EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
September 6, 2007, by and between Gateway Offshore Pipeline Company, a Nebraska
corporation ("Buyer"), Gateway Energy Corporation, a Delaware corporation
("Parent"), Gulfshore Midstream Pipelines, Ltd., a Texas limited partnership
("Seller"), and Gulfshore Midstream, LLC (the "General Partner"), Trailblazer
Partners, Ltd. and Bayou Trail Enterprises, Ltd. (collectively, with the General
Partner, the "Partners").
Recitals:
WHEREAS, the Partners own all of the general partner and limited partner
interests of Seller and Seller desires to sell the Assets (as hereinafter
defined) of Seller to Buyer, and Buyer desires to acquire from Seller the Assets
for the consideration and on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, undertakings,
representations and warranties set forth herein, the Parties agree as follows:
ARTICLE 1
Definitions
For purposes of this Agreement, the terms set forth below shall have the
following meanings:
1.1 "Action" means any action, suit, arbitration, proceeding or
investigation by or before any Governmental Authority or arbitrator.
1.2 "Adjustment Period" shall have the meaning set forth on Section 2.3.1.
1.3 "Affiliate" means:
1.3.1 with respect to any Person which is a business entity:
(a) any Person owning or holding, directly or indirectly,
10% or more of the equity capital in such business entity, or
(b) any Person in which such business entity owns or holds,
directly or indirectly, 10% or more of the equity capital;
1.3.2 with respect to any Person which is a trust or similar entity:
(a) any trustee or other fiduciary of such trust or similar
entity; or
(b) any direct or indirect beneficiary of such trust or
similar entity;
1.3.3 with respect to any natural Person, any spouse, parent, child,
grandchild grandparent, brother or sister of such Person.
1.4 "Agreement" means this Agreement, together with the Schedules and
Exhibits hereto.
1.5 "Assets" means all of the assets to be sold to Buyer pursuant to
Section 2.1.
1.6 "Assumed Contracts" shall have the meaning set forth in Section 2.1.4.
1.7 "Assumed Liabilities" shall have the meaning set forth in Section 2.4.
1.8 ."Basket" shall have the meaning set forth in Section 10.4.1.
1.9 "Borrowed Money Indebtedness" means without duplication (i) all
obligations of Seller for borrowed money or funded indebtedness or issued in
substitution for or exchange for borrowed money or funded indebtedness, (ii) any
indebtedness evidenced by any note, bond, debenture or other similar instrument,
(iii) all obligations of Seller issued or assumed as the deferred purchase price
of property (but excluding trade accounts payable and other accrued current
liabilities arising in the ordinary course of business consistent with past
practices), (iv) all obligations of Seller for the reimbursement of any obligor
on any letter of credit, banker's acceptance or similar credit transaction that
has been drawn upon; (v) any indebtedness guaranteed by Seller, (vi) any
obligations under, or associated with, any hedging, derivative or swap
agreements, and (vii) all unpaid interest, premiums, penalties, redemption costs
and other charges in respect of the prepayment of any obligations of the type
described in each of the foregoing in clauses (i) through (vi) in connection
with the consummation of the transaction contemplated by this Agreement.
1.10 "Business" means the business related to the Assets as conducted by
Seller prior to the Closing.
1.11 "Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in Houston, Texas are authorized or required to
close.
1.12 "Buyer" shall have the meaning set forth in the first paragraph of
this Agreement.
1.13 "Buyer Indemnitees" shall have the meaning set forth in Section 10.1.
1.14 "Charter Documents" means, (a) with respect to any corporation, the
articles or certificate of incorporation of the entity, and its by-laws, and any
amendments to such documents, (b) with respect to a limited partnership, the
articles or certificate of organization or formation of the entity, and its
partnership agreement, and (c) with respect to a limited liability company, the
articles or certificate of organization or formation of the entity, and its
operating or limited liability company agreement.
1.15 "Closing" means the consummation of the transactions contemplated
hereby.
1.16 "Closing Date" shall have the meaning set forth in Section 2.6.1.
1.17 "Closing Payment Amount" shall have the meaning set forth in Section
2.6.3.
1.18 "Closing Statement" shall have the meaning set forth in Section 2.3.3.
1.19 "Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor law, and regulations issued thereunder.
1.20 "Common Stock" shall have the meaning set forth in Section 2.3.1.
1.21 "Consent" shall have the meaning set forth in Section 3.8.
1.22 "Contracts" means all contracts, agreements, undertakings,
instruments, leases, licenses, commitments and arrangements, except Permits.
1.23 "Conveyance" means a xxxx of sale, in the form attached hereto as
Exhibit A, together with such deeds, conveyances, certificates of title,
assignments, assurances and other instruments and documents as Buyer may
reasonably request in order to effect the sale, conveyance and transfer of the
Assets from Seller to Buyer, provided that any such instruments or documents of
conveyance and transfer are in form and substance reasonably acceptable to
Seller.
1.24 "Damages" means all losses, claims, damages, costs, fines, penalties,
obligations, payments and Liabilities (including those arising out of any
Action), together with all reasonable costs and expenses (including reasonable
outside attorneys' fees and reasonable out-of-pocket expenses) incurred in
connection with any of the foregoing. Notwithstanding anything to the contrary
contained in this Agreement, Damages shall not include any exemplary, punitive,
special, indirect, consequential, remote, or speculative damages, including lost
profits.
1.25 "Dollars" or "$" means lawful currency of the United States.
1.26 "Easements" means rights-of-way, servitudes, rights of egress and
ingress and other similar rights related to the use or enjoyment of real
property.
1.27 "Effective Time" shall have the meaning set forth in Section 2.1.
1.28 Reserved.
1.29 "Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
1.30 "Environmental Law" means any Law pertaining to health (with respect
to exposure to Hazardous Materials) or the Environment currently in effect in
any or all jurisdictions in which Seller owns Assets or has owned assets or
conducts or has conducted business, including the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980,
as amended, the Federal Water Pollution Control Act, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Safe Drinking Water Act,
as amended, the Toxic Substances Control Act, as amended, the Hazardous & Solid
Waste Amendments Act of 1984, as amended, the Superfund Amendments and
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Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation
Act, as amended, the Oil Pollution Act of 1990, and any state and local Laws
implementing or comparable to the foregoing federal Laws.
1.31 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.32 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.33 "Extended Representations" shall have the meaning set forth in Section
10.3.4.
1.34 "GAAP" means U.S. generally accepted accounting principles at the time
in effect and applied on a basis consistent with prior periods.
1.35 "Governmental Authority" means any federal, state or local government,
any of its subdivisions, agencies, authorities, commissions, boards or bureaus,
any federal, state or local court or tribunal and any arbitrator or arbitral
tribunal.
1.36 "Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any mixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
1.37 "Knowledge" means present, actual and not imputed or constructive
knowledge, without any duty of inquiry. For purposes of Seller's Knowledge, it
shall be the Knowledge of Xxxxx Xxxxxxx and Xxxx XxxxxxXxxxxx. For purposes of
Buyer's or Parent's Knowledge, it shall be the Knowledge of any officer of the
Buyer or Parent.
1.38 "Indebtedness" means, (i) Borrowed Money Indebtedness; and (ii) the
amount of any capital lease obligations that would be required to be reflected
as a liability on the balance sheets of Seller.
1.39 "Indemnitee" shall have the meaning set forth in Section 10.3.1.
1.40 "Insurance Policies" shall have the meaning set forth in Section 3.16.
1.41 "Intellectual Property" means all trade names, trademarks, service
marks, patent rights, patent applications, copyrights, know-how, trade secrets,
domain names and other intellectual property rights.
1.42 "Law" means any applicable law, statute, or ordinance of any nation or
state, including the United States of America, and any political subdivision
thereof, including any state of the United States of America, any regulation,
policy, protocol, proclamation, or executive order promulgated by any
Governmental Authority, any rule or regulation of any self-regulator
organization such as a securities exchange or public utilities commission, or
any applicable judgment, order, decree, or decision of any court or other
Governmental Authority having the effect of law in any such jurisdiction.
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1.43 "Lease" means any lease or sublease of real or personal property.
1.44 "Leased Personal Property" means all right, title and interest of
Seller, as lessee, in and to any personal property leased to Seller.
1.45 "Liability" means any Indebtedness, obligation, duty or liability of
any nature (including any undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, unasserted, contingent, conditional, inchoate, implied,
vicarious, joint, several or secondary liability) whether known or unknown,
whenever or wherever arising, regardless of whether such debt, obligation, duty
or liability would be required to be disclosed on a balance sheet.
1.46 "Lien" means any lien, mortgage, deed of trust, security interest,
charge, pledge, retention of title agreement, easement, encroachment, condition,
reservation, covenant or other encumbrance affecting title or the use, benefit
or value of the asset in question.
1.47 "Material Adverse Effect" means any condition, circumstance, event,
change, or effect that (i) when used with respect to Seller or the Assets ,
would reasonably be expected to cause loss or liability in excess of $350,000
with respect to Seller or the Assets after the Closing, or (ii) when used with
respect to the ability of a Person to perform its obligations under this
Agreement, would reasonably be expected to materially and adversely affect such
ability.
1.48 "Material Contracts" shall have the meaning set forth in Section 3.11.
1.49 "Material Lease" means a Lease relating to Leased Personal Property
involving a term of more than six (6) months or rental obligations exceeding
$50,000 per annum.
