File No.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
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National Fuel Gas Company Leidy Hub, Inc.
30 Rockefeller Plaza 10 Lafayette Square
New York, NY 10112 Buffalo, NY 14203
(Name of company filing this statement
and address of principal executive offices)
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NATIONAL FUEL GAS COMPANY
(Name of top registered holding company)
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Walter E. DeForest, President Anna Marie Cellino, Secretary
Leidy Hub, Inc. National Fuel Gas Company
10 Lafayette Square 10 Lafayette Square
Buffalo, NY 14203 Buffalo, NY 14203
(Names and addresses of agents for service)
It is respectfully requested that the Commission send copies of all
notices, orders and communications to:
James R. Peterson, Esq.
Suite 1500
10 Lafayette Square
Buffalo, NY 14203
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OUTLINE
Item 1. Description of Proposed Transactions.
A. SUMMARY OF JURISDICTIONAL TRANSACTIONS
B. SUMMARY OF NON-JURISDICTIONAL TRANSACTIONS
C. RELATED UNITED STATES TRANSACTIONS
D. FORMATION AND OPERATION OF CANDOCO
E. FORMATION AND OPERATION OF OTHER ENTITIES
(1) Enerchange Canada
(2) QuickTrade Canada
(3) Operating the Electronic Trading System
(4) Other and Incidental Activities
F. PURCHASE AGREEMENT FOR CANDOCO
G. PARENT GUARANTEES
H. ANALYSIS
(1) Satisfaction of Requirements of Section 10(b) and 10(c)
(2) Applicability of the Gas Related Activities Act
I. RULE 16 EXEMPTIONS
(1) Candoco's Rule 16 Exemption
(2) Enerchange Canada's Rule 16 Exemption
(3) QuickTrade Canada's Rule 16 Exemption
J. FINANCING
Item 2. Fees, Commissions and Expenses.
Item 3. Applicable Statutory Provisions.
Item 4. Regulatory Approval.
Item 5. Procedure.
Item 6. Exhibits and Financial Statements.
Item 7. Information as to Environmental Effects.
SIGNATURES
National Fuel Gas Company ("National"), is a public utility
holding company registered under the Public Utility Holding Company
Act of 1935, as amended ("Act"). National's wholly-owned
subsidiary, Leidy Hub, Inc. ("LHI") has joined this
application/declaration to the Securities and Exchange Commission
(the "Commission").
Item 1. Description of Proposed Transactions.
A. SUMMARY OF JURISDICTIONAL TRANSACTIONS
National and LHI are proposing and asking for Commission
approval of the following transactions (the "Proposed
Transactions"), described below in more detail:
(i) LHI would enter into a Purchase Agreement ("Purchase
Agreement", copy attached as Exhibit A-7) with NICOR Hub Services,
Inc. ("NICOR", an Illinois corporation wholly-owned by NICOR, Inc.).
After approval of this application/declaration, LHI would thereby
acquire a 29.59184% Member Interest in CanDuCo Company, a Nova
Scotia unlimited liability company ("CanDuCo"). This Proposed
Transaction would have been authorized by Rule 58, except that Rule
58 limits "gas-related companies" to United States activities.
Although this is a Canadian transaction, all dollar amounts in this
application/declaration refer to United States dollars.
For the convenience of the Commission, a chart illustrating the
proposed transaction above, for which LHI is seeking Commission
approval, as well as related transactions described in B(i) and
(ii), has been included as Exhibit E-1.
(ii) From time to time, LHI or National may guarantee a
portion of the trade obligations of QuickTrade Canada Limited
Partnership, an Alberta Limited Partnership ("QuickTrade Canada"),
Enerchange Canada Inc., an Alberta Corporation ("Enerchange Canada")
and/or CanDuCo.
The Proposed Transactions would result from LHI's entering into
the Purchase Agreement. This application/declaration is filed (i)
to seek authority for LHI to enter into and perform the Purchase
Agreement, and (ii) to seek authority for LHI or National to
guarantee a portion of the trade obligations of QuickTrade Canada,
CanDuCo, and/or Enerchange Canada, from time to time, to the extent
management elects to do so.
B. SUMMARY OF NON-JURISDICTIONAL TRANSACTIONS
In addition to the Proposed Transactions, other related
transactions will occur, or have occurred. These transactions do
not require Commission approval, but are described to provide the
context within which the Proposed Transactions would occur.
For the convenience of the Commission, the related transactions
described in (i) and (ii), as well as the proposed transaction
described in A(i), are reflected on a chart provided as Exhibit E-1.
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(i) QuickTrade Canada has acquired assets, including an
electronic natural gas trading system, from Energy Exchange, Inc.,
an unaffiliated Alberta corporation ("EEI Canada").
(ii) CanDuCo will acquire a Limited Partner Interest of
48.51% of QuickTrade Canada.
(iii) LHI and/or National may make additional capital
contributions to CanDuCo, pursuant to Rule 45, and/or make loans to
CanDuCo, pursuant to Rule 52. NICOR and Pacific Enerchange ("PE", a
California corporation wholly-owned by Pacific Enterprises) will own
the remaining ownership interests in CanDuCo.
Enerchange Canada is an Alberta corporation with an office in
Calgary, Alberta, and is a wholly-owned subsidiary of Enerchange,
L.L.C., a Delaware limited liability company ("Enerchange US"). The
Commission approved LHI's acquisition of a 14.5% Member Interest in
Enerchange US in a previous proceeding (File No. 70-8655, HCAR No.
35-26365, August 31, 1995, the "Enerchange US Proceeding"). Hub
Services, Inc. (a wholly-owned subsidiary of NGC Corporation), NICOR
and PE own the remaining ownership interests in Enerchange US.
QuickTrade Canada is an Alberta limited partnership with an
office in Calgary, Alberta. The limited partner of QuickTrade
Canada is NGC Canada Inc. (a wholly-owned subsidiary of NGC
Corporation) and Enerchange Canada is the general partner in
QuickTrade Canada. As stated in B(ii) above, CanDuCo will acquire a
48.51% limited partner interest in QuickTrade Canada.
C. RELATED UNITED STATES TRANSACTIONS
In the Enerchange US Proceeding, the Commission authorized LHI
to acquire a 14.5% membership interest in the Enerchange US
Proceeding. The Enerchange US Proceeding described the planned
acquisition, pursuant to Rule 16, by Enerchange US of a 50%
membership interest in QuickTrade L.L.C., a Delaware limited
liability company ("QuickTrade US"). The electronic gas trading
systems of QuickTrade US and QuickTrade Canada are operated together
using essentially the same computer hardware and software.
Enerchange US has since acquired, also pursuant to Rule 16, the
remaining 50% of the beneficial ownership of QuickTrade US. The
ultimate beneficial owners (including National) of Enerchange US and
QuickTrade US will have the same proportions of beneficial ownership
in Enerchange Canada and QuickTrade Canada. National's beneficial
interest in all the operating entities (Enerchange US, Enerchange
Canada, QuickTrade US and QuickTrade Canada) will be 14.5% of the
outstanding ownership interests.
D. FORMATION AND OPERATION OF CANDUCO
CanDuCo will be formed on or about July 15, 1997. CanDuCo will
be formed for the principal purpose of holding a limited partner
interest in QuickTrade Canada, and any other legally permissible
purpose.
The other Members of CanDuCo will be NICOR and PE, who are two
of the Members owning Enerchange US (as described in the Enerchange
US Proceeding.)
Although CanDuCo has not yet been formed, it is planned to be a
Nova Scotia unlimited liability company named CanDuCo Company. LHI
would be a member of CanDuCo with an ownership interest of
29.59184%. CanDuCo would in turn own 48.51% of QuickTrade Canada.
After CanDuCo is formed, LHI may make additional capital
contributions and/or loans to CanDuCo to enable CanDuCo to make
capital contributions or loans to QuickTrade Canada.
The operation of CanDuCo will be governed by Articles of
Association. The terms of the articles will be substantially the
same as those contained in the Enerchange US L.L.C. Agreement,
approved by the Commission in the Enerchange US Proceeding. The
CanDuCo Articles, will contain provisions similar to those in the
Enerchange US L.L.C. Agreement concerning liability of Members, tax
status, the governing body, powers of the Executive Committee,
capital contributions, the establishing of capital accounts,
distributions, the consequences of dissolution, the consequences of
the withdrawal of a Member, the opportunity to purchase additional
interests, as well as record keeping and record filing requirements.
CanDuCo's Articles of Association will be filed as an exhibit to
this application by amendment.
E. FORMATION AND OPERATION OF OTHER ENTITIES
(1) Enerchange Canada
Enerchange Canada was formed on October 22, 1996, and became a
wholly-owned subsidiary of Enerchange US on February 27, 1997,
pursuant to Rule 16. LHI has a 14.5% ownership interest in
Enerchange US.
(2) QuickTrade Canada
QuickTrade Canada was formed on February 27, 1997, for the
purpose of providing an electronic trading and nomination system
that can be accessed via computers for transactions at locations in
Canada, as is provided in the United States by QuickTrade US.
CanDuCo will acquire 48.51% of QuickTrade Canada, pursuant to
Rule 16. The remaining interests in QuickTrade Canada will be owned
by NGC Canada and Enerchange Canada.
CanDuCo, Enerchange Canada and QuickTrade Canada do not plan to
have any facilities, or provide any services, which are regulated by
the Federal Energy Regulatory Commission ("FERC") or by any state
commission.
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(3) Operating the Electronic Trading System.
QuickTrade Canada recently acquired the assets of EEI Canada,
consisting of an electronic trading and nomination system accessed
via computer by buyers and sellers of natural gas to make and accept
binding offers to buy or sell gas at specific locations in Canada.
Subscribers to QuickTrade Canada's system can see, on-line in real
time, the price at which gas is being sold at any location listed on
the system (without being able to see the names of the parties
involved). Subscribers can also nominate directly to pipelines to
transport the gas being sold via the system.
Entities in the gas business subscribe to QuickTrade Canada's
on-line computer service, install in their computer(s) software
provided by QuickTrade Canada, and receive training in the use of
the system. Subscribers pay to QuickTrade Canada flat monthly
subscription fees, and pay additional fees based on their actual
usage of the system.
The operations of QuickTrade Canada will be essentially the
same as the operations of QuickTrade US described in the Enerchange
US Proceeding, except that the transactions will be at locations in
Canada.
Profits and losses of QuickTrade Canada would be allocated in
part to CanDuCo, which would in turn allocate those profits or
losses to the Members of CanDuCo, including LHI. This allocation
would be according to each Member's percentage of ownership, or
their "allocable share".
(4) Other and Incidental Activities.
The CanDuCo Articles will reserve CanDuCo's rights to engage in
other activities not prohibited by law, and to engage in activities
which are incidental to the specified purposes of CanDuCo.
F. PURCHASE AGREEMENT FOR CANDUCO
If the Commission grants this application/declaration without
the imposition of any conditions which make it impracticable to
consummate the Proposed Transactions and enter into the Purchase
Agreement, LHI will purchase an interest in CanDuCo at a closing
(the "Closing"). At the Closing, NICOR will convey to LHI an
"Allocable Share" amounting to 29.59184% of the total Allocable
Shares of all the Members of CanDuCo.
The Purchase Price has been agreed upon by both parties and is
reflected in the attached financial exhibits and the Purchase
Agreement. The applicant/declarants request confidential treatment,
pursuant to Rule 104(b), for all financial exhibits and for the
Purchase Agreement, a copy of which is filed herewith as Exhibit
A-7. The Purchase Price is subject to adjustment depending on events
occurring before the Closing.
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G. PARENT GUARANTEES
National and LHI seek authorization from the Commission to
allow National to act as guarantor of certain obligations of LHI,
CanDuCo, Enerchange Canada and QuickTrade Canada, and to allow LHI
to act as guarantor of certain obligations of CanDuCo, Enerchange
Canada and QuickTrade Canada. National and its other subsidiaries
have previously been granted similar authority pursuant to the
provisions of the application/declarations and the Orders of the
Commission dated November 12, 1993, HCAR No. 25922, and dated July
29, 1994, HCAR No. 35-26093 (collectively, the "Parent Guarantee
Orders"). This application/declaration seeks to add these
additional entities to the list of affiliates whose obligations can
be guaranteed, without increasing the total dollar amount of
guaranty authority.
The obligations of LHI, CanDuCo, Enerchange Canada and
QuickTrade Canada which might need to be guaranteed would be
incurred as a result of the activities undertaken by QuickTrade
Canada related to the supply of natural gas as delineated in the Gas
Related Activities Act (see Item 1(H)(2) below). It is anticipated
that whenever CanDuCo provides a guarantee, the guarantee would be
provided 29.59184% by National and/or LHI, and 70.40816% by the
other Members of CanDuCo (NICOR and PE) and/or their corporate
parents. It is also anticipated that whenever QuickTrade Canada is
required to provide a guarantee, the guarantee would be provided
48.51% by CanDuCo and 51.49% by the other owners of QuickTrade
Canada (NGC Canada and Enerchange Canada) and/or their corporate
parents.
