EXHIBIT 10.25
AGREEMENT FOR PURCHASE AND SALE OF STOCK
This Agreement for Purchase and Sale of Stock (this "Agreement") is
made and entered into as of the 6th day of September 1995, by and
between MIDCOAST HOLDINGS NO. ONE, INC., a Delaware corporation,
("Seller"), and XXXX GATEWAY PIPELINE COMPANY., a Delaware
corporation ("Buyer"). (Seller and Buyer are sometimes hereinafter
referred to collectively as the "Parties" and individually as a
"Party".)
W I T N E S S E T H:
WHEREAS, Seller is currently in the process of repurchasing
all of the issued and outstanding shares of capital stock of Five
Flags Pipe Line Company from Five Flags Holding Company (the HOLDING
COMPANY TRANSACTION), and Seller presently owns all of the issued and
outstanding shares of capital stock of H&W Pipeline Corporation
(Five Flags Pipe Line Company and H&W Pipeline Corporation being
hereinafter sometimes jointly referred to as the "Companies");
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, all of the issued and outstanding shares
of capital stock of Five Flags Pipe Line Company (the "Five Flags
Stock") immediately upon its acquisition by Seller from Five Flags
Holding Company and all of the issued and outstanding shares of
capital stock of H&W Pipeline Corporation (the "H&W Stock"); and
WHEREAS, the Parties desire this Agreement to set forth the
terms and conditions upon which they are willing to sell and
purchase the Five Flags Stock and the H&W Stock;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements contained herein, the sufficiency
of which is hereby acknowledged, the Parties, intending to be
legally bound, covenant and agree as follows:
1. Purchase and Sale; Purchase Price.
Subject to the terms of this Agreement, at the closing
provided for in Section 3 of this Agreement (the "Closing"), Seller
agrees to sell, assign, transfer and deliver to Buyer, and Buyer
agrees to purchase and acquire from Seller, the Five Flags Stock
and the H&W Stock. Notwithstanding the above, Buyer may prior to
closing with or without cause elect in writing not to purchase the
H&W Stock, in which event, all references to H&W Pipeline
Corporation in this Agreement shall be void and have no force or
effect in this Aagreement, and the Parties agree that they shall
proceed with the purchase and sale of the Five Flag Stock as
otherwise described herein.
The amount to be paid by Buyer to Seller is Four Million
Seven Hundred Fifty Thousand and No/100 Dollars ($4,750,000.00) for
the Five Flags Stock and Two Hundred Fifty Thousand and No/100
Dollars ($250,000.00) for the H&W Stock, subject to any adjustments
which may be made pursuant to Section 10 of this Agreement
(collectively, the "Purchase Price"). The Purchase Price shall be
paid by Buyer to Seller at the Closing by cashier's or certified
check, or, at Seller's election, by wire transfer of immediately
available funds to a bank account designated by Seller.
2. Instruments of Conveyance. At the Closing, as provided
for in Section 3 of this Agreement, Seller will assign, transfer
and deliver to Buyer all right, title, and interest in and to the
Five Flags Stock and the H&W Stock, (such issued and outstanding
shares of the Five Flags Stock and the H&W Stock being hereinafter
collectively referred to as the "Stock"). Certificates
representing the Stock delivered to Buyer shall be duly endorsed in
blank, or accompanied by duly executed stock powers in blank and
otherwise in proper form for transfer. At the Closing, Seller
shall also deliver to Buyer a copy of all required resolutions or
consents of the Board of Directors and the sole Shareholder of
Seller, and a certificate of incumbency of representatives of
Seller executing this Agreement duly certified by an appropriate
officer, approving the execution and delivery of this Agreement and
the consummation of the transaction contemplated hereby.
3. Closing. The closing of the purchase and sale of the Five
Flags Stock and the H&W Stock shall all take place no later than
3:00 p.m. on the fifth day following the date on which all
conditions to Closing, as set out in Sections 8 and 9 of this
Agreement, have been met, unless terminated by either Party hereto
pursuant to Section 12 of this Agreement (the "Closing"). The
Closing shall be held at the offices of Seller in Houston, Texas,
or such other place as the Parties may mutually agree upon in
writing (the date on which Closing occurs being referred to herein
as the "Closing Date"). The Closing shall be effective as of 7:00
a.m. Florida time, on the Closing Date (the "Effective Date").
4. Representations, Warranties and Covenants of Seller.
Seller represents, warrants and covenants to Buyer as of the date
of this Agreement and on and as of the Closing Date, the following:
(a) Seller has full, complete and absolute title to the
H&W Stock. At the Closing, Seller will have full, complete and
absolute title to the Five Flags Stock. The Stock constitutes 100%
of the issued and outstanding securities of any kind. No person or
entity other than the Seller has any record or beneficial ownership
interest whatsoever in the Stock;
(b) Seller's ownership of the Stock at Closing shall
consist of good, valid and indefeasible title thereto, and the
Stock shall be free and clear of any liens, security interests,
encumbrances, options, calls, pledges, trusts, voting trusts,
covenants, restrictions, reservations, claims and other burdens of
any type whatsoever;
(c) Five Flags Pipe Line Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Florida. H&W Pipeline Corporation is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Alabama. Both of the Companies have the
requisite power and authority to own or lease and operate their
properties and to carry on their business as now being conducted,
and both of them are duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property
owned or leased and operated by them or the nature of the business
conducted by them make such qualifications or licensing necessary;
(d) All of the Stock is validly issued, fully paid and
nonassessable. All dividends and other distributions declared with
respect to the Stock have been paid or distributed. There are no
existing subscriptions, rights, warrants, calls, options,
commitments or agreements of any character relating to the Stock
which is authorized but unissued or held in the treasury. Copies
of the Articles of Incorporation (certified by the Secretary of
State) and the Bylaws (certified by the respective Secretary) of
both of the Companies shall be delivered by Seller to the Buyer no
later than 10 days after the closing of the Holding Company
Transaction, and will be true, correct and complete and reflect all
amendments thereto as of the date thereof;
(e) The present directors and officers of H&W Pipeline
Corporation are set forth on Schedule 4(e) attached hereto. After
Seller's reacquisition of Five Flags Pipe Line Company, Schedule
4(e) will be amended to set forth the then present directors and
officers of Five Flags Pipe Line Company. The written resignations
of all directors and officers of both of the Companies will be
delivered to Buyer at Closing;
(f) A balance sheet of H&W Pipeline Corporation dated as
of the 31st day of July, 1995 (the "H&W Balance Sheet") is attached
hereto as Schedule 4(f-1). A balance sheet of Five Flags Pipe Line
Company dated the effective date of the Holding Company Transaction
(the "Five Flags Balance Sheet") will be attached hereto as
Schedule 4(f-2) no later than ten (10) days after the closing of
the Holding Company Transaction. The H&W Balance Sheet and the
Five Flags Balance Sheet will both correctly set forth the
financial condition of the respective Companies as of the dates
indicated and title to all assets referred to or shown on the
respective balance sheet of the Companies will be vested in the
respective Companies as of said dates, except for cash and accounts
receivable which pursuant to Section 7 shall be retained by Seller.