1.50 "Order" means any order, judgment, injunction, decree, determination
or award of any Governmental Authority.
1.51 "Party" means each of Seller, the Partners, Buyer and Parent, and
"Parties" means Seller, the Partners, Buyer and Parent, collectively.
1.52 "Permit" means any permit, license, certificate (including a
certificate of occupancy), registration, authorization or approval issued by a
Governmental Authority.
1.53 "Permitted Liens" means (a) Liens for Taxes that are not yet due and
payable or that are being contested in good faith by appropriate proceedings and
as to which adequate reserves have been established , consistently applied, and
(b) mechanics' and materialmen's Liens not filed of record and similar charges
not delinquent or that are filed of record but are being contested in good faith
by appropriate proceedings.
1.54 "Person" means any natural person, corporation, partnership, limited
liability company, trust, unincorporated organization or other entity.
1.55 "Pipeline" shall have the meaning set forth in Section 2.1.1.
1.56 "Pledge Agreement" means the Pledge Agreement, by and between Seller
and Buyer in the form attached hereto as Exhibit C.
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1.57 "Purchase Price" shall have the meaning set forth in Section 2.3.1.
1.58 "Real Property" means the real property owned, leased, or in which
Seller has an interest, together with all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property attached or appurtenant
thereto and all easements, licenses, rights and appurtenances relating to the
foregoing.
1.59 "Registration Rights Agreement" means the Registration Rights
Agreement, by and between Seller and the Parent in the form attached hereto as
Exhibit B.
1.60 "Review Period" shall have the meaning set forth in Section 2.6.1.
1.61 ."Seller" shall have the meaning set forth in the first paragraph of
this Agreement.
1.62 "Seller Indemnitees" shall have the meaning set forth in Section 10.2.
1.63 "Tax" or "Taxes" means all income, profits, franchise, gross receipts,
capital, sales, use, withholding, value added, ad valorem, transfer, employment,
social security, disability, occupation, property, severance, production, excise
and other taxes, duties and similar governmental charges and assessments imposed
by or on behalf of any Governmental Authority (including interest and penalties
thereon).
1.64 "Tax Return" means any return, report, statement, form or other
documentation (including any additional or supporting material and any
amendments or supplements) filed or maintained, or required to be filed or
maintained, with respect to or in connection with the calculation,
determination, assessment or collection of any Taxes.
1.65 "Third Party Claim" shall have the meaning set forth in Section
10.3.2.
1.66 "Update" shall have the meaning set forth in Section 5.6.
ARTICLE II
Purchase and Sale of Interests
2.1 Assets to be Sold. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, but effective as of August 1, 2007 (the
"Effective Time"), Seller shall sell, convey, assign, transfer and deliver to
Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any
Liens other than Permitted Liens, all of Seller's right, title and interest in
and to the following (but excluding the Excluded Assets):
2.1.1 all pipeline assets described in Schedule 2.1.1 (the "Pipeline")
and all rights, title and interest in any easements or Permits related
thereto; however, Buyer acknowledges that Seller does not own fee title to
any Real Property relating to the Pipeline and is not including fee title
to any Real Property as part of the Assets;
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2.1.2 all Tangible Personal Property specifically related to the
Pipeline, including without limitation, measurement facilities and chemical
injection equipment;
2.1.3 all accounts receivable accruing on or after the Effective Time;
2.1.4 all Material Contracts listed in Schedule 2.1.4 (the "Assumed
Contracts");
2.1.5 all Governmental Authorizations and all pending applications
therefor or renewals thereof, in each case to the extent transferable to
Buyer, including those listed in Schedule 2.1.5;
2.1.6 all data and records related to the operations of Seller related
to the Pipeline, including client and customer lists and records, referral
sources, research and development reports and records, production reports
and records, service and warranty records, equipment logs, operating guides
and manuals, financial and accounting records, oil spill response plans,
creative materials, advertising materials, promotional materials, studies,
reports, correspondence and other similar documents and records and other
records described in Schedule 2.1.6;
2.1.7 all of the intangible rights and property of Seller relating to
the Pipeline, including going concern value, goodwill, telephone, telecopy
and e-mail addresses and listings and those items listed in Schedule 2.1.7;
however, Buyer acknowledges that no Intellectual Property is being conveyed
or included as part of the Assets;
2.1.8 all insurance benefits, including rights and proceeds, arising
from or relating to the Assets or the Assumed Liabilities on or after the
Effective Time, unless expended in accordance with this Agreement;
2.1.9 all claims of Seller against third parties relating to the
Assets, whether xxxxxx or inchoate, known or unknown, contingent or
noncontingent, arising on or after the Effective Time, including all such
claims listed in Schedule 2.1.9; and
2.1.10 all rights of Seller relating to deposits, prepaid expenses,
bonds, claims for refunds, and rights to offset in respect thereof, to the
extent that such deposits, expenses, bonds, and claims for refunds were
paid or made on or after the Effective Time and relate to Assets described
in Sections 2.1.1 through 2.1.9.
All of the property and assets to be transferred to Buyer hereunder
are herein referred to collectively as the "Assets."
Any Liability incurred by the Parties related to the Assets shall be
the responsibility of a Party based upon whether such Liability is a Retained
Liability or an Assumed Liability, as set forth below in Sections 2.4 and 2.5.
2.2 Excluded Assets. Notwithstanding anything to the contrary contained in
Section 2.1 or elsewhere in this Agreement, the following assets of Seller
(collectively, the "Excluded Assets") are not part of the sale and purchase
contemplated hereunder, are excluded from the Assets and shall remain the
property of Seller after the Closing:
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2.2.1 all cash, cash equivalents and short-term investments;
2.2.2 all minute books, partnership interest transfer records and
company seals;
2.2.3 those rights relating to deposits and claims for refunds and
rights to offset in respect thereof to the extent arising prior to the
Effective Time including those listed in Schedule 2.2.3;
2.2.4 all insurance policies and rights thereunder (except to the
extent specified above in Section 2.1.8);
2.2.5 all of the Contracts of the Seller other than the Assumed
Contracts;
2.2.6 all personnel records;
2.2.7 all claims for refund of Taxes and other governmental charges of
whatever nature;
2.2.8 all rights in connection with and assets of the Employee Plans;
and
2.2.9 all rights of Seller under this Agreement, the Conveyance, and
the Registration Rights Agreement.
2.3 Consideration.
2.3.1 Purchase Price. The consideration for the Assets (the "Purchase
Price") will be (a) $3,130,00.00 (the "Cash Consideration"), (b) 1,550,000
shares of common stock, par value $0.25 per share ("Common Stock") of the
Parent issued to Seller, and (c) the assumption of the Assumed Liabilities.
2.3.2 Payment of Purchase Price. The Cash Consideration to be paid at
Closing pursuant to Section 2.3.1 shall be paid by Buyer to Seller at
Closing by wire transfer of immediately available funds to the bank account
described in wire transfer instructions provided by Seller to Buyer at
least two (2) Business Days prior to Closing.
2.4 Assumed Liabilities. On the Closing Date, but effective as of the
Effective Time, Buyer and Parent shall assume and agree to discharge and bear
sole responsibility for the following Liabilities relating to the Assets (the
"Assumed Liabilities"):
2.4.1 any trade account payable (other than a trade account payable to
any Partner or a Affiliate of a Partner) incurred by Seller in the ordinary
course of business for services or goods received during the Adjustment
Period;
2.4.2 any Liability arising after the Effective Time under the Assumed
Contracts which shall include any obligations to be performed after the
Closing Date (other than any Liability relating to a breach that occurred
prior to the Effective Time);
2.4.3 any Liability of Seller described in Schedule 2.4.3; and
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2.4.4 in recognition that the conveyance of the Assets is on an
"as-is, where-is" basis, any other Liability relating to the physical
condition of the Assets and their continued use or abandonment, including,
without limitation, any obligations with respect to repair, maintenance,
abandonment, removal and operation related to the post-Effective Time use
of the Assets, and any other post-Effective Time use of the Assets.
2.5 Retained Liabilities. The Retained Liabilities shall remain the sole
responsibility of and shall be retained, paid, performed and discharged solely
by Seller. "Retained Liabilities" shall mean every liability of the Seller other
than Assumed Liabilities, including without limitation:
2.5.1 any trade account payable incurred by Seller in the ordinary
course of business for services or goods received prior to the Effective
Time;
2.5.2 any Liability for a breach of the Assumed Contracts arising
before the Effective Time (with the exception of those Liabilities set
forth in Schedule 2.5.2);
2.5.3 any Liability for violation of Environmental Laws arising before
the Effective Time ;
2.5.4 any Liability for Taxes (excluding transfer Taxes) due before
the Effective Time, but only for an amount as prorated between the Parties
to take into account the portion of any annual tax related to the time
period prior to the Effective Time;
2.5.5 any Liability as described in Schedule 2.5.5.
2.6 Closing.
2.6.1 Time and Place. On the terms and subject to the conditions of
this Agreement, the Closing shall take place at such location or by such
means as the Parties may hereafter agree at 10:00, Central Time, five (5)
days after all of the conditions to Closing have been first satisfied (or
if such a date falls on a weekend or a holiday recognized by the state
courts of Xxxxxx County, Texas, the first business day thereafter), or such
other date as the Parties may agree in writing (the "Closing Date").
