STOCK PURCHASE AND SALE AGREEMENT
This STOCK PURCHASE AND SALE AGREEMENT (the “AGREEMENT’) is entered into on the 13th day of February 2018, by and among Berkshire Hathaway Inc., a Delaware corporation (the “STOCKHOLDER”), National Indemnity Company (“NICO”), a wholly-owned subsidiary of STOCKHOLDER and Phillips 66, a Delaware corporation (the “COMPANY”).
WHEREAS, certain wholly-owned subsidiaries of STOCKHOLDER currently own 74,587,892 shares of Common Stock, par value $.01 per share, of the Company, including 63,291,892 shares owned by NICO (the “SHARES”) and certain STOCKHOLDER subsidiary defined benefit plans own 6,102,000 shares of Common Stock, par value $0.1 per share, of the Company, constituting approximately 16.1% of the outstanding Shares in the aggregate.
WHEREAS, STOCKHOLDER desires to minimize its expense and effort associated with certain regulatory requirements, including reporting obligations imposed pursuant to Section 16(a) of the Securities Exchange Act, as amended, and Part 33 of the Federal Energy Regulatory Commission regulations, that currently exist by virtue of its ownership of more than 10% of the outstanding Shares and, therefore, desires to reduce its equity ownership interest percentage in the Company from its current level to approximately 9.8%.
WHEREAS, the Company desires to repurchase from NICO the Purchased Shares (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements set forth in this Agreement, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 PURCHASE OF SHARES. On the terms and subject to the conditions of this Agreement, at the Closing, NICO shall sell, assign, transfer and deliver to the Company, and the Company shall acquire from NICO, thirty-five million (35,000,000) Shares owned by NICO (the “PURCHASED SHARES”) in exchange for cash in an aggregate amount calculated at the volume-weighted average price for the Company’s shares on the New York Stock Exchange on February 13, 2018.
ARTICLE II
THE CLOSING
2.1 CLOSING; CLOSING DELIVERIES.
(a) Subject to clause (d) below, the closing shall take place on February 14, 2018, at a time and place mutually agreed by parties (the “CLOSING”).
(b) At the Closing, NICO shall cause the Purchased Shares to be transferred to the Company (and such transfer to be reflected on the share registry of the Company) free and clear of all liens, claims, security interests, pledges, charges and other encumbrances.
(c) At the Closing, the Company shall deliver by wire transfer to the account to be designated by STOCKHOLDER immediately available funds in U.S. dollars in an amount equal to the Purchase Price.
(d) The obligations of the parties hereto to consummate the transaction contemplated hereby shall be subject to the satisfaction at the Closing of the condition that there shall be no statute, regulation, injunction, restraining or other order, rule or decree of any nature of any local, state, federal or foreign court, arbitrator, arbitral tribunal, or other governmental, administrative or regulatory entity, agency, instrumentality or authority (collectively, a “GOVERNMENTAL AUTHORITY”) that is in effect that prohibits, restricts or prevents consummation of the transaction contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce STOCKHOLDER and NICO to enter into this Agreement, the Company hereby represents and warrants to STOCKHOLDER and NICO as follows:
3.1 CORPORATE POWER AND AUTHORITY. The Company is duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to enter into and deliver this Agreement, to perform its obligations hereunder and to consummate the transaction contemplated by this Agreement. The execution, delivery and performance of this Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and (assuming due authorization, execution and delivery by NICO and STOCKHOLDER) constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms subject to (a) applicable bankruptcy,
insolvency, fraudulent conveyance and other similar laws and (b) general principles of equity, including equitable defenses and limits as to the availability of equitable remedies, whether such principles are considered in a proceeding at law or in equity.
3.2 CONFLICTS; CONSENTS AND APPROVALS. To the knowledge of the Company as of the date hereof, the execution and delivery of this Agreement and the consummation of the transaction contemplated by this Agreement do not and will not (a) violate, conflict with, or result in a breach of any provision of, or constitute a default under, the Company’s Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws; (b) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company; or (c) require any action or consent or approval of, or review by, or registration of material filing by the Company, other than any filing required pursuant to the Securities Exchange Act of 1934, as amended, with any Governmental Authority, except as set forth herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER AND NICO
To induce the Company to enter into this Agreement, NICO and STOCKHOLDER represent and warrant to the Company as follows:
4.1 TITLE TO SHARES. NICO owns beneficially the Purchased Shares and has good title, free and clear of all liens, claims, security interests, pledges, charges and other encumbrances, to the Purchased Shares.
