EXHIBIT 10.27
AGREEMENT FOR PURCHASE AND SALE OF STOCK
This Agreement for Purchase and Sale of Stock (this "Agreement") is
made and entered into as of the 13th day of September, 1995, by and
between FIVE FLAGS HOLDING COMPANY, a Florida corporation,
("Seller"), and MIDCOAST HOLDINGS NO. ONE, INC., a Delaware
corporation ("Buyer"). (Seller and Buyer are sometimes hereinafter
referred to collectively as the "Parties" and individually as a
"Party".)
W I T N E S S E T H:
WHEREAS, Five Flags Pipe Line Company, a Florida corporation (the
"Company"), is a wholly-owned subsidiary of Seller;
WHEREAS, Buyer desires to purchase from Seller, and Seller desires
to sell to Buyer, all of the issued and outstanding shares of
capital stock of the Company (the "Stock"); and
WHEREAS, the Parties desire this Agreement to set forth the terms
and conditions upon which they are willing to sell and purchase the
Stock;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the sufficiency of which
is hereby acknowledged, the Parties, intending to be legally bound,
covenant and agree as follows:
1. Purchase and Sale; Purchase Price.
Subject to the terms of this Agreement, at the closing provided for
in Section 3 of this Agreement (the "Closing"), Seller agrees to
sell, assign, transfer and deliver to Buyer or its nominee, and
Buyer or its nominee agrees to purchase and acquire from Seller,
the Stock.
The amount to be paid by Buyer to Seller for the Stock is Two
Million and No/100 Dollars ($2,052,000.00), subject to any
adjustments which may be made pursuant to Section 10 of this
Agreement (the "Purchase Price"). The Purchase Price shall be paid
by Buyer to Seller at the Closing by cashier's or certified check,
or, at Seller's election, by wire transfer of immediately available
funds.
2. Instruments of Conveyance. At the Closing, as provided for in
Section 3 of this Agreement, Seller will assign, transfer and
deliver to Buyer the Stock. All certificates representing the
Stock delivered to Buyer shall be duly endorsed in blank, or
accompanied by duly executed stock powers in blank and otherwise in
proper form for transfer. At the Closing, Seller shall also
deliver to Buyer a copy of the resolutions or consents of the Board
of Directors and the Shareholder of Seller approving the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby, and a certificate of incumbency of
representatives of Seller executing this Agreement duly certified
by an appropriate officer.
3. Closing. The closing of the purchase and sale of the Stock
shall all take place at 10:00 a.m. local time on September 15,
1995, or at such earlier date as Seller and Buyer may otherwise
mutually agree upon in writing (the "Closing"). The Closing shall
be held at the offices of Seller, at Nine Greenway Plaza - Coastal
Tower, Xxxxxxx, Xxxxx 00000, or such other place as the parties may
mutually agree upon in writing (the date on which Closing occurs
being referred to herein as the "Closing Date"). The Closing shall
be effective as of 7:00 a.m. Florida time, on the Closing Date.
4. Representations, Warranties and Covenants of Seller. Seller
represents, warrants and covenants to Buyer as of the date of this
Agreement and on and as of the Closing Date, the following:
(a) Seller has full, complete and absolute title to the Stock.
The Stock constitutes 100% of the issued and outstanding securities
of any kind of the Company. No person or entity other than the
Seller has any record or beneficial ownership interest whatsoever
in the Stock;
(b) Seller's ownership of the Stock consists of good, valid and
indefeasible title to the Stock and the Stock is free and clear of
any liens, security interests, encumbrances, options, calls,
pledges, trusts, voting trusts, covenants, restrictions,
reservations and other burdens of any type whatsoever;
(c) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has
the requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now being
conducted. The Company is duly qualified or licensed and is in
good standing to do business in each jurisdiction in which the
property owned or leased and operated by it or the nature of the
business conducted by it make such qualifications or licensing
necessary;
(d) All of the Stock is validly issued, fully paid and
nonassessable. All dividends and other distributions declared with
respect to the Stock have been paid or distributed. There are no
existing subscriptions, rights, warrants, calls, options,
commitments or agreements of any character relating to the capital
stock of the Company which is authorized but unissued or held in
the treasury. Copies of the Articles of Incorporation (certified
by the Secretary of State of Florida) and the Bylaws (certified by
the Secretary of the Company) of the Company heretofore delivered
to the Buyer, are true, correct and complete and reflect all
amendments thereto as of the date hereof;
(e) The present directors and officers of the Company are set
forth on Schedule 4(e) attached hereto, and the written
resignations of said directors and officers will be delivered to
Buyer at Closing;
(f) A balance sheet (the "Balance Sheet") of the Company dated as
of the 31st day of July, 1995 (the "Balance Sheet Date") is
attached hereto as Schedule 4(f). The Balance Sheet correctly sets
forth the financial condition of the Company as of said date and
title to all assets referred to or shown on the Balance Sheet was
vested in the Company as of the Balance Sheet Date, free of any
liens, security interests or other like encumbrances. To Seller's
best knowledge, except as otherwise disclosed by Seller to Buyer in
writing prior to Closing, the books of account, as summarized in
the Balance Sheet, reflect the Company's assets and known
liabilities, and the records and files of the Company reflect its
operations and transactions. Since the Balance Sheet date, there
has not been: (i) any change in the financial condition, business,
operations, properties, assets or liabilities (whether direct,
indirect, accrued, absolute, contingent or otherwise) of the
Company other than changes in the ordinary course of business, none
of which have been materially adverse; (ii) any damage, destruction
or loss whether covered by insurance or not, materially and
adversely affecting the properties or business of the Company;
(iii) any increase in the compensation payable or to become payable
by the Company to any of its directors, officers, employees or
agents or in any stock option, bonus payment, service award,
pension, retirement, expense allowance or other arrangement made to
or with any of them; (iv) any sale, assignment, lease, transfer,
license, abandonment or other disposition by the Company of any
interest in its properties, excluding inventory sold in the
ordinary course of business, and specifically including but not
limited to any machinery, equipment or other operating property,
any patent, trademark, service xxxx, trade name, brand name,
copyright (or pending application for any patent, trademark,
service xxxx or copyright), invention, process, know-how, formula,
pattern, design, trade secret or interest thereunder or other
intangible asset; (v) any declaration, setting aside or payment of
any dividend or other distribution on or in respect of shares of
the Stock, or any direct or indirect redemption, retirement,
purchase or other acquisition by the Company of any such shares;
(vi) any stock dividend, stock split, reorganization,
recapitalization or other change of any type whatsoever in the
Stock; or (vii) any dispute or any other occurrence, event or
condition of any character, which reasonably could be anticipated
to give rise to a legal or administrative action or to a material
adverse effect upon the condition (financial or otherwise) of the
business, operations, properties, assets or liabilities (whether
direct, indirect, accrued, absolute, contingent or otherwise) of
the Company (whether or not covered by insurance);
(g) Between the Balance Sheet Date and the date of this Agreement,
the Company has not: (i) transferred, sold or otherwise disposed of
any corporate property or assets material to the operation of its
business other than in the ordinary and usual course of its
business as heretofore conducted, save and except such items as
shall have become no longer useful, obsolete or worn out, or
rendered of no further use, and, if heretofore useful in the
conduct of its business and operations, as may have been replaced
with other items of substantially the same value and utility as the
items transferred, sold, exchanged or otherwise disposed of; (ii)
created, participated in or agreed to the creation of any liens or
encumbrances on its corporate property, save and except liens for
taxes not yet due and liens created in the ordinary and usual
course of its business as heretofore conducted in connection with
normal purchases of natural gas; (iii) entered into any leases,
contracts or agreements of any kind or character or incur any
liabilities, save and except those to which it is presently
committed and which are disclosed herein or in the Exhibits hereto;
(iv) made any payments or distributions to or for the benefit of
any of its officers, directors, stockholders or employees, save and
except (x) wages and salaries made to employees in the ordinary and
usual course of the business as heretofore conducted, and (y)
contributions required pursuant to any health and/or life insurance
plans presently in effect; (v) amended or repealed its Articles of
Incorporation or Bylaws or issued any shares of capital stock in
addition to, and other than, the shares heretofore issued, or
reissued any treasury stock; or (vi) taken any action that is
materially different or varies from the ordinary course of business
of the Company;
(h) To the best of Seller's knowledge, all tax returns required to
be filed by the Company on or before the Closing Date for all years
prior to the current tax year have been properly prepared, executed
and duly filed pursuant to applicable laws and regulations and all
taxes calculated thereon have been paid, and, to the best of
Seller's knowledge, the Company's tax returns filed since September
2, 1993 were all included in consolidated tax returns filed by Five
Flags Holding Company;