As a result, National and/or LHI might provide a guarantee
based on 29.59184% of CanDuCo's 48.51% interest in QuickTrade
Canada, and guarantees based on the other 70.40816% of CanDuCo's
interest in QuickTrade Canada would be provided by the other Members
of CanDuCo and/or their corporate parents. In addition, Enerchange
US would provide any guarantee arising out of Enerchange Canada's
General Partner Interest in QuickTrade Canada, and National and/or
LHI would ultimately provide a guarantee of no more than 14.5% of
Enerchange US's obligation.
In other words, National and/or LHI would not guarantee any
more than 14.5% of any obligation of QuickTrade Canada, which is the
new real operating entity. Such guarantees would include guarantees
of obligations associated with agreements relating to the
transportation, storage, or supply (including marketing) of natural
gas.
QuickTrade Canada may find it necessary to issue some kind of
assurance to its customers that QuickTrade Canada will be able to
perform its commitments. For example, to induce customers to enter
into transactions with other subscribers on an anonymous basis:
QuickTrade Canada may have to commit to a buyer that the gas
he buys will arrive where and when it is supposed to;
if the seller doesn't perform, QuickTrade Canada would make
the gas appear as committed; and
<PAGE>
QuickTrade Canada would recover its cost of performance from
the seller, either from security previously posted by the
seller or otherwise.
Buyers may require some evidence that QuickTrade Canada is able
to perform in such situations. LHI's indirect interest in
QuickTrade Canada would amount to no more than 14.5% of QuickTrade
Canada. LHI and/or National would therefore not guarantee any more
than 14.5% of any QuickTrade Canada obligation.
CanDuCo, Enerchange Canada and QuickTrade Canada will not start
out having sufficient unencumbered assets to obtain letters of
credit. In any event, the fees associated with letters of credit
could be saved if a parent guarantee was provided in lieu of such
letters of credit. In the alternative, LHI, CanDuCo, Enerchange
Canada and QuickTrade Canada might be able to secure letters of
credit or otherwise meet the pipeline creditworthiness requirements
if the letters of credit were backed by National's guarantee of the
obligations of LHI, CanDuCo, Enerchange Canada and/or QuickTrade
Canada, and by the other Members' parents' guarantees of the
obligations of CanDuCo, Enerchange Canada and QuickTrade Canada.
Such guarantees have become necessary to do business. The
maximum total amount of such guarantees to be outstanding at any one
time by National for the benefit of LHI, CanDuCo, Enerchange Canada
and QuickTrade Canada or by LHI for the benefit of CanDuCo,
Enerchange Canada and QuickTrade Canada, will not exceed $5 million.
National and LHI are not asking the Commission to expand the $5
million guarantee limit applicable to LHI approved in the Enerchange
US Proceeding, but seek only to add CanDuCo, Enerchange Canada and
QuickTrade Canada to the list of entities whose obligations can be
guaranteed within that $5 million limit. National and LHI seek
authority to provide the additional guarantees described above
through December 31, 2000.
Neither National nor LHI would pay any fees, expenses or
penalties associated with any of their guarantees. They could,
however, as guarantor assume rights and obligations of CanDuCo,
Enerchange Canada, QuickTrade Canada and/or LHI upon a payment
default. LHI, CanDuCo, Enerchange Canada and QuickTrade Canada
would be responsible to repay National or LHI for any payments
National or LHI, as guarantor, must make on their behalf, and any
expenses incurred or paid by National or LHI as guarantor.
H. ANALYSIS
As discussed in this filing, it is proposed that LHI will enter
into the Purchase Agreement with NICOR whereby LHI will acquire, own
and control 29.59184% of CanDuCo, (with the opportunity and/or
obligation to acquire additional interests in CanDuCo from time to
time). Section 9(a)(1) of the Act requires that this acquisition of
a security or an interest in a business be preceded by the
Commission's approval under Section 10(a)(3) of the Act.
<PAGE>
LHI and National may make additional capital contributions to
CanDuCo, pursuant to Rule 45 (b)(4), and/or make loans to CanDuCo,
pursuant to Rule 52(d).
It is also proposed that LHI and National may act to guarantee
a portion of the trade obligations of QuickTrade Canada and/or
CanDuCo.
(1) Satisfaction of Requirements of Section 10(b) and 10(c)
Section 10(b)(1) - The activities of LHI, CanDuCo, Enerchange
Canada and QuickTrade Canada do not involve the acquisition of
"utility assets" as defined by Section 2(a)(18) of the Act.
CanDuCo, Enerchange Canada and QuickTrade Canada will not be "gas
utility compan[ies]" as defined in Section 2(a)(4) of the Act, in
that CanDuCo, Enerchange Canada and QuickTrade Canada will not "own
or operate facilities used for the distribution at retail of natural
or manufactured gas for heat, light or power." Accordingly, LHI's
acquisition of an interest in CanDuCo cannot possibly tend "towards
interlocking relations or the concentration of control of
public-utility companies," the concern of Section 10(b)(1) of the
Act.
Section 10(b)(2) - As discussed above, the proposed activities
of LHI and CanDuCo do not involve the acquisition of utility assets
or an interest in a gas utility company. The Acquired Interest (a
29.59184% ownership interest in CanDuCo) might be thought to be a
"security", in which case Section 10(b)(2) would be applicable. The
Applicants submit that the total consideration (which includes no
fees, commissions or other remuneration not disclosed in this
application/declaration) paid directly by LHI to NICOR and to
CanDuCo (no consideration being paid indirectly) in connection with
this acquisition is reasonable. The Applicants further submit that
the acquisitions will not unduly complicate the capital structure of
National (the holding company) or be detrimental to the public
interest or the interest of investors or consumers or the proper
functioning of National's holding company system. See Item 1(H)(2)
below for additional discussion of the benefits to consumers of the
Proposed Transaction.
Section 10(b)(3) - The proposed investment by LHI in CanDuCo
will have a de minimis effect on the capital structure of the
National Fuel System. Further, as discussed at Item 1(H)(2) below,
these Proposed Transactions will not be detrimental to the public
interest or the interest of investors or consumers or the proper
functioning of such holding company system.
Section 10(c)(1) - Since this filing does not involve the
acquisition of utility assets or securities of a gas or electric
company, Section 8 of the Act is not applicable. Also, as discussed
at Item 1(H)(2) below, LHI's investment in CanDuCo is not
detrimental to the provisions of Section 11 of the Act.
Section 10(c)(2) - Again, as this filing does not involve the
acquisition of utility assets or securities of a public utility or
holding company, this section is not applicable.
<PAGE>
An exemption from competitive bidding is available because no
underwriting or public sale of securities is involved, and
competitive bidding is not necessary or appropriate in the public
interest or for the protection of investors or consumers.
(2) Applicability of the Gas Related Activities Act
National and its subsidiaries (the "National Fuel System" or
the "System") are engaged principally in the exploration,
production, purchasing, gathering, transmission, storage, marketing
and distribution of natural gas. As a result of state and federal
legislation and regulatory developments, the roles and functions of
gas pipeline and distribution companies have in recent years changed
drastically. The passage by Congress of the Gas Related Activities
Act in 1990, Pub. L. No. 101-572 (1990) (hereinafter referred to as
the "GRAA") acknowledged the changing structure of the natural gas
industry. Under the Section 11(b) of the Act, all proposed
investments by Public Utility Holding Companies and their
subsidiaries are scrutinized by the Commission to insure that the
investments are necessary or appropriate to the operation of an
integrated public utility system.
Section 2(a) of the GRAA provides in effect that the investment
by LHI in CanDuCo, and the activities of CanDuCo and QuickTrade
Canada involving the transportation and storage of natural gas are
deemed, for purposes of Section 11(b)(1) of the Act, to be
reasonably incidental or economically necessary or appropriate to
the operation of the National Fuel System. The transportation- and
storage-related services which QuickTrade Canada (and, indirectly,
Enerchange Canada and CanDuCo) will provide will comprise the
predominance of its business. Under Section 2(a) of the GRAA, the
proposed investment by LHI in CanDuCo, and the transportation- and
storage-related activities of CanDuCo, therefore automatically
satisfy Section 11 of the Act.
Section 2(b) of the GRAA provides in effect that the
acquisition by LHI of an interest in CanDuCo, and the activities of
CanDuCo related to the supply of natural gas, including marketing or
other similar activities, are deemed, for purposes of Section
11(b)(1) of the Act, to be reasonably incidental or economically
necessary or appropriate to the operation of the National Fuel
System if the Commission determines that such acquisition:
is in the interest of consumers of National's
subsidiaries, including National Fuel Gas Distribution
Corporation ("Distribution"); and
will not be detrimental to the interests of
consumers of National's subsidiaries (including
Distribution) or to the proper functioning of the National
Fuel System.
The activities of CanDuCo, Enerchange Canada and QuickTrade
Canada are expected to benefit utility customers, including
Distribution's customers, by making the market for natural gas more
efficient, more transparent and therefore more competitive.
Improved efficiency in the market should result in Distribution
paying less for Canadian natural gas, and also for US natural gas
which competes with Canadian natural gas. In turn, Distribution can
offer such gas at lower prices to its consumers.
I. RULE 16 EXEMPTIONS
In order for a Rule 16 exemption to be applicable, the entity
seeking the exemption and its affiliates must satisfy four
conditions. These conditions state:
(i) the entity must not be a "public utility
company" as defined in Section 2(a)(5) of
the Act;
(ii) the entity will be engaged primarily in
arranging for storage, transportation and
supply of natural gas;
(iii) no more than 50% of the entity's voting
interest can be "owned, directly or
indirectly, by one or more registered
holding companies"; and
(iv) the Commission will have approved the
acquisition of the interest pursuant to
the application/declaration.
(1) CanDuCo's Rule 16 Exemption
Because LHI, a wholly-owned subsidiary of National, will
control 29.59184% of the voting interests of CanDuCo, CanDuCo will
be a "subsidiary" of LHI under Section 2(a)(8) of the Act, and as a
subsidiary will be a part of National's "holding company system"
under Section 2(a)(9), and therefore an "associate company" of
National under Section 2(a)(10) of the Act. However, CanDuCo and
its affiliates, as defined in Section 2(a)(11) of the Act, in
particular NICOR and PE, will be exempt from all obligations, duties
and liabilities otherwise imposed upon it by the Act, as a result of
Rule 16 promulgated under the Act (17 CFR Section 250.16).
CanDuCo satisfies all four conditions set forth for the
applicability of a Rule 16 exemption.
(2) Enerchange Canada's Rule 16 Exemption
Because LHI, a wholly-owned subsidiary of National, will
control 14.5% of the voting interests of Enerchange US, and
Enerchange Canada will be a wholly-owned subsidiary of Enerchange
US, Enerchange Canada will be a "subsidiary" of LHI under Section
2(a)(8) of the Act, and as a subsidiary will be a part of National's
"holding company system" under Section 2(a)(9), and therefore an
"associate company" of National under Section 2(a)(10) of the Act.
However, Enerchange Canada and its affiliates, as defined in Section
2(a)(11) of the Act, in particular NICOR, Hub Services, Inc., PE and
Enerchange US, will be exempt from all obligations, duties and
liabilities otherwise imposed upon it by the Act, as a result of
Rule 16 promulgated under the Act (17 CFR Section 250.16).
Enerchange Canada satisfies all four conditions set forth for
the applicability of a Rule 16 exemption.
(3) QuickTrade Canada's Rule 16 Exemption
Because LHI, a wholly-owned subsidiary of National, will
control 29.59184% of the voting interests of CanDuCo, and CanDuCo
controls 48.51% of the voting interests of QuickTrade Canada,
QuickTrade Canada will be a subsidiary of CanDuCo, and thus a
"subsidiary" of LHI under Section 2(a)(8) of the Act, and as a
subsidiary will be a part of National's "holding company system"
under Section 2(a)(9), and therefore an "associate company" of
National under Section 2(a)(10) of the Act. However, QuickTrade
Canada and its affiliates, as defined in Section 2(a)(11) of the
Act, in particular NICOR, NGC and PE, will be exempt from all
obligations, duties and liabilities otherwise imposed upon it by the
Act, as a result of Rule 16 promulgated under the Act (17 CFR
Section 250.16).
QuickTrade Canada satisfies all four conditions set forth for
the applicability of a Rule 16 exemption.
J. FINANCING
After LHI's payment of the initial purchase price for its
acquisition of a 29.59184% interest in CanDuCo (the amount of which
is contained in the financial exhibits), National and LHI expect
that there may be subsequent capital contributions made, without
interest, to CanDuCo by LHI, pursuant to rule 45(b)(4). There are
three ways in which LHI may finance these subsequent capital
contributions:
(i) LHI may receive money as a
distribution from Enerchange US.
