Xxxxx commencing
at 8:00 a.m. local time(a) on January 3, 2002 (provided, however, that such date
shall be extended (i) for any period of time that Seller is attempting to cure a
breach in accordance with the provisions of Section 6.07 or (ii) for any period
of time that the respective Affiliate of Seller has extended the date for
closing the transactions contemplated by the AMPCO Agreement or the Upstream
Agreement, in each case through and including, but no later than, April 2, 2002)
or(b) on such other date as Buyer and Seller may mutually agree in writing. The
date upon which the Closing occurs shall be referred to herein as the "CLOSING
DATE."
3.02 Deliveries by Seller.
(a) Delivery of Documents. At the Closing, Seller shall deliver to
Buyer:
(i) With respect to the Shares, stock certificates
representing such Shares, accompanied by (A) a duly executed share
transfer form, (B) a copy of a duly executed resolution of the
Management Committee of Associates approving transfer of the Shares,
and (C) a copy of Associates share register reflecting the transfer
of the Shares to Buyer;
(ii) Two (2) originals of an assignment and assumption
agreement duly executed by Seller and Associates in substantially
the form attached hereto as Schedule 3.02(a)(ii) with respect to the
interest of the Seller in and to the Shares and Associates (the
"INSTRUMENT OF CONVEYANCE"); and
9
(iii) All other documents, instruments and writings required
to be delivered by Seller at the Closing pursuant to the terms of
this Agreement.
(b) Delivery of Records. On the Closing Date (or as soon thereafter
as practicable), Seller shall deliver or cause to be delivered to Buyer
all Records of the Companies in Seller's possession, subject to the
following provisions:
(i) Seller may retain the originals of all Records that
contain information relating to the Companies but principally relate
to Seller or its Affiliates (with Buyer to receive copies thereof),
and Seller may retain copies of all Records that contain information
relating to Seller or its Affiliates but principally relate to the
Companies;
(ii) Seller may retain all Records prepared in connection with
the sale of the Shares, including offers received from prospective
purchasers of the Shares and any information relating to such
offers, and need not deliver to Buyer or grant Buyer access to any
such Records; and
(iii) Seller may retain (with Buyer to receive copies thereof)
all consolidating and consolidated financial information and all
other accounting Records prepared or used in connection with (A) the
preparation of financial statements of the Companies and (B) the
preparation and filing of any Tax Returns.
3.03 Deliveries by Buyer. At the Closing, Buyer shall deliver to Seller:
(a) The Adjusted Purchase Price, no later than 1:00 p.m., Houston
time, on the Closing Date, by wire transfer of immediately available funds
to an account designated by Seller;
(b) Two (2) originals of the Instrument of Conveyance duly executed
by Buyer; and
(c) All other documents, instruments and writings required to be
delivered by Buyer at the Closing pursuant to the terms of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND CMS
Each of Seller and CMS represents and warrants to Buyer as of the date
hereof as follows:
4.01 Existence and Qualification. Each of Seller, CMS, and the Companies
is a corporation or company duly organized and validly existing under the laws
of the jurisdiction of its organization. Each of Seller, CMS, and the Companies
(to the Knowledge of Seller as it relates to compliance by AMPCO with any legal
requirements of the Government of Equatorial Guinea) is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a Material Adverse Effect. Each of the Companies
(to the Knowledge of Seller as it relates to compliance by AMPCO with any legal
requirements of the Government of Equatorial Guinea) has all requisite power and
authority to own, operate and lease its properties and to carry on the Business
as presently conducted by it.
4.02 Authority, Approval and Enforceability. Each of Seller and CMS has
all requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement. The execution and
delivery of this Agreement by each of Seller and CMS and the performance of the
transactions contemplated hereby by Seller and CMS have been duly and validly
approved by the board of directors of Seller and CMS, by the shareholder of
Seller, and by all other corporate action, if any, necessary on behalf of Seller
and CMS. The resolutions of the management committee of Associates approving the
transfer of the Shares has been duly and validly adopted by such management
committee. This Agreement has been duly executed and delivered on behalf of
Seller and CMS and constitutes the legal, valid and binding obligation of Seller
and CMS, enforceable against Seller and CMS in accordance with its terms,
subject to applicable bankruptcy, insolvency or other similar laws relating to
or affecting the enforcement of creditors' rights generally and to general
principles of equity ("CREDITORS' RIGHTS"). At the Closing all documents
required hereunder to be executed and delivered by Seller and CMS will have been
duly authorized, executed and delivered by Seller and CMS and will constitute
legal, valid and binding obligations of Seller and CMS, enforceable in
accordance with their terms, subject to Creditors' Rights.
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4.03 Capitalization of the Companies.
(a) The authorized share capital of Associates is $50,000 divided
into 50,000 ordinary shares of $1.00 nominal or par value. Of the
authorized shares, 10,000 shares have been issued at a subscription price
of $42,000 per share, the subscription amount to be paid as and when
required pursuant to the Associates Members' Agreement. Seller owns
beneficially and of record the Shares. The Shares represent fifty percent
(50%) of issued and outstanding shares of Associates. Except as otherwise
provided in the Associates Members' Agreement, (i) the Shares are free and
clear of all mortgages, pledges, security interests, liens or encumbrances
of any kind and are not subject to any agreements or understandings among
any Persons with respect to the voting or transfer thereof, and (ii) there
are no outstanding subscriptions, options, convertible securities,
warrants, calls or other securities granting rights to purchase or
otherwise acquire the Shares or any unissued shares or new securities of
Associates or any commitments or agreements of any character obligating
Seller or Associates to issue or transfer any such shares or other
securities.
(b) The authorized share capital of AMPCO is $50,000 divided into
50,000 ordinary shares of $1.00 nominal or par value. Of the authorized
shares, 10,000 shares have been issued at a subscription price of $42,000
per share, the subscription amount to be paid as and when required
pursuant to the AMPCO Members' Agreement. Associates owns beneficially and
of record 9,000 of the shares of AMPCO (the "AMPCO SHARES"), which
represent ninety percent (90%) of the issued and outstanding shares of
AMPCO. Except as otherwise provided in the AMPCO Members' Agreement, (i)
the AMPCO Shares are free and clear of all mortgages, pledges, security
interests, liens or encumbrances of any kind and are not subject to any
agreements or understandings among any Persons with respect to the voting
or transfer thereof and (ii) there are no outstanding subscriptions,
options, convertible securities, warrants, calls or other securities
granting rights to purchase or otherwise acquire such shares in AMPCO or
any unissued shares or other new securities of AMPCO or any commitments or
agreements of any character obligating AMPCO to issue or transfer any such
shares or other securities.
4.04 No Conflicts. Except as provided in Schedule 4.13, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein will:
(a) conflict with or result in a breach, default or violation of the
articles of incorporation or other governing documents of Seller, CMS, or
either of the Companies;
(b) conflict with or result in a breach, default or violation of,
any material agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which Seller, CMS, or
either of the Companies (to the Knowledge of Seller as it relates to
compliance by AMPCO with any legal requirements of the Government of
Equatorial Guinea) is a party or is subject that would have a Material
Adverse Effect; or
(c) result in the creation of any lien, charge or other encumbrance
upon any of the properties or assets of either of the Companies that would
have a Material Adverse Effect.
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4.05 Financial Statements.
(a) The balance sheet of AMPCO and the related statements of
members' equity and of cash flows for the twelve (12) month period ending
December 31, 2000 certified by Xxxxxx Xxxxxxxx LLP, copies of which have
been delivered to the Buyer by the Seller, fairly present in all material
respects the financial position of AMPCO as of such date and the results
of its operations and cash flows for such year and have been prepared in
accordance with GAAP.
(b) Attached as Schedule 4.05 are the unaudited balance sheet of
each of the Companies as of September 30, 2001 and the related statements
of income for the period then ended. Such balance sheets and statements of
income fairly present in all material respects the financial position of
the Companies as of such date and the results of their respective
operations for such period and have been prepared in accordance with GAAP,
except that footnotes and related schedules otherwise required by GAAP
have not been included with such unaudited financial statements.
(c) The financial statements referred to in clauses (a) and (b)
above are hereinafter referred to as the "FINANCIAL STATEMENTS."