All assets referred to or shown on the respective balance sheets
for the Companies will be free of any liens, indebtedness security
interests, claims to ownership by others, or other like
encumbrances. To the best of Seller's knowledge (as used in this
Agreement, the term to the best of Seller's knowledge' shall mean
the knowledge of Seller after due inquiry as well as the four
employees of Five Flags Pipe Line Company at the Pace Florida
office). The books of account, as summarized in the H&W Balance
Sheet and the Five Flags Balance Sheet, will accurately reflect the
assets and known liabilities of the respective Companies. Between
execution of this Agreement and Closing with respect to the
acquisition of H&W Pipeline Company and between the acquisition of
Five Flags Pipeline Company by Seller and Closing, there will not
be: (i) any materially adverse change in the financial condition,
business, operations, properties, assets or liabilities (whether
direct, indirect, accrued, absolute, contingent or otherwise) of
either of the Companies other than changes in the ordinary course
of business, (ii) any damage, destruction or loss whether covered
by insurance or not, materially and adversely affecting the
properties or business of either of the Companies; (iii) any
increase in the compensation payable or to become payable by either
of the Companies to any of its directors, officers, employees or
agents or in any stock option, bonus payment, service award,
pension, retirement, expense allowance or other arrangement made to
or with any of them; (iv) any sale, assignment, lease, transfer,
license, abandonment or other disposition by either of the
Companies of any interest in its properties, excluding inventory
sold in the ordinary course of business, and specifically including
but not limited to any machinery, equipment or other operating
property, any patent, trademark, service xxxx, trade name, brand
name, copyright (or pending application for any patent, trademark,
service xxxx or copyright), invention, process, know-how, formula,
pattern, design, trade secret or interest thereunder or other
intangible asset; (v) any declaration, setting aside or payment of
any dividend or other distribution on or in respect of shares of
the Stock, or any direct or indirect redemption, retirement,
purchase or other acquisition by the Company of any such shares;
(vi) any stock dividend, stock split, reorganization,
recapitalization or other change of any type whatsoever in the
Stock; (vii) any incurrence of indebtedness, pledge, security
interest, liens or like debts or encumbrances other than those
incurred in the ordinary course of business for trade account
payables; or (viii) any dispute or any other occurrence, event or
condition of any character, which reasonably could be anticipated
to give rise to a legal or administrative action or to a material
adverse effect upon the condition (financial or otherwise) of the
business, operations, properties, assets or liabilities (whether
direct, indirect, accrued, absolute, contingent or otherwise) of
the Company (whether or not covered by insurance); and to the best
of Seller's knowledge, none of the above events described in (i)
through (viii) are anticipated or shall have taken place between
the time of the execution of this Agreement and the reacquisition
by Seller of Five Flags Pipeline Line Company;
(g) All tax returns required to be filed by the
Companies on or before the Closing Date for all years prior to the
current tax year have been filed, and all taxes calculated thereon
have been paid, and to the best of Seller's knowledge such tax
returns have been properly prepared and executed pursuant to
applicable laws and regulations;
(h) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state where
formed and conducting business. Seller has all requisite corporate
power and authority and is entitled to carry on its business as now
being conducted;
(i) Neither the execution, delivery, nor the performance
of this Agreement by Seller will conflict with, result in a default
or loss of rights under, or result in the creation of any lien,
charge or encumbrance pursuant to, any provision of Seller's
certificate of incorporation or by-laws or any material franchise,
mortgage, deed of trust, lease, license, agreement or
understanding, or any order or judgment or decree to which Seller
is a party or by which Seller is bound. Seller has the full power
and authority to enter into this Agreement and to carry out the
transaction contemplated hereby, and this Agreement has been duly
authorized and executed by Seller and constitutes a valid and
binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other laws relating to or
affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(j) To the best of Seller's knowledge, there are no
claims, legal actions or suits pending against or relating to the
Companies, their properties, assets or business, and Seller is not
aware of any facts which might result in such a claim, action,
suit, arbitration or other proceeding;
(k) To the best of Seller's knowledge, except as set
forth in Schedule 4(k) hereto: (i) the Companies have all permits,
licenses, certificates and other authorizations necessary for them
to carry on their respective business in its current manner; (ii)
the Companies have not received any written notice that they, or
either of them, have failed to comply with any laws, rules,
regulations, ordinances, licenses, permits, judgments, decrees and
orders of federal, state and local or other governmental
authorities having jurisdiction applicable to their respective
properties, assets or business which have not been previously
remedied; and (iii) Seller and each of the Companies, respectively,
are not in violation of or in default under any terms or provisions
of their certificate of incorporation or by-laws, as presently in
effect, or of any material liens, mortgage, lease or agreement, or
of any order, judgment or decree to which Seller or the Companies
are a named party;
(l) The Companies have good and marketable title to
their respective assets described or referred to in the Exhibits
hereto (the "Companies' Assets"), other than the Leased Property
and the pipeline rights-of-way of H&W Pipeline Company, free of any
liens, security interests or other like encumbrances;
(m) All ad valorem and personal property taxes assessed
against the Companies' Assets (including any penalties or
assessments for delinquencies in payment) and all other taxes of
any nature with respect to the Companies' Assets which are due and
payable by the Companies as of the Closing Date will be paid in
full by said Closing Date;
(n) Five Flags Pipe Line Company owns a natural gas
transmission pipeline system situated in Escambia and Santa Xxxx
Counties, Florida, as depicted on the map attached as Exhibit "A-1"
hereto, consisting of approximately 42 miles of 10" diameter 0.219
wall 2X52 pipe, approximately 15 miles of 8" diameter 0.280 wall
X42 pipe, and various meters and metering stations, control
equipment, corrosion equipment, dehydration facilities, buildings
and other operating equipment attached to, or used or held for use
in the operation of said natural gas transmission pipeline system
(collectively the "Five Flags Pipeline System"). H&W Pipeline
Corporation owns a non-operating natural gas transmission pipeline
situated in Escambia County, Alabama, as depicted on the map
attached as Exhibit "A-2" hereto, consisting of approximately 350
feet of 6" O.D. schedule, 40 seamless, Grade B, coated and wrapped
pipe, 42,000 feet of 6" O.D. x 0.188" W.T., X-42 coated and wrapped
pipe, 2-6" block valve settings, and 200 feet of 6" O.D. x 0.250"
W.T., X-42 pipe (The Big Escambia Creek Crossing), station adjacent
to the Exxon-Big Escambia Creek Plant which consists of a 6" pig
launcher/receiver and the associated valves, fittings, and piping,
and a metering and control station at Exxon Flomation Plant which
consists of a 4" orifice meter, a 4" pressure control valve, a 2"
flow control valve and a 6" pig launcher/receiver with the
associated valves, fittings, piping and instrumentation (the "H&W
Pipeline");
(o) A schedule of (i) all vehicles, (ii) all, or
substantially all, office equipment, and (iii) all leases of
personal property, of Five Flags Pipe Line Company is attached
hereto as Exhibit "B" (collectively the "Equipment");
(p) That certain lease (the "Lease") of real property,
relating to office space and equipment storage ("Leased Premises"),
presently held in the name of Five Flags Pipe Line Company,
described in Exhibit "C" hereto, is the only lease of real property
affecting either of the Companies which is presently in force and
effect;
(q) A schedule of all easement agreements and other
similar agreements of Five Flags Pipe Line Company is attached
hereto as Exhibit "D" (the "Easement Agreements");
(r) A schedule of all or substantially all maintenance
and operating supplies, fuel and spare parts for the Equipment of
Five Flags Pipe Line Company is set forth as Exhibit "E" hereto
(collectively the "Inventory");
(s) A schedule of all gas transmission contracts and
other similar agreements of Five Flags Pipe Line Company is set
forth as Exhibit "F" hereto (the "Transmission Contracts");
(t) A schedule of all certificates of occupancy and
other licenses, permits, orders or approvals of any federal, state
or local governmental or regulatory body relating to the use,
operation, or enjoyment of the assets of Five Flags Pipe Line
Company is set forth in Exhibit "G" hereto (the "Permits");
(u) A schedule of all easements, rights-of-way,
licenses, permits, surface use agreements and other similar
agreements of H&W Pipeline Corporation is attached hereto as
Exhibit "H" (the "H&W Agreements");
(v) To the best of Seller's knowledge, the Exhibits to
this Agreement collectively constitute a complete and correct list
and description of all material agreements or contracts affecting
the Companies' Assets, as operated in the ordinary course of
business, including all amendments, modifications, revocations and
notices, except those that would not have a material adverse effect
upon the rights, obligations or liabilities of the Companies under
said contracts;
(w) To the best of Seller's knowledge, the contracts,
agreements, permits and other documents listed on Exhibits "D", "F"
and "G" hereto are all valid, binding and enforceable in accordance
with their terms and are in full force and effect and there are no
facts which would give rise to a claim otherwise. To the best of
Seller's knowledge, Five Flags Pipe Line Company has performed all
obligations and made all payments required, to be performed or paid
under such contracts, agreements and other documents and Seller has
not received any written or oral notice from any party to said
contracts and agreements claiming the existence of any default
under any of such contracts, agreements or other documents which
have not been previously remedied;
(x) To the best of Seller's knowledge, except as
disclosed to Buyer on Schedule
4(x) hereto, neither of the Companies is in
violation of any federal, state or local law, ordinance or regulation
relating to the environment on, under or about any real property or related
facilities and equipment owned or used by either of the Companies
including, but not limited to, soil and groundwater conditions. To
the best of Seller's knowledge, there is no contamination, waste or
Hazardous Substance in existence on or below the surface of any
real property within the United States owned by the Companies, or
in any building located upon such property, including without
limitation, contamination of the soil, subsoil or ground water,
which exposes the Companies to liability to third parties; nor are
the Companies subject to any reporting requirement with respect
thereto nor have they received any notices with respect thereto.
