Document:

gateway_pevowassetsalesagree.htm - Generated by SEC Publisher for SEC Filing

 

ASSET SALES AGREEMENT

 

            This
Agreement (the "Agreement") is made this 12th day
of December, 2012, by and between Gateway Pipeline USA Corporation, a Delaware
corporation (hereinafter referred to as "Seller"), and GEC
Holding, LLC, a Delaware limited liability company (hereinafter referred to as
"Buyer").  (Seller and Buyer are sometimes referred to
collectively herein as the "Parties" and individually as a
"Party"). 

 

W I 
T  N  E  S  S  E  T  H: 

 

            WHEREAS,
Seller owns those certain pipelines and pipeline facilities located in
Guadalupe and Shelby Counties, Texas, Miller County, Arkansas and Pettis
County, Missouri (same being collectively referred to herein as the "Facilities")
that are described with more particularity in this Agreement; and

 

            WHEREAS,
Seller desires to sell, transfer, assign and convey to Buyer, and Buyer desires
to purchase and acquire from Seller, the Assets (as defined herein), all
according to the terms, conditions and other provisions of this Agreement.

 

            NOW,
THEREFORE, for and in consideration of the mutual agreement of the Parties
contained herein and subject to the terms, conditions and other provisions set
forth in this Agreement, the Parties agree as follows:

 

1.                 
PURCHASE AND SALE 

 

Seller agrees to sell, transfer, assign and convey to
Buyer, and Buyer agrees to purchase, pay for and acquire from Seller, the
following (collectively, the "Assets"):   

 

(a)        the Facilities, which
are described on Attachment A to the Bill of Sale and Assignment of Right of
Ways set forth as Exhibit I attached hereto and made a part hereof;

  

(b)        all easements, permits, licenses,
servitudes and rights-of-way on which the Facilities are located, as described
on Attachment B to the Bill of Sale and Assignment of Right of Ways set forth
as Exhibit I attached hereto and made a part hereof ("Surface
Contracts"), but excluding any such easements, permits, licenses,
servitudes or rights-of-way to the extent transfer is restricted by third party
agreement or applicable law and necessary consents to transfer are not
obtained;

 

(c)        all contracts, agreements, and  instruments
by which the Assets are bound are listed on Attachment A to the Bill of Sale,
Assignment and Assumption Agreement set forth as Exhibit II attached
hereto and made a part hereof (the "Commercial Contracts", and
collectively with the Surface Contracts, the "Contracts"); and

 

(d)        all books, records, data, files,
measurement statements and accounting records, in each case to the extent
related primarily to the Assets, or used or held for use primarily in connection
with the maintenance or operation thereof; and copies of all corporate and
financial records and statements, income, franchise, sales and other tax and
legal records and statements of Seller that relate to the operation of the
Assets (the "Records"). 

 

 

 

 

	

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2.         DELIVERY AND MAINTENANCE OF RECORDS

 

                        Seller,
at Seller’s sole cost and expense, shall deliver the Records to Buyer within
fifteen      (15) days following Closing.  Seller may retain copies of any
Records.  Buyer, for a period of  seven (7) years following Closing, will (i)
retain the Records, (ii) provide Seller, its affiliates and            their
respective officers, employees and representatives with reasonable access to
the Records             during normal business hours for review and copying for
legitimate business reasons at Seller’s  expense, and (iii) provide Seller, its
affiliates and their respective officers, employees and             representatives,
with reasonable access, during normal business hours, to materials received or             produced
after Closing, for review and copying at Seller’s expense.

 

3.                 
PRICE 

 

Buyer agrees
to pay to Seller a sum of One Million One Hundred Thousand and no/100 Dollars
($1,100,000.00) as full and valuable consideration for the Assets (the "Consideration"). 
Buyer shall pay the Consideration to Seller in immediately available funds on
the Closing Date (as defined herein).

 

4.                 
RECORDING FEES AND TRANSFER TAXES

 

Buyer shall
be responsible for and pay all documentary, filing, and recording fees and the
sales, use and other transfer taxes, if any, incident to the transfer of the
Assets.

 

5.                 
INSPECTION 

 

EXCEPT FOR THE EXPRESS REPRESENTATIONS AND
WARRANTIES OF SELLER SET FORTH IN SECTION 6 OF THIS AGREEMENT, In making the
decision to enter into this Agreement and consummate the transactions
contemplated hereby, Buyer has relied solely on, and on the basis of, its own
independent investigation, analysis and evaluation of the Assets and public
records relating to such Assets.  Buyer acknowledges that Seller has not made
any representation or warranty, express, implied, at common law, by statute or
otherwise relating to (i) the condition(s) of the Assets (including, but not
limited to, any implied or express warranty of merchantability or fitness for a
particular purpose), (ii) any infringement by the Seller of any patent or
proprietary right of any third party, and (iii) any information, data or other
materials (written or oral) furnished to the Buyer by or on behalf of the
Seller and the Buyer expressly waives any and all causes of action, claims and
demands with respect thereto, and the Seller hereby expressly disclaims all
liability and responsibility and negates any representation or warranty,
express, implied, at common law, by statute or otherwise relating to the
condition(s) of the Assets (including, but not limited to, any implied or
express warranty of merchantability or fitness for a particular purpose).

 

6.                 
REPRESENTATIONS AND WARRANTIES OF SELLER

 

	

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Seller
agrees, represents and warrants to Buyer as to all of the following:

 

A.                                        
Organization, Qualification, etc.  Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Seller has full power and authority to enter into this Agreement and to
consummate the transactions contemplated herein.  The making and performance by
Seller of this Agreement and the conveyances, bills of sales and other
documents required hereunder to be executed by Seller have been duly authorized
by Seller.