(ii) LHI may borrow under its existing
authority in National's "money
pool". LHI's participation in the
money pool was authorized in HCAR
No. 35-25964, dated December 29,
1993.
(iii) LHI may receive capital
contributions or open account
advances from National, pursuant
to Rule 45(b)(4).
<PAGE>
LHI may make loans to CanDuCo. If so, these loans, with
interest, can be made pursuant to Rule 52(d).
It is expected, however that QuickTrade Canada will function
entirely from its own revenue and from money it borrows from
Enerchange US. Pursuant to Rule 16, Enerchange US can lend money
and take back notes from QuickTrade Canada. LHI's participation in
Enerchange US has already been approved by the Commission in the
Enerchange US Proceeding.
Item 2. Fees, Commissions and Expenses.
It is estimated that the expenses to be incurred by National
and LHI in connection with the herein Proposed Transactions are as
follows:
Filing Fee $2,000
Fees and Expenses of Counsel (a) $2,000
- Estimated
(a) Stryker, Tams & Dill
Item 3. Applicable Statutory Provisions
Sections 9(a), 10, 11(b), 12(b), 13(b) of the Act and Rules 16,
23, 24, 45, 51 and 52, and the Gas Related Activities Act of 1990
are all considered applicable to the Proposed Transactions.
The applicability of each of the sections and rules to each of
the Proposed Transactions are set out as follows:
Proposed Transaction Applicable Provisions of the Act
LHI's acquisition of Section 9(a), 10, 11(b) and the
an interest in Gas Related Activities Act
CanDuCo Rules 23, 24, 51
LHI's possible loan(s) Section 12(b)
to CanDuCo Rules 23, 24, 45 and 52
Guarantee by National Section 12(b)
and LHI of Obligations Rules 23, 24 45
of CanDuCo and
QuickTrade Canada
Operations of CanDuCo Section 13(b), Rule 16 and the
Gas Related Activities Act
To the extent that any Proposed Transaction is considered by
the Commission to require authorization, approval or exemption under
any section of the Act or provision of the rules or regulations
other than those specifically referred to herein, request for such
authorization, approval or exemption is hereby made.
Item 4. Regulatory Approval.
No federal regulatory authority, other than the Commission, has
jurisdiction over the Proposed Transactions.
No state regulatory authority has jurisdiction over the
proposed transactions.
Item 5. Procedure.
Pursuant to the provisions of Rule 62, the Commission is
requested to issue an Order permitting the Declaration to become
effective as soon as possible with respect to consummation of the
transactions described herein.
Pursuant to Rule 24, Applicant-Declarants will provide on a
quarterly basis an income statement and balance sheet reflecting the
activities of LHI, bearing the File Number of this proceeding
regarding LHI. Those Rule 24 filings will display LHI's allocated
share of the profits/losses of CanDuCo. If LHI's income statement
reflects a net loss for a consecutive twelve (12) month period, at
the request of the Commission, a more detailed income statement and
balance sheet would be provided in the form as mutually agreed by
LHI and the Commission Staff. Applicant-Declarants request
permission to file such information within 45 days after the end of
each quarter. LHI asks (partly at the request of other Members of
CanDuCo) that the Commission not require the Applicant-Declarants to
provide income statements and balance sheets for CanDuCo because (i)
CanDuCo does not otherwise intend to make its financial statements
publicly available, (ii) CanDuCo will be an owner of a highly
competitive business in which information such as that displayed on
CanDuCo's financial statements will have commercial value, and (iii)
LHI would be only a minority owner of CanDuCo without any actual
control over the persons who will generate CanDuCo's financial
statements.
Within six months after the effective date of the order, LHI
shall file with the Commission, in accordance with Section 15 of the
Act and pursuant to Rule 24, a copy of the accounting system
maintained by LHI and CanDuCo as well as any cost allocation
methodology, work order procedures and cost accounting procedures
needed to collect and account for the income and expenses of the
activities of LHI and CanDuCo. This is to include the allocation of
CanDuCo's profits to LHI and the other Members.
Applicant/Declarants respectfully request that the Commission's
Order herein be entered pursuant to the provisions of Rule 23. If a
hearing be ordered, Applicant/Declarants waive a recommended
decision by a Hearing Officer, or any other responsible officer of
the Commission, agree that the Division of Investment Management may
assist in the preparation of the Commission's decision and request
that there be no waiting period between the issuance of the
Commission's Order and the date on which it becomes effective.
The Applicants hereby request that certain information
contained in the Exhibits hereto, as indicated in the index to
Exhibits (the "Information") be kept confidential pursuant to Rule
104(b) [17 CFR Section 250.104(b)].
Public disclosure of the Information is not necessary or
appropriate in the public interest or for the protection of
investors or consumers. The Information describes the purchase
price of the Acquired Interest and other financial information
relating to CanDuCo, Enerchange Canada, QuickTrade Canada and the
financial effect of the proposed transactions on LHI and on the
National Fuel System.
The amounts involved are orders of magnitude too small to be
material to either investors or consumers. LHI expects to invest a
fraction of 1% of National's capitalization in its interest in
CanDuCo during the first year of operation.
The people who would be most interested in the Information
would be the marketers, hub operators and computer service providers
who would be in competition with QuickTrade Canada. These people
typically operate with a minimal capital investment and very tight
margins in a highly competitive environment. In this environment,
information on a competitor's costs, margins, plans and projections
is a valuable trade secret, and is treated by all the competitors as
confidential, proprietary information.
These competitors can not obtain the Information anywhere else.
The Applicants cannot obtain similar information about their
competitors. The Applicants firmly believe that the investing and
consuming public would be best served by allowing the Information to
remain confidential, thereby permitting CanDuCo, Enerchange Canada
and QuickTrade Canada to compete on an equal basis with their
competitors.
Item 6. Exhibits and Financial Statements.
The following exhibits and financial statements are made part
of this Application-Declaration:
(a) Exhibits
A-1 Restated Certificate of Incorporation of National
Fuel Gas Company, dated March 15, 1985 Incorporated
by Reference to Exhibit A-4 in File No. 70-6667).
A-2 Certificate of Amendment of Restated Certificate of
Incorporation of National Fuel Gas Company, dated
March 9, 1987 (Incorporated by Reference to Exhibit
A-3 in File No. 70-7334).
A-3 Certificate of Amendment of Restated Certificate of
Incorporation of National Fuel Gas Company, dated
February 22, 1988 (Incorporated by Reference to
Exhibit B-5 in File No. 70-7478).
A-4 Certificate of Amendment of Restated Certificate of
Incorporation, dated March 17, 1992. (Incorporated by
Reference to Exhibit A-4 in File No. 70-8109).
A-5 Bylaws of National Fuel Gas Company, as amended.
(Incorporated by Reference to Exhibit A-5 in File No.
70-8109).
A-6 Form of Pre-Purchase Agreement (Designated as Exhibit
EX-2 for EDGAR purposes). (Note that Exhibit A to
the Pre-Purchase Agreement is included as Exhibit
A-7). A PORTION OF THIS AGREEMENT IS SUBJECT TO A
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 104(b).
A-7 Form of Purchase Agreement (Designated as Exhibit
EX-2 for EDGAR purposes). A PORTION OF THIS
AGREEMENT IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT UNDER RULE 104(B). (to be provided by
amendment)
A-8 Articles of Association of CanDuCo (to be provided by
amendment)
E-1 Chart illustrating the proposed and related
transactions (Designated as Exhibit EX-99 for EDGAR
purposes).
F-1 Opinion of Stryker, Tams and Dill (Designated as
Exhibit EX-5 for EDGAR purposes). (to be provided by
amendment)
F-2 Opinion of James R. Peterson (Designated as EX-5 for
EDGAR purposes). (to be provided by amendment)
G-1 Financial Data Schedules
NOT INCLUDED BECAUSE ALL OF THE FINANCIAL STATEMENT
EXHIBITS ARE SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT UNDER RULE 104 (b).
H-1 Proposed form of public notice (Designated as Exhibit
EX-99 for EDGAR purposes).
(b) Financial Statements
S-1 National Fuel Gas Company and Subsidiaries Pro Forma
Consolidated Statement of Income and Earnings
Reinvested in the Business for the twelve months
ended February 28, 1997, Pro Forma Consolidated
Balance Sheet at February 28, 1997 and Pro Forma
Adjusting Entries. THIS EXHIBIT IS SUBJECT TO A
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 104 (b).
S-2 Leidy Hub, Inc. Pro Forma Statement of Income and
Earnings Reinvested in the Business for the twelve
months ended February 28, 1997, Pro Forma Balance
Sheet at February 28, 1997 and Pro Forma Adjusting
Entries. THIS EXHIBIT IS SUBJECT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 104 (b).
S-3 Notes to Financial Statements. THIS EXHIBIT IS
SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER
RULE 104 (b).
S-4 CanDuCo Company Condensed Balance Sheet at February
28,1997. This financial statement, as agreed to by
the parties to the formation of CanDuCo, (and not
prepared by representatives of the
Applicant-Declarants) is incorporated in Exhibit A-6.
(to be provided by amendment)
There have been no material changes not in the ordinary
course of business since February 28, 1997.
Item 7. Information as to Environmental Effects.
The proposed transactions outlined herein involve no major
action which will significantly effect the quality of the human
environment.
No federal agency has prepared or is preparing an environmental
impact statement with respect to the transactions proposed in this
Declaration.
SIGNATURES
Pursuant to the requirements of the Public Holding Utility
Company Act of 1935, the undersigned company has duly caused this
Statement to be signed on its behalf by the undersigned thereunto
duly authorized.
NATIONAL FUEL GAS COMPANY
By: /s/ A. M. Cellino
A. M. Cellino
Secretary
LEIDY HUB, INC.
By: /s/ Walter E. DeForest
Walter E. DeForest
President
Dated: June 27, 1997
EXHIBIT A-6
[CONFIDENTIAL TREATMENT OF BRACKETED MATERIAL REQUESTED PURSUANT TO
RULE 104(B)]
FORM OF PRE-PURCHASE AGREEMENT
(Designated as Exhibit EX-2 for EDGAR purposes)
THIS PRE-PURCHASE AGREEMENT (this "Agreement"), dated as of July
15, 1997, is made by and between NICOR Hub Services, Inc., an
Illinois corporation ("Seller"), and Leidy Hub, Inc., a New York
corporation ("LHI" or "Purchaser"). Other capitalized terms used in
this Agreement are defined in Article I.
RECITALS
1. Prior to the date hereof, Seller and Pacific Enerchange,
formed CanDuCo.
2. The Articles of Association provide that shares of the
Company may be transferred with the approval of the directors of the
Company.
3. The Seller wishes to sell to the Purchaser, and the Purchaser
wishes to buy from the Seller, 29.59184% of the issued and
outstanding shares in CanDuCo (the "Acquired Interest") and the
directors of the Company have approved such transfer of the Acquired
Interest.
4. Purchaser and National Fuel Gas Company, a New Jersey
corporation which owns LHI ("NFG"), must obtain Securities and
Exchange Commission approval prior to LHI's purchase of the Acquired
Interest.
In consideration of the mutual covenants, agreements and
warranties herein contained, it is agreed that Purchaser shall
acquire from Seller all of the Acquired Interest upon the terms and
conditions hereinafter set forth and pursuant to a purchase agreement
substantially in the form of the Purchase Agreement attached to this
Agreement as Exhibit A.
ARTICLE I
DEFINITIONS
The following terms shall have the meanings set forth herein for
the purposes of this Agreement:
"Acquired Interest" is defined in the second recital.
"Act" means the Companies Act (Nova Scotia), R.S.N.S. 1989, c.81,
and all amendments to the Act, as in effect from time to time.
"Affiliate" means, with respect to any Person, another Person that
directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with such Person.
"Articles of Association" means that certain Articles of
Association of CanDuCo Company dated as of _______, 1997, between
Seller and Pacific Enerchange.
"Closing Date" means the date on which the sale and purchase of
the Acquired Interest occurs.
"CanDuCo" or "Company" means CanDuCo Company, a Nova Scotia,
Canada unlimited liability company.
"Electronic Trading System" means the electronic gas trading and
nominations system that QuickTrade Canada operates in Canada.
"Governmental Authority" means the governments of the United
States or Canada, any state, province or political subdivision
thereof, and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Indemnified Person" shall mean the Person entitled to, or
claiming a right to, indemnification under Article VIII.
"Indemnifying Person" shall mean the Person claimed by the
Indemnified Person to be obligated to provide indemnification under
Article VIII.
"Losses" is defined in Section 8.2.
"NFG" is defined in the fourth recital.
"Person" means an individual, trust, Governmental Authority,
estate or any incorporated or unincorporated company, corporation,
limited liability company, partnership or other organization.
"Pacific Enerchange" means Pacific Enerchange, a California
corporation.