To the best of Seller's knowledge, there is no actual or threatened
proceeding or investigation by any governmental entity with respect
to the presence of such Hazardous Substance on any real property
owned or leased by either of the Companies or the migration thereof
from or to other property, and neither of the Companies has ever
been requested mandated or ordered by any governmental entity to
treat, clean-up or otherwise dispose, remove or neutralize any
Hazardous Substance from or on any real property owned or leased by
either of the Companies. For purposes of this Agreement,
"Hazardous Substances" shall mean (but shall not be limited to)
substances defined or listed as hazardous substances, hazardous
materials, hazardous wastes or toxic substances, or any
variation thereof, in or determined at any time to be such pursuant
to applicable laws, and regulations adopted and publications set
forth in or promulgated pursuant to such laws, including, without
limitation: (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Sections 9601 et seq.; Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq.; the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901 et seq.; and (ii)
pesticides, fungicides, solvents, herbicides, flammable explosives,
asbestos, polychlorinated biphenyls, radioactive materials; and
petroleum, and drilling fluids, produced waters and other wastes
associated with the exploration, development, or production of
crude oil, natural gas or geothermal energy;
(y) To the best of Seller's knowledge, neither the
execution and delivery of, nor Seller's performance under this
Agreement, is prohibited by or requires any consent, authorization,
approval or registration under any law, rule or regulation, other
than those customarily required in transactions of this type, or
under any judgment, order, writ, injunction or decree to which
Seller was a named party;
(z) Neither of the Companies are subject to any
arrangement to purchase gas or under any arrangement which the
Companies will be obligated, by virtue of a prepayment arrangement,
a "take-or-pay" arrangement, a production payment, or any other
arrangement, to transport or deliver hydrocarbons at some future
time without then or thereafter receiving full payment therefor, or
to make payment at some future time for hydrocarbons or the
transportation or delivery of hydrocarbons previously purchased or
transported;
(aa) To the best of Seller's knowledge, none of the
statements, representations or warranties made by Seller in this
Agreement, or in any Exhibit or Schedule hereto, or in any
certificate or other document delivered with or pursuant to this
Agreement, contains any untrue statement of any material fact, or
omits to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under
which they were made, not misleading. Except as and to the extent
expressly set forth in this Agreement, or in any Exhibit or
Schedule hereto, Seller makes no representations or warranties
whatsoever. Seller disclaims all liability and responsibility for
any negligent representation, warranty, statement or information
made or communicated, by oversight or otherwise (orally or in
writing) to Buyer other than those expressly made by Seller in this
Agreement or in the Exhibits and Schedules hereto (including, but
not limited to, any opinion, information or advice which may have
been provided to Buyer by Seller or Five Flags Pipe Line Company,
H&W Pipeline Corporation, or any of their respective stockholders,
officers, directors, employees, agents, attorneys, consultants,
representatives, or any party acting on their behalf). This
subparagraph (aa) shall not excuse Seller from any intentional
misrepresentation, statement, warranty or act in furnishing
incorrect, false or misleading information to Buyer by Seller or
any person acting on behalf of Seller, if made, given or done with
the intent that the other Party rely thereon and be misled thereby;
(bb) there are no agreements allowing another party to
purchase all or some of the Companies' Assets;
(cc) the Lease is in full force and effect in accordance
with its terms and Seller knows of no default thereunder or no
condition or event under which the lessor under the Lease could
terminate the Lease prior to the end of the primary term or any
extension thereof;
(dd) Neither of the Companies is a party to any partner-
ship or joint venture;
(ee) Schedule 4(ee) attached hereto is a complete list
of all policies of insurance with respect to the Companies' Assets,
all of which will remain in full force and effect until the Closing
Date;
(ff) Between the date of this Agreement and the Closing
Date, neither of the Companies will: (a) transfer, sell or
otherwise dispose of any corporate property or assets material to
the operation of its business other than in the ordinary and
usual course of its business as heretofore conducted, save and
except such items as shall have become no longer useful, obsolete
or worn out, or rendered of no further use, and, if heretofore
useful in the conduct of its business and operations, as may have
been replaced with other items of substantially the same value and
utility as the items transferred, sold, exchanged or otherwise
disposed of; (b) create, participate in or agree to the creation of
any liens or encumbrances on its corporate property, save and
except liens for taxes not yet due and liens created in the
ordinary and usual course of its business as heretofore conducted
in connection with normal purchases of natural gas; (c) enter into
any leases, contracts or agreements of any kind or character
extending for more than a sixty (60) day period unless terminable
by giving sixty (60) days or less advance written notice, or incur
any liabilities, save and except those to which it is presently
committed and which are disclosed herein or in the Exhibits hereto;
(d) make any payments or distributions to or for the benefit of any
of its officers, directors, stockholders or employees, save and
except wages and salaries made to employees in the ordinary and
usual course of the business as heretofore conducted and
contributions required pursuant to any health and/or life insurance
plans presently in effect; (e) amend or repeal its Articles of
Incorporation or Bylaws or issue any shares of capital stock in
addition to, and other than, the shares heretofore issued, or
reissue any treasury stock; (f) take any action that is materially
different or varies from the ordinary course of its business; or
(g) not pay or agree to pay any severance or termination benefit to
any employee of the Companies that is triggered by the Closing and
that would be binding upon Buyer or it, or affect its ownership,
operation and enjoyment of its assets;
(gg) Schedule 4(gg) attached hereto is a schedule of (i)
the name of each bank, savings and loan or other financial
institution at which Five Flags Pipe Line Company has any account
or safe deposit box, including the style and number of each such
account or safe deposit box and the names of all persons authorized
to draw thereon or who have access thereto, and (ii) the name of
each person, corporation, firm, association or business entity or
enterprise holding a general or special power of attorney from the
Companies and a summary of the terms thereof. (H&W Pipeline
Corporation has no accounts and no safe deposit box);
(hh) Schedule 4(hh) attached hereto sets forth all
pension plans, profit sharing plans, retirement benefit plans,
executive compensation arrangements, deferred compensation
arrangements, retiree medical arrangements, employment contracts,
health, disability and/or life insurance plans, and other benefit
plans, payments or arrangements for employees of Five Flags Pipe
Line Company (the "Benefit Plans") presently in effect with respect
to the Companies. Seller has heretofore delivered to Buyer true,
correct and complete copies of summary plan descriptions of all
Benefit Plans and will provide Buyer with such additional
information regarding the Benefit Plans as Buyer may reasonably
request. (H&W Pipeline Corporation has no employees.);
(ii) To the best of Seller's knowledge, Schedule 4(ii)
hereto setting forth the Pipeline Class Location Rating and
M.A.O.P. Determination for the Five Flags Pipeline System, from
which pressure ratings may be obtained and pipeline capacities
evaluated, is accurate;
(jj) To the best of the Seller's knowledge except as
disclosed to Buyer on Schedule 4(x) hereto, neither of the
Companies is in violation of any federal, state or local law,
ordinance or regulation; and
(kk) Seller shall represent and warrant at Closing that
to the best of its knowledge it has made available at either its
office or that of the Companies all materials, records, documents,
and other information in its possession or in the possession of
Five Flags Pipe Line Company at its Pace Florida office to Buyer
for its inspection and review.
5. Representations, Covenants, and Warranties by
Buyer. Buyer represents, warrants, and covenants to Seller as of
the date of this Agreement and on and as of the Closing Date, the
following:
(a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
where formed and conducting business. Buyer has all requisite
power and authority and is entitled to carry on its businesses as
now being conducted;
(b) Neither the execution, delivery nor the performance
of this Agreement by Buyer will conflict with, result in a default
or loss of rights under, or result in the creation of any lien,
charge or encumbrance pursuant to, any provision of Buyer's
certificate of incorporation or by-laws or any material franchise,
mortgage, deed of trust, lease, license, agreement or
understanding, or any order or judgment or decree to which Buyer is
a party or by which Buyer is bound or affected. Buyer or its
nominee has the full power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby,
and this Agreement has been duly authorized and executed by Buyer
and constitutes a valid and binding obligation of Buyer or its
nominee, enforceable against Buyer or its nominee in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency or other laws relating to or affecting the
enforcement of creditors' rights generally and general principles
of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law). Buyer or its nominee has
complied with all applicable laws and regulations and has all
certificates, permits, approvals, and licenses from any and all
governmental authorities that may be required for Buyer or its
nominee to validly own the Stock;
(c) To the best of Buyer's knowledge, there are no
claims, legal actions, suits, arbitrations, governmental
investigations or other administrative proceedings in progress or
pending against or relating to Buyer, and Buyer is not aware of any
facts which might result in such claim, action, suit, arbitration
or other proceeding which might reasonably be expected to have a
material adverse effect on Buyer's or Buyer's assignee's ability to
perform this Agreement;
(d) To the best of Buyer's knowledge, none of the
statements, representations or warranties made by Buyer in this
Agreement, or in any certificate or other document delivered with
or pursuant to this Agreement, contains any untrue statement of any
material fact, or omits to state any material fact necessary in
order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading;
(e) In the event Buyer elects to inspect and/or
investigate the Five Flags Pipeline System, the H&W Pipeline or any
of the other assets constituting a portion of the Companies'
Assets, Buyer shall have the duty to disclose in writing to Seller,
prior to Closing, any fact or results obtained through such
inspection and/or investigation which Buyer knows to constitute a
material violation of any local, state or federal laws, rules or
regulations;
(f) Buyer has obtained prior to the date of this
Agreement, the requisite power and authority to execute and enter
into this Agreement and to close the transactions contemplated
hereby without further action or resolution by the Board of
Directors of Buyer; and
(g) Buyer covenants that it shall diligently seek to
obtain all requisite consent approvals needed from any government
entity to consummate the transactions contemplated herein. (The
period of time within it takes for Buyer to obtain such requisite
approvals, if any, is hereinafter referred as the "Approval
Period")