(i) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the state where formed and
conducting business. Seller has all requisite corporate power and
authority and is entitled to carry on its business as now being
conducted;
(j) Neither the execution, delivery, nor the performance of this
Agreement by Seller will conflict with, result in a default or loss
of rights under, or result in the creation of any lien, charge or
encumbrance pursuant to, any provision of Seller's certificate of
incorporation or by-laws or any material franchise, mortgage, deed
of trust, lease, license, agreement or understanding, or any order
or judgment or decree to which Seller is a party or by which Seller
is bound. Seller has the full power and authority to enter into
this Agreement and to carry out the transaction contemplated
hereby, and this Agreement has been duly authorized and executed by
Seller and constitutes a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency or
other laws relating to or affecting the enforcement of creditors'
rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity
or at law);
(k) To the best of Seller's knowledge, there are no claims, legal
actions or suits pending against or relating to the Company, its
properties, assets or business, and Seller is not aware of any
facts which might result in such claim, action, suit, arbitration
or other proceeding and which might reasonably be expected to have
a material adverse effect on the Company Assets, on the Company's
operation and enjoyment of the Company Assets, or on Seller's
ability to perform this Agreement;
(l) To the best of Seller's knowledge, except as set forth in
Schedule 4(l) hereto: (i) the Company has all permits, licenses,
certificates and other authorizations necessary for the Company to
carry on its business in its current manner; (ii) the Company has
not received any written notice that it has failed to comply with
any laws, rules, regulations, ordinances, licenses, permits,
judgments, decrees and orders of federal, state and local or other
governmental authorities having jurisdiction applicable to its
properties, assets or business which have not been previously
remedied; and (iii) Seller is not in violation of or in default
under any terms or provisions of its certificate of incorporation
or by-laws, as presently in effect, or of any material liens,
mortgage, lease or agreement, or of any order, judgment or decree
to which Seller was a named party;
(m) To the best of Seller's knowledge, the Company has good and
marketable title to its assets described or referred to in the
Exhibits hereto (the "Company Assets"), other than the Leased
Property, free of any liens, security interests or other like
encumbrances;
(n) All ad valorem and personal property taxes assessed against the
Company Assets (including any penalties or assessments for
delinquencies in payment) and all other taxes of any nature with
respect to the Company Assets or the operation by the Company of
the Pipeline System which are due and payable by the Company as of
the Closing Date will be paid in full by said Closing Date;
(o) The Company owns a natural gas transmission pipeline system
situated in Escambia and Santa Xxxx Counties, Florida, as depicted
on the map attached as Exhibit "A" hereto, consisting of
approximately 42 miles of 10" diameter 0.219 wall 2X52 pipe,
approximately 15 miles of 8" diameter 0.280 wall X42 pipe, and
various meters and metering stations, control equipment, corrosion
equipment, dehydration facilities, storage facilities, buildings
and other operating equipment attached to, or used or held for use
in the operation of said natural gas transmission pipeline system
(collectively the "Pipeline System");
(p) A schedule of (i) all vehicles, (ii) all, or substantially
all, office equipment, and (iii) all leases of personal property,
of the Company is attached hereto as Exhibit "B" (collectively the
"Equipment");
(q) That certain lease (the "Lease") of real property, relating to
office space and equipment storage ("Leased Premises"), presently
held in the name of the Company, described in Exhibit "C" hereto,
is the only lease of real property affecting the Company which is
presently in force and effect;
(r) A schedule of all easement agreements and other similar
agreements of the Company is attached hereto as Exhibit "D" (the
"Easement Agreements");
(s) A schedule of all or substantially all maintenance and
operating supplies, fuel and spare parts for the Equipment is set
forth as Exhibit "E" hereto (collectively the "Inventory");
(t) A schedule of all gas transmission contracts and other similar
agreements of the Company is set forth as Exhibit "F" hereto (the
"Transmission Contracts");
(u) A schedule of all certificates of occupancy and other
licenses, permits, orders or approvals of any federal, state or
local governmental or regulatory body relating to the use,
operation, or enjoyment of the Company Assets is set forth in
Exhibit "G" hereto (the "Permits");
(v) To the best of Seller's knowledge, the Exhibits to this
Agreement collectively constitute a complete and correct list and
description of all material contracts affecting the Company Assets,
as operated by the Company in the ordinary course of business,
including all amendments, modifications, revocations and notices,
except those that would not have a material adverse effect upon the
Company's rights, obligations or liabilities under said contracts;
(w) To the best of Seller's knowledge, the contracts, agreements,
permits and other documents listed on Exhibits "D", "F" and "G"
hereto are all valid, binding and enforceable in accordance with
their terms and are in full force and effect. To the best of
Seller's knowledge, the Company has performed all obligations and
made all payments required, to be performed or paid under such
contracts, agreements and other documents and Seller has not
received any written notice from any party to said contracts and
agreements claiming the existence of any default under any of such
contracts, agreements or other documents which have not been
previously remedied;
(x) To the best of Seller's knowledge, except as disclosed to Buyer
on Schedule 4(x) hereto, the Company has complied with all
applicable Environmental Protection Laws (as defined in Section
18(d) of this Agreement) save and except where the failure to
comply would not have a material adverse effect upon the Company or
the Company Assets;
(y) To the best of Seller's knowledge, neither the execution and
delivery of, nor Seller's performance under this Agreement, is
prohibited by or requires any consent, authorization, approval or
registration under any law, rule or regulation, other than those
customarily required in transactions of this type, or under any
judgment, order, writ, injunction or decree to which Seller was a
named party;
(z) The Company is not subject to any arrangement under which it or
Buyer will be obligated, by virtue of a prepayment arrangement, a
"take-or-pay" arrangement, a production payment, or any other
arrangement, to transport or deliver hydrocarbons at some future
time without then or thereafter receiving full payment therefor, or
to make payment at some future time for hydrocarbons or the
transportation or delivery of hydrocarbons previously purchased or
transported;
(aa) To the best of Seller's knowledge, none of the statements,
representations or warranties made by Seller in this Agreement, or
in any Exhibit or Schedule hereto, or in any certificate or other
document delivered with or pursuant to this Agreement, contains any
untrue statement of any material fact, or omits to state any
material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made,
not misleading. Except as and to the extent expressly set forth in
this Agreement, or in any Exhibit or Schedule hereto, Seller makes
no representations or warranties whatsoever, and disclaims all
liability and responsibility for any negligent representation,
warranty, statement or information made or communicated, by
oversight or otherwise (orally or in writing) to Buyer (including,
but not limited to, any opinion, information or advice which may
have been provided to Buyer by Seller or the Company or any of
their stockholders, officers, directors, employees, agents,
attorneys, consultants, representatives, or any party acting on
their behalf). This subparagraph (aa) shall not excuse Seller from
any intentional misrepresentation, statement, warranty or act in
furnishing incorrect, false or misleading information to Buyer by
Seller or any person acting on behalf of Seller, if made, given or
done with the intent that the other party rely thereon and be
misled thereby;
(bb) there are no agreements allowing another party to purchase all
or some of the Company Assets except in the ordinary course of
business;
(cc) the Lease is in full force and effect in accordance with its
terms and Seller knows of no default thereunder or no condition or
event under which the lessor under the Lease could terminate the
Lease prior to the end of the primary term or any extension
thereof;
(dd) the Company is not a party to any partnership or joint
venture;
(ee) Schedule 4(ee) attached hereto is a complete list of all
policies of insurance with respect to the Company Assets, all of
which will remain in full force and effect until the Closing Date;
and
(ff) Seller expressly covenants and agrees that from and after the
date of this Agreement until the Closing Date:
(i) Seller shall give the officers, attorneys, accountants and
other authorized representatives of Buyer access, during normal
business hours, to all the records, properties and personnel of the
Company relating to it and its business. Seller will furnish the
representatives of Buyer during such period with all information as
such representatives may reasonably request and cause the
employees, accountants and attorneys of the Company, to the extent
reasonably possible, to cooperate with such representatives in
connection with such review and examination, and to make full
disclosure to Buyer of all material facts affecting the Company
Assets. Notwithstanding the foregoing, Buyer shall not unduly or
unreasonably disrupt or interfere with the conduct of the Company
or its business.