2.6.2 Deliveries by Seller. At the Closing, Seller shall deliver to
Buyer the following:
(a) the Conveyance, in sufficient duplicate originals to allow
recording in all appropriate jurisdictions and offices, duly executed
and acknowledged/notarized by Seller;
(b) to the extent any of the Assets are burdened by Liens or
Security Interests, executed and acknowledged/notarized originals of a
Partial Release of Liens and Security Interests, or similar
instruments, in a form reasonably satisfactory to Purchaser, releasing
the Assets from any and all mortgages, liens, financing statements or
other security interests and Seller shall cause such Partial Release
to be filed in the appropriate offices within 24-hours of the Closing;
and
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(c) an executed statement described in Treasury Regulation
1.1445-2(b)(2) certifying that Seller is not a foreign person within
the meaning of the Code.
(d) the recorded Charter Documents of Seller, certified by the
Secretary of State of the State of Texas dated within ten (10)
Business Days of the Closing Date.
(e) A certificate of the Secretary or other authorized
representative of General Partner of Seller dated the Closing Date
certifying (i) the adoption of resolutions of the Managers of the
General Partner authorizing the transactions contemplated by this
Agreement, (ii) the incumbency and signatures of those officers of the
Managers of Seller that executed this Agreement and any documents or
agreements related to the Closing, and (iii) a true and correct copy
of the Charter Documents of Seller in effect on the Closing Date, all
in form and substance reasonably satisfactory to Buyer;
(f) a certificate of an executive officer of Seller dated the
Closing Date certifying that the conditions to Buyer's obligation to
consummate the transactions contemplated by this Agreement as set
forth in Section 8.1 have been satisfied in all respects;
(g) the Registration Rights Agreement duly executed by Seller, in
the form set forth in Exhibit B hereto, and any related documents or
instruments necessary for the issuance of the Common Stock to Seller;
(h) the Pledge Agreement duly executed by Seller, in the form set
forth in Exhibit C hereto; and
(i) such other documents, instruments and certificates as Buyer
may reasonably request in connection with the transactions
contemplated by this Agreement, provided that such documents shall be
in form and substance acceptable to Seller.
2.6.3 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller the following:
(a) the payment described in Section 2.3.2;
(b) a Certificate of Good Standing of Buyer dated within ten (10)
Business Days of the Closing Date issued by the Secretary of State of
the State of Nebraska;
(c) a Certificate of Good Standing of Parent dated within ten
(10) Business Days of the Closing Date issued by the Secretary of
State of the State of Delaware;
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(d) a certificate of the Secretary of Buyer dated the Closing
Date certifying (i) the adoption of resolutions of the Board of
Directors of Buyer authorizing the transactions contemplated by this
Agreement, (ii) the incumbency and signatures of those officers of
Buyer that executed this Agreement and any documents or agreements
related to the Closing, and (iii) a true and correct copy of the
Charter Documents of Buyer in effect on the Closing Date, all in form
and substance reasonably satisfactory to Seller;
(e) a certificate of the Secretary of Parent dated the Closing
Date certifying (i) the adoption of resolutions of the Board of
Directors of Parent authorizing the transactions contemplated by this
Agreement, (ii) the incumbency and signatures of those officers of
Parent that executed this Agreement and any documents or agreements
related to the Closing, and (iii) a true and correct copy of the
Charter Documents of Parent in effect on the Closing Date, all in form
and substance reasonably satisfactory to Seller;
(f) A certificate of an executive officer of Buyer dated the
Closing Date certifying that the conditions to Seller's obligations to
consummate the transactions contemplated by this Agreement set forth
in Section 8.2 have been satisfied;
(g) the Registration Rights Agreement duly executed by Parent and
Buyer, in the form set forth in Exhibit B hereto, and any related
documents or instruments necessary for the issuance of the Common
Stock to Seller including amendments which may be required to Buyer's
Charter Documents (if any);
(h) the Pledge Agreement duly executed by Buyer, in the form set
forth in Exhibit C hereto; and
(i) Such other documents, instruments and certificates as Seller
may reasonably request in connection with the transactions
contemplated by this Agreement provided that such documents shall be
in form and substance acceptable to Buyer.
2.7 Expenses. Seller and Buyer shall each pay their respective expenses
incurred in connection with the negotiation, execution, closing, and performance
of this Agreement, including without limitation, all legal fees and expenses.
Without limitation of the foregoing, Buyer shall be responsible for and pay all
sales, transfer, deed, stamp, notary public and other similar taxes, duties and
transfer fees applicable to the transactions contemplated by this Agreement
(other than stock transfer taxes), including fees to record transfer documents
and all costs, expenses and fees related to acquiring Consents.
2.8 Allocation of Purchase Price. Seller and Buyer agree that the Purchase
Price and the Liabilities of Seller (plus other relevant items) will be
allocated to the Assets of Seller for Tax purposes in a manner mutually agreed
upon by the Parties. Seller and Buyer will file all Tax Returns (including
amended returns and claims for refund) and information reports in a manner
consistent with such allocation.
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2.9 Casualty Loss During the Adjustment Period. The Parties agree that
Section 5.3(e), below, governs their rights in the event of a casualty loss
occurring during the Adjustment Period.
ARTICLE III
Representations and Warranties of Seller and the General Partner
Seller and the General Partner, jointly and severally, make the following
representations and warranties to Buyer and Parent:
3.1 Corporate Organization. Seller is a limited partnership duly organized,
validly existing, under the laws of the State of Texas. Seller has all
partnership power needed to own or lease and operate the Assets and to conduct
its business as now conducted.
3.2 Due Qualification. Seller is duly qualified to do business under the
laws of each jurisdiction in which the nature of its Business or Assets makes
such qualification necessary.
3.3 Partnership Documentation. Copies of the Charter Documents that have
been delivered to Buyer are complete and correct. The partnership interest
transfer records of Seller are set forth in the limited partnership agreement.
Other than as set forth in such records, no interest in Seller has been issued,
sold or transferred.
3.4 Capitalization. The Partners are and will be on the Closing Date the
record and beneficial owners and holders of all of the partnership interests of
Seller, free and clear of all Liens. There are no Contracts relating to the
issuance, sale or transfer of any partnership interests of Seller.
3.5 Authorization; Execution and Validity. The execution, delivery and
performance by Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby to be consummated by it have been duly
authorized by all necessary partnership action. This Agreement has been duly and
validly executed and delivered by Seller and the Partners, constitutes a valid
and binding obligation of Seller and the Partners and is enforceable against
Seller and the Partners in accordance with its terms, except to the extent that
the enforcement hereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of equity
regardless of whether enforceability is considered in a proceeding in equity or
at law. At or prior to Closing, Seller shall deliver to Buyer a certificate of
Seller certifying that a resolution has been adopted by the managers of the
General Partner of Seller authorizing the transactions contemplated by this
Agreement.
3.6 Financial Statements; Books and Records; Absence of Undisclosed
Liabilities.
3.6.1 Financial Statements. Seller has delivered to Buyer the account
receivable records, meter readings, account payable records, and any
related working documents requested by Buyer that Seller maintains relating
to Seller's normal practice of accounting for the Assets. Such documents
fairly present the financial condition and results of operations of the
Seller as of the respective dates of and for the periods referred to in
such documents. The Buyer recognizes that Seller does not maintain audited
financial statements.
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3.6.2 Books and Records. To Seller's Knowledge, the books of account
and other financial records of Seller which have been made available to
Buyer, are complete and correct in all material respects and represent
actual, bona fide transactions and have been maintained in accordance with
sound business practices.
3.7 Absence of Certain Changes. Except as set forth on Schedule 3.7, during
the sixty (60) days preceding the date of the Effective Xxxx Xxxxxx has
conducted its Business in the ordinary course consistent with past practices and
there has been no material (a) event or occurrence that has had or is reasonably
expected to have a Material Adverse Effect on the Assets, (b) amendment or
termination of any Material Contract, Material Lease or Permit relating to the
Assets, (c) destruction, damage or other loss to any of the Assets of Seller
that is not covered by insurance and that is reasonably likely to result in a
material interruption of Seller's Business, (d) sale, lease, or other
disposition of any of the Assets of Seller other than Assets sold, leased or
otherwise disposed of in the ordinary course of business , (e) purchase or lease
of any Assets of Seller, other than Assets purchased or leased in the ordinary
course of business, or (g) agreement or commitment by Seller to take any action
described in this Section 3.7.
3.8 No Conflict; Seller Consents. Except as set forth on Schedule 3.8, the
execution, delivery and performance of this Agreement by each of Seller and the
Partners will not to their Knowledge (a) violate any Law to which either Seller
or Partners are subject, (b) violate any Charter Document, (c) violate any Order
to which either Seller or Partners are a party or by which either Seller or
Partners are bound, (d) require any consent, approval, authorization, waiver or
notification from any Person, including any Governmental Authority, from any
Person, including any Governmental Authority (other than consents related to the
assignment of specific contracts, permits or licenses, collectively, a
"Consent," which are addressed herein in section 5.1), (e) breach in any
material respect any contract, agreement, or Permit of Seller, or (f) result in
the creation of any Lien on any of the Assets of Seller.
