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EXHIBIT 10.24
CMS TAX AGREEMENT
This Agreement is made and entered into as of the 24th day of February,
1995, by and between Amoco Corporation ("Amoco"), an Indiana corporation
("Amoco"), Amoco Production Company, a Delaware corporation ("APC"), CMS Energy
Corporation, a Michigan corporation ("CMS"), CMS Enterprises, Inc., a Michigan
corporation ("Enterprises"), CMS-Nomeco Oil & Gas Co., a Michigan corporation
("Nomeco"), Walter International, Inc., a Texas corporation ("Walter"), Walter
Congo Holdings, Inc., a Texas corporation ("Walter Holdings"), and Walter
International Congo, Inc., a Delaware corporation ("Walter Congo").
W I T N E S S E T H:
WHEREAS, Amoco is the indirect parent of APC; and
WHEREAS, APC was the owner of ten (10) issued capital shares, one
hundred United States Dollars (U.S. $100.00) par value per share, of Amoco
Congo Exploration Company ("ACEC") (ACEC or its successor corporation, Walter
Congo, sometimes hereinafter referred to as the "Company"), constituting all of
the ACEC's issued and outstanding shares of capital stock ("Shares"); and
WHEREAS, the Company's operations are subject to taxation in the
Republic of the Congo ("Congo") as a branch operation of a foreign corporation;
and
WHEREAS, ACEC may have incurred substantial dual consolidated losses
("DCLs"), as defined by the DCL Regulations; and
WHEREAS, APC and the Amoco Consolidated Group have filed all necessary
certifications required pursuant to Treasury Regulation Section
1.1503-2A(d)(3), and have filed and will timely file all certifications
required pursuant to Treasury Regulation Section 1.1503-2(g)(2), and have
filed the replacement election under Treasury Regulation Section
1.1503-2(h)(2)(ii) with the United States Internal Revenue Service ("IRS")
regarding the use of said DCLs; and
WHEREAS, the existing DCLs of the Company must be recaptured into income
under certain circumstances, potentially resulting in substantial tax
liability, as well as an interest charge thereon; and
WHEREAS, on February 22, 1995, Amoco filed a request for a private
letter ruling with the U.S. Internal Revenue Service (the "Service") that the
net operating losses of ACEC do not constitute DCLs; and
WHEREAS, on the Sale Closing Date (as hereinafter defined), APC sold all
of the Shares of ACEC to Walter Holdings by means of a taxable reverse
subsidiary merger; and
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WHEREAS, Walter Holdings is a wholly-owned subsidiary of Walter; and
WHEREAS, OPIC has issued to Walter a contract of political risk
insurance ("Insurance Policy") with respect to Walter's investment in the
Company, and, upon payment of certain claims under such policy, Walter will
transfer or cause to be transferred, to OPIC the Shares and/or other interests
in, or of, the Company; and
WHEREAS, OPIC and Walter Holdings have entered into a Finance Agreement
(the "Finance Agreement") and a related Participation and Guaranty Agreement,
pursuant to which OPIC has guaranteed the obligations of Walter Holdings and
the Company in respect of loans (the "Loans") to be made by lenders pursuant to
the Finance Agreement; and
WHEREAS, the obligations of the Company and Walter Holdings under the
Loan Agreements will be secured by a pledge of the Shares and by a lien on
specified escrow accounts at a bank in the United States containing funds
denominated in U.S. dollars; and
WHEREAS, under the terms of that certain Tax Agreement dated February
23, 1995, between, inter alia, Amoco, APC, Walter, Walter Holdings, and the
Company (the "Tax Agreement"), Walter, Walter Holdings, and the Company agreed
that they shall (i) promptly notify APC of any proposed transaction that might
constitute an event that could trigger recapture of any DCLs under the DCL
Regulations; (ii) allow APC to advise them regarding the terms and conditions
of such proposed transaction solely for the purpose of avoiding recapture of
any DCLs; and (iii) obtain the written approval of APC with respect to such
proposed transaction, which approval is not to be unreasonably withheld; and
WHEREAS, following the sale of ACEC to Walter Holdings, CMS Merging
Corporation, a Texas corporation and a wholly-owned subsidiary of CMS, will be
merged with and into Walter. It is contemplated that following the CMS Merging
Corporation-Walter merger, CMS will transfer all the outstanding stock of
Walter to Enterprises, a subsidiary of CMS, and immediately thereafter,
Enterprises will transfer all of the outstanding stock of Walter to Nomeco, a
subsidiary of Enterprises (the transactions described in this paragraph
hereinafter collectively referred to as the "Proposed Acquisition"); and
WHEREAS, follow the Proposed Acquisition, each of Enterprises, Nomeco,
Walter, Walter Holdings, and Walter Congo will be members of the CMS
Consolidated Group; and
WHEREAS, the execution of this Agreement by the parties hereto is a
condition precedent to Amoco's granting its approval to the Proposed
Acquisition; and
WHEREAS, the parties hereto desire to avoid triggering recapture into
income of any DCLs pursuant to the provisions of the DCL Regulations; and
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WHEREAS, CMS Enterprises, Nomeco, Walter, Walter Holdings, and Walter
Congo collectively, the "CMS Indemnifying Parties") hereby acknowledge that,
after the Proposed Acquisition, Amoco and APC can rely only on CMS,
Enterprises, Nomeco, Walter, Walter Holdings, Walter Congo, and their
successors and assigns, to monitor transactions with respect to the Company and
take any action necessary to prevent the triggering of the DCL recapture
liability.
