U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the Quarterly Period
Ended March 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 0-8898
Midcoast Energy Resources, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 76-0378638
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1100 Louisiana, Suite 2950
Houston, Texas 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 650-8900
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
On March 31, 1996, there were outstanding 329,557 shares of the
Company's common stock, par value $.01 per share.
Transitional Small Business Disclosure Format. Yes No X
<PAGE>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
Quarterly Report on Form 10-QSB for the
Quarter Ended March 31, 1996
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995 3
Consolidated Statements of Operations for the three
months ended March 31, 1996 and March 31, 1995 4
Consolidated Statement of Shareholders' Equity for
the three months ended March 31, 1996 5
Consolidated Statements of Cash Flows for the three months
ended March 31, 1996 and March 31, 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Results of Operations 9
PART II. OTHER INFORMATION 13
SIGNATURE 15
<TABLE>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
ASSETS March 31, December 31,
1996 1995
--------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 939,500 $ 106,152
Accounts receivable, no allowance for doubtful accounts 2,116,775 2,319,667
Asset held for resale 210,447 210,447
--------------- -------------
Total current assets 3,266,722 2,636,266
--------------- -------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Natural gas transmission facilities 7,422,770 7,365,421
Investment in transmission facilities 1,284,609 1,284,609
Oil and gas properties, using the full cost method of accounting 309,556 302,293
Other property and equipment 108,167 85,819
--------------- -------------
9,125,102 9,038,142
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION (953,895) (831,981)
--------------- -------------
8,171,207 8,206,161
DEFERRED CONTRACT COSTS AND OTHER ASSETS, net of amortization 449,112 246,081
--------------- -------------
Total assets $ 11,887,041 $ 11,088,508
--------------- -------------
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 2,726,206 $ 2,086,138
Current portion of deferred income 83,000 83,000
Short-term borrowing from bank - 25,000
Current portion of long-term debt payable to:
Banks 878,645 540,998
Shareholders and affiliates 20,000 -
--------------- ---------------
Total current liabilities 3,707,851 2,735,136
--------------- ---------------
LONG-TERM DEBT PAYABLE TO:
Bank 2,988,588 2,926,947
Shareholders and affiliates 453,822 1,033,822
--------------- ---------------
Total long-term debt 3,442,410 3,960,769
--------------- ---------------
DEFERRED INCOME 214,417 235,167
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY:
5% cumulative preferred stock, $1 par value, 1 million
shares authorized, 200,000 shares issued and outstanding
with a liquidation preference of $1,183,665 200,000 200,000
Common stock, $.01 par value, 6 million shares authorized,
329,557 and 328,557 shares issued and outstanding at
March 31, 1996 and December 31, 1995, respectively 3,296 3,286
Paid-in capital 18,842,042 18,836,052
Accumulated deficit (14,416,175) (14,775,102)
Unearned compensation (106,800) (106,800)
--------------- ---------------
Total shareholders' equity 4,522,363 4,157,436
--------------- ---------------
Total liabilities and shareholders' equity $ 11,887,041 $ 11,088,508
--------------- ---------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
For The Three Months Ended
----------------------------------
March 31, March 31,
1996 1995
--------------- ---------------
<S> <C> <C>
OPERATING REVENUES:
Sale of natural gas and transportation fees $ 5,090,497 $ 2,903,098
Sale of pipeline 22,500 -
Oil and gas revenue 50,769 1,742
--------------- ---------------
Total operating revenues 5,163,766 2,904,840
--------------- ---------------
OPERATING EXPENSES:
Cost of natural gas and transportation charges 4,304,681 2,501,151
Cost of pipeline sold 2,153 -
Production of oil and gas 22,288 912
Depreciation, depletion, and amortization 136,328 85,320
General and administrative 190,720 181,809
--------------- ---------------
Total operating expenses 4,656,170 2,769,192
--------------- ---------------
Operating income 507,596 135,648
NON-OPERATING ITEMS:
Interest expense (114,669) (64,424)
Other income(expense), net (19,245) (5,835)
--------------- ---------------
INCOME BEFORE INCOME TAXES 373,682 65,389
PROVISION FOR INCOME TAXES - -
--------------- ---------------
Net income 373,682 65,389
5% CUMULATIVE PREFERRED STOCK DIVIDENDS (14,755) (14,593)
--------------- ---------------
NET INCOME APPLICABLE TO
COMMON SHAREHOLDERS $ 358,927 $ 50,796
--------------- ---------------
NET INCOME PER COMMON SHARE $ 1.09 $ 0.16
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 328,590 314,357
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 1996
(UNAUDITED)
<CAPTION>
5% Cumulative Total
Preferred Common Paid-in Accumulated Unearned Shareholders'
Stock Stock Capital Deficit Compensation Equity
------------- ------------ ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 $ 200,000 $ 3,286 $ 18,836,052 $ (14,775,102) $ (106,800) $ 4,157,436
Issuance of 1,000 shares in connection
with a financing agreement with an
affiliate (Note 7) - 10 5,990 - - 6,000
Net income - - - 373,682 - 373,682
5% cumulative preferred stock dividends - - - (14,755) - (14,755)
------------- ------------- ------------- ------------ ------------ ------------
BALANCE, March 31, 1996 $ 200,000 $ 3,296 $ 18,842,042 $ (14,416,175) $ (106,800) $ 4,522,363
------------- ------------- ------------- ------------- ------------ ------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For The Three Months Ended
--------------------------------
March 31, March 31,
1996 1995
--------------- -------------
<S> <S> <S>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income applicable to common shareholders $ 358,927 $ 50,796
Adjustments to arrive at net cash provided (used) in
operating activities-
Depreciation, depletion and amortization 136,328 85,320
Gain on sale of operating pipeline (20,347) -
Recognition of deferred income (20,750) (20,750)
Income on partnership investments (26,300) -
Changes in working capital accounts-
Decrease in accounts receivable 227,967 629,202
Increase (decrease) in accounts payable and
accrued liabilities 652,376 (272,138)
--------------- --------------
Net cash provided by operating activities 1,308,201 472,430
--------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (104,823) (248,929)
Investments in partnerships and other (184,318) -
--------------- --------------
Net cash used in investing activities (289,141) (248,929)
--------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank debt borrowings 1,653,000 715,000
Bank debt repayments (1,278,712) (933,777)
Proceeds from notes payable to
shareholders & affiliates 100,000 -
Repayments on notes payable to
shareholders & affiliates (660,000) -
--------------- -------------
Net cash used in financing activities (185,712) (218,777)
--------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 833,348 4,724
--------------- -------------
CASH AND CASH EQUIVALENTS, beginning of period 106,152 65,921
--------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 939,500 $ 70,645
--------------- -------------
CASH PAID FOR INTEREST $ 137,722 $ 74,586
--------------- ---------------
CASH PAID FOR INCOME TAXES $ - $ -
--------------- ---------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
MIDCOAST ENERGY RESOURCES, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial information has been prepared
by Midcoast Energy Resources, Inc. ("Midcoast" or "the Company") in
accordance with the instructions to Form 10-QSB. The information
furnished reflects all adjustments, all of which were of a normal
recurring nature, which are, in the opinion of the Company,
necessary for a fair presentation of the results for the interim
periods presented. Although the Company believes that the
disclosures are adequate to make the information presented not
misleading, certain information and footnote disclosures, including
significant accounting policies, normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations. It is suggested that the financial
information be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1995.
2. BACKGROUND
Midcoast was formed on May 11, 1992, as a Nevada corporation and,
in September 1992, became the successor to Nugget Oil Corporation
("Nugget") through a merger pursuant to the Nugget Plan of
Reorganization. The merger was accounted for as a pooling of
interests.
3. PARTNERSHIP INVESTMENTS
In January, 1996, the Company and three unaffiliated parties
jointly formed Starr County Gathering System, a Joint Venture (the
"Joint Venture"). The companies joined together for the purpose of
acquiring, owning and operating pipelines. Effective January 1,
1996, the Joint Venture acquired a gas gathering system consisting
of approximately 10 miles of pipeline located in Starr County,
Texas from an unaffiliated third party. The Joint Venture paid
cash consideration of $164,400 for the system. The Joint Venture
financed the entire purchase price with a credit facility obtained
from a commerical lender. Midcoast will act as manager of the
Joint Venture and operate the systems.
On February 28, 1996, the Company and Resource Energy Development
Company, L.L.C. ("Resource"), an unaffiliated third party, jointly
formed Pan Grande, L.L.C. ("Pan Grande") a Texas Limited Liability
Company each owning a 50% interest. The companies joined together
for the purpose of acquiring, owning and operating pipelines. On
March 1, 1996, Pan Grande acquired six gas gathering systems
consisting of approximately 77 miles of pipeline located in Texas
from an unaffiliated third party. Cash consideration of $1,000,000
was paid by Pan Grande for the systems. Pan Grande financed
$800,000 of the acquisition with a credit facility obtained from a
bank. Midcoast as 50% owner of Pan Grande has guaranteed 50% of the
loan value. The remaining $200,000 of the purchase price was obtained
through equal $100,000 capital contributions from Midcoast and Resource.
Midcoast's $100,000 capital contribution was financed through a loan
from an affiliate owned by an officer and director of the Company
(see Note 7). Midcoast will act as manager of Pan Grande and operate
the systems.
4. PIPELINE CONSTRUCTION
Construction of a one-half mile pipeline in Obion County, Tennessee
comenced in March 1996. The pipeline is being constructed pursuant
to a long-term transportation agreement with an industrial customer
and is expected to be completed in May 1996. Construction costs
are estimated to be $65,000. The construction is being financed
through cash generated from operations and long-term bank financing
(see Note 5).
Construction of a two mile pipeline in Roane County, Tennessee
commenced in March 1996. The pipeline is being constructed
pursuant to a long-term transportation agreement with an industrial
customer and is expected to be completed in June 1996.
Construction costs are estimated to be $370,000. The construction
is being financed from cash generated from operations and long-term
financing (see Note 5).
5. BANK DEBT
In March 1996, $343,000 was extended by a bank to partially finance
the construction of two pipelines in Tennessee (see Note 4). The
note payable bears interest at the prime rate plus 1% and is
payable in 60 monthly installments of principal and accrued
interest of $7,185 beginning August 15, 1996 with a final maturity
of July 15, 2001. The note is secured by an assignment of revenues
generated by contracts on both pipelines being constructed and with
a negative pledge on both systems. The note has been personally
guaranteed by three major stockholders who are also directors and
offficerd of the Company.
6. COMMITMENTS
In March 1996, Midcoast entered into a new noncancelable operating
lease for its office space which expires on January 31, 1999.
Previously, Midcoast had another noncancelable lease which expired
in June 1995 and converted to a monyh-to-month arrangement until
the new lease was executed. During the three months ended March 31,
1995 and 1996, $12,500 in rent expense was incurred in both
periods. As of March 31, 1996, approximately $211,000 in future
minimum lease payments are due under this lease.
7. RELATED PARTY TRANSACTION
In March 1996, an affiliate owned by a officer and director of the
Company provided a loan committment of $175,000 of which $100,000 was
drawn to fund the Company's equity contribution in a new entity
Pan Grande) in which the Company has a 50% interest (see Note 3).
The loan, as amended, provides for 59 monthly payments of $1,667 plus
accrued interest and a final installment at March 15, 2001 in the amount of
the remaining principal plus accrued interest. The note bears interest at
the prime rate plus 2.5% and is secured by the Company's interest
in Pan Grande.
8. SUBSEQUENT EVENTS
The Board of Directors and a majority of the existing shareholders
have authorized a 4.47 for 1 stock split in anticipation of the
Company registering with the U.S. Securities and Exchange Commission
("SEC") 1,150,000 shares (after consideration of the stock split) of
its common stock, including the Company's grant of an option to the
underwriters to purchase up to 150,000 shares to satisfy over-
allotments in the sale of the Company's common stock. Under the terms of
the underwriting agreement, the underwriters will also receive
warrants to acquire 100,000 shares at 120% of the initial offering
price per share. The securities underlying these warrants are
subject to piggy-back registration rights.
The Board of Directors and a majority of the existing Shareholders
have authorized a 4.47 for stock split in anticipation of the
Company registering with the Securities and Exchange Commission
1,000,000 shares (after consideration of the stock split) of its
Common Stock. In addition the Company has granted an option to the
underwriters to purchase up to 150,000 shares on the same terms to
satisfy over-allotments in the sale of the 1,000,000 shares. Under
the terms of the underwriting agreement, the underwriters will also
receive a warrant to acquire 100,000 shares at 120% of the initial
offering price per share. The securities underlying these warrents
are subject to piggy-back registration rights.
In May 1996, the Board approved the redemption of the 5% cumulative
preferred stock for $118,367 held by directors and officers of the
Company. The shares were redeemed for ten percent (10%) of the
stated liquidation value $1,183,665. Subsequently, no shares of
the Company's preferred stock remain outstanding. Following
redemption of the Company's 5% cumulative preferred stock, the
Board and a majority of the outstanding shareholders approved a
resolution to amend the Articles of Incorporation to reflect only
one class of outstanding securities, the Company's common stock.
In May 1996, Magnolia Pipeline Corporation, a wholly owned
subsidiary, acquired nine gathering pipeline systems and one
transmission pipeline system from Texas Southeastern Gas Gathering
Company ("TSGGC)". The Systems were acquired pursuant to a
purchase and sale agreement dated March 12, 1996 for a total
purchase price of $390,000 less purchase price adjustments giving
effect to operating income since the effective date of January 1,
1996. These systems total approximately 113 miles of 2 inch to 10
inch diameter pipeline with associated equipment. Five systems are
located in Alabama, and five systems are located in Mississippi.
The bulk of the systems are located within 100 miles of Magnolia's
existing system and it is the Company's intention to integrate the
operation of these systems with Magnolias' systems. TSGGC had
acquired these systems in 1994 as part of a larger acquisition
package. The acquisition was financed by amending an existing
credit facility with a bank as discussed below.
In May 1996, the Company's $1,500,000 revolving line of credit with
a bank was amended to increase the available credit by $350,000 and
adjust the monthly reduction of availability from $17,860 to
$23,000. This amendment was made to finance the TSGGC acquisition
discussed in the preceding paragraph.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS
Results of Operations
Operating Revenues:
Operating revenues generated during the three months ended March
31, 1996 totaled approximately $5.2 million as compared to $2.9
million in 1995 which represents a 78% increase in 1996. The
increase is primarily attributable to increased marketing
opportunities where the Company has a fixed asset investment.
Sales of this type increased from $1.9 million to $3.6 million
during the three months ended March 31, 1995 and 1996 respectively.
In addition, Magnolia was acquired in August 1995 and contributed
$413,548 in transportation revenue for the first quarter of 1996.
Magnolia's impact, however, is more evident with respect to
earnings as discussed in the "Earnings" section below.
Operating Expenses:
Operating expenses for the three months ended March 31, 1996
totaled approximately $4.7 million, or 68% higher than the
comparable 1995 period. As explained in the preceding section, the
primary explanation for the increase can be attributed to increased
gas marketing transactions where the Company has a fixed asset
investment.
Depreciation, depletion, and amortization expense was approximately
$136,000 in 1996, as compared to approximately $85,000 in 1995.
The increase in 1996 can be attributed to the acquisition of
Magnolia on August 1, 1995.
General and administrative expenses incurred for the three months
ended March 31, 1996 were approximately $191,000 or 5% higher than
for the same period in the first quarter of 1995. The small
increase in general and administrative expenses in 1996, despite
the Company's significant growth, is a result of the Company's
ongoing effort to control expenses and effectively assimilate new
business using existing resources.
Interest expense for the first quarter of 1996 and 1995, was
approximately $115,000 and $64,000, respectively. The Company was
servicing an average of approximately $4.3 million in debt during
the first quarter of 1996 as compared to an average of $2.8 million
in debt during the first quarter of 1995. The increased debt
service in 1996 is attributable to the acquisition of Magnolia in
August 1995.
Earnings:
The Company recognized operating income and net income of $507,596
and $358,927 respectively, for three months ended March 31, 1996 as
compared to operating income and net income of $135,648 and $50,796
for the three months ended March 31, 1995. Despite a 60% increase
in depreciation, depletion and amortization expense in 1996,
operating income increased by $371,948 over 1995. The primary
factor which contributed to the increase in operating earnings in
1996 was the transportation revenue generated by Magnolia. During
the three months ended March 31, 1996, Magnolia generated income
(before depreciation, general and administrative expenses, and
interest) of approximately $267,000. The Company anticipates
Magnolia's income levels to be seasonal in nature with the greatest
income to be generated during the winter months.
Another factor which contributed to higher earnings in 1996 versus
1995 were the increased gas sales to customers where the Company
has a fixed asset investment. The colder than expected winter
temperatures forced gas prices and demand higher. As a result, the
Company was able to sell gas at slightly higher margins than is
typical of gas marketing transactions.
Capital Resources and Liquidity
General:
The Company's capital requirements relate primarily to the
construction and acquisition of pipeline systems. Since mid-1994,
the Company and its affiliates have constructed or acquired 26
pipeline systems. In general, the success of the Company's
business strategy is dependent upon continued constructions and
acquisitions.
Historically, the Company has funded its capital requirements
through cash flow from operations and borrowings from affiliates
and commercial lenders. For the year ended December 31, 1995, the
Company generated cash flow from operations of approximately
$2,361.000. For the three months ended March 31, 1996, the Company
generated cash flow from operations of approximately $1,308,201
and had an aggregate of approximately $809,164 available to the
Company through two of its credit facilities.
Credit Facilities:
In December 1992, the Company entered into a financing agreement
which included a $400,000 line of credit. In September 1994, the
line of credit was renewed and the available line raised to
$750,000. The line of credit expires on June 1, 1996, however, the
Company expects that it will be renewed or a new facility will be
in place prior to that date, as discussed below. Borrowings under
this credit facility are collateralized by the Company's non-
transportation based accounts receivable and the entire facility
has been personally guaranteed by Dan C. Tutcher, Stevens G,
Herbst, and Kenneth B. Holmes, Jr., officers, directors and major
stockholders of the Company. At March 31, 1996, the Company had
$750,000 of available funds under this credit facility.
In October 1995, the Company entered into a new financing agreement
with an existing bank lender. The new agreement provides for an
initial $1,250,000 revolving line of credit with the amount of
available credit being reduced by $20,833 per month beginning
December 1, 1995. Upon maturity at November 1, 1998, the balance
of principal plus accrued interest then remaining outstanding and
unpaid is payable in full. The note is secured by transportation
revenues from eight (8) of the Company's pipeline systems which are
also subject to a negative pledge to keep the pipelines free and
clear of all liens and encumbrances. The facility has been
personally guaranteed by Dan C. Tutcher, Stevens G. Herbst, and
Kenneth B. Holmes, Jr., officers, directors and major stockholders
of the Company. At March 31, 1996, the Company had $59,164 of
available funds under this credit facility.
In December 1995, the Company entered into a new financing
agreement with a bank. The agreement provided for an initial
$1,500,000 revolving line of credit with the amount of available
credit being reduced by $17,860 per month beginning February 1,
1996. In May 1996, the agreement was amended to increase the
available credit by $350,000 and adjust the monthly reduction of
availability from $17,860 to $23,000. The $350,000 was immediately
drawn to fund the acquisition of ten gas gathering pipelines from
TSGGC in May 1996. Upon maturity at January 15, 1999, the balance
of principal plus accrued interest then remaining outstanding and
unpaid is payable in full. In connection with this financing agreement,
a $50,000 certificate of deposit and 100% of Magnolia's stock has been
pledged as collateral and has been personally guaranteed by Dan C. Tutcher,
Stevens G. Herbst, and Kenneth B. Holmes, Jr., officers, directors
and major stockholders of the Company. At March 31, 1996, the
Company had no funds available under this credit facility.
Outlook:
The profitability of the Company's operations is dependent upon the
continued construction and acquisition of new pipelines, as well as
the continued development of existing pipelines. The Company
expects to increase its efforts to construct or acquire additional
pipeline systems upon the completion of a proposed equity offering.