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3.9 Easements. Each Easement is valid, existing and enforceable; there has
not been, and there currently is not any event (with or without notice, lapse of
time or both with respect thereto) that would result in the termination,
impairment or limitation of any Easement; no future payments of any kind are due
under any Easement in order to maintain its existence other than annual lease
payments to the Mineral Management Service of the Department of Interior or
other similar payments disclosed by Seller to Buyer; each Easement is perpetual
or continues for a term of years; and the continuation, validity and
enforceability of each Easement will not be disturbed by the transaction
contemplated herein. Notwithstanding the above, Buyer acknowledges that the
Mineral Management Service and other fee title owners of Real Property
underlying the Easements may need to provide a Consent to the assignment of the
Easements. The Parties' obligations with respect to obtaining such Consents are
governed by those portions of Article V discussing Consents.
3.10 Personal Property.
3.10.1 Owned Personal Property. Subject to Permitted Liens, Seller has
good and marketable title to all personal property comprising a portion of
the Assets owned by Seller, other than (i) property that has been disposed
of in the ordinary course of business, (ii) property that has been disposed
of in transactions disclosed to Buyer prior to the date hereof, and (iii)
Leased Personal Property.
3.10.2 Leased Personal Property. Schedule 3.10.2 lists all of Seller's
Material Leases of Personal Property that pertain to personal property
comprising a portion of the Assets. All such Material Leases of Leased
Personal Property are valid and binding and in full force and effect. There
has been no breach of any such Material Lease by Seller or, to Seller's
Knowledge, any other Person, which breach has not been cured or waived.
3.11 Contracts. To Seller's Knowledge, Schedule 3.11 lists all written
Contracts and describes in reasonable detail all unwritten Contracts to which
the Assets of Seller are subject, meeting any of the following descriptions
("Material Contracts"):
3.11.1 Contracts that could, by their terms, require payment or
payments by or to Seller totaling more than Ten Thousand Dollars
($10,000.00) during any twelve (12) month period, and that relate to the
Assets;
3.11.2 Contracts relating to Borrowed Money Indebtedness or the
creation of any guarantee or security interest affecting the Assets or
contracts involve sums in excess of $50,000 which include indemnity
obligations;
3.11.3 Contracts entered into by Seller other than in the ordinary
course of its business and that relate to the Assets;
3.11.4 Contracts that materially limit the freedom of Seller to
compete in any line of business or to conduct business in any geographic
location, and that relate to the Assets;
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3.11.5 Contracts relating to the purchase, sale or combination of any
business or line of business (by asset transfer, equity transfer, merger,
consolidation or otherwise), and that relate to the Assets;
3.11.6 Contracts relating to any joint venture, partnership or other
cooperative arrangement with any third party other than the Organizational
Documents of Seller or any Partner, and that relate to the Assets;
3.11.7 Contracts imposing confidentiality obligations on Seller that
relate to the Assets, other than such agreements involving the potential
sale of the Assets to other prospective buyers from Seller;
3.11.8 Contracts concerning the licensing of Intellectual Property
that relate to the Assets; and
3.11.9 Contracts between Seller and any Governmental Authority that
relate to the Assets.
Contracts listed or described by Seller in Schedules 3.10.2, 3.17, and 3.19.2
will be deemed to have been listed or described in Schedule 3.11. To Seller's
Knowledge, all Material Contracts are valid and binding in all material respects
and in full force and effect. To Seller's Knowledge, there has been no material
breach of any Contract by Seller or, to Seller's Knowledge, any other Person,
which breach has not been cured or waived. Seller has not received from any
other party to any Material Contract notification that such Material Contract is
not in full force and effect, that Seller has failed to perform its obligations
thereunder to date, or that any other party thereto has not performed its
obligations thereunder to date unless disclosed on Schedule 3.11. To Seller's
Knowledge, no event has occurred, and no circumstance or condition exists, that
(with or without notice or lapse of time) would reasonably be expected to result
in a material breach or violation of, or a default under, the terms of any
Material Contract. Except as otherwise set forth on Schedule 3.11, no Material
Contract will be revoked, invalidated or otherwise amended as a result of the
consummation of the transaction contemplated by this Agreement.
3.12 Litigation; Orders. Except as set forth on Schedule 3.12, there is no
Action by any Person or by or before any Governmental Authority that is pending
or, to Seller's Knowledge threatened, by, against or affecting the Assets or
Seller's ability to convey its Assets. Except as set forth on Schedule 3.12,
Seller's conveyance of the Assets, and the Assets themselves, are not subject to
any Order.
3.13 Environmental Matters. To Seller's Knowledge except as set forth in
Schedule 3.13, with respect to the ownership and operation of the Assets: (i)
Seller and all of the Assets are in material compliance with all Environmental
Laws; and (ii) there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, but not limited to, the release,
emission, discharge or disposal of any Hazardous Material, that could form the
basis of any material claim against, or violation by Seller pursuant to any
Environmental Law. No notice, notification, demand, request for information,
citation, summons, complaint or Order has been received by, and no Action is
pending, or to Seller's Knowledge threatened by any Person against the Assets
with respect to any Environmental Law.
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3.14 Compliance with Laws.
3.14.1 Compliance. To Seller's Knowledge, (i) Seller is in compliance
with all applicable Laws in all material respects, (ii) Seller has not
received any notification from any applicable Governmental Authority that
it is not in compliance with any applicable Laws, and (iii) no event has
occurred, and no circumstances or condition exists, that (with or without
notice or lapse of time) would reasonably be expected to constitute or
result in a failure of Seller to comply with the terms of any applicable
Law in any material respect.
3.14.2 Permits. Schedule 3.14.2 sets forth all Permits owned by Seller
relating to the Assets and such Permits constitute all the authorizations
that are necessary to carry on the Business as currently conducted. No
action is pending or, to Seller's Knowledge, threatened to revoke or limit
any such Permit which, if adversely determined, would have a Material
Adverse Effect on the Assets. All of Seller's Permits are valid and in full
force and effect and to Seller's Knowledge (i) Seller is not in default,
and (ii) no condition exists that with notice or lapse of time or both
would constitute a default, under such Permits. Seller has not received
from any Governmental Authority notification that any Permit is not in full
force and effect, has been violated in any material respect, or is subject
to any suspension, revocation, modification or cancellation. Except as
otherwise set forth on Schedule 3.14.2, no Permit will be revoked,
invalidated or otherwise amended as a result of the transaction
contemplated in this Agreement.
3.15 Taxes. To the Knowledge of the Seller, there are no pending written
proposed deficiencies or other written claims for unpaid Taxes related to the
Assets.
3.16 Insurance. Seller's insurance policies (including performance bonds)
now in force and that will continue in force during the Adjustment Period (all
of such policies, "Insurance Policies"), have been provided or made available to
Buyer. Seller is not in default with respect to payment of premiums on any such
policy. No notice of cancellation or termination of any Insurance Policy has
been given to Seller by the carrier of such policy. Buyer acknowledges that
Seller is not agreeing under this Agreement to insure the Assets beyond the date
of Closing, and Buyer is responsible for obtaining any insurance it desires to
have in effect after Closing.
3.17 Affiliate Agreements. Schedule 3.17 lists each material Contract that
relates to the Assets and that is between Seller and (a) any Partner, (b) any
Affiliate of Seller or (c) any Affiliate of Seller which is currently in effect.
3.18 Brokers. Except as set forth in Schedule 3.18, no person is or will
become entitled to receive any brokerage or finder's fee, advisory fee or other
similar payment for the transactions contemplated by this Agreement by virtue of
having been engaged by or acted on behalf of Seller or Seller.
3.19 The Pipeline; Condition of Assets.
3.19.1 Except as set forth in Schedule 3.19.1, Seller has good and
defensible title to the easements and rights of way which comprise the
Pipeline free and clear of all Liens except for Permitted Liens; provided,
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however, that Seller's title is subject to the terms and conditions of each
of said easements and right of way agreements.
3.19.2 There are no contracts affecting the title to or possession of
the Pipeline other than those set out in Schedule 3.19.2.
3.19.3 Neither the whole nor any portion of the Pipeline has been
condemned, requisitioned, or otherwise taken by any public authority, and
no notice of any such condemnation, requisition, or taking has been
received by Seller. To Seller's Knowledge, no such condemnation,
requisition, or taking is threatened or contemplated. Seller has no
Knowledge of any public improvements that may result in special assessments
against the Pipeline.
3.19.4 (a) except as disclosed in Schedule 3.19.4, Seller has all
licenses, permits, and authorizations required to operate the Pipeline as
currently operated by Seller, (b) except as disclosed in Schedule 3.19.4,
Seller has such easements and rights as are necessary to operate the
Pipeline as currently operated by Seller, and (c) to Seller's Knowledge, no
fact or condition exists that has resulted or is reasonably likely to
result in the termination or impairment of access to, or abandonment of,
the Pipeline or discontinuation of utilities necessary to operate the
Pipeline.
3.19.5 Except as set forth in Schedule 3.19.5, Seller has delivered or
made available to Buyer accurate, correct, and complete (in all material
respects) copies of all (a) valid and existing leases, mortgages, deeds of
trust, certificates of occupancy, easements, right of way agreements,
existing title insurance policies, title reports, surveys, and all
amendments thereof that are within Seller's possession or control with
respect to the Pipeline, and (b) all maps, descriptions, schematics,
locations and specifications of the Pipeline that are in the possession of
Seller.