"Purchaser" is defined in the preamble.
"Purchase Agreement" is defined in the last paragraph of the
Recitals.
"Purchase Price" is defined in Section 2.2.
"QuickTrade Canada" means QuickTrade Canada Limited Partnership,
an Alberta, Canada, limited partnership.
<PAGE>
"SEC Approval" means SEC approval of Purchaser's purchase of the
Acquired Interest without any conditions which in the judgment of
either of the parties make it impractical to consummate the
transactions contemplated by this Agreement.
"Seller" is defined in the preamble.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale of The Acquired Interest. Subject to the
terms and conditions set forth in this Agreement, within ten business
days following SEC Approval, or such longer period acceptable to the
parties, Seller and Purchaser shall execute and perform the Purchase
Agreement in substantially the form attached hereto as Exhibit A.
2.2 Payment of Purchase Price. In consideration of such sale,
assignment, transfer, conveyance and delivery to Purchaser by Seller
of all of the Acquired Interest, Purchaser shall pay to Seller the
"Purchase Price" of [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX].
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
3.1 Ownership of Acquired Interest. Seller owns beneficially and
legally all right, title and interest in and to the Acquired
Interest, free and clear of any security interest, lien, adverse
claim or other encumbrance. The Acquired Interest in the aggregate
constitutes 29.59184% of the issued and outstanding shares of
CanDuCo. None of the Acquired Interest is subject to any restriction
on transfer, other than as set forth in the Articles of Association.
3.2 Due Organization. To the best of Seller's knowledge, the
Company is an unlimited liability company duly organized, validly
existing and in good standing under the laws of the province of Nova
Scotia with all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. To the best of Seller's knowledge, the Company is duly
qualified and in good standing to do business in each jurisdiction
where the failure to be so qualified would, in the aggregate, have a
material adverse effect on the business or operations of the Company.
The Company owns no equity or debt securities of any Person. True,
correct and complete copies of the Company's Memorandum of
Association and all other organizational documents of the Company
have been delivered to Purchaser.
<PAGE>
3.3 Due Authorization. Seller has full power and authority to
enter into this Agreement and to carry out the transactions
contemplated hereby, and this Agreement has been duly and validly
executed and delivered by Seller, and constitutes the legal, valid
and binding obligation of Seller, enforceable in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
from time to time in effect which affect creditors' rights generally,
and by legal and equitable limitations on the availability of
specific remedies.
3.4 No Conflict. The execution, delivery and performance of this
Agreement and all other instruments, agreements, certificates and
documents contemplated hereby by Seller do not: (i) violate any
order, decree or judgment of any Governmental Authority applicable to
Seller, or the Acquired Interest or, to the best of Seller's
knowledge, the Company; (ii) violate any law (or regulation or rule
promulgated under any law); (iii) violate or conflict with, or result
in a breach of, or constitute a default (or an event which, with or
without notice or lapse of time or both, would constitute a default)
under, or permit cancellation of, or result in the creation of any
lien or encumbrance or other contingent liability upon any of the
assets of the Company or the Acquired Interest under, any of the
terms, conditions, or provisions of any contract to which Seller or
the Company is a party, or by which either of them or any of the
assets of the Company or the Acquired Interest is bound; (iv) permit
the acceleration of the maturity of any indebtedness of the Company,
or any indebtedness secured by any of the assets of the Company or
the Acquired Interest; or (v) violate or conflict with any provision
of the charter, by-laws or other organizational documents of Seller
or, to the best of Seller's knowledge, the Company.
3.4 Consents. Prior to execution of this Agreement and prior to
the Closing Date, Seller will have obtained all authorizations,
consents and permits required to permit the consummation of the
transactions contemplated by this Agreement.
3.5 Accuracy of Statements. This Agreement does not contain any
untrue statement of a material fact regarding Seller, the Company,
the assets of the Company or the Acquired Interest.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that:
4.1 Due Authorization. Purchaser has full power and
authority to enter into this Agreement and to carry out the
transactions contemplated hereby, and this Agreement has been duly
and validly executed and delivered by Purchaser, and constitutes the
legal, valid and binding obligation of Purchaser, enforceable in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect which
affect creditors' rights generally, and by legal and equitable
limitations on the availability of specific remedies.
4.2 No Conflict. The execution, delivery and performance of this
Agreement does not: (i) violate any decree or judgment of any
Governmental Authority applicable to Purchaser; (ii) violate any law
(or regulation promulgated under any law); (iii) violate or conflict
with, or result in a breach of, or constitute a default (or an event
which, with or without notice or lapse of time or both, would
constitute a default) under, any of the terms, conditions, or
provisions of any contract to which Purchaser is a party, or by which
Purchaser is bound; or (iv) violate or conflict with any provision of
the charter, by-laws or other organizational documents of Purchaser.
4.3 Investment Intent. Purchaser is acquiring the Acquired
Interest for its own account, for investment and not with a view to,
or for sale or other disposition in connection with, any
"distribution" thereof, within the meaning of the Securities Act of
1933, as amended, nor with any present intention of selling or
otherwise disposing of the Acquired Interest.
4.4 Consents. Prior to the execution of this Agreement and prior
to the Closing Date, Purchaser will have obtained all authorizations,
consents and permits of others required to permit the consummation of
the transactions contemplated by this Agreement except, with respect
to SEC Approval, LHI and NFG will file applications for approval as
soon as possible and will use their best efforts to obtain such
approval.
ARTICLE V
PRE-CLOSING OPERATION OF THE COMPANY
5.1 Pre-Closing Company Operations. The parties contemplate that
the Company will conduct operations in accordance with the terms and
conditions of the Articles of Association and/or the Limited Partner
Agreement or a Shareholder Agreement.
5.2 Purchaser's Pre-Closing Participation. Purchaser will be
entitled to participate in the pre-Closing Date business affairs of
the Company in accordance with the following procedures. Seller will
furnish Purchaser with copies of all notices and other material
documents relating to the Company's business. Seller will afford
Purchaser an opportunity to review and comment on all matters
presented to the Company's Executive Committee for approval and
Seller agrees to take Purchaser's comments on all such matters into
account prior to voting on matters in the Executive Committee. In
addition, Seller agrees to use its best efforts to obtain approval
for a representative of Purchaser to attend all meetings of the
Executive Committee as an observer.
5.3 Periodic Reports. Seller shall at a minimum furnish
Purchaser with copies of all reports and other statements that the
Company is required to furnish its Members pursuant to the Company
Agreement.
<PAGE>
5.4 Pre-Closing Competition with the Company. During the period
prior to the Closing Date, Purchaser agrees that it shall be subject
to any provisions of the Articles of Association limiting the extent
to which Members and their Affiliates may compete with the business
of the Company.
ARTICLE VI
CONDITIONS PRECEDENT TO EXECUTION OF THE PURCHASE AGREEMENT
6.1 Conditions Precedent to Obligations of the Purchaser. The
obligation of Purchaser to execute and perform the Purchase Agreement
is subject to the satisfaction of the following conditions and such
conditions that may be established in the Purchase Agreement:
6.1.1 Covenants, Representations and Warranties. Seller shall
have performed, in all material respects, all obligations and
agreements and complied with all covenants contained in this
Agreement to be performed and complied with by Seller prior to the
Closing Date. Each of the warranties and representations of Seller
contained in this Agreement shall be accurate in all material
respects, at and as of the date made and also at and as of the
Closing Date with the same force and effect as though made on and as
of the Closing Date, and Seller shall have delivered to Purchaser a
certificate so certifying.
6.1.2 SEC Approval. The SEC Approval shall have been obtained
without any conditions which in the judgment of either party make it
impractical to consummate the transactions contemplated by this
Agreement.
6.2 Conditions Precedent to Obligations of Seller. The
obligation of Seller to execute and perform the Purchase Agreement is
subject to the satisfaction of the following conditions and such
conditions that may be established in the Purchase Agreement:
6.2.1 Covenants, Representations and Warranties. Purchaser shall
have performed, in all material respects, all obligations and
agreements and complied with all covenants contained in this
Agreement to be performed and complied with by Purchaser prior to
the Closing Date. Each of the warranties and representations of
Purchaser contained in this Agreement shall be accurate in all
material respects, at and as of the date made and also at and as of
the Closing Date with the same force and effect as though made on and
as of the Closing Date, and Purchaser shall have delivered to Seller
a certificate so certifying.
ARTICLE VII
COVENANTS
7.1 Implementing This Agreement. From the date hereof to the
Closing Date, each of Purchaser and Seller will take all necessary
action to fulfill its respective obligations under this Agreement and
shall take all commercially reasonable efforts to consummate the
transactions contemplated thereby.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival. The representations and warranties of the parties
hereto contained herein shall survive the Closing. Such
representations and warranties shall be deemed made as of the date of
this Agreement and as of the Closing Date. The representations and
warranties of the parties hereto contained herein shall survive the
Closing.
8.2 Indemnification by Seller. Seller agrees to indemnify
Purchaser against, and agrees to hold Purchaser harmless from, any
and all liabilities, losses, costs, claims, damages (including
without limitation consequential damages), penalties and expenses
(including without limitation reasonable attorneys' fees and expenses
and reasonable costs of investigation) (collectively, "Losses")
incurred or suffered by Purchaser relating to or arising out of or in
connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Seller in this Agreement; or
(b) any breach of or failure by Seller to perform any covenant or
obligation of Seller set out or contemplated in this Agreement.
8.3 Indemnification by Purchaser. Purchaser agrees to indemnify
Seller against, and agrees to hold Seller harmless from, any and all
Losses incurred or suffered by Seller relating to or arising out of
or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Purchaser in this Agreement;
(b) any breach of or failure by Purchaser to perform any covenant
or obligation of Purchaser set out or contemplated in this Agreement;
and
(c) notwithstanding any other provision of this Agreement,
Purchaser is not obligated to indemnify, and does not agree to
indemnify, Seller or any other person against any market or
investment risk in connection with Purchaser's acquisition, retention
or disposition of the subject matter of this Agreement.
8.4 Claims. The provisions of this Section shall be subject to
Section 8.5. As soon as is reasonably practicable after becoming
aware of a claim for indemnification under this Agreement the
Indemnified Person shall promptly give notice to the Indemnifying
Person of such claim and the amount the Indemnified Person will be
entitled to receive hereunder from the Indemnifying Person; provided
that the failure of the Indemnified Person to give notice shall not
relieve the Indemnifying Person of its obligations under this Article
VIII except to the extent (if any) that the Indemnifying Person shall
have been prejudiced thereby. If the Indemnifying Person does not
object in writing to such indemnification claim within 30 calendar
days of receiving notice thereof, the Indemnified Person shall be
entitled to recover promptly from the Indemnifying Person the amount
of such claim, and no later objection by the Indemnifying Person
shall be permitted. If the Indemnifying Person agrees that it has an
indemnification obligation but objects on the grounds that it is
obligated to pay only a lesser amount, the Indemnified Person shall
nevertheless be entitled to recover promptly from the Indemnifying
Person the lesser amount, without prejudice to the Indemnified
Person's claim for the difference.
8.5 Notice of Third Party Claims; Assumption of Defense. The
Indemnified Person shall give notice as promptly as is reasonably
practicable to the Indemnifying Person of the assertion of any claim,
or the commencement of any Proceeding, by any Person not a party
hereto in respect of which indemnity may be sought under this
Agreement; provided that the failure of the Indemnified Person to
give notice shall not relieve the Indemnifying Person of its
obligations under this Article VIII except to the extent (if any)
that the Indemnifying Person shall have been prejudiced thereby. The
Indemnifying Person may, at its own expense, (a) participate in the
defense of any claim, suit, action or proceeding and (b) upon notice
to the Indemnified Person and the Indemnifying Person's delivering to
the Indemnified Person a written agreement that the Indemnified
Person is entitled to indemnification for all Losses arising out of
such claim or Proceeding and that the Indemnifying Person shall be
liable for the entire amount of any Loss, at any time during the
course of any such claim or Proceeding, assume the defense thereof;
provided, however, that (i) the Indemnifying Person's counsel is
reasonably satisfactory to the Indemnified Person, and (ii) the
Indemnifying Person shall thereafter consult with the Indemnified
Person upon the Indemnified Person's reasonable request for such
consultation from time to time with respect to such claim or
Proceeding. If the Indemnifying Person assumes such defense, the
Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof. If the Indemnified Person
reasonably determines in its judgment that representation by the
Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of
interest, then such Indemnified Person may employ separate counsel to
represent or defend it in any such claim or Proceeding, and the
Indemnifying Person shall pay the fees and disbursements of such
separate counsel. Whether or not the Indemnifying Person chooses to
defend or prosecute any such claim or Proceeding, all of the parties
hereto shall cooperate in the defense or prosecution thereof.