NOW THEREFORE, in consideration of the premises and the respective
covenants, agreements, and conditions contained herein, the parties hereby
agree as follows:
1. Definitions
For the purposes of this Agreement, the following terms shall have the
following meanings:
"Affiliate" shall mean:
(1) any company at least fifty percent (50%) of whose shares
entitled to vote for the election of directors are owned,
directly or indirectly, by such party;
(2) any company which owns, directly or indirectly, at least
fifty percent (50%) of the shares entitled to vote for the
election of directors of such party; or
(3) any company at least fifty percent (50%) of whose shares
entitled to vote for the election of directors are owned,
directly or indirectly, by a company which at the same time
owns, directly or indirectly, at least fifty percent (50%) of
the shares entitled to vote for the election of directors of
such party.
"Agreement" shall mean this Agreement and any amendments thereto.
"Closing Agreement" shall mean an agreement described in Treasury
Regulation Section 1.1503-2(g)(2)(iv)(B)(2).
"Closing Date" shall mean the date of the proposed merger of CMS Merging
Corporation into Walter.
"Code" shall mean the U.S. Internal Revenue Code of 1986, as amended.
All references herein to the Code, or to the Treasury Regulations
promulgated thereunder, shall include any amendments or any substitute
or successor provisions thereto.
"Consolidated Group" shall mean a group of corporations that has elected
to make a consolidated return with respect to income tax imposed by
chapter 1 of the Code.
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"DCL" shall mean the dual consolidated losses of the Company, if any, as
defined in section 1503(d) of the Code and the DCL Regulations.
"DCL Regulations" shall mean Treasury Regulation Section 1.1503-2A,
Treasury Regulation Section 1.1503-2, or any successor regulation as in
effect from time to time.
"Event of Default" shall have the meaning defined in the Finance
Agreement.
"Loss Event" shall have the meaning defined in the Insurance Policy.
"Obligated Person" shall mean any Person (other than OPIC or any Person
(other than a Person who is a party to this Agreement) who acquires any
interest in any of the Shares or any of the assets of the Company from
or under the direction of OPIC solely as a result of OPIC's exercise of
its rights under any Insurance Policy or Loan Agreement) who acquires
any interest in any of the Shares or any of the assets of the Company
(including but not limited to any transferee, creditor, guarantor, or
subrogee), excluding any unrelated third party who purchases
hydrocarbons or surplus materials or equipment from the Company in the
ordinary course of the Company's business.
"OPIC" shall mean the Overseas Private Investment Corporation, an agency
of the United States of America organized as a corporation under the
laws of the United States.
"Person" shall have the meaning contained in section 7701(a)(1) of the
Code and any Treasury Regulations promulgated thereunder.
"Sale Closing Date" shall mean the date on which APC sold all of the
Shares to Walter Holdings by means of a taxable reverse subsidiary
merger.
"Separate Unit" shall have the meaning contained in Treasury Regulation
Section 1.1503-2(c)(3).