Buyer shall assume all risks involved in entering upon the
Company's premises or any of the Company's properties, and Buyer
shall indemnify, protect, defend and hold Seller and the Company
harmless from any liens, claims, losses, liabilities, costs and
expenses arising out of Buyer's exercising any right of access
granted hereunder, including, without limitation, any claims,
losses and liabilities resulting from bodily injury or death to
persons or damage to property sustained by any party as a result of
the exercise of Buyer's right of access. Buyer's indemnity
contained in this subsection shall survive the recision,
cancellation, termination or consummation of this Agreement; and
(ii) Between the date of this Agreement and the Closing Date, the
Company will not: (a) transfer, sell or otherwise dispose of any
corporate property or assets material to the operation of its
business other than in the ordinary and usual course of its
business as heretofore conducted, save and except such items as
shall have become no longer useful, obsolete or worn out, or
rendered of no further use, and, if heretofore useful in the
conduct of its business and operations, as may have been replaced
with other items of substantially the same value and utility as the
items transferred, sold, exchanged or otherwise disposed of; (b)
create, participate in or agree to the creation of any liens or
encumbrances on its corporate property, save and except liens for
taxes not yet due and liens created in the ordinary and usual
course of its business as heretofore conducted in connection with
normal purchases of natural gas; (c) enter into any leases,
contracts or agreements of any kind or character extending beyond
August 15, 1995 or incur any liabilities, save and except those to
which it is presently committed and which are disclosed herein or
in the Exhibits hereto; (d) make any payments or distributions to
or for the benefit of any of its officers, directors, stockholders
or employees, save and except wages and salaries made to employees
in the ordinary and usual course of the business as heretofore
conducted and contributions required pursuant to any health and/or
life insurance plans presently in effect; (e) amend or repeal its
Articles of Incorporation or Bylaws or issue any shares of capital
stock in addition to, and other than, the shares heretofore issued,
or reissue any treasury stock; (f) take any action that is
materially different or varies from the ordinary course of business
of the Company; or (g) not pay or agree to pay any severance or
termination benefit to any employee of the Company that is
triggered by the Closing and that would be binding upon Buyer or
the Company, or affect the Company's ownership, operation and
enjoyment of the Company Assets.
(gg) Schedule 4(gg) attached hereto is a schedule of (i) the name
of each bank, savings and loan or other financial institution at
which the Company has any account or safe deposit box, including
the style and number of each such account or safe deposit box and
the names of all persons authorized to draw thereon or who have
access thereto, and (ii) the name of each person, corporation,
firm, association or business entity or enterprise holding a
general or special power of attorney from the Company and a summary
of the terms thereof;
(hh) Schedule 4(hh) attached hereto sets forth all pension plans,
profit sharing plans, retirement benefit plans, executive
compensation arrangements, deferred compensation arrangements,
retiree medical arrangements, employment contracts, health,
disability and/or life insurance plans, and other benefit plans,
payments or arrangements for employees of the Company (the "Benefit
Plans") presently in effect with respect to the Company. Seller
has heretofore delivered to Buyer true, correct and complete copies
of summary plan descriptions of all Benefit Plans and will provide
Buyer with such additional information regarding the Benefit Plans
as Buyer may reasonably request.
5. Representations and Warranties by Buyer. Buyer represents and
warrants to Seller as of the date of this Agreement and on and as
of the Closing Date, the following:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction where formed and
conducting business. Buyer has all requisite power and authority
and is entitled to carry on its businesses as now being conducted;
(b) Neither the execution, delivery nor the performance of this
Agreement by Buyer will conflict with, result in a default or loss
of rights under, or result in the creation of any lien, charge or
encumbrance pursuant to, any provision of Buyer's certificate of
incorporation or by-laws or any material franchise, mortgage, deed
of trust, lease, license, agreement or understanding, or any order
or judgment or decree to which Buyer is a party or by which Buyer
is bound or affected. Buyer or its nominee has the full power and
authority to enter into this Agreement and to carry out the
transactions contemplated hereby, and this Agreement has been duly
authorized and executed by Buyer and constitutes a valid and
binding obligation of Buyer or its nominee, enforceable against
Buyer or its nominee in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other
laws relating to or affecting the enforcement of creditors' rights
generally and general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law). Buyer or its nominee has complied with all applicable laws
and regulations and has all certificates, permits, approvals, and
licenses from any and all governmental authorities that may be
required for Buyer or its nominee to validly own the Stock;
(c) To the best of Buyer's knowledge, there are no claims, legal
actions, suits, arbitrations, governmental investigations or other
administrative proceedings in progress or pending against or
relating to Buyer which might reasonably be expected to have a
material adverse effect upon Buyer, its properties, assets or
businesses, and Buyer is not aware of any facts which might result
in such claim, action, suit, arbitration or other proceeding which
might reasonably be expected to have a material adverse effect on
Buyer's or Buyer's nominee's ability to perform this Agreement;
(d) To the best of Buyer's knowledge, Buyer has complied with all
applicable material laws, rules, regulations, ordinances and orders
applicable to its respective businesses or properties. To the best
of Buyer's knowledge, Buyer is not in violation of or in default
under any material terms or provisions of any material lien,
mortgage, lease, agreement, instrument, order, judgment or decree;
(e) To the best of Buyer's knowledge, none of the statements,
representations or warranties made by Buyer in this Agreement, or
in any certificate or other document delivered with or pursuant to
this Agreement, contains any untrue statement of any material fact,
or omits to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under
which they were made, not misleading;
(f) In the event Buyer elects to inspect and/or investigate the
Pipeline System, the Equipment or any of the other assets
constituting a portion of the Company Assets, Buyer shall have the
duty to disclose in writing to Seller, prior to Closing, any fact
or results obtained through such inspection and/or investigation
which Buyer knows to constitute a material violation of any local,
state or federal laws, rules or regulations.
6. Liabilities and Obligations Assumed by Seller. Notwithstanding
Buyer's purchase of the Stock, Buyer and Seller expressly agree
that Seller shall expressly assume and timely pay or perform, as
applicable, the following liabilities and obligations of the
Company only to the extent not reflected on the Balance Sheet.