8.6 Settlement or Compromise. Any settlement or compromise made
or caused to be made by the Indemnified Person or the Indemnifying
Person, as the case may be, of any such claim or Proceeding of the
kind referred to in Section 8.5 shall also be binding upon the
Indemnifying Person or the Indemnified Person, as the case may be, in
the same manner as if a final judgment or decree had been entered by
a court of competent jurisdiction in the amount of such settlement or
compromise; provided, however, that no obligation, restriction or
Loss shall be imposed on the Indemnified Person as a result of such
settlement without its prior written consent.
8.7 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not elect to assume the defense of any claim
or Proceeding, then any failure of the Indemnified Person to defend
or to participate in the defense of any such claim or Proceeding or
to cause the same to be done, shall not relieve the Indemnifying
Person of its obligations hereunder.
ARTICLE IX
MISCELLANEOUS
9.1 Expenses. Each party hereto shall bear its own expenses with
respect to this transaction.
9.2 Amendment. This Agreement may be amended, modified or
supplemented, but only in writing signed by each of the parties
hereto.
9.3 Counterparts. This Agreement may be executed simultaneously
in counterparts, each of which shall be deemed to be an original, but
together shall constitute one and the same instrument.
9.4 Headings. Section and Article headings in this Agreement are
for convenience of reference only, and shall not govern the
interpretation of the provisions of this Agreement.
9.5 Severability. Any provisions of this Agreement that are held
to be inoperative, unenforceable or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions of this Agreement
in that jurisdiction or the operation, enforceability, or validity of
such provisions in any other jurisdiction.
9.6 Entire Understanding. This Agreement and the Company
Agreement set forth the entire agreement and understanding of the
parties hereto with respect to the transaction contemplated hereby
and supersede all prior arrangements, agreements and understandings
relating to the subject matter hereof. There have been no
representations or statements, oral or written, that have been relied
on by either party hereto, except those expressly set forth in this
Agreement and the Company Agreement.
9.7 Applicable Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the
State of Delaware, without regard to the conflicts of law principles
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on the date first above
written.
<PAGE>
NICOR Hub Services, Inc.
By: ______________________
Title:____________________
Printed Name:_____________
LEIDY HUB, INC.
By:_______________________
President
Walter E. DeForest
<PAGE>
EXHIBIT A
FORM OF PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement"), dated as of ________,
1997, is made by and between NICOR Hub Services, Inc., an Illinois
corporation ("Seller"), and Leidy Hub, Inc., a New York corporation
("LHI" or "Purchaser"). Other capitalized terms used in this
Agreement are defined in Article I.
RECITALS
1. On _________, 1997, Seller and Pacific Enerchange, a
California corporation, formed CanDuCo.
2. The Articles of Association provide that shares of the
Company may be transferred with the approval of the directors of the
Company.
3. Seller wishes to sell to Purchaser, and Purchaser wishes to
buy from Seller 29.59184% of the issued and outstanding shares in
CanDuCo (the "Acquired Interest").
4. The directors of the Company have approved Seller's sale of
the Acquired Interest to Purchaser.
In consideration of the mutual covenants, agreements and
warranties herein contained, the parties desire that Purchaser shall
acquire from Seller all of the Acquired Interest upon the terms and
conditions hereinafter set forth.
ARTICLE I
DEFINITIONS
The following terms shall have the meanings set forth herein for
the purposes of this Agreement:
"Acquired Interest" is defined in the second recital.
"Act" means the Companies Act (Nova Scotia), R.S.N.S. 1989, c.81,
and all amendments to the Act, as in effect from time to time.
"Affiliate" means, with respect to any Person, another Person that
directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with such Person.
"Articles of Association" means that certain Articles of
Association dated as of _____, 1997 between Seller and Pacific
Enerchange.
"Closing Date" means the date on which the Closing occurs or is to
occur.
<PAGE>
"CanDuCo" or "Company" means CanDuCo Company, a Nova Scotia,
Canada unlimited liability company.
"Electronic Trading System" means the electronic gas trading and
nominations system that QuickTrade Canada operates in Canada.
"Governmental Authority" means the government of the United States
or Canada, any state, province, or political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Indemnified Person" shall mean the Person entitled to, or
claiming a right to, indemnification under Article VIII.
"Indemnifying Person" shall mean the Person claimed by the
Indemnified Person to be obligated to provide indemnification under
Article VIII.
"Losses" is defined in Section 8.2.
"Person" means an individual, trust, Governmental Authority,
estate or any incorporated or unincorporated company, corporation,
limited liability company, partnership or other organization.
"Purchase Price" is defined in Section 2.2.
"Pre-Purchase Agreement" means that certain Pre-Purchase Agreement
dated ______, 1997, executed by Seller and Purchaser.
"Proceedings" is defined in Section 3.17.
"Purchaser" is defined in the preamble. "Seller" is defined in the
preamble.
"QuickTrade Canada" means QuickTrade Canada Limited Partnership,
an Alberta, Canada, limited partnership.
"Taxes" means all taxes, charges, fees, duties, levies or
other assessments, including (without limitation) income, gross
receipts, net proceeds, ad valorem, turnover, real and personal
property (tangible and intangible), sales, use, franchise, excise,
value added, stamp, leasing, lease, user, transfer, fuel, excess
profits, occupational, interest equalization, windfall profits,
severance and employees' income withholding, unemployment and Social
Security taxes, which are imposed by the United States, or any state,
local or foreign government or subdivision or agency thereof, and
such term shall include any interest, penalties or additions to tax
attributable to such Taxes.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale of The Acquired Interest.
Subject to the terms and conditions set forth in this Agreement, at
the Closing, Seller shall sell, assign, transfer, convey and deliver
to Purchaser, and Purchaser shall accept, acquire and take assignment
and delivery of, all of the Acquired Interest.
2.2 Payment of Purchase Price. In consideration for such
sale, assignment, transfer, conveyance and delivery to Purchaser by
Seller of all of the Acquired Interest, on the Closing Date Purchaser
will pay to Seller the sum of [XXXXXXXXXXXXXXXXXXXXXXXXX], the
"Purchase Price".
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
3.1 Ownership of Acquired Interest. Seller owns beneficially and
legally all right, title and interest in and to the Acquired
Interest, free and clear of any security interest, lien, adverse
claim or other encumbrance. The Acquired Interest in the aggregate
constitutes 29.59184% of the issued and outstanding shares in
CanDuCo. None of the Acquired Interest is subject to any restriction
on transfer, other than as set forth in the Articles of Association.
3.2 Due Organization. To the best of Seller's knowledge, the
Company is an unlimited liability company duly organized, validly
existing and in good standing under the laws of the province of Nova
Scotia with all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. To the best of Seller's knowledge, the Company is duly
qualified and in good standing to do business in each jurisdiction
where the failure to be so qualified would, in the aggregate, have a
material adverse effect on the business or operations of the Company.
The Company owns no equity or debt securities of any Person. True,
correct and complete copies of the Company's Memorandum of
Association and all other organizational documents of the Company
have been delivered to Purchaser.
3.3 Due Authorization. Seller has full power and authority to
enter into this Agreement and to carry out the transactions
contemplated hereby, and this Agreement has been duly and validly
executed and delivered by Seller, and constitutes the legal, valid
and binding obligation of Seller, enforceable in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
from time to time in effect which affect creditors' rights generally,
and by legal and equitable limitations on the availability of
specific remedies.
3.4 No conflict. The execution, delivery and performance of this
Agreement and all other instruments, agreements, certificates and
documents contemplated hereby by Seller do not: (i) violate any
order, decree or judgment of any Governmental Authority applicable to
Seller, or the Acquired Interest or, to the best of Seller's
knowledge, the Company; (ii) violate any law (or regulation or rule
promulgated under any law); (iii) violate or conflict with, or result
in a breach of, or constitute a default (or an event which, with or
without notice or lapse of time or both, would constitute a default)
under, or permit cancellation of, or result in the creation of any
lien or encumbrance or other contingent liability upon any of the
assets of the Company or the Acquired Interest under, any of the
terms, conditions, or provisions of any contract to which Seller or
the Company is a party, or by which either of them or any of the
assets of the Company or the Acquired Interest is bound; (iv) permit
the acceleration of the maturity of any indebtedness of the Company,
or any indebtedness secured by any of the assets of the Company or
the Acquired Interest; or (v) violate or conflict with any provision
of the charter, by-laws or other organizational documents of Seller
or, to the best of Seller's knowledge, the Company.
3.5 Ownership of Interests. Prior to giving effect to
Purchaser's acquisition of the Acquired Interest pursuant to this
Agreement, Seller owned 70.40546% of the issued and outstanding
shares in the Company. Neither Seller nor, to the best of Seller's
knowledge, the Company has granted any option, warrant, or similar
right to any Person to purchase or acquire any rights with respect to
any shares, or any other interest whatsoever, in the Company.
3.6 Title to and Condition of Properties and the Company. To the
best of Seller's knowledge the Company has good title to and is the
lawful owner of all of the assets of the Company, free and clear of
all security interests, liens, adverse claims and other encumbrances.
All of the assets of the Company are listed on Schedule 3.6(a). All
of the liabilities of the Company are listed on Schedule 3.6(b). The
Company has no liabilities, debts, claims or obligations, whether
accrued, absolute, contingent or otherwise, whether due or to become
due, except as set forth on Schedule 3.6(b).
3.7 No Defaults or Violations. To the best of Seller's
knowledge, except as set forth on Schedule 3.7, (a) the Company has
not materially breached any provision of, nor is it in material
default under the terms of, any contract to which it is a party or
under which it has any rights or by which it is bound, and to
Seller's knowledge no other party to any such contract is in default
thereunder in any material respect, and (b) the Company is not in
material violation of or default under or with respect to any law,
governmental regulation or rule or order of any Governmental
Authority that is applicable in any way to the business or operation
of the Company, provided that, to the extent such representations and
warranties in clauses (a) and (b) above are made with respect to any
breach, default or violation by the Company that may have arisen from
and after the Company's formation, such representations and
warranties are made to the best of Seller's knowledge. Except as set
forth in Schedule 3.7, none of the assets of the Company is in
material violation of any law, building, zoning or other ordinance,
code or regulation applicable to it.
<PAGE>
3.8 Taxes. To the best of Seller's knowledge, having been formed
shortly before the Closing Date, the Company has not previously filed
any Federal, state and other tax returns and reports as of the
Closing Date; the Company has not been required to file any such
returns; and the Company has not been required to pay any Taxes on or
prior to the Closing Date.
3.9 Condition of Assets. To the best of Seller's knowledge,
except as disclosed on Schedule 3.9, all of the assets of the
Company, whether real or personal, owned or leased, are in reasonably
good operating condition (with the exception of normal wear and tear).
3.10 Contracts. To the best of Seller's knowledge, Schedule 3.10
includes all the contracts and arrangements (including, without
limitation, any employment contracts) to which the Company is a party
or by which it is bound or to which any of the assets of the Company
is subject. Seller has delivered to Purchaser true, correct and
complete copies of each document listed on Schedule 3.10, and a
written description of each oral arrangement so listed.
3.11 Permits, etc. To the best of Seller's knowledge, the Company
holds all of the licenses, certificates, permits, franchises and
rights listed on Schedule 3.11, and, to the best of Seller's
knowledge, does not require any other licenses, certificates,
permits, franchises and rights to conduct the Business and its other
affairs.
3.12 Insurance Policies. To the best of Seller's knowledge,
Schedule 3.12 contains a list of each insurance policy currently
providing coverage for the assets or business of the Company and a
copy of each such policy has been delivered to Purchaser.
3.13 Employee Benefit Plans. To the best of Seller's knowledge,
each "employee pension benefit plan," as such term is defined in
Section 3(2) of ERISA, and each "employee welfare benefit plan," as
defined in Section 3(1) of ERISA, that is maintained by the Company
to provide benefits for its employees is described on Schedule 3.13.
3.14 No Other Agreement. To the best of Seller's knowledge,
other than the Sale Agreements, neither Seller nor any its Affiliates
has any contract, agreement, arrangement or understanding with
respect to the sale or other disposition of the assets of the Company
or any interests in the Company.
3.15 Consents. Except as set forth on Schedule 3.15, no notice to,
filing with, authorization of, exemption by, or consent of any Person
is required in order for Seller to consummate the transactions
contemplated hereby.
3.16 Litigation.
(a) To the best of Seller's knowledge, except as disclosed in
Schedule 3.16, there are no claims, actions, suits, arbitrations,
regulatory proceedings or other litigation, proceedings or
governmental investigations (collectively, "Proceedings") pending, or
to the best of Seller's knowledge, threatened against or affecting
the Company, Seller or any of its respective officers, directors,
employees, agents or stockholders thereof in their capacity as such,
or any of their respective properties or businesses relating to such
Persons in such capacities, and Seller is not aware of any facts or
circumstances which may give rise to any of the foregoing; provided
that to the extent such representations and warranties in this clause
are made with respect to any Proceedings that may have arisen against
the Company from and after the Company's formation, such
representations and warranties are made to the best of Seller's
knowledge.