The Company is preparing to register with the SEC 1,150,000 shares
(after consideration of a 4.47 to 1 stock split) of its common stock.
The Company believes that its existing credit facilities and funds
provided by operations are sufficient for it to meet its operating
cash needs for the foreseeable future. At March 31, 1996, the
Company was committed to make capital expenditures of $265,000
during 1996. The Company has historically arranged for project
financing with various banks to fund between seventy-five (75%) and
ninety percent (90%) of the construction or acquisition costs of
its new projects. Management of the Company believes that project
financing and funds from operations will continue to be available
to the Company to fund its committed 1996 expenditures. The
Company is presently negotiating with several commercial banks to
obtain a comprehensive credit facility which will facilitate
financing on future construction projects or acquisitions. Such
facility will likely include a working capital line of credit and
a revolving facility to finance future acquisition or construction
projects. There can, however, be no assurance that the Company
will be able to obtain such financing.
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities
Magnolia Pipeline Corporation ("Magnolia"), a wholly-owned subsidiary, has a
revolving credit facility with a abnk which prohibits the payment of dividends
to Magnolia stockholders. As such, Magnolia's cash balance of $183,007 at
March 31, 1996 is restricted from the payment of dividends. In addition,
the Company has pledged a $50,000 certificate of deposit as collateral on
the Magnolia revolving credit facility mentioned above.
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits:
10.44 Amendment dated April 8, 1996 to the Employment
Agreement by and between Midcoast Energy Resources,
Inc. and Richard A. Robert dated April 30, 1994.
10.45 First Amendment dated March 1, 1996 to the Promissory
Note by Texline Gas Company and Midcoast Energy
Resources, Inc. dated December 30, 1994.
10.46 Second Amendment dated May 1, 1996 to the Promissory
Note by and between Texline Gas Company and Midcoast
Energy Resources, Inc. dated December 30, 1994.
10.47 First Amendment dated March 1, 1996 to the Promissory
Note by and between Texline Gas Company and Midcoast
Energy Resources, Inc. dated May 30, 1995.
10.48 Promissory Note dated March 1, 1996 by and between
Rainbow Investments Company and Midcoast Energy
Resources, Inc. including related Security Agreement.
10.49 First Amendment dated May 1, 1996 to the Promissory
Note by and between Rainbow Investments Company and
Midcoast Energy Resources, Inc.
10.50 Purchase and Sale Agreement dated March 12, 1996 by
and between Texas Southeastern Gas Gathering Company
and Magnolia Pipeline Corporation.
10.51 Amendment dated May 8, 1996 to the Purchase and Sale
Agreement by and between Texas Southeastern Gas
Gathering Company and Magnolia Pipeline Corporation
dated March 12, 1996.
10.52 First Amendment and Supplement dated May 8, 1996 to
the Credit Agreement and between Compass Bank -
Houston and Magnolia Pipeline Corporation dated
December 20, 1995 including related amendments to the
Security Agreement, Promissory Note, and Guaranty
Agreements.
27.1 Financial Data Schedule
b. Reports on Form 8-K
NONE
Signature
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MIDCOAST ENERGY RESOURCES, INC.
(Registrant)
BY: /s/ Richard A. Robert
Richard A. Robert
Treasurer
Principal Financial Officer
Principal Accounting Officer
Date: May 15, 1996
EXHIBIT 10.44
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is by and
between Midcoast Energy Resources, Inc. ("Employer" or "Midcoast") and
Richard Robert ("Employee") and is entered into this eighth day of
April, 1996 ("Effective Date").
WHEREAS effective April 30, 1994, Employer and Employee
entered into an Employment Agreement ("Agreement"); and
WHEREAS Employer and Employee desire to amend certain terms of
the Agreement to make it conform to the intent of the parties.
NOW, THEREFORE, for and in consideration of the mutual
covenants and promises set forth herein, the parties hereby agree
as follows:
1. Section 5(A) shall be deleted from the Agreement and replaced
with the following:
A. Base Salary. Beginning April 1, 1996, Employee's base
salary ("Salary") shall be Sixty-Nine Thousand, and No/100 Dollars
($69,000.00), payable in equal semi-monthly installments of Two
Thousand, Eight Hundred and Seventy-five/100 Dollars ($2,875.00)
each. Each year thereafter, on the anniversary date of this
Agreement, Employee's Salary shall be increased a minimum of ten
percent (10%) per annum. Employer shall make appropriate
deductions from Employee's Salary for customary withholding taxes
and other employment taxes as required for salaried compensation
under Federal and State tax laws. Employee's Salary shall be in
addition to any bonuses (in cash or stock), which shall be given
from time to time at the discretion of the President.
2. The first sentence of Section 5(B) of the Agreement shall
be revised to read as follows:
Upon execution of the Amendment and in order to further encourage
Employee to remain in the service of Employer, Employee is hereby
awarded two thousand (2,000) shares of Employer's Common Stock,
$.01 par value per share (the "Common Stock"), all of which shall
be issued as of the Effective Date. However, if Employee's
employment with the Company should terminate for any reason, other
than by reason of death or disability, during the time periods
indicated below, then the Company shall have the option (the
"Repurchase Option"), exercisable in its sole discretion, to
purchase from Employee up to the number of Shares set forth below
(subject to adjustment for stock splits, combinations, and the
like) for a purchase price equal to the number of Shares being
purchased times the then current par value per share (the "Purchase
Price"):
Date of Termination Number of Shares
Subject to Purchase
April 1, 1996 through March 31, 1997 2,000
April 1, 1997 through March 31, 1998 1,333
April 1, 1998 through March 31, 1999 666
The Company shall have thirty (30) days after the date of
termination of Employee's employment to notify Employee in writing
of its election to exercise the Repurchase Option, and shall
deliver to Employee along with such written notice cash in the
amount of the Purchase Price and, if applicable, a stock
certificate evidencing the number of Shares remaining in Employee's
name after the purchase of Shares by the Company. Notwithstanding
any provision herein to the contrary, the Repurchase Option shall
terminate in the event that the Company ceases to operate for any
reason, sells a controlling interest in its stock, or enters
bankruptcy proceedings. Shares which are subject to the
Repurchase Option shall not be transferable by Employee.
The remainder of Section 5(B) shall remain a part of the Agreement
and shall not be affected by the execution of this Amendment.
3. This Section 5(E) shall be added to the Agreement.
C. Tax Reimbursement. Employer shall reimburse Employee
for the federal income tax liability, including, without
limitation, federal income taxes, social security tax, medicare
tax, and other such taxes, incurred by Employee which is
attributable solely to the issuance of the Shares. It is
understood that Employee will elect pursuant to section 83(b) of
the Internal Revenue Code to include all compensation related to
the 2,000 shares received under this Amendment in the current
taxable year. Employer, as required by Federal law, shall submit
the required withholding at the then current required withholding
tax rate and as well as any other applicable payroll taxes to the
Internal Revenue Service or the appropriate taxing authorities (the
"Tax Deposits"), at no expense to Employee, on a timely basis.
3. Section 8(B) shall be deleted from the Agreement and replaced
with the following:
B. Other Agreements. This Agreement constitutes the entire
agreement between the parties hereto, expressly superseding all
prior understandings, committments, and agreements other than those
expressly referred to in this Agreement, whether written or oral,
between Employer and Employee; provided however, that Employer and
Employee agree that the Shareholder's Agreement dated April 30,
1994, shall not be superseded by this Agreement or the Amendment
thereto and shall remain in full force and effect.
4. All other provisions of the Agreement shall remain in full
force and effect and shall not be affected by this Amendment.
In Witness Hereof, the parties hereto have executed this Amendment on
this Eighth day of April, 1996.
EMPLOYER:
Midcoast Energy Resources, Inc.
By:
Dan C. Tutcher, President
EMPLOYEE:
Richard Robert
EXHIBIT 10.45
AMENDMENT TO
PROMISSORY NOTE DATED 12/30/94
This amendment is to modify the terms of payment in the original
promissory note by and between Texline Gas Company ("Texline") and
Midcoast Energy Resources, Inc. ("Midcoast") dated December 30,
1994, in the original principal amount of $275,000.
It is hereafter mutually agreed that the final maturity date of the
aforementioned note shall be extended until April 1, 1997, when all
sums still outstanding, including accrued interest, shall be due
and payable.
It is further agree that effective March 1, 1996, the annual
interest rate shall be increased to the Prime rate plus five
percent (5%) as defined in the original note. It is further agreed
that beginning the same date, Midcoast shall begin to make monthly
payments of all accrued interest then due and shall continue to
make such payments on the first of each succeeding month until
maturity.
DATED March 1, 1996
TEXLINE GAS COMPANY
BY:_____________________________________
MIDCOAST ENERGY RESOURCES,INC.
BY:_____________________________________
EXHIBIT 10.46
AMENDMENT #2 TO
PROMISSORY NOTE DATED 12/30/94
This amendment is to modify the terms of payment in the original
promissory note by and between Texline Gas Company ("Texline") and
Midcoast Energy Resources, Inc. ("Midcoast") dated December 30,
1994, the original principal amount of $275,000, and as amended
March 1, 1996.
It is hereby mutually agreed that effective March 1, 1996, the
annual interest rate shall be the Prime rate plus one and one-half
percent (1.5% as defined in the original note.
DATED MAY 1, 1996
TEXLINE GAS COMPANY
By:________________________________
MIDCOAST ENERGY RESOURCES, NC.
By:_______________________________
Dan C. Tutcher
EXHIBIT 10.47
AMENDMENT TO
PROMISSORY NOTE DATED 5/30/95
This amendment is to modify the terms of payment in the original
promissory note by and between Texline Gas Company ("Texline") and
Midcoast Energy Resources, Inc. ("Midcoast") dated May 30, 1995, in
the amount of $173,822.16
It is hereafter mutually agreed that the final maturity date of the
aforementioned note shall be extended until April 1, 1997, when
sums still outstanding, including accrued interest, shall be due
and payable.
However, notwithstanding the above, in the event this bote is not
repaid in full on or before June 1, 1996, Texline shall still be
assigned and additional one-half Percent (.5%) working interest in
the Sun Field properties in Starr County, Texas as outlines in the
Letter Agreement dated May 31, 1995 by and Between Texline and
Midcoast.
DATED March 1, 1996
TEXLINE GAS COMPANY
BY:_______________________________
MIDCOAST ENERGY RESOURCES, INC.
BY:________________________________
EXHIBIT 10.48
SECURED PROMISSORY NOTE
Date of Note: March 1, 1996
Maker: Midcoast Energy Resources, Inc.
Maker's Mailing Address: 1100 Louisiana, Suite 2950
Houston, Texas 77002
Payee: Rainbow Investments Company
Place for Payment: P.O. Box 1050, Corpus Christi, Texas
78403-1050
Principal Amount: One hundred seventy-five thousand and No/100
Dollars ($175,000.00)
Annual Interest Rate on Unpaid Principal from Date of Funding:
Prime Rate as defined hereafter plus five percent (5%)
Annual Interest Rate on Matured, Unpaid Amounts:
Eighteen percent (18%) per annum
The term "Prime Rate" as used herein shall mean the "prime
rate" as reported from time to time in the Money Rates section of
the Southwest Edition of the Wall Street Journal, such interest
rate automatically fluctuating upward and downward with each
announcement without notice to Maker or any other person.
Said rate shall be computed on a per annum basis of a year of
360 days and for the actual number of days elapsed, however, said
maximum legal rate shall be computed on a full calendar year
(365/366 days) basis. Article 5069 Chapter 15 V.A.T.S. shall not
in any event apply to the loan evidenced hereby. After maturity
hereof, unpaid principal and accrued interest shall bear interest
from maturity until paid at the rate of eighteen percent (18%) per
annum, calculated on a full year basis.
Terms of Payment: This note shall be due and payable in 60
monthly installments, unless sooner paid, the first 59 installments
being in the amount of $1,666.67, plus accrued interest, and the
60th and final installment being in the amount of the balance of
principal plus accrued interest then remaining outstanding and
unpaid hereon. The first such installment is due and payable April
15, 1996, and the remaining installments are due and payable in
consecutive order on the same day of each and every succeeding
month thereafter until all sums hereunder have been paid, the final
installment due hereon being due on March 15, 2001 (the "maturity
date"). In the event of prepayment, no prepayment of principal
shall be reduce the amount of installments next coming due, and
every prepayment of principal shall be applied in inverse order
against the principal last coming due hereunder. Further provided,
the amount of such installments is based on an initial advance of
$100,000.00 hereon, and the installment amount will be
proportionately increased as additional advances are made hereon.
All payments hereon shall be first applied to accrued interest
with the remainder, if any, applied to unpaid principal. Principal
and accrued interest may be prepaid in whole or in part from time
to time without penalty or premium.
This note evidences funds advanced or to be advanced pursuant
to a Loan Agreement of even date herewith for Maker's capital
contribution to Pan Grande Pipeline, L.L.C.. Payment hereof is
secured by Makers interest in said L.L.C. and guaranteed as set
forth in said Loan Agreement.
Maker reserves the right to prepay, prior to maturity, all or
any part of the principal of this note without penalty, and
interest shall immediately cease on any amounts prepaid.
Maker promises to pay to the order of Payee at the place for
payment and according to the terms of payment the principal amount
plus interest at the rates stated above. All unpaid amounts shall
be due by the final scheduled payment date.
On default in the payment of this note the unpaid principal
balance and earned interest on this note shall become immediately
due at the election of Payee. Maker and each surety, endorser, and
guarantor waive all demands for payment, presentations for payment,
notices of intentions to accelerate maturity, protests, and notices
or protest.
If this note is given to an attorney for collection , or if
suit is brought for collection, or if it is collected or enforced
through probate, bankruptcy, or other judicial proceeding, Maker
shall pay Payee all costs of collection, including reasonable
attorney's fees and court costs, in addition to other amounts due.
Reasonable attorney's fees shall be 10% of all amounts due unless
either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed
the maximum amount of nonusurious interest that may be contracted
for, taken, reserved, charged, or received under law; any interest
in excess of that maximum amount shall be credited on the principal
of the debt or, if that has been paid, refunded. On any
acceleration or required or permitted prepayment, any such excess
shall be canceled automatically as of the acceleration or
prepayment or, if already paid, credited on the principal of the
debt or, if the principal of the debt has been paid, refunded.
This provision overrides other provisions in this and all other
instruments concerning debt.
Each Maker is responsible for all obligations represented by
this note.
When the context requires, singular nouns and pronouns include
the plural.
EXECUTED this 1st day of March, 1996.
MIDCOAST ENERGY RESOURCES, INC.
By: Dan C. Tutcher, President
MERI.RBW
SECURITY AGREEMENT
(Third Party Pledge)
Date: March 1, 1996
A. PARTIES
1. Pledgor: MIDCOAST ENERGY RESOURCES, INC.
2. Address: 1100 Louisiana, Suite 2950, Houston, Texas 77002
3. Secured Party: RAINBOW INVESTMENTS COMPANY
4. Address: P.O. Box 1050, Corpus Christi, Texas 78403
B. AGREEMENT
In order to induce Secured Party to loan monies or otherwise
extend credit with or without credit to the hereafter named
Borrower, and at the request of Secured Party, the Pledgor hereby
pledges the hereafter described Collateral unto Secured Party and
grants a security interest in the Collateral unto Secured Party,
in order to secure payment of the Secured Obligations. The
Borrower to which this Pledge Agreement applies and references is
as follows:
Borrower: Midcoast Energy Resources, Inc.
C. SECURED OBLIGATIONS
1. The following are the obligations secured by this
Agreement (herein called the "Secured Obligations").
Note of even date in the original principal sum of $175,000.00
executed by Borrower payable to Secured Party.
D. COLLATERAL
1. The security interest is granted in the following
Collateral:
All interest in Pan Grande Pipeline, L.L.C. now owned or
hereafter acquired.
E. AGREEMENTS OF PLEDGOR
1. Pledgor will: take adequate care of the Collateral;
insure the Collateral for such hazards and in such amounts as
Secured Party directs, policies to be satisfactory to Secured
Party; pay all costs necessary to obtain, preserve, and enforce
this security interest, collect the obligation, and preserve
the Collateral, including (but not limited to) taxes, assessments,
insurance premiums, reasonable attorneys' fees and legal expenses,
and expenses of sale; furnish Secured Party with any information on
the Collateral requested by Secured Party; allow Secured Party to
inspect the Collateral and inspect and copy all records relating to
the Collateral and the obligation; sign any papers furnished by
Secured Party which are necessary to obtain and maintain this
security interest; assist Secured Party in complying with the
Federal Assignment of Claims Act, where necessary to enable Secured
Party to become an assignee under such Act; take necessary steps to
preserve the liability of account debtors, obligors, and secondary
parties whose Secured Obligations are part of the Collateral;
transfer possession of all instruments, documents, and chattel
paper which are part of the Collateral to Secured Party
immediately, or as to those hereafter acquired, immediately
following acquisition; perfect a security interest (using a method
satisfactory to Secured Party) in goods covered by chattel paper
which is part of the Collateral; notify Secured Party of any change
occurring in or to the Collateral, or in any fact or circumstance
warranted or represented by Pledgor in this agreement or
furnished to Secured Party, or if any event of default occurs.
2. Pledgor will not (without Secured Party's consent):
remove the Collateral from the locations specified herein; allow
the Collateral to become an accession to other goods; sell, lease,
otherwise transfer, manufacture, process, assemble, or furnish
under contracts of service, the Collateral; allow the Collateral to
be affixed to real estate, except goods identified herein as
fixtures.
3. Pledgor warrants: no financing statement has been filed
with respect to the Collateral, other than relating to this
security interest; Pledgor is absolute owner of the Collateral, and
it is not encumbered other than by this security interest (and the
same will be true of Collateral acquired hereafter when acquired);
none of the Collateral is affixed to real estate or an accession to
other goods, nor will Collateral acquired hereafter be affixed to
real estate or an accession to other goods when acquired, unless
Pledgor has furnished Secured Party the consents or disclaimers
necessary to make this security interest valid against persons
holding interests in the real estate or other goods; all account
debtors and obligors, whose Secured Obligations are part of the
Collateral, are to the extent permitted by law prevented from
asserting against Secured Party any claims or defenses they have
against sellers, or can be so prevented by Secured Party taking
action provided by law for such purposes.
F. RIGHTS OF SECURED PARTY
Secured Party may, in its discretion, after default:
terminate, on notice to Pledgor, Pledgor's authority to sell,
lease, otherwise transfer, manufacture, process or assemble, or
furnish under contracts of service, inventory Collateral, or any
other Collateral as to which such permission has been given;
require Pledgor to give possession or control of the Collateral to
Secured Party; indorse as Pledgor's agent any instruments or
chattel paper in the Collateral; notify account debtors and
obligors on instruments to make payment direct to Secured Party;
contact account debtors directly to verify information furnished by
Pledgor; take control of proceeds and use cash proceeds to reduce
any part of the obligation; take any action Pledgor is required to
take or otherwise necessary to obtain, preserve, and enforce this
security interest, and maintain and preserve the Collateral,
without notice to Pledgor, and add costs of same to the obligation
(but Secured Party is under no duty to take any such action);
release Collateral in its possession to Pledgor, temporarily or
otherwise; take control of funds generated by the Collateral, such
as dividends, interest, and proceeds or refunds from insurance, and
use same to reduce any part of the Secured Obligations; waive any
of its rights hereunder without such waiver prohibiting the later
exercise of the same or similar rights; revoke any permission or
waiver previously granted to Pledgor.
G. MISCELLANEOUS
1. The rights and privileges of Secured Party shall inure to
its successors and assigns. All representations, warranties, and
agreements of Pledgor are joint and several if Pledgor is more than
one and shall bind Pledgor's personal representatives, heirs,
successors, and assigns. Definitions in the Uniform Commercial Code
(also known as the Texas Business and Commerce Code) apply to
words and phrases in this agreement; if Code definitions conflict,
Article 9 definitions apply. Pledgor waives presentment, demand,
notice of dishonor, protest, and extension of time without notice
as to any instruments and chattel paper in the Collateral. Notice
mailed to Pledgor's address in Item A2, or to Pledgor's most recent
changed address on file with Secured Party, at least five (5) days
prior to the related action (or, if the Uniform Commercial Code
specifies a longer period, such longer period prior to the related
action), shall be deemed reasonable.