(a) accounts payable accruing between September 2, 1993 and the
Closing Date (the "Ownership Period");
(b) accrued expenses and similar current liabilities accruing
during the Ownership Period;
(c) all "Taxes" (as defined in Section 16 of this Agreement)
arising from the Company's ownership or use of the Company Assets
and any other operations of the Company during the Ownership
Period;
(d) all obligations accruing during the Ownership Period under,
and all liabilities and obligations arising on or after the Closing
Date by reason of any breaches or defaults during the Ownership
Period under, any of the following: (i) the Lease, (ii) the
Easement Agreements, (iii) the Transmission Contracts, (iv) the
Permits, and (v) the FERC Letter Order described in Section 6.(h);
(e) any and all claims or liabilities arising out of any
employment relationship during the Ownership Period, for
termination or severance of employees, for deferred compensation,
accrued vacation or sick leave under any employment agreement or
employee benefit plan or policy, or any other claims alleged by
employees or with respect to any retirement, pension or profit
sharing plan or similar agreement;
(f) all liabilities for claims for injury, disabilities, death or
workers compensation arising from employment during the Ownership
Period, but only to the extent not covered by insurance carried by
the Company;
(h) all liabilities for claims or damages arising from
environmental matters relating to the Company that resulted from
conditions first occurring during the Ownership Period;
(i) any refund obligations, including interest thereon, due to
customers for the transporting of gas during the Ownership Period,
including but not limited to those arising pursuant to paragraph 2
of that certain Letter Order, issued by the Federal Energy
Regulatory Commission ("FERC") in Docket Number PR91-3-000, dated
October 24, 1991, approving the Stipulation and Agreement filed
with FERC pursuant to Section 311 of the Natural Gas Policy Act.
7. Note Payable to ANR Southern Pipeline Company. Sixty
thousand, six hundred dollars ($60,600) of the Purchase Price shall
be applied towards the Note Payable to ANR Southern Pipeline
Company is the amount of $60,600 by the Company.
8. Conditions to Obligation of Buyer to Close. The obligation of
Buyer to consummate the transactions contemplated by this Agreement
is subject to the satisfaction of the following conditions unless
waived by Buyer:
(a) The representations and warranties of Seller set forth herein
shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (including representations and warranties
made as of a specific date being true and correct as though that
specific date were changed to the Closing Date);
(b) Seller shall have performed all obligations and agreements and
complied with all covenants and conditions applicable to it
contained in this Agreement prior to or on the Closing Date, except
those which if not performed or complied with would not materially
and adversely affect Buyer or the Company Assets or the fair market
value of the Company Assets;
(c) Seller shall have endorsed in blank (or executed stock powers
in blank) and delivered to Buyer certificates representing the
Stock on the Closing Date, and shall have delivered to Buyer the
written resignations of the present directors and officers of the
Company in accordance with Section 4(e) of this Agreement;
(d) No suit, action or other proceeding by a third party or
governmental authority shall be pending or threatened which seeks
damages from Buyer in connection with, or seeks to restrain, enjoin
or otherwise prohibit, the consummation of the transaction
contemplated by this Agreement;
(e) Between the date of this Agreement and the Closing Date, no
material adverse change in the business or operations of the
Company shall have occurred;
(f) Between the date of this Agreement and the Closing Date, no
damage to or destruction of any of the Company Assets resulting in
a repair or replacement cost in excess of $25,000.00 shall have
occurred;
(g) No material (i) environmental violations, (ii) title failures
or defects or (iii) violations of or noncompliance with applicable
pipeline safety laws and regulations determined in accordance with
the uses for which the Pipeline System is currently being utilized
shall have been determined by Buyer through its due diligence; and
(h) An opinion of counsel to Seller, dated as of the Closing Date,
addressed to Buyer, and satisfactory to Buyer's counsel in form and
substance, as to the matters contained in Sections 4(c), (i) and
(j) of this Agreement; and
(i) Buyer shall have determined through its due diligence that the
Pipeline System is an intrastate pipeline under applicable federal
and state laws and regulations.
9. Conditions to Obligation of Seller to Close. The obligation of
Seller to consummate the transaction contemplated by this Agreement
is subject to the satisfaction of the following conditions unless
waived by Seller:
(a) The representations and warranties of Buyer set forth herein
shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (including representations and warranties
made as of a specific date being true and correct as though that
specific date were changed to the Closing Date);
(b) Buyer shall have performed all obligations and agreements and
complied with all covenants and conditions applicable to it
contained in this Agreement prior to or on the Closing Date, except
those which if not performed or complied with would not materially
and adversely affect Seller;
(c) No suit, action or other proceeding by a third party or a
governmental authority shall be pending or threatened which seeks
substantial damages from Seller in connection with, or seeks to
restrain, enjoin or otherwise prohibit, the consummation of the
transactions contemplated by this Agreement;
(d) Payment by Buyer to Seller of the Purchase Price; and
(e) An opinion of counsel to Buyer, dated as of the Closing Date,
addressed to Seller, and satisfactory to Seller's counsel in form
and substance, as to the matters contained in Section 5(a) and (b)
of this agreement.
10. Casualty Loss Prior to Closing. If prior to Closing any of
the Company Assets are damaged or destroyed by fire, flood, storm
or other casualty and the repair or replacement cost thereof, as
applicable, is $25,000.00 or less, then, subject to the other terms
and provisions of this Agreement, Buyer shall proceed to purchase
the Stock without any reduction in the Purchase Price. If prior to
Closing any of the Company Assets are damaged or destroyed by fire,
flood, storm or other casualty and the repair or replacement cost
thereof, as applicable, is in excess of $25,000.00, but is less
than $250,000.00, then Buyer shall have the option to either
terminate this Agreement or to proceed to purchase the Stock with
a reduction in the Purchase Price by the amount of the repair or
replacement cost thereof, as applicable, of such damaged or
destroyed assets. If prior to Closing any of the Company Assets
are damaged or destroyed by fire, flood, storm or other casualty
and the repair or replacement cost thereof, as applicable, is
$250,000.00 or more, then both Buyer and Seller shall have the
option to terminate this Agreement; and if neither Buyer nor Seller
elects to terminate this Agreement, then Buyer shall proceed to
purchase the Stock with a reduction in the Purchase Price by the
amount of the repair or replacement cost thereof, as applicable, of
such damaged or destroyed assets.
All repair or replacement costs shall be determined jointly by
Seller and Buyer or, in the event of disagreement between Buyer and
Seller with respect thereto, such repair or replacement cost shall
be determined by arbitration as provided in Section 37 of this
Agreement.
11. Termination. Anything elsewhere in this Agreement to the
contrary notwithstanding, this Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the
Closing in the following manner:
(a) By mutual written consent of Seller and Buyer;
(b) By Seller, through written notice to Buyer, if, on September
12, 1995, any of the conditions to the Closing set forth in Section
9 of this Agreement shall not have been satisfied and shall not
have been waived by Seller;
(c) By Buyer, through written notice to Seller, if, on September
12, 1995, any of the conditions set forth in Section 8 of this
Agreement shall not have been satisfied and shall not have been
waived by Buyer;
(d) By Buyer, through written notice to Seller on or before 5:00
p.m., Texas time on September 12, 1995, specifying material
environmental violations and/or material title failures or defects
and/or material violations of or noncompliance with applicable
pipeline safety laws and regulations and/or that the Pipeline
System is not an intrastate pipeline, as determined by Buyer
through its due diligence;
(e) By Seller, if at any time prior to Closing Seller determines
that it has made a material misrepresentation or materially
breached a covenant or a warranty made under this Agreement, which
after delivery of written notice thereof to Buyer, Buyer is
unwilling to waive same as a condition to Closing and to release
Seller from any liability therefor;
(f) By Buyer, if at any time prior to Closing, Buyer determines
that it has made a material misrepresentation or materially
breached a covenant or a warranty under this Agreement, which after
delivery of written notice thereof to Seller, Seller is unwilling
to waive same as a condition to Closing and to release Seller from
any liability therefor;
(g) By Buyer, through written notice to Seller on or before 5:00
p.m., Texas time on September 12, 1995, specifying a material
breach by Seller of any of the representations, warranties and/or
covenants contained in Section 4 of this Agreement; and
(h) By Seller, through written notice to Buyer on or before 5:00
p.m., Texas time on September 12, 1995, specifying a material
breach by Buyer of any of the representations, warranties and/or
covenants contained in Section 5 of this Agreement.