(b) To the best of Seller's knowledge, there are no Proceedings
pending or, to the best of Seller's knowledge, threatened by or
against the Company or Seller with respect to this Agreement, or in
connection with the transactions contemplated hereby or thereby, and
Seller has no reason to believe there is a valid basis for any such
Proceeding; provided that to the extent such representations and
warranties in this clause are made with respect to any Proceedings
that may have arisen against the Company from and after the Company's
formation, such representations and warranties are made to the best
of Seller's knowledge.
3.17 No Conflict of Interest. Neither Seller nor any of its
Affiliates has or claims to have any direct or indirect interest in
any tangible or intangible property used in the Business, except
Seller's interest as an owner of its shares in the Company.
3.18 Bank Accounts. Schedule 3.18 sets forth the names and
locations of each bank or other financial institution at which the
Company has an account (giving the account numbers) or safe deposit
box and the names of all Persons authorized to draw thereon or have
access thereto, and the names of all Persons, if any, now holding
powers of attorney or comparable delegation of authority from the
Company and a summary statement thereof.
3.20 Accuracy of Statements. This Agreement does not contain any
untrue statement of a material fact regarding Seller, the Company,
the assets of the Company or the Acquired Interest.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that:
4.1 Due Authorization. Purchaser has full power and authority to
enter into this Agreement and to carry out the transactions
contemplated hereby, and this Agreement has been duly and validly
executed and delivered by Purchaser, and constitutes the legal, valid
and binding obligation of Purchaser, enforceable in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
from time to time in effect which affect creditors' rights generally,
and by legal and equitable limitations on the availability of
specific remedies.
4.2 No Conflict. The execution, delivery and performance of this
Agreement and all other instruments, agreements, certificates and
documents contemplated hereby by Purchaser do not: (i) violate any
decree or judgment of any Governmental Authority applicable to
Purchaser; (ii) violate any law (or existing regulation promulgated
under any law); (iii) violate or conflict with, or result in a breach
of, or constitute a default (or an event which, with or without
notice or lapse of time or both, would constitute a default) under,
any of the terms, conditions, or provisions of any contract to which
Purchaser is a party, or by which Purchaser is bound; or (iv) violate
or conflict with any provision of the charter, by-laws or other
organizational documents of Purchaser.
4.3 Investment Intent. Purchaser is acquiring the Acquired
Interest for its own account, for investment and not with a view to,
or for sale or other disposition in connection with, any
"distribution" thereof, within the meaning of the Securities Act of
1933, as amended, nor with any present intention of selling or
otherwise disposing of the Acquired Interest.
4.4 Consents. Except as set forth on Schedule 4.3, no notice to,
filing with, authorization of, exemption by, or consent of any Person
is required in order for Purchaser to consummate the transactions
contemplated hereby.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to Obligations of the Purchaser. The
obligation of Purchaser to purchase the Acquired Interest at Closing
is subject to the satisfaction of the following conditions:
5.1.1 Representations and Warranties. The representations and
warranties set forth in this Agreement made by Seller shall be
accurate as of the Closing Date as if made on the Closing Date, and
Seller shall have delivered to Purchaser a certificate so certifying.
5.1.2 Compliance with Agreements and Covenants. Seller
shall have performed and complied with all of its covenants,
obligations and agreements contained in this Agreement to be
performed and complied with by Seller on or prior to the Closing Date.
5.2 Conditions Precedent to Obligations of Seller. The
obligation of Seller to sell the Acquired Interest at Closing is
subject to the satisfaction of the following conditions:
5.2.1 Representations and Warranties. The representations and
warranties set forth in this Agreement made by Purchaser shall be
accurate as of the Closing Date as if made on the Closing Date, and
Purchaser shall have delivered to Seller a certificate so certifying.
5.2.2 Compliance with Agreements and Covenants. Purchaser shall
have performed and complied with all of its covenants, obligations
and agreements contained in this Agreement to be performed and
complied with by Purchaser on or prior to the Closing Date.
5.2.3 Company Approval. Seller shall have obtained the approval
of the directors of the Company to sell the Acquired Interest to
Purchaser in form and substance satisfactory to Seller in its sole
discretion.
ARTICLE VI
COVENANTS
6.1 Implementing This Agreement. From the date hereof to
the Closing Date, each of Purchaser and Seller will take all
necessary action to fulfill its respective obligations under this
Agreement and shall take all commercially reasonable efforts to
consummate the transactions contemplated thereby.
ARTICLE VII
CLOSING
7.1 Closing. The Closing shall take place on or before the tenth
business day following the day on which Purchaser's acquisition of
the Acquired Interest is approved by the SEC, or on such later date
to which the parties hereto shall agree.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival. The representations and warranties of the
parties hereto contained herein and in this Article VIII shall
survive the Closing. Such representations and warranties shall be
deemed made as of the date of this Agreement and as of the Closing
Date.
8.2 Indemnification by Seller. Seller agrees to indemnify
Purchaser against, and agrees to hold Purchaser harmless from, any
and all liabilities, losses, costs, claims, damages (including
without limitation consequential damages), penalties and expenses
(including without limitation reasonable attorneys' fees and expenses
and reasonable costs of investigation) (collectively, "Losses")
incurred or suffered by Purchaser relating to or arising out of or in
connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Seller in this Agreement;
(b) any breach of or failure by Seller to perform any covenant or
obligation of Seller set out or contemplated in this Agreement; or
<PAGE>
(c) any actual and/or contingent liabilities arising from, or in
connection with, or as a result of Seller's performance, act or
omission prior to the Closing Date.
8.3 Indemnification by Purchaser. Purchaser agrees to indemnify
Seller against, and agrees to hold Seller harmless from, any and all
Losses incurred or suffered by Seller relating to or arising out of
or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Purchaser in this Agreement ; or
(b) any breach of or failure by Purchaser to perform any
covenant or obligation of Purchaser set out or contemplated in this
Agreement.
8.4 Claims. The provisions of this Section shall be subject to
Section 8.5. As soon as is reasonably practicable after becoming
aware of a claim for indemnification under this Agreement the
Indemnified Person shall promptly give notice to the Indemnifying
Person of such claim and the amount the Indemnified Person will be
entitled to receive hereunder from the Indemnifying Person; provided
that the failure of the Indemnified Person to give notice shall not
relieve the Indemnifying Person of its obligations under this Article
VIII except to the extent (if any) that the Indemnifying Person shall
have been prejudiced thereby. If the Indemnifying Person does not
object in writing to such indemnification claim within 30 calendar
days of receiving notice thereof, the Indemnified Person shall be
entitled to recover promptly from the Indemnifying Person the amount
of such claim, and no later objection by the Indemnifying Person
shall be permitted. If the Indemnifying Person agrees that it has an
indemnification obligation but objects on the grounds that it is
obligated to pay only a lesser amount, the Indemnified Person shall
nevertheless be entitled to recover promptly from the Indemnifying
Person the lesser amount, without prejudice to the Indemnified
Person's claim for the difference.
8.5 Notice of Third Party Claims; Assumption of Defense.
The Indemnified Person shall give notice as promptly as is reasonably
practicable to the Indemnifying Person of the assertion of any claim,
or the commencement of any Proceeding, by any Person not a party
hereto in respect of which indemnity may be sought under this
Agreement; provided that the failure of the Indemnified Person to
give notice shall not relieve the Indemnifying Person of its
obligations under this Article VIII except to the extent (if any)
that the Indemnifying Person shall have been prejudiced thereby. The
Indemnifying Person may, at its own expense, (a) participate in the
defense of any claim, suit, action or proceeding and (b) upon notice
to the Indemnified Person and the Indemnifying Person's delivering to
the Indemnified Person a written agreement that the Indemnified
Person is entitled to indemnification for all Losses arising out of
such claim or Proceeding and that the Indemnifying Person shall be
liable for the entire amount of any Loss, at any time during the
course of any such claim or Proceeding, assume the defense thereof;
provided, however, that (i) the Indemnifying Person's counsel is
reasonably satisfactory to the Indemnified Person, and (ii) the
Indemnifying Person shall thereafter consult with the Indemnified
Person upon the Indemnified Person's reasonable request for such
consultation from time to time with respect to such claim or
Proceeding. If the Indemnifying Person assumes such defense, the
Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof. If the Indemnified Person
reasonably determines in its judgment that representation by the
Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of
interest, then such Indemnified Person may employ separate counsel to
represent or defend it in any such claim or Proceeding, and the
Indemnifying Person shall pay the fees and disbursements of such
separate counsel. Whether or not the Indemnifying Person chooses to
defend or prosecute any such claim or Proceeding, all of the parties
hereto shall cooperate in the defense or prosecution thereof.
8.6 Settlement or Compromise. Any settlement or compromise made
or caused to be made by the Indemnified Person or the Indemnifying
Person, as the case may be, of any such claim or Proceeding of the
kind referred to in Section 8.5 shall also be binding upon the
Indemnifying Person or the Indemnified Person, as the case may be, in
the same manner as if a final judgment or decree had been entered by
a court of competent jurisdiction in the amount of such settlement or
compromise; provided, however, that no obligation, restriction or
Loss shall be imposed on the Indemnified Person as a result of such
settlement without its prior written consent.
8.7 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not elect to assume the defense of any claim
or Proceeding, then any failure of the Indemnified Person to defend
or to participate in the defense of any such claim or Proceeding or
to cause the same to be done, shall not relieve the Indemnifying
Person of its obligations hereunder.
ARTICLE IX
MISCELLANEOUS
9.1 Expenses. Each party hereto shall bear its own expenses with
respect to this transaction.
9.2 Amendment. This Agreement may be amended, modified or
supplemented, but only in writing signed by each of the parties
hereto.
9.3 Counterparts. This Agreement may be executed simultaneously
in counterparts, each of which shall be deemed to be an original, but
together shall constitute one and the same instrument.
9.4 Headings. Section and Article headings in this Agreement are
for convenience of reference only, and shall not govern the
interpretation of the provisions of this Agreement.
9.5 Severability. Any provisions of this Agreement that are held
to be inoperative, unenforceable or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions of this Agreement
in that jurisdiction or the operation, enforceability, or validity of
such provisions in any other jurisdiction.
9.6 Entire Understanding. This Agreement, the Pre-Purchase
Agreement and the Company Agreement set forth the entire agreement
and understanding of the parties hereto with respect to the
transaction contemplated hereby and supersede all prior arrangements,
agreements and understandings relating to the subject matter hereof.
There have been no representations or statements, oral or written,
that have been relied on by either party hereto, except those
expressly set forth in this Agreement, the Pre-Purchase Agreement and
the Company Agreement.
9.7 Applicable Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the internal laws of
the State of Delaware, without regard to the conflicts of law
principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on the date first above
written.
NICOR Hub Services, Inc.
By:___________________________
Title:___________________________
Printed Name:_______________________
LEIDY HUB, INC.
By:____________________________
President
Walter E. DeForest
<PAGE>
SCHEDULE 3.2
JURISDICTIONS OF QUALIFICATION
1. Nova Scotia
<PAGE>
SCHEDULE 3.6(a)
ASSETS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] <PAGE>
SCHEDULE 3.6(b)
LIABILITIES
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.7
DEFAULTS AND VIOLATIONS
1. None
<PAGE>
SCHEDULE 3.9
CONDITION OF ASSETS
1. No disclosure is made pursuant to Section 3.9.
<PAGE>
SCHEDULE 3.10
CONTRACTS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] <PAGE>
SCHEDULE 3.11
LICENSES, PERMITS, FRANCHISES AND RIGHTS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] <PAGE>
SCHEDULE 3.12
INSURANCE
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.13
EMPLOYEE BENEFIT PLANS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.15
CONSENTS
1. In accordance with Section _____ of the Articles of Association,
Seller is obligated to obtain the consent of Pacific Enerchange to
the disposition of the Acquired Interest.
<PAGE>
SCHEDULE 3.16
LITIGATION
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.18
BANK ACCOUNTS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
EXHIBIT A-7
[CONFIDENTIAL TREATMENT OF BRACKETED MATERIAL REQUESTED PURSUANT TO
RULE 104(B)]
FORM OF PURCHASE AGREEMENT
(Designated as Exhibit EX-2 for EDGAR purposes)
THIS PURCHASE AGREEMENT (this "Agreement"), dated as of
________, 1997, is made by and between NICOR Hub Services, Inc., an
Illinois corporation ("Seller"), and Leidy Hub, Inc., a New York
corporation ("LHI" or "Purchaser"). Other capitalized terms used in
this Agreement are defined in Article I.
RECITALS
1. On _________, 1997, Seller and Pacific Enerchange, a
California corporation, formed CanDuCo.
2. The Articles of Association provide that shares of the
Company may be transferred with the approval of the directors of the
Company.