4.06 Material Contracts.
(a) Except as listed on Schedule 4.06(a)(i) (collectively, the
"MATERIAL CONTRACTS"), none of the Companies is a party to or bound by any
lease, agreement or other contract of the type described below currently
in effect (except for those entered into after the Execution Date and
prior to the Closing in accordance with Section 6.02):
(i) any agreements whereby either of the Companies guarantees
any material obligation of Seller, any of its Affiliates, or any
other Person;
(ii) any employment agreement between either of the Companies
and any expatriates (other than employment contracts with Philippine
Overseas Contract Workers who do not fill management positions and
similar non-local employees);
(iii) any agreement for capital expenditures or the
acquisition or construction of fixed assets that requires future
payments in excess of $500,000 (or the equivalent in local
currency);
(iv) any collective bargaining agreement with any labor union;
(v) any agreement granting to any Person a right of first
refusal, option, subscription right or other preferential right to
purchase or acquire any of the Shares;
(vi) agreements, indentures or other instruments relating to
the borrowing, or the guarantee of any borrowing, by either of the
Companies;
(vii) any agreement for the purchase or sale of natural gas,
methanol, or associated products with a term of more than ninety
(90) days;
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(viii) any agreement for the sale of any asset (other than
sales of methanol or associated products in the ordinary course of
business) of any of the Companies for more than $2,000,000 (or the
equivalent in local currency);
(ix) any agreement that constitutes a lease under which either
of the Companies is the lessor or lessee of real or personal
property which lease (A) cannot be terminated without penalty upon
not more than thirty (30) days notice and (B) involves an annual
base rental in excess of $500,000 (or the equivalent in local
currency) or whereby such a lease constitutes a capital lease for
Tax or GAAP purposes;
(x) any agreement with Seller or its Affiliates relating to
the provision of goods or services or the payment of funds or the
advancing or borrowing of money (the "INTERCOMPANY Agreements");
(xi) any agency, consultancy or similar agreement requiring
payment in excess of $250,000 per annum (or the equivalent in local
currency);
(xii) any agreement concerning a partnership or joint venture;
(xiii) any commodity futures agreement;
(xiv) any other agreement that (A) involves future payment by
or to any of the Companies in excess of $500,000 (or the equivalent
in local currency) and (B) is not an agreement entered into in the
ordinary course of owning and operating a methanol production
facility and marketing production therefrom;
(xv) any agreement granting or reserving a net profits
interest, overriding royalty interest, production payment, incentive
compensation based on production, or similar burden on methanol
production that reduces the proceeds of production that would
otherwise be attributable to the Companies;
(xvi) any agreement pursuant to which AMPCO has transferred an
interest in the AMPCO Plant or subjected the AMPCO Plant to any
liens or judgments.
Attached as Schedule 4.06(a)(ii) is a list of certain agreements that, as
of the Execution Date, have not been executed and are under negotiation
(the "PENDING MATERIAL CONTRACTS"). True and complete copies of each
Pending Material Contract have been made available to Buyer, and the draft
date of each such draft so made available is listed on Schedule
4.06(a)(ii).
(b) True and complete copies of each Material Contract have been
made available to Buyer; provided, however, that certain of the documents
are in the Spanish language, and Seller makes no representations as to the
accuracy or completeness of any English translations made available to
Buyer.
(c) To the Knowledge of Seller, except as set forth in Schedule
4.06(c), (i) each of the Material Contracts is in full force and effect,
except to the extent that the failure to be in full force and effect would
not have a Material Adverse Effect, and (ii) neither of the Companies is
in default with respect to any Material Contract, other than exceptions to
the foregoing that would not have a Material Adverse Effect.
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(d) Except as set forth on Schedule 4.06(d), (i) to the Knowledge of
Seller, (i) AMPCO has acquired the rights required pursuant to applicable
Law to construction, own, and operate the methanol production plant and
related facilities owned and operated by AMPCO (the "AMPCO PLANT") in
substantially the manner in which it has been constructed, owned, and
operated prior to the Execution Date, (ii) the government of the Republic
of Equatorial Guinea, as of the Execution Date, has not threatened
termination of any of the rights of AMPCO with respect to the AMPCO Plant,
and (iii) AMPCO has not transferred any interest in the AMPCO Plant to any
other party or subjected to the AMPCO Plant to any liens or judgments
(except for Permitted Encumbrances).
4.07 Absence of Certain Changes. Since the date of the September 30, 2001
Financial Statements, neither of the Companies has
(a) transferred any of its assets, including any right under any
lease or Material Contract or any proprietary right or other intangible
asset, in each case having a value in excess of $1,000,000 except for fair
consideration and in the ordinary course of business;
(b) waived, released, canceled, settled or compromised any debt,
claim or right having a value in excess of $1,000,000 in each case except
in the ordinary course of business;
(c) suffered (i) any damage, destruction or casualty of property if
the anticipated cost to repair such property, after application of all
insurance proceeds with respect thereto, exceeds $5,000,000 in the
aggregate or (ii) any taking by condemnation or eminent domain of any of
its property or assets having a historical cost or fair market value that
exceeds $2,000,000;
(d) conducted any of its affairs in a manner that is outside the
ordinary course of business and inconsistent with its past practices
except (i) for any event described in any of Sections 4.07(a) through (c)
hereof( disregarding the applicable dollar thresholds in any of such
sections), (ii) as otherwise contemplated in this Agreement, or (iii) as
results from announcements by Seller of its intention to sell the Shares;
(e) changed any accounting methods or principles used in recording
transactions on the books of any Company or in preparing the financial
statements of either Company other than as required by GAAP; or
(f) entered into any contract committing itself with respect to any
of the foregoing.
4.08 Employees. Except as set forth on Schedule 4.08, (i) the Companies
have no employees, and (ii) the Companies do not administer or sponsor any
employee pension benefit plan or employee welfare benefit plan. For the purposes
of this Section 4.08, an employee pension benefit plan includes any plan, fund
or program providing either retirement income to employees, former employees or
their beneficiaries or a deferral of income to employees, former employees or
their beneficiaries beyond termination of employment. Also, for purposes of this
Section 4.08, an employee welfare benefit plan includes any plan, fund or
program providing employees, former employees or their beneficiaries with
health, sickness, accident, disability, death, unemployment or other similar
benefits.
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4.09 Insurance. Schedule 4.09 contains a list of all material policies of
property damage, liability and other forms of insurance (other than officer's
and director's liability policies) that cover occurrences as of, or claims made
on, the date hereof and maintained by either of the Companies or by Seller or
any Affiliate thereof to the extent applicable to either of the Companies.
4.10 Litigation. Except for (a) claims listed in Schedule 4.10, (b) claims
under worker's compensation and similar Laws, (c) routine claims for employee
benefits and (d) claims for money damages alone of less than $250,000 (or the
equivalent in local currency) in respect of any claim, there are no lawsuits,
claims, arbitrative, governmental investigations or other legal proceedings
pending or, to the Knowledge of Seller, threatened against either of the
Companies or otherwise relating to the conduct of the Business that would have a
Material Adverse Effect.
4.11 Liability for Brokers' Fees. Buyer will not directly or indirectly
incur any liability or expense as a result of any undertakings or agreements of
Seller or Seller's Affiliates for brokerage fees, finder's fees, agent's
commissions or other similar forms of compensation in connection with this
Agreement or any agreement or transaction contemplated hereby.
4.12 Compliance with Laws. Except as listed in Schedule 4.12, neither of
the Companies has received any written notice of any violation of any applicable
Law other than such violations as would not have a Material Adverse Effect.
Except as would not have a Material Adverse Effect or as set forth on Schedule
4.12, (a) to the Knowledge of Seller, the Companies are in compliance with all
applicable Laws and (b) neither of the Companies has entered into or agreed to
any court decree or order or is subject to any judgment, decree or order
relating to compliance with any applicable Laws.
4.13 Consents and Preferential Rights. Except as disclosed in Schedule
4.13, (i) no consents are required to be obtained by Seller or any of the
Companies in connection with the transfer of the Shares to Buyer, and (ii) there
are no preferential purchase rights applicable to the transfer of the Shares to
Buyer.
4.14 Taxes. Except as set forth on Schedule 4.14 or as would not otherwise
have a Material Adverse Effect,
(a) To the Knowledge of Seller, all returns, reports, and
declarations of estimated Tax with respect to any Tax that are required to
be filed on or prior to the Closing with respect to the Companies ("TAX
RETURNS") have or will be duly and properly filed, all items of income,
gain, loss, deduction, credit, or other items ("TAX ITEMS") required to be
included in each such Tax Return have been so included, and all such Tax
Items and any other information provided in each such Tax Return are true,
correct, complete, and in accordance with applicable Laws, and all such
Tax Returns reflect all liabilities for Taxes for the periods covered by
such Tax Returns, all Taxes shown as due on each such Tax Return have been
or will be 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 or any estimate relating to such Tax, and
all Tax withholdings and deposit requirements imposed on or with regard to
the Companies have been satisfied in full in all respects.
(b) There is no investigation or other proceeding pending with
respect to the Companies for any Tax in any jurisdiction where the
Companies do not file Tax Returns.
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(c) There are no pending audits, assessments or claims for any Tax
deficiency of the Companies. There are no pending claims for refund of any
Tax for the Companies.
(d) There are no outstanding agreements, rulings, or requests for
rulings applicable to any Tax that are, or if issued would be, binding
upon the Companies for any post-Closing period.
(e) The Companies do not have in force any waiver of any statute of
limitations in respect of any Tax or any extension of time with respect to
a Tax assessment or deficiency.
(f) There are no liens for any Tax upon any of the assets of the
Companies except for liens for Taxes not yet due.
(g) Except as reflected in the Companies' Tax Returns, there are no
elections with respect to any Tax affecting the Companies.
(h) Any Tax required to be withheld by the Companies and paid in
connection with amounts paid or owing to any lender, creditor, employee,
contractor, service provider, or any other Person has in fact been
withheld and paid in full, and all Tax withholding, reporting, and payment
obligations have been complied with in accordance with applicable Law.
(i) Neither of the Companies is party to, bound by, or has any
obligation under any Tax sharing agreement, Tax indemnification agreement,
or similar agreement.
(j) Each of the Companies is, and has been classified for more than
twelve (12) months prior to the date hereof, as a partnership pursuant to
Treasury Regulation Section 301.7701-3. Copies of Internal Revenue Service
Forms 8832 filed by Seller with respect to the Companies are attached
hereto as Schedule 4.14(j).
4.15 Intellectual Property. Each of the Companies owns or has valid
licenses for all Intellectual Property used by it in the conduct of its Business
and such rights shall not be adversely affected by the transactions contemplated
under this Agreement.