 

B.                                        
Binding Obligation.  When executed and delivered, this Agreement
and the assignments, the bill of sale, and any other documents executed
pursuant to this Agreement, will constitute legal and binding obligations of
Seller, and will be valid and enforceable in accordance with the respective
terms hereof and thereof.

 

C.                                        
Title to Assets.  Seller owns one hundred percent (100%) interest
of, and has good and marketable title to, the personal property comprising a
part of the Assets, free and clear of any liens, security interests or other
encumbrances of any kind.  As to the real property comprising a part of the
Assets, Seller has not previously assigned, conveyed, mortgaged or otherwise
hypothecated its interest therein.

 

D.                                        
Consents, Approvals and Other Actions.  Seller will or has
obtained all consents, approvals or other actions by governmental or regulatory
authorities necessary to the sale, conveyance, transfer and assignment of the
Assets to Buyer in accordance with the terms of this Agreement.

 

E.                                         
No Litigation.  There is no suit, action, arbitration or legal,
administrative or other proceeding or governmental investigation pending or, to
the knowledge of Seller after reasonable inquiry, threatened against or
affecting the Assets or the consummation of the transactions contemplated
hereby.

 

F.                                         
No Conflict.  The closing by Seller of the transactions contemplated
by this Agreement will not result in the breach of (a) any term or provision of
or constitute a default under, its certificate of formation (or applicable
organizing document), (b) any other agreements or instruments to which Seller
is a party or which affect the Assets, including, without limitation, the
Contracts, (c) result in default (with due notice or lapse of time or both) or
the creation of any lien or encumbrance or give rise to any right of
termination, cancellation or acceleration under any terms, conditions or
provisions of any note, bond, mortgage, indenture, license or agreement to
which Seller is a party or that affect the Assets, (d) violate any judgment,
order, ruling, or decree applicable to Seller as a party in interest, or (e)
violate any laws, rules or regulations of any governmental body applicable to
Seller or any of the Assets, except for rights to consent by, required notices
to, filings with, approval or authorizations of, or other actions by any
governmental body where the same are not required prior to the assignment of
the related Asset or are customarily obtained subsequent to the sale or
conveyance thereof.

 

G.                                        
Contract.  Each Contract is valid, binding and enforceable
against Seller and, to Seller's knowledge (without any duty of inquiry or
investigation), the other party or parties to such Contract, in accordance with
its terms; and Seller is not in breach or default of, and no event has occurred
which with notice or lapse of time would constitute a default by Seller or
permit termination, modification or acceleration under, any Contract,
and to Seller's knowledge, no such other party to a Contract is in breach or
default of or has repudiated any provision of, and no event has occurred which
with notice or lapse of time would constitute a default by such other party or
permit termination, modification or acceleration under, any Contract.

	

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H.                                        
No Threatened or Planned Plant Closures.  Seller has no knowledge
(without any duty of inquiry or investigation) of any threats or plans by Tyson
to close or discontinue operations of the plants that are served by the Assets.

 

I.                                           
Rights of Parties in Possession. Seller, after reasonable
inquiry, has no knowledge of any rights or claims of third parties with respect
to any of the Assets.

 

J.                                          
Compliance with Applicable Laws, Regulations, Ordinances. 
Seller’s ownership and operation of the Assets has been and is in compliance in
all material respects with all applicable laws, rules, regulations, and
ordinances of governmental authorities having jurisdiction over the ownership
and operation of the Assets and the businesses pertaining thereto.

 

K.                                        
Brokers.  Seller has incurred no liability, contingent or
otherwise, for brokers or finders fees relating to the transactions
contemplated by this Agreement for which Buyer shall have any responsibility
whatsoever.

 

L.                                         
Environmental.   Seller, after reasonable inquiry, has no
knowledge of or reason to believe that there have been any violations of any
laws, rules or regulations of any governmental authorities relating to the
environment in connection with Seller's or its predecessors-in-interest
ownership or operation of the Facilities which have not been previously cured
or remedied in accordance with all such applicable laws, rules and regulations.

 

M.                                       
Condition of Assets.  The Assets are all in reasonable working
condition.  The Facilities and Equipment have been maintained and repaired by
Seller in all material respects in the same manner as would a prudent
operator.  The sale and conveyance of the Assets is made with the express
understanding that SELLER DISCLAIMS ALL WARRANTIES EXPRESS OR IMPLIED OF
MERCHANTABILITY OR FITNESS OR USE FOR A PARTICULAR PURPOSE AND THE CONVEYANCE
OF THE ASSETS IS MADE ON AN "AS IS" AND "WHERE IS" BASIS.

 

N.                                        
Assets Necessary to Comply with Obligations.   The Facilities and
the Contracts constitute all of the assets utilized by Seller in the operation
of its business necessary to comply with its obligations to Tyson Foods, Inc.
under those Commercial Contracts to which Tyson Foods, Inc. is a counterparty.

 

O.                                        
Renewal of Commercial Contracts.  Seller has no knowledge
(without any duty of inquiry or investigation) that Tyson Foods, Inc. plans to
terminate or not renew any of the Commercial Contracts.

 

All
representations and warranties are true and correct as of the date hereof and
shall be true and correct as of the Closing Date.  All representations and
warranties made pursuant to this Section 6 as same relate to matters as of the
Closing Date shall survive the Closing and continue in effect only for twelve
(12) months thereafter; provided, however, if any specific claim or claims are made in writing by Buyer to Seller prior to the
expiration of such twelve (12) month period, then the representations and
warranties of Seller which related thereto shall continue in force and effect
until resolved by written release of Buyer or a final, non-appealable judgment
of a court of competent jurisdiction. 