3.19.6 Except as expressly set forth in this Section 3.19, the Seller
makes no representation or warranty regarding the condition of the Pipeline
and related assets, structures and equipment utilized by Seller, which
assets are being acquired "as is, where is." Notwithstanding the foregoing,
Seller has good and marketable title to the Assets and to Seller's
Knowledge the Assets have been operated by Seller in material compliance
with accordance with Title 49, C.F.R. Part 192.
3.20 Investment Representations. Seller is acquiring the Common Stock for
investment for its own account and not with a view to, or for sale in connection
with, any distribution thereof. Seller (either alone or together with its
advisors) has sufficient knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its investment
in the Company Shares and is capable of bearing the economic risks of such
investment. Seller is an "accredited investor," as such term is defined in Rule
501(a) of Regulation D promulgated under the Securities Act. Seller acknowledges
and understands that the Common Stock will be subject to restrictions on resale
as contemplated by Rule 503(d) of Regulation D.
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3.21 Certain Business Practices. Neither Seller, nor to Seller's Knowledge
any partner, officer, agent or employee of Seller has (a) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, (assuming for purposes of this Section 3.21 that Seller is
subject to Section 30A of the Exchange Act), or (c) made any other unlawful
payment.
3.22 Adjustment Period Collections and Receivables. Seller has not
delivered or otherwise sent to any third party an invoice or other request for
payment with respect to services provided by Seller during the Adjustment
Period, and Seller has received no payment therefor.
3.23 EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET
FORTH IN THIS ARTICLE, BUYER ACKNOWLEDGES THAT (1) SELLER IS SELLING AND BUYER
IS ACQUIRING THE ASSETS ON AN "AS IS", "WHERE IS" BASIS, WITHOUT ANY
REPRESENTATIONS AND WARRANTIES CONCERNING THE ASSETS (EXPRESS, IMPLIED OR
STATUTORY), (2) SELLER HAS NOT MADE AND IS NOT MAKING ANY REPRESENTATION OR
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR OTHERWISE WITH
REGARD TO THE ASSETS AND SELLER HAS EXPRESSLY DISCLAIMED ANY WARRANTIES
(EXPRESS, IMPLIED OR STATUTORY), AND (3) SELLER HAS NOT AND DOES NOT WARRANT
DESCRIPTION, VALUE, QUALITY, OR CONDITION OF ANY OF THE ASSETS. BUYER FURTHER
ACKNOWLEDGES THAT SELLER HAS NOT MADE AND IS NOT MAKING ANY REPRESENTATION OR
WARRANTY CONCERNING THE PRESENT OR FUTURE VALUE OF THE POSSIBLE INCOME, COSTS OR
PROFITS IF ANY, TO BE DERIVED FROM THE ASSETS. BUYER HAS MADE INDEPENDENT
INSPECTIONS, ESTIMATES, COMPUTATIONS, REPORTS, STUDIES, AND EVALUATIONS OF THE
ASSETS AND HAS SATISFIED OR WILL SATISFY ITSELF PRIOR TO CLOSING WITH RESPECT TO
THE CONDITION OF THE ASSETS.
ARTICLE IV
Representations and Warranties of Buyer and Parent
Buyer and Parent, jointly and severally, make the following representations
and warranties to Seller:
4.1 Organization; Power and Authority.
4.1.1 Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nebraska. Buyer has all
corporate power needed to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby
to be consummated by it. At or prior to the Closing, Buyer shall deliver to
the Seller a certificate of the Buyer certifying that a corporate
resolution has been adopted by the Board of Directors of the Buyer
authorizing the transactions contemplated by this Agreement.
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4.1.2 Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Parent has all
corporate power needed to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby
to be consummated by it. At or prior to the Closing, Parent shall deliver
to the Seller a certificate of the Parent certifying that a corporate
resolution has been adopted by the Board of Directors of the Parent
authorizing the transactions contemplated by this Agreement.
4.2 Authorization; Execution and Validity. The execution, delivery and
performance by Buyer and Parent of this Agreement and the consummation by Buyer
and Parent of the transactions contemplated hereby to be consummated by it have
been duly authorized by all necessary company action. This Agreement has been
duly and validly executed and delivered by Buyer and Parent, constitutes a valid
and binding obligation of Buyer and Parent and is enforceable against Buyer and
Parent in accordance with its terms, except to the extent that the enforcement
hereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law.
4.3 No Conflict; Buyer and Parent Consents. Except as set forth on Schedule
4.3, the execution, delivery and performance by Buyer and Parent of this
Agreement will not (a) violate any Law to which Buyer or Parent is subject, (b)
violate any Charter Document of Buyer or Parent, (c) violate any Order to which
Buyer or Parent is a party or by which either is bound, (d) require any Consent
from any Governmental Authority, or (e) breach any material Contract to which
Buyer or Parent is a party or by which it is bound.
4.4 Litigation; Orders. There is no Action by any Person or by or before
any Governmental Authority that is pending or, to Buyer's Knowledge or Parent's
Knowledge threatened against or affecting Buyer or Parent or any of their
properties, assets, operations or business which would, if adversely determined,
have a material adverse effect on Buyer's ability or Parent's ability to
consummate the transactions contemplated by this Agreement, nor is Buyer or
Parent subject to any Order which would have any such effect.
4.5 SEC Filings; Financial Statements.
4.5.1 The Parent has timely filed all forms, reports, documents, proxy
statements and exhibits required to be filed with the SEC since December
31, 2005 (collectively, the "Parent SEC Reports"). The Parent SEC Reports
(i) complied in all material respects, as of their respective dates of
filing with the SEC, with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were
filed and do not, as amended and supplemented, if applicable, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the Parent's Subsidiaries (including Buyer) are
required to file any form, report, proxy statement or other document with
the SEC.
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4.5.2 The consolidated financial statements contained in the Parent
SEC Reports complied, as of their respective dates of filing with the SEC,
and the Parent SEC Reports filed with the SEC after the date of this
Agreement will comply as of their respective dates of filing with the SEC,
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been,
and the Parent SEC Reports filed after the date of this Agreement will be,
prepared in accordance with GAAP (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-QSB under the
Exchange Act and except as may be indicated in the notes thereto) and
fairly present, and the financial statements contained in the Parent SEC
Reports filed after the date of this Agreement will fairly present, in all
material respects, the consolidated financial position of the Parent and
its Subsidiaries as of the respective dates thereof and the consolidated
statements of operations and cash flows of the Parent for the periods
indicated, except in the case of unaudited quarterly financial statements
that were or are subject to normal and recurring non-material year-end
adjustments
4.6 Brokers. Except as set forth in Schedule 4.6, no Person is or will
become entitled to receive any brokerage or finder's fee, advisory fee or other
similar payment for the transactions contemplated by this Agreement by virtue of
having been engaged by or acted on behalf of Buyer or Parent.
4.7 Common Stock. The shares of Common Stock that are being issued to
Seller hereunder, when issued and delivered in accordance with the terms hereof
for the consideration described herein will be duly and validly issued, fully
paid and nonassessable, will not be subject to any preemptive rights or rights
of first refusal, and will be free of any liens or encumbrances. Based in part
upon the representations of Buyer and Parent in this Agreement, the Common Stock
will be issued in compliance with all applicable federal and state securities
laws. Buyer and Parent represent and warrant to Seller that no securities Law
filings are required by Buyer or Parent in connection with this transaction
except as set forth in Schedule 4.7.
4.8 Certain Business Practices. Neither Buyer nor Parent, nor to their
Knowledge any partner, officer, agent or employee of Buyer or Parent has (a)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (b) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (assuming for purposes of this
Section 4.8 that Buyer or Parent is subject to Section 30A of the Exchange Act),
or (c) made any other unlawful payment.
4.9 Limitations on Seller's Representations and Warranties. Buyer
acknowledges that prior to the Effective Time, Buyer and its representatives
were permitted such access to the books and records and other properties and
assets of Seller that it and its representatives have desired or requested to
see and/or review, and that it and its representatives have had such opportunity
to meet with the officers and employees of Seller to discuss the businesses and
assets of Seller as Buyer deemed necessary. Buyer and Seller intend that Buyer
rely primarily on its due diligence inspections in making its decision to enter
into this Agreement.
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ARTICLE V
Covenants of Seller and the Partners
5.1 Cooperation by Seller and the Partners. From the date hereof through
the Closing Date, Seller and the Partners shall use commercially reasonable
efforts to take all actions and to do all things reasonably necessary to
consummate the transactions contemplated by this Agreement and to cooperate with
Buyer in connection with the foregoing, including using commercially reasonable
efforts to obtain all of the Consents. Unless required for consummation of the
transactions contemplated by this Agreement, Seller and the Partners shall have
no obligation to amend, or cause to be amended, any Contract, to change, or
cause to be changed, any Permit, or to make, or cause to be made, any payment to
obtain any Consent; provided, however, that in the event Seller and the Partners
make any payment needed in order to obtain the Consents, then Buyer shall be
responsible for reimbursing Seller the amount of such payment.
5.2 Pre-Closing Access to Information. From the date hereof through the
Closing Date, Seller and the Partners shall (a) afford to Buyer, its
accountants, advisors, and its counsel reasonable access, in a reasonable
manner, upon reasonable notice and at reasonable times, access to each of
Seller's personnel, properties, contracts, books and records, and other
documents and data related to the Assets, (b) furnish Buyer, its accountants,
advisors, and its counsel with copies of all such contracts, books and records,
and other existing documents and data as Buyer may reasonably request related to
the Assets, and (c) furnish Buyer, its accountants, advisors, and its counsel
with such additional financial, operating, and other data and information as
Buyer may reasonably request related to the Assets. Notwithstanding the
foregoing, Seller shall not be required to provide Buyer with any matters
subject to attorney client privilege or confidentiality agreements (if any).