For purposes of subsection (d) hereinabove and Section 8(g) of this
Agreement, material environmental violations, title failures or
defects, or violations of or noncompliance with applicable pipeline
safety laws and regulations means only those which will cost more
than $25,000.00 (singularly or in the aggregate) to correct as
jointly determined by Seller and Buyer or, in the event of
disagreement between Buyer and Seller with respect thereto, as
determined by arbitration as provided in Section 37 of this
Agreement.
Upon the termination of this Agreement by either Party in
accordance with this Section 11, neither Party shall have any
liability whatsoever to the other Party in connection with this
Agreement and the transaction contemplated hereby, except as
otherwise expressly provided in this Agreement.
12. Expenses. All expenses incurred by Seller in connection with
or related to the authorization, preparation or execution of this
Agreement, the Exhibits and the Schedules hereto and thereto, and
all other matters related to the Closing, including without
limitation, all fees and expenses of counsel, accountants and
financial advisers employed by Seller, shall be borne solely and
entirely by Seller; and all such expenses incurred by Buyer shall
be borne solely and entirely by Buyer, and any expenses incurred by
Buyer or as the result of the exercise of its right of access
granted in Section 4(ff)(i) of this Agreement, shall be borne
solely and entirely by Buyer.
13. Broker's Fees, Counsel Fees and Expenses. Seller and Buyer
each represent to the other that neither has employed any broker or
entered into any agreement for the payment of any fees,
compensation or expense to any person, firm or corporation in
connection with the transactions contemplated by this Agreement.
Seller and Buyer further covenant and agree, each to the other, to
indemnify and hold the other harmless against any loss, liability,
costs, claims, demands, damages, actions, causes of action and
suits arising out of or in any manner related to the alleged
employment or use by the indemnifying party of any broker or agent
in connection with this Agreement or the transactions contemplated
hereby. The indemnification provision of this Section 13 shall
survive any rescission, cancellation, termination, expiration or
consummation of this Agreement.
14. Notices. Unless otherwise designated in writing, any notice
or demand required or permitted by any provision of this Agreement
shall be deemed to have been sufficiently given or served for all
purposes if it is sent by United States Mail, return receipt
requested, postage prepaid, addressed as follows or by facsimile to
the numbers contained below:
If to Seller:
Five Flags Holding Company
c/o ANR Southern Pipeline Company
Nine Greenway Plaza - Coastal Tower
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
If to Buyer:
Midcoast Holdings No. One, Inc.
Suite 3030, 0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxx X. Xxxxxxx,
President
Facsimile: (000) 000-0000
15. Operation of the Company Assets Prior to Closing. From and
after the date of this Agreement to the Closing Date, Seller agrees
to cause the Company to maintain and operate the Company Assets in
a good and workmanlike manner in accordance with present practices
and in compliance with applicable laws, rules and regulations,
maintain in full force and effect that insurance which is currently
in force with respect to the Company Assets, pay or cause to be
paid all costs and expenses incurred in connection therewith, keep
all agreements relating to the Company Assets in full force and
effect according to their present terms and conditions, and
otherwise comply with all of the covenants contained in all
agreements relating to the Company Assets. Seller further
covenants and agrees that it and/or the Company, as applicable,
shall:
(a) Promptly notify Buyer of any suit, action or other proceeding
that arises prior to the Closing Date affecting any of the Company
Assets or Seller's ability to consummate and perform under this
Agreement;
(b) Not mortgage, pledge or otherwise encumber any of the Company
Assets, or grant easements or licenses upon or further encumbering
any of the Company Assets without the prior written consent of
Buyer;
(c) Not enter into or terminate any material Easement Agreements,
Transmission Contracts or make any material changes to any of same,
other than in the ordinary course of business without the prior
written consent of Buyer, which consent shall not be unreasonably
withheld or delayed; and
(d) Not sell or otherwise dispose of any of the Company Assets
(except for use of such of the Inventory as shall be necessary in
normal day-to-day operations and maintenance), or make any material
changes to any of same, without the prior written consent of Buyer,
which consent shall not be unreasonably withheld or delayed.
16. Internal Revenue Code.
The terms used herein which are defined in the Agreement shall have
the meanings specified in this Agreement unless specifically
otherwise defined herein. As used herein, (i) the term "Code"
means the U.S. Internal Revenue Code of 1986, as amended, or any
successor law, (ii) the term "Law" means the law of any country or
political jurisdiction thereof other than the Code and (iii) the
term "Taxes" means all federal, foreign, state, local and/or
combined taxes, specifically including gross income, net income,
gross receipts, petroleum revenue, sales, use, ad valorem, value-
added, franchise, withholding, payroll, employment, excise,
property, or windfall profit taxes, together with any interest
thereon and any penalties, additions to tax, or additional amounts
applicable thereto which have been or may be imposed upon the
Company.