2. This pledge is an absolute, completed and continuing one,
and no notice of the Secured Obligations or any extension of credit
already or hereafter contracted by or extended to the Borrower need
be given to the Pledgor. Secured Party may extend credit to
Borrower in excess of the amount secured hereunder. Borrower and
Secured Party may rearrange, extend and/or renew from time to time
any or all of the Secured Obligations without notice to the Pledgor
and in such event Pledgor will remain fully bound hereunder to
secure such Secured Obligations regardless of the number of
rearrangements, renewals and extensions. The Pledgor hereby
expressly waives marshalling of assets and liabilities, sale in
inverse order of alienation, presentment, demand, protest, notice
of intention to accelerate maturity, notice of acceleration of
maturity, and notice of protest and dishonor on any and all forms
of such Secured Obligations, and also notice of acceptance of this
pledge, acceptance on the part of Secured Party being conclusively
presumed by its request for this pledge and delivery of the same to it.
3. Pledgor authorizes Secured Party, without notice or
demand and without affecting Pledgor's liability hereunder, to take
and hold other security for the payment of the Secured Obligations,
and exchange, enforce, waive and release any such other security;
and to apply such other security and direct the order or manner of
sale thereof as Secured Party in its discretion may determine; and
to obtain a guaranty of the Secured Obligations from any one or
more other persons, corporations or entities whomsoever and at any
time or times to enforce, waive, rearrange, modify, limit or
release such other persons, corporations or entities from their
obligations under such guaranties. If at any time there be other
debt of Borrower to Secured Party not secured hereby, then Secured
Party may apply all amounts realized by Secured Party from
Borrower, from guarantors or from other collateral to such other
debt. Provided, if a particular instrument (such as a guaranty or
security agreement) expressly requires application of amounts
received by Secured Party different than permitted under the
preceding sentence, then such amounts shall be applied as provided
in such instrument.
4. Pledgor waives any right to require Secured Party to (a)
proceed against the Borrower or (b) proceed against or exhaust any
other security held to secure the Secured Obligations, or (c)
exercise any right of set-off against Borrower, or (d) pursue any
other remedy in Secured Party's power whatsoever. Pledgor waives
any defense arising by reason of any disability, lack of corporate
authority or power, or other defense of the Borrower or of any
guarantor of the Secured Obligations, and shall remain liable
hereon regardless of whether Borrower or any guarantor be found not
liable thereon for any reason. Until all the Secured Obligations
shall have been paid in full, Pledgor shall have no right of
subrogation, and waives any right to enforce any remedy which
Secured Party now has or may hereafter have against the Borrower,
and waives any benefit of and any right to participate in any
security now or hereafter held by Secured Party.
5. Pledgor agrees that if the maturity of any Secured
Obligations hereby secured is accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for the
purpose of this pledge without demand or notice to Pledgor. In
addition to the other obligations of Pledgor imposed by this Pledge
Agreement, if it should become necessary for the Secured Party to engage
the services of an attorney to enforce this Pledge Agreement against
Pledgor, then Pledgor agrees to pay the costs of collection,
including reasonable attorneys' fees, incurred by Secured Party in
enforcing this Pledge Agreement against Pledgor, and this pledge of
the Collateral shall also secure amounts expended by Secured Party
in enforcing this Pledge Agreement against Pledgor.
6. Pledgor hereby subordinates all indebtedness owing to the
Pledgor from Borrower to all Secured Obligations of Borrower to
Secured Party, and shall not attempt to set off or reduce any
obligations to Secured Party because of such indebtedness. The
Pledgor further subordinates any lien or security interest that he
may have on any collateral or security of the Borrower or any other
party to the liens and security interests on said collateral and
security in favor of the Secured Party. Upon and an event of
default on the Secured Obligations and for so long as such default
exists, Pledgor agrees not to accept any payment on the
subordinated indebtedness nor realize upon any collateral
herefor. If the Pledgor should receive any such payment,
satisfaction or security for indebtedness of the Borrower to the
Pledgor in violation of the terms hereof, the Pledgor agrees
forthwith to deliver the same to the Secured Party in the form
received, endorsed or assigned as may be appropriate for
application on account of, or as security for, the Secured
Obligations, and until so delivered, agree to hold the same in
trust for the Secured Party.
7. The term of this Agreement shall be for so long as any of
the Secured Obligations remains outstanding and unpaid. It is
further agreed that maturity of the Secured Obligations, as such
may be extended from time to time by agreement between Secured
Party and Borrower as aforesaid, shall be the same with respect to
Pledgor as with respect to Borrower.
8. Pledgor warrants to Secured Party that Pledgor has
independent means of obtaining financial and other information
about Borrower, and agrees that Pledgor has not been induced to
sign this pledge by reason of information regarding Borrower
furnished by Secured Party, and agrees that Secured Party shall not
in the future be required to furnish Pledgor with any information
regarding Borrower nor notify Pledgor of any adverse changes as to
Borrower's financial condition or otherwise.
9. If other persons or entities have executed other
instruments guaranteeing any indebtedness of Borrower to Secured
Party, or pledging property to secure any indebtedness of Borrower
to Secured Party, this pledge and instrument is in addition to such
other instruments, and the total indebtedness of Borrower to
Secured Party secured by Pledgor hereunder and by such other
persons or entities, if any, shall be compounded and be the sum of
the amount secured hereunder by Pledgor, plus the amounts
guaranteed or secured by each other person or entity.
H. DEFAULT
1. Any of the following is an event of default: failure of
Borrower to pay any note in the Secured Obligations in accordance
with its terms or any event of default under other loan documents
executed in connection with or evidencing the Secured Obligations;
failure of Pledgor to perform any act or duty required by this
agreement; falsity of any warranty or representation in this
agreement when made; substantial change in any fact warranted or
represented in this agreement; involvement of Pledgor in bankruptcy
or insolvency proceedings, death, dissolution, or other termination
of Pledgor's existence; merger or consolidation of Pledgor with
another; substantial loss, theft, destruction, sale, reduction in
value, encumbrance of, damage to, or change in the Collateral;
modification of any contract, the rights to which are part of the
Collateral; levy on, seizure, or attachment of the Collateral;
judgment against Pledgor; filing any financing statement with
regard to the Collateral, other than relating to this security
interest; Secured Party's belief that the prospect of payment of
any part of the obligation, or the performance of any part of this
agreement, is impaired.
2. At any time that the Secured Obligations (or any part
thereof) are matured, Secured Party may proceed to enforce the
security interest herein granted and exercise any and all of the
rights and remedies available to a secured party under the Uniform
Commercial Code as well as all other rights and remedies. When an
event of default occurs, Pledgor, upon demand by Secured Party,
shall assemble the Collateral and make it available to Secured
Party at a place reasonably convenient to both parties. Pledgor is
entitled to any surplus.
I. FIRST AND PRIOR LIEN
This security interest grants to Secured Party, a first and
prior lien to secure the payment of the Secured Obligations,
and extensions and renewals thereof, with or without notice to
Pledgor.
PLEDGOR:
MIDCOAST ENERGY RESOURCES, INC.
By:
Dan C. Tutcher, President
EXHIBIT "A"
SUMMARY OF COLLATERAL
- - - Certificate #10 representing 7,200 shares of Magnolia Pipeline
Corporation.
AMENDMENT 10.49
AMENDMENT #1 TO
PROMISSORY NOTE DATED 3/01/96
This amendment is to modify the terms of payment in the original
promissory note by and between Rainbow Investments Company
("Rainbow") and Midcoast Energy Resources, Inc. ("Midcoast") dated
March 1, 1996, in the original principal amount of $175,000.
It is hereby, mutually agreed that effective March 1, 1996, the
annual interest rate shall be the Prime rate plus two and one-half
(2.5%) as defined in the original note.
DATED May 1, 1996
RAINBOW INVESTMENTS COMPANY
By:_______________________________
Stevens G. Herbst, President
MIDCOAST ENERGY RESOURCES, INC.
By:_______________________________
Dan C. Tutcher, President
EXHIBIT 10.50
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement"), is entered into
as of the 6th day of March, 1996, by and between Texas Southeastern
Gas Gathering Company, a Texas corporation, whose address is 1177
West Loop South, Suite 1825, Houston, Texas 77027 ("Seller") and
Magnolia Pipeline Corporation, an Alabama corporation, whose
address is 1100 Louisiana, Suite 2950, Houston, Texas 77002
("Purchaser"). (Seller and Purchaser are sometimes hereinafter
referred to collectively as the "Parties" and individually as a
"Party".)
INTRODUCTION:
Seller desires to sell and assign certain assets to Purchaser.
Purchaser desires to purchase and acquire such assets from
Seller on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, and the
covenants and agreements contained in this Agreement, and other
good and valuable consideration, the receipt of which is
acknowledged, the Parties agree as follows:
1. SALE AND PURCHASE OF ASSETS:
Subject to the terms and conditions of this Agreement, Seller
shall sell, assign, transfer and deliver to Purchaser and Purchaser
shall purchase, acquire from and pay Seller for certain of Seller's
assets as more specifically set forth below in Sections 1.1 through
1.7 (collectively the "Purchased Assets") which are all of the
assets currently used by Seller in connection with its gas
gathering and transmission business in Alabama and Mississippi (the
Business"). Purchaser and Seller shall treat the transaction as
being effective as of January 1, 1996 (the "Effective Time") and
all liabilities, obligations, expenses and revenues related to the
Purchased Assets and pertaining to any period prior to January 1,
1996 shall be for the account of Seller and all Assumed Liabilities
(as defined in Section 2.1), obligations, expenses and revenues
related to the Purchased Assets arising on and after January 1,
1996 shall be for the account of Purchaser. The Purchased Assets
consist of the gathering systems described on Exhibit "A" (the
"Gathering Systems") and certain related property and rights as
follows:
1.1. Pipelines, Etc. The gathering lines and pipelines
associated with the Gathering Systems and the compressors, meter
stations, dehydrators, tanks, equipment, tools, testing equipment,
and other tangible assets located on and about the Gathering
Systems and used or useful thereto, including, without limitation,
those items specifically described on Exhibit "B", together with
all of Seller's beneficial interest in and to all the property and
rights incident thereto (collectively the "Pipeline Property").
1.2. Property Rights. The easements, rights of way, leases,
licenses, permits and other agreements owned or held by Seller in
connection with the ownership and operation of the Pipeline
Property, including, without limitation, the real property
interests and other interests specifically set forth on Exhibit "C"
(collectively the "Property Rights").
1.3. Contract Rights. All existing and effective contracts
and operating agreements related to the Gathering Systems or any of
the Pipeline Property, including, without limitation, the gas
gathering contracts, gas transportation contracts, gas purchase
contracts, gas sales contracts, gas compression contracts, and
other written agreements, to the extent assignable, specifically
set forth on Exhibit "D" (collectively the "Contracts").
1.4. Records. All files, books, maps, documents, records, data
and information of, or relating to, the Pipeline Property, the
Property Rights, the Contracts or the Gathering Systems
(collectively the "Records").
1.5. Permits, Etc. All licenses, permits, orders and other
governmental authorizations owned or held by Seller in connection
with the ownership or operation of the Gathering Systems, to the
extent assignable, including without limitation the permits,
licenses, orders and other governmental authorizations listed on
Exhibit "D" (collectively the "Permits").
1.6. Office Furniture and Stock in Alabama. The office
furniture and stock located in Alabama, including, without
limitation, that as set forth on Exhibit "E" (collectively the
"Alabama Assets").
1.7. Vehicles. The vehicles, including phones, radios, tools,
testing equipment and other personal property of Seller located
therein and used in connection with the business, listed on
Exhibit "F" (collectively the "Vehicles").
To the extent the Parties discover any errors or omissions on
the schedules and exhibits hereto as to the Purchased Assets prior
to Closing, the Parties will cooperate with one another to revise
such exhibits or schedules accordingly.
2. ASSUMPTION OF LIABILITIES.
2.1. Assumption of Contracts. On the Closing date, Purchaser
shall assume pursuant to an Assumption Agreement in substantially
the form attached hereto as Exhibit "G" as of the Effective Time,
all liabilities and obligations under the Contacts arising from and
after the Effective Date, except those obligations and/or
liabilities caused by any breaches of the Contracts prior to the
Effective Time, and all ad valorem and similar taxes, if any,
(subject to proration in accordance with Section 3 of this
Agreement) payable with respect to the Purchased Assets and
relating to periods after the Effective Time (the "Assumed
Liabilities").
2.2. Assumable Nature of Obligations. Seller agrees to use
reasonable commercial efforts to obtain and secure any and all
consents and approvals that may be necessary to effect the transfer
or assignment of any of the Contracts assumed by Purchaser.
2.3 Non-assumption of Other Liabilities. Other than the
Assumed Liabilities identified in Section 2.1, Purchaser does not
assume any other liabilities, debts or obligations of Seller.
Seller expressly retains responsibility for all liabilities and
obligations accruing or relating to the owning, operating or
maintaining of the Purchased Assets as to all matters relating to
or arising from periods prior to the Effective Time, including,
without limitation, all obligations arising under the Contracts and
other agreements covering or relating to the Purchased Assets.
3. ACCOUNTS/PRORATIONS.
3.1. Amounts. Seller shall be entitled to and shall collect
all revenues arising from the operation of the Business prior to
the Effective Time and shall be obligated for, and shall pay, all
expenses arising from the operations of the Business prior to the
Effective Time. Purchaser shall be entitled to all revenues and
shall be liable for, and shall pay, all expenses arising from the
operation of the Purchased Assets from and after the Effective
Time, except as otherwise expressly provided elsewhere in this
Agreement. Prior to and following the Closing, the parties shall
cooperate with one another with respect to the allocation of any
items of revenue or expense to carry out the Parties' understanding
that all such items occurring prior to the Effective Time are for
the account of Seller and all such items occurring after the
Effective Time are for the account of Purchaser. Seller shall
promptly deliver to Purchaser any and all payments relating to the
operation of the Purchased Assets after January 1, 1996, which
Seller receives after January 1, 1996. Purchaser shall promptly
deliver to Seller any and all payments relating to the operation of
the Purchased Assets before January 1, 1996, which Purchaser
receives after January 1, 1996.
3.2. Prorations. All utility charges, prepaid expenses,
insurance, general taxes, ad valorem and similar taxes, Department
of Transportation charges and other similar items shall be adjusted
ratably as of the Effective Time. The amount of any taxes shall be
prorated as of the Effective Time.
4. PURCHASE PRICE.
4.1. General. The total purchase price for the Purchased
Assets shall be four hundred fifteen thousand and 00/100 Dollars
($415,000.00), subject to any adjustments which may be made
pursuant to other provisions of this Agreement (the Base Purchase
Price") and, if Closing does not occur on or before April 20, 1996
by reason of the fault of Purchaser, an additional amount therewith
equal to the amount of interest which would accrue on the Base
Purchase Price at the prime rate of interest as established by the
Wall Street Journal during the period from and after April 20, 1996
through the day preceding the Closing Date (collectively, the
"Purchase Price").
4.2. Adjustments. The Seller shall prepare a "Preliminary
Settlement Statement" and submit it to Purchaser five days prior to
Closing for Purchaser's comment and review. The Preliminary
Settlement Statement shall set forth the Closing Amount and all
adjustments and associated calculations. The term "Closing Amount"
means the Purchase Price and any adjustments as provided in
Sections 3.1 and 3.2 above and Section 6.3 below, using the best
information available. After Closing, the Purchase Price shall be
further adjusted pursuant to the Final Settlement Statement
delivered pursuant to Section 14.1.
4.3. Allocation of Purchase Price. Seller and Purchaser shall
allocate the Purchase Price among the Purchased Assets in the
manner set forth in Exhibit "H" and in conformity with the
applicable provisions of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, and each of
Seller and Purchaser shall prepare and file asset acquisition
statements on Form 8594 with their income tax returns for the tax
year that includes the Closing Date. The value allocated to each
portion of the Purchased Assets as set forth in Exhibit "H" shall
be referred to as the "Allocated Value" for such portion.
5. PROPERTY INSPECTION.
5.1. Access to Records. Prior to Closing, Seller will
disclose and make available to Purchaser and its representatives
for inspection and review, in Seller's offices during normal
business hours, all material records within its possession relating
to the Purchased Assets as may be reasonably requested by Purchaser
for the purpose of permitting Purchaser to perform its due
diligence review, to the extent that Seller may do so without
violating legal constraints or any obligation of confidence or
other contractual commitment of Seller to a third party. Subject
to the consent and cooperation of third parties, Seller will
cooperate with Purchaser in Purchaser's efforts to obtain, at
Purchaser's expense, such additional information relating to the
Purchased Assets as Purchaser may reasonably request.
5.2. Access to Purchased Assets. Prior to Closing, Seller
shall permit Purchaser's authorized representatives to consult with
Seller and/or third-party operators, agents, and employees during
reasonable business hours and, upon advance notice, to conduct, at
Purchaser's sole risk and expense, reasonable on-site inspections
of the Purchased Assets. In connection with such on-site
inspections of the Purchased Assets, Purchaser agrees (i) not to
unreasonably interfere with the normal operation of the Purchased
Assets, (ii) to perform Purchaser's on-site inspections diligently
and without delay so that all such inspections are completed within
the Due Diligence Period (as defined in Section 6.2(a)) and (iii)
to abide by Seller's safety rules, regulations, and other operating
policies applicable to the Purchased Assets while conducting their
activities on the Purchased Assets.
5.3. Confidentiality. In connection with the review,
inspection and assessment of the transactions contemplated in this
Agreement, Purchaser and Seller, their agents, representatives, and
employees, agree to keep confidential all information furnished,
obtained, discovered, or otherwise made available to each other,
and they agree not to use or disclose any such information in any
manner except in connection with the transactions contemplated by
this Agreement or except as required by law. The obligations of
Purchaser created by this provision shall terminate upon Closing,
but otherwise continue for a period of two years after Closing. If
Closing occurs, Seller, its agents, representatives and employees
agree to keep confidential and not to use or disclose in any
manner, except as required by law, any information pertaining to
the Purchase Price, the Assumed Liabilities and the Purchased
Assets, including, but not limited to, all that information
furnished or otherwise made available by Seller to Purchaser
pursuant to this Agreement for a period of two years.
6. TITLE AND DUE DILIGENCE MATTERS.
6.1. Title Defects. A portion of the Purchased Assets shall be
deemed to have a "Title Defect" if:
(a) Seller does not have good and indefeasible title, free
and clear of all mortgages, liens, charges and other encumbrances
whatsoever; or
(b) During the Due Diligence Period, Purchaser determines
reasonably and in good faith that such portion of the Purchased
Assets is likely to be materially adversely affected by a third
party claim, a regulatory order fine or penalty, or a violation of
any Environmental Laws (as defined in Section 7.9), in each case
arising from the presence of any Hazardous Substance (as defined in
Section 7.9) (hereinafter an Environmental Liability"); or
(c) Any required consent to the assignment to Purchaser of
any of the Contracts, Permits or Property Rights is not obtained by
the end of the Due Diligence Period (other than governmental
consents customarily obtained after closing); or
(d) With respect to any of the Contracts, Permits or Property
Rights to which the Seller is a party such is not in full force and
effect, or an event of default shall have occurred thereunder, or
an event which, with notice or the passage of time, or both, would
constitute events of default thereunder shall have occurred; or
(e) The Property Rights do not include (i) rights of way,
easements, licenses, or permits covering the entire routes of the
Gathering Systems, and (ii) surface leases or fee lands covering
the locations of all compressors, meter stations, dehydrators,
tanks, equipment and other tangible assets located on and about the
Gathering Systems and constituting part of the Pipeline Property;
or
(f) Seller does not have all licences, permits, orders, and
other governmental authorizations required for the ownership or
operation of the gathering systems and/or the business.
6.2. Purchaser=s Title Review.
(a) During the period commencing with the date of this
Agreement and continuing until April 1, 1996 (the "Due Diligence
Period"), Seller shall permit Purchaser or its representatives
access to the Purchased Assets and to the records pertaining to the
Purchased Assets in accordance with Article 5.