4.16 Data Room and Information. To Seller's Knowledge and except for (i)
the Permitted Encumbrances (excluding item (i) in the definition of Permitted
Encumbrances) and (ii) matters disclosed in any Schedule to this Agreement:
(a) all material written data and written information of Seller the
Companies relating to the Companies or the Business of the Companies in
Seller's or the Companies' possession was contained in the Data Room or
subsequently disclosed or made available to Buyer or Buyer's Affiliates
(excluding any information described in Section 3.02(b)(ii); and
(b) all written data and written information given to Buyer or
Buyer's Affiliates in the Data Room or subsequently disclosed or made
available by or on behalf of Seller concerning the Companies or the
Business is believed by Seller (i) not to be misleading in any material
respect, and (ii) to be accurate in all material respects when given and
by reference to the facts existing at the time such information or data
was created; provided that no representation or warranty is made or given
as to the accuracy or completeness of any
17
models, projections, opinions, interpretations, estimates or forecasts
(whether contained in any third party document or otherwise) or any
information or data contained in any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND MARATHON
Each of Buyer and Marathon represents and warrants to Seller as of the
date hereof as follows:
5.01 Corporate Existence and Qualification. Each of Buyer and Marathon is
a corporation duly incorporated and validly existing under the laws of the
jurisdiction of its organization, and each of Buyer and Marathon has all
requisite corporate power and authority to own, operate and lease its properties
and to carry on its business as presently conducted.
5.02 Authority, Approval and Enforceability. Each of Buyer and Marathon
has all requisite power and authority to execute and deliver this Agreement and
to perform its obligations under this Agreement. The execution and delivery of
this Agreement by Buyer and Marathon and the performance of the transactions
contemplated hereby by Buyer Marathon have been duly and validly approved by the
board of directors of Buyer and Marathon and by all other corporate action, if
any, necessary on behalf of Buyer and Marathon. This Agreement has been duly
executed and delivered on behalf of Buyer and Marathon and constitutes the
legal, valid and binding obligation of Buyer and Marathon enforceable in
accordance with its terms, subject to Creditors' Rights. At the Closing, all
documents required hereunder to be executed and delivered by either or both of
Buyer and Marathon will have been duly authorized, executed and delivered by
Buyer and Marathon, as applicable, and will constitute legal, valid and binding
obligations of Buyer and Marathon, as applicable, enforceable in accordance with
their terms, subject to Creditors' Rights.
5.03 No Default or Consents. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein will:
(a) conflict with or result in a breach, default or violation of the
articles of incorporation or other governing documents of Buyer or
Marathon;
(b) conflict with or result in a breach, default or violation of any
material agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which Buyer or Marathon is
a party or is subject; or
(c) require Buyer or Marathon to obtain or make any waiver, consent,
action, approval clearance or authorization of, or registration,
declaration or filing with, any Governmental Authority.
5.04 Investment. Marathon is an accredited investor as defined in
Regulation D of the United States Securities Act of 1933 and is causing Buyer to
acquire the Shares, to be held by Buyer for its own account, for investment and
not with a view to, or for offer or resale in connection with, a distribution
thereof within the meaning of the Securities Act of 1933 or a distribution
thereof in violation of any applicable securities laws. Each of Buyer and
Marathon, together with its respective directors, executive officers and
advisors, is familiar with investments of the nature of the Shares and
18
the Business, understands that this investment involves substantial risks, has
adequately investigated the Companies and the Business and has substantial
knowledge and experience in financial and business matters and the international
oil and gas industry such that it is capable of evaluating, and has evaluated,
the merits and risks inherent in purchasing the Shares and is able to bear the
economic risks of such investment.
5.05 Financial Capacity. Marathon will cause Buyer to have cash on hand or
financing commitments that are sufficient to satisfy all of Buyer's obligations
under this Agreement to be performed at the Closing. Neither Buyer nor Marathon
is aware of any event or occurrence, which would result in any of the conditions
to its right to funds under such financing commitments not to be satisfied.
Marathon will provide to Seller such documentation as Seller may reasonably
request to confirm Buyer's financial capacity.
5.06 Liability for Brokers' Fees. Seller will not directly or indirectly
incur any liability or expense as a result of any undertakings or agreements of
Buyer or Buyer's Affiliates for brokerage fees, finder's fees, agent's
commissions or other similar forms of compensation in connection with this
Agreement or any agreement or transaction contemplated hereby.
5.07 No Knowledge of Seller's Breach. As of the Execution Date, neither
Buyer nor Marathon has Knowledge of any breach by Seller or CMS of Seller's and
CMS's representations and warranties hereunder.
ARTICLE VI
COVENANTS OF SELLER AND BUYER
6.01 Access.
(a) During the period commencing with the Execution Date and ending
at 5:00 p.m., local time, on November 30, 2001 (the "DUE DILIGENCE
PERIOD"), Buyer shall have the right to conduct the investigation
described in Section 6.01(b).
(b) Upon reasonable notice from Buyer to Seller, Seller shall
permit, and shall exercise its rights under the Associates Members'
Agreement and the AMPCO Members' Agreement to cause the Companies to
permit, Buyer and its authorized employees, agents, accountants, legal
counsel and other representatives to have reasonable access, at Buyer's
sole expense, risk and cost, to the facilities, properties, personnel and
Records of the Companies (including all title, land, geological,
geophysical, seismic, engineering, production, product sales,
personnel-related documents and financial records and data of the
Companies) for the purpose of conducting an investigation of their
financial condition, corporate status, business, properties and assets;
provided however, that such investigation shall be conducted in a manner
that does not interfere with normal operations of the Companies.
(c) Prior to Closing, (i) Buyer will not contact any Governmental
Authority of the Republic of Equatorial Guinea, or official thereof, or
any employee of Seller, either other Companies, or any of their
Affiliates, without first obtaining the approval of an authorized
representative of Seller (not to be unreasonably withheld), and (ii)
Seller will furnish, or shall
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exercise its rights under the Associates Members' Agreement and the AMPCO
Members' Agreement to cause the Companies to furnish, Buyer with such
additional financial and operating data and other information pertaining
to the Companies and their assets and operations as Buyer may reasonably
request; provided however that nothing in this Agreement shall obligate
Seller to take any action that would disrupt the normal course of its or
any of its Affiliate's, or any of the Companies', business or violate the
terms of any applicable Law or agreement to which it or any of its
Affiliates or any Company is a party or to which it or any of its
Affiliates, any Company or any of their assets are subject; and provided
further, that the confidentiality of any data or information to which
Buyer is given access shall be maintained by Buyer and its representatives
in accordance with Section 11.01.
(d) After the expiration of the Due Diligence Period and until
Closing or termination of this Agreement, Buyer shall continue to have the
right to conduct the investigation described in Section 6.01 to the extent
necessary for the purposes of preparing for an orderly transition of
ownership of the Companies.
6.02 Operation of Business.
(a) Except (i) as set forth in Schedule 6.02 or as otherwise
contemplated in this Agreement, (ii) as otherwise consented to by Buyer in
writing (which consent will not be unreasonably delayed, withheld or
conditioned), (iii) as provided for in the Material Contracts, and (iv)
for the execution by AMPCO of any Pending Material Contract (provided such
Pending Material Contract is substantially in the form of the draft listed
on Schedule 4.06(a)(ii)), from the Execution Date through the Closing
Date, Seller will, to the extent of Seller's voting and other rights under
the Associates Member's Agreement and the participation by representatives
of Seller on the management committees of the Companies, use Reasonable
Efforts to cause each of the Companies to:
(A) conduct its Business in all material respects, in the
ordinary course of business, including without limitation completion
of construction of the AMPCO Plant, consistent with past practices;
(B) use its Reasonable Efforts to comply in all material
respects with all applicable Laws and use its Reasonable Efforts to
maintain compliance in all material respects with all of its
material agreements;
(C) continue its existing practices relating to the
maintenance and operation of its assets;
(D) not directly or indirectly purchase, redeem or otherwise
acquire or dispose of any share of its capital stock or any
subscriptions, warrants, options, calls or other commitments or
rights to acquire any shares of its capital stock or take any steps
otherwise affecting or changing its capitalization;
(E) not merge into or with or consolidate with any other
Person or acquire all or substantially all of the business or assets
of any Person;
(F) not make any change in its governing documents;
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(G) not purchase any securities of any Person except for
short-term investments made in the ordinary course of business;
(H) not sell, lease or otherwise dispose of or grant rights in
respect of any of its assets or properties that have a fair market
value in excess of $1,000,000 (or the equivalent in local currency)
(1) for less than fair market value and (2) other than in the
ordinary course of business;
(I) not create, incur, assume or guarantee any long-term debt
or capitalized lease obligation or, except in the ordinary course of
business and consistent with past practices, incur or assume any
short-term debt;
(J) not mortgage, pledge or subject to any lien, claim,
encumbrances or security interest any of its assets, tangible or
intangible, except for Permitted Encumbrances or other similar liens
or encumbrances created in the ordinary course of business
consistent with past practices;
(K) not take any action or enter into any commitment with
respect to or in contemplation of any liquidation, dissolution,
recapitalization, reorganization or other winding up of its
Business;
(L) not grant any preferential right of purchase or similar
consent right to the transfer or assignment of the Business or any
of its assets;
(M) not take, or knowingly permit to be taken, any action in
the conduct of the Business that would be contrary to or in breach
of any of the terms or provisions of this Agreement; and
(N) not commit to do any of the foregoing.