	

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7.                 
REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer agrees, represents, and
warrants to Seller as to all of the following:

 

A.                                        
Organization, Qualifications, etc.  Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
the state of Delaware.  Buyer has full power and authority to enter into this
Agreement and to consummate the transactions contemplated herein.  The making
and performance by Buyer of this Agreement and the assignments, the bill of
sale and any other documents hereunder to be executed by Buyer have been duly
authorized.

 

B.                                        
Binding Effect of the Agreement.  When executed and delivered,
this Agreement and all documents or agreements executed by Buyer pursuant to
this Agreement, will constitute legal and binding obligations of Buyer, and
will be valid and enforceable against Buyer in accordance with the respective
terms hereof and thereof.

 

C.                                        
Consent, Approvals and Other Actions.  Buyer has obtained all
necessary consents, approvals or other actions by third parties and/or
governmental or regulatory authorities necessary to acquire the Assets.

 

D.                                        
Brokers.  Buyer has incurred no liability, contingent or
otherwise, for broker’s or finder’s fees relating to the transactions
contemplated by this Agreement for which Seller shall have any responsibility
whatsoever.

 

8.                 
CLOSING 

 

The closing of the transactions contemplated in this Agreement (the
"Closing") shall take place on or before the close of business
at 5:00 PM, Central Standard Time, on December 31, 2012, or such other date and
time that the Parties shall mutually agree upon in writing (the “Closing
Date”).  The Closing shall be held at Seller’s offices in Houston, Texas.  

 

9.                 
EFFECTIVE TIME

 

Upon the
Closing of this Agreement, the purchase and sale of the Assets shall be
effective as of 11:59 pm Central Time on that day (herein referred to as the “Effective
Time”). 

 

10.             
PRORATION OF REVENUES, EXPENSES AND TAXES

 

Seller shall
be entitled to all revenue and responsible for all direct operating expenses,
taxes, other public charges, or assessments on the Assets that accrue prior to
the Effective Time.  Buyer shall be entitled to all revenue and be responsible
for all direct operating expenses, taxes, other public charges, or assessments
on the Assets, which accrue on and after the Effective Time.  Buyer expressly
agrees to assume, protect, defend and indemnify Seller against and hold Seller
harmless from any and all obligations and liabilities that arise out of the
ownership or operation of the Assets from and after the Effective Time.  Seller
expressly agrees to assume, protect, defend and
indemnify Buyer against and hold Buyer harmless from any and all obligations
and liabilities that arise out of the ownership or operation of the Assets
prior to the Effective Time.  If either Party has or obtains knowledge of a
claim against the Assets it shall notify the other Party within five days after
receipt of such claim.

	

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11.             
BILL OF SALE AND ASSIGNMENT OF RIGHT OF WAYS

 

At the
Closing, Seller and Buyer shall jointly execute and deliver a Bill of Sale and
Assignment of Right of Ways in the form attached hereto as Exhibit “I”,
covering the Facilities and Surface Contracts.  To the extent that consents are
required for the assignment of any of the Surface Contracts, Seller and Buyer
shall reasonably cooperate to obtain such consents prior to Closing and, if any
of such consents are not obtained prior to Closing, then Seller agrees to hold
such Surface Contract(s) as to which consents were not obtained for the benefit
of Buyer until such consents are obtained; provided, however, Buyer shall
protect, defend, indemnify, reimburse and hold Seller harmless from any costs,
losses, expenses, claims or liabilities, (including reimbursement of reasonable
attorney’s fees incurred by Seller) in connection with its holding of any such
Surface Contracts for the benefit of Buyer.

 

12.             
BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT

 

At the
Closing, Seller and Buyer shall jointly execute and deliver a Bill of Sale;
Assignment and Assumption Agreement in the form attached hereto as Exhibit
“II”, covering the Records and Commercial Contracts.  To the extent that
consents are required for the assignment of any of the Commercial Contracts,
Seller and Buyer shall reasonably cooperate to obtain such consents prior to
Closing and, if any of such consents are not obtained prior to Closing, then
Seller agrees to hold such Commercial Contract(s) as to which consents were not
obtained for the benefit of Buyer until such consents are obtained; provided,
however, Buyer shall protect, defend, indemnity, reimburse and hold Seller
harmless from any costs, losses, expenses, claims or liabilities, (including
reimbursement of reasonable attorney’s fees incurred by Seller) in connection
with its holding of any such Commercial Contracts for the benefit of Buyer.

 

13.             
COVENANTS 

 

Seller covenants and agrees
with Buyer that:

 

A.                                        
Access.  Between the date of execution of this Agreement and the
Closing Date, Seller will give Buyer and its representatives access to the
Assets and access to the Records in Seller’s possession for the purpose of
conducting an investigation of the Assets, but only to the extent that Seller
may do so without violating any obligations to  any third party and to the
extent that Seller has authority to grant such access without breaching any
restriction binding on Seller.  Such access by Buyer shall be limited to Seller’s
normal business hours and any weekends and after hours requested by Buyer that
can be reasonably accommodated by Seller, and the investigation by Buyer shall
be conducted in a manner that minimizes interference with the operation of the
Assets.  All information obtained by Buyer and its respective representatives
under this Section, except as otherwise agreed to by Seller, shall be
maintained confidential.