6. Liabilities and Obligations Assumed by Seller.
Notwithstanding Buyer's purchase of the Five Flags Stock and the
H&W Stock, Buyer and Seller expressly agree that Seller shall
expressly assume and timely pay or perform immediately prior to
Closing or as soon thereafter as practical if not payable prior, as
applicable, all liabilities and obligations related to the
operation of the Companies prior to the Effective Date, including
but not limited to the following liabilities and obligations of
Five Flags Pipe Line Company and H&W Pipeline Corporation:
(a) all accounts payable accruing prior to the Effective
Date or otherwise attributable to such period;
(b) all expenses and similar current liabilities accruing prior to
the Effective Date or otherwise attributable to such period;
(c) all "Taxes" (as defined in Section 16 of this
Agreement) arising from the ownership or use of the Companies'
Assets prior to the Effective Date and any other operations of the
Companies;
(d) all obligations accruing prior to the Effective Date
under, and all liabilities and obligations arising on or after the
Closing Date by reason of any breaches or defaults prior to the
Closing Date under, any of the following: (i) the Lease, (ii) the
Easement Agreements, (iii) the Transmission Contracts, (iv) the
Permits, and (v) the H&W documents;
(e) for periods prior to the Effective Date, any and all
claims, wages, payroll taxes, or other liabilities arising out of
any employment relationship of an individual or entity prior to the
Effective Date, for termination or severance of employees, for
deferred compensation, accrued vacation or sick leave under any
employment agreement or employee benefit plan or policy, or any
other claims alleged by employees or with respect to any
retirement, pension or profit sharing plan or similar agreement;
(f) all liabilities in respect of all indebtedness of
the Companies incurred prior to the Effective Date;
(g) all liabilities for claims for injury, disabilities,
death or workers compensation arising from employment by Five Flags
Pipe Line Company or H&W Pipeline Company during any period prior
to the Effective Date, but only to the extent not covered by
insurance carried by or for the benefit of Five Flags Pipe Line
Company;
(h) all liabilities for claims or damages arising from
environmental matters relating to Five Flags Pipe Line Company that
resulted from conditions first occurring between the Holding
Company Transaction and the Effective Date; and
(i) any imbalance of natural gas over delivered or
undelivered to any third party prior to the Effective Date.
7. Accounting Between Buyer and Seller. If Closing
occurs, Seller, at or immediately prior to Closing, shall cause the
Companies to make payment on any then outstanding accounts and
notes payable of the Companies to Seller and/or to the subsidiaries
and affiliates of Seller, and/or to employees or third parties with
the then remaining cash-on-hand of the Companies, and pay all other
cash-on-hand of the Companies to Seller, and Seller shall expressly
assume and discharge the unpaid balance of all then remaining
accounts and notes payable, if any, of the Companies, to Seller
and/or to the affiliates and subsidiaries of Seller, and/or to
employees or third parties, such that at Closing the Companies
shall have no cash-on-hand, and the Companies shall have no
accounts payable to Seller or to any affiliates or subsidiaries of
Seller, and/or third parties.
To the extent that either of the Companies receives
payment on accounts or notes receivable attributable to periods
prior to Closing Date, Buyer shall account to the Seller for the
same and shall pay or cause to be paid said sums to the Seller,
less any payments made by the Companies which are part of the
liabilities and obligations assumed by Seller pursuant to Section
6 of this Agreement. Such accountings and such payments by the
Companies to Seller shall be on a monthly basis, commencing as of
the 20th day of the second calendar month following the Closing
Date and thereafter on the 20th day of each succeeding month.
Buyer shall cause the Companies to use reasonable efforts to
collect any and all accounts and notes receivable attributable to
periods prior to Closing Date; provided, however, if all such
accounts and notes receivable have not been collected on or before
the expiration of six (6) months following the Closing Date, then
Seller, at Seller's sole cost and expense, shall be responsible for
the collection of all such accounts and notes receivable, and Buyer
shall, at Seller's request, assign them to Seller (without recourse
or warranty of title). Further, Buyer will cooperate with Seller
as long as necessary and reasonable for Seller to collect the
amounts and notes receivable for periods prior to Closing Date.
Seller shall have the same obligations to Buyer for any proceeds it
may receive on behalf of the Companies attributable to activities
and transactions of the Companies attributable to periods after the
Effective Date which it may receive.
8. Conditions to Obligation of Buyer to Close. The
obligation of Buyer to consummate the transactions contemplated by
this Agreement is subject to the satisfaction of the following
conditions unless waived by Buyer in writing:
(a) The representations and warranties of Seller set
forth herein shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (including representations and
warranties made as of a specific date being true and correct as
though that specific date were changed to the Closing Date);
(b) Seller shall have performed all obligations and
agreements and complied all covenants and conditions applicable to
it contained in this Agreement in all material respects prior to or
on the Closing Date, except those which if not performed or
complied with would not materially and adversely effect Seller;
(c) Seller shall have endorsed in blank (or executed
stock powers in blank) and delivered to Buyer certificates
representing all outstanding and issued shares of the H&W Stock and
the Five Flags Stock on the Closing Date, and shall have delivered
to Buyer the written resignations of the present directors and
officers of the Companies in accordance with Section 4(e) of this
Agreement;
(d) No suit, action or other proceeding by a third party
or governmental authority shall be pending or threatened which
seeks damages from Buyer in connection with, or seeks to restrain,
enjoin or otherwise prohibit, the consummation of the transactions
contemplated by this Agreement or precludes Buyer from operating
the Companies' Assets;
(e) Buyer has all required governmental approvals, if
any, to consummate the transactions contemplated herein;
(f) Between the date of this Agreement and the Closing
Date, no material adverse change in the business or operations of
the Companies shall have occurred;
(g) If prior to Closing any of the Companies' Assets are
damaged or destroyed by fire, flood, storm or other casualty and
the repair or replacement cost thereof, as applicable, is in excess
of five percent (5%) of the Purchase Price, Seller shall agree to
reduce the Purchase Price by a sum equal to that amount by which
the repair or replacement cost thereof, as applicable, of such
damaged or destroyed assets exceeds five percent (5%) of the
Purchase Price, less all sums payable by insurance carriers to
Buyer and to the Companies, or either of them, by reason of such
loss;
(h) No uncured or unsatisfied items on the Defect List
exist which exceed five percent (5%) of the Purchase Price,
singularly or in the aggregate, upon the expiration of the Curative
Period; and
(i) An opinion of counsel to Seller, dated as of the
Closing Date, addressed to Buyer, and satisfactory to Buyer's
counsel in form and substance, as to the matters contained in
Sections 4(c), (i) and (j) of this Agreement.
9. Conditions to Obligation of Seller to Close.
The obligation of Seller to consummate the transaction contemplated
by this Agreement is subject to the satisfaction of the following
conditions unless waived by Seller:
(a) The representations and warranties of Buyer set
forth herein shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (including representations and
warranties made as of a specific date being true and correct as
though that specific date were changed to the Closing Date);
(b) Buyer shall have performed all obligations and
agreements and complied with all covenants and conditions
applicable to it contained in this Agreement in all material
respects prior to or on the Closing Date, except those which if not
performed or complied with would not materially and adversely
affect Seller;
(c) No suit, action or other proceeding by a third party
or a governmental authority shall be pending or threatened which
seeks substantial damages from Seller in connection with, or seeks
to restrain, enjoin or otherwise prohibit, the consummation of the
transactions contemplated by this Agreement;
(d) Payment by Buyer to Seller of the Purchase Price;
and
(e) An opinion of counsel to Buyer, dated as of the
Closing Date, addressed to Seller, and satisfactory to Seller's
counsel in form and substance, as to the matters contained in
Section 5(a) and (b) of this agreement.
10. Due Diligence Review, Defect List, and Curative
Period.