5.3 Conduct of Business. With respect to the Assets, from the date hereof
through the Closing Date, Seller shall, and the Partners shall cause Seller to
use commercially reasonable efforts to: (a) preserve Seller's relationships with
suppliers, customers and Employees; (b) maintain the Insurance Policies; (c)
perform its obligations under the Material Contracts and the Permits in all
material respects; (d) materially comply with all applicable Laws, including all
Environmental Laws, except as would not constitute a Material Adverse Effect;
(e) maintain and repair the Assets as would a reasonably prudent operator and
not alter, modify or discontinue any normal maintenance, repair or inspections
relating to the Assets (in the event of any casualty, loss, damage to, or
disposal or consumption of, any of the Assets prior to Closing, Seller shall
either repair or replace such Assets with Assets of comparable function and
quality or, if Buyer agrees, transfer to Buyer at Closing the proceeds of any
insurance recovery with respect thereto); (f) maintain its books, accounts and
records in accordance with past custom and practices as applied by Seller on a
consistent basis, and (g) carry on the Business in the ordinary course. Seller
shall not, and the Partners shall cause Seller to not, in connection with the
conduct of the Business, without the prior written consent of Buyer:
5.3.1 incur any additional Borrowed Money Indebtedness;
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5.3.2 sell, lease, exchange, assign or transfer, or permit the
creation of any Lien on, any of the Assets of Seller, except for any such
Assets disposed of in the ordinary course of business;
5.3.3 enter into any Material Contract or Material Lease relating to
the Assets;
5.3.4 amend or terminate any Material Contract, Material Lease or
Permit relating to the Assets;
5.3.5 waive any material right, forgive any material debt or release
any material claim relating to the Assets;
5.3.6 accelerate or delay the sale of services or equipment
constituting the conduct of the Business or the collection of accounts
receivable of Seller in a manner that is not in the ordinary course of
business;
5.3.7 adopt any amendments to Seller's Charter Documents;
5.3.8 make any change in any of its respective methods of accounting
in effect at December 31, 2006,; make or rescind any election relating to
any Taxes; or settle or compromise any Action, except for matters that
would not reasonably be expected to have a Material Adverse Effect with
respect to the Assets; or
5.3.9 Reserved.
5.3.10 agree to take any of the actions described in Sections 5.3.1
through 5.3.10.
5.4 Further Assurances. Subject to the other terms and conditions of this
Agreement, at any time and from time to time, whether before or after the
Closing, Seller and the Partners shall execute and deliver all reasonable
instruments and documents (provided they are in form and substance acceptable to
Seller) and take all other action that Buyer may reasonably request to
consummate or to evidence the consummation of the transactions contemplated by
this Agreement, provided that neither Seller nor the Partners shall be required
to incur unreasonable expense in connection with its obligation under this
Section 5.4.
5.5 Cooperation. Prior to the Closing, Seller and the Partners shall
provide commercially reasonable cooperation to Buyer and shall take all actions
that are commercially reasonable and requested by Buyer to ensure a smooth
transition of the ownership of the Assets from Seller to Buyer, provided that
neither Seller nor the Partners shall be required to incur unreasonable expense
in connection with the obligation under this Section 5.5.
5.6 Supplements to Schedules. If any event occurs or condition changes that
causes any of its representations or warranties in this Agreement to be
inaccurate, Seller shall notify Buyer thereof in writing (an "Update"). Seller
shall supplement the Schedules to account for any such event or change. In the
event that any Update shall concern a Material Adverse Effect to the Assets
after the Effective Time, Buyer shall have ten (10) Business Days from receipt
of notice of such Update to notify Seller as to whether Buyer accepts or rejects
such Update or objects to such Material Adverse Effect. If Buyer rejects such
Update or Material Adverse Effect, Seller and Buyer shall negotiate in good
22
faith to amend this Agreement (including the Purchase Price and/or other
appropriate terms) to account for the Update or Material Adverse Effect in a
manner mutually acceptable to Seller and Buyer. If Buyer and Seller cannot agree
on a mutually acceptable amendment to this Agreement within ten (10) Business
Days after Buyer's notice of rejection to Seller, Buyer shall have the right to
terminate this Agreement without penalty by providing written notice of
termination within five (5) Business Days after the expiration of such period.
If Buyer does not terminate this Agreement as set forth in the preceding
sentence, and the transaction hereunder closes, then Buyer shall be deemed to
have accepted the Update or Material Adverse Effect and to have waived any
rights to seek indemnity or damages in relation thereto.
5.7 Notice of Breach. If at any time on or before the Closing Date, Seller
obtains any knowledge (whether through investigation or otherwise) of any fact,
condition or event constituting a breach of any representation or warranty of
Buyer set forth herein or any document referred to herein, then Seller shall
immediately upon obtaining such knowledge inform Buyer thereof and of such
breach.
5.8 Transition Cooperation. From the date hereof and continuing after the
Closing Date for a period of ninety (90) days, Seller and the Partners agree to
provide commercially reasonable assistance with respect to the transition of the
Assets to Buyer and to assist Buyer and Buyer's independent accounting firm in
connection with the preparation of historical and pro forma financial statements
and other disclosures to the extent required pursuant to the reporting
requirements applicable to Parent under the Exchange Act. Nothing contained
herein is intended to require Seller or the Partners to incur any expenses in
connection with such assistance, and Buyer shall reimburse Seller and the
Partners for all third party costs incurred in connection with such assistance.
ARTICLE VI
Covenants of Buyer and Parent
6.1 Cooperation by Buyer. From the date hereof through the Closing Date,
Buyer and Parent shall use commercially reasonable efforts to take all actions
and to do all things necessary or advisable to consummate the transactions
contemplated by this Agreement and to cooperate with Seller in connection with
the foregoing, including using commercially reasonable efforts to obtain all of
the Consents, provided that Buyer shall not be required to incur unreasonable
expense in connection with its obligation under this Section 6.1.
6.2 Further Assurances. Subject to the other terms and conditions of this
Agreement, at any time and from time to time, whether before or after the
Closing, Buyer and Parent shall execute and deliver all instruments and
documents and take all other action that Seller may reasonably request to
consummate or to evidence the consummation of the transactions contemplated by
this Agreement, provided that neither Buyer nor Parent shall be required to
incur unreasonable expense in connection with its obligation under this Section
6.2.
6.3 Notice of Breach. If at any time on or before the Closing Date, Buyer
or Parent obtain any knowledge (whether through investigation or otherwise) of
any fact, condition or event constituting a breach of any representation or
warranty of Seller set forth herein or any document referred to herein, then
Buyer or Parent shall immediately upon obtaining such knowledge inform Seller
thereof and of such breach.
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6.4 Supplements to Schedules. If any event occurs or condition changes that
causes any of its representations or warranties in this Agreement to be
inaccurate, Buyer shall notify Seller thereof in writing (an "Update"). In the
event that any Update shall concern a Material Adverse Effect after the
Effective Time, Seller shall have ten (10) Business Days from receipt of notice
of such Update to notify Buyer as to whether Seller accepts or rejects such
Update or objects to such Material Adverse Effect. If Seller rejects such Update
or Material Adverse Effect, Seller and Buyer shall negotiate in good faith to
amend this Agreement (including the Purchase Price and/or other appropriate
terms) to account for the Update or Material Adverse Effect in a manner mutually
acceptable to Seller and Buyer. If Buyer and Seller cannot agree on a mutually
acceptable amendment to this Agreement within ten (10) Business Days after
Seller's notice of rejection to Buyer, Seller shall have the right to terminate
this Agreement without penalty by providing written notice of termination within
five (5) Business Days after the expiration of such period. If Seller does not
terminate this Agreement as set forth in the preceding sentence, and the
transaction hereunder closes, then Seller shall be deemed to have accepted the
Update or Material Adverse Effect and to have waived any rights to seek
indemnity or damages in relation thereto.
ARTICLE VII
Additional Agreements
7.1 Governmental Matters.
7.1.1 Governmental Approvals. The Parties shall comply with all Laws
which are applicable to any of the transactions contemplated hereby and
pursuant to which government notification or approval of such transaction
is necessary. The Parties shall cooperate with one another in providing any
information about Seller or Buyer or Parent which is required for this
purpose and in promptly filing, separately or jointly, any applications for
such government notification or approval. The Parties shall use
commercially reasonable efforts to resolve such objections, if any, as may
be asserted by any Governmental Authority with respect to the transactions
contemplated hereby.
7.1.2 No Required Dispositions or Other Adverse Actions.
Notwithstanding any other provision of this Agreement to the contrary, no
Party or its Affiliates shall be obligated, in order to obtain any Permit
or other approval by any Governmental Authority that is necessary to
consummate the transactions contemplated hereby, to hold, separate, sell or
otherwise dispose or make reductions in the scope or use of its businesses,
assets or properties.
7.2 Tax Information and Assistance. With respect to taxes relating to the
Assets, the Parties shall provide each other with such commercially reasonable
assistance as may be requested by them in connection with the preparation of any
Tax Return, any Tax audit or other examination by any Governmental Authority, or
any judicial or administrative proceedings related to liability for Taxes. The
Party requesting assistance hereunder shall reimburse the other for reasonable
out-of-pocket expenses incurred in providing such assistance.