17. Tax Allocation Arrangements; Tax Audits.
(a) Tax Allocation Arrangements. Effective as of the Closing
Date, all liabilities and obligations between the Company and the
Seller under any tax allocation agreement or arrangement in effect
prior to the Closing Date shall cease to exist, and any liabilities
or rights existing under any such agreement or arrangement shall be
extinguished in full and shall not be paid thereafter. Seller
shall execute any documents necessary to effectuate the provisions
of this paragraph;
(b) Pre-Closing and Post-Closing Tax Liabilities. Seller shall be
solely responsible for the payment of all Taxes payable with
respect to the Company attributable to any period ending on or
before the Closing Date. Seller shall indemnify the Buyer from any
such Taxes (including any interest and penalties thereon.) In the
case of any state or local Taxes computed for a period which
includes the Closing Date but which ends after the Closing Date,
the Seller shall be liable for no more than its pro rata share of
such Taxes. The Buyer and the Company shall be liable for and
indemnify the Seller and its Affiliates and successors or assignees
against all Taxes which are imposed on or incurred by the Buyer for
taxable years or periods or portions thereof beginning on or after
the Closing Date;
(c) Apportionment of Tax Liabilities. The apportionment of tax
liabilities addressed in Section 17(b) of this Agreement shall be
determined on the basis of actual taxable events, taxable periods,
and activities, except that exemptions, allowances or deductions
that are granted or calculated on an annual or periodic basis, such
as the deduction for property taxes, franchise taxes (other than
franchise taxes measured by income), payments in lieu of such taxes
and similar taxes or fees shall be apportioned between the Seller
and Buyer on a pro rata daily basis over the relevant tax period,
based on the tax periods or portions thereof each is responsible
for under Section 17(b) of this Agreement;
(d) Tax Reimbursement. If, as a result of any adjustment which is
made after the Closing to Company's liability for Taxes for any
taxable period, the Seller or Buyer or any Affiliate of either
makes a payment of Taxes in accordance with Section 17(b) of this
Agreement and, as a result of such adjustment, Company receives a
refund of, or realizes a reduction in, Taxes for any other Taxable
period, then the amount of such refund or reduction in Taxes shall
promptly (and in any event no later than thirty days after the
close of the taxable period with respect to which the refund or
reduction in Taxes is received, taken or obtained) be remitted to
the party which made such payment of Taxes. If any refund or
credit of Taxes for which a payment has been made by Company
pursuant to this Section 17(d) is subsequently reduced or
disallowed, Seller or Buyer or any Affiliate of either who received
such refund or credit of Taxes, shall pay Company for the amount of
such reduction or disallowance within thirty days of such reduction
or disallowance;
(e) Filing of Returns. The Seller shall prepare and file or cause
to be prepared and filed when due (i) all separate company income
or franchise tax returns and all consolidated, combined or unitary
income and franchise tax returns that are required to be filed by
or with respect to the Company for taxable years or periods during
the Ownership Period including any returns as to which an election
is made under the provisions of Section 338(h)(10) of the Code or
under any comparable provisions under other Laws, and (ii) all
other tax returns and reports of the Company which are required to
be filed or furnished on or before the Closing Date. Buyer shall
prepare and file, or cause to be prepared and filed, when due all
other tax returns and reports that are required to be filed by or
with respect to the Company, including returns necessitated by a
stand-alone election under Section 338(g) of the Code or comparable
provisions under other Laws;
(f) Claims and Suits for Refunds. If Buyer or any Affiliate of
Buyer (including Company) received a refund of any Taxes that
Seller is responsible for hereunder, or if Seller or any Affiliate
of Seller (other than Company) receives a refund of any Taxes that
Buyer and the Company are responsible for hereunder, the party
receiving such refund shall, within thirty (30) days after receipt
of such refund, remit it to the party who has responsibility for
such Taxes hereunder. For the purpose of this Section 17(f), the
term "refund" shall include a reduction in Tax and the use of an
overpayment as a credit or other tax offset, and receipt of a
refund shall occur upon the filing of a return or an adjustment
thereto using such reduction, overpayment or offset or upon the
receipt of cash;
(g) Payment. All Taxes, including Taxes owed after a compromise
or settlement of an audit or dispute with a taxing authority, shall
be paid to the taxing authority by the party which is legally
responsible therefor under the Code or Law. Upon payment of any
Taxes with respect to which a party is entitled to receive
indemnification hereunder, such party shall submit an invoice, with
evidence of payment, to the indemnifying party stating that such
Taxes have been paid and giving in reasonable detail the
particulars relating thereto. The indemnifying party shall remit
payment for such Taxes promptly upon receipt of such invoice,
evidence of payment and particulars. Such payment will include
interest (at the Prime Rate) from the date Taxes are paid by the
party entitled to indemnification through the date the payment is
remitted by the indemnifying party;
(h) Assistance and Cooperation. Following Closing, in the event
that one Party receives notice of any examination, audit, claim or
other proceeding with respect to the liability of the Company for
Taxes relating to any period for which the other Party is liable,
the first Party shall within ten (10) days notify the other Party
in writing thereof. In the event of an audit or dispute with a
taxing authority over Taxes for which a party is liable pursuant to
this Section 17, that Party will be entitled to control the
proceedings, at its sole expense, related to such Taxes (including
action taken to pay, compromise or settle such Taxes), provided,
that Seller and Buyer shall jointly control, in good faith with
each other, any proceeding related to a taxable year or period
which begins before and ends after the Closing Date and which both
parties have liability for pursuant to Section 17(b) of this
Agreement, provided further, however, that Seller will in any event
be entitled to solely control any proceeding which relates to or
impacts a consolidated, combined or unitary return filed in any
jurisdiction by Seller or its Affiliates. The Party which is not
entitled to control any such proceedings shall be afforded a
reasonable opportunity to participate in such proceedings at its
own expense;
(i) Further Assurances. Each of the Parties hereby agrees to
provide to the other such cooperation and information as reasonably
requested and necessary for the preparation and/or filing of any
return, amended return or claim for refund; in determining a
liability or a right to refund; in conducting any audit; or in
responding to any examination, audit, claim or other proceeding,
involving any Taxes. The Company and each Party will preserve and
retain all returns, schedules, work papers and all material records
or other documents relating to any Taxes until the expiration of
the statutory period of limitations (including extensions) for the
taxable periods to which such documents relate and until the final
determination of any payments which may be required with respect to
such periods under this Agreement. The Company shall make such
documents available at the then current administrative headquarters
of the Company to Seller upon reasonable notice and at reasonable
times. Seller shall be entitled, at its sole expense, to make
copies of any such books and records as it shall deem necessary for
any reason. The Buyer further agrees to permit representatives of
Seller to meet with employees of the Buyer and the Company on a
mutually convenient basis in order to enable such representatives
to obtain additional information and explanations of any documents
provided pursuant to this paragraph. Any information obtained
pursuant to this paragraph shall be kept confidential, except as
may be otherwise necessary in connection with the filing of returns
or claims for refund or in conducting or responding to any
examination, audit, claim or other proceeding.
(j) Prior Year Returns. The Seller represents that the Company
has copies of all separate and consolidated returns filed since
September 2, 1993 of prior year "Taxes", regardless of whether the
Seller owned the Company at the time the tax returns were filed.
18. Indemnification by Seller. Seller agrees that, on and after
the Closing, it will indemnify, hold harmless and defend Buyer from
and against any and all losses, claims, demands, costs and expenses
(including, without limitation, reasonable attorneys' fees and
disbursements) of every kind, nature and description based upon,
arising out of or otherwise in respect of the following:
(a) any misrepresentation, breach of warranty or breach of
covenant by Seller contained in this Agreement or in any documents
entered into or delivered in connection therewith;
(b) claims or demands of third parties arising from or otherwise
related to the operations of, or any work performed by Seller,
prior to the Closing;
(c) the nonfulfillment by Seller of any of the obliga-tions and
liabilities of the Company assumed by Seller pursuant to
subsections (a), (b), (c), (d), (e), (f), (g) and (h) of Section 6
of this Agreement;
(d) any and all violations of "Environmental Protection Laws"
occurring during the Ownership Period with respect to Seller's
ownership or operation of the Pipeline System, the Equipment or any
of the other assets constituting a portion of the Company Assets.
"Environmental Protection Laws" shall include any and all laws,
statutes, rules, regulations, and judicial interpretation thereof
of the United States, of any state in which the Company Assets, or
any portion thereof, is located, and of any other governmental or
quasi-governmental authority having jurisdiction, that relate to
the prevention, abatement, and/or elimination of pollution and/or
protection of the environment, including, but not limited to, those
federal statutes commonly known as the Solid Waste Disposal Act of
1970, the Resource Conservation and Recovery Act of 1976, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of
1986, the Clean Water Act, the Clean Air Act, the Safe Drinking
Water Act, the Migratory Bird Treaty Act, the Toxic Substances
Control Act, and the Hazardous Materials Transportation Act,
together with all applicable state statutes serving any similar or
related purpose;
(e) all "Taxes" (as defined in Section 16 of this Agreement) of
Seller attributable to all periods during the Ownership Period,
without regard to whether or not the period for which any "Taxes"
are determined ends either before or subsequent to the Closing
Date;
(f) the non-existence of any particular Company Assets which are
described in this Agreement or in the Exhibits or Schedules
thereto;
(g) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including without
limitation, legal fees and expenses incurred by Buyer, incident to
any of the foregoing or incurred by Buyer in investigation or
attempting to avoid the same or to oppose the imposition thereof,
or in enforcing this indemnity; and
(h) title defects by, through and under the Company occurring
during the Ownership Period.