(a) Due Diligence Review. Buyer shall have a period of
up to thirty (30) days after Seller's repurchase of Five Flags Pipe
Line Company from Five Flags Holding Company within which to
complete its due diligence review of both Companies (the "Due
Diligence Period") with respect to compliance with all applicable
laws, rules, orders and regulations, environmental matters,
personnel matters, legal matters and claims, operational matters,
financial matters, and all other matters which could have a
material and adverse affect upon any of Five Flags Pipe Line
Company, H&W Pipeline Corporation, Buyer or Buyer's affiliate, Xxxx
Gateway Pipeline Company (collectively the "Buyer's Group"). Buyer
shall make a good faith effort to complete its due diligence within
as short a period of time as reasonably possible. Commencing as of
the date of this Agreement, Seller shall give the officers,
attorneys, accountants and other authorized representatives of
Buyer access, during normal business hours, to all the records and
properties of H&W Pipeline Corporation relating to it and its
business, including access to its physical properties. Upon
Seller's reacquisition of Five Flags Pipe Line Company from Five
Flags Holding Company, Seller shall give the officers, attorneys,
and other authorized representatives of Buyer access, during normal
business hours, to all the records and properties of Five Flags
Pipe Line Company relating to it and its business, including access
to its physical properties. To the extent that Seller can do so
prior to its reacquisition of Five Flags Pipe Line Company, it
shall provide Buyer with right-of-way information and other
information, and if provided Buyer agrees to immediately commence
and diligently proceed with right-of-way due diligence and all
other due diligence which can be accomplished or partially
accomplished with the information furnished by Seller prior to its
reacquisition of Five Flags Pipe Line Company. During the Due
Diligence Period, Seller will furnish the representatives of Buyer
with all such information as such representatives may reasonably
request, and shall cause the employees, accountants and attorneys
of Seller and the Companies, to the extent reasonably possible, to
cooperate with such representatives in connection with such review
and examination, and to make full disclosure to Buyer of all
material facts affecting the Companies' Assets. When undertaking
visual inspections of the Five Flags Pipe Line System, the H&W
Pipeline or other properties of the Companies, a Seller
representative shall accompany Buyer's representatives responsible
for such inspections. Notwithstanding the foregoing, Buyer shall
not unduly or unreasonably disrupt or interfere with the conduct of
the Companies, and Buyer shall assume all risks involved in
entering upon the Five Flags Pipeline System, the H&W Pipeline, and
any of the other properties of the Companies. Further, Buyer shall
indemnify, protect, defend and hold Seller and the Companies
harmless from any liens, claims, losses, liabilities, costs and
expenses arising out of Buyer's exercising any right of access
granted hereunder, including, without limitation, any claims,
losses, and liabilities resulting from bodily injury or death to
persons or damage to property sustained by any party as a result of
the exercise of Buyer's right of access. Buyer's indemnity
contained in this Section 10 shall survive the rescission,
cancellation, termination or consummation of this Agreement;
(b) Defect List. On or before the expiration of the Due
Diligence Period, Seller shall deliver to MidCoast a complete,
written list (the "Defect List") of all matters that materially and
adversely affect the Buyer's Group. For purposes of this
Agreement, "materially and adversely affect" means at a cost or
loss to the Buyer's Group, of more than five percent (5%) of the
Purchase Price, singularly or in the aggregate. If Seller and
Buyer disagree as to the individual or aggregate amount of the cost
or loss to the Buyer's Group of matters on the Defect List or as to
whether a matter on the Defect List has been remedied or cured by
Seller, any and all such matters of disagreement shall be deemed
automatically referred to arbitration for decision by the
arbitrator pursuant to the provisions of Section 35 of this
Agreement; and
(c) Curative Period. Seller shall have a period of up
to thirty (30) days after its receipt of the Defect List within
which to remedy or cure any or all matters set forth thereon, at
its sole election, and deliver all curative documents and
information obtained by it to Buyer; provided, however, as to
disputed matters arbitrated in which the arbitrator finds in favor
of Buyer, Seller shall have an additional period of up to twenty
(20) days after its receipt of written notice from the arbitrator
of his decision within which to remedy or cure such matters, at its
sole election. Further provided, however, as to disputed matters
arbitrated in which the arbitrator finds in favor of Seller, the
Defect List shall be deemed revised in accordance with the
arbitrator's decision. Seller shall make a good faith effort to
complete its curative work within as short a period of time as
reasonably possible. (The entire period of time commencing with
the initial thirty (30) day period, the period of arbitration, if
applicable, and the additional twenty (20) day period, if
applicable, is referred to in this Agreement as the "Curative
Period".) If prior to Closing any of the defects cannot be cured
within the Curative Period, then Buyer shall have the right to
either terminate this Agreement or agree with to reduce the
Purchase Price by an appropriate amount mutually agreed; and
(d) Any period of time referenced in this Section 10
shall be extended for a like period during which access to the
facilities or records is unavailable due to storm, flood, or fire.
11. Casualty Loss Prior to Closing. If prior to
Closing any of the Companies' Assets are damaged or destroyed by
fire, flood, storm or other casualty and the repair or replacement
cost thereof, as applicable, is five percent (5%) of the Purchase
Price or less, then, subject to the other terms and provisions of
this Agreement, Buyer shall proceed to purchase the Five Flags
Stock and the H&W Stock without any reduction in the Purchase
Price. If prior to Closing any of the Companies' Assets are
damaged or destroyed by fire, flood, storm or other casualty and
the repair or replacement cost thereof, as applicable, is in excess
of five percent (5%) of the Purchase Price, then Buyer shall have
the right to terminate this Agreement unless Seller agrees to
reduce the Purchase Price by a sum equal to that amount by which
the repair or replacement cost thereof, as applicable, of such
damaged or destroyed assets exceeds five percent (5%) of the
Purchase Price, less all sums payable by insurance carriers to
Buyer and to the Companies, or either of them, by reason of such
loss.
All repair or replacement costs shall be determined jointly
by Seller and Buyer or, in the event of disagreement between Buyer and
Seller with respect thereto, such repair or replacement cost shall
be automatically referred to arbitration for decision by the
arbitrators pursuant to the provisions of Section 35 of this
Agreement.
12. Termination. Anything elsewhere in this Agreement
to the contrary notwithstanding, this Agreement may be terminated
and the transactions contemplated hereby abandoned at any time
prior to the Closing in the following manner:
(a) By mutual written consent of Seller and Buyer;
(b) By Seller, through written notice to Buyer, if, at
any time after the Curative Period and the Approval Period, any of
the conditions to the Closing set forth in Section 9 of this
Agreement shall not have been satisfied and shall not have been
waived by Seller;
(c) By Buyer, through written notice to Seller, if, at
any time after the Curative Period and the Approval Period, any of
the conditions set forth in Section 8 of this Agreement shall not
have been satisfied and shall not have been waived by Buyer;
(d) By Seller, if at any time prior to Closing Seller
determines that it has made a material misrepresentation or
materially breached a covenant or a warranty made under this
Agreement, which after delivery of written notice thereof to Buyer,
Buyer is unwilling to waive same as a condition to Closing and to
release Seller from any liability therefor;
(e) By Buyer, if at any time prior to Closing, Buyer
determines that it has made a material misrepresentation or
materially breached a covenant or a warranty under this Agreement,
which after delivery of written notice thereof to Seller, Seller is
unwilling to waive same as a condition to Closing and to release
Seller from any liability therefor;
(f) By Seller, if at any time prior to Closing Seller
determines that Buyer has made a material adverse misrepresentation
or materially and adversely breached a covenant or a warranty made
under this Agreement, which if after delivery of written notice
thereof to Buyer, Buyer is unwilling or unable to cure such
misrepresentation or breach;
(g) By Buyer, if at any time prior to Closing, Buyer
determines that Seller has made a material adverse
misrepresentation or materially and adversely breached a covenant
or a warranty under this Agreement, which if after delivery of
written notice thereof to Seller, Seller is unwilling or unable to
cure such misrepresentation or breach;
(h) By Buyer, if Seller or either of the Companies should
file for bankruptcy or have creditors file an involuntary
bankruptcy proceeding, prior to closing; and
(i) By Seller, if Buyer or its assignee should file for
bankruptcy, or have creditors file an involuntary bankruptcy
proceeding, prior to closing.
Upon the termination of this Agreement by either Party in
accordance with this Section 12, neither Party shall have any
liability whatsoever to the other Party in connection with this
Agreement and the transaction contemplated hereby, except as
otherwise expressly provided in this Agreement.
13. Expenses. All expenses incurred by Seller in
connection with or related to the authorization, preparation or
execution of this Agreement, the Exhibits and the Schedules hereto
and thereto, and all other matters related to the Closing,
including without limitation, all fees and expenses of counsel,
accountants and financial advisers employed by Seller, shall be
borne solely and entirely by Seller; and all such expenses incurred
by Buyer shall be borne solely and entirely by Buyer, and any
expenses incurred by Buyer or as the result of the exercise of its
right of access granted in this Agreement, shall be borne solely
and entirely by Buyer.
14. Broker's Fees, Counsel Fees and Expenses.
Seller and Buyer each represent to the other that neither has
employed any broker or entered into any agreement for the payment
of any fees, compensation or expense to any person, firm or
corporation in connection with the transactions contemplated by
this Agreement. Seller and Buyer further covenant and agree, each
to the other, to indemnify and hold the other harmless against any
loss, liability, costs, claims, demands, damages, actions, causes
of action and suits arising out of or in any manner related to the
alleged employment or use by the indemnifying Party of any broker
or agent in connection with this Agreement or the transactions
contemplated hereby. The indemnification provision of this Section
14 shall survive any rescission, cancellation, termination,
expiration or consummation of this Agreement.
15. Notices. Unless otherwise designated in
writing, any notice or demand required or permitted by any
provision of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if it is sent by
United States Mail, return receipt requested, postage prepaid,
addressed as follows or by facsimile to the numbers contained
below:
If to Seller:
MidCoast Holdings No. One, Inc. Copy to:
Suite 3030, 1100 Louisiana Xx. Xxxxxx X. Xxxxxxxx,Esq.
Xxxxxxx, Xxxxx 00000 Xxxxxxxxxx Xxxxx XX,000
Attention: Xx. Xxx X. Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxx 00000
President Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to Buyer:
Xxxx Gateway Pipeline Company Copy to:
600 Xxxxxx Xx. Xxxxx X.Xxxxxx,Attorney
Xxxxxxx, Xxxxx 00000 Xxxx Industries, Inc.