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7.3 Books and Records.
7.3.1 Access and Assistance. For a one (1) year period ending on the
first anniversary of the Closing, each Party shall provide the other Party
with commercially reasonable access during normal business hours to its
books and records relating to the Assets (other than books and records
protected by the attorney-client privilege) to the extent that they relate
to the condition or operation of the Assets prior to or after the Closing
and are requested by such Party to prepare its Tax Returns, or to respond
to Third Party Claims (not involving the other Party). Each Party shall
have the right, at its own expense, to make copies of any such books and
records.
7.3.2 Confidentiality. Each Party may take such action which it deems
to be commercially reasonable to separate or redact information unrelated
to the Assets from documents and other materials requested and made
available pursuant to this Section 7.3 and may condition the other Party's
access to documents and other materials that it deems confidential to the
execution and delivery of an agreement by the other Party not to disclose
or misuse such information.
ARTICLE VIII
Conditions Precedent to Closing
8.1 Conditions Precedent to Buyer's and Parent's Obligations. The
obligation of Buyer and Parent to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction of the following conditions,
any of which may be waived in writing by Buyer.
8.1.1 Accuracy of Representations and Warranties. The representations
and warranties of Seller and the General Partner in this Agreement that are
qualified as to materiality are accurate, and any such representations and
warranties that are not so qualified are accurate, in all material
respects, as of the date of this Agreement and as of the Closing Date
(except for representations and warranties that address matters only as of
a specific date, in which case such representations and warranties
qualified as to materiality are true and correct, and those not so
qualified are true and correct in all material respects, on and as of such
earlier date).
8.1.2 Performance of Covenants. Seller and the Partners have performed
and complied in all material respects with all covenants and agreements
required by this Agreement to be performed by Seller and the Partners prior
to or at the Closing.
8.1.3 No Material Adverse Effect. There has been no change having a
Material Adverse Effect on the Assets.
8.1.4 Deliveries. Seller has delivered to Buyer the documents required
by Section 2.7.2.
8.1.5 No Order. No Order shall be in effect forbidding or enjoining
the consummation of the transactions contemplated hereby.
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8.1.6 Pipeline Condition. The Pipeline is in operational condition, as
operated by Seller in accordance with past practice.
8.1.7 Insurance. There shall be no meteorological event occurring
which prevents Buyer from obtaining insurance coverage on the Assets on the
Closing Date, unless Buyer is able to become the assignee of the Seller's
current insurance on the Assets.
8.2 Conditions Precedent to Seller's and the Partners' Obligations. The
obligation of Seller and the Partners' to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions, any of which may be waived in writing by Seller.
8.2.1 Accuracy of Representations and Warranties. The representations
and warranties of Buyer and Parent in this Agreement that are qualified as
to materiality are accurate, and any such representations and warranties
that are not so qualified are accurate, in all material respects, as of the
date of this Agreement and as of the Closing Date (except for
representations and warranties that address matters only as of a specific
date, in which case such representations and warranties qualified as to
materiality are true and correct, and those not so qualified are true and
correct in all material respects, on and as of such earlier date).
8.2.2 Performance of Covenants. Buyer and Parent have performed and
complied in all material respects with all covenants and agreements
required by this Agreement to be performed by Buyer and Parent prior to or
at the Closing.
8.2.3 Deliveries. Buyer and Parent have delivered to Seller the
payments and documents required by Section 2.3.
8.2.4 No Order. No Order is in effect forbidding or enjoining the
consummation of the transactions contemplated hereby.
ARTICLE IX
Termination Prior to Closing Date
9.1 Termination. This Agreement may be terminated prior to the Closing Date
only as follows:
9.1.1 By either Buyer or Seller upon written notice to the other Party
if a material breach of any provision of this Agreement has been committed
by the other Party and such breach has not been waived in writing or cured
within fifteen (15) days after receipt of such notice by the Party
committing such breach;
9.1.2 By Buyer pursuant to the terms of Section 5.6;
9.1.3 By Seller pursuant to the terms of Section 6.4;
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9.1.4 By the mutual written consent of the Buyer and Seller; or
9.1.5 By either Buyer or Seller upon written notice to the other Party
if the conditions precedent to the Closing set forth in Article 8 shall not
have occurred or been waived by the appropriate Party on or before
September 30, 2007; provided, however, that the right to terminate this
Agreement under this Section shall not be available to any Party whose
breach of any obligation under this Agreement shall have been the cause of,
or shall have resulted in, the failure of the Closing to occur on or prior
to such date.
9.2 Effect of Termination. If this Agreement terminates pursuant to Section
9.1, no Party shall have any liability or obligation to the other Party
hereunder; provided, however, that no such termination shall relieve any Party
of any liability for Damages resulting from a breach of this Agreement or
liability that otherwise existed as of the date of such termination.
ARTICLE X
Indemnification
10.1 Indemnification by Seller and the General Partner. Subject to the
other provisions of this Article 10, from and after the Closing Date, Seller and
the General Partner shall, jointly and severally, defend, indemnify and hold
Buyer, Parent, their Affiliates and their respective employees, officers,
directors and agents (the "Buyer Indemnitees") harmless from and against any and
all Damages suffered by any Buyer Indemnitee arising out of:
10.1.1 the breach of any representation or warranty made by Seller in
this Agreement or in any certificate required to be executed and delivered
by Seller, the Partners or their respective officers at the Closing
pursuant to this Agreement;
10.1.2 the failure of Seller to perform any covenant or obligation by
Seller contained in this Agreement or any other agreement required to be
executed and delivered by Seller at the Closing pursuant to this Agreement;
or
10.1.3 any Retained Liability.
10.2 Indemnification by Buyer and Parent. Subject to the other provisions
of this Article 10, from and after the Closing Date, Buyer and Parent, jointly
and severally, shall defend, indemnify and hold Seller, the Partners, their
Affiliates and their respective employees, officers, directors and agents (the
"Seller Indemnitees") harmless from and against any Damages suffered by any
Seller Indemnitee arising out of:
10.2.1 the breach of any representation or warranty made by Buyer or
Parent in this Agreement or in any certificate required to be executed and
delivered by Buyer or Parent or their officers at the Closing pursuant to
this Agreement;
10.2.2 the failure of Buyer or Parent to perform any covenant or
obligation by Buyer or Parent contained in this Agreement or any other
agreement required to be executed and delivered by Buyer or Parent at the
Closing pursuant to this Agreement; or
10.2.3 any Assumed Liability.
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10.3 Notice and Resolution of Claims.
10.3.1 Notice. Each person entitled to indemnification pursuant to
Section 10.1 or Section 10.2 (an "Indemnitee") shall promptly give written
notice to the indemnifying Party, in accordance with Section 12.7, after
obtaining knowledge of any claim that it may have pursuant to this Article
10; provided, however, the failure of any Indemnitee to give timely notice
thereof shall not affect any of its rights to indemnification hereunder nor
relieve the indemnifying Party from any of its indemnification obligations
hereunder except to the extent such failure prejudices the rights or
defenses of the indemnifying Party. Such notice shall set forth in
reasonable detail the claim and the basis for indemnification.
10.3.2 Right to Assume Defense. If such claim for indemnity shall
arise from a claim or Action involving a third party (a "Third Party
Claim"), the Indemnitee shall permit the indemnifying Party to assume its
defense. If the indemnifying Party assumes the defense of such Third Party
Claim, it shall take all reasonable steps necessary to investigate, defend
or settle such Action. The indemnifying Party shall keep the Indemnitee
informed of the progress of the defense of any such Third Party Claim.
Without the written consent of the Indemnitee, the indemnifying Party shall
not consent to entry of any judgment or enter into any settlement that does
not include an unconditional and complete release of the Indemnitee by the
claimant or plaintiff making the Third Party Claim without the imposition
of any injunction or other equitable relief against the Indemnitee. The
Indemnitee may participate in such defense or settlement through its own
counsel, but at its own expense provided that if there is an actual
conflict of interest between Indemnitee and the indemnifying Party with
respect to such Third Party Claim, the Indemnitee may retain its own
counsel at the indemnifying Party's expense. In the event that the
Indemnitee elects to participate in the defense of a Third Party Claim, the
indemnifying Party and the Indemnitee shall mutually cooperate and make
available to the other witnesses, records and materials related to the
matter. No Third Party Claim that is being defended in good faith by the
indemnifying party shall be settled or compromised by the Indemnitee
without the written consent of the indemnifying Party.
10.3.3 Failure to Assume Defense. Failure by the indemnifying Party to
notify the Indemnitee of its election to assume the defense of any Third
Party Claim within thirty (30) days after its receipt of notice thereof
pursuant to Section 10.3.1 shall be deemed a waiver by the indemnifying
Party of its right to assume the defense of such Third Party Claim. In such
event, the Indemnitee may defend against such Third Party Claim in any
manner it deems appropriate. The Indemnitee may settle such Third Party
Claim or consent to the entry of any judgment with respect thereto,
provided that it acts in good faith and in a commercially reasonable
manner.