(b) In addition to the foregoing, from the Execution Date until the
Closing or the termination of this Agreement, Seller agrees to keep Buyer
reasonably apprised, from time to time, of any significant developments in
the Business of the Companies and to consult with Buyer with regard to
such developments. To the extent any disruption occurs to the Business of
the Companies prior to Closing as a result of the announcement by Seller
of its intention to sell the Shares, Seller agrees to use Reasonable
Efforts to minimize such disruption.
(c) Seller shall refrain and, to the extent of Seller's voting and
other rights under the Associates Member's Agreement and the participation
by representatives of Seller on the management committees of the
Companies, shall cause the Companies to refrain from taking any action
that would change the classification for U.S. income tax purposes of the
Companies as described in Section 4.14(j).
(d) Seller shall refrain and, to the extent of Seller's voting and
other rights under the Associates Member's Agreement and the participation
by representatives of Seller on the management committees of the
Companies, shall cause the Companies not to dividend, loan, or otherwise
distribute money to or for the benefit of Seller at any time on or after
the Measurement Date.
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6.03 Satisfaction of Buyer's Conditions. Seller will use its, and will, to
the extent of Seller's voting and other rights under the Associates Member's
Agreement and the participation by representatives of Seller on the management
committees of the Companies, cause the Companies to use their, Reasonable
Efforts to obtain the satisfaction of the conditions to the Closing set forth in
Section 8.02 hereof and to obtain the consent or approval of the relevant
parties to the assumption or substitution by Buyer of the guaranties specified
in Schedule 6.10.
6.04 Press Releases. From the Execution Date through the Closing Date,
subject to applicable securities law or stock exchange requirements, each Party
shall promptly advise and consult with, and obtain the consent (which consent
will not be unreasonably delayed, withheld or conditioned) of, the other Party
before issuing, or permitting any of its directors, officers, employees, agents
or its Affiliates to issue, any press release with respect to this Agreement or
the transactions contemplated hereby.
6.05 Insurance. Seller shall, to the extent of Seller's voting and other
rights under the Associates Member's Agreement and the participation by
representatives of Seller on the management committees of the Companies, use its
Reasonable Efforts to cause the Companies to not voluntarily terminate and to
maintain in force and effect through the Closing Date the insurance coverages
set forth on Schedule 4.09 or to cause to be placed in force and effect
comparable insurance coverage. Buyer acknowledges that no insurance coverage or
policy maintained by Seller or its Affiliates will extend beyond the Closing for
the benefit of the Companies or Buyer.
6.06 Satisfaction of Seller's Conditions. Buyer will use its Reasonable
Efforts to obtain the satisfaction of the conditions to the Closing set forth in
Section 8.01 hereof.
6.07 Breach Notice. If, prior to the Closing Date, Buyer obtains Knowledge
of a breach of any of Seller's representations and warranties or of any of
Seller's covenants contained in this Agreement, Buyer shall notify Seller in
writing of such information (the "BREACH NOTICE") within five (5) Business Days
of such discovery or the day prior to the Closing Date, whichever is earlier.
The Breach Notice shall contain reasonable details regarding the alleged breach
and Buyer's good faith estimate of the potential Losses associated with such
breach. In the event the breach is of a magnitude such that Losses attributable
to such breach (together with other such breaches discovered by Buyer with
respect to which Buyer has delivered the requisite Breach Notices) are
reasonably likely to exceed $13,000,000 and (x) Seller fails to deliver to Buyer
a written undertaking within five Business Days of receipt of such Breach Notice
that Seller intends to cure such breach prior to the Closing Date or (y) Seller
delivers such written undertaking but fails to cure such breach prior to the
Closing Date, (i) Buyer may terminate this Agreement upon written notice to
Seller (provided that Buyer has timely given Seller the requisite Breach
Notices) and (ii) Seller may terminate this Agreement upon written notice to
Buyer.
6.08 Uncollected Accounts Receivable. Following the Closing Date, Buyer
will use its, and will, to the extent of Buyer's voting and other rights under
the Associates Members' Agreement and the participation by representatives of
Buyer on the management committees of the Companies, cause the Companies to use
their, Reasonable Efforts to collect any Uncollected Accounts Receivable. If
either of the Companies receives all or any portion of any Uncollected Accounts
Receivable, Buyer shall pay to Seller, by wire transfer in immediately available
funds to an account designated by Seller, forty-five percent (45%) of such
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amounts received (net of any offsets for accounts payable used in the
calculation of Uncollected Accounts Receivable) that are allocable to
Associates.
6.09 Consents and Preferential Rights. Seller will use Reasonable Efforts
to obtain any consent listed in Schedule 4.13 prior to the Closing Date, and
Buyer agrees to use Reasonable Efforts to cooperate in such process, as
requested by Seller.
6.10 Release of Guaranties. Buyer acknowledges that Seller and its
Affiliates have guaranteed the obligations (whether of performance or of
payment) of the Companies set forth in Schedule 6.10. If Seller and its
Affiliates have not been released as of the Closing Date of all obligations
relating to those guaranties and any liabilities related thereto and Seller
elects in writing to waive the condition to closing set forth in Section
8.01(e), Buyer shall indemnify Seller and its Affiliates against and assume all
such obligations and shall deliver to Seller a document reasonably acceptable to
Seller effectuating and evidencing such indemnification and assumption.
6.11 Preservation of Books and Records; Access.
(a) For a period of seven (7) years after the Closing Date, Buyer
shall (a) preserve and retain the Records and all other corporate,
accounting, legal, auditing and other books and records of the Companies
(including any documents relating to any governmental or non-governmental
actions, suits, proceedings or investigations) relating to the conduct of
the business and operations of the Companies prior to the Closing Date and
(b) cause the Companies to permit Seller and its authorized
representatives to have reasonable access thereto on the same basis as
applies to Buyer pursuant to Section 6.01 and to meet with employees of
Buyer and the Companies on a mutually convenient basis in order to obtain
additional information and explanations with respect to such books and
records. Notwithstanding the foregoing, during such seven-year period,
Buyer may dispose of any such Records that are offered to, but not
accepted by, Seller.
(b) After Closing, upon reasonable prior notice to Buyer, Buyer
shall permit and shall exercise its rights under the Associates Members'
Agreement and the AMPCO Members' Agreement to cause AMPCO to permit, CMS
and its nominee to have reasonable access, at CMS's sole expense, risk and
cost, to the AMPCO Plant site and such Records of AMPCO as are reasonably
necessary to verify the amount of emissions reductions in carbon dioxide,
methane, nitrous oxide, hydrofluorocarbons, perfluorcarbons, and sulfer
hexafluoride as a result of the use by the AMPCO Plant (without taking
into account any expansion of the AMPCO Plant that may occur following the
Closing Date) of methane feedstock that, but for the AMPCO Plant, would
otherwise be flared; provided however, that such activities shall be
conducted in a manner that does not interfere with normal operations of
AMPCO.
6.12 Further Assurances. At and after the Closing, Seller and Buyer will
use Reasonable Efforts to take all appropriate action and execute any documents
or instruments of any kind that may be reasonably necessary to effectuate the
intent of this Agreement.
6.13 Casualty Loss. If, after the date hereof and prior to the Closing
Date, all or any part of the assets of the Companies shall be destroyed by
explosion, fire or other casualty, and if the Closing occurs, Seller shall pay
to Buyer at the Closing all sums paid to Seller or any of its Affiliates by
third parties by reason of the destruction of such assets, and in addition,
Seller shall, and shall
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ensure that its Affiliates shall, assign, transfer and set over unto Buyer all
of the right, title and interest of Seller or the relevant Affiliate in and to
any unpaid awards or other payments from third parties arising out of such
destruction. Seller shall not voluntarily compromise, settle or adjust any
amounts payable by reason of such destruction without the prior written consent
of Buyer. Seller shall use its Reasonable Efforts to obtain payment from the
relevant third party.
ARTICLE VII
TAX MATTERS
7.01 Preparation and Filing of Tax Returns.
(a) After the Closing Date, each of Seller and Buyer shall provide
each other, and Buyer, to the extent of its voting and other rights under
the Associates Members' Agreement and the participation by its
representatives on the management committees of the Companies, shall cause
each of the Companies to provide to Seller, such cooperation and
information relating to the Companies as may reasonably be requested in
connection with filing any Tax Return or refund claim, determining any Tax
liability or a right to a refund, conducting or defending any audit or
other proceeding in respect of Taxes related to the business of the
Companies, or effectuating the terms of this Agreement. Buyer shall, to
the extent of Buyer's voting and other rights under the Associates
Members' Agreement and the participation by representatives of Buyer on
the management committees of the Companies, cause each of the Companies to
file timely with the appropriate Governmental Authority all Tax Returns
required to be filed with respect to the Companies following the Closing
Date regardless of whether the subject of such Tax Returns relate
partially or wholly to the time period prior to the Closing Date. Such Tax
Returns shall be prepared in a manner consistent with practices and the
Laws followed in prior years with respect to similar Tax Returns, except
for changes required by changes in Law.
(b) For United States tax purposes, Buyer and Seller shall report
their respective allocable shares of the items of income, gain, loss,
deduction, and credit of the Companies based on an interim closing of the
books as of January 3, 2002.