"Taxes" shall mean all federal, state, local, foreign, and other net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties, or other taxes, fees,
assessments, or charges in the nature of a tax, together with any
interest and any penalties, additions to tax or additional amounts with
respect thereto, and the term "Tax" means any of the foregoing Taxes.
"Treasury Regulations" shall mean the Treasury Regulations promulgated
under the Code, including any amendments or any substitute or successor
provisions thereto.
"Triggering Event" shall mean any one or more of the events specified in
Treasury Regulation Section 1.1503-2(g)(iii)(A) or Treasury Regulation
Section 1.1503-2A(d)(4), the occurrence of which would require the
recapture of DCLs, plus applicable interest, into income as provided in
the DCL Regulations.
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2. Closing Agreement
A. Amoco and CMS agree that prior to the Closing Date, CMS, Walter,
the Company, and if the Service deems it necessary, Amoco, shall
submit to the IRS a request for a Closing Agreement as specified
in Treasury Regulation Section 1.1503-2(g)(2)(iv)(B)(2) in the
form and substance attached hereto as Exhibit A.
B. In conjunction with the Closing Agreement specified in Article
2.A, above, and as an integral part thereof, CMS, Walter, the
Company, and if the Service deems it necessary, Amoco, shall
request from the Service a ruling that the Proposed Acquisition
will not constitute a Triggering Event with respect to any DCLs of
the Company.
C. CMS, Walter, the Company, and, if necessary, Amoco, agree to make
all representations and to supply all information necessary for
the Service to enter into the Closing Agreement and to issue the
rulings requested under this Article 2, including, but not limited
to:
(1) representations by CMS, Walter, Walter Congo, and, if deemed
necessary by the Service in order to have an effective
Closing Agreement, Amoco, that they agree to be jointly and
severally liable for the amount of United States federal
income tax with respect to any DCLs of ACEC incurred up to
and including the Sale Closing Date, plus any applicable
interest charge thereon, due as a result of the occurrence of
any Triggering Event;
(2) representations by CMS, Walter, and Walter Congo that they
agree to be jointly and severally liable for the amount of
United States federal income tax, plus any applicable
interest charge thereon, with respect to any DCLs of the
Company incurred after the Sale Closing Date, due as a result
of the occurrence of any Triggering Event;
(3) representations by CMS that it will treat any potential
recapture amount as unrealized built-in gain for purposes of
section 384(a) of the Code;
(4) representations by CMS and the Company that they will each
timely file the agreement (including applicable
certifications) required by Treasury Regulation Section
Section 1.1503-2(g)(2)(iv)(B)(2)(iii) and 1.1503-2(g)(2)(i).
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3. Covenants Regarding Periods After Closing Date
CMS, Enterprises, Nomeco, Walter, and the Company agree with respect to
each taxable year ending after the Closing Date that they:
A. shall not take any action to cause the occurrence of any
Triggering Event;
B. shall limit the business of the Company to the exploitation of the
Yombo Permit;
C. shall promptly notify APC of (i) any proposed voluntary sale,
exchange, transfer, contribution, distribution, actual or
constructive liquidation, dissolution, reorganization, lease,
farmout of any of the Shares or any of the assets of the Company
or any Separate Unit thereof that would have the effect of causing
the Company to cease being a member of its Consolidated Group, or
any of the assets of the Company or any Separate Unit thereof
(other than sales of hydrocarbons or surplus materials or
equipment to unrelated third parties in the ordinary course of
business), or (ii) any proposed sale, exchange, transfer,
contribution, reorganization, distribution, actual or constructive
liquidation, dissolution, lease, or other disposition of CMS,
Enterprises, Nomeco, Walter, or Walter Holdings or the stock of
CMS, Enterprises, Nomeco, Walter, or Walter Holdings that would
have the effect of causing the Company to become a member of a new
Consolidated Group. Prior to the consummation of any such
voluntary sale, exchange, transfer, contribution, reorganization,
distribution, actual or constructive liquidation, dissolution,
lease, farmout, or other disposition, CMS shall:
(1) allow APC to advise CMS and its Affiliates regarding the
terms and conditions of such proposed sale, exchange,
transfer, contribution, reorganization, distribution, actual
or constructive liquidation, dissolution, lease, farmout, or
other disposition solely for the purpose of avoiding
recapture of any DCLs of the Company or any Separate Unit
thereof as a result of said sale, exchange, transfer,
contribution, reorganization, distribution, actual or
constructive liquidation, dissolution, lease, farmout, or
other disposition; and
(2) obtain the written approval of APC with respect to such terms
and conditions, which approval shall not be unreasonably