This right to indemnification is in addition to any other right
available to Buyer, including, without limitation, the right of
Buyer to xxx Seller for a misrepresentation, breach of warranty, or
breach of covenant under this Agreement.
19. Indemnification by Buyer. Buyer hereby agrees that, on and
after the Closing, it will indemnify, hold harmless and defend
Seller from and against any and all losses, claims, demands,
damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) of every kind, nature
and description based upon, arising out of or otherwise in respect
of the following:
(a) any misrepresentation, breach of warranty or breach of
covenant by Buyer contained in this Agreement or in any documents
entered into or delivered in connection herewith;
(b) the nonfulfillment by Buyer of any Assumed Obligation;
(c) claims or demands of third parties arising from or otherwise
related to the operations of, or any work performed by the Company,
after the Closing;
(d) any and all violations of Environmental Protection Laws, as
defined in Section 18(d) of this Agreement, first occurring on or
after the Closing Date with respect to the Company's ownership or
operation of the Pipeline System, the Equipment or any of the other
assets constituting a portion of the Company Assets; and
(e) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including without
limitation, reasonable legal fees and expenses incurred by Seller,
directly related to any of the foregoing, or in enforcing this
indemnity. This right to indemnification is in addition to any
other right available to Seller, including, without limitation, the
right of Seller to xxx Buyer for a misrepresentation, breach of
warranty, or breach of covenant under this Agreement.
20. Defense by Parties. Notice of any claim for indemnification
under this Agreement shall be given promptly to the indemnifying
party stating in reasonable detail the nature of such claim and the
amount thereof. If an action, suit or proceeding is brought
against a party with respect to which an indemnifying party has
liability under an indemnity agreement contained herein, the
indemnifying party shall, at its sole expense, conduct the defense
of any such action, suit or proceeding. The party seeking
indemnity, at its sole expense, may participate in the defense of
any such action, suit or proceeding and, in such event, all parties
shall cooperate fully with each other and their counsel in order to
ensure a proper and adequate defense. If the indemnifying party
refuses or declines to defend such action, suit or proceeding, the
party seeking indemnity shall have the right, at the expense of the
indemnifying party, to defend such claim with counsel of its own
choosing.
21. Limitations on Liabilities of the Parties. All statements,
covenants, representations, warranties and indemnity obligations
contained in this Agreement, in the Exhibits and Schedules hereto,
or in any certificate or document delivered hereunder shall not be
deemed merged into the Closing or the documents delivered at
Closing, but, rather shall survive until December 15, 1996 (unless
waived in writing at or prior to Closing). Both Seller's and
Buyer's liability for any claims against the other arising out of
or in any way pertaining to this Agreement or the purchase and sale
of the Stock, including but not limited to any misrepresentations,
breaches of covenants, breaches of warranties and breaches of
indemnity obligations, shall terminate on December 15, 1996, and it
shall, therefore, be a condition to a Party's liability for any
such claims under this Agreement that it receive due notice of such
claims, as provided under Section 15 of this Agreement, on or
before December 15, 1996; provided, however, in the event there is
a claim, for which notice has been given as provided above, pending
on December 15, 1996, then the liability of a Party for any such
claim shall not terminate, but shall continue in effect with
respect to any such claim. Notwithstanding the foregoing, Seller's
liability for Seller's breach of the obligations and liabilities of
the Company assumed by Seller pursuant to subsections (a), (b),
(c), (d), (e) (f), (g) and (h) of Section 6 of this Agreement
("Seller's Assumed Obligations"), shall survive the Closing and
continue in effect thereafter, and Buyer's liability for the
indemnity obligation of Buyer under Section 4(ff)(i) of this
Agreement shall survive the Closing and continue in effect
thereafter. Notwithstanding any provision to the contrary in this
Agreement or the Exhibits and Schedules hereto: (i) the aggregate
liability of (x) Seller's parent company, ANR Southern Pipeline
Company, under the Indemnity Agreement issued by it pursuant to
Section 22 of this Agreement and otherwise under any applicable
laws, and (y) Seller under this Agreement and otherwise under any
applicable laws, to Buyer for any claims and/or of any losses
arising out of or in any way pertaining to the sale and assignment
of the Stock, including but not limited to any misrepresentations,
breaches of covenants, breaches of warranties and breaches of
indemnity obligations, shall be limited to Two Million, Fifty-Two
Thousand and No/100 Dollars ($2,052,000); and (ii) the aggregate
liability of Buyer to Seller under this Agreement and otherwise
under any applicable laws for any claims and/or any of the losses
arising out of or any way pertaining to the sale and assignment of
the Stock, including but not limited to any misrepresentations,
breaches of covenants, breaches of warranties and breaches of
indemnity obligations, shall be limited to Two Million, Fifty-Two
Thousand and No/100 Dollars ($2,052,000).
22. Indemnity Agreement of Parent Corporation. At Closing, Seller
agrees to deliver to Buyer, and each of Seller and Buyer shall
execute, an Indemnity Agreement issued by ANR Southern Pipeline
Company, in substantially the same form as that attached hereto as
Exhibit "H".
23. The Parties, Their Successors and Assigns. This Agreement
shall inure to the benefit of and be binding upon the Parties and
their respective successors, legal representatives and assigns;
provided, however, that no Party may assign its obligations
hereunder without the prior written consent of the other Party.
24. Entire Agreement. This Agreement and its Exhibits and
Schedules constitute the entire agreement of the Parties with
respect to the subject matter hereof, supersedes all prior and
contemporaneous agreements and understandings between the Parties,
and may not be modified or amended except by a written agreement
executed by both Parties. No representation, promise, or statement
of intention has been made by either Party that is not embodied in
this Agreement, and neither Party shall be bound or liable for any
alleged representation, promise or statement of intention not so
set forth in this Agreement.
25. Governing Law. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State
of Texas, except for any conflict of laws rules which would refer
any matter to the law of another jurisdiction, and irrespective of
(i) the respective jurisdictions of incorporation of the Parties,
(ii) the locations of the respective principal offices or places of
business of the Parties, (iii) the places of execution or place of
consummation of this Agreement, or (iv) the location of the
property which is the subject of this Agreement.
26. Cooperation After Closing. After the Closing, upon reasonable
advance notice, Buyer shall provide access during normal business
hours to, and copying of, any books and records and other
information as Seller may reasonably require to close the books and
records of Seller and prepare Seller's tax returns or in connection
with, any claim made against, or obligation of, Seller or any
Affiliate of Seller, involving the Company or its property.
27. Section and SubSection Headings. The Section and subsection
headings contained herein are for the purpose of convenience only
and are not intended to define or limit the contents thereof.
28. Counterparts. This Agreement may be executed in one or more
counterparts, all of which when taken together shall be deemed to
be one original.
29. Exhibits and Schedules. All Exhibits and all Schedules
attached to or referred to in this Agreement are incorporated into
and made of part of this Agreement.
30. Waivers. Any failure by either Party to comply with any of
its obligations, agreements or conditions herein contained may be
waived in writing, but not in any other manner, by the Party to
whom such compliance is owed. No waiver of, or consent to a change
in, any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of, or consent to a change in, other
provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
31. Further Assurances. Seller and Buyer agree to deliver or
cause to be delivered to each other on the Closing Date and at such
other time thereafter as shall be reasonably agreed, any such
additional instruments as Buyer or Seller may reasonably request
for the purpose of carrying out this Agreement, including but not
limited to: (a) Seller and Buyer amending the Exhibits hereto as
required to effectuate the transactions contemplated hereunder; and
(b) Seller providing Buyer with immediate disclosure of
noncompliance with Environmental Protection Laws as contemplated by
Section 4(e) of this Agreement.