(c) Seller shall, to the extent of its voting and other rights under
the Associates Members' Agreement and the participation by its
representatives on the management committees of the Companies, cause the
Companies not to make, revoke, or amend any Tax election that would affect
the period after the Closing (other than any election that must be made
periodically and that is made consistently with past practice) without the
prior consent of Buyer.
(d) The Buyer Indemnified Parties shall not take any action, and, to
the extent of Buyer's voting and other rights under the Associates
Members' Agreement and the participation by representatives of Buyer on
the management committees of the Companies, shall not allow either of the
Companies to take any action, on or after the Closing Date, that would
increase the liability of the Seller or its direct or indirect
shareholders for Taxes during the period of time prior to or ending on the
Closing Date; provided, however, that nothing in this Section 7.01(d)
shall prevent the Buyer Indemnified Parties from making any election under
Section 754 of the Code. Seller shall consent to, and cooperate with the
Buyer Indemnified Parties in making, any such Section 754 elections for
periods beginning on or after January 1, 2002.
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(e) Seller shall be responsible for any Transfer Taxes, including
the filing of any Tax Return with respect thereto.
(f) The Adjusted Purchase Price shall be allocated in the manner
required by Section 1060 of the Code. To facilitate such allocation, Buyer
shall deliver to Seller, not later than December 1, 2001, a schedule
setting forth Buyer's proposed allocation of the Base Purchase Price.
Buyer and Seller shall use Reasonable Efforts to agree upon a final
allocation of the Adjusted Purchase Price not later than 120 days after
Closing. Buyer and Seller shall timely file IRS form 8594 with respect to
the transactions contemplated by this Agreement.
7.02 Retention of Information. Each of the Parties will preserve and
retain all schedules, work papers and other documents relating to any Tax
Returns of or with respect to the Companies or to any claims, audits or other
proceedings affecting the Companies until the expiration of the statute of
limitations (including extensions) applicable to the taxable period to which
such documents relate or until the final determination of any controversy with
respect to such taxable period, and until the final determination of any
payments that may be required with respect to such taxable period under this
Agreement.
7.03 Indemnification by Seller. Seller hereby agrees to protect, defend,
indemnify and hold harmless the Buyer Indemnified Parties and the Companies from
and against, and agrees to pay (a) any Taxes (net of any realized Tax benefits
associated therewith) of the Companies (but only in an amount proportional to
Seller's direct or indirect interest in the relevant Company for the period to
which such Taxes relate) attributable to the time period prior to January 1,
2002 (including for the avoidance of doubt any Taxes of the Companies for the
period prior to January 1, 2002 that are set forth on Schedule 4.14), but only
to the extent such Taxes exceed the amount reserved for such Taxes on the
Settlement Statement, (b) any Taxes arising out of the transactions contemplated
by this Agreement, (c) any increase in Taxes of a Buyer Indemnified Party
resulting from a breach by Seller of its representations in Section 4.14(j) or
its covenant in Section 6.02(c), and (d) any Taxes of any corporation (other
than the Companies) that is or was an Affiliate of Seller at any time prior to
January 1, 2002. Notwithstanding anything to the contrary in this Agreement, no
claim for Taxes shall be permitted under this Section 7.03 unless such claim is
first made before the expiration of the statute of limitations (including
applicable extensions) for the taxable period to which the claim relates or, if
no such statute of limitation exists, prior to the date on which such claim is
otherwise barred by Law.
7.04 Buyer Tax Indemnification. Buyer agrees to protect, defend, indemnify
and hold harmless the Seller Indemnified Parties from and against, and agrees to
pay (a) any Taxes of the Companies (but only in an amount proportional to
Seller's direct or indirect interest in the relevant Company for the period to
which such Taxes relate) attributable to the time period from and after January
1, 2002, excluding for purposes of clarification any Taxes arising out of the
transactions contemplated by this Agreement, and (b) any liability arising from
a breach by Buyer of its covenants in Article VII.
7.05 Tax Indemnification Procedures.
(a) If a claim shall be made by any Tax authority that, if
successful, would result in the indemnification of a Party under this
Agreement (referred to herein as the "TAX INDEMNIFIED PARTY"), the Tax
Indemnified Party shall promptly notify the party obligated
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under this Agreement to so indemnify (referred to herein as the "TAX
INDEMNIFYING PARTY") in writing of such fact.
(b) The Tax Indemnified Party shall take such action in connection
with contesting such claim as the Tax Indemnifying Party shall reasonably
request in writing from time to time, including the selection of counsel
and experts and the execution of powers of attorney; provided that (i)
within thirty (30) days after the notice described in Section 7.05(a) has
been delivered (or such earlier date that any payment of Taxes is due by
the Tax Indemnified Party but in no event sooner than five (5) days after
the Tax Indemnifying Party's receipt of such notice), the Tax Indemnifying
Party requests that such claim be contested, (ii) the Tax Indemnifying
Party shall have agreed to pay to the Tax Indemnified Party all costs and
expenses that the Tax Indemnified Party incurs in connection with
contesting such claim, including reasonable attorneys' and accountants'
fees and disbursements, and (iii) if the Tax Indemnified Party is
requested by the Tax Indemnifying Party to pay the Tax claimed and xxx for
a refund, the Tax Indemnifying Party shall have advanced to the Tax
Indemnified Party, on an interest-free basis, the amount of such claim.
The Tax Indemnified Party shall not make any payment of such claim for at
least thirty (30) days (or such shorter period as may be required by
applicable law) after the giving of the notice required by Section
7.05(a), shall give to the Tax Indemnifying Party any information
reasonably requested relating to such claim, and otherwise shall cooperate
with the Tax Indemnifying Party in good faith in order to contest
effectively any such claim.
(c) Subject to the provisions of Section 7.05(b), the Tax
Indemnified Party shall only enter into a settlement of such contest with
the applicable taxing authority or prosecute such contest to a
determination in a court or other tribunal of initial or appellate
jurisdiction as instructed by the Tax Indemnifying Party.
(d) If, after actual receipt by the Tax Indemnified Party of an
amount advanced by the Tax Indemnifying Party pursuant to Section
7.05(b)(iii), the extent of the liability of the Tax Indemnified Party
with respect to the claim shall be established by the final judgment or
decree of a court or other tribunal or a final and binding settlement with
an administrative agency having jurisdiction thereof, the Tax Indemnified
Party shall promptly repay to the Tax Indemnifying Party the amount
advanced to the extent of any refund received by the Tax Indemnified Party
with respect to the claim together with any interest received thereon from
the applicable taxing authority and any recovery of legal fees from such
taxing authority, net of any Taxes as are required to be paid by the Tax
Indemnified Party with respect to such refund, interest or legal fees.
Notwithstanding the foregoing, the Tax Indemnified Party shall not be
required to make any payment hereunder before such time as the Tax
Indemnifying Party shall have made all payments or indemnities then due
with respect to the Tax Indemnified Party pursuant to this Agreement.
7.06 Mutual Cooperation. Seller and Buyer shall reasonably cooperate with
each other and with each other's agents, including accounting firms and legal
counsel, in connection with Tax matters relating to the Companies, including (i)
preparation and filing of Tax Returns, (ii) determining the liability and amount
of any Taxes due or the right to and amount of any refund of Taxes, (iii)
examinations of Tax Returns, and (iv) any administrative or judicial proceedings
in respect of Taxes assessed or proposed to be assessed. Such cooperation shall
include each Party's making all information and
26
documents in its possession relating to the Companies available to the other
Party and retaining all Tax Returns, schedules and work papers, and all material
records and other documents relating thereto, until the expiration of the
applicable statute of limitations (including, to the extent notified by any
Party, any extension thereof) of the Tax period to which such Tax Returns and
other documents and information relate. Each of the Parties shall also make
available to the other Party, as reasonably requested and available, personnel
(including officers, directors, employees, and agents) responsible for
preparing, maintaining, and interpreting information and documents relevant to
Taxes, and personnel reasonably required as witnesses or for purposes of
providing information or documents in connection with any administrative or
judicial proceeding relating to Taxes. Each of the Parties shall exert all
appropriate efforts to preserve the confidentiality of all non-public
information and documents obtained or used in connection with such cooperation
or assistance. Any Party requesting any such cooperation or assistance shall
promptly reimburse any other Party providing any such cooperation or assistance
for the reasonable expenses incurred by such other Party with respect thereto.
Notwithstanding anything to the contrary in this Agreement, neither Seller nor
Buyer shall be required to provide to the other party all or any portion of a
U.S. consolidated federal income Tax Return filed by the respective consolidated
group in which Seller or Buyer is included.
7.07 Survival. The covenants, representations and warranties of the
Parties contained in this Article VII shall survive the Closing and shall
continue in full force and effect until all applicable statutes of limitations,
including waivers and extensions, have expired with respect to the matters
addressed therein, and if no statute of limitations exists, until such matters
are finally settled. Notwithstanding the foregoing, any such covenant as to
which a bona fide claim relating thereto is asserted in writing (which states
with specificity the basis therefor) during such survival period shall, with
respect only to such claim, continue in force and effect beyond such survival
period pending resolution of the claim.
7.08 Conflict. In the event of a conflict between the provisions of this
Article VII and any other provisions of this Agreement, this Article VII shall
control.