(b) During the Due Diligence Period, Purchaser shall notify
Seller in writing promptly upon discovery, but in no event later
than April 1, 1996, of any matters which, in Purchaser's reasonable
opinion, constitute Title Defects regarding any portion of the
Purchased Assets. Any Gathering Systems affected by one or more
Title Defects is referred to herein as a "Title Defect Property."
Purchaser shall be deemed to have waived any Title Defects which
Purchaser identifies but fails to assert prior to the expiration of
the Due Diligence Period.
(c) Following Purchaser's notification to Seller in writing
of those matters, which in Purchaser's reasonable opinion
constitute Title Defects, the parties shall cooperate with one
another to agree on the Initial Title Defect Amount pursuant to
Section 6.3 below.
(d) It is agreed and understood that the allegations by
Purchaser or Seller of any factual matters in connection with the
identification of Title Defects shall be made in good faith but
shall not be construed as a representation or warranty of the
accuracy of such factual matters.
6.3 Title Defect Amounts and Closing Procedure. Attached
hereto as Exhibit T is a listing of six anticipated title defect
problems and the defect amount to be allocated to each of those six
types of anticipated title defects.
The adjustment value for any Title Defect Property (the "Title
Defect Amount") not listed on Exhibit T shall be the amount
determined by mutual agreement between Seller and Purchaser
pursuant to good faith negotiations to be conducted between them
within the ten (10) day period following Purchaser's delivery to
Seller of written notice of any and all matters which constitute a
Title Defect to the Assets. The Title Defect Amount shall not
exceed the Allocated Value of the relevant Title Defect Property,
and shall be determined by taking into account the nature and
certainty of the Title Defect, the likely adverse economic effects
of such Title Defect, and the state of title generally considered
prudent by experienced gathering system operators in the location
of the Title Defect Property.
If Seller and Purchaser cannot reach a mutually agreeable
Title Defect Amount for a Title Defect Property within the ten (10)
day period following Purchaser's delivery to Seller of written
notice of any and all matters which constitute a Title Defect to
the Assets and in the good faith opinion of either Seller or
Purchaser the aggregate of the Title Defect Amounts for which
Purchaser and Seller have been unable to agree on a mutually
acceptable Title Defect adjustment amount exceeds ten percent (10%)
of the Base Purchase Price, then Seller and Purchaser shall each
have the right to terminate this Agreement by written notice to the
other at any time on or before the expiration of five (5) days
following the aforementioned 10-day period. If any such
termination notice is given, all rights, duties and obligations of
both parties hereunder shall cease. If neither Seller or Purchaser
give such termination notice then Seller, at Seller's sole cost and
expense, may attempt to cure such matters. In the event Seller is
unable to cure such matters or elects not to cure such matters,
Purchaser, at Purchaser's option, may elect either of the following
by written notice to Seller at any time on or before the Closing:
(i) the affected portion of the Asset may be excluded from the
Assets to be purchased and sold hereunder, and the Purchase Price
shall be adjusted downward, or (ii) the affected portion of the
Asset may be included at a reduced value and the Purchase Price
shall be adjusted downward. The amount of any downward adjustments
to be made if Purchaser elects under subsections (i) or (ii) of the
preceding sentence with respect to any Title Defect Property shall
be deemed automatically submitted to arbitration for decision by
the arbitrator pursuant to the provisions of Section 16 of this
Agreement if Buyer and Seller are unable to agree on an amount
(except for Title Defect Properies where one or more of the
applicable Title Defects is of the type described in section 6.1(b)
above, any of which, at Purchaser's option, shall not be conveyed
unless and until such Title Defects are resolved or cured.).
Arbitrator's decision regarding the Title Defect Amount shall not
exceed the Allocated Value of the relevant Title Defect Property.
If there is any Title Defect Property as to which the Title
Defect Amount has not been mutually agreed upon at Closing the
Title Defect Amount proposed by Purchaser will be utilized pending
receipt of the Arbitrator's decision and/or Seller curative efforts
being successful. If the aggregate Title Defect Amount exceeds
$10,000, either party may require holding and distribution to be
administered by Compass Bank, as escrow agent, pursuant to an
escrow agreement which shall be entered into by and among Seller,
Purchaser and Escrow Agent substantially in the form and content of
the Escrow Agreement attached hereto as Exhibit "S".
Seller shall have until June 15, 1996, at its cost and expense
if it so elects, but without obligation, to cure all or a portion
of a title Defect Property. Promptly after individual Title
Defects are resolved or cured, but in no event later than June 15,
1996, Seller shall notify Purchaser in writing of the fact and
manner of such cure or resolution, and shall include with such
notice sufficient evidence thereof. In the event Purchaser does
not believe the Title Defect has been resolved or cured, then
within fifteen (15) days after receipt of any such notice,
Purchaser shall notify Seller in writing that it does not agree
with the resolution or cure. Purchaser's failure to timely deliver
to Seller such written notice shall be deemed an acceptance by
Purchaser of the resolution or cure. If Purchaser shall have
timely objected in writing to any resolution or cure, then the
unresolved matter(s) shall be deemed automatically submitted to
arbitration for decision by the arbitrator pursuant to the
provisions of Section 16 of this Agreement, along with the amount
of the downward adjustment which may be made to the Base Purchase
Price if the arbitrator finds that the Title Defect has not been
resolved or cured.
7. REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER.
Seller hereby represents, warrants and agrees that as of the
date of this Agreement and as of the Closing Date (except as may be
disclosed by Seller to Purchaser in writing prior to the Closing)
as follows:
7.1. Organization and Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Texas. Seller is qualified to do business in
Alabama and Mississippi and is in good standing in both states.
7.2. Compliance with Laws and Permits. Seller has not received
any written or oral notice from any governmental body, agency,
person or entity that the operation of the Gathering Systems
violates any laws, ordinances, regulations, orders, licenses,
permits or authorizations. To the best of Seller's knowledge and
belief, after due inquiry, Seller currently possesses all
governmental licenses, permits or authorizations necessary for
operation of the Gathering Systems. To the best of Seller's
knowledge and belief, after due inquiry, Seller is not in violation
of any laws, ordinances regulations, orders, licenses, permits or
authorizations, except where such violation would not have a
material adverse effect on the business, operations or financial
condition of the Purchase Assets.
7.3. No Breach, Default, Violation, Etc. Neither the
execution of this Agreement nor the performance by Seller of the
various terms and provisions hereof will result in a breach or
violation of any term or provision of, or constitute a default
under, the certificate of incorporation or bylaws of Seller, or,
any indenture, mortgage, lease or any other agreement to which
Seller is a party.
7.4 Corporate Authority. The execution and delivery by
Seller of this Agreement and each of the other documents and
instruments contemplated herein and the performance by Seller of
all of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate and shareholder action
and this Agreement constitutes the valid and binding obligation of
Seller enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium and other laws
affecting the rights of creditors generally and to judicial
limitations on the enforcement of equitable remedies.
7.5. Absence of Certain Changes or Events. Since October 31,
1995, there has not been (a) any material adverse change in the
business, financial condition, or results of operations of any of
the Gathering Systems, as currently operated; or (b) any damage,
destruction or loss of any of the Purchased Assets, whether or not
covered by insurance, materially and adversely affecting any of the
Gathering Systems, as currently operated.
7.6. Governmental Consents. Except as set forth on Exhibit
I", to the best knowledge and belief of Seller, after due inquiry,
no approval, or authorization of, registration, qualification, or
filing with, any governmental agency or authority is required for
the execution and delivery of this Agreement or for the
consummation by Seller of the transactions contemplated hereby.
7.7. Title to Assets. Except as set forth on Exhibit "J":
(a) Seller has good and marketable title to, or a valid
leasehold interest in, the Pipeline Property, Records,
Permits, Alabama Assets and the Vehicles, and such assets will
be, on the Closing Date, owned by Seller, free and clear of
all mortgages, liens, charges and other encumbrances
whatsoever. With respect to any leases to which the Seller is
a party, such lease is a valid lease, in full force and effect
and, to the best of Seller's knowledge and belief, after due
inquiry, (i) no event of default has occurred thereunder, and
(ii) no event which, with notice or the passage of time, or
both would constitute an event of default thereunder.
(b) With respect to the Contracts, to the best knowledge
and belief of Seller, after due inquiry (but without any
independent legal review of the Contracts by counsel) each
Contract is legal, valid, binding and enforceable against
Seller. On the Closing Date, Seller's right, title and
interest in and to the Contracts will be free and clear of any
mortgages, liens, charges and other encumbrances arising by or
through Seller, but such Contracts will be subject to the
rights and obligations of the parties with whom the respective
contracts are made.
(c) Subject to the provisions of Section 7.14, Seller
makes no representations or warranties of any kind or nature
whatsoever with respect to the Property Rights except that to
the best of its knowledge Seller owns valid and existing
Property Rights covering the entire routes of the Gathering
Systems, and that to the best of its knowledge and belief,
after due inquiry, Seller is not aware of any pending or
threatened claims by any party asserting either the invalidity
of any Property Right or the nonexistence of a valid Property
Right covering any portion of the Gathering Systems. Seller
shall convey the Property Rights by Bill of Sale, Assignment
and Special Warranty Deed in substantially the form attached
hereto as Exhibit "K". It is understood and agreed that
Purchaser will inspect and investigate the Property Rights and
satisfy itself as to all matters of title in accordance with
the procedures of Article 6.
7.8 No Litigation. Except as set forth on Exhibit "L", there
are no claims, actions, or suits, pending, or, to the best of
Seller's knowledge and belief, after due inquiry threatened against
Seller with respect to or relating to any of the Purchased Assets.
7.9 Environmental. With respect to the Purchased Assets and
the Gathering Systems, to the best of Seller's knowledge and
belief, after due inquiry, other than incidental emissions or
discharges of Hazardous Substances which do not pose an imminent
threat to persons or property, the Gathering Systems are in
material compliance with all laws, rules and regulations, relating
to emissions, discharges or releases of Hazardous Substances into
ambient air, surface water, groundwater or land, otherwise relating
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances,
("Environmental Laws").
To the best of Seller's knowledge and belief, after due
inquiry, Seller has not received written or oral notice of, and is
otherwise unaware of, the occurrence of any past or present events
or incidents which are reasonably likely to give rise to any third
party claim or regulatory order, fine or penalty based on or
related to the ownership or operation of any of the Purchased
Assets, or the processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emissions, discharge,
release or threatened release into the environment, of any
Hazardous Substances from or attributable to the Gathering Systems.
The Gathering Systems have been used by Seller solely for the
gathering, transportation, processing, and sale of natural gas and
operations related or incidental thereto. Except for the
processing and sale of natural gas and operations related or
incidental thereto, during Seller's ownership of the Gathering
Systems, the Gathering Systems have not been used for the
generation, storage or disposal of a Hazardous Substance or as a
landfill or other waste disposal site.
"Hazardous Substance" as used in this paragraph 7.9 means any
substance:
(i) which is defined as a "hazardous waste" or "hazardous
substance" under any federal, state or local statute, regulation or
ordinance or amendments thereto including, without limitation,
Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ' 9601(14); or which is
toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is regulated by
any governmental authority, agency, department, commission. board,
agency or instrumentality of the United States, or any state or any
political subdivision thereof having or asserting jurisdiction over
any of the Gathering Systems; or
(ii) without limitation, which contains gasoline, diesel fuel
or other petroleum hydrocarbons, polychlorinated biphenyls (PCB's)
or asbestos.
To the best of Seller's knowledge and belief, after due
inquiry, all applications, reports, certificates and other
instruments required to be filed with or finished to any local,
state or federal governmental body, authority or agency with
respect to environmental matters affecting the Gathering Systems
have been filed and do not (1) contain any untrue statement of
material fact or (2) omit any statement of material fact necessary
to make the statements therein not misleading.
7.10. Contractual Rights. The Contacts listed on Exhibit "D"
are all of the agreements relating to the ownership or operation of
the Gathering Systems, are valid obligations and in full force and
effect, and to the best of Seller's knowledge and belief, after due
inquiry, there are no defaults or events which, with notice or the
passage of time or both, would constitute events of default under
such Contracts. Neither Seller nor, to the best knowledge and
belief of Seller, after due inquiry, any other party to any of the
Contracts has given or threatened to give notice of any action to
cancel or terminate any such Contracts.
7.11. Financial Information. Seller has delivered to Purchaser
certain information relating to the Business, including summaries
of operating data, throughput, revenues, expenses and margins. The
financial information attached hereto as Exhibit "M" presents
fairly, in all material respects, the information summarized or
described therein.
7.12. Assets in Good Operating Condition. Those of the
Purchased Assets which are tangible assets have been maintained in
accordance with normal industry practice, and are, in all material
respects, in good condition and repair, reasonable wear and tear
excepted.
7.13. Gas Contracts. Exhibit "D" includes each gas
transportation, gas gathering, gas compression, gas sales and gas
purchase agreement to which the Purchased Assets, or any portion of
the Purchased Assets is related, in each case, as of the date of
this Agreement. The list of gas transportation, gas gathering, gas
compression, gas sales and gas purchase agreements included in
Exhibit D" correctly sets forth the sources connected to the
Pipeline Assets as of the date of this Agreement.
7.14 Consents and Preferential Purchase Rights. Except for
consent (i) with respect to the Contracts identified on Exhibit "N"
for which consents have or will be obtained prior to Closing and
(ii) which are required pursuant to any of the other Contracts set
forth on Exhibit D", which Seller will use reasonable commercial
efforts to obtain prior to the Closing, and except for any consents
required by state statutes, there are no consents required to be
obtained by Seller for its assignment of the Gathering Systems to
Purchaser, and there are no preferential purchase rights with
respect to the Gathering Systems that have not been waived or have
not expired.
7.15. Taxes. All ad valorem, property, excise, Department of
Transportation, gas utility, sales, use, and other similar taxes
and assessments due and assessed against, or otherwise payable as
to, the Purchased Assets, or for the gathering, compressing,
treating, purchase or sale of gas relating to the Gathering
Systems, for all taxable periods prior to the taxable period in
which this Agreement is executed have been properly paid, unless
contested by appropriate proceeding, and all such taxes and
assessments that become due prior to the Closing shall be paid on
time. All such taxes which may become due for periods prior to the
Closing, but which are not assessed until after the Closing, shall
be prorated by the Parties in accordance with Section 4.2 of this
Agreement.
7.16. Balancing. Any imbalance in the Gathering Systems at
Closing will be settled at the price in effect on the relevant
system or pipeline where the imbalance exists as of January 1,
1996, and such amount(s) will be paid by Purchaser to Seller or by
Seller to Purchaser as shown on Exhibit "O".
7.17. No "Take or Pay". Seller is not subject to any
arrangement to purchase gas or under any arrangement with respect
to any of the Gathering Systems whereby it or Purchaser after
closing will be obligated, by virtue of a prepayment arrangement,
a take or pay" arrangement, or a production payment, 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.
7.18. Complete Disclosure. To the best of Seller's knowledge
and belief, after due inquiry, 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.
7.19. Disclaimer/Limitation of Liability. Except as
specifically set forth in Sections 7.1 through 7.18, Seller makes
no warranties or representations, express or implied, of any kind
or nature whatsoever, but the Purchased Assets are being sold to
Purchaser with full substitution and subrogation of Purchaser in
and to all covenants and warranties by other parties previously
given or made in respect of the Purchased Assets. Except as
otherwise set forth in Sections 7.1 through 7.18, (a) Purchaser
shall take the Purchased Assets "as is, where is", without any
representation or warranty, express or implied, including the
warranty of merchantability or fitness for a particular purpose and
no warranties of any kind (other than those given in Section 7.1
through 7.16) are to be implied or inferred; (b) it is understood
and agreed that Purchaser will respect the Purchased Assets for all
purposes prior to the Closing Date and satisfy itself with respect
to such Purchased Assets; (c) PURCHASER EXPRESSLY WAIVES THE
PROVISIONS OF CHAPTER XVII, SUBCHAPTER E, SECTIONS 17.41 THROUGH
17.63, INCLUSIVE, OF VERNON'S TEXAS CODE ANNOTATED BUSINESS AND
COMMERCE CODE; and (d) any description of the real property or
Property Rights set forth in the various exhibits or schedules to
this Agreement shall not be deemed to create an express or implied
warranty that real property or Property Rights conform to such
description.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby agrees, represents and warrants that as of
the date of this Agreement and as of the Closing Date (except as
will be disclosed by Purchaser to Seller in writing prior to the
Closing):
8.1. Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation with full power
to enter into and perform this Agreement and the transactions
contemplated hereby.
8.2. No Breach, Default, Violation, Etc. Neither the
execution of this Agreement nor the performance by Purchaser of the
various terms and provisions hereof will violate the charter or
bylaws of Purchaser or to the best of Purchaser's knowledge result
in a breach or violations of any term or provision of, or
constitute a default under, any indenture, mortgage, lease or any
other agreement or instrument to which Purchaser is a party.
8.3. Corporate Authority. The execution and delivery by
Purchaser of this Agreement and each of the other documents and
instruments contemplated herein and the performance by Purchaser of
all of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action. This Agreement
consists of valid and binding obligations of Purchaser enforceable
in accordance with its term, subject to applicable bankruptcy,
insolvency, moratorium and all other laws affecting the rights of
creditors generally and to judicial limitation on the enforcement
of equitable remedies. Purchaser is not a party to any contract or
subject to any other legal restrictions that would prevent or
restrict complete fulfillment of any of the terms and conditions of
this Agreement or compliance with Purchaser's obligations
hereunder.
8.4. Governmental Consents. Except as set forth on Exhibit
"P", to the best knowledge and belief of Purchaser, after due
inquiry, no approval, authorization of, registration,
qualification, or filing with, any governmental agency or authority
is required for its execution and delivery of this Agreement or for
the consummation by Purchaser of the transactions contemplated
hereby.
8.5. No Litigation. Except as set forth on Exhibit "Q", there
are no claims, actions, or suits, pending or, to the best of
Purchaser's knowledge and belief, after due inquiry, threatened
against Purchaser that impedes or is likely to impede Purchaser's
ability to consummate the transactions contemplated by this
Agreement.
8.6. Complete Disclosure. To the best of Purchaser's
knowledge and belief, after due inquiry, none of the statements,
representations or warranties made by Purchaser 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.
9. CONDITIONS TO THE OBLIGATIONS OF PURCHASER.
The obligations of Purchaser under this Agreement, and to
consummate the transactions contemplated hereby, are subject to the
prior fulfillment of each of the following conditions; subject,
however, to the right of Purchaser to waive any one or more of such
conditions in writing, to-wit:
9.1. Representations of Seller True. The representations and
warranties of Seller contained in this Agreement shall be true on
and as of the Closing Date in all material respects as though the
same were made on and as of such date.
9.2. Satisfaction of Conditions. Each and all of the
agreements and conditions to be performed and satisfied hereunder
by Seller at or prior to the Closing Date shall have been duly
performed and satisfied.
9.3. No Litigation. No action or proceeding shall be pending
or threatened any time prior to the Closing Date before any court
or other governmental body by any person or public authority
seeking to restrain or prohibit, or to obtain damages or other
relief in connection with, the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby.
9.4. Absence of Material Adverse Change. Prior to the Closing
Date, there shall be no material adverse change in the business,
financial condition, or results of operations of any of the
Gathering Systems.
9.5. Due Diligence. Purchaser shall have completed its due
diligence investigation to its satisfaction on or before April 1,
1996.
9.6. Operatorship. Purchaser shall have determined to its
reasonable satisfaction that it will be able to take over operation
of the Purchased Assets upon Closing.
9.7. Material Consents. Consents shall have been obtained for
the transfer and assignment of those of the Contracts and Permits
requiring a consent to assignment.
9.8. Affidavits of Use and Possession. Seller shall, subject
to the satisfaction of the other conditions of Closing, deliver
affidavits of use of possession for all of the Gathering Systems.