 

B.                                        
Notification of Breaches.  Until the Closing, Buyer and Seller
shall each promptly give to the other Party or Parties, as applicable, written
notice with particularity upon obtaining actual knowledge of any matter that
would constitute a breach by such Party or Parties, as
applicable, of any representation, warranty, agreement or covenant of such
Party or Parties, as applicable, contained in this Agreement.  If any of
Buyer’s or Seller’s representations or warranties are untrue or shall become
untrue in any material respect between the date of execution of this Agreement
and the Closing Date, or if any of Buyer’s or Seller’s covenants or agreements
to be performed or observed prior to or on the Closing Date shall not have been
so performed or observed in any material respect, but if such breach of
representation, warranty, covenant or agreement shall (if curable) be cured by
the Closing (or, if the Closing does not occur, by the Termination Date), then
such breach shall be considered not to have occurred for all purposes of this
Agreement.

	

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C.                                        
Maintenance of Assets.  From the date hereof to the Closing, except
as consented to by Buyer in writing, Seller shall:  (i) operate and maintain
the Assets consistent with its past standard operating practices; (ii) comply
in all material respects with all applicable laws and regulations applicable to
ownership and operation of the Assets;  (iii) not sell or dispose of any
portion of the Assets or encumber any of the same; and (iv) promptly advise
Buyer in writing of any material adverse change in the condition of the Assets.

 

D.                                        
Tax Matters.  Seller shall be responsible for all taxes related
to the Assets (including without duplication, Seller’s portion of any ad
valorem, property, and similar taxes based upon or measured by the ownership or
operation of the Assets) attributable to any period of time at or prior to the
Effective Time, and Buyer shall be responsible for all such taxes related to
the Assets attributable to any period of time after the Effective Time. 
Regardless of which Party is responsible, Seller shall handle payment to the
appropriate government body of all taxes with respect to the Assets that are
required to be paid prior to Closing (and shall file all tax returns with
respect to such taxes).  If requested by Buyer, Seller will assist Buyer with
preparation of all ad valorem and property tax returns attributable to the
period on or before December 31, 2012 (including any extensions requested). 
Seller shall deliver to Buyer within thirty (30) days of filing copies of all
tax returns filed by Seller after the Effective Time relating to the Assets and
any supporting documentation provided by Seller to taxing authorities,
excluding tax returns related to income tax, franchise tax or other similar
taxes.

 

E.                                         
No Restriction.  Seller shall use reasonable efforts to assure
that as of the Closing Date it will not be under any legal or contractual
restrictions that would prohibit or delay the timely consummation of the
transactions contemplated by this Agreement, but in doing so, Seller shall not
be required to file suit or otherwise expend any sums of money in excess of
$5,000 in the aggregate.

 

F.                                         
Satisfaction of Conditions.  Seller and Buyer shall use
commercially reasonable efforts to cause all conditions contained in this
Agreement over which each of them, respectively, has control to be satisfied
(but neither Buyer nor Seller shall never be required to file suit or otherwise
expend any sums of money in excess of $5,000 in the aggregate, nor pay any
amounts to third parties to obtain any necessary consents).

 

G.                                        
Solicitation Period.  Notwithstanding anything in this Agreement
to the contrary, prior to the earlier of (i) December 31, 2012, (ii) the
Closing or (iii) the termination of this Agreement, the Company may (acting
through a special committee if such committee exists): (i) furnish information
or data to any third party purchaser for a proposed sale of the Assets or other
assets in order to raise proceeds of at least $1.1 million (a “Competing  Proposal”), (ii) participate in discussions or
negotiations with such party regarding such Competing Proposal; and (iii)
subject to the approval of the Board of Directors, enter into, and enter into,
a definitive agreement containing a Competing Proposal (a "Superior
Agreement"), but only if (a) such Competing Proposal constitutes a
Superior Proposal (as defined below), (b) the Company shall have provided
written notice to Buyer (a “Notice of Superior Proposal”) advising Buyer
that the Company has received a Superior Proposal, specifying in writing the
true and complete final terms and conditions of such Superior Proposal and
identifying the Person making such Superior Proposal, (c) Buyer does not,
within five Business Days of Buyer’s receipt of the Notice of Superior Proposal
make an offer that the Board of Directors of the Company (acting through a
special committee if such committee exists) determines in good faith to be more
favorable to the Company's stockholders (in their capacities as stockholders)
than such Superior Proposal, and (d) simultaneously with Buyer failing to make
the offer described in clause (c) above in the time allotted or the Board of
Directors (acting through a special committee if such committee exists) making
the determination required by clause (c) above that any such offer of Buyer is
not more favorable to the Company's stockholders (in their capacities as
stockholders) than such Superior Proposal, as applicable, this Agreement is
terminated pursuant to Section 16D(v).  "Superior Proposal"
means any bona fide written Competing Proposal made by a third party, which the
Board of Directors of the Company (acting through a special committee if such
committee exists) determines in good faith (A) is or would result in a
transaction that if consummated would be more favorable to the stockholders of
the Company (in their capacity as stockholders) from a financial point of view
than the sale of Assets contemplated hereby, taking into account all of the
terms and conditions of such proposal and of this Agreement (including any
proposal by Buyer to amend the terms of this Agreement), specifically including
the satisfaction of a condition similar to Section 16B(iii), (B) is capable of
being, and is reasonably likely to be, consummated on or prior to January 15,
2013 on the terms so proposed taking into account all financial, regulatory,
legal and other aspects of such proposal and (C) is such that a failure by the
Board of Directors (acting through a special committee if such committee
exists) to accept and recommend such Competing Proposal would be inconsistent
with the directors’ fiduciary duties under applicable law.

	

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14.             
EXPENSES 

 

All fees,
costs and expenses incurred by Buyer and Seller in negotiating this Agreement
or in consummating the transactions contemplated by this Agreement shall be
paid by the Party incurring the same, including without limitation, legal and
accounting fees, costs and expenses.