3. Seller wishes to sell to Purchaser, and Purchaser wishes
to buy from Seller 29.59184% of the issued and outstanding shares in
CanDuCo (the "Acquired Interest").
4. The directors of the Company have approved Seller's sale
of the Acquired Interest to Purchaser.
In consideration of the mutual covenants, agreements and
warranties herein contained, the parties desire that Purchaser shall
acquire from Seller all of the Acquired Interest upon the terms and
conditions hereinafter set forth.
ARTICLE I
DEFINITIONS
The following terms shall have the meanings set forth herein
for the purposes of this Agreement:
"Acquired Interest" is defined in the second recital.
"Act" means the Companies Act (Nova Scotia), R.S.N.S. 1989,
c.81, and all amendments to the Act, as in effect from time to time.
"Affiliate" means, with respect to any Person, another Person
that directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with such
Person.
"Articles of Association" means that certain Articles of
Association dated as of _____, 1997 between Seller and Pacific
Enerchange.
<PAGE>
"Closing Date" means the date on which the Closing occurs or is
to occur.
"CanDuCo" or "Company" means CanDuCo Company, a Nova Scotia,
Canada unlimited liability company.
"Electronic Trading System" means the electronic gas trading
and nominations system that QuickTrade Canada operates in Canada.
"Governmental Authority" means the government of the United
States or Canada, any state, province, or political subdivision
thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Indemnified Person" shall mean the Person entitled to, or
claiming a right to, indemnification under Article VIII.
"Indemnifying Person" shall mean the Person claimed by the
Indemnified Person to be obligated to provide indemnification under
Article VIII.
"Losses" is defined in Section 8.2.
"Person" means an individual, trust, Governmental Authority,
estate or any incorporated or unincorporated company, corporation,
limited liability company, partnership or other organization.
"Purchase Price" is defined in Section 2.2.
"Pre-Purchase Agreement" means that certain Pre-Purchase
Agreement dated July 15, 1997, executed by Seller and Purchaser.
"Proceedings" is defined in Section 3.17.
"Purchaser" is defined in the preamble. "Seller" is defined in
the preamble.
"QuickTrade Canada" means QuickTrade Canada Limited
Partnership, an Alberta, Canada, limited partnership.
"Taxes" means all taxes, charges, fees, duties, levies or other
assessments, including (without limitation) income, gross receipts,
net proceeds, ad valorem, turnover, real and personal property
(tangible and intangible), sales, use, franchise, excise, value
added, stamp, leasing, lease, user, transfer, fuel, excess profits,
occupational, interest equalization, windfall profits, severance and
employees' income withholding, unemployment and Social Security
taxes, which are imposed by the United States, or any state, local
or foreign government or subdivision or agency thereof, and such
term shall include any interest, penalties or additions to tax
attributable to such Taxes.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale of The Acquired Interest. Subject to
the terms and conditions set forth in this Agreement, at the
Closing, Seller shall sell, assign, transfer, convey and deliver to
Purchaser, and Purchaser shall accept, acquire and take assignment
and delivery of, all of the Acquired Interest.
2.2 Payment of Purchase Price. In consideration for such
sale, assignment, transfer, conveyance and delivery to Purchaser by
Seller of all of the Acquired Interest, on the Closing Date
Purchaser will pay to Seller the sum of
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX], the "Purchase Price".
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
3.1 Ownership of Acquired Interest. Seller owns beneficially
and legally all right, title and interest in and to the Acquired
Interest, free and clear of any security interest, lien, adverse
claim or other encumbrance. The Acquired Interest in the aggregate
constitutes 29.59184% of the issued and outstanding shares in
CanDuCo. None of the Acquired Interest is subject to any
restriction on transfer, other than as set forth in the Articles of
Association.
3.2 Due Organization. To the best of Seller's knowledge, the
Company is an unlimited liability company duly organized, validly
existing and in good standing under the laws of the province of Nova
Scotia with all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted. To the best of Seller's knowledge, the Company is
duly qualified and in good standing to do business in each
jurisdiction where the failure to be so qualified would, in the
aggregate, have a material adverse effect on the business or
operations of the Company. The Company owns no equity or debt
securities of any Person. True, correct and complete copies of the
Company's Memorandum of Association and all other organizational
documents of the Company have been delivered to Purchaser.
3.3 Due Authorization. Seller has full power and authority to
enter into this Agreement and to carry out the transactions
contemplated hereby, and this Agreement has been duly and validly
executed and delivered by Seller, and constitutes the legal, valid
and binding obligation of Seller, enforceable in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
from time to time in effect which affect creditors' rights
generally, and by legal and equitable limitations on the
availability of specific remedies.
3.4 No conflict. The execution, delivery and performance of
this Agreement and all other instruments, agreements, certificates
and documents contemplated hereby by Seller do not: (i) violate any
order, decree or judgment of any Governmental Authority applicable
to Seller, or the Acquired Interest or, to the best of Seller's
knowledge, the Company; (ii) violate any law (or regulation or rule
promulgated under any law); (iii) violate or conflict with, or
result in a breach of, or constitute a default (or an event which,
with or without notice or lapse of time or both, would constitute a
default) under, or permit cancellation of, or result in the creation
of any lien or encumbrance or other contingent liability upon any of
the assets of the Company or the Acquired Interest under, any of the
terms, conditions, or provisions of any contract to which Seller or
the Company is a party, or by which either of them or any of the
assets of the Company or the Acquired Interest is bound; (iv) permit
the acceleration of the maturity of any indebtedness of the Company,
or any indebtedness secured by any of the assets of the Company or
the Acquired Interest; or (v) violate or conflict with any provision
of the charter, by-laws or other organizational documents of Seller
or, to the best of Seller's knowledge, the Company.
3.5 Ownership of Interests. Prior to giving effect to
Purchaser's acquisition of the Acquired Interest pursuant to this
Agreement, Seller owned 70.40546% of the issued and outstanding
shares in the Company. Neither Seller nor, to the best of Seller's
knowledge, the Company has granted any option, warrant, or similar
right to any Person to purchase or acquire any rights with respect
to any shares, or any other interest whatsoever, in the Company.
3.6 Title to and Condition of Properties and the Company. To
the best of Seller's knowledge the Company has good title to and is
the lawful owner of all of the assets of the Company, free and clear
of all security interests, liens, adverse claims and other
encumbrances. All of the assets of the Company are listed on
Schedule 3.6(a). All of the liabilities of the Company are listed
on Schedule 3.6(b). The Company has no liabilities, debts, claims
or obligations, whether accrued, absolute, contingent or otherwise,
whether due or to become due, except as set forth on Schedule 3.6(b).
3.7 No Defaults or Violations. To the best of Seller's
knowledge, except as set forth on Schedule 3.7, (a) the Company has
not materially breached any provision of, nor is it in material
default under the terms of, any contract to which it is a party or
under which it has any rights or by which it is bound, and to
Seller's knowledge no other party to any such contract is in default
thereunder in any material respect, and (b) the Company is not in
material violation of or default under or with respect to any law,
governmental regulation or rule or order of any Governmental
Authority that is applicable in any way to the business or operation
of the Company, provided that, to the extent such representations
and warranties in clauses (a) and (b) above are made with respect to
any breach, default or violation by the Company that may have arisen
from and after the Company's formation, such representations and
warranties are made to the best of Seller's knowledge. Except as
set forth in Schedule 3.7, none of the assets of the Company is in
material violation of any law, building, zoning or other ordinance,
code or regulation applicable to it.
3.8 Taxes. To the best of Seller's knowledge, having been
formed shortly before the Closing Date, the Company has not
previously filed any Federal, state and other tax returns and
reports as of the Closing Date; the Company has not been required to
file any such returns; and the Company has not been required to pay
any Taxes on or prior to the Closing Date.
3.9 Condition of Assets. To the best of Seller's knowledge,
except as disclosed on Schedule 3.9, all of the assets of the
Company, whether real or personal, owned or leased, are in
reasonably good operating condition (with the exception of normal
wear and tear).
3.10 Contracts. To the best of Seller's knowledge, Schedule
3.10 includes all the contracts and arrangements (including, without
limitation, any employment contracts) to which the Company is a
party or by which it is bound or to which any of the assets of the
Company is subject. Seller has delivered to Purchaser true, correct
and complete copies of each document listed on Schedule 3.10, and a
written description of each oral arrangement so listed.
3.11 Permits, etc. To the best of Seller's knowledge, the
Company holds all of the licenses, certificates, permits, franchises
and rights listed on Schedule 3.11, and, to the best of Seller's
knowledge, does not require any other licenses, certificates,
permits, franchises and rights to conduct the Business and its other
affairs.
3.12 Insurance Policies. To the best of Seller's knowledge,
Schedule 3.12 contains a list of each insurance policy currently
providing coverage for the assets or business of the Company and a
copy of each such policy has been delivered to Purchaser.
3.13 Employee Benefit Plans. To the best of Seller's
knowledge, each "employee pension benefit plan," as such term is
defined in Section 3(2) of ERISA, and each "employee welfare benefit
plan," as defined in Section 3(1) of ERISA, that is maintained by
the Company to provide benefits for its employees is described on
Schedule 3.13.
3.14 No Other Agreement. To the best of Seller's knowledge,
other than the Sale Agreements, neither Seller nor any its
Affiliates has any contract, agreement, arrangement or understanding
with respect to the sale or other disposition of the assets of the
Company or any interests in the Company.
3.15 Consents. Except as set forth on Schedule 3.15, no notice
to, filing with, authorization of, exemption by, or consent of any
Person is required in order for Seller to consummate the
transactions contemplated hereby.
3.16 Litigation.
(a) To the best of Seller's knowledge, except as disclosed in
Schedule 3.16, there are no claims, actions, suits, arbitrations,
regulatory proceedings or other litigation, proceedings or
governmental investigations (collectively, "Proceedings") pending,
or to the best of Seller's knowledge, threatened against or
affecting the Company, Seller or any of its respective officers,
directors, employees, agents or stockholders thereof in their
capacity as such, or any of their respective properties or
businesses relating to such Persons in such capacities, and Seller
is not aware of any facts or circumstances which may give rise to
any of the foregoing; provided that to the extent such
representations and warranties in this clause are made with respect
to any Proceedings that may have arisen against the Company from and
after the Company's formation, such representations and warranties
are made to the best of Seller's knowledge.
(b) To the best of Seller's knowledge, there are no
Proceedings pending or, to the best of Seller's knowledge,
threatened by or against the Company or Seller with respect to this
Agreement, or in connection with the transactions contemplated
hereby or thereby, and Seller has no reason to believe there is a
valid basis for any such Proceeding; provided that to the extent
such representations and warranties in this clause are made with
respect to any Proceedings that may have arisen against the Company
from and after the Company's formation, such representations and
warranties are made to the best of Seller's knowledge.
<PAGE>
3.17 No Conflict of Interest. Neither Seller nor any of its
Affiliates has or claims to have any direct or indirect interest in
any tangible or intangible property used in the Business, except
Seller's interest as an owner of its shares in the Company.
3.18 Bank Accounts. Schedule 3.18 sets forth the names and
locations of each bank or other financial institution at which the
Company has an account (giving the account numbers) or safe deposit
box and the names of all Persons authorized to draw thereon or have
access thereto, and the names of all Persons, if any, now holding
powers of attorney or comparable delegation of authority from the
Company and a summary statement thereof.
3.20 Accuracy of Statements. This Agreement does not contain
any untrue statement of a material fact regarding Seller, the
Company, the assets of the Company or the Acquired Interest.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that:
4.1 Due Authorization. Purchaser has full power and authority
to enter into this Agreement and to carry out the transactions
contemplated hereby, and this Agreement has been duly and validly
executed and delivered by Purchaser, and constitutes the legal,
valid and binding obligation of Purchaser, enforceable in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws from time to time in effect which affect creditors'
rights generally, and by legal and equitable limitations on the
availability of specific remedies.
4.2 No Conflict. The execution, delivery and performance of
this Agreement and all other instruments, agreements, certificates
and documents contemplated hereby by Purchaser do not: (i) violate
any decree or judgment of any Governmental Authority applicable to
Purchaser; (ii) violate any law (or existing regulation promulgated
under any law); (iii) violate or conflict with, or result in a
breach of, or constitute a default (or an event which, with or
without notice or lapse of time or both, would constitute a default)
under, any of the terms, conditions, or provisions of any contract
to which Purchaser is a party, or by which Purchaser is bound; or
(iv) violate or conflict with any provision of the charter, by-laws
or other organizational documents of Purchaser.
4.3 Investment Intent. Purchaser is acquiring the Acquired
Interest for its own account, for investment and not with a view to,
or for sale or other disposition in connection with, any
"distribution" thereof, within the meaning of the Securities Act of
1933, as amended, nor with any present intention of selling or
otherwise disposing of the Acquired Interest.