32. No Solicitation. Seller agrees that on and after the date
this Agreement has been fully executed by both Buyer and Seller and
one counterpart delivered to each of the parties, except as
otherwise consented to in writing by Buyer, Seller and any
affiliates or agents of Seller will immediately terminate all
discussions with any party other than Buyer with respect to any
sale or other similar transaction involving the Company Assets.
Neither Buyer nor Seller, or any affiliates or agents of Buyer or
Seller, shall enter into or conduct discussions, whether or not
solicited by any of Buyer, Seller or their agents, with any party
other than Buyer with respect to any sale or other similar
transaction involving the Company Assets until Closing or
termination of this Agreement.
33. Confidentiality. Seller expressly agrees that all copies of
books, files, maps and records pertaining to the Company Assets
that are retained by Seller (Buyer herewith acknowledging and
agreeing that Seller shall be entitled to retain copies of any such
books, files, maps and records as Seller deems necessary or
desirable) shall be, and shall be handled by Seller as,
confidential information of the Company. Seller shall not disclose
any such information to any third party, including without
limitation, any local, state or federal governmental body or
regulatory agency, unless required to do so by applicable law.
Prior to any such disclosure, Seller shall notify the Company, as
far in advance of any such required disclosure as is practicable,
that Seller is required to disclose such information and the basis
for such required disclosure, and Seller shall cooperate fully with
the Company to obtain confidential treatment for any such disclosed
information by the party to which such information is disclosed.
34. Amendment. At any time prior to the Closing Date this
Agreement may be amended or modified in any respect by the Parties
by an agreement in writing executed in the same manner as this
Agreement. No supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the
party to be bound thereby.
35. Attorneys' Fees. In the event suit or action arising out of
the Agreement should be brought by either Party, the prevailing
Party, after conclusion of all appeals, shall be entitled to
reimbursement of court costs and reasonable attorneys' fees;
provided, however, that should the litigation concern the issue of
value or damages related to a breach of this Agreement and the
defendant offers to tender to the plaintiff a settlement amount and
plaintiff refuses said offer, then plaintiff must recover an
amount, exclusive of interest, attorneys' fees and court costs, at
least fifteen percent (15%) greater than the settlement offer in
order to be entitled to the cost and fee recovery provisions of
this Section 35.
36. Construction. Each Party acknowledges and agrees that this
Agreement was negotiated and drafted jointly by both Parties
hereto, and that in the event of any ambiguity, this Agreement
shall not be construed against either Party but rather the terms
herein shall be given a reasonable interpretation.
37. Arbitration. Either Party may upon notice given to the other
call for submission to arbitration (i) whether the cost of
correcting any environmental violation and/or title defect or title
failure and/or violations of or noncompliance with applicable
pipeline safety laws and regulations will exceed $25,000.00
(singularly or in the aggregate), pursuant to the notice which may
be given by Buyer to Seller under Section 11(d) of this Agreement
or (ii) the amount of repair or replacement cost of any Company
Assets damaged or destroyed by fire, flood, storm or other casualty
prior to Closing, pursuant to the determination which may be made
under Section 10 of this Agreement, in accordance with the
following:
(a) The Party requesting arbitration shall set forth in such
notice its proposed material amount. Within ten (10) days from the
receipt of such notice, the other Party may set forth its proposed
material amount. Within ten (10) days after the giving of such
latter notice, each Party shall furnish to the other Party a notice
("Decision Number") setting forth the amount that such Party wishes
the arbitrator(s) to select. Within ten (10) days after the giving
of the latter of the two Decision Numbers, the Parties shall attend
a meeting ("Meeting") at a mutually acceptable time and place to
discuss fully the content of such Decision Numbers and based
thereon determine whether either or both wish to modify their
Decision Numbers in any way. Any such modifications shall be
discussed with each other, so that when each Party finalizes its
Decision Number, it shall do so with full knowledge of the content
of the other Party's final Decision Number. The finalization of
such Decision Numbers and the delivery of same by each Party to the
other shall occur at the Meeting unless by mutual agreement they
agree to have one or more additional Meetings for such purposes.
If arbitration is invoked by either Party, the decision of the
arbitrator(s) shall be final and binding upon all Parties, and no
Party shall seek to have the applicable issues litigated rather
than arbitrated (except as may be otherwise required by law).
(b) It is the intent of the Parties that, to the extent
practicable, such binding arbitration shall be conducted by a
person knowledgeable and experienced in the type of matter that is
the subject of the dispute. In the event the Parties are unable to
agree upon such person within ten (10) days after the last Meeting
held pursuant to subsection (a) of this Section 37, then each Party
shall select a person that it believes has the qualifications set
forth above as its designated arbitrator (which selection shall be
accomplished by notifying the other Party of the identity of such
person), and such arbitrators so designated shall mutually agree
upon a similarly qualified third person to complete the arbitration
panel, provided, however, that if one of the Parties fails to
select its designated arbitrator as specified herein within ten
(10) days of receiving notice from the other Party that such other
Party has selected its designated arbitrator, then the arbitration
provided for herein shall be conducted by the one arbitrator so
designated. In the event that the persons selected by the Parties
are unable to agree on a third member of the panel within ten (10)
days after the selection of the latter of the two arbitrators, such
person shall be designated by the American Arbitration Association.
Upon final selection of the entire panel, such panel shall, as
expeditiously as possible (and if possible, within ninety (90) days
after the selection of the last arbitrator), render a decision on
the matter submitted for arbitration. Such panel shall be required
to adopt either one of the Decision Notices and shall have no power
whatsoever to reach any other result. Such panel shall adopt the
decision that in its judgment is the more fair, equitable and in
conformity with this Agreement. The arbitration shall be conducted
in Houston, Texas, in accordance with the commercial arbitration
rules of the American Arbitration Association.
(c) Upon the determination of any such dispute, the arbitrators
shall xxxx the costs attributable to such binding arbitration to
the losing Party; provided, however, that the arbitrators shall be
empowered to apportion such costs between the Parties if they deem
it appropriate.
(d) It is the intent of the Parties that, once arbitration is
invoked by either Party pursuant to the provisions of this Section
37, the matters set for arbitration shall be decided as set forth
herein, and they shall not seek to have this Section 37 rendered
unenforceable or to have such matter decided in any other way,
provided, however, that nothing herein shall prevent the Parties
from negotiating a settlement of any issue at any time.
IN WITNESS WHEREOF, the Parties have executed or caused this
Agreement to be executed in multiple originals by duly authorized
officers as of the day and year first above written.
SELLER:
FIVE FLAGS HOLDING COMPANY
By:__________________
Name:________________
Title:_______________
BUYER:
MIDCOAST HOLDINGS NO. ONE, INC.
By:_______________________
Xxx X. Xxxxxxx,
President
ffh.stk
EXHIBITS:
Exhibit "A" - "Map of the "Pipeline System"
Exhibit "B" - "Equipment"
Exhibit "C" - "Lease"
Exhibit "D" - "Easement Agreements"
Exhibit "E" - "Inventory"
Exhibit "F" - "Transmission Contracts"
Exhibit "G" - "Permits"
Exhibit "H" - "Indemnity Agreement"
SCHEDULES:
Schedule 4(e) - Directors and Officers of the Company
Schedule 4(f) - "Balance Sheet"
Schedule 4(l) - Notices of Failure to Comply with Laws
Schedule 4(x) - Exceptions to Compliances with Environmental Laws
Schedule 4(ee)- Schedule of Insurance Coverages
Schedule 4(gg)- Bank Accounts
Schedule 4(hh)-"Benefit Plans"