withheld;
D. shall promptly notify APC of any actual or potential involuntary
sale, exchange, transfer, contribution, reorganization,
distribution, actual or constructive liquidation, dissolution,
lease, farmout, or other disposition of the Company or any of the
Shares or any of the assets of a Company or any Separate Unit
thereof, or any sale, exchange, transfer, contribution,
reorganization, distribution, actual or constructive liquidation,
dissolution, lease, or other disposition of CMS or any Affiliate
of CMS or the stock of CMS or any Affiliate of CMS that could have
the effect of causing a Company to become a member of a new
Consolidated Group, including, but not
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limited to (i) any Event of Default by any of Walter, Walter
Holdings, or the Company under any Loan Document or other
obligation to OPIC; (ii) any default or claimed default by any of
Walter, Walter Holdings, or the Company with respect to any
indebtedness that could result in a recapture of DCLs of the
Company or any separate Unit thereof; or (iii) any Loss Event
under any Insurance Policy or any other similar policy issued by
any other Person relating to the Company that could result in a
recapture of DCLs of the Company or any Separate Unit thereof;
E. shall, prior to any sale, exchange, transfer, contribution,
reorganization, distribution, actual or constructive liquidation,
dissolution, lease, farmout, or other disposition of the Company
or any of the Shares that would have the effect of causing a
Company to cease being a member of its Consolidated Group or any
of the assets of the Company or any Separate Unit thereof (other
than sales of hydrocarbons or surplus materials or equipment in
the ordinary course of business), notify APC in writing of the
terms and conditions of the proposed sale, exchange, transfer,
contribution, disposition, reorganization, actual or constructive
liquidation, dissolution, lease, farmout, or other disposition and
APC shall then have thirty (30) days to elect to purchase such
Shares or assets on such notified terms;
F. shall require any Obligated Person to agree to fulfill and be
bound by all of the obligations and covenants of CMS, Enterprises,
Nomeco, Walter, Walter Holdings, and Walter Congo contained in
this Agreement;
G. shall honor and abide by, and shall not in any way amend the terms
and obligations, of that certain Letter dated November 21, 1994,
from ACEC to the Director General of Taxation of the Congo;
H. shall not permit the Company to incur secured indebtedness in
excess of $10,000,000 in the aggregate, other than the Loans,
without the prior written consent of APC, which consent shall be
granted if the lender enters into an option agreement with APC
similar in form and substance to that certain Option Agreement
between Amoco and OPIC dated February 24, 1995; and
I. shall not permit any omission within its control that causes a
Triggering Event (other than any failure to contribute money or
assets to the Company).
Notwithstanding the covenants contained in this Article 3, (A) if (i) the
conditions contained in Article 4.B or Article 4.C hereof are met with respect
to an event and (ii) CMS or any Affiliate of CMS is released from any indemnity
in accordance with Article 4.B hereof or Article 4.C hereof, then CMS or such
Affiliate shall, with respect to that event only, (a) have no further
obligation to comply with the obligations or covenants
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contained herein and (b) be released from any breach of any covenant or
obligation contained herein, and (B) if (i) the conditions contained in Article
4.B hereof are met with respect to an event and (ii) the Company is released
from any indemnity in accordance with Article 4.B hereof, then CMS and its
Affiliates shall, with respect to that event only (a) have no further
obligation to comply with the obligations or covenants contained herein, and
(b) be released from any breach of any covenant or obligation contained herein.
For purposes of this paragraph and Article 4.B and Article 4.C hereof, an event
shall be deemed to be a separate event regardless of whether it may be, or may
have been intended to be, directly or indirectly, dependent on, related to, or
contemporaneous with any other event.
4. Indemnification by CMS, Enterprises, Nomeco, Walter, Walter Holdings,
and the Company
A. Except as expressly provided in Article 4.B and 4.C hereof, CMS,
Enterprises, Nomeco, Walter, Walter Holdings, the Company, or each
of them, jointly and severally, agree to indemnify and hold
harmless APC, its Affiliates, and their respective directors,
officers, and employees from and against any and all Taxes, tax
credits utilized, interest, penalties, costs of enforcement, and
reasonable attorneys fees incurred in defending against any claim
for Taxes, interest, penalties, or additional income or the
enforcement of this indemnification, if any, arising out of or
based upon or with respect to any failure by CMS, Enterprises,
Nomeco, Walter, Walter Holdings, the Company, or any of them, to
comply with each and every obligation and covenant of this
Agreement.