9.9 Pipeline Rights of Way. The Property Rights shall
include valid and enforceable (a) rights of way, easements,
licenses, or permits covering the entire routes of the Gathering
Systems, and (b) surface leases or fee lands covering the locations
of all compressors, meter stations, dehydrators, tanks, equipment
and other tangible assets located on and about the Gathering
Systems and constituting part of the Pipeline Property.
9.10 Woodville Gas System. With respect to the Woodville Gas
System, Wilkinson County, Mississippi, Seller shall obtain an
estoppel letter" in form and content satisfactory to Purchaser,
whereby Millbrook Gas Gathering stipulates and agrees that it will
be legally obligated from and after the Effective Date to pay
Purchaser minimum payments of $1,500.00 per month during the
remaining term of the lease covering the Woodville System.
10. CONDITIONS TO THE OBLIGATIONS OF SELLER.
The obligations of Seller under this Agreement, and to
consummate the transactions contemplated hereby, are subject to the
fulfillment of each of the following conditions; subject, however,
to the right of Seller to waive one or more of such conditions in
writing, to-wit:
10.1. Representations of Purchaser True. The
representations and warranties of Purchaser contained in this
Agreement shall be true on and as of the Closing Date in all
material respects as though such representations and warranties
were made on and as of such date.
10.2. Satisfaction of Conditions. Each and all of the
agreements and conditions to be performed and satisfied hereunder
by Purchaser at or prior to the Closing Date shall have been duly
performed and satisfied.
10.3. No Litigation. No action or proceeding shall be
pending or threatened at any time prior to the Closing Date, before
any court or other governmental body by any person or public
authority seeking to restrain or prohibit, or to obtain damages or
other relief in connection with, the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby.
11. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING DATE.
The parties hereby agree that, pending the Closing Date:
11.1. Preservation of Business. Seller shall use its best
efforts to preserve its business intact, and preserve the good will
of its customers, suppliers and others with whom it has business
relations.
11.2. Representations and Warranties. Seller shall use its
best efforts to conduct the business in such a manner that on the
Closing Date the representations and warranties of Seller contained
in this Agreement shall be true, except for changes in the ordinary
course of business.
11.3. Certain Changes of Events. Without the consent of
Purchaser, Seller shall not (a) sell or otherwise dispose of or
encumber, or contract to sell or otherwise dispose of or encumber
any of the Purchased Assets other than in sales or dispositions in
the ordinary course of business; (b) take any action or course of
action inconsistent with its compliance with the covenants and
agreements hereunder or the consummation of the transactions
contemplated hereby, or fail to operate the business in the manner
in which it is presently being operated, or (c) without first
obtaining Purchaser's written consent, enter into any contracts or
agreements which can not be unilaterally terminated by Purchaser
after Closing, without penalty or other obligation, effective as of
the end of any month upon not less than 30 days prior written
notice.
11.4. Casualty Loss. Prior to Closing, if a portion of the
Purchased Assets is destroyed by fire or other casualty is taken or
threatened to be taken in condemnation or under the right of
eminent domain ("Casualty Loss"), Purchaser shall purchase the
property at Closing for, at Purchaser's option, either (i) the
Allocated Value of the property reduced by the estimated cost to
repair or replace, as applicable, such property (with equipment of
similar utility) up to the Allocated Value thereof (the reduction
being the "Net Casualty Loss"), or (ii) the Allocated Value of the
property and Seller shall assign Purchaser all of Seller's right to
any awards or other payments from third parties arising out of the
Casualty Loss; provided, however, in the event the Casualty Loss
exceeds 20% of the Allocated Value of a Gathering System(s), then
at Purchaser's option, Purchaser can elect not to purchase such
Gathering System(s) and the Purchase Price shall be reduced by the
Allocated Value of such Gathering System(s).
11.5. Cooperation. The parties will cooperate with one
another to consummate the transaction contemplated herein and,
without limited the foregoing, Seller will assist Purchaser in
obtaining any necessary consents or approvals.
11.6. Repairs. Without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld, Seller
shall not undertake any repairs on the Pipeline Property costing in
excess of $5,000 unless such repair is required by law or such
repairs are necessitated by an emergency situation.
12. CLOSING.
12.1. Effective Time/Closing. The purchase and sale of the
Purchased Assets shall be effective as of January 1, 1996, at 7:00
A.M. local time where the respective Purchased Assets are located
(the "Effective Time"), and the closing of said purchase and sale
(the "Closing") shall take place at the offices of Seller in
Houston, Texas at 10:00 a.m., on or before April 20, 1996, unless
otherwise extended pursuant to the provisions of Section 13 of this
Agreement, or at such other time and/or date as may be mutually
agreed upon by the Parties (the "Closing"; "Closing Date").
12.2. Seller's Deliveries. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser the Purchased Assets
and the following documents:
(a) A general assignment, bill of sale and special warranty
deed conveying all of the Pipeline Property, Contracts, Records,
Permits, and Alabama Assets in substantially the form attached
hereto as Exhibit "K".
(b) Such separate assignments or appropriate instruments of
transfer as may be reasonably necessary to transfer and convey any
part of the assets mentioned in 12.2(a) above not appropriately
transferred by the general assignment and bill of sale.
(c) Change of operator forms for those Gathering Systems
operated by Seller for which such forms are required.
(d) Duly endorsed titles for the Vehicles.
(e) The Preliminary Settlement Statement.
(f) An affidavit of use and possession in substantially the
form attached hereto as Exhibit "R".
12.3 Purchaser's Deliveries. At the Closing, Purchaser shall
deliver to Seller the following:
(a) The Closing Amount in immediately available funds.
12.4. Transfer Taxes, Recording and Filing Fees and Similar
Costs. Purchaser shall bear any sales, use, transfer, gross
receipts and excise taxes, recording fees, and similar costs
incurred and imposed upon, or with respect to, the sale and
transfer of the Purchased Assets, and shall reimburse Seller for
same if paid by Seller.
13. TERMINATION.
Notwithstanding any other provision of this Agreement to the
contrary, this Agreement may be terminated and the transactions
contemplated hereby abandoned, as follows: (a) by the mutual
written consent of Seller and Purchaser at any time prior to the
Closing; (b) by Seller's notice to Purchaser on April 21, 1996 if
the Closing does not occur on or before April 20, 1996 by reason of
a failure of any condition precedent to Closing under Section 10 of
this Agreement, unless the failure results primarily from Seller
itself breaching any representation, warranty or covenant contained
in this Agreement; provided, however, that such termination shall
not be effective if, on or before on business day following
Purchaser's receipt of Seller's termination notice, Purchaser
delivers to Seller by fax and confirmed by certified mail a letter
agreeing to close as soon as reasonably practicable, but in any
event not later than April 30, 1996 (in which event the Closing
Date shall be deemed automatically extended until April 30, 1996),
subject to the satisfaction of the conditions precedent to Closing
under Section 9 of this Agreement, other than those conditions set
forth in Sections 9.5 and 9.6 which shall be deemed waived by
Purchaser; and (c) by Purchaser's notice to Seller on April 21,
1996, if the Closing does not occur on or before April 20, 1996, by
reason of a failure of any condition precedent to Closing under
Section 9 of this Agreement; unless the failure results primarily
from Purchaser itself breaching any representation, warranty or
covenant contained in this Agreement; provided, however, Purchaser
may, in lieu of giving such termination notice, deliver to Seller
a letter agreeing to close as soon as practicable, but in any event
not later than April 30, 1996 (in which event the Closing Date
shall be deemed automatically extended until April 30, 1996),
subject to the satisfaction of the conditions precedent to Closing
under Section 9 of this Agreement, other than those conditions set
forth in Sections 9.5 and 9.6 which shall be deemed waived by
Purchaser. Any Party desiring to exercise the right of termination
contained in Section 13 shall do so by written notice to the other
Party and a Party exercising its right to terminate in accordance
with this Section 13 shall have no liability whatsoever to the
other in connection with this Agreement and the transactions
contemplated hereby.
Purchaser, through its employees and consultants, may make a
visual inspection of the Pipeline Property within ten workdays of
actual execution of this agreement by both parties. Seller shall
cooperate fully with the performance of this visual inspection. If
Purchaser is not satisfied with the state of the Pipeline Property
based on this visual inspection, then Purchaser may unilaterally
terminate this Agreement by written notice to Seller at any time on
or before 24 hours following the expiration of the 10 workday
visual inspection period.
14. POST-CLOSING OBLIGATIONS.
14.1. Post-Closing Adjustments. As soon as practicable after
the Closing, but in no event later than 90 days after Closing,
Seller shall prepare and deliver to Purchaser the final settlement
statement (the "Final Settlement Statement") setting forth each
adjustment or payment that was not formally determined as of the
Closing and showing the calculation of such adjustment and the
resulting final purchase price (the "Final Purchase Price"). As
soon as practicable after receipt of the Final Settlement
Statement, but in no event later than 15 days after receipt of
Seller's proposed Final Settlement Statement, Purchaser shall
deliver to Seller a written report containing any changes that
Purchaser proposes to make to the Final Settlement Statement.
Purchasers failure to deliver to Seller a written report detailing
proposed changes to the Final Settlement Statement by that date
shall be deemed an acceptance by Purchaser of the Final Settlement
Statement as submitted by Seller. The Parties shall agree with
respect to the changes proposed by Purchaser, if any, no later than
30 days after receipt of Seller's proposed Final Settlement
Statement, and those changes not agreed upon within said 30-day
period shall be deemed automatically referred to arbitration for
decision by the arbitrator pursuant to the provisions of Section 16
of this Agreement. The date upon which the Final Purchase Price is
established, whether by acceptance, agreement or arbitrator's
decision, for a transaction shall be herein called the "Final
Settlement Date". If the Final Purchase Price is more than the
Closing Amount, Purchaser shall pay Seller the amount of such
difference. If the Final Purchase Price is less than the Closing
Amount, Seller shall pay to Purchaser the amount of such
difference. Either such payment shall be by wire transfer in
immediately available funds or, if the amount of such difference is
less than $25,000, by cashier's check. Payment by Purchaser or
Seller, as the case may be, shall be within five days of the Final
Settlement Date.
14.2. Indemnification.
(a) Subject to the provisions of paragraph (c) of this
Section 14.2, for a period of 24 months from and after the
Closing Date, Seller shall defend, indemnify and save and hold
harmless Purchaser, its directors, officers, employees and
agents against all losses, damages, claims, demands, suits,
costs, expenses, and liabilities including, without
limitation, reasonable attorneys' fees, court costs and costs
of investigation, that relate: (i) to the Purchased Assets
and arise from or are attributable to the period prior to the
Effective Time; (ii) Seller's breach of any of the terms,
covenants or conditions of this Agreement; or (iii) Seller's
misrepresentation or breach of warranty contained in this
Agreement or any of the documents entered into or delivered in
connection therewith. For claim(s) noticed in writing received
during this twenty four month period from and after the
Closing Date (except for matters involving taxes, for which
there shall be no limit on the period of indemnity) the
indemnity obligation of the Indemnifying Party shall continue
in effect with respect to the matters pertaining to such
noticed claim(s) only.
(b) Subject to the provisions of paragraph (c) of this
Section 14.2, for a period of 24 months from and after the
Closing Date Purchaser shall defend, indemnify and save and
hold harmless Seller, its directors, officers, employees and
agents against all losses, damages, claims, demands, suits,
costs, expenses, and liabilities including, without
limitation, reasonable attorneys' fees, court costs and costs
of investigation, that relate: (i) to the Purchased Assets and
arise from or are attributable to the period after the
Effective Time; (ii) Purchaser's breach of any of the terms,
covenants or conditions of this Agreement; or (iii)
Purchaser's misrepresentation or breach of warranty contained
in this Agreement or any of the documents entered into or
delivered in connection therewith. For claim(s) noticed in
writing received during this twenty four month period from and
after the Closing Date (except for matters involving taxes,
for which there shall be no limit on the period of indemnity)
the indemnity obligation of the Indemnifying Party shall
continue in effect with respect to the matters pertaining to
such noticed claim(s) only.
(c) Notwithstanding the foregoing, (i) neither Party shall be
required to indemnify the other Party until the aggregate
amount of the loss(es) suffered or incurred by the Party
seeking indemnification exceeds $10,000; (ii) The maximum
amount of indemnification that either Party shall be required
to pay shall be an amount equal to the Purchase Price; and
(iii) except as to claims involving taxes, the respective
indemnity obligations of the Parties shall terminate upon the
expiration of 24 months following the Closing Date except for
claim(s) in writing for indemnity against the other Party (the
Indemnifying Party') within said 24 month period, in which
event the indemnity obligation of the Indemnifying Party shall
continue in effect with respect to the matters pertaining to
such claim(s) only.
(d) The right to indemnification set forth in this Section
14.2 shall survive the Closing and (ii) the due diligence of
any party seeking indemnity.
14.3. Transfer of Operations. Seller agrees to provide access
to records and reasonable assistance to effectuate an orderly
conversion of the operation of the Purchased Assets from Seller to
Purchaser for a period of 60 days after Closing ("TransferPeriod").
Seller shall have the right to retain certain records for
reconciliation purposes and closing of 1995 business during the
Transfer Period provided that Seller provides copies of such
documents which are reasonably necessary for Purchaser's ongoing
operation. Purchaser and Seller mutually agree to accommodate any
reasonable request by the other part which would allow for a
minimum of interruption in the normal business cycle related to the
Purchased Assets during the Transfer Period.
15. MISCELLANEOUS.
15.1. Post-Closing Access to and Delivery of Records.
Following the Closing and subject to Section 14.3, Seller shall
promptly deliver all records and documents or copies thereof
relating to the Purchased Assets to Purchaser and Purchaser shall
provide Seller, at the location where Purchaser maintains such
records and at Seller's expense, reasonable access to, and the
right to copy, excerpt or reproduce, any records in Purchaser's
possession relating to Seller's ownership of the Purchased Assets
or operation of the Business. Seller shall use the information to
which it has access only with respect to (i) federal, local or
state regulation or tax matters affecting Seller; (ii) the
resolution of any existing disputes or contract compliance issues
affecting Seller and related to the Purchased Assets; or (iii) any
other matter or disputes relating to Seller's ownership of the
Purchased Assets.
15.2. Broker. Neither Party hereto has retained any broker or
agreed to pay any brokerage fee or commission to any finder, agent
or broker for or in respect of this Agreement. Each Party shall
indemnify the other and hold it harmless against any claim for a
brokerage fee or commission made by any third party arising out of
or related to the transactions contemplated herein.
15.3. Termination of Representations and Warranties. The
respective representations and warranties of the Parties herein
contained shall survive the Closing and, except as to claims
involving taxes, shall terminate upon the expiration of 24 months
following the Closing Date unless a Party has made a claim or
claims in writing for a misrepresentation or breach of warranty
against the other Party (the "Breaching Party") within said 24
month period, in which event the representation and warranty of the
Breaching Party shall continue in effect with respect to matters
pertaining to said claim(s) only.
15.4. Expenses. Each Party shall pay its own expenses in
connection with this Agreement and the transactions contemplated
hereby.
15.5. Entire Agreement, Modifications. This Agreement
(including the exhibits and schedules) represents the desire,
understanding and agreement of the Parties with respect to the
subject matter hereof, supersedes and cancels all prior
negotiations between the Parties and all prior and contemporaneous
agreements, letters and understandings; and there are no
representations, warranties or other agreements between the parties
in connection with the subject matter hereof, except as
specifically set forth herein. This Agreement cannot be amended,
supplemented or changed orally, but only by an agreement in writing
signed by the Party or Parties against whom enforcement is sought
and making specific reference to this Agreement.
15.6. Assignment and Succession. This Agreement may not be
assigned by any Party without the prior written consent of the
others, but shall be binding upon and shall inure to the benefit of
the Parties hereto and their respective successors and assigns;
provided that notwithstanding the foregoing, Purchaser shall be
allowed, without Seller's consent, to assign its rights hereunder
to a joint venture of which it is a joint venturer.
15.7. Notices. All notices, requests, demands and other
communications which are required or permitted hereunder shall be
in writing and shall be deemed to have been duly given (i) upon
delivery, if delivered personally, or (ii) upon deposit in the
United States mail, if sent by certified or registered mail,
postage prepaid and properly addressed as follows, or (iii) upon
being sent by facsimile transmission to the telephone numbers set
forth below:
In the Case of Seller:
Texas Southeastern Gas Gathering Company
1177 West Loop South, Suite 1825
Houston, Texas 77027
Attn: Sam L. Banks
Telephone: (713) 968-7068
Facsimile: (713) 968-7017
In the Case of the Purchaser:
Magnolia Pipeline Corporation
1100 Louisiana, Suite 2950
Houston, Texas 77002
Attn: I. J. "Chip" Berthelot II
Telephone: (713) 650-8900
Facsimile: (713) 650-3232
or to such other address as either Party shall have specified by
notice in writing to the other Party.
15.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas,
without regard for the provisions thereof regarding conflict of
laws.
15.9. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be one and
the same instrument.
15.10. Section and Paragraph Headings. The section and
paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.11. Publicity. All publicity concerning the transaction
contemplate by this Agreement shall be subject to the mutual
consent of the parties, which consent shall not be unreasonably
withheld.
15.12. Confidentiality. The parties hereto agree that all
financial and other proprietary information submitted by either
party, and all discussions, registrations and agreements shall be
held in the strictest confidence by such party and its counsel,
employees and representatives, and shall not be disclosed to any
person without the prior written consent of the other party.
15.13. Time of Essence. Time is of the essence of this
Agreement.
15.14. Severability. The invalidity or unenforceability of
any particular provision of this Agreement shall not affect the
other provisions hereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provisions were
omitted.
15.15. Specific Performance. Each of the Parties
acknowledges that the other Party would be irreparably damaged and
would not have an adequate remedy by law for money damages in the
event that any of the covenants contained in this Agreement were
not performed in accordance with its terms or otherwise were
materially breached. Each of the Parties therefore agrees that,
without the necessity of proving actual damages or posting bond or
other security, the other Party shall be entitled to temporary
and/or permanent injunction or injunctions to prevent breaches of
such performance and to specific enforcement of such covenants in
addition to any other remedy to which they may be entitled, at law
or in equity.
15.16. Attorneys' Fees and Costs. In the event attorneys'
fees and other costs are incurred to enforce, through legal action,
any of the obligations herein provided for, or to establish damages
for the breach thereof, or to obtain any other appropriate relief,
whether by way of prosecution or defense, the Party prevailing
shall be entitled to recover reasonable attorneys' fees and costs
incurred therein.
16. ARBITRATION. Any of the following matters as to which
there is disagreement between the Parties shall be submitted to
arbitration: (i) as to whether a matter on the Defect List has been
remedies or cured by Seller, pursuant to Section 6.3 of this
Agreement, (ii) the amount of any Final Title Defect Amount
proposed by Seller and any other unresolved matter(s) pursuant to
Section 14.1 of this Agreement, and (iii) the amount of repair or
replacement cost of any of the Purchased Assets damaged or
destroyed by fire or other casualty or taken or threatened to be
Closing, pursuant to the determination which may be made under
Section 11.4 of this Agreement. The following shall apply to all
such issues arbitrated:
(a) The decision of the arbitrator(s) shall be final and
binding upon both 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 mutually agreeable to the parties and knowledgeable and
experienced in the type of matter that is the subject of the
dispute. In the event that Parties are unable to agree upon such
person within ten (10) days after a matter have been automatically
referred to arbitration, 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. 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 thirty (30) days after the
selection of the last arbitrator], render a decision on the matters
submitted for arbitration. 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 bill their fees and costs attributable to such
binding arbitration in equal shares to the Parties and each Party
shall bear its own attorneys' fees and other out-of-pocket costs
expended by it; and
(d) It is the intent of the Parties that, once arbitration is
invoked pursuant to the provisions of this Section 16, the matters
set for arbitration shall be decided as set forth herein, and they
shall not seek to have this Section 16 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.