Attention: Xx. Xxxx Xxxxxxx 0000 Xxxx 00xx Xx.Xxxxx
Telephone: (000) 000-0000 Xxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000
16. Operation of the Companies' Assets Prior to
Closing. From and after the date of this Agreement to the Closing
Date, Seller agrees to cause the Companies to maintain and operate
the Companies' Assets in a good and workmanlike manner in
accordance with present practices and in compliance with applicable
laws, rules and regulations, maintain in full force and effect that
insurance which is currently in force with respect to the
Companies' Assets, pay or cause to be paid all costs and expenses
incurred in connection therewith, keep all agreements relating to
the Companies' Assets in full force and effect according to their
present terms and conditions, and otherwise comply with all of the
covenants contained in all agreements relating to the Companies'
Assets. Seller further covenants and agrees that it and/or the
Companies, as applicable, shall:
(a) Promptly notify Buyer of any suit, action or other
proceeding or facts and circumstances that arise prior to the
Closing Date affecting or potentially affecting any of the
Companies' Assets or Seller's ability to consummate and perform
under this Agreement;
(b) Not mortgage, pledge or otherwise encumber any of
the Companies' Assets, or grant easements or licenses upon or
further encumber any of the Companies' Assets without the prior
written consent of Buyer;
(c) Not enter into or terminate any material Easement
Agreements, Transmission Contracts or make any material changes to
any of same, having an adverse effect, without the prior written
consent of Buyer, which consent shall not be unreasonably withheld
or delayed; and
(d) Not sell or otherwise dispose of any of the
Companies' Assets (except for use of such of the Inventory as shall
be necessary in normal day-to-day operations and maintenance), or
make any material changes to any of same, without the prior written
consent of Buyer, which consent shall not be unreasonably withheld
or delayed.
17. Internal Revenue Code.
The terms used herein which are defined in the Agreement shall
have the meanings specified in this Agreement unless specifically
otherwise defined herein. As used herein, (i) the term "Code"
means the U.S. Internal Revenue Code of 1986, as amended, or any
successor law, (ii) the term "Law" means the law of any country or
political jurisdiction thereof other than the Code and (iii) the
term "Taxes" means all federal, foreign, state, local and/or
combined taxes, specifically including gross income, net income,
gross receipts, petroleum revenue, sales, use, ad valorem, value-
added, franchise, withholding, payroll, employment, excise,
property, or windfall profit taxes, together with any interest
thereon and any penalties, additions to tax, or additional amounts
applicable thereto which have been or may be imposed upon the
Companies.
18. Section 338(h)(10) Election; Tax Allocation
Arrangements; Tax Audits.
(a) Section 338(h)(10) Election. The Buyer shall have
the unconditional right to make an election under Section 338(g) of
the Code or similar state statutes with respect to the purchase of
the stock. In addition, subject to the conditions set forth
hereunder, the Seller agrees that the Buyer may require the Seller
and the Buyer to make a joint election under Section 338(h)(10) of
the Code or under similar state statutes with respect to such
purchase (a "Joint Election"). If Buyer requires that a Joint
Election be made, subject to paragraph (b) below, and within 180
days after the Closing, the Seller and the Buyer shall exchange
completed and executed copies of Form 8023 and required schedules
thereto (the "Form") for the Companies. The Seller and the Buyer"
agree to take all other action and file all other necessary reports
to elect validly pursuant to Section 338(h)(10) to treat the
transaction as a sale of assets as opposed to a sale of the Stock.
The Buyer and the Seller shall each file a copy of the Form in a
timely manner and shall provide assurance to the other Party that
it has done so. The Seller shall report the sale of the
Corporation for federal, state, local, and foreign tax purposes
consistent with such elections (to the extent permitted under the
laws of the particular jurisdictions), and shall file a
consolidated federal income tax return for its taxable year that
includes the Closing Date. The deemed sale price of the assets of
the Corporation for federal and state tax purposes shall be
determined according to the MADSP formula described in Treasury
Regulation 1.338(h)(10)-1(f). The Buyer shall be held harmless
from any tax liability of the Seller resulting from the Section
338(h)(10) elections provided for in this Section;
(b) No Warranty. No party to this Agreement makes any
warranties to any other party hereto of the tax treatment of the
transaction contemplated by this Agreement under the provisions of
any Sections of the Code, regulations or state tax laws;
(c.) Section 1445(f)(3) Certification. At or prior to
Closing the Seller shall certify in writing the Buyer that the
Seller is not a "foreign person" as defined in Section 1445(f)(3)
of the Code, as amended;
(d) Transfer Taxes. Seller shall be liable for any
sales, use, transfer, gross receipts, excise and documentary taxes
and recording and filing fees applicable to the transactions
contemplated by this Agreement. To the extent Buyer must make such
payments, Seller shall remit to Buyer such amounts prior to the
date on which Buyer is obligated to pay the same to the applicable
government authority. Seller shall defend, indemnify and hold
Buyer harmless with respect to the payment of any such taxes and
fees including any interest or penalties assessed thereon;
(e) Tax Allocation Arrangements. Effective as of the
Closing Date, all liabilities and obligations between the Companies
and the Seller under any tax allocation agreement or arrangement in
effect prior to the Closing Date shall cease to exist, and any
liabilities or rights existing under any such agreement or
arrangement shall be extinguished in full and shall not be paid
thereafter. Seller shall execute any documents necessary to
effectuate the provisions of this paragraph;
(f) Pre-Closing and Post-Closing Tax Liabilities.
Seller shall be solely responsible for the payment of all Taxes
payable with respect to the Companies attributable to any period
ending on or before the Closing Date. Seller shall indemnify the
Buyer from any such Taxes (including any interest and penalties
thereon.) In the case of any state or local Taxes computed for a
period which includes the Closing Date but which ends after the
Closing Date, the Seller shall be liable for no more than its pro
rata share of such Taxes. The Buyer and the Companies shall be
liable for and indemnify the Seller and its Affiliates and
successors or assignees against all Taxes which are imposed on or
incurred by the Buyer for taxable years or periods or portions
thereof beginning on or after the Closing Date;
(g) Apportionment of Tax Liabilities. The apportionment
of tax liabilities shall be determined on the basis of actual
taxable events, taxable periods, and activities, except that
exemptions, allowances or deductions that are granted or calculated
on an annual or periodic basis, such as the deduction for property
taxes, franchise taxes (other than franchise taxes measured by
income), payments in lieu of such taxes and similar taxes or fees
shall be apportioned between the Seller and Buyer on a pro rata
daily basis over the relevant tax period, based on the tax periods
or portions thereof each is responsible for under Section 18(f) of
this Agreement;
(h) Tax Reimbursement. If, as a result of any
adjustment which is made after the Closing to Companies' liability
for Taxes for any taxable period, the Seller or Buyer or any
Affiliate of either makes a payment of Taxes in accordance with
Section 18(f) of this Agreement and, as a result of such
adjustment, Companies receives a refund of, or realizes a reduction
in, Taxes for any other Taxable period, then the amount of such
refund or reduction in Taxes shall promptly (and in any event no
later than thirty days after the close of the taxable period with
respect to which the refund or reduction in Taxes is received,
taken or obtained) be remitted to the Party which made such payment
of Taxes. If any refund or credit of Taxes for which a payment has
been made by Companies pursuant to this Section 18(h) is
subsequently reduced or disallowed, Seller or Buyer or any
Affiliate of either who received such refund or credit of Taxes,
shall pay Companies for the amount of such reduction or
disallowance within thirty days of such reduction or disallowance;
(i) Filing of Returns. The Seller shall prepare and
file or cause to be prepared and filed when due (i) all separate
company income or franchise tax returns and all consolidated,
combined or unitary income and franchise tax returns that are
required to be filed by or with respect to the Companies for
taxable years or periods ending on or before the Closing Date
including any returns as to which an election is made under the
provisions of Section 338(h)(10) of the Code or under any
comparable provisions under other Laws, and (ii) all other tax
returns and reports of the Companies which are required to be filed
or furnished on or before the Closing Date. Buyer shall prepare
and file, or cause to be prepared and filed, when due all other tax
returns and reports that are required to be filed by or with
respect to the Companies, including returns necessitated by a
stand-alone election under Section 338(g) of the Code or comparable
provisions under other Laws;
(j) Claims and Suits for Refunds. If Buyer or any
Affiliate of Buyer (including Companies) received a refund of any
Taxes that Seller is responsible for hereunder, or if Seller or any
Affiliate of Seller (other than Companies) receives a refund of any
Taxes that Buyer and the Companies are responsible for hereunder,
the Party receiving such refund shall, within thirty (30) days
after receipt of such refund, remit it to the Party who has
responsibility for such Taxes hereunder. For the purpose of this
Section 18(j), the term "refund" shall include a reduction in Tax
and the use of an overpayment as a credit or other tax offset, and
receipt of a refund shall occur upon the filing of a return or an
adjustment thereto using such reduction, overpayment or offset or
upon the receipt of cash;
(k) Payment. All Taxes, including Taxes owed after a
compromise or settlement of an audit or dispute with a taxing
authority, shall be paid to the taxing authority by the Party which
is legally responsible therefor under the Code or Law. Upon
payment of any Taxes with respect to which a Party is entitled to
receive indemnification hereunder, such Party shall submit an
invoice, with evidence of payment, to the indemnifying Party
stating that such Taxes have been paid and giving in reasonable
detail the particulars relating thereto. The indemnifying Party
shall remit payment for such Taxes promptly upon receipt of such
invoice, evidence of payment and particulars. Such payment will
include interest (at the Prime Rate) from the date Taxes are paid
by the Party entitled to indemnification through the date the
payment is remitted by the indemnifying Party;
(l) Assistance and Cooperation. Following Closing, in
the event that one Party receives notice of any examination, audit,
claim or other proceeding with respect to the liability of the
Companies for Taxes relating to any period for which the other
Party is liable, the first Party shall within ten (10) days notify
the other Party in writing thereof. In the event of an audit or
dispute with a taxing authority over Taxes for which a Party is
liable pursuant to this Section 18, that Party will be entitled to
control the proceedings, at its sole expense, related to such Taxes
(including action taken to pay, compromise or settle such Taxes),
provided, that Seller and Buyer shall jointly control, in good
faith with each other, any proceeding related to a taxable year or
period which begins before and ends after the Closing Date and
which both Parties have liability for pursuant to Section 18(f) of
this Agreement, provided further, however, that Seller will in any
event be entitled to solely control any proceeding which relates to
or impacts a consolidated, combined or unitary return filed in any
jurisdiction by Seller or its Affiliates. The Party which is not
entitled to control any such proceedings shall be afforded a
reasonable opportunity to participate in such proceedings at its
own expense; and
(m) Further Assurances. Each of the Parties hereby
agrees to provide to the other such cooperation and information as
reasonably requested and necessary for the preparation and/or
filing of any return, amended return or claim for refund; in
determining a liability or a right to refund; in conducting any
audit; or in responding to any examination, audit, claim or other
proceeding, involving any Taxes. The Companies and each Party will
preserve and retain all returns, schedules, work papers and all
material records or other documents relating to any Taxes until the
expiration of the statutory period of limitations (including
extensions) for the taxable periods to which such documents relate
and until the final determination of any payments which may be
required with respect to such periods under this Agreement. The
Companies shall make such documents available at the then current
administrative headquarters of the Companies to Seller upon
reasonable notice and at reasonable times. Seller shall be
entitled, at its sole expense, to make copies of any such books and
records as it shall deem necessary for any reason. The Buyer
further agrees to permit representatives of Seller to meet with
employees of the Buyer and the Companies on a mutually convenient
basis in order to enable such representatives to obtain additional
information and explanations of any documents provided pursuant to
this paragraph. Any information obtained pursuant to this
paragraph shall be kept confidential, except as may be otherwise
necessary in connection with the filing of returns or claims for
refund or in conducting or responding to any examination, audit,
claim or other proceeding.