B. Notwithstanding the foregoing Article 4.A, CMS, Enterprises,
Nomeco, Walter, Walter Holdings, or the Company shall not be
required to indemnify APC, its Affiliates, or their respective
directors, officers, and employees:
(1) if, in the case of (i) a voluntary sale, exchange, transfer,
contribution, reorganization, distribution, actual or
constructive liquidation, dissolution, lease, farmout, or
other disposition of the Company or any of the Shares that
would have the effect of causing the Company to cease being a
member of its Consolidated Group or assets of the Company or
any Separate Unit thereof (other than sales of hydrocarbons
or surplus materials or equipment in the ordinary course of
business), or (ii) any sale, exchange, transfer,
contribution, reorganization, distribution, actual or
constructive liquidation, dissolution, lease, or other
disposition of CMS, Enterprises, Nomeco, Walter, Walter
Holdings or the stock of CMS, Enterprises, Nomeco, Walter, or
Walter Holdings that would have the effect of causing the
Company to become a member of a new Consolidated Group, CMS,
Enterprises, Nomeco, Walter, Walter Holdings, and the Company
obtained the review and written approval described in Article
3.C hereof.
(2) in the case of a transfer of any Shares of U.S. dollars
contained in any escrow account to OPIC or any other secured
lender as a result of a foreclosure upon default, but only if
APC and OPIC or other secured lender, as the case may be,
are, at the time of such transfer of Shares of U.S. dollars,
parties to an option agreement in the form and substance of
that certain Option Agreement attached as Schedule L to the
Agreement;
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(3) in the case of any transfer of Shares or assets resulting
from an expropriation or other Loss Event under an Insurance
Policy, unless OPIC fails to pay compensation for any loss
under political risk or similar insurance because OPIC has
determined that a primary cause of the loss was unreasonable
actions, including corrupt practices, attributable to CMS or
any Affiliate of CMS; or
(4) if, in the case of any other sale, exchange, transfer,
contribution, reorganization, distribution, actual or
constructive liquidation, dissolution, lease, farmout, or
other disposition of the Company or any of the Shares or
assets of the Company not otherwise described in this Article
4.B, CMS, Enterprises, Nomeco, Walter, Walter Holdings, or
Company complied with Article 3.E hereof.
C. Notwithstanding the foregoing Article 3 or Article 4.A, in the
case of a Triggering Event attributable to a taxable period in
which the Company is not an Affiliate of CMS, CMS and its
Affiliates at the time of such Triggering Event shall not be
required to comply with the covenants and obligations contained in
Article 3 hereof or to indemnify APC, its Affiliates, or their
respective directors, officers, and employees.
5. Indemnification by APC
If CMS, Enterprises, Nomeco, Walter, Walter Holdings, and the Company
shall have complied with the obligations and covenants contained in
Article 3 of this Agreement with respect to a Triggering Event that
caused the recapture of DCLs of a Company or a Separate Unit thereof and
such DCLs are attributable to periods ending on or before the Sale
Closing Date, then APC shall indemnify and hold harmless CMS and its
Affiliates, and their respective directors, officers, and employees from
and against any and all Taxes, tax credits utilized, interest,
penalties, costs of enforcement, and reasonable attorneys fees incurred
in defending against any claim for Taxes, interest, penalties, or
additional income or the enforcement of this indemnification, if any,
arising out of or based upon or with respect to any such recapture.
6. Rights of Indemnifying Party
A. Each indemnified party hereunder agrees that within five (5)
calendar days following the issuance of any notice from any taxing
authority of a Tax assessment or deficiency resulting from any DCL
recapture in connection with which a claim for indemnification
under this Agreement might be made (a "Claim"), it will give
prompt notice thereof to the indemnifying party, together with a
statement of such information respecting any of such facts as it
may have and a formal demand for indemnification. The
indemnifying party shall not be obligated to indemnify the
indemnified party with respect to any Claim if the indemnified
party fails to notify the indemnifying party in sufficient time
and with sufficient detail to permit the
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indemnifying party to defend against such matter and to make a
timely response thereto.
