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EXHIBIT 10.19
TRANSFER AGREEMENT
TRANSFER AGREEMENT dated as of the 31st day of August, 1995 between CMS
NOMECO Oil & Gas Co. (CMS NOMECO), a Michigan corporation, CMS Enterprises
Company (CMS Enterprises), a Michigan corporation and CMS Energy Corporation
(CMS Energy), a Michigan Corporation.
WHEREAS, CMS Energy has (i) entered into an Agreement and Plan of Merger (the
"Merger Agreement") among CMS Energy, CMS Merging Corporation, a Michigan
corporation and a wholly-owned subsidiary of CMS Energy, Terra Energy Ltd.
("Terra"), Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xx. Xxxxxx Xxxxx and Xxxxx X.
Xxxxx, Xx. Xxxxx Xxxxxx and Xxxx X. Xxxxxx, The Revocable Living Trust of Xx.
Xxxxxxx X. Xxxxxxxx under agreement dated May 1, 1990, Xxxxxx X. Xxxxx and
Xxxxx Xxxxxxxxxx pursuant to which CMS Energy has acquired all of the
outstanding stock (the "Terra Stock") of Terra in exchange for approximately
2,319,055 shares of the common stock of CMS Energy ("CMS Energy Stock") and an
amount of cash representing the value of fractional shares of CMS Energy Stock
that would otherwise be delivered pursuant to the Merger Agreement, and (ii)
entered into a Covenant Not to Compete dated as of August 31, 1995 (the
"Covenant Agreement") pursuant to which CMS Energy acquired undertakings by
certain of the former shareholders of Terra not to compete with Terra for a
specified period within the area designated in the Covenant Agreement and not
to disclose certain information for a specified period in exchange for which
CMS Energy is obligated to deliver approximately 265,626 shares of CMS Energy
Stock and an amount of cash representing the value of fractional shares of CMS
Energy Stock that would otherwise be delivered pursuant to the Covenant
Agreement;
WHEREAS, CMS Energy desires to transfer to its subsidiary, CMS Enterprises, for
the consideration described herein, the Terra Stock and its rights under the
Covenant Agreement described above;
WHEREAS, CMS Enterprises desires to transfer to its subsidiary, CMS NOMECO,
for the consideration described herein, the Terra Stock and the rights under
the Covenant Agreement which it has received from CMS Energy;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. CMS Energy hereby transfers to CMS Enterprises the Terra Stock and its
(CMS Energy's) rights under the Covenant Agreement. CMS Energy and CMS
Enterprises intend $1 million of the value of the Terra Stock to be a
contribution to the capital of CMS Enterprises and CMS Enterprises agrees to
pay to CMS Energy the
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remaining $62,648,000 of the anticipated Aggregate Consideration (as that term
is defined in the Merger Agreement), consisting of $56,106,940 of the value of
the Terra Stock and all $6,541,060 of the value of the Covenant Agreement by
assignment to CMS Energy of the obligation of CMS NOMECO described in
Paragraph 2 hereof.
2. CMS Enterprises, immediately following the transfer described in
Paragraph 1 hereof, hereby transfers to CMS NOMECO the Terra Stock and its
(CMS Enterprises') rights under the Covenant. CMS Enterprises and CMS NOMECO
intend $1 million of the value of the Terra Stock to be a contribution to the
capital of CMS NOMECO and CMS NOMECO agrees to pay to CMS Enterprises the
remaining $62,648,000 of the Aggregate Consideration, consisting of
$56,106,940 of the value of the Terra Stock and all $6,541,060 of the value of
the Covenant Agreement. A copy of that certain note (the "Note") dated the
date hereof, evidencing CMS NOMECO's payment obligation to CMS Enterprises, in
an amount equal to the difference of the Aggregate Consideration and the $1
million of contribution to capital, is attached hereto. CMS NOMECO
acknowledges that the Note will be assigned by CMS Enterprises to CMS Energy
and CMS NOMECO agrees to make all payments required under the Note directly to
CMS Energy. CMS Enterprises agrees that all payments by CMS NOMECO under the
Note shall be made to CMS Energy. CMS Energy acknowledges that the Note is
subject to a Subordination Agreement dated as of August 31, 1995 among CMS
Enterprises and the Banks party to the CMS NOMECO Amended and Restated Credit
Agreement dated as of November 1, 1993, as amended, and agrees to be bound by
all of the Terms and Conditions of said Subordination Agreement.
3. The parties further agree that in the event that post-closing
adjustments to the Aggregate Consideration (as that term is defined in the
Merger Agreement), cause the Aggregate Consideration to be other than
$63,648,000, the obligation of CMS NOMECO under the Note (and the consideration
payable by CMS Enterprises to Energy) will be adjusted as follows:
(a) if the Aggregate Consideration is more than $63,648,000, the
obligation of CMS NOMECO under the Note (and the consideration payable by CMS
Enterprises to CMS Energy) will be increased by such difference, and
(b) if the Aggregate Consideration is less than $63,648,000, the
obligation of CMS NOMECO under the Note (and the consideration payable by CMS
Enterprises to CMS Energy) will be decreased by such difference.
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In the event of any such adjustment, the parties hereto will revise the terms
of the Note (and the terms of this Agreement) to reflect such adjustment.
CMS ENTERPRISES COMPANY CMS ENERGY CORPORATION
By: /s/ Xxxxxx X. XxXxxx By: /s/ Xxxxxx X. XxXxxx
Its _____________________ Its _____________________
CMS NOMECO OIL & GAS CO.
By: /s/ Xxxx X Xxxxxx
Xxxx X. Xxxxxx
Its Vice President, Secretary
and Treasurer