ARTICLE VIII
CLOSING CONDITIONS
8.01 Conditions to Obligations of Seller. The obligations of Seller to
proceed with the Closing are subject to the satisfaction at or prior to the
Closing of all of the following conditions, any one or more of which may be
waived in writing in whole or in part by Seller (which waiver shall be deemed to
constitute a waiver of any liability Buyer may have under this Agreement with
respect to the event or condition causing such condition not to be satisfied at
the Closing):
(a) Compliance. Each of Buyer and Marathon shall have complied in
all material respects with its covenants and agreements contained herein,
and Buyer's and Marathon's representations and warranties contained
herein, or in any certificate or similar instrument required to be
delivered by or on behalf of Buyer or Marathon pursuant hereto, shall be
true in all material respects on and as of the Closing Date, with the same
effect as though made at such time;
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(b) Officers' Certificate. Seller shall have received certificates
dated as of the Closing Date (i) by a Director, President, or Vice
President of Buyer, in his or her representative capacity, to the effect
that the conditions specified in Section 8.01(a) have been fulfilled,(ii)
by a Secretary or Assistant Secretary of Buyer, in his or her
representative capacity, certifying the accuracy and completeness of the
copies of, as well as the current effectiveness of, the resolutions to be
attached thereto of the Board of Directors (or any committee thereof) of
Buyer authorizing the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein, as
well as to the incumbency of the officers executing this Agreement on
behalf of Buyer and any documents to be executed and delivered by Buyer at
the Closing, and (iii) by a Secretary or Assistant Secretary of Marathon,
in his or her representative capacity, certifying the accuracy and
completeness of the copies of, as well as the current effectiveness of,
the resolutions to be attached thereto of the board of directors (or any
committee thereof) of Marathon authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, as well as to the incumbency of the officers
executing this Agreement on behalf of Marathon and any documents to be
executed and delivered by Marathon at the Closing;
(c) No Orders. No order, writ, injunction or decree shall have been
entered and be in effect by any court of competent jurisdiction or any
governmental or regulatory instrumentality or authority, and no statute,
rule, regulation or other requirement shall have been promulgated or
enacted and be in effect, that restrains, enjoins or invalidates the
transactions contemplated hereby;
(d) No Suits. No suit or other proceeding shall be pending or
threatened by any third party before any court or governmental agency
seeking to restrain or prohibit or declare illegal, or seeking substantial
damages in connection with, the transactions contemplated by this
Agreement;
(e) Guaranties. Buyer shall have assumed or provided substitutes
for, and Seller shall have been released from all liabilities with respect
to, the guaranties specified in Schedule 6.10 in a manner satisfactory to
Seller; and
(f) Approvals. All Approvals (without any adverse conditions or
obligations) and waivers of preferential purchase and similar rights of
third parties in connection with the transactions contemplated by this
Agreement listed on Schedule 8.01(f) and all other Approvals required by
Law shall have been satisfied or obtained.
(g) Simultaneous Closing. The simultaneous closing of the
transactions contemplated by (i) the AMPCO Agreement, and (ii) the
Upstream Agreement.
8.02 Conditions to Obligations of Buyer. The obligations of Buyer to
proceed with the Closing are subject to the satisfaction at or prior to the
Closing of all of the following conditions, any one or more of which may be
waived in writing in whole or in part by Buyer (which waiver shall be deemed to
constitute a waiver of any liability Seller may have under this Agreement (other
than liability for matters specified in a duly delivered Breach Notice) with
respect to the event or condition causing such condition not to be satisfied at
the Closing):
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(a) Compliance. Each of Seller and CMS shall have complied in all
material respects with its covenants and agreements contained herein, and
Seller's and CMS' representations and warranties contained herein or in
any certificate or similar instrument required to be delivered by or on
behalf of Seller or CMS pursuant hereto, shall be true and correct in all
material respects on and as of the Closing Date, with the same effect as
though made at such time except to the extent Seller or CMS has been
unable to cure a breach identified by Buyer in a Breach Notice; provided
that if a representation or warranty is expressly made only as of a
specific date, it need only be true and correct in all material respects
as of such date; provided, however, that Buyer's right not to proceed with
the Closing as a result of a breach of Seller's or CMS' representations
and warranties shall only arise in the event that Buyer has a right to
terminate this Agreement pursuant to Section 6.07.
(b) Officers' Certificate. Buyer shall have received certificate
dated as of the Closing Date (i) by a Director, President, or Vice
President of Seller, in his or her representative capacity, to the effect
that the conditions specified in Section 8.02(a) have been fulfilled, (ii)
by a Secretary or Assistant Secretary of Buyer, in his or her
representative capacity, certifying the accuracy and completeness of the
copies of, as well as the current effectiveness of, the consent and
resolutions to be attached thereto of the shareholder and of the board of
directors (or any committee thereof) of Seller authorizing the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein, as well as to the incumbency of the
officers executing this Agreement on behalf of Seller and any documents to
be executed and delivered by Seller at the Closing, and (iii) by a
Secretary or Assistant Secretary of CMS, in his or her representative
capacity, certifying the accuracy and completeness of the copies of, as
well as the current effectiveness of, the resolutions to be attached
thereto of the board of directors (or any committee thereof) of CMS
authorizing the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein, as well as to
the incumbency of the officers executing this Agreement on behalf of CMS
and any documents to be executed and delivered by CMS at the Closing;
(c) Resignations. Seller shall have delivered to Buyer (i)
resignations substantially in the form attached hereto as Schedule
8.02(c), effective as of the Closing Date, of all of the members of the
management committees and officers of the Companies nominated or appointed
by Seller and (ii) appointments, in a form reasonably satisfactory to
Buyer, appointing Buyer's designees to the vacant positions created by
such resignations (it being acknowledged that chairmanship of the
management committees of the Companies shall pass to a designees of
Samedan Methanol following consummation of the transactions contemplated
by this Agreement);
(d) No Orders. No order, writ, injunction or decree shall have been
entered and be in effect by any court of competent jurisdiction or any
governmental or regulatory instrumentality or authority, and no statute,
rule, regulation or other requirement shall have been promulgated or
enacted and be in effect, that restrains, enjoins or invalidates the
transactions contemplated hereby;
(e) No Suits. No suit or other proceeding shall be pending or
threatened by any third party before any court or governmental agency
seeking to restrain or prohibit or declare illegal, or seeking substantial
damages in connection with, the transactions contemplated by this
Agreement;
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(f) Approvals. All Approvals (without any adverse conditions or
obligations) and waivers of preferential purchase and similar rights of
third parties in connection with the transactions contemplated by this
Agreement listed on Schedule 8.02(f) and all other Approvals required by
Law shall have been satisfied or obtained.
(g) Simultaneous Closing. The simultaneous closing of the
transactions contemplated by (i) the AMPCO Agreement and (ii) the Upstream
Agreement.
(h) Casualty Loss. AMPCO shall not have experienced any casualty
events between the Execution Date and the Closing Date resulting in Losses
to Buyer exceed in the aggregate an amount equal to $30,000,000.
ARTICLE IX
TERMINATION
9.01 Termination. This Agreement may be terminated in the following
instances:
(a) by Seller, if through no fault of Seller, the Closing does not
occur on or before January 3, 2002 (or on or before such later date if the
Closing Date has been extended pursuant to Section 3.01 as a result of
Seller's attempts to cure a breach pursuant to Section 6.07);
(b) by Buyer, if through no fault of Buyer, the Closing does not
occur on or before January 3, 2002 (or on or before such later date if the
Closing Date has been extended pursuant to Section 3.01 as a result of
Seller's attempts to cure a breach pursuant to Section 6.07);
(c) by Seller or Buyer, as applicable, in accordance with Section
6.07; or
(d) at any time by the mutual written agreement of Buyer and Seller.
30
9.02 Effect of Termination. The following provisions shall apply in the
event of a termination of this Agreement:
(a) If this Agreement is terminated by either Party for any reason
except pursuant to an express right to do so set forth herein, the other
Party shall be entitled to exercise all rights and remedies available at
law or in equity as a result of such wrongful termination; provided in no
event shall such other Party ever be entitled to any consequential or
speculative damages including lost profits and, provided further, that if
this Agreement is terminated by either Party due to the failure of the
conditions to the obligations of such Party to close in Article VIII to be
satisfied and the other Party has exercised Reasonable Efforts to satisfy
such conditions, any recovery for claims arising in connection therewith
shall be limited to actual out-of-pocket expenses actually incurred by the
terminating Party in connection with this Agreement prior thereto. Upon
termination of this Agreement by Seller pursuant to an express right to do
so set forth herein, Seller shall be free to enjoy immediately all rights
of ownership of the Shares and to sell, transfer, encumber and otherwise
dispose of the Shares to any Party without any restriction under this
Agreement.
(b) Seller and Buyer hereby agree that the provisions of Section
9.02 and Articles X and XI shall survive any termination of this Agreement
pursuant to the provisions of this Article IX.
ARTICLE X
INDEMNIFICATION; SCOPE OF REPRESENTATIONS; LIMITATIONS
10.01 Indemnification.
(a) Subject to the limitations of this Article X, Seller agrees to
indemnify, defend and hold harmless the Buyer Indemnified Parties from and
against any and all Indemnified Losses resulting from or arising out of
any of the following:
(i) any breach of any of the representations and warranties of
Seller contained in this Agreement or in any instrument executed
pursuant hereto; and
(ii) any breach of any covenant of Seller contained in this
Agreement.