17. NON-COMPETITION AGREEMENT.
For a period of three (3) years following the Closing (or if
this period shall be unenforceable by law, then for such shorter
period as shall be enforceable), neither Seller nor any affiliate
of Seller will, directly or indirectly, compete with Purchaser's
business of operating the Gathering Systems, or otherwise engage in
the business of purchasing, selling, gathering, or transporting of
gas within a 5-mile radius extending from all points on the entire
route of each of the Gathering Systems in the following counties:
Monroe, Wilkinson, Jasper and Lamar Counties, Mississippi, and
Lamar, Tuscaloosa and Fayette Counties, Alabama.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives
as of the date first above written.
SELLER:
TEXAS SOUTHEASTERN GAS GATHERING COMPANY
BY:
Sam L. Banks
Chairman
PURCHASER:
MAGNOLIA PIPELINE CORPORATION
BY:
Dan C. Tutcher
Vice President, Treasurer and Assistant Secretary
INDEX TO EXHIBITS
Exhibit A List of Gathering Systems (referenced in Section 1)
Exhibit B Schedule of Pipeline Property (referenced in
Section 1.1)
Exhibit C Descriptions of Property Rights and Permits
(referenced in Section 1.2)
Exhibit D Contracts (referenced in Section 1.3 and 1.5)
Exhibit E Alabama Office Furniture and Stock (referenced in
Section 1.6)
Exhibit F Vehicles (referenced in Section 1.7)
Exhibit G Form of Assumption Agreement (referenced in Section
2.1)
Exhibit H Allocation of Purchase Price (referenced in Section
4.3)
Exhibit I Governmental Consents (referenced in Section 7.6)
Exhibit J Title Defects (referenced in Section 7.7)
Exhibit K Form of Bill of Sale, Assignment and Special
Warranty Claim Deed (referenced in Section 7.7c)
Exhibit L Litigation (Seller) (referenced in Section 7.8)
Exhibit M Operating Information (referenced in Section 7.11)
Exhibit N Material Contracts (Consents) (referenced in
Section 7.14)
Exhibit O Balancing (referenced in Section 7.16)
Exhibit P Governmental Consents (referenced in Section 8.4)
Exhibit Q Litigation (Purchaser) (referenced in Section 8.5)
Exhibit R Affidavit of Use and Possession (referenced in
Section 12.2)
Exhibit S Escrow Agreement (referenced in Section 6)
Exhibit T Common title defect types with agreed defect amount
for each title defect (referenced in Section 6)
EXHIBIT "A"
LISTING OF GATHERING SYSTEMS
MISSISSIPPI SYSTEM #
SYSTEMS:
GREENWOOD SPRINGS - MONROE COUNTY 102
MILLBROOK - WILKINSON COUNTY 88
HEIDELBERG -TGP - JASPER COUNTY 184
HEIDELBERG-KOCH - JASPER COUNTY 185
CARAWAY - MARION COUNTY 187
BAXTERVILLE - LAMAR COUNTY 186
ALABAMA
SYSTEMS:
DETROIT/ BEAVERTON - LAMAR COUNTY 123
MOORES BRIDGE - TUSCALOOSA COUNTY 17
EAST/WEST FAYETTE - FAYETTE COUNTY 17
HAPPY HILL - FAYETTE COUNTY 244
SIZEMORE - LAMAR COUNTY 146
EXHIBIT "B"
PIPELINE PROPERTY
ALABAMA
DETROIT SYSTEM (LAMAR COUNTY):
PIPE:
12,900' (2.44 miles) - 7/8" O.D. x .156" W.T., X-42
22,236' (4.21 miles) - 4-1/2" O.D. x .188" W.T., X-42
30,935' (5.86 miles) - 8-5/8" O.D. x .219" W.T., X-42
BEAVERTON SYSTEM (LAMAR COUNTY)
PIPE:
20,856' (3.95 miles) - 2-3/8" O.D. x .154" W.T., X-42
7,200' (1.36 miles) - 4-1/2" O.D. x .188" W.T., X-42
TUSCALOOSA SYSTEM (TUSCALOOSA COUNTY)
PIPE:
23,500' (4.45 miles) - 10.750' O.D.x .219" W.T., X-46
EAST/WEST FAYETTE SYSTEM (FAYETTE COUNTY)
PIPE:
135,200' (25.6 miles) - 6.625" O.D. x .188" W.T., X-42
118,200' (22.4 miles) - 4.500" O.D. x .188" W.T., X-42
25,000' (4.7 miles) - 3.500" O.D. x .156" W.T., X-42
7,200' (1.4 miles) - 2.875" O.D. x .156" W.T., X-42
75,250' (14.25 miles) - 2.375" O.D. x .154" W.T., X-42
METER STATION EQUIPMENT
*Individual Station Meter Runs Not Counted Here
AL029-07-1
-013 3" SIMPLEX NO BY-PASS; 3 PEN WHITSON
-017 2" SIMPLEX W/BY-PASS; 3 PEN BOWLING
-018 2" SIMPLEX W/BY-PASS; 3 PEN FOWLER 9-6
-019 2" SIMPLEX W/BY-PASS; 3 PEN CANNON 33-15
-023 2" SIMPLEX W/BY-PASS; 3 PEN FOWLER 11-4
-030 2" SIMPLEX W/BY-PASS; 3 PEN FOWLER 25-9
-031 2" SIMPLEX NO BY-PASS; 3 PEN WATKINS 6-16
-034 2" SIMPLEX W/BY-PASS; 3 PEN FOWLER 2-12
-035 2" SIMPLEX W/BY-PASS; 3 PEN PERRY
-038 REMOVED-STILL HAVE VALVES ON LOCATION-
GRIMSLEY-043 2" SIMPLEX W/BY-PASS; WALTON
-045 2" SIMPLEX TUBE ONLY WOODWARD 25-5
-046 2" SIMPLEX W/BY-PASS; 3 PEN WOODWARD 26-9
-048 2" SIMPLEX TUBE ONLY TUCKER 35-11
-054 2" SIMPLEX W/BY-PASS; 3 PEN SHEPHERD 18-6
-055 2" SIMPLEX W/BY-PASS; 3 PEN FOWLER 14-1
-058 2" SIMPLEX TUBE ONLY FOWLER 15-1
-064 3" SIMPLEX W/BY-PASS; 3 PEN ARTHUR M/M
-066 2" SIMPLEX W/BY-PASS; 3 PEN US STEEL 31-13
-072 2" SIMPLEX W/BY-PASS; 3 PEN TUCKER FOWLER 35-2
-073 2" SIMPLEX W/BY-PASS; 3 PEN JOHNSON 36-6
IN YARD 2" SIMPLEX W/BY-PASS; 3 PEN (SKID MOUNTED)BRASHER
AL029-07-1
-005 2" SIMPLEX NO BY-PASS; 3 PEN SWANSON
-007 2" SIMPLEX NO BY-PASS; 3 PEN W.0 - PINKERTON
-008 2" SIMPLEX NO BY-PASS; 3 PEN STANLEY HARKINS
-056 2" SIMPLEX W/ BY-PASS; 3 PEN JOHNSON 30-10
-070 2" SIMPLEX W/ BY-PASS; 3 PEN CANNON 18-13
LAMAR COUNTY - DETROIT AREA
AL040-06-3
-018 2" SIMPLEX W/BY-PASS; 3 PEN DAY
-020 2" SIMPLEX W/BY-PASS; 3 PEN PRIDDY
-021 2" SIMPLEX W/BY-PASS; 3 PEN CUNNINGHAM TAYLOR
-033 2" SIMPLEX W/BY-PASS; 3 PEN ALLEN BENTON
-079 2" SIMPLEX W/BY-PASS; 3 PEN CRUMP
MOORES BRIDGE COMPRESSOR STATION
SOUTHERN NATURAL
AL063-07-2-002
VALVES:
1 - 6" F/F ORBIT VALVE (SUCTION)
1 - 6" F/F ORBIT VALVE (DISCHARGE TO ALAGASCO)
1 - 6" F/F ORBIT VALVE (DISCHARGE TO SNG)
1 - 4" FISHER VEE BALL VALVE W/FISHER CONTROLLER
SUCTION AND DISCHARGE HEADER SYSTEM FOR THREE UNITS
2 - 2" BLOW DOWN VALVES
1 PULSATION CHAMBER W/OIL SCRUBBER
METER STATIONS:
2' SIMPLEX METER RUN W/BY-PASS
3 PEN BARTON METER W/HOUSE
COMPRESSORS:
UNIT 43 G3306NA, 7Y1436, FE 332 C-21
1 - 2" SUCTION VALVE W/MASONIELLION CONTROL VALVE (1")
1 - 2" DISCHARGE VALVE AND CHECK VALVE
1 - 300 GALLON DAY TANK
1000 GAL TANK
*NOTE: TSGGC OWNS PIPE TO SNG METER STATION
SNG OWNS METER STATION
ALAGASCO METER STATION
AL063-07-2-001
METER STATIONS:
6" SENIOR METER RUN
3 PEN BARTON METER 24 HOUR AUTO DROP
6' x 8' WALK-IN METER BUILDING ON PAD
1 - 6" F/F VALVES
3 - 4" F/F VALVES - REGULATOR BY-PASS
3" FISHER VEE BALL VALVE
FISHER PRESSURE CONTROLLER
BARTON DIFFERENTIAL CONTROLLER
2" F/F SLOW DOWN VALVE<PAGE>
WEST STATION
AL029-07-6-001
METER STATIONS:
4" SENIOR METER RUN W/
3 PEN BARTON METER 24 HOUR AUTO DROP
BARTON DIFFERENTIAL CONTROL
FISHER PRESSURE CONTROL
4' x 6' WALK IN METER BUILDING AND PAD
FISHER CONTROL VALVE
KING TOOL ODORIZER 140# CAPACITY W/RESERVOIR
3 - 3" F/F VALVES
1 - 4" F/F VALVES
6" BLOCK VALVE F/F
2 - 4" SIDE VALVES (F/F)
2 - 2" BLOW DOWNS (ORBIT F/F)
SUCTION AND DISCHARGE HEADER SYSTEM FOR TWO COMPRESSORS
1 - 4" ORBIT VALVE (INLET)
2 - 2" BLOW DOWN VALVES
W/BY-PASS SYSTEM-4" VALVE AND CHECK VALVE (PISTON)
FUEL GAS METER
2" SIMPLEX METER RUN W/BY-PASS 3 PEN BARTON METER
DEHYDRATORS:
24" x 24'2" TOWER - 175,000 BTU BS&B MANUFACTURERS No. 17692
9015 KIMRAY, 2 - 3" F/F/ VALVES, GLYCOL HEAT EXCHANGER
SCRUBBER - 2" INLET & OUTLET COMPLETE
PULSATION CHAMBER & OIL SCRUBBER
1 - 100 BBL TANK
1 - 2" AXIAL PRESSURE CONTROL RELIEF W/BLOCK VALVE 2" F/F
300 GAL OIL DAY TANK
4" SUCTION VALVE
3" DISCHARGE VALVE AND CHECK VALVE
TIE-IN AT NORTHWEST
3" VALVE F/F
3" CHECK VALVE F/F
(ALSO SEE NORTH CITY OF FAYETTE - TIE IN W/FTC - 2" F/F VALVE)
HAPPY HILL STATION
AL029-07-2-002
METER STATIONS:
4" SENIOR METER RUN
3 PEN BARTON METER 24 HOUR AUTO DROP
WALK IN METER BUILDING - 4' x 6' ON PAD
3" F/F CHECK VALVE
3" F/F ORBIT VALVE
VALVES:
2 - 2" VEE BALL CONTROL VALVES
2 - PRESSURE CONTROL VALVES (FISHER-WIZARD)
REGULATOR BY-PASS SYSTEM W/5 - 2" F/F ORBIT VALVES
3" BLOCK VALVE
1 - SIDE VALVE (4" ORBIT)
3" F/F CHECK VALVE
INLET SCRUBBER - 30" x 10' - FLOECO 4" IN & OUT WP 1200#
2 - 4" F/F ORBIT VALVES
W/BY-PASS 1 - 2" F/F ORBIT VALVE
2" BLOW DOWN VALVE
PIPING FOR COMPRESSOR SUCTION AND DISCHARGE LINE 4"
CHAIN LINK FENCED LOCATION
EAST STATION
AL029-07-6-002
METER STATIONS:
6" SENIOR METER RUN W/
3 PEN BARTON METER W/24 HOUR AUTO DROP
4' x 6' WALK IN METER BUILDING WITH PAD
BARTON DIFFERENTIAL CONTROL
BARTON PRESSURE CONTROL
2 - 4" F/F VALVES
KING TOOL ODORIZER BY-PASS TYPE 140# CAPACITY
SCRUBBER 30" x 9' - 4" INLET & OUTLET COMPLETE
2" FISHER VEE BALL CONTROL VALVE
REGULATOR BY-PASS SYSTEM INCLUDES 3- 3" F/F VALVES
2" F/F VALVE ON BLOW DOWN
TIE-IN AT NORTHWEST
6" BLOCK VALVE BETWEEN EAST AND WEST SYSTEMS
3" F/F VALVE
3" F/F CHECK VALVE<PAGE>
ENSERCH STATION
AL029-07-6-003
METER STATIONS:
2" SIMPLEX METER RUN W/BY-PASS
3 PEN BARTON METER W/HOUSE
VALVES:
1 - 4" ORBIT SUCTION LINE
1 - 4" ORBIT DISCHARGE LINE
DEHYDRATOR:
12" x 16' FLOECO WP 1000# #1576 2015 PUMP BTU 90,000 2 MMCFD
SCRUBBER:
16' x 5' 2" INLET/OUTLET DISCHARGE
30" x 9' 4" INLET OUTLET SUCTION WP 480#
TANKS:
1 - 500 GALLON TANK<PAGE>
COUNTRY CLUB
AL029-07-2-001
METER STATIONS:
2" SIMPLEX METER RUN W/BY-PASS
3 PEN BARTON METER W/HOUSE
3 - 2" F/F ORBIT VALVES
INLET SCRUBBER:
16" x 6' 2" INLET/OUTLET W/BY-PASS COMPLETE
3 - 2" F/F ORBIT VALVES
REGULATION:
1 - 1" MASONIELAN PRESSURE CONTROL VALVE
BACK UP SUPPLY SYSTEM (REVISED 11/22/91)
3 - 2" F/F ORBIT VALVES
BELONGS TO FAYETTE GAS:
2 - 2" AXIAL PRESSURE REGULATORS W/BY-PASS
4 - 2" F/F ORBIT VALVES
FILTER SINGER 2-CFR-1440-25<PAGE>
NORTH CITY OF FAYETTE
AL029-07-2-003
METER STATIONS:
2" SIMPLEX METER RUN COMPLETE W/BY-PASS
6 - 2" F/F VALVES (ORBIT)
1 - 2" F/F CHECK VALVE
3 PEN BARTON METER W/HOUSE
TIE-IN WITH TSGGC
2" F/F VALVE
FAYETTE GAS BOARD EQUIPMENT
FISHER 399 - 2' PRESSURE REGULATORS
INLINE FILTER 2" 600#
PRESSURE RELIEF VALVE 3"
PRESSURE RECORDER
SIZEMORE MASTER METER
AL040-06-3-043
METER STATIONS:
3" SIMPLEX METER RUN W/BY-PASS
3 PEN BARTON METER W/HOUSE
2" FISHER PRESSURE CONTROL VALVE 667-ET
(PLUG VALVE 600# FLANGE) W/FISHER CONTROL
1" RELIEF SET AT 385#
2" F/F VALVE TO NORTHWEST
HAVE TWO LINES COMING INTO SCRUBBER
2 - 2" F/F VALVES
<PAGE>
DETROIT MASTER METER
AL040-06-4-003
TIE IN W/NORTHWEST
3" BLOW DOWN VALVE
6" W/W/ VALVE (ORBIT)
2 - 2" FISHER VEE BALL VALVES W/2 FISHER CONTROLLERS (PRESSURE)
*NORTHWEST OWNS METER STATION
CANNON 18-13
AL029-07-1-070
METER STATIONS:
2" SIMPLEX METER RUN W/BY-PASS (SKID MOUNTED)
3 PEN BARTON METER W/HOUSE
REGULATOR:
2 - 1" MASONEILAN CAMFLEX II PRESSURE CONTROL VALVES
W/CONTROLLERS
SCRUBBER:
16" x 5' COMPLETE
RELIEF VALVE:
1" SET AT 385#
<PAGE>
JOHNSON 30-10
AL029-07-1-056
METER STATIONS:
2" SIMPLEX METER RUN W/BY-PASS (SKID MOUNTED)
3 PEN BARTON METER W/HOUSE
REGULATOR:
2 - 1" MASONEILAN CAMFLEX II PRESSURE CONTROL VALVES
W/CONTROLLERS
SCRUBBER:
16" x S' COMPLETE
RELIEF VALVE:
1" SET AT 385#
COVIN STATION
AL029-07-3-001
GEI EXCHANGE
AL029-07-3-003
6" PIG RECEIVER
6" F/F VALVE
4" F/F VALVE
2 - 2" ORBIT VALVES
*NOTE:6" PIG LAUNCHER ON EAST FAYETTE SYSTEM
RECTIFIERS
TUSCALOOSA COUNTY 10" SYSTEM
GOOD-ALL CSAWSC - 40 - 4GM
DC RATING - 40 VOLTS 4 AMPS
EAST FAYETTE SYSTEM - HUBBERTVILLE
GOOD-ALL CSAWSC - 60 - 8GM
DC RATING - 60 VOLTS 8 AMPS
WEST FAYETTE SYSTEM - COVIN
GOOD-ALL CSAWSC - 40 - 4GM
DC RATING - 40 VOLTS 4 AMPS
DETROIT SYSTEM
ENTECH PASSC -120 - 9 -BFG SN#82H525
DC RATING - 120 VOLTS 9 AMPS
BLOCK VALVES
EAST FAYETTE SYSTEM
6" PIG LAUNCHER SYSTEM
6" IN LINE BLOCK VALVE TO TANYARD CREEK 6"
4" BLOCK VALVE TO HUBBERTVILLE 4"
WEST FAYETTE SYSTEM
1 - 4" VALVES IN VAULT AT COVIN, HWY 37
<PAGE>
WILKINSON COUNTY SYSTEM
WILKINSON COUNTY, MISSISSIPPI GEI 88
PIPE:
32,915' - 6-5/8" O.D. x .188" W.T., X-42, TGF-3
5,575' - 3-1/2" O.D. x .188" W.T., X-42, TGF-3
4,265' - 2-3/8" O.D. x .154" W.T., X-42, TGF-3
4,265' - 2-7/8" O.D. x .203" W.T., X-42, TGF-3
METER STATIONS:
MS079-04-001
2 - 4" Senior Meter Runs
2 Pen Barton Meter
Barton Temperature Recorder
Walk-In Meter Building
2 - 2" Fisher Vee Ball W/Pressure Controls
GREENWOOD SPRINGS MASTER METER
MONROE COUNTY, MISSISSIPPI GEI 102
PIPE:
20,000' - 4.00" O.D. x .188" W.T., API5-L, X-42
9,473' - 6.00" O.D. x .203" W.T., API5-L, X-42
6,913' - 3.00" O.D. x .125" W.T., API5-L, X-42
5,200' - 2.00"- O.D. x .154" W.T., API5-L, X-42
METER STATIONS:
MS048-06-4-001
2" Simplex Meter Tube 2 Pen Barton Meter
Barton Temperature Recorder
Walk-In Meter Building
MS048-06-3-001: Board of Supervisors
2" Simplex Meter Tube
2 Pen Barton W/Temperature Recorder
MS048-06-3-002: Davis 10-13
2" Simplex Meter Tube
2 Pen Barton W/Temperature Recorder
GEI-TGP
HEIDELBERG, MISSISSIPPI GEI 184
PIPE:
11,700' - 4-1/2" O.D. x .188" W.T., API5-L, X-42, ERW, TGF-3
3,300' - 3-1/2" O.D. x .156" W.T., API5-L, X-42, ERW, TGF-3
3,250' - 2-3/8" O.D. x .154" W.T., API5-L, X-42, ERW, TGF-3
DEHYDRATOR:
16' x 20' FLOECO
FILTER SEPARATOR:
16' x 10' FLOECO
PULSATION BOTTLE:
FLOECO
MISCELLANEOUS COMPRESSOR PIPING:
1" Masoneilan Pressure Regulator
Unit ETC-51 on Location
TANKS:
1 - 210 BBL
1 - 500 GAL. Compressor Oil
<PAGE>
METER STATIONS:
MS031-06-2-001:
3" Senior Meter Run
2 Pen Barton Meter
Barton Temperature Recorder
Walk-In Meter Building
MS031-06-5-001: Fuel Gas Meter
2" Simplex W/Big Joe Pressure Regulator
3 Pen Barton Meter
MS031-06-1-001: Lyons 32-7
2" Simplex Meter Tube
3 Pen Barton Meter
MS031-06-1-002: Eddy 32-9
2" Simplex Meter Tube
3 Pen Barton Meter
MS031-06-1-003: Morrison 29-15
2" Simplex Meter Tube
3 Pen Barton Meter
MS031-06-1-006: Arledge 29-7
2" Simplex Meter Tube
3 Pen Barton Meter
COMPRESSION:
UNIT# ENGINE HP MODEL COMPR. CYLINDER
51 225 HP 342NA ARDNER-DENVER 1-5.5" x 11'
GEI-KOCH
HEIDELBERG, MISSISSIPPI GEI 185
PIPE:
1,858' - 4-1/2" O.D. x .188" W.T., API5-L, X-42, ERW, TGF-3
2,665' - 3-1/2" O.D. x .156" W.T., API5-L, X-42, ERW, TGF-3
RUPTURE DISK ASSEMBLY:
420#
SEPARATOR:
5' x 16" FLOECO
TANK:
1 - 210 BBL
METER STATIONS:
MS031-06-2-002
4" Senior Meter Run
Solarflow Meter - UGPL
MS031-06-1-004: Lloyd 20-14
2" Simplex Meter Tube
3 Pen Barton Recorder
MS031-06-1-005: Carroway 19-7
2" Simplex Meter Tube
3 Pen Barton Recorder
PIPE:
150' - 2-3/8" O.D. x .154" W.T., X-42, API5-L, ERW EPOXY
1,870' - 3-1/2" O.D. x .156" W.T., X-42, API5-L, ERW,TGF-3
PIPE:
2,050' - 3-1/2" O.D. x -156" W.T., X-42, API5-L, ERW, TGF-3
1,900' - 2-3/8" O.D. x -154" W.T., X-42, API5-L, ERW, TGF-3
800' - 2-3/8" O.D. x Old CWF Line Purchased
UGPL owns measurement equipment at Master Meter
END OF EXHIBIT "B"
EXHIBIT "C"
RIGHTS-OF-WAY, PERMITS AND LICENSES
CTC 17
State Highway Permit #5-1-70; Executed by Counsel, State of Alabama
Highway Department on June 7, 1978 for a 4" Highway 18 Crossing and
Approximately 4,225 Feet of 4-1/2" Pipeline along Highway 107;
Fayette County, Alabama.