B. The indemnifying party shall be entitled, at its cost and expense,
to contest and defend by all appropriate legal proceedings any
Claim with respect to which they are called upon to indemnify the
indemnified party; provided, that notice of the intention so to
contest shall be delivered by the indemnifying party to the
indemnified party within 10 days after the date of receipt by the
indemnifying party of notice by the indemnified party of the
assertion of the Claim. Any such contest may be conducted in the
name and on behalf of the indemnifying party or the indemnified
party as may be appropriate. The indemnified party shall have the
right but not the obligation to participate in such proceedings
and to be represented by counsel of its own choosing at its sole
cost and expense.
C. If requested by the indemnifying party, the indemnified party
agrees to cooperate with the indemnifying party and its counsel in
contesting any Claim that the indemnifying party elects to contest
or, if appropriate, in making any counterclaim against the Person
asserting the Claim, or any cross-complaint against any Person,
and the indemnifying party will reimburse the indemnified party
for any expenses it incurs by so cooperating. The indemnified
party agrees to afford the indemnifying party and its counsel the
opportunity to be present at, and to participate in, conferences
with all Persons asserting any Claim against the indemnified party
or conferences with representatives of or counsel for such
Persons.
D. The indemnified party shall take no action which would prejudice
the indemnifying party's defense of the matter giving rise to the
Claim.
E. The indemnified party shall have no right to recover from any
other party hereto any losses, costs, expenses, or damages arising
under or in connection with this Agreement any amount in excess of
actual damages, court costs, and reasonable attorney fees,
suffered by such party. Each indemnified party waives any right
to recover punitive, special, exemplary, and consequential damages
arising under or in connection with this Agreement.
7. Defense Against Tax Claims
A. Amoco and CMS each agrees to notify the other parties to this
Agreement promptly in the event that, in respect of the Company or
any Separate Unit thereof, (i) any tax authority, in the course of
any audit or other examination of the tax returns or records of
such party, raises any question or issue with respect to any loss,
expense, or deduction constituting a DCL or any potential DCL
recapture, or (ii) any tax authority issues a notice of proposed
adjustment or similar notice with respect to any potential DCL
recapture.
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CMS will permit Amoco and will cause the Company and/or its
successors to permit Amoco, at Amoco's option and expense, to
direct the Company or any other Affiliate of CMS to take whatever
actions are reasonably necessary in Amoco's judgment to contest
and defend any issues which may result in a claim for such Taxes
prior to the payment of such Taxes.
In the event CMS or any Affiliate of CMS is responsible for paying
Taxes described in this Agreement or required to pay Amoco the
amount of such Taxes under any of the terms of this Agreement,
Amoco will permit CMS, at CMS's option and expense, to direct
Amoco to take whatever actions are reasonably necessary in CMS's
judgment to contest and defend any issues which may result in a
claim for such Taxes prior to the Payment of such Taxes and prior
to the payment of the amount of such Taxes to Amoco. If CMS
exercises the option provided for in the preceding sentence, Amoco
will, at CMS's request, cause its employees and representatives to
be available (at reasonable times and places) to consult with
employees and representatives of CMS regarding the issues relating
to such Taxes. CMS shall reimburse Amoco for all its reasonable
costs and expenses in complying with the previous sentence.
In the event of a claim by any taxing authority which will
adversely affect both Amoco and CMS by the liability to pay Taxes
and by payments under the terms of this Agreement or, if the
liability under such claim cannot be readily ascertained, Amoco
and CMS agree to cooperate fully with each other, each bearing its
own expenses, to take whatever action is necessary to contest and
defend or to direct the Company to contest and defend any issue
which may result in a claim for Taxes or a payment under the terms
of this Agreement prior to the payment of such Taxes and prior to
the payment of the amount of such Taxes to CMS or Amoco.
B. If a Tax has been paid to any taxing authority and, as a result of
the payment of such Tax, either Amoco or CMS incurs a liability to
make payment to the other because of the payment of such Tax,
provisions similar to Article 6.A above shall apply to enable the
party or parties bearing the burden of the Tax liability to cause
the appropriate party to take whatever action is necessary to
claim, pursue or litigate with respect to a refund of such Tax.