(b) Notwithstanding anything to the contrary in Section 10.01(a), in
no event shall any amounts be recovered from Seller or any of its
Affiliates:
(i) relating to any breach of a representation or warranty by
Seller or a covenant of Seller of which Buyer had Knowledge prior to
the Closing Date and, with respect to such breach, Buyer failed to
timely provide a Breach Notice to Seller in accordance with Section
6.07;
(ii) for any matter under Section 10.01(a) for which a written
notice of claim specifying in reasonable detail the specific nature
of and specific basis of the Losses and the estimated amount of such
Indemnified Losses ("CLAIM NOTICE") is not delivered to Seller prior
to the close of business on the day twenty-four (24) months
following the Closing Date, and the indemnities granted by Seller in
Section 10.01(a) shall terminate on such date; provided, however,
that such indemnities shall survive with respect only to the
specific matter that is the subject of any Claim Notice
31
delivered in good faith in compliance with the requirements of this
Section 10.01(b) prior to such twenty-four (24) month anniversary
until the earlier to occur of (x) the date on which a final
nonappealable resolution of the matter described in such Claim
Notice has been reached or (y) the date on which the matter
described in such Claim Notice has otherwise reached final
resolution;
(iii) under Section 10.01(a) for any Tax Claim, Buyer's
exclusive remedy for any Tax Claim being set forth in Article VII,
which shall not be subject to any Deductible or maximum claim
amount;
(iv) for any Indemnified Losses resulting from matters
described in Section 10.01(a)(i) until the aggregate amount of
Indemnified Losses incurred by the Buyer Indemnified Parties in
respect of all matters giving rise to such Indemnified Losses
exceeds $1,000,000 (the "DEDUCTIBLE") in which event Seller will be
obligated, subject to the other provisions of this Section 10.01(b),
to indemnify the Buyer Indemnified Parties to the extent and only to
the extent such Indemnified Losses exceed the Deductible; and
(v) for any Indemnified Losses resulting from matters
described in Section 10.01(a)(i) that in the aggregate exceed an
amount equal to twenty percent (20%) of the Adjusted Purchase Price
(including the Deductible); provided, however, that this Section
10.01(b)(v) shall not apply to Indemnified Losses arising from a
breach of Seller's representations or warranties set forth in
Section 4.03 or 4.06(d) or to action grounded in fraud. For the
avoidance of doubt, the limitation described in this Section
10.01(b) permits a maximum possible recovery by Buyer under Section
10.01(a)(i) (other than Indemnified Losses arising from a breach of
Seller's representations or warranties set forth in Section 4.03 or
Section 4.06(d) or actions grounded in fraud) of an aggregate amount
equal to twenty percent (20%) of the Adjusted Purchase Price minus
the Deductible.
In addition to the foregoing limitations of this Section 10.01(b), except
for actions grounded in fraud, the maximum amount in the aggregate that
the Buyer Indemnified Parties shall be able to recover from Seller or any
of its Affiliates for any and all Indemnified Losses resulting from
matters described in Section 10.01(a)(i) (including with respect to
Sections 4.03 and 4.06(d)) shall in no event exceed an amount equal to
100% of the Adjusted Purchase Price.
(c) Subject to the limitations of this Article X, Buyer agrees to
indemnify, defend and hold harmless the Seller Indemnified Parties from
and against any and all Indemnified Losses resulting from or arising out
of any of the following:
(i) any breach of any of the representations and warranties of
Buyer contained in this Agreement or in any instrument executed
pursuant hereto;
(ii) any breach of any covenant of Buyer contained in this
Agreement; and
(iii) any Third Party Claim in respect of the conduct of the
Business or any part thereof, and any liability or obligation of the
Companies that arises after the
32
Closing Date, including, but not limited to, the obligation to pay
all costs and expenses incurred with respect to the Business after
the Closing Date, but only to the extent that such Third Party Claim
did not result from the breach of a representation or warranty of
Seller made pursuant hereto.
Notwithstanding anything to the contrary contained in this Section
10.01(c), in no event shall any amounts be recovered from Buyer under
Section 10.01(c) for any Tax Claim, Seller's exclusive remedy with respect
to Tax Claims being set forth in Article VII.
(d) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall Indemnified Losses include any exemplary,
punitive, special, indirect, consequential, remote or speculative damages.
10.02 Indemnification Procedures. All claims for indemnification under
this Section 10.02 shall be asserted and resolved pursuant to this Section
10.02. Any Person claiming indemnification hereunder is hereinafter referred to
as the "INDEMNIFIED PARTY" and any Person against whom such claims are asserted
hereunder is hereinafter referred to as the "INDEMNIFYING PARTY." In the event
that any Indemnified Losses are asserted against or sought to be collected from
an Indemnified Party by a third party, said Indemnified Party shall with
reasonable promptness provide to the Indemnifying Party a Claim Notice. The
Indemnifying Party shall have thirty (30) days from the personal delivery or
receipt of the Claim Notice (the "NOTICE PERIOD") to notify the Indemnified
Party (a) whether or not it disputes the liability of the Indemnifying Party to
the Indemnified Party hereunder with respect to such Losses and (b) whether or
not it desires, at the sole cost and expense of the Indemnifying Party, to
defend the Indemnified Party against such Losses; provided, however, that any
Indemnified Party is hereby authorized prior to and during the Notice Period to
file any motion, answer or other pleading that it shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party (and of
which it shall have given notice and opportunity to comment to the Indemnifying
Party) and not prejudicial to the Indemnifying Party. In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
it desires to defend the Indemnified Party against such Losses, the Indemnifying
Party shall have the right to defend all appropriate proceedings, and with
counsel of its own choosing, which proceedings shall be promptly settled or
prosecuted by them to a final conclusion. If the Indemnified Party desires to
participate in, but not control, any such defense or settlement it may do so at
its sole cost and expense. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Losses that the Indemnifying Party elects to contest
or, if appropriate and related to the claim in question, in making any
counterclaim against the person asserting the third party Losses, or any
cross-complaint against any Person. No claim may be settled or otherwise
compromised without the prior written consent of the Indemnifying Party.
10.03 Exclusive Remedy. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE
REMEDIES SET FORTH IN ARTICLE VII AND ARTICLE X, INCLUDING THE DEDUCTIBLES,
LIABILITY LIMITS, SURVIVAL PERIODS, DISCLAIMERS AND LIMITATIONS ON SUCH
REMEDIES, ARE INTENDED TO BE, AND SHALL BE, THE EXCLUSIVE REMEDIES WITH RESPECT
TO ANY ASPECT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
HEREBY RELEASES, WAIVES AND DISCHARGES, AND COVENANTS NOT TO XXX WITH RESPECT
TO, ANY CAUSE OF ACTION OR CLAIM NOT EXPRESSLY PROVIDED FOR IN THIS AGREEMENT
INCLUDING CLAIMS UNDER STATE OR FEDERAL SECURITIES
33
LAWS, AVAILABLE AT COMMON LAW OR BY STATUTE (EXCLUDING FRAUD CLAIMS).
10.04 Independent Investigation. Buyer acknowledges and affirms that (a)
it has had full access to the Data Room and the information contained in, or
made available or provided with respect to materials contained in, the Data
Room, including copies of the Material Contracts, (b) provided Seller complies
with Seller's obligations pursuant to Section 6.01, it has had access to the
personnel, officers, professional advisors, operations and Records of the
Companies and (c) in making the decision to enter into this Agreement and to
consummate the transactions contemplated hereby, it has relied on the
representations, warranties, covenants and agreements of Seller set forth in
this Agreement and in the certificate provided for in Section 8.02(b), and other
than such reliance, it has relied solely on the basis of its own independent
investigation, analysis and evaluation of the Companies and their assets,
business, financial condition, operations and prospects.
10.05 Scope of Representations. Except to the extent expressly set forth
in this Agreement, Seller makes no representations or warranties whatsoever and
disclaims all liability and responsibility for any other representation,
warranty, statement or information made or communicated (orally or in writing)
to Buyer. Without limiting the generality of the foregoing, except as expressly
set forth in this Agreement, Seller makes no representation or warranty as to
title to any of the assets or properties of the Companies and, with respect to
any personal property and equipment included within such assets or properties,
SELLER EXPRESSLY DISCLAIMS AND NEGATES ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, AND OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS.
ARTICLE XI
MISCELLANEOUS
11.01 Confidentiality.
(a) Until the Closing Date, all data or information received by
Buyer or its Affiliates pursuant to this Agreement or in connection with
the transactions contemplated thereby shall be subject to that certain
confidentiality agreement countersigned July 20, 2001 between Marathon and
CMS Gas Transmission Company (the "CONFIDENTIALITY AGREEMENT"), the terms
and conditions of which are hereby incorporated by reference as if Buyer
and Seller were party to such agreement.
(b) From and after the Closing, any data or information received at
any time by Seller from Buyer and any data or information regarding the
Companies, including data or information regarding their assets and
operations, shall be maintained by Seller and its representatives in
confidence for a period of twenty-four (24) months from the Closing Date,
except (i)to the extent necessary to resolve any matters relating to
Governmental Authorities (including Tax controversies) or disputes with
Buyer pursuant to this Agreement or (ii) if such information (x) is
already in possession of the public or becomes available to the public,
other than through the act or omission of Seller in violation of this
Agreement; (y) is required to be disclosed under any applicable Law,
order, decree, regulation or rule of (A) a Governmental Authority or court
or (B) any regulatory entity, securities commission or stock exchange; or
(z) is acquired independently and without a confidential restriction from
a third party who represents that it has the right to disseminate it at
the time it is acquired by Seller.