 

15.             
NOTICES 

 

All notices
and communications required or permitted under this Agreement shall be in
writing and any communication or delivery hereunder shall be deemed to have
been duly made when personally delivered to the individual indicated below, or
if mailed, when received by the Party charged with such notice and addressed as
follows:

 

            If to Buyer:      GEC
Holding, LLC

                                    c/o
Gateway Energy Corporation

                                    Attn:
Frederick M. Pevow, Jr.

                                    Wedge
Tower

                                    1415
Louisiana Street, Suite 4100

	

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                                    Houston,
TX 77002 

                                    Fax:
(713) 336-0855

             

            If to Seller:       Gateway
Pipeline USA Corporation

                                    c/o
Gateway Energy Corporation

                                    Attn:
David Huff

                                    Wedge
Tower

                                    1415
Louisiana Street, Suite 4100

                                    Houston,
TX 77002 

                                    Fax:
(713) 336-0855

 

16.             
CONDITIONS PRECEDENT; CASUALTY LOSS

 

A.                                        
Conditions to Obligation of the
Buyer.  The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions: 

 

(i)         the representations and warranties of the
Seller contained in Section 6 shall be true and correct in all material
respects when made and as of the Closing Date (except that such representations
and warranties may be untrue and incorrect as a result of actions or
transactions expressly permitted by this Agreement or actions or transactions
of the Seller made with the prior written consent by Buyer); 

(ii)        Seller shall have performed in all
material respects all of its covenants hereunder through the Closing;

(iii)       Buyer shall have been provided financing
for the payment of the Consideration on terms and conditions no less favorable
to Buyer than as set forth in Term Sheet from Meridian Bank to Buyer dated
November 30, 2012;

(iv)       Seller shall have obtained from Tyson
Foods, Inc. all necessary consents or approvals to Seller’s assignment to Buyer
of those Commercial Contracts to which Tyson Foods, Inc. is a counterparty; and

(v)        there shall not be any injunction,
judgment, order, decree, ruling, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement.

Buyer may waive any condition specified in Sections
16.A(i), (ii), (iii), (iv) and (v) if it executes a waiver in writing so
stating at or before the Closing.

B.                     Conditions
to Obligations of the Seller.   The obligation of the Seller to consummate
the transactions to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions: 

 

(i)         the representations and warranties of the
Buyer contained in Section 6 shall be true and correct in all material respects
when made and as of the Closing Date (except that such representations and
warranties may be untrue and incorrect as a result of actions or transactions
expressly permitted by this Agreement or actions or transactions of the Buyer
made with the prior written consent by Seller); 

	

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(ii)        Buyer shall have performed in all material
respects all of its covenants hereunder through the Closing; 

(iii)       Gateway Energy Corporation shall have entered
into a Forbearance Agreement (or an amendment to its existing credit agreement)
with Meridian Bank under terms and conditions acceptable to the Board of
Directors of Gateway Energy Corporation; and

(iv)       there shall not be any injunction,
judgment, order, decree, ruling, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement.

Seller
may waive any condition specified in Section 16.B (i) and (ii) if it executes a
writing so stating at or before the Closing.

C.                     Casualty Loss.   Prior
to Closing, if any of the Assets are destroyed by fire or other casualty or are
taken or threatened to be taken in condemnation or under the right of eminent
domain (“Casualty Loss”), Buyer shall purchase the Assets at the Closing
for the Consideration reduced by the estimated cost to repair or replace, as
applicable, such property (with equipment of similar utility); provided,
however, in the event such estimated cost to repair or replace, as applicable,
exceeds five percent (5%) of the Consideration and/or any of the Facilities
will be reasonably unlikely to operate within ten (10) days after the
occurrence of such casualty at a rate equal to or greater than eighty percent
(80%) of its average volume for the three (3) month period immediately prior to
the occurrence of the Casualty, then in either or both such events, at Buyer’s
option, Buyer may elect not to purchase the Assets and to terminate this
Agreement.

D.                    Termination.  This
Agreement may be terminated at any time prior to Closing:

                        (i)         by the mutual
prior written consent of the parties; or

                        (ii)  by either Buyer or
Seller, if Closing has not occurred on or before January 15, 2013 (the “Termination
Date”); provided, however, that the right to terminate this Agreement under
this Section 16(D)(ii) shall not be available (i) to Seller, if any breach of
this Agreement by Seller has been the principal cause of, or resulted in, the
failure of the Closing to occur on or before the Termination Date or (ii) to
Buyer, if any breach of this Agreement by Buyer has been the principal cause
of, or resulted in, the failure of the Closing to occur on or before the
Termination Date; or

                        (iii)  by Buyer or Seller, if
any governmental authority having competent jurisdiction has issued a final,
nonappealable order, decree, ruling or injunction prohibiting consummation of
the transactions contemplated by this Agreement; or

                        (iv)   by Buyer pursuant to
the provisions of Section 16(C); or

                        (v)   by the Company, if the
Company accepts a Superior Proposal.

            If this Agreement is terminated pursuant
to Section 16(D), this Agreement shall be of no further force or effect (except
for the provisions of Sections 14, 16(D), and 17 of this Agreement, all of
which shall continue in full force and effect).  If Seller fails or refuses to close notwithstanding the satisfaction of the
conditions precedent set forth in Section 16(B) and Buyer waives in writing all
of those conditions to Closing set forth in Sections 16(A) that have not 
been satisfied, then Buyer, at its election, shall be entitled, as its sole
remedy, either (i) to a cash payment from Seller of $33,000 (as agreed
liquidated damages to Buyer for its costs incurred in connection with the
transaction contemplated hereby) or (ii) to seek specific performance and
recover its reasonable attorneys’ fees in connection therewith. In the event
this Agreement terminates under Section 16(D)(ii) because (i) any of the
conditions to Closing set forth in Section 16(B)(i) or Section 16(B)(ii) have
not been satisfied or (ii) the refusal or inability of Buyer to close
notwithstanding the satisfaction of the conditions precedent set forth in
Section 16(A), then Seller shall be entitled, as its sole remedy, to a cash
payment from Buyer of $33,000 (as agreed liquidated damages for its costs
incurred in connection with the transaction contemplated hereby).  In the event
this Agreement terminates under Section 16(D)(i), Section 16(D)(iii), Section
16(D)(iv) or Section 16(D)(v), then Buyer
shall be entitled, as its sole remedy, to a cash payment of $33,000 (as agreed
liquidated damages to Buyer for its costs incurred in connection with the
transaction contemplated hereby).