If the entire burden of an increased Tax liability has been borne
by Amoco or by CMS, the right to litigate for or otherwise claim
Tax refunds shall be assigned, to the extent it is legally
permissible to do so, to the party bearing such economic burden.
If any refunds or settlement amounts shall be delivered to the
party who did not bear the burden of the Tax liability, such party
shall assign such amounts to the party who bore the burden of the
Tax liability. In the event both Amoco and CMS jointly bear the
economic burden of the payment of any Tax described in this
Agreement, Amoco and CMS agree to cooperate fully with each other,
each bearing its own expenses, to cause the appropriate party to
litigate the claim for Tax refund and to share the proceeds of any
refund or settlement in proportion to the economic burden
previously borne.
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8. Survival
Except as otherwise expressly provided in Article 4.C hereof, the
obligations, covenants, and agreements set forth in the Tax Agreement
and this Agreement and in any certificate or instrument delivered in
connection therewith and herewith shall, unless otherwise provided,
survive regardless of any subsequent transaction involving the stock or
assets of the CMS, Enterprises, Nomeco, Walter, Walter Holdings, or the
Company or any Separate Unit thereof.
9. Notices
A. All notices shall be given in writing and shall be delivered (i)
by hand to the party for which intended, (ii) by registered or
certified mail, return receipt requested, postage prepaid, (iii)
by telex, or (iv) by facsimile, all of which addressed to the
party for which it is intended at the following respective
addresses or such other person or address previously furnished in
writing by either party in the manner provided herein:
To Amoco or its Affiliates: Amoco Corporation
501 WestLake Park Boulevard
Houston, Texas 77079
Telephone: (713) 366-7119
Facsimile: (713) 366-7596
Attention: Michael A. Wolf,
Director of Taxes--APC(I)
with a copy to:
Amoco Corporation
501 WestLake Park Boulevard
Houston, Texas 77079
Telephone: (713) 366-2755
Facsimile: (713) 366-7596
Attention: Robert M. Gordon,
Senior Tax Attorney (International)
To CMS or its Affiliates: CMS-Nomeco Oil & Gas Company
1 Jackson Square
Jackson, Michigan 49204
Telephone: (517) 787-9011
Facsimile: (517) 787-6360
Attention: William H. Stephens, III
B. The date of service of the notice shall be the date on which
notice is received.
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10. No Waiver
No failure or delay by any party hereto in exercising any right, power,
privilege or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power, privilege or
remedy preclude the exercise of any other right, power, privilege or
remedy. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law. No amendment,
modification or waiver of, or consent with respect to, any provision of
this Agreement shall in any event be effective unless the same shall be
in writing.
11. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective permitted successors and assigns other than
OPIC or any other Person who is not an Obligated Person. No party to
this Agreement shall be relieved of its obligations hereunder, by
assignment or otherwise, without the prior written consent of the other
parties hereto.
12. Governing Law and Dispute Resolution
A. This Agreement shall be governed by the laws of Illinois excluding
any choice of law provisions which would require the application
of the law of any other jurisdiction.
B. Any action, dispute, claim or controversy of any kind now existing
or hereafter arising between any of the parties hereto in any way
arising out of, pertaining to or in connection with this Agreement
(a "Dispute") shall be resolved by binding arbitration in
accordance with the terms hereof. Any party may, by summary
proceedings, bring an action in court to compel arbitration of any
Dispute.
C. Any arbitration shall be administered by the American Arbitration
Association (the "AAA") in accordance with the terms of this
Article 12, the Commercial Arbitration Rules of the AAA, and, to
the maximum extent applicable, the Federal Arbitration Act.
Judgment on any award rendered by an arbitrator may be entered in
any court having jurisdiciton.
D. Any arbitration shall be conducted before one arbitrator. The
arbitrator shall be a licensed practicing attorney who is
knowledgeable in the subject matter of the Dispute selected by
agreement between the parties hereto. If the parties cannot agree
on an arbitrator within 30 days after the request for an
arbitration, then any party may request the AAA to select an
arbitrator. The arbitrator may engage engineers, accountants or
other consultants that the arbitrator deems necessary to render a
conclusion in the arbitration proceeding.