4.2 POWER AND AUTHORITY. NICO is duly organized and validly existing under the laws of the state of Nebraska and STOCKHOLDER is duly organized and validly existing under the laws of the state of Delaware. NICO and STOCKHOLDER have all requisite power and authority to enter into and deliver this Agreement, to perform its obligations hereunder and to consummate the transaction contemplated by this Agreement. The execution, delivery and performance of this Agreement by NICO and STOCKHOLDER has been duly authorized by all necessary action on their parts. This Agreement has been duly executed and delivered by NICO and STOCKHOLDER and (assuming due authorization, execution and delivery by the Company) constitutes the legal, valid and binding obligations of NICO and STOCKHOLDER, enforceable against it in accordance with its terms subject to (a) applicable bankruptcy, insolvency, fraudulent, conveyance and other similar laws and (b) general principles of equity, including equitable defenses and limits as to the availability of equitable remedies, whether such principles are considered in a proceeding at law or in equity.
4.3 CONFLICTS; CONSENTS AND APPROVALS. To the knowledge of NICO and STOCKHOLDER as of the date hereof, the execution and delivery of this Agreement and the consummation of the transaction contemplated by this Agreement does not and will not (a) violate, conflict with, or result in a breach of any provision of, or constitute a default under, NICO’S or STOCKHOLDER’S governing or organizational documents; (b) violate any order, writ, injunction, decree, statute, rule or regulation applicable to NICO or STOCKHOLDER; or (c) require any action or consent or approval of, or review by, or registration or material filing, other than a filing pursuant to Section 16(a) under the Securities Exchange Act of 1934, as amended, by it with, any Governmental Authority except as set forth herein.
4.4 NO AGREEMENTS OR UNDERSTANDINGS. NICO and STOCKHOLDER are not parties to any contract, agreement, arrangement, understanding or relationship (legal or otherwise) with any other person, individual, firm, corporation, partnership, trust, joint venture, governmental authority or other entity with respect to any securities of the Company, including without limitation transfer or voting of any securities of the Company, finders fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or losses or the giving or withholding of proxies.
ARTICLE V
ADDITIONAL COVENANTS
5.1 TRANSFER TAXES. NICO shall be responsible for the payment of any stock transfer or similar taxes in connection with the transaction contemplated by this Agreement.
5.2 RELATED AGREEMENTS. NICO and STOCKHOLDER agree to cooperate with the Company in publicly announcing this transaction via a mutually acceptable press release.
5.3 FURTHER ASSURANCES.
(a) Each of the parties hereto shall use its reasonable best efforts to take, or cause to be taken, all appropriate action, to do or cause to be done all things necessary, proper or advisable under applicable law, and to execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and to consummate and make effective the transaction contemplated by this Agreement.
(b) Each of the Company, NICO and STOCKHOLDER agrees to cooperate and use its reasonable best efforts to contest and resist any action, including, without limitation, administrative or judicial action, and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order (whether temporary, preliminary or permanent) that is in effect that restricts, prevents
or prohibits the consummation of the transaction contemplated by this Agreement, including,without limitation, by pursuing all reasonably available avenues of administrative and judicial appeal.
ARTICLE VI
MISCELLANEOUS
6.1 COUNTERPARTS. This Agreement may be executed in any number of counterparts, which together shall constitute one and the same Agreement. The parties may execute more than one copy of the Agreement, each of which shall constitute an original. This Agreement may be delivered via facsimile or email/pdf, it being the express intent of the Parties that such Agreement signed and delivered via facsimile or email/pdf shall have the same force and effect as if it was an original.
6.2 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements, understandings, arrangements or representations by or between the parties, written and oral, with respect to the subject matter hereof.
6.3 THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express or implied, is intended or shall be construed to create any third-party beneficiaries.
6.4 GOVERNING LAW; JURISDICATION. This Agreement shall be governed by the laws of the State of Delaware, without giving effect to the conflict of laws principles thereof. Each party irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of Delaware and of the United States of America, in each case located in the State of Delaware, for any action or proceeding arising out of or relating to this Agreement and the transaction contemplated by this Agreement (and agrees not to commence any action except in any such court). Each party irrevocably and unconditionally waives any objection to the laying of venue of any action or proceeding in the courts of the State of Delaware or of the United States of America, in each case located in the State of Delaware, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any action or proceeding brought in any such court has been brought in an inconvenient forum. Each party irrevocably and unconditionally waives any right it may have to a trial by jury in connection with any action or proceeding arising out of or relating to this Agreement and the transaction contemplated by this Agreement.
6.5 SPECIFIC PERFORMANCE. The transaction contemplated by this Agreement is unique. Accordingly, each of the parties acknowledges and agrees that, in addition to all other remedies to which it may be entitled, each of the parties hereto is entitled to a decree of specific performance and injunctive and other equitable relief.
6.6 AMENDMENT. This Agreement may not be altered, amended or supplemented except by an agreement in writing signed by each of the parties hereto.