State Highway Permit #5-1-233; Executed by Counsel, State of Alabama
Highway Department on September 6, 1985 for a 6" Pipeline Highway
43 Crossing; Fayette County, Alabama.
On April 24, 1987 for a Road Approach to Highway 102 for a Meter Station;
Fayette County, Alabama.
County Highway Permit; Executed by Fayette County Commission on March 30,
1987 for 5 - 6" County Road Crossings in Sections 9, 16, 17 & 20,
T15S, R12W, Fayette County, Alabama.
County Highway Permit; Executed by the Fayette County Engineer on November
12, 1976 for 14.5 Miles of 4" and 6" Pipeline Along Various County
Roads, Fayette County, Alabama.
100' x 100' Surface Easement, Section 24, T14S, R12W, Willadian and G. E.
Hubbert, Grantor; Recorded in Volume 148, Page 210, Fayette County,
Alabama.
60.85Rods; Sec. 26, T15S, R13W; Katherine Tucker, Grantor; Recorded in
Volume 152, Page 58-59, Fayette County, Alabama.
State Highway Permit #5-1-47; Executed by Counsel, State Highway
Department on October 16, 1976 for the Installation of 4 inch and
6-inch Pipeline Along and Across Alabama Highways #96, 18, 102,
129, 171 and U.S. Route 43; Fayette County, Alabama.
Tract #1: 25.45 Rods; Sec. 7, T16S, R13W; David Fowler Grantor; Recorded
Dated Feb. 19, 1985; recorded in Volume 192, Page 915, Fayette
County, Alabama.
Tract #2: 134.79 Rods; Sec. 6, 5, & 8, T16S, R13W; Elmer Watkins, Jr.,
Grantor; Recorded in Vol. 149, Page 302, Fayette County, Alabama;
James H. Watkins, Grantor; Recorded in Volume 49, Page 304, Fayette
County, Alabama.
Tract #3: 151.52 Rods; Sec. 8, T16S, R13W; Alvis L. Fowler, Grantor;
Recorded in Volume 149, Page 462, Fayette County, Alabama.
Tract #4: 100' x 100' Surface Easement; Sec. 33, T15S, T13S; Thomas and
Carolyn Roberts, Grantors; Recorded in Volume 168, Page 299,
Fayette County, Alabama.
Tract #5: 16.00 Rods; Sec. 27, T15S, R13W; Mrs. Earnest Dodson, Grantor;
Recorded in Volume 142, Page 875, Fayette County, Alabama.
Tract #6: 142.43 Rods; Sec. 27, T15S, R13W; Macon W. Gravlee, Jr.,
Grantor; Recorded in Volume 143, Page 26, Fayette County, Alabama.
Tract #7: 80.74 Rods; Sec. 27, T15S T13W; Mary and Alexander Williams,
Grantors; Recorded in Volume 142, Page 869, Fayette County,
Alabama.
Tract #8: 15.05 Rods; Sec. 27, T15S, R13W; Roy and Myra Renfro, Grantors;
Recorded in Volume 142, Page 877, Fayette County, Alabama.
Tract #9: 63.51 Rods; Sec. 27, T15S, R13W; James and Annette Morrison,
Grantors; Recorded in Volume 142, Page 873, Fayette County,
Alabama.
Tract #10: 38.00 Rods; Sec. 27, T15S, R13W; James and Annette Morrison,
Grantors; Recorded in Volume 143, Page 321, Fayette County,
Alabama.
Tract #11: 54.70 Rods; Sec. 27, T15S, R13W; Mrs. R. T. Newman, Grantor;
Recorded in Volume 142, Page 871, Fayette County, Alabama.
Tract #12: 109.10 Rods; Sec. 25, T15S, R12W, Sec. 30, T15S, R13W; Joe D.
and Linda Acker, Grantors; Recorded in Volume 149, Page 321,
Fayette County, Alabama; Mrs. Carrie Wright, Grantor; Recorded in
Volume 149, Page 266, Fayette County, Alabama.
Tract #13: 15' x 15' Surface Easement; Sec. 29, T15S, R12W; Jack Newman,
Grantor, Recorded in Volume 167, Page 394, Fayette County, Alabama.
Tract #14: 70.00 Rods; Sec. 10, T15S, R11W; Thomas and Debora Odenwelder,
Grantors; Recorded in Volume 164, Page 596, Fayette County,
Alabama.
Tract #15: 47.91 Rods; Sec. 10 , T15S, R11W; James Arnold Sims, Grantor;
Recorded in Volume 165, Page 145, Fayette County, Alabama.
Tract #16: 165.07 Rods; Sec. 9 and Sec. 10, T15S, R11W; Louise Dunn,
Grantor; Recorded in Volume 148, Page 146, Fayette County, Alabama.
Tract #17: 144.41 Rods; Sec. 9 and Sec. 10, T15S, R11W; James Palmer,
Grantor; Recorded in Volume 148, Page 144, Fayette County, Alabama.
Tract #18: 303.03 (Scaled) Rods; Sec. 10 and Sec. 11, T15S, R11W; Seeatus
Fowler, Grantor; Recorded in Volume 148, Page 207, Fayette County,
Alabama; Leon and Virgie Fowler, Grantors; Recorded in Volume 148,
Page 209, Fayette County, Alabama.
Tract #19: 80.00 Rods (App.); Sec. 2 and Sec. 11, T15S, R11W; Leon Fowler,
Grantor; Recorded in Volume 153, Page 161, Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
CTC LTD. 17-2
Tract #l: Walton #30-12: 84.85 Rods; Sec. 30, T15S, R11W; Henry Fowler,
Grantor; Recorded in Volume 153, Page 541, Fayette County, Alabama.
Also, Same Property; Earl and Wife, Flora Dell Walton, Grantors;
Recorded in Volume 153, Page 544, Fayette County, Alabama.
Tract #2: 110.05 Rods; Sec. 30 & Sec. 19, T15S, R11W; Earl Walton and
Wife, Dora, Grantors; Recorded in Volume 153, Page 535, Fayette
County, Alabama.
Tract #3: 95.32 Rods; Sec. 24 & Sec. 19, T15S, R11W; Robert Walter
Burroughs and Mother, Connie O., Grantors; Recorded in Volume 153,
Page 539, Fayette County, Alabama.
Tract #4: 70.07 Rods; Sec. 24, T15S, R12W; Weyerhaeuser Company, Grantor;
Recorded in Volume 167, Page 467, Fayette County, Alabama.
Tract #5: 136.62 Rods; Sec. 25, T15S, R12W; Dalton B. Eason and Wife, Ira
Faye, Grantors; Recorded in Volume 153, Page 602, Fayette County,
Alabama.
Tract #6: 126.41 Rods; Sec. 25, T15S, R12W; Dalton B. Eason and wife Ira
Faye, Grantors; Recorded in Volume 156, Page 346, Fayette County,
Alabama.
Tract #7: 134.78 Rods; Sec. 26, T15S, R12W; Dalton B. Eason and wife, Ira
Faye, Grantors; Recorded in Volume 154, Page 447, Fayette County,
Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
CTC LTD. 17-3
Tract #1: 4.93 Rods; Sec. 29, T15S, R12W; Inez Nabors, Grantor; Recorded
in Volume 153, Page 157, Fayette County, Alabama.
Tract #2: 97.99 Rods; Sec. 30, T15S, R12W; Sarah Bell Ray, Grantor;
Recorded in Volume 153, Page 159, Fayette County, Alabama.
Tract #3: 142.88 Rods; Sec. 30, T15S, R12W; James Ethel Hubbert, Grantor;
Recorded in Volume 153, Page 155, Fayette County, Alabama.
Tract #4: 20.50 Rods; Sec. 30, T15S, R12W; James Ethel Hubbert, Grantor;
Recorded in Volume 157, Page 619, Fayette County, Alabama.
Tract #5: 55.33 Rods; Sec. 30, T15S, R12W; Evelyn M. Couch, Grantor;
Recorded in Volume 153, Page 163, Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
CTC LTD. 17-6
Tract #1: 58.34 Rods; Sec. 34, T14S, R11W; Travis Lowery, Grantor;
Recorded in Volume 154, Page 445, Fayette County, Alabama.
Tract #2: 80.72 Rods; Sec. 34, T14S, R11W; L. C. Hamner, Grantor; Recorded
in Volume 154, Page 352, Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
CTC LTD. 17-7
Tract #1: 97.69 Rods; Sec. 12, T15S, R11W; C. S. Deavours and Wife, Carrie
L., Grantors; Recorded in Volume 155, Page 07, Fayette County,
Alabama.
Tract #2: 21.96 Rods; Sec. 12, T15S, R11W; W. M. Nairemore and Wife, Celia
W., Grantors; Recorded in Volume 154, Page 713, Fayette County,
Alabama.
Tract W3: 134.52 Rods; Sec. 13, T15S, R11W; Weyerhaeuser Company, Grantor;
Recorded in Volume 55, Page 147, Fayette County, Alabama.
Tract #4: 238.17 Rods; Sec. 11, T15S, R11W; Leon Fowler, Grantor; Recorded
in Volume 155, Page 05, Fayette County, Alabama.
Tract #5: 44.97 Rods; Sec. 12, T15S, R11W; Celia Nairemore and Marion
Nairemore, Grantors; Recorded in Volume 156, Page 540, Fayette
County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
CTC LTD. 17-9
Tract #1: 258.56 Rods; Sec. 5, T15S, R12W; Joe Lynn Smith, Grantor;
Recorded in Volume 148, Page 135, Fayette County, Alabama.
Tract #2: 179.12 Rods; Sec. 5, T15S, R12W; Cecil Watkins, Grantor;
Recorded in Volume 148, Page 129, Fayette County, Alabama.
Tract #3: 125.22 Rods; Sec. 5, T15S, R12W; Delmas Jenkins, Grantor;
Recorded in Volume 148, Page 132, Fayette County, Alabama.
Tract #4: 248.52 Rods; Sec. 5, T15S, R12W; William Oswalt, Grantor;
Recorded in Volume 148, Page 141, Fayette County, Alabama.
Tract #5: 83.64 Rods; Sec. 20, T15S, R12W; Fred Ham and Wife, Augie B.,
Grantors; Recorded in Volume 141, Page 116, Fayette County,
Alabama.
Tract #6: 200' x 200' Site (Approx. 92 Acres); Sec. 20, T15S, R12W; Fred
Ham and Wife, Augie B., Grantors; Recorded in Volume 182, Page 654,
Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS and LICENSES
CTC LTD. 17-11
Tract #1: 133.07 Rods; Sec. 13, T15S, R11W, and Sec. 18, T15S, R10W;
Weyerhaeuser Company, Grantor; Recorded in Volume 167, Page 461,
Fayette County, Alabama.
Tract #2: 53.34 Rods; Sec. 18, T15S, R10W; Hiwassee Land Company, Grantor;
Fayette County, Alabama.
Tract #3: 126.83 Rods; Sec. 11 and Sec. 14, T15S, R11W; Mary Jewel Fowler,
Grantor; Recorded in Volume 156, Page 537, Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
CTC LTD. 17-14
Tract #12-16: 97.18 Rods; Sec. 12, T14S, R12W; Thomas L. Stough and Wife,
Mary Grace, Grantors; Recorded in Volume 159, Page 389, Fayette
County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
EAST TO WEST INTERCONNECT CTC 17-15
Tract #1: 189.87 Rods; Sec. 20, T15S, R12W; Fred and Augie Ham, Grantors;
Recorded in Vol. 163, Page 845, Fayette County, Alabama.
Tract #2: 43.72 Rods; Sec. 20, T15S, R12W; W. E. Oswalt, Grantor; Recorded
in Vol. #163, Page 836, Fayette County, Alabama.
Tract #3: 3.18 Rods; Sec. 17, T15S, R12W; Kenneth and Jo Frances Seaborn,
Grantors; Recorded in Volume 163, Page 839, Fayette County,
Alabama.
Tract #4: 83.96 Rods; Sec. 17, T15S, R12W; Ray Lee and Maxine Dozier,
Grantors; Recorded in Volume 163, Page 854, Fayette County,
Alabama.
Tract #5: 25.03 Rods; Sec. 16, T15S, R12W; Martha and Morris Roberts, Mary
Alice and James Hill Maddox, Ira V. and Wynelle M. Matthews,
Grantors; Recorded in Vol. 164, Page 71, Fayette County, Alabama.
Tract #6: 131.54 Rods; Sec. 16, T15S, R12W; W. I. Roberts, Grantor;
Recorded in Vol. 163, Page 830, Fayette County, Alabama.
Tract #7: 42.71 Rods; Sec. 16, T15S, R12W; Sara Moss, Grantor; Recorded in
Vol. 163, Page 842, Fayette County, Alabama.
Tract #8: 39.11 Rods; Sec. 16, T15S, R12W; Robert and Dorothy Ann
Musgrove, Grantors; Recorded in Vol. 163, Page 833, Fayette County,
Alabama.
Tract #9: 81.83 Rods; Sec. 16, T15S, R12W; Sara Moss, Grantor; Recorded in
Vol. 52, Page 229, Fayette County, Alabama.
Tract #10: 60.59 Rods; Sec. 9, T15S, R12W; Ned and Joe Lynn Smith,
Grantors; Recorded in Vol. 163, Page 827, Fayette County, Alabama.
Tract #11: 115.27 Rods; Sec. 9, T15S, R12W; Lillian Musgrove, Grantor;
Recorded in Vol. 163, Page 824, Fayette County, Alabama.
Tract #12: 4.82 Rods; Sec. 9, T15S, R12W; Joe Lynn and Linda M. Smith,
Grantors; Recorded in Vol. 163, Page 851, Fayette County, Alabama.
Tract #13: 59.00 Rods; Sec. 9, T15S, R12W; Robert Yawn and Carolyn Yawn
Mann, Grantors; Recorded in Vol. 163, Page 848, Fayette County,
Alabama.
Tract #14: 7.47 Rods; Sec. 9, T15S, R12W; Robert Yawn and Carolyn Yawn
Mann, Grantors; Recorded in Vol. 168, Page 281, Fayette County,
Alabama.
Tract #15: 76.79' x 123.21' Easement; Sec. 9, T15S, R12W; Robert Yawn and
Carolyn Yawn Mann, Grantors; Recorded in Vol. 168, Page 279,
Fayette County, Alabama.
165' x 250' Easement (5 Yr. Term with Option to Renew); Sec. 11, T15S,
R12W; Jerry and Sandra Jeffrie Lawrence, Grantors; Recorded in
Volume 167, Page 392, Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
TANYARD CREEK LATERAL
CTC 17-16, 17-19, 20, 21, 22, 24, 30, 32, 35, & 36
Tract #1: 11.38 Rods; Sec. 33, T14S, R11W; Coy Aldridge, Grantor; Recorded
in Vol. 164, Page 541, Fayette County, Alabama.
Tract #2: 50.73 Rods; Sec. 34, T14S, R11W; John and Gloria Madison,
Grantors; Recorded in Vol. #164, Page 556, Fayette County, Alabama.
Tract #3: 52.70 Rods; Sec. 34, T14S, R11W; Nicholas and Marilyn Madison,
Grantors; Recorded in Volume 164, Page 553, Fayette County,
Alabama.
Tract #4: 176.64 Rods; Sec. 34, T14S, R11W; Eunice and David Q. Lowery,
Gwendolyn M. Dick, James W. Lowery, Brenda Hanselman, Mary M. and
Benjamin L. Lowery, Grantors; Recorded in Volume 164, Page 870,
Fayette County, Alabama.
Tract #5: 80.35 Rods; Sec. 34, T145S, R11W, L. C. and Wylene Hamner,
Grantors; Recorded in Vol. 164, Page 576, Fayette County, Alabama.
Tract #6: 147.40 Rods; Sec. 35, T14S, R11W; Eunice Hocutt, Grantor;
Recorded in Vol. 164, Page 608, Fayette County, Alabama.
Tract #7: 20.28 Rods; Sec. 35, T14S, R11W; Jerry and Marie McCluskey,
Grantors; Recorded in Vol. 164, Page 562, Fayette County, Alabama.
State Highway Permit #5-1-243; Executed by Councel, State of Alabama
Highway Department for a 6-inch St. Highway 13 Crossing, Located in
Section 35, T14S, R11W, Fayette County Alabama.
County Highway Permit; Executed by Fayette County Engineer on February 10,
1986 for 4 - 6" County Road Crossings located in Sec. 34, 35, & 36,
T14S, R11W, Fayette County, Alabama.
Tract #8: 119.73 Rods; Sec. 35, T14S, R11W; Glendon and Lou Nell Tucker,
Grantors; Recorded in Vol. 164, Page 544, Fayette County, Alabama.
Tract #9: 82.10 Rods; Sec. 35, T14S, R11W; Allen Grocholski, Grantor;
Recorded in Vol. 164, Page 538, Fayette County, Alabama.
Tract #10: 160.00 Rods; Sec. 36, T14S, R11W; Weyerhaeuser Company,
Grantor; Recorded in Vol. 167, Page 84, Fayette County, Alabama.
Tract #11: 83.32 Rods; Sec. 36, T14S, R11W; Cratus Dozier, Grantor;
Recorded in Vol. 164, Page 550, Fayette County, Alabama.
Tract #12: 10.19 Rods; Sec. 36, T14S, R11W; Cleveland Land Company,
Grantor; Recorded in Vol. 164, Page 568, Fayette County, Alabama.