	

  10

  

 

 

 

17.       OTHER
TERMS AND CONDITIONS

 

A.                                        
Confidentiality.   Seller agrees that it will hold, and will use
its commercially reasonable efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning Buyer or the business attributable to the Subject Assets provided to
it pursuant to this Section, including the terms of this agreement.

 

B.                                        
Entire Agreement.  This Agreement, together with the exhibits attached
hereto,  constitutes the entire agreement of the Parties concerning the matters
referred to herein, and supersedes and terminates all prior negotiations,
understandings or agreements, written or oral, between the Parties with respect
to this transaction.  In the event of any conflict between the terms contained
in the body of this Agreement, and those contained in any exhibit, the terms
contained in the body of this Agreement shall control.

 

C.                     Counterparts.   This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and such counterparts together shall
constitute one instrument.

 

D.                    Further Assurances. 
Seller will, from time to time on or after the Closing Date, execute and
deliver to Buyer all such further assignments, endorsements and other documents
as Buyer reasonably requests in order to complete the transfer of Seller’s
right, title and interest in the Assets to Buyer.

 

E.                     Rights and Obligations. 
This Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective successors and assigns.  Nothing in this Agreement,
expressed or implied, is intended to confer upon any other person any rights or
remedies under or by reason of this Agreement.

 

F.                     Amendments and Waivers. 
The provisions of this Agreement may be amended only by the written agreement
of the Parties hereto.  Any waiver, permit, consent, or approval of any kind or
character on the part of any Party of any provisions or conditions of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in such writing.

	

  11

  

 

 

 

 

G.                    Severability. 
Each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.

 

H.                    Descriptive
Headings.  The descriptive headings of this Agreement are inserted for
convenience of reference only and do not constitute a part of this Agreement.

 

I.                      Survival.    Except as
to the covenants and indemnities of the Parties under Sections 10, 11, 12,
13(D), 14, 17 and 18 hereof (which shall survive indefinitely) and except as
may otherwise be expressly provided elsewhere in this Agreement, the provisions
of this Agreement shall terminate at the Closing Date.

 

J.                      Governing Law.  This Agreement shall be
governed by and interpreted in accordance with the laws of the State of Texas,
without reference to its conflict of law provisions.

 

K.                    Sales Taxes.   No sales, transfer or
similar taxes will be collected at Closing from Buyer.  Accordingly, Buyer
shall be responsible for the timely payment of such taxes, if any shall be due
by reason of Seller’s sale and/or conveyance of the Assets to Buyer.

 

18.       LIMITATION
ON SELLER’S LIABILITY

 

                        Notwithstanding
any other provisions of this Agreement or any of the documents executed at or
subsequent to Closing in connection with the transaction contemplated hereby
(the “Conveyance Documents”), it is controllingly understood and agreed
that Seller’s liability to Buyer, its successors and assigns, pursuant to its
representations, warranties, indemnities, covenants and other obligations under
this Agreement shall not  exceed, in the aggregate, twenty percent (20%)
of the amount of the Consideration, except with respect to Seller’s breach of
its representations and warranties under Sections 6(C), (G) (H) and (O) of this
Agreement.  Seller’s total liability to Buyer for breach of its representations
and warranties set forth in Sections 6(C), (G), (H) and (O) of this Agreement
(subject to the time limitation provided in Section 6) and the Conveyance
Documents, together with its total liability to Buyer pursuant to the
provisions of the immediately preceding sentence shall not  exceed, in
the aggregate, an amount equal to fifty percent (50%) of the Consideration. 
Furthermore, in no event shall Buyer have the right to make any claim against
Seller for any liability arising under or pursuant to this Agreement or the
Conveyance Documents, or otherwise in connection with the transaction covered
thereby, unless the loss relating to such claim exceeds one percent (1%) of the
amount of the Consideration.

 

 

 

 

[Signature page follows.]

	

  12

  

 

 

 

IN WITNESS WHEREOF, the Parties have executed this
Agreement as of the date first set above.

 

SELLER

 

GATEWAY PIPELINE USA
CORPORATION

 

 

By:  /s/ Perin G. deGeurin                                

Name:  Perin G. deGeurin

Authorized Representative

 

 

BUYER

 

GEC HOLDING, LLC

 

 

By:  /s/ Frederick M. Pevow,
Jr.                                   

        Frederick M. Pevow, Jr.

        President              

        

 

	

  13gateway_pevowbillofsaleandas.htm - Generated by SEC Publisher for SEC Filing

 

EXHIBIT
I

BILL OF SALE AND ASSIGNMENT OF RIGHT OF WAYS

 

THIS BILL OF SALE AND ASSIGNMENT OF RIGHT OF WAYS
(this "Agreement") is made effective as of December [__],
2012, by and between Gateway Pipeline USA Corporation, a Delaware corporation,
having an office at 1415 Louisiana, Suite 4100, Houston, Texas 77002 ("Grantor”),
and  GEC Holding, LLC, a Delaware limited liability corporation (the "Grantee"). 