4.4 Consents. Except as set forth on Schedule 4.3, no notice
to, filing with, authorization of, exemption by, or consent of any
Person is required in order for Purchaser to consummate the
transactions contemplated hereby.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to Obligations of the Purchaser. The
obligation of Purchaser to purchase the Acquired Interest at Closing
is subject to the satisfaction of the following conditions:
5.1.1 Representations and Warranties. The representations and
warranties set forth in this Agreement made by Seller shall be
accurate as of the Closing Date as if made on the Closing Date, and
Seller shall have delivered to Purchaser a certificate so certifying.
5.1.2 Compliance with Agreements and Covenants. Seller shall
have performed and complied with all of its covenants, obligations
and agreements contained in this Agreement to be performed and
complied with by Seller on or prior to the Closing Date.
5.2 Conditions Precedent to Obligations of Seller. The
obligation of Seller to sell the Acquired Interest at Closing is
subject to the satisfaction of the following conditions:
5.2.1 Representations and Warranties. The representations and
warranties set forth in this Agreement made by Purchaser shall be
accurate as of the Closing Date as if made on the Closing Date, and
Purchaser shall have delivered to Seller a certificate so certifying.
5.2.2 Compliance with Agreements and Covenants. Purchaser
shall have performed and complied with all of its covenants,
obligations and agreements contained in this Agreement to be
performed and complied with by Purchaser on or prior to the Closing
Date.
5.2.3 Company Approval. Seller shall have obtained the
approval of the directors of the Company to sell the Acquired
Interest to Purchaser in form and substance satisfactory to Seller
in its sole discretion.
ARTICLE VI
COVENANTS
6.1 Implementing This Agreement. From the date hereof to the
Closing Date, each of Purchaser and Seller will take all necessary
action to fulfill its respective obligations under this Agreement
and shall take all commercially reasonable efforts to consummate the
transactions contemplated thereby.
ARTICLE VII
CLOSING
7.1 Closing. The Closing shall take place on or before the
tenth business day following the day on which Purchaser's
acquisition of the Acquired Interest is approved by the SEC, or on
such later date to which the parties hereto shall agree.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival. The representations and warranties of the
parties hereto contained herein and in this Article VIII shall
survive the Closing. Such representations and warranties shall be
deemed made as of the date of this Agreement and as of the Closing
Date.
8.2 Indemnification by Seller. Seller agrees to indemnify
Purchaser against, and agrees to hold Purchaser harmless from, any
and all liabilities, losses, costs, claims, damages (including
without limitation consequential damages), penalties and expenses
(including without limitation reasonable attorneys' fees and
expenses and reasonable costs of investigation) (collectively,
"Losses") incurred or suffered by Purchaser relating to or arising
out of or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Seller in this Agreement;
(b) any breach of or failure by Seller to perform any covenant
or obligation of Seller set out or contemplated in this Agreement; or
(c) any actual and/or contingent liabilities arising from, or
in connection with, or as a result of Seller's performance, act or
omission prior to the Closing Date.
8.3 Indemnification by Purchaser. Purchaser agrees to
indemnify Seller against, and agrees to hold Seller harmless from,
any and all Losses incurred or suffered by Seller relating to or
arising out of or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Purchaser in this Agreement ; or
(b) any breach of or failure by Purchaser to perform any
covenant or obligation of Purchaser set out or contemplated in this
Agreement.
8.4 Claims. The provisions of this Section shall be subject
to Section 8.5. As soon as is reasonably practicable after becoming
aware of a claim for indemnification under this Agreement the
Indemnified Person shall promptly give notice to the Indemnifying
Person of such claim and the amount the Indemnified Person will be
entitled to receive hereunder from the Indemnifying Person; provided
that the failure of the Indemnified Person to give notice shall not
relieve the Indemnifying Person of its obligations under this
Article VIII except to the extent (if any) that the Indemnifying
Person shall have been prejudiced thereby. If the Indemnifying
Person does not object in writing to such indemnification claim
within 30 calendar days of receiving notice thereof, the Indemnified
Person shall be entitled to recover promptly from the Indemnifying
Person the amount of such claim, and no later objection by the
Indemnifying Person shall be permitted. If the Indemnifying Person
agrees that it has an indemnification obligation but objects on the
grounds that it is obligated to pay only a lesser amount, the
Indemnified Person shall nevertheless be entitled to recover
promptly from the Indemnifying Person the lesser amount, without
prejudice to the Indemnified Person's claim for the difference.
8.5 Notice of Third Party Claims; Assumption of Defense. The
Indemnified Person shall give notice as promptly as is reasonably
practicable to the Indemnifying Person of the assertion of any
claim, or the commencement of any Proceeding, by any Person not a
party hereto in respect of which indemnity may be sought under this
Agreement; provided that the failure of the Indemnified Person to
give notice shall not relieve the Indemnifying Person of its
obligations under this Article VIII except to the extent (if any)
that the Indemnifying Person shall have been prejudiced thereby.
The Indemnifying Person may, at its own expense, (a) participate in
the defense of any claim, suit, action or proceeding and (b) upon
notice to the Indemnified Person and the Indemnifying Person's
delivering to the Indemnified Person a written agreement that the
Indemnified Person is entitled to indemnification for all Losses
arising out of such claim or Proceeding and that the Indemnifying
Person shall be liable for the entire amount of any Loss, at any
time during the course of any such claim or Proceeding, assume the
defense thereof; provided, however, that (i) the Indemnifying
Person's counsel is reasonably satisfactory to the Indemnified
Person, and (ii) the Indemnifying Person shall thereafter consult
with the Indemnified Person upon the Indemnified Person's reasonable
request for such consultation from time to time with respect to such
claim or Proceeding. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right (but not the
duty) to participate in the defense thereof. If the Indemnified
Person reasonably determines in its judgment that representation by
the Indemnifying Person's counsel of both the Indemnifying Person
and the Indemnified Person would present such counsel with a
conflict of interest, then such Indemnified Person may employ
separate counsel to represent or defend it in any such claim or
Proceeding, and the Indemnifying Person shall pay the fees and
disbursements of such separate counsel. Whether or not the
Indemnifying Person chooses to defend or prosecute any such claim or
Proceeding, all of the parties hereto shall cooperate in the defense
or prosecution thereof.
8.6 Settlement or Compromise. Any settlement or compromise
made or caused to be made by the Indemnified Person or the
Indemnifying Person, as the case may be, of any such claim or
Proceeding of the kind referred to in Section 8.5 shall also be
binding upon the Indemnifying Person or the Indemnified Person, as
the case may be, in the same manner as if a final judgment or decree
had been entered by a court of competent jurisdiction in the amount
of such settlement or compromise; provided, however, that no
obligation, restriction or Loss shall be imposed on the Indemnified
Person as a result of such settlement without its prior written
consent.
8.7 Failure of Indemnifying Person to Act. In the event that
the Indemnifying Person does not elect to assume the defense of any
claim or Proceeding, then any failure of the Indemnified Person to
defend or to participate in the defense of any such claim or
Proceeding or to cause the same to be done, shall not relieve the
Indemnifying Person of its obligations hereunder.
ARTICLE IX
MISCELLANEOUS
9.1 Expenses. Each party hereto shall bear its own expenses
with respect to this transaction.
9.2 Amendment. This Agreement may be amended, modified or
supplemented, but only in writing signed by each of the parties
hereto.
9.3 Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed to be
an original, but together shall constitute one and the same
instrument.
<PAGE>
9.4 Headings. Section and Article headings in this Agreement
are for convenience of reference only, and shall not govern the
interpretation of the provisions of this Agreement.
9.5 Severability. Any provisions of this Agreement that are
held to be inoperative, unenforceable or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions of this Agreement
in that jurisdiction or the operation, enforceability, or validity
of such provisions in any other jurisdiction.
9.6 Entire Understanding. This Agreement, the Pre-Purchase
Agreement and the Company Agreement set forth the entire agreement
and understanding of the parties hereto with respect to the
transaction contemplated hereby and supersede all prior
arrangements, agreements and understandings relating to the subject
matter hereof. There have been no representations or statements,
oral or written, that have been relied on by either party hereto,
except those expressly set forth in this Agreement, the Pre-Purchase
Agreement and the Company Agreement.
9.7 Applicable Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the
State of Delaware, without regard to the conflicts of law principles
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on the date first above
written.
NICOR Hub Services, Inc.
By:___________________________
Title:________________________
Printed Name:_________________
LEIDY HUB, INC.
By:___________________________
President
Walter E. DeForest
<PAGE>
SCHEDULE 3.2
JURISDICTIONS OF QUALIFICATION
1. Nova Scotia
<PAGE>
SCHEDULE 3.6(a)
ASSETS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.6(b)
LIABILITIES
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.7
DEFAULTS AND VIOLATIONS
1. None
<PAGE>
SCHEDULE 3.9
CONDITION OF ASSETS
1. No disclosure is made pursuant to Section 3.9.
<PAGE>
SCHEDULE 3.10
CONTRACTS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.11
LICENSES, PERMITS, FRANCHISES AND RIGHTS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] <PAGE>
SCHEDULE 3.12
INSURANCE
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.13
EMPLOYEE BENEFIT PLANS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.15
CONSENTS
1. In accordance with Section _____ of the Articles of Association,
Seller is obligated to obtain the consent of Pacific Enerchange to
the disposition of the Acquired Interest.
<PAGE>
SCHEDULE 3.16
LITIGATION
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
<PAGE>
SCHEDULE 3.18
BANK ACCOUNTS
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
EXHIBIT E-1
CHART ILLUSTRATING THE PROPOSED AND RELATED TRANSACTIONS
(Designated as Exhibit EX-99 for EDGAR purposes)
QuickTrade Canada
(Post-Acquisition)
Enerchange L.L.C.
(Delaware limited <_____14.5%_______LHI NICOR PE
liability company) | | |
| 100% 29.59184% | |
| | | |
| | | |
Enerchange Canada Inc. | | |
(Alberta corporation)____ |_______CanDuCo Company____|
| (Nova Scotia
| unlimited liability company)
| |
|(general | (48.51%
| partner | limited
NGC Canada Inc. | interest) | partner
(Alberta corporation) | | interest)
| (limited | |
| partner | |
| interest) | |
| | |
|______________ QuickTrade Canada_________|
Limited Partnership
(Alberta limited partnership)
NICOR = NICOR Hub Services, Inc.
NGC = Natural Gas Clearinghouse
LHI = Leidy Hub, Inc.
PE = Pacific Enerchange
EXHIBIT H-1
Proposed Form of Public Notice (Designated as EX-99 for EDGAR
purposes
Exhibit H-1
UNITED STATES OF AMERICA
before the SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 Release No. _______
In the Matter of
NATIONAL FUEL GAS COMPANY
10 Lafayette Square
Buffalo, NY 14203
LEIDY HUB, INC.
10 Lafayette Square
Buffalo, NY 14203
( )
NOTICE OF PROPOSED ACQUISITION OF AN INTEREST IN A BUSINESS
National Fuel Gas Company ("National"), a registered holding
company, and its wholly-owned subsidiary, Leidy Hub, Inc. ("LHI")
have filed an Application-Declaration with this Commission pursuant
to Sections 9(a), 10, 11(b), 12(b), 13(b) of the Public Utility
Holding Company Act of 1935, as amended (the "Act"), the Gas
Related Activities Act of 1990, and Rules 16, 23, 24, 45, 51 and
52 promulgated under the Act.
National and LHI propose that LHI enter into a purchase
agreement whereby LHI will acquire a 29.59184% ownership interest
in CanDuCo Company, a Nova Scotia unlimited liability company
("CanDuCo"). CanDuCo will hold a limited partner interest in
QuickTrade Canada Limited Partnership, and Alberta Limited
Partnership ("QuickTrade Canada"). QuickTrade Canada provides an
electronic trading and nomination system that can be accessed via
computers for transactions at locations in Canada, as is provided
in the United State by QuickTrade L.L.C., a Delaware limited
liability company. National and LHI are also seeking authority for
National and LHI to make loans to CanDuCo and to guarantee certain
obligations of LHI, CanDuCo, Enerchange Canada Inc., an Alberta
Corporation and/or QuickTrade Canada to be incurred in connection
with CanDuCo's business.
The Application-Declaration and any amendments thereto are
available for public inspection through the Commission's Office of
Public Reference. Interested persons wishing to comment or request
a hearing should submit their views in writing to the Secretary,
Securities and Exchange Commission, Washington, D.C. 20549, and
serve a copy on the applicant at the address specified above.
Proof of service (by Affidavit or, in case of an attorney-at-law,
by Certificate) should be filed with the request. Any request for
a hearing shall identify specifically the issues of fact or law
that are disputed. A person who so requests will be notified of
any hearing, if ordered, and will receive a copy of any notice or
order issued in this matter.
After said date, the Application-Declaration, as filed or as
it may be amended, may be granted and/or permitted to become
effective.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