19. Indemnification by Seller. Seller agrees that, on and
after the Closing, it will indemnify, hold harmless and defend
Buyer from and against any and all losses, claims, demands, costs
and expenses (including, without limitation, reasonable attorneys'
fees and disbursements) of every kind, nature and description based
upon, arising out of or otherwise in respect of the following:
(a) any untrue representation, breach of warranty or
nonfulfillment of any agreement by Seller contained in this
Agreement or in any documents entered into or delivered in
connection therewith;
(b) for a period of two (2) years after the Closing: (i)
seventy-five percent (75%) of any and all "Third Party Claims" (as
hereinafter defined) resulting from any and all violations by H&W
Pipeline Corporation, of "Environmental Protection Laws" (as
hereinafter defined) or from any other environmental matter or
practice occurring prior to the Effective Date with respect to its
ownership or operation of the H&W Pipeline, not to exceed, however,
an aggregate amount equal to fifty percent (50%) of the Purchase
Price paid by Buyer to Seller for the H&W Stock; and (ii) seventy-
five percent (75%) of any and all "Third Party Claims" resulting
from any and all violations by Five Flags Pipe Line Company of
"Environmental Laws" or from any other environmental matter or
practice, occurring prior to the Effective Date with respect to its
ownership or operation of the Five Flags Pipe Line System, not to
exceed, however, an aggregate amount equal to fifty percent (50%)
of that portion of the Purchase Price paid by Buyer to Seller for
the Five Flags Stock. In the event there are any "Third Party
Claims" pending at the end of said two (2) year period for which a
claim for indemnity has been made by Buyer to Seller, then the
indemnity of Seller to Buyer for such claim shall not terminate,
but shall continue in effect with respect to such claim.
"Environmental Protection Laws" means any and all laws, statutes,
rules, regulations, and judicial interpretation thereof of the
United States, of any state in which the Company Assets, or any
portion thereof, is located, and of any other governmental or
quasi-governmental authority having jurisdiction, that relate to
the prevention, abatement, and/or elimination of pollution and/or
protection of the environment, including, but not limited to, those
federal statutes commonly known as the Solid Waste Disposal Act of
1970, the Resource Conservation and Recovery Act of 1976, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of
1986, the Clean Water Act, the Clean Air Act, the Safe Drinking
Water Act, the Migratory Bird Treaty Act, the Toxic Substances
Control Act, and the Hazardous Materials Transportation Act,
together with all applicable state statutes serving any similar or
related purpose. "Third Party Claims" means any and all actions,
claims, demands or proceedings by any person or entity other than
the Parties hereto or their respective affiliates which give rise
to a right of indemnification under this Agreement provided that
such claims are not precipitated as a result of the actions of the
Party seeking indemnity hereunder with respect to such claim.
Submission of reports required by law shall not be considered to be
actions of a party seeking indemnity hereunder which precipitated
a claim arising from such reports. This Section 19(b) contains
Seller's exclusive indemnification of Buyer with respect to
environmental matters and the Environmental Protection Laws; and
(c) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including
without limitation, legal fees and expenses incurred by Buyer,
incident to any of the foregoing or incurred by Buyer in
investigation or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
This right to indemnification is in addition to any other
right available to Buyer, including, without limitation, the right
of Buyer to xxx Seller for a misrepresentation, breach of warranty,
or breach of covenant under this Agreement.
20. Indemnification by Buyer. Buyer hereby agrees that, on
and after the Closing, it will indemnify, hold harmless and defend
Seller from and against any and all losses, claims, demands,
damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) of every kind, nature
and description based upon, arising out of or otherwise in respect
of the following:
(a) any untrue representation, breach of warranty or
nonfulfillment of any agreement by Buyer contained in this
Agreement or in any documents entered into or delivered in
connection herewith;
(b) the operations, the use of the Companies' Assets,
and any work performed by the Companies or the Buyer, after the
Effective Date;
(c) any and all violations of Environmental Protection
Laws, as defined in Section 19(b) of this Agreement, resulting from
actions of Buyer or the Companies occurring on or after the
Effective Date with respect to the Buyer's ownership or operation
of the Pipeline Systems, the Equipment or any of the other assets
constituting a portion of the Assets of the Companies; and
(d) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including
without limitation, reasonable legal fees and expenses incurred by
Seller, directly related to any of the foregoing, or in enforcing
this indemnity.
This right to indemnification is in addition to any other
right available to Seller, including, without limitation, the right
of Seller to xxx Buyer for a misrepresentation, breach of warranty,
or breach of covenant under this Agreement.
21. Defense by Parties and Indemnification Limits. Notice of
any claim for indemnification under this Agreement shall be given
promptly to the indemnifying Party stating in reasonable detail the
nature of such claim and the amount thereof. If an action, suit or
proceeding is brought against a Party with respect to which an
indemnifying Party has liability under an indemnity agreement
contained herein, the indemnifying Party shall, at its sole
expense, conduct the defense of any such action, suit or
proceeding. The Party seeking indemnity, at its sole expense, may
participate in the defense of any such action, suit or proceeding
and, in such event, all Parties shall cooperate fully with each
other and their counsel in order to ensure a proper and adequate
defense. If the indemnifying Party refuses or declines to defend
such action, suit or proceeding, the Party seeking indemnity shall
have the right, at the expense of the indemnifying Party to defend
such claim with counsel of its own choosing.
Other than with respect to Environmental claims which are
covered by Section 19(b) hereof, neither Party shall have any
obligation to indemnify the other with respect to any asserted
loss, claim, expense or liability which does not individually
exceed fifty thousand dollars ($50,000),except and unless such
claims in the aggregate exceed two hundred fifty thousand dollars
($250,000). Losses which individually exceed fifty thousand
dollars ($50,000) or in the aggregate exceed two hundred fifty
thousand dollars ($250,000) are referred to as "Allowable Losses".
Neither Party shall have an obligation to pay the other Party until
the aggregate of Allowable Losses exceeds $250,000. In such event,
such Party shall then be obligated thereafter to pay the other Party the
entire amount of any losses thereafter which are in excess of the
threshold $250,000 amount, such $250,000 threshold shall have to be met only
one time, with all losses thereafter being paid, except to the extent they
exceed 50% of the Purchase Price as described immediately below. Seller's
and Buyer's individual aggregate liability of all indemnification pursuant to
this Agreement, inclusive of Environmental claims under Section 19(b) hereof,
shall in no event exceed an amount equal to fifty percent (50%) of the
Purchase Price.