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E. To the maximum extent practicable, an arbitration proceeding
hereunder shall be concluded within 180 days of the filing of the
Dispute with the AAA. Arbitration proceedings shall be conducted
in Houston, Texas. Arbitrators shall be empowered to impose
sanctions and to take such other actions as the arbitrators deem
necessary to the same extent a judge could impose sanctions or
take such other actions pursuant to the Federal Rules of Civil
Procedure and applicable law. At the conclusion of any
arbitration proceeding, the arbitrator shall make specific written
findings of fact and conclusions of law. The arbitrator shall
have the power to award recovery of all costs and fees to the
prevailing party. Each party agrees to keep all Disputes and
arbitration proceedings strictly confidential except for
disclosure of information required by applicable law.
F. All fees of the arbitrator and any engineer, accountant or other
consultant engaged by the arbitrator, shall be paid by Amoco, on
the one hand, and CMS, on the other hand, equally unless otherwise
awarded by the arbitrator.
13. Further Assurances and Guaranty
A. The parties hereto hereby agree to execute all such further
instruments and documents, and to take all such other actions, as
may be reasonable and appropriate to further effectuate the intent
of this Agreement.
B. CMS, Enterprises, Nomeco, Walter, Walter Holdings, and Walter
Congo, jointly and severally, unconditionally guarantee as if each
of them were the primary obligor, the punctual payment and
performance of each of their obligations under this Agreement and
any other agreement between any of the parties hereto required by
this Agreement.
14. Headings
References herein to Articles are to Articles of this Agreement.
Article headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of the Agreement for
any other purpose.
15. Severability of Provisions; Effectiveness
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability
of such provision in any other jurisdiction. This Agreement shall
become effective when CMS Merging Corporation, or another member of the
CMS consolidated group, merges into and with Walter as contemplated by
the fourteenth Whereas paragraph hereof.
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16. Execution in Counterparts
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of
which taken together shall constitute but one and the same instrument.
17. Entire Agreement
Except for the Tax Agreement, to which Amoco, APC, Walter, Walter
Holdings, and the Company shall remain subject, this Agreement
represents the entire understanding of the parties with respect to the
subject matter hereof. There are no other terms, condiitions,
representations or warranties, express or implied, written or oral,
except as set forth herein or in the Tax Agreement. No amendments,
modifications or additions hereto shall be binding unless executed in
writing by all of the parties to this Agreement.
18. Expenses
Except as otherwise expressly provided in the Agreement or in this
Agreement, each party shall pay its own expenses, including
consultants', counsels', and public accountants' fees and expenses
incurred in any way in connection with this Agreement.
19. Confidentiality
Except as may be required by law or regulation or this Agreement, the
parties agree to keep confidential this Agreement and the terms and
provisions hereof and not to disclose them to any third party without
the prior written consent of the parties hereto.
20. No Third Party Beneficiaries
Nothing expressed or referred to in this Agreement is intended to or
shall be construed to give any Person other than Amoco or CMS (and their
respective Affiliates) any legal or equitable remedy or claim under or
with respect to this Agreement.
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IN WITNESS WHEREOF, the parties have negotiated and duly executed this
Agreement on the day and year first written above.
AMOCO CORPORATION
By /s/ John D. Spence
------------------------
Name: John D. Spence
Title: Attorney-In-Fact
AMOCO PRODUCTION COMPANY
By /s/ John D. Spence
------------------------
Name: John D. Spence
Title: Attorney-In-Fact
CMS ENERGY CORPORATION
By P. D. Hopper
------------------------
Name: Preston D. Hopper
Title: Vice President
CMS ENTERPRISES COMPANY
By P. D. Hopper
------------------------
Name: Preston D. Hopper
Title: Vice President
CMS-NOMECO OIL & GAS COMPANY
By /s/ W. H. Stephens
------------------------
Name: W. H. Stephens, III
Title: Sr. Vice President
WALTER INTERNATIONAL, INC.
By F. Fox Benton, Jr.
------------------------
Name: F. Fox Benton, Jr.
Title: Exec. Vice President
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WALTER CONGO HOLDINGS COMPANY
By F. Fox Benton, Jr.
------------------------
Name: F. Fox Benton, Jr.
Title: Exec. Vice President
WALTER INTERNATIONAL CONGO, INC.
By F. Fox Benton, Jr.
------------------------
Name: F. Fox Benton, Jr.
Title: Exec. Vice President
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