 

RECITALS

 

WHEREAS, this Agreement is being executed and
delivered pursuant to the terms of that certain Asset Sales Agreement, dated as
of December 12, 2012 (the "Purchase Agreement"), between
Grantor and Grantee.  Capitalized terms used but not defined herein shall have
the meanings given to them in the Purchase Agreement; and

 

WHEREAS, Grantor desires to assign, transfer and
convey to Grantee all of the right, title and interest of Grantor in and to the
Facilities and Surface Contracts (each as defined below).

 

NOW, THEREFORE, for and in consideration of the sum of
Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Grantor and Grantee
agree as follows:

 

1.         Grant.  That Grantor, for and in
consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Grantor, has
GRANTED, BARGAINED, SOLD AND CONVEYED and by these presents does GRANT,
BARGAIN, SELL and CONVEY unto Grantee, and its successors and assigns, all of
Grantor's right, title and interest in and to the following:

 

(a)        the natural gas transmission pipeline
facilities located in Guadalupe and Shelby Counties, Texas, Miller County,
Arkansas and Pettis County, Missouri described more fully on Attachment A
attached hereto and made a part hereof (collectively, the "Facilities");
and

 

(b)        the easements, permits, licenses,
servitudes and rights-of-way on which the Facilities are located, as described
on  Attachment B attached hereto and made a part hereof ("Surface
Contracts"), but excluding any such easements, permits, licenses,
servitudes or rights-of-way to the extent transfer is restricted by third party
agreement or applicable law and necessary consents to transfer are not
obtained;

 

TO
HAVE AND TO HOLD the Facilities and Surface Contracts unto said Grantee, its
successors and assigns, forever, and Grantor, does by these presents bind
itself and its successors and assigns to WARRANT AND FOREVER DEFEND, all and
singular, the Facilities and Surface Contracts unto Grantee, its successors and
assigns, against every person whomsoever lawfully claiming or to claim the same
or any part thereof by, through or under Grantor, but not otherwise.  Grantee
hereby assumes and agrees to pay, perform or discharge, in accordance with
their terms, all of the prospective obligations and covenants of Grantor that
arise under the Surface Contracts from and after the Effective Time.  Grantor
hereby assigns to Grantee all rights, claims, and causes of action on title
warranties given or made by Grantor's predecessors (other than affiliates of
Grantor), and Grantee is specifically subrogated to all rights which Grantor
may have against its predecessors (other than affiliates of Grantor), to the
extent that Grantor may legally transfer such rights and grant such
subrogation.

 

	

  1

  

 

 

 

2.         Further
Assurances.     From and after the date hereof, Grantor and Grantee shall,
without further consideration, execute, deliver and (if applicable) file or
record, or cause to be executed, delivered and filed or recorded, all
instruments, and take such actions, as may be reasonably required of Grantor or
Grantee to accomplish the conveyance and transfer of the Facilities and Surface
Contracts and otherwise consummate the transactions contemplated by this
Agreement and the Purchase Agreement.

 

3.         Subordination.  The parties hereto
hereby acknowledge and agree that their execution of this Agreement shall not
modify the rights and obligations of the parties to the Purchase Agreement. 
This Agreement is subject and subordinate to all of the terms and provisions of
the Purchase Agreement.  

 

4.         Disclaimers.  Other than as
expressly set forth in the Purchase Agreement, Grantee accepts the Facilities
"AS IS" and "WHERE IS" and acknowledges that GRANTOR HAS
MADE NO REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO THE
PHYSICAL CONDITION OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
REPRESENTATIONS OR WARRANTIES REGARDING MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OR USE.  GRANTEE EXPRESSLY WAIVES THE PROVISIONS OF CHAPTER
XVIII, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63 INCLUSIVE (OTHER THAN SECTION
17.555 WHICH, IF APPLICABLE, IS NOT WAIVED) OF VERNON’S TEXAS CODES ANNOTATED,
BUSINESS AND COMMERCE CODE.  ANY AND ALL INFORMATION AND OTHER MATERIALS
FURNISHED BY GRANTOR ARE PROVIDED TO GRANTEE AS A CONVENIENCE AND ANY RELIANCE
ON OR USE OF THE SAME SHALL BE AT GRANTEE’S SOLE RISK.

 

5.         Effective Time.  This Agreement is
effective for all purposes as of 11:59 pm Central Time on the date first above
written.

 

6.         Successors and Assigns. All of the provisions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.  

 

7.         Headings.  The headings in this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

 

8.         Miscellaneous.  This Agreement shall
be governed and construed in accordance with the substantive laws of the State
of Texas without reference to principles of conflicts of law.  This Agreement
may be executed in any number of original counterparts, all of which constitute
one and the same instrument.  This Agreement together with the Purchase
Agreement contains the entire understanding and agreement of Grantor and
Grantee with respect to the subject matter hereof.

 

 

[Signature page follows.]

	

  2

  

 

 

 

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

GEC HOLDING, LLC 

 

 

By:                                                                    

Name:                                                               

Title:                                                                             

 

GATEWAY PIPELINE USA CORPORATION

             

                                                             

By:                                                                    

Name:                                                               

Title:                                                                             

 

STATE OF TEXAS                  §

                                                §

COUNTY OF HARRIS            §

 

 

This instrument was acknowledged before me on the ______ day of __________2012, by Fredrick Pevow, as the President of GEC Holding, LLC, on behalf of said entity.