Any claim against Seller or Buyer for indemnity arising under or out of this
Agreement must be brought within two (2) years after the Closing Date or, in
the case of any claim relating to any Tax, within thirty (30) days after the
expiration of the applicable statute of limitations (including extensions
thereof) for the assessment of such Tax.
22. The Parties, Their Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Parties and their respective successors,
legal representatives and assigns; provided, however, that no Party may assign
this Agreement without the prior written consent of the other Party, except
that Buyer may assign this Agreement to a wholly owned affiliate of its parent
company, Xxxx Industries, Inc. without the prior written consent
of Seller.
23. Entire Agreement. This Agreement and its Exhibits and Schedules
constitute the entire agreement of the Parties with respect to the subject
matter hereof, supersedes all prior and contemporaneous agreements and
understandings between the Parties, and may not be modified
or amended except by a written agreement executed by both Parties.
No representation, promise, or statement of intention has been made by either
Party that is not embodied in this Agreement, and neither Party shall
be bound or liable for any alleged representation, promise or statement of
intention not so set forth in this Agreement.
24. Governing Law. This Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of Texas, except for any
conflict of laws rules which would refer any matter to the law of another
jurisdiction, and irrespective of (i) the respective jurisdictions of
incorporation of the Parties, (ii) the locations of the respective principal
offices or places of business of the Parties, (iii) the places of execution or
place of consummation of this Agreement, or (iv) the location of the property
which is the subject of this Agreement.
25. Cooperation After Closing. After the Closing, upon reasonable advance
notice, Buyer shall provide access during normal business hours to any books
and records and other information as Seller may reasonably require to close the
books and records of Seller and prepare Seller's tax returns.
26. Section and Subsection Headings. The Section and subsection headings
contained herein are for the purpose of convenience only and are not intended
to define or limit the contents thereof.
27. Counterparts. This Agreement may be executed in one or more counterparts,
all of which when taken together shall be deemed to be one original.
28. Exhibits and Schedules. All Exhibits and all Schedules attached to or
referred to in this Agreement are incorporated into and made of part of this
Agreement. Each Party shall with ten (10) days of discovery and in any event
no later than five (5) days before the Closing Date, advise the other in
writing of additions or changes to the Exhibits or Schedules of this
Agreement required to reflect events subsequent to the date of this Agreement
or facts discovered by such Party, so as to cause the representations,
warranties and covenants in Section 4 to be materially true and correct,
as amended, on the Closing Date. Each Party shall promptly advise the
other in writing if it or its counsel learns that any representation or
warranty of the other is inaccurate or incomplete.
29. Waivers. Any failure by either Party to comply with any of its
obligations, agreements or conditions herein contained may be waived in
writing, but not in any other manner, by the Party to whom such compliance
is owed. No waiver of, or consent to a change in, any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of, or
consent to a change in, other provisions hereof (whether or not similar),
nor shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
30. Further Assurances. Seller and Buyer agree to deliver or cause to be
delivered to each other on the Closing Date and at such other time thereafter
as shall be reasonably agreed, any such additional instruments as Buyer or
Seller may reasonably request for the purpose of carrying out this Agreement.
31. No Solicitation. Seller agrees that on and after the date this
Agreement has been fully executed by both Buyer and Seller and one
counterpart delivered to each of the Parties, except as otherwise consented
to in writing by Buyer, Seller and any affiliates or agents of Seller
will immediately terminate all discussions with any party other than Buyer
with respect to any sale or other similar transaction involving the Companies'
Assets. Further, Buyer agrees to execute a confidentiality agreement in
substantially the same form as attached hereto as Exhibit "J" and deliver
same to Seller with the counterparts of this Agreement which Buyer has
executed. Neither Buyer nor Seller, or any affiliates or agents of Buyer or
Seller, shall enter into or conduct discussions, whether or not solicited by
any of Buyer, Seller or their agents, with any party other than Buyer with
respect to any sale or other similar transaction involving the
Companies' Assets until Closing or termination of this Agreement.
32. Confidentiality. Seller expressly agrees that all copies of books, files,
maps and records pertaining to the Companies' Assets that are retained by
Seller (Buyer herewith acknowledging and agreeing that Seller shall be entitled
to retain duplicate copies at its own expense of any such books, files,
maps and records as Seller deems necessary or desirable) shall be, and
shall be handled by Seller as, confidential information of the Companies.
Seller shall not disclose any such information to any third party, including
without limitation, any local, state or federal governmental body or regulatory
agency, unless required to do so by applicable law. Prior to any such
disclosure, Seller shall notify the Companies, as far in advance of any such
required disclosure as is practicable, that Seller is required to disclose
such information and the basis for such required disclosure, and Seller shall
cooperate fully with the Companies to obtain confidential treatment for any
such disclosed information by the party to which such information is disclosed.
33. Amendment. At any time prior to the Closing Date this Agreement may be
amended or modified in any respect by the Parties by an agreement in writing
executed in the same manner as this Agreement. No supplement, modification,
waiver or termination of this Agreement shall be binding unless executed in
writing by the Party to be bound thereby.
34. Construction. Each Party acknowledges and agrees that this Agreement was
negotiated and drafted jointly by both Parties hereto, and that in the event
of any ambiguity, this Agreement shall not be construed against either Party
but rather the terms herein shall be given a reasonable interpretation.
35. Arbitration. Any of the following matters as to which there is
disagreement between the Parties shall be submitted to arbitration:
(i) the individual or aggregate amount of the cost or loss to the Buyer's
Group of matters on the Defect List and as to whether a matter
on the Defect List has been remedied or cured by Seller, pursuant to Section
10 of this Agreement, and (ii) the amount of repair or replacement cost of any
Companies' Assets damaged or destroyed by fire, flood, storm or other casualty
prior to Closing, pursuant to the determination which may be made under Section
11 of this Agreement. The following shall apply to all such issues arbitrated:
(a) The decision of the arbitrator(s) shall be final and binding upon all
Parties, and no Party shall seek to have the applicable issues litigated rather
than arbitrated (except as may be otherwise required by law);
(b) It is the intent of the Parties that, to the extent practicable, such
binding arbitration shall be conducted by a person mutually agreeable to the
parties knowledgeable and experienced in the type of matter that is the subject
of the dispute. In the event the Parties are unable to agree upon such person
within ten (10) days after a matter has been automatically referred to
arbitration, then each Party shall select a person that it believes has the
qualifications set forth above as its designated arbitrator (which selection
shall be accomplished by notifying the other Party of the identity of such
person), and such arbitrators so designated shall mutually agree upon a
similarly qualified third person to complete the arbitration panel. In the
event that the persons selected by the Parties are unable to agree on a third
member of the panel within ten (10) days after the selection of the latter of
the two arbitrators, such person shall be designated by the American
Arbitration Association. Upon final selection of the entire panel, such panel
shall, as expeditiously as possible (and if possible, within thirty (30) days
after the selection of the last arbitrator), render a decision on the matters
submitted for arbitration. The arbitration shall be conducted in Houston,
Texas, in accordance with the commercial arbitration rules of the American
Arbitration Association;
(c) Upon the determination of any such dispute, the arbitrators shall xxxx
the costs attributable to such binding arbitration in equal shares to the
Parties; and
(d) It is the intent of the Parties that, once arbitration is invoked pursuant
to the provisions of this Section 35, the matters set for arbitration shall be
decided as set forth herein, and they shall not seek to have this Section 35
rendered unenforceable or to have such matter decided in any other way,
provided, however, that nothing herein shall prevent the Parties from
negotiating a settlement of any issue at any time.
36. Indemnification by Seller's Parent Corporation. At the Closing, Seller
shall cause its parent corporation, MidCoast Energy Resources, Inc., a Nevada
corporation, to execute and deliver to Buyer an original of the Indemnity
Agreement attached hereto as Exhibit "I."
IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to be
executed in multiple originals by duly authorized officers as of the day and
year first above written.
SELLER:
MIDCOAST HOLDINGS NO. ONE, INC.
By:__________________
Xxx X. Xxxxxxx,
President
BUYER:
XXXX GATEWAY PIPELINE COMPANY
By:_______________________
Xxxx X. Xxxxxxx
President
EXHIBITS:
Exibit "A" -Map of the "Five Flags Pipe Line System"
Exhibit "A-2" -Map of the "H&W Pipeline"
Exhibit "B" -"Equipment"
Exhibit "C" -"Lease"
Exhibit "D" -"Easement Agreements"
Exhibit "E" -"Inventory"
Exhibit "F" -"Transmission Contracts"
Exhibit "G" -"Permits"
Exhibit "H" -"H&W Documents"
Exhibit "I" -"Indemnification Agreement"
Exhibit "J" -"Confidentiality Agreement"
SCHEDULES:
Schedule 4(e) -Directors and Officers of the Companies
Schedule 4(f) -"Balance Sheet"
Schedule 4(l) -Notices of Failure to Comply with Laws
Schedule 4(x) -Exceptions to Compliances with Environmental Laws
Schedule 4(ee)-Schedule of Insurance Coverages
Schedule 4(gg)-Bank Accounts
Schedule 4(hh)-"Benefit Plans"
Schedule 4(ii)-Pipeline Class Location Rating and M.A.O.P. Determination