10.3.4 Survival. Neither Party shall have any obligation to indemnify
any Indemnitee pursuant to Sections 10.1 or 10.2 unless such Indemnitee has
given written notice to such Party in accordance with Section 10.3.1 prior
to the expiration of twelve (12) months after the Closing Date, except in
the case of those representations and warranties set forth in Sections 3.14
and 3.19 (the "Extended Representations") which shall survive until the
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earlier of (i) the expiration of the statutory limitation periods
pertaining to the respective events which may constitute a breach of such
representations and warranties, or the expiration of three (3) years after
the Closing Date.
10.4 Limits on Indemnification.
10.4.1 Thresholds and Basket. Seller and the General Partner shall be
liable to the Buyer Indemnitees for Damages that are indemnifiable pursuant
to Section 10.1.1, and Buyer and Parent shall be liable to the Seller
Indemnitees for Damages that are indemnifiable pursuant to Section 10.2.1,
but in either case, only if (a) amount of Damages for each claim exceeds a
de minimus threshold of $5,000.00 (unless such claim is part of a related
series of breaches of representations and warranties) before it may be
asserted, but if that threshold is exceeded the first dollar of the claim
is applied against the Basket, and (b) the aggregate amount of such Damages
to all Buyer Indemnitees or all Seller Indemnitees, respectively, exceeds
$25,000.00 (the "Basket"), and then only with respect to Damages which in
the aggregate exceed $25,000.
10.4.2 Limit of Liability. The total aggregate liability of Seller and
its General Partner for any claims for Damages arising under Section 10.1.1
of this Agreement shall not exceed in the aggregate the cash portion of the
Purchase Price.
10.4.3 Consequential Damages; Insurance; Taxes. Neither Seller and the
General Partner, on the one hand, nor Buyer and Parent, on the other hand,
shall have any obligation to indemnify any Seller Indemnitee or Buyer
Indemnitee for any other Damages that are (a) recoverable by the Indemnitee
from any third party (including insurers to the extent recoverable), except
to the extent of any deductible, retention or demonstrated increase in
premiums related thereto, or (b) offset by tax savings realized on account
of such Damages by the Indemnitee or any of its Affiliates (to the extent
and at the time of such tax savings). Notwithstanding anything to the
contrary contained in this Agreement, no Party hereto shall be entitled to
recover from any other Party hereto any amount in respect of exemplary,
punitive, special, indirect, consequential, remote, or speculative damages,
including lost profits.
10.4.4 Exclusive Remedy. This Article 10 sets forth the exclusive
remedy owing from Seller and the General Partner to the Buyer Indemnitees
and from Buyer and Parent to Seller Indemnitees that arise from the matters
described in Sections 10.1 and 10.2. Seller, the Partners, the General
Partner, Buyer, and the Parent hereby waive any other claim or cause of
action that each might assert against the other Party with respect to the
matters described in Sections 10.1 and 10.2.
10.4.5 Indemnity Payments. All payments made pursuant to this Article
10 (other than interest payments) shall be treated by the Parties on all
Tax Returns as an additional payment or rebate, as the case may be, of the
Purchase Price.
10.4.6 Payment and Assignment of Claims. Upon final determination by
the Parties or by a court of competent jurisdiction that an Indemnitee is
entitled to indemnification under this Article 10, the indemnifying Party
shall promptly pay or reimburse, as appropriate, the Indemnitee for any
29
Damages to which it is entitled to be indemnified hereunder. Neither Party
nor its Affiliates shall permit any exercise of any right of set-off
against the other Party or its Affiliates until such final determination is
made.
10.5 Other Indemnitees. Buyer and Parent shall cause Buyer Indemnitees, and
Seller and the General Partner shall cause Seller Indemnitees, to comply with
the provisions and to abide by the limitations set forth in this Article 10.
ARTICLE XI
Employee Matters
Buyer and Parent do not intend to hire or otherwise retain any employee of
Seller or the Partners after the Closing Date, and Buyer and Parent shall have
no obligation to such employees and any obligation or Liability with respect to
such employees shall be deemed a "Retained Liability."
ARTICLE XII
Miscellaneous
12.1 Severability. If any provision of this Agreement as applied to any
Party or to any circumstance shall be held invalid, illegal or unenforceable by
any court of competent jurisdiction, (i) the validity, legality and
enforceability of the remaining provisions of this Agreement will remain in full
force and effect and (ii) the application of such provision to any other part or
to any other circumstance shall not be affected or impaired thereby.
12.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the successors, whether by
merger, consolidation or otherwise, and permitted assigns of the Parties;
provided, however, that neither this Agreement nor any of the rights or
obligations thereunder may be assigned by any Party without the prior written
consent of the other Party. Any assignment in violation of this Section 12.2
shall be null and void.
12.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which, when taken together, shall constitute one and the same
agreement.
12.4 Headings. The captions and headings used in this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction or interpretation hereof.
12.5 Waiver. Any of the terms or conditions of this Agreement may be waived
in writing at any time by the Party which is entitled to the benefits thereof.
Neither the failure nor any delay by any Party in exercising any right, power or
privilege under this Agreement or the documents referred to in this Agreement
will operate as a waiver of such right, power or privilege, and no single or
partial exercise of any such right, power or privilege will preclude any other
or further exercise of such right, power or privilege or the exercise of any
other right, power or privilege.
30
12.6 No Third-Party Beneficiaries. Nothing in this Agreement shall create
or confer upon any Person (including but not limited to any employees), other
than the Parties or their respective successors and permitted assigns, any legal
or equitable rights, remedies, obligations, liabilities or claims under or with
respect to this Agreement, except as expressly provided herein.
12.7 Notices. Unless otherwise provided, all notices and other
communications hereunder shall be in writing and shall be deemed duly given (a)
on the date of delivery if delivered personally, or by telecopy or
telefacsimile, upon confirmation of receipt, in each case, if on a Business Day,
and otherwise on the next Business Day, (b) on the fifth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid, or (c) the second Business Day following deposit
with a nationally recognized overnight courier. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the Party to receive such notice:
If to Buyer or Parent:
Gateway Energy Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxxx Xxxxxxxx Xxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Seller or the Partners:
Gulfshore Midstream Pipelines, Ltd.
00000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx and Xxxx XxxxxxXxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
31
with copies to:
Shannon, Martin, Xxxxxxxxxxx & Xxxxxxxx, P.C.
000 Xxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx/Xxxx Xxxx
Telephone: 000-000-0000
Facsimile: 713-752-0337
or at such other address or facsimile number for a Party as shall be specified
in writing by that Party.
12.8 Governing Law. This Agreement shall be construed in accordance with
and governed by the Laws of the State of Texas applicable to agreements made and
to be performed wholly within such jurisdiction, without regard to conflicts of
law principles.
12.9 Interpretation.
12.9.1 Unless specifically stated otherwise, references to Articles,
Sections, Exhibits and Schedules refer to Articles, Sections, Exhibits and
Schedules in this Agreement. References to "includes" and "including" mean
"includes without limitation" and "including without limitation."
12.9.2 No provision of this Agreement shall be interpreted in favor
of, or against, either of the Parties by reason of the extent to which
either such Party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
12.10 Confidentiality and Public Announcements. No public release or
announcement of the proposed transaction or related discussions or negotiations
shall be made without the advance approval thereof by Buyer and Seller, except
as may be required by Law (including Buyer's reporting requirements under the
Securities Exchange Act of 1934, as amended) or legal process, in which case the
other Party shall receive prior notification and opportunity for review before
release. Seller and Buyer shall agree on the terms of any public releases or
other announcements related to this Agreement and shall consult with each other
before issuing any public releases or other announcements related to this
Agreement. In addition, the Parties agree to consult with, and provide
commercially reasonable cooperation to, each other with respect to the form and
content of any communication to Employees, customers, suppliers and others
having dealings with Seller concerning this Agreement and the transactions
contemplated thereby through the Closing Date. Notwithstanding the foregoing,
Buyer shall be permitted to discuss the proposed transaction with lenders and
investors and Governmental Authorities responsible for issuing any required
authorizations in connection with the Assets.
12.11 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, constitutes the sole understanding of the Parties with respect
to the matters contemplated hereby and thereby and supersedes and renders null
and void all prior agreements and understandings, written and oral, between the
Parties with respect to the subject matter hereof and thereof. No Party shall be
32
liable or bound to any other Party in any manner by any promises, conditions,
representations, warranties, covenants, agreements and understandings, except as
specifically set forth herein or therein.
12.12 Amendment. No amendment, modification or alteration of the terms or
provisions of this Agreement, including any Schedules and Exhibits, shall be
binding unless the same shall be in writing and duly executed by the Party
against whom such amendment, modification or alteration is sought to be
enforced.
12.13 Confidentiality. The Parties acknowledge that the Confidentiality
Agreements dated as of June 27, 2007 shall remain in full force and effect.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
as of the date set forth above.
GATEWAY ENERGY CORPORATION
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
Title: President and
Chief Executive Officer
GATEWAY OFFSHORE PIPELINE COMPANY
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
Title: President
GULFSHORE MIDSTREAM PIPELINES, LTD.
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Manager and
Chief Executive Officer of
Gulfshore Midstream, LLC,
Sole General Partner of
Gulfshore Midstream
Pipelines, Ltd.
GULFSHORE MIDSTREAM, LLC
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Manager and
Chief Executive Officer
TRAILBLAZER PARTNERS, LTD.
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
BAYOU TRAIL ENTERPRISES, LTD.
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
34