 

 

                                                                                                ___________________________

Notary Public's Signature

My commission expires: ________

 

STATE OF TEXAS                  §

                                                §

COUNTY OF HARRIS            §

 

 

This instrument was acknowledged before me on the ______ day of __________2012, by [__________], as the [__________] of Gateway Pipeline USA Corporation, a Delaware corporation, on behalf of said Corporation.

 

 

                                                                                                ___________________________

Notary Public's Signature

My commission expires: ________

 

 

	

   3

 

 

 

ATTACHMENT A

TO BILL OF SALE AND ASSIGNMENT OF RIGHT OF WAYS

 

DESCRIPTION OF FACILITIES

 

 

 

	

Lateral Name
	

County, State
	

Lateral Dimensions
	

Interest Owned

	

   Seguin System
	

   Guadalupe, Texas
	

   1.2 miles 2.375" OD x 0.154" WT, steel
	

   100%

	

   Center System
	

   Shelby, Texas
	

   2.4 miles 3.5" OD x 0.156" WT, steel
	

   100%

	

   Sedalia System
	

   Pettis, Missouri
	

   1.0 miles 3.5" OD x 0.156" WT, steel
	

   100%

	

   Texarkana System
	

   Miller, Arkansas
	

   5.0 miles 3.5" OD x 0.188" WT, steel
	

   100%

 

ASSTS LISTED BELOW

 

Seguin System:

4   Fisher Regulators

1   Bypass Odorizer

2   2” turbine meters with Electronic Measurement

2   3” Pressure Relief Valves

 

Center System:

4 Fisher Regulators

1   2’ turbine meters with Electronic Measurement

1   3” turbine meter with analog display

1   Bypass Odorizer

1   3” Pressure relief Valve

 

Sedalia System:

1   6” turbine meter with analog display

2  Fisher Regulators

1   non working 6” turbine meter with analog display

 

Texarkana System:

1     Natural Gas line heater

6    Fisher Regulators

1   2” Senior Meter Tube with Electronic Flow Measurement

2   3” Pressure Relief Valves

 

 

 

 

 

 

 

 

 

 

 

 

 

	

   4

 

 

 

ATTACHMENT B

TO BILL OF SALE AND ASSIGNMENT OF RIGHT OF WAYS

EASEMENTS AND PERMITS

 

Seguin System - Guadalupe County, Texas 

 

	

   Grantor
	

   Instrument
	

   Date
	

   Volume/Page

	

   City of Seguin
	

   Gas Franchise
	

   4/7/1998
	

   NA

	

   Texas Dept of Transportation
	

   Line within hwy row
	

   10/10/1997
	

   NA

 

 

Center System - Shelby County, Texas 

                                     

	

   Grantor
	

   Instrument
	

   Date
	

   Volume/Page

	

   Texas Dept of Transportation
	

   Line within hwy row
	

   6/15/1998
	

   NA

	

   James Kenneth Carroll
	

   Right of way Grant
	

   6/23/1998
	

   Book 852, Page 319

	

   Margaret Anne Carroll
	

   Right of way Grant
	

   6/23/1998
	

   Book 852, Page 321

	

   Louise Hicks Carroll
	

   Right of way Grant
	

   6/23/1998
	

   Book 852, Page 323

	

   Mary Constance Carroll Landry
	

   Right of way Grant
	

   6/24/1998
	

   Book 852, Page 325

	

   Robert David Carroll
	

   Right of way Grant
	

   6/25/1998
	

   Book 852, Page 327

	

   Joycelyn Carrol Vineyard
	

   Right of way Grant
	

   6/25/1998
	

   Book 852, Page 329

	

   Doris Carrol Miller
	

   Right of way Grant
	

   6/23/1998
	

   Book 852, Page 331

	

   Marcell Carrol Bartle
	

   Right of way Grant
	

   6/23/1998
	

   Book 852, Page 333

	

   T. G. Carrol
	

   Right of way Grant
	

   6/24/1998
	

   Book 852, Page 335

	

   Thomas Finley Carrol 
	

   Right of way Grant
	

   6/19/1998
	

   Book 852, Page 337

	

   Wayne & Carroll Mays
	

   Right of way Grant
	

   5/15/1998
	

   Book 852, Page 339

	

   Homa Askew
	

   Right of way Grant
	

   6/03/1998
	

   Book 852, Page 344

	

   Mike Middleton
	

   Right of way Grant
	

   6/06/1998
	

   Book 852, Page 343

	

   Pilgrims Pride Corporation
	

   Right of way Grant
	

   5/12/1998
	

   Book 852, Page 342

	

   First Baptist Church
	

   Right of way Grant
	

   5/20/1998
	

   Book 852, Page 341

	

   Martha Lou Carroll
	

   Right of way Grant
	

   7/23/1998
	

   Book 852, Page 317

	

   Shelby County
	

   Road Crossing
	

    
	

   NA

 

 

Sedalia System - Pettis County, Missouri 

 

	

   Grantor
	

   Instrument
	

   Date
	

   Volume/Page

	

   Union Pacific Railroad Company
	

   Railroad crossing
	

   2/28/1998
	

   NA

	

   Pettis County Utility Permit
	

   County road crossing
	

   3/02/1998
	

   NA

	

   Tyson Foods, Inc. 
	

   Right of way Grant
	

   3/28/2001
	

   Book 221, Page 524

 

Texarkana System - Miller County, Arkansas

 

	

   Grantor
	

   Instrument
	

   Date
	

   Volume/Page

	

   International Paper Company
	

   Right of Way Grant
	

   6/10/1997
	

   Book 58, Page 247

	

   Tyson Foods, Inc.
	

   Right of Way Grant
	

   2/19/1997
	

   NA

	

   Tyson Foods, Inc.
	

   Right of Way Grant
	

   3/28/2001
	

   Book 70, Page 80

 

	

   5

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