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11.02 Brokers. Regardless of whether the Closing shall occur, (a) Seller
shall indemnify and hold harmless Buyer and the Companies and their Affiliates
from and against any and all liability for any brokers' or finders' fees (and
any court costs and attorneys' fees) arising with respect to brokers or finders
retained or engaged by Seller or any of its Affiliates in respect of the
transactions contemplated by this Agreement and (b) Buyer shall indemnify and
hold harmless Seller and its Affiliates from and against any and all liability
for any brokers' or finders' fees (and court costs and attorneys' fees) arising
with respect to brokers or finders retained or engaged by Buyer or any of its
Affiliates in respect of the transactions contemplated by this Agreement.
11.03 Expenses. Except as specifically provided herein, each Party hereto
shall pay all legal and other costs and expenses incurred by such Party or any
of its Affiliates in connection with this Agreement and the transactions
contemplated hereby.
11.04 Notices. Any notice, request, instruction, correspondence or other
communication to be given or made hereunder by either Party to the other (herein
collectively called "NOTICE") shall be in writing and (a) delivered by hand, (b)
mailed by certified mail, postage prepaid and return receipt requested, (c) sent
by telecopier or (d) sent by Express Mail, Federal Express or other express
delivery service, as follows:
If to Seller, addressed to:
CMS Methanol Company
x/x Xxxxxx xxx Xxxxxx
X.X. Xxx 000 X.X.
Xxxxxx House
South Church Street
Grand Cayman, Cayman Islands
British West Indies
Attention: Xxxxxx Xxxxxxxxx
Telephone: (000) 000 0000
Telecopier: (000) 000 0000
With a copy to:
CMS Gas Transmission Company
Fairlane Plaza South
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
35
If to CMS, addressed to:
CMS Enterprises Company
Fairlane Plaza South
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopier: (000) 000 0000
If to Buyer, addressed to:
Marathon E.G. Marathon Limited
c/o Caledonian Bank & Trust Limited
P.O. Box 1043
Xxxxxx Town, Grand Cayman, British West Indies
Attention: Xxxxx Xxxxxx
Telephone: (000) 000 0000
Telecopier: (000) 000 0000
With a copy to Marathon
If to Marathon, addressed to:
Marathon Oil Company
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X Xxxxxxxx
Telephone: (000) 000 0000
Telecopier: (000) 000-0000
Notice given by hand, Federal Express or other express delivery service or by
mail shall be effective upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next business day after receipt if
not received during the recipient's normal business hours. All Notices by
facsimile shall be confirmed promptly after transmission in writing by certified
mail or personal delivery. No Notice shall be given to or by the Companies. Any
Party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
11.05 Governing Law. THE PROVISIONS OF THIS AGREEMENT, THE SCHEDULES
HERETO AND THE DOCUMENTS DELIVERED PURSUANT HERETO SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
(EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER SUCH MATTERS
TO THE LAWS OF ANOTHER JURISDICTION), EXCEPT TO THE EXTENT THAT SUCH MATTERS ARE
MANDATORILY SUBJECT TO THE LAWS OF ANOTHER JURISDICTION PURSUANT TO THE LAWS OF
SUCH OTHER JURISDICTION. THE PARTIES IRREVOCABLY
36
CONSENT AND SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
IN THE STATE OF TEXAS.
11.06 Waiver of Jury Trial. THE PARTIES VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY OF THE PARTIES HERETO.
THE PARTIES HERETO HEREBY AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH
LITIGATION WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL HAS NOT OR CANNOT BE
WAIVED. THE PROVISIONS OF THIS SECTION 11.06 HAVE BEEN FULLY NEGOTIATED BY THE
PARTIES HERETO AND SHALL BE SUBJECT TO NO EXCEPTIONS.
11.07 Entire Agreement; Amendments and Waivers. This Agreement, together
with all Schedules hereto, constitutes the entire agreement between the Parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the Party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.
11.08 Binding Effect and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective permitted
successors and assigns. Neither this Agreement nor any of the rights, benefits
or obligations hereunder shall be assigned, by operation of law or otherwise, by
any Party hereto prior to the Closing without the prior written consent of the
other Party, except that Seller may assign all of its rights, benefits and
obligations hereunder to an Affiliate without being released from its
obligations hereunder. Except as expressly provided herein, nothing in this
Agreement is intended to confer upon any Person other than the Parties and their
respective permitted successors and assigns, any rights, benefits or obligations
hereunder.
11.09 Severability. If any one or more of the provisions contained in this
Agreement or in any other document delivered pursuant hereto shall for any
reason, be held to be invalid, illegal or unenforceable in any material respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such document.
11.10 Headings and Schedules. The headings of the several Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.11 Survival of Representations. The representations and warranties in
this Agreement shall survive the Closing except for the representations and
warranties of Seller, which shall terminate twenty-four (24) months after the
Closing.
11.12 Time of the Essence. The Parties agree and acknowledge that time is
of the essence of this Agreement.
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11.13 Counterparts; Facsimile. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute but one agreement. The Parties hereto agree that any
document or signature delivered by facsimile transmission shall be deemed an
original executed document for all purposes hereof.
11.14 No Third Party Beneficiaries. This Agreement is not intended to and
shall not confer upon any Person, other than the Parties hereto (and Persons
specifically granted indemnification rights hereunder), any rights or remedies
with respect to the subject matter or any provision hereof.
38
IN WITNESS WHEREOF, the Parties have duly executed this Agreement the day
and year first written above.
SELLER: CMS METHANOL COMPANY
BY: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
Authorize Representative
CMS, in consideration of the premises, the agreements and the covenants
contained herein, and the benefits it is deriving from the execution and
delivery of this Agreement and the transactions contemplated hereby, the receipt
and sufficiency of which is hereby acknowledged, hereby unconditionally and
irrevocably guarantees payment to Buyer and performance by Seller of the
obligations of Seller under this Agreement (the "SELLER'S OBLIGATIONS"), subject
to any defenses of Seller under this Agreement (except those enumerated
hereafter), but CMS waives (i) any defense that may arise by reason of
incapacity, lack of authority, invalidity, bankruptcy or insolvency of Seller,
(ii) any defense based on election of remedies, (iii) any requirement that Buyer
pursue or exhaust any remedy against Seller, and (iv) any defense based on any
right to consent to any amendment, waiver, modification, or supplement of this
Agreement or any provision hereof or of the Seller Obligations. CMS acknowledges
and agrees that the guaranty set forth above is a guaranty of payment and
performance and not merely a guaranty of collection, that CMS is liable as a
primary obligor, and, except as provided in the first sentence of this
paragraph, that the obligations of CMS under this guaranty set forth above shall
not be released, discharged, or in any way affected by any circumstance or
condition whatsoever that might otherwise constitute a legal or equitable
defense or discharge of a guarantor, indemnitor, or surety or that might
otherwise limit recourse against CMS under any applicable Law. Should Buyer be
obligated by a reorganization, insolvency, bankruptcy, or other Law to repay
Seller or CMS, or any trustee, receiver, or other representative of any of them,
any amounts previously paid by Seller or CMS pursuant to this Agreement, then
the guaranty of CMS set forth above shall be reinstated in the amount of such
repayments. CMS consents to and agrees to be bound by the provisions of Articles
VII, X and XI (as if it were Seller) with respect to any claims under this
guaranty.
CMS ENTERPRISES COMPANY
BY: /s/ Xxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
39
BUYER: MARATHON E.G. METHANOL LIMITED
BY: /s/ X.X. Xxxxx
-----------------------------------
X. X. Xxxxx
Director
Marathon, in consideration of the premises, the agreements and the
covenants contained herein, and the benefits it is deriving from the execution
and delivery of this Agreement and the transactions contemplated hereby, the
receipt and sufficiency of which is hereby acknowledged, hereby unconditionally
and irrevocably guarantees payment to Seller and performance by Buyer of the
obligations of Buyer under this Agreement (the "BUYER'S OBLIGATIONS"), subject
to any defenses of Buyer under this Agreement (except those enumerated
hereafter), but Marathon waives (i) any defense that may arise by reason of
incapacity, lack of authority, invalidity, bankruptcy or insolvency of Buyer,
(ii) any defense based on election of remedies, (iii) any requirement that
Seller pursue or exhaust any remedy against Buyer, and (iv) any defense based on
any right to consent to any amendment, waiver, modification, or supplement of
this Agreement or any provision hereof or of the Buyer Obligations. Marathon
acknowledges and agrees that the guaranty set forth above is a guaranty of
payment and performance and not merely a guaranty of collection, that Marathon
is liable as a primary obligor, and, except as provided in the first sentence of
this paragraph, that the obligations of Marathon under this guaranty set forth
above shall not be released, discharged, or in any way affected by any
circumstance or condition whatsoever that might otherwise constitute a legal or
equitable defense or discharge of a guarantor, indemnitor, or surety or that
might otherwise limit recourse against Marathon under any applicable Law. Should
Seller be obligated by a reorganization, insolvency, bankruptcy, or other Law to
repay Buyer or Marathon, or any trustee, receiver, or other representative of
any of them, any amounts previously paid by Buyer or Marathon pursuant to this
Agreement, then the guaranty of Marathon set forth above shall be reinstated in
the amount of such repayments. Marathon consents to and agrees to be bound by
the provisions of Articles VII, X and XI (as if it were Buyer) with respect to
any claims under this guaranty.
MARATHON OIL COMPANY
BY: /s/ X. X. Xxxxxx
-----------------------------------
X. X. Xxxxxx
Senior Vice President
40