6.7 NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by facsimile, by courier service or by registered or certified mail to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 6.7);
If to NICO, to:
National Indemnity Company
1314 Douglas Street
Omaha, NE 68102
Attn: President
With a copy to:
National Indemnity Company
1314 Douglas Street
Omaha, NE 68102
Attn: Treasurer
If to STOCKHOLDER, to:
Berkshire Hathaway Inc.
3555 Farnam Street
Omaha, NE 68131
Attn: CFO
With a copy to:
Berkshire Hathaway Inc.
3555 Farnam Street
Omaha, NE 68131
Attn: Todd Combs
If to the Company, to:
Phillips 66
1075 W. Sam Houston Parkway N., Suite 200
Houston, TX 77043
Attn:
CFO
With a copy to:
Phillips 66
1075 W. Sam Houston Parkway N., Suite 200
Houston, TX 77043
Attn: General Counsel
6.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either of the parties (whether by operation of law or otherwise) without the prior written consent of the other party. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.
6.9 FEES AND EXPENSES. Except as otherwise provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the transaction contemplated by this Agreement shall be the responsibility of and shall be paid by the party incurring such fees or expenses, whether or not the transaction contemplated by this Agreement is consummated.
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be executed by its officer thereunto duly authorized as of the date first written above.
Berkshire Hathaway Inc.
By:
/s/ Marc D. Hamburg
Name:
Marc D. Hamburg
Title:
Senior Vice President – CFO
National Indemnity Company
By:
/s/ Marc D. Hamburg
Name:
Marc D. Hamburg
Title:
Chairman
Phillips 66
By:
/s/ Kevin J. Mitchell
Name: K. J. Mitchell
Title: Executive Vice President, Finance and
Chief Financial Officer
Phillips 66 and Berkshire Hathaway
Announce Share Repurchase Agreement
HOUSTON, TX/OMAHA, NE Feb. 13, 2018 – Phillips 66 (NYSE: PSX) announces it has agreed to repurchase 35 million shares of Phillips 66 common stock from a wholly-owned subsidiary of Berkshire Hathaway Inc. (NYSE: BRK.A; BRK.B) for $93.725 per share. This $3.3 billion repurchase is expected to close on Feb. 14, 2018.
“We are excited to have this opportunity to return capital to our shareholders in such a meaningful way,” said Greg Garland, Chairman and CEO of Phillips 66. “This transaction benefits all of our shareholders, as it is immediately accretive to earnings per share and positive for valuation. While this highlights our dedication to shareholder distributions, our strategy remains unchanged. We are committed to running our assets safely and reliably, growing our Midstream and Chemicals businesses, enhancing our Refining and Marketing returns, and rewarding our shareholders through a secure, competitive and growing dividend along with continued share repurchases.”
“Phillips 66 is a great company with a diversified downstream portfolio and a strong management team,” commented Warren E. Buffett, Berkshire Hathaway Chairman and CEO. “This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10 percent. We remain one of Phillips 66’s largest shareholders and plan to continue to hold the stock for the long term.”
At closing of this transaction, Phillips 66 will have 466.5 million shares outstanding of which Berkshire will have an equity ownership interest in 45.7 million shares.
About Phillips 66
Phillips 66 is a diversified energy manufacturing and logistics company. With a portfolio of Midstream, Chemicals, Refining, and Marketing and Specialties businesses, the company processes, transports, stores and markets fuels and products globally. Phillips 66 Partners, the company's master limited partnership, is an integral asset in the portfolio. Headquartered in Houston, the company has 14,600 employees committed to safety and operating excellence. Phillips 66 had $54 billion of assets as of Dec. 31, 2017. For more information, visit
www.phillips66.com
or follow us on Twitter
@Phillips66Co
.
About Berkshire Hathaway
Berkshire Hathaway and its subsidiaries engage in diverse business activities including insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.
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CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This news release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Words and phrases such as “is anticipated,” “is estimated,” “is expected,” “is planned,” “is scheduled,” “is targeted,” “believes,” “continues,” “intends,” “will,” “would,” “objectives,” “goals,” “projects,” “efforts,” “strategies” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to Phillips 66’s operations (including joint venture operations) are based on management’s expectations, estimates and projections about the company, its interests and the energy industry in general on the date this news release was prepared. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include fluctuations in NGL, crude oil, and natural gas prices, and petrochemical and refining margins; unexpected changes in costs for constructing, modifying or operating our facilities; unexpected difficulties in manufacturing, refining or transporting our products; lack of, or disruptions in, adequate and reliable transportation for our NGL, crude oil, natural gas, and refined products; potential liability from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; and other economic, business, competitive and/or regulatory factors affecting Phillips 66’s businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACTS
Phillips 66
832-765-2297 (investors)
832-765-1850 (media)
Berkshire Hathaway
Marc D. Hamburg
402-346-1400