Tract #13: 160.22 Rods; Sec. 31 and 32, T14S, R1OW; Jim and Cynthia
Willingham, Grantors; Recorded in Vol. 164, Page 559, Fayette
County, Alabama.
Tract #14: 66.52 Rods; Sec. 32, T14S, R10W; Ruby and Andrew Cook,
Grantors; Recorded in Vol. 164, Page 565, Fayette County, Alabama.
Tract #15: 40.55 Rods; Sec. 32, T14S, R10W; Fred and Myrtle Loggins,
Grantors; Recorded in Vol. 164, Page 571, Fayette County, Alabama.
Tract #16: 210.00' x 225.00' Surface Easement; Sec. 32, T14S, R1OW; Fred
and Myrtle Loggins, Grantors; Recorded in Vol. 164, Page 573,
Fayette County, Alabama.
Tract #17: 20.71 Rods; Sec. 1, T15S, R11W; Eunice Hocutt, Grantor;
Recorded in Vol. 164, Page 723, Fayette County, Alabama.
Tract #18: 34.07 Rods; Sec. 1, T15S, R11W; Calvin Fowler, Grantor;
Recorded in Vol. 164, Page 777, Fayette County, Alabama.
Tract #19: 65.17 Rods; Sec. 1, T15S, R11W; Vonie Fowler Caldwell, Grantor;
Recorded in Vol. 165, Page 48, Fayette County, Alabama.
Tract #20: 55.55 Rods; Sec. 25, T14S, R11W; Cecil and Hazell Moore,
Grantors; Recorded in Vol. 164, Page 726, Fayette County, Alabama.
Tract #21: 172.31 Rods; Sec. 36, T14S, R11W; Weyerhauser Company, Grantor;
Recorded in Vol. 167, Page 627, Fayette County, Alabama.
Tract #22: 102.01 Rods; Sec. 36, T14S, R11W; J. C. and Agnes Woodward,
Grantors; Recorded in Vol. 165, Page 45, Fayette County, Alabama.
Tract #23: 101.39 Rods; Sec. 36, T14S, R11W; Cratus Dozier, Grantor;
Recorded in Vol. 164, Page 720, Fayette County, Alabama.
Tract #24: 83.24 Rods; Sec. 36, T14S, R11W; J. C. and Agnes Woodward,
Grantors; Recorded in Vol. 164, Page 798, Fayette County, Alabama.
Tract #25: 42.42 (Scaled) Rods; Sec. 1, T15S, R11W; Calvin and Erna Mae
Fowler, Grantors; Recorded in Vol. 165, Page 794, Fayette County,
Alabama.
Tract #26: 103.03 (Scaled) Rods; Sec. 1 and 2, T15S, R11W; Eunice Fowler
Hocutt, Grantors; Recorded in Vol. 165, Page 796, Fayette County,
Alabama.
Tract #27: 18.81 Rods; Sec. 1, T15S, R11W; Evon Fowler Caldwell, Grantor;
Recorded in Vol. 168, Page 39, Fayette County, Alabama.
Tract #28: 85.62 Rods; Sec. 1, T15S, R11W; J. C. and Agnes Woodard,
Grantors; Recorded in Vol. 168, Page 43, Fayette County, Alabama.
Tract #29: 85.32 Rods; Sec. 1, T15S, R11W; Champion International Corp.,
Grantor; Recorded in Vol. 168, Page 47, Fayette County, Alabama.
Tract #30: 56.23 Rods; Sec. 6, T15S, R10W; Bowater Inc., Grantor; Recorded
in Vol. 168, Page 588, Fayette County, Alabama.
Tract #31: 48.48 Rods; Sec. 35, T14S, R11W; Sherman and Mary Lou Fowler,
Grantors; Recorded in Vol. 169, Page 403, Fayette County, Alabama.
Tract #32: 92.28 Rods; Sec. 36, T14S, R11W; Weyerhauser Company; Recorded
in Volume 170, Page 151, Fayette County, Alabama.
Tract #33: 161.99 Rods; Sec. 5, T15S, R10W; Tennessee River Pulp and Paper
Company; Recorded in Volume 168, Page 580, Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
ARTHUR/SPARKS LATERAL CTC 17-23
Tract #1: 66.50 Rods; Sec. 2, T16S, R13W; Luther and Emma
Wallace,Grantors; Recorded in Volume 166, Page 557, Fayette County,
Alabama; Pearlie May and Arlie Newman, Grantors; Recorded in Volume
166, Page 561, Fayette County, Alabama.
County Highway Permit Executed by County Engineer on June 9, 1986 for 2 -
3-1/2 Inch Road Crossings on County Road 16 Located in Sec. 10,
T15S, R13W, Fayette County, Alabama.
Tract #2: 63.30 Rods; Sec. 11, T16S, R13W; Robbie Perry, Grantor; Recorded
in Volume 166, Page 563, Fayette County, Alabama; Jeanette and
James R. Herren, Grantors; Recorded in Volume 166, Page 565,
Fayette County, Alabama.
Tract #3: 80.25 Rods; Sec. 11, T16S, R13W; James and Sara Gullett,
Grantors; Recorded in Volume 166, Page 567, Fayette County,
Alabama.
Tract #4: 60.58 Rods; Sec. 11, T16S, R13W; Richard and Leila Arthur,
Grantors; Recorded in Volume 166, Page 569, Fayette County,
Alabama.
Tract #5: 111.12 Rods; Sec. 11, T16S, R13W; Fayette Country Club, Grantor;
Recorded in Volume 165, Page 798, Fayette County, Alabama.
Assignment of Right-of-Way Agreements from Petrus Operating Company to
Coronado Transmission Company; Recorded in Volume 166, Page 719,
Fayette County, Alabama.
Tract #6: 131.54 Rods; Sec. 16, T15S, R12W; W. I. Roberts, Grantor;
Recorded in Vol. 163, Page 830, Fayette County, Alabama.
Tract #7: 42.71 Rods; Sec. 16, T15S, R12W; Sara Moss, Grantor; Recorded in
Vol. 163, Page 842, Fayette County, Alabama.
Tract #8: 39.11 Rods; Sec. 16, T15S, R12W; Robert and Dorothy Ann
Musgrove, Grantors; Recorded in Vol. 163, Page 833, Fayette County,
Alabama.
Tract #9: 81.83 Rods; Sec. 16, T15S, R12W; Sara Moss, Grantor; Recorded in
Vol. 52, Page 229, Fayette County, Alabama.
Tract #10: 60.59 Rods; Sec. 9, T15S, R12W; Ned and Joe Lynn Smith,
Grantors; Recorded in Vol. 163, Page 827, Fayette County, Alabama.
Tract #11: 115.27 Rods; Sec. 9, T15S, R12W; Lillian Musgrove, Grantor;
Recorded in Vol. 163, Page 824, Fayette County, Alabama.
Tract #12: 4.82 Rods; Sec. 9, T15S, R12W; Joe Lynn and Linda M. Smith,
Grantors; Recorded in Vol. 163, Page 851, Fayette County, Alabama.
Tract #13: 59.00 Rods; Sec. 9, T15S, R12W; Robert Yawn and Carolyn Yawn
Mann, Grantors; Recorded in Vol. 163, Page 848, Fayette County,
Alabama.
Tract #14: 7.47 Rods; Sec. 9, T15S, R12W; Robert Yawn and Carolyn Yawn
Mann, Grantors; Recorded in Vol. 168, Page 281, Fayette County,
Alabama.
Tract #15: 76.79' x 123.21' Easement; Sec. 9, T15S, R12W, Robert Yawn and
Carolyn Yawn Mann, Grantors; Recorded in Vol. 168, Page 279,
Fayette County, Alabama.
165' x 250' Easement (5 Yr. Term with Option to Renew); Sec. 11, T15S,
R12W; Jerry and Sandra Jeffrie Lawrence, Grantors; Recorded in
Volume 167, Page 392, Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
HAPPY HILLS LATERAL CTC 17-25
Tract #1: 51.60 (Scaled) Rods; Sec. 11, T14S, R12W; Gail Mayfield Gray,
Grantor; Recorded in Volume 166, Page 639, Fayette County, Alabama.
Tract #2: 35.54 (Scaled) Rods; Sec. 11, T14S, R12W; Augusta Mayfield
Kimbrell, Grantor; Recorded in Volume #166, Page 633, Fayette
County, Alabama.
Tract #3: 16.97 (Scaled) Rods; Sec. 11, T14S, R12W; Donny Mayfield,
Grantor; Recorded in Volume 166, Page 741, Fayette County, Alabama.
Tract #4: 54.55 (Scaled) Rods; Sec. 11, T14S, R12W; Jack Mayfield,
Grantor; Recorded in Volume 166, Page 643, Fayette County, Alabama.
Tract #5: 890.91 (Scaled) Rods; Sec. 2, T14S, R12W; Ida Youngblood,
Grantor; Recorded in Volume 166, Page 462, Fayette County, Alabama.
Tract #6: 84.24 (Scaled) Rods; Sec. 3, T14S, R12W; Myrtie Week, Grantor;
Recorded in Volume 166, Page 641, Fayette County, Alabama.
Tract #7: 87.27 (Scaled) Rods; Sec. 3, T14S, R12W; Charles Wheeler, Jr.,
Grantor; Recorded in Volume 166, Page 777, Fayette County, Alabama.
Tract #8: 108.57 (Scaled) Rods; Sec. 3, T14S, R12W; Gillie Porter,
Grantor; Recorded in Volume 166, Page 631, Fayette County, Alabama.
Tract #9: 61.14 (Scaled) Rods; Sec. 3, T14S, R12W; Weyerhaeuser, Grantor;
(No Agreement Found).
County Highway Permit, Executed By Counsel, Fayette County commission on
October 10, 1986 for 4 - 4-Inch County Road Crossings and 4,230 Ft.
of 4" Pipeline Along White Springs Road, Located in Sections 3 &
11, T14S, R12W and Sections 33 & 34, T13S, R12W, Fayette County,
Alabama.
Tract #10: 14.54 (Scaled) Rods; Sec. 34, T13S, R12W; Guy and Dorothy
Bolten, Grantors; Recorded in Volume 166, Page 804, Fayette County,
Alabama and Houston Bly, Grantors; Recorded in Volume 166, Page
645, Fayette County, Alabama.
Tract #11: 30.30 (Scaled) Rods; Sec. 34, T13S, R12W; 0. Vaughn, Grantor;
Recorded in Volume 166, Page 637, Fayette County, Alabama.
Tract #12: 20.48 (Scaled) Rods; Sec. 33, T13S, R12W; Larry and Pamela
Harris, Grantors; Recorded in Volume 166, Page 635, Fayette County,
Alabama.
Tract #13: 20.00 (Scaled) Rods; Sec. 33, T13S, R12W; Jerry and Collette
Harris, Grantors; Recorded in Volume 166, Page 549, Fayette County,
Alabama.
Tract #14: 188.35 (Scaled) Rods; Sec. 33, T13S, R12W; Joe Edd Earnest,
Maggie Lee Mills Doris Gene Lynn, James F. Earnest, and Marjorie
Wood, Grantors; Recorded in Volume 166, Page 743, Fayette County,
Alabama.
1 Acre Surface Site; Sec. 33, T13S, R12W; Joe Edd Earnest, Maggie Lee
Mills Doris Gene Lynn, James F. Earnest, and Marjorie Wood,
Grantors; Recorded in Volume 166, Page 853, Fayette County,
Alabama.
Tract #15: 213.94 (Scaled) Rods; Sec. 32, T13S, R12W; Clyde F. Smith,
Grantor; Recorded in Volume 166, Page 629, Fayette County, Alabama.
20' x 20' Site; Sec. 32, T13S, R12W; Clyde F. Smith, Grantor; Recorded in
Volume 166, Page 647, Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
BRASHER #13-14 CTC: 17-40
FAYETTE COUNTY, ALABAMA
Tract #1: 800 feet; SE/4 of SW/4, Section 13, T15S, R12W, Fayette County,
Alabama; Frances Brasher, Grantor; Recorded in Volume 180, Page
253, Fayette County, Alabama.
Tract #2: 1,600 feet; NW/4 of NE/4 and NE/4 of NW/4, Section 24, T15S,
R12W, Fayette County, Alabama; Bobby C. Newman, Grantor; Recorded
in Volume 180, Page 249, Fayette County, Alabama.
Tract #3: 1,000 feet; E/2 of NE/4, Section 24, T15S, R12W, Fayette County,
Alabama; Robert W. and wife, Brenda K. Burroughs, Grantors;
Recorded in Volume 180, Page 251, Fayette County, Alabama.
Tract #4: 1,000 feet; SW/4 of SW/4 of SE/4, Section 13, T15S, R12W,
Weyerhaeuser Corporation, Grantor; Recorded in Volume 180, Page
403, Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
WEST ALABAMA SAND & GRAVEL, INC. CTC: 17-41
FAYETTE COUNTY, ALABAMA
Tract #1: 2,000 feet; SW/4 of SW/4, Section 10 and N12 of NW/4, Section
15, T15S, R12W, Fayette County, Alabama; West Alabama Sand and
Gravel, Inc., Grantor; Recorded in Volume 179, Page 743, Fayette
County, Alabama.
Tract #2: 250 feet; S/W of S/W4, Section 10, T15S, R12W, Fayette County,
Alabama; West Alabama Sand and Gravel, Inc., Grantor; Recorded in
Volume 179, Page 745, Fayette County, Alabama.
Tract #3: 469.87 feet; SW/4 of NW/4 and NW/4 of SW/4, Section 10, T15S,
R12W, Fayette County, Alabama; Joe Roberts and wife, Debbie
Roberts, Grantors; Recorded in Volume 179, Page 741, Fayette
County, Alabama.
Tract #4: 1,089.47 feet; NW/4 of SW/4, Section 10, T15S, R12W, Fayette
County, Alabama; Donald Freeman and wife, Lois Freeman, Grantors;
Recorded in Volume 179, Page 739, Fayette County, Alabama.
Tract #5: 407.7 feet; NW/4 of SW/4 and SW/4 of SW/4, Section 10, T15S,
R12W, Fayette County, Alabama; James Roland Lawrence and wife,
Marilyn Lawrence, Grantors; Recorded in Volume 179, Page 737,
Fayette County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
EAST DETROIT SYSTEM CTC-123
Crump Estate Well (#20-15): CTC:123-2
Tract #1: 15.15 Rods; Sec. 20, T12S, R15W; Ittie Lee Finch, Grantor;
Recorded Under File #2123, in Fiche 87-78, Frame D5-D6, Lamar
County, Alabama.
Tract #2: 51.52 Rods; Sec. 20, T12S, R15W; Murray and Ittie Lee Finch,
Grantors; Recorded Under File #1898, in Fiche 87-75, Frame C9-Cl0,
Lamar County, Probate Court, Alabama.
Tract #3: 60.61 Rods; Sec. 20, T12S, R15W; Orbie P. and Madeline Crump,
Grantors; Recorded Under File #2064, in Fiche 87-77, Frame A9-Al0,
State of Alabama, Lamar County Probate Court.
4-Inch Pipeline (CTC: 123-1):
Tract #1: 218.84 Rods; Sec. 18, T12S, R15W; Fred Ogden Estate, Grantor;
Recorded Under File #9737, Book 230, Pages 477-479, Lamar County,
Alabama.
Tract #2: 88.50 Rods; Sec. 18, T12S, R15W; Henry Allen and Henry Benton,
Grantors; Recorded Under File #9713, Book 230, Pages 111-113, Lamar
County, Alabama.
Tract #3: 186.58 Rods; Sec. 13, T12S, R16W; James Buford Markham, et al,
Grantors; Recorded Under File #9736, Book 230, Pages 483-485, Lamar
County, Alabama.
Tract #4:97.43 Rods; Sec. 13, T12S, R16W; J. M. Real and Wife,
Geraldine, Grantors; Recorded Under File #9039, Book 226, Pages
909-911, Lamar County, Alabama.
Tract #5:33.10 Rods; Sec. 13, T12S, R16W; Lecil Thompson,
Grantor;Recorded Under File #8993, Book 226, Pages 883-885, Lamar County,
Alabama.
Fox #31-1:
Tract #1: 18.18 Rods; Sec. 16, T12S, R16W; W. W. Ogden II, Grantor;
Recorded Under File #170, Book 183, Page 955, Lamar County,
Alabama.
Tract #2: 95.35 Rods; Sec. 32, T12S, R15W; John C. Coats, Grantor; Lamar
County, Alabama.
RIGHTS-OF-WAY, PERMITS AND LICENSES
TUSCALOOSA 10-INCH PIPELINE SYSTEM
Parcels #1 & #2: #1 Being 0.41 Acres and #2 Being 2.00 Acres; Section 1,
T19S, R12W; Worth B. McGee, Grantor; Recorded in Book 840, Pages
233-234, Tuscaloosa County, Alabama.
Parcels #1 & #2: #1 Being 0.41 Acres and #2 Being 2.00 Acres; Section 1,
T19S, R12W; Curtis Watson and Wife, Joan L., Grantors; Recorded in
Book 839, Pages 130-131, Tuscaloosa County, Alabama.
Parcel #1 & #2: #1 Being 0.41 Acres and #2 Being 2.00 Acres; Section 1,
T19S, R12W; Douglas D. Watson, Grantor; Recorded in Book 840, Pages
73-74, Tuscaloosa County, Alabama.
State Highway Permit: Executed by Counsel, State of Alabama Highway
Department for Pipeline Easement on State Highway 171, Tuscaloosa
County, Alabama.
ROAD BORES LISTED FROM LAMAR CO. ROAD #21 GOING EAST:
LAMAR CO. ROAD 21 90 FT.
LAMAR CO. ROAD GRAVEL 46 FT.
LAMAR CO. ROAD 23 70 FT.
LAMAR CO. ROAD GRAVEL 65 FT.
LAMAR CO. ROAD GRAVEL 52 FT.
LAMAR CO. ROAD 25 80 FT.
ALA. STATE HWY.17 120 FT.
LAMAR CO. ROAD GRAVEL 60 FT.
LAMAR CO. ROAD 29 76 FT.
LAMAR CO. ROAD 9 54 FT.
LAMAR CO. ROAD GRAVEL 38 FT.
LAMAR CO. ROAD GRAVEL 100 FT.
ALA. STATE HWY.OLD # 18 80 FT.
ALA. STATE HWY.NEW # 18 240 FT.
LAMAR CO. ROAD GRAVEL 78 FT.
LAMAR CO. ROAD GRAVEL 50 FT.
LAMAR CO. ROAD 49 68 FT.
LAMAR CO. ROAD GRAVEL 50 FT.
LAMAR CO. ROAD 41 80 FT.
TOTAL 1,497 FT.
RIGHTS-OF-WAY, PERMITS AND LICENSES
WILKINSON COUNTY LATERAL GEI - 88
WILKINSON COUNTY, MISSISSIPPI
Tract #1: 12.08 Rods; Section 22, T1N, R2W, Wilkinson County, Mississippi;
Harold Daves, Grantor,unsigned, base lease.
Tract #lA: 40.02 Rods; Section 22, T1N, R2W, Wilkinson County,
Mississippi, Susie Martens and August Martens, Grantors. Recorded
in Book 9-K, Page 651, Wilkinson County, Mississippi.
Tract #2:218.52 Rods; Section 21, T1N, R 2W, Wilkinson County,
Mississippi; Susie Martens and August Martens, Grantors. Recorded
in Book 7-T, Page 3, Wilkinson County, Mississippi.
Tract #3: 92.90 Rods; Section 21, T1N, R2W, Wilkinson County,
Mississippi; Susie Martens and August Martens, Grantors. Recorded
in Book 7-R, Page 684, Wilkinson County, Mississippi.
Tract #4: 323.20 Rods; Sections 21 and 20 , T1N, R2W, Wilkinson
County, Mississippi; Florence Pohlmann, Grantor; Recorded in Book
7-R, Page 716, Wilkinson County, Mississippi.
Tract #5:284.68 Rods; Sections 29 and 30, T1N, R2W, Wilkinson County,
Mississippi; Eva B. Stockett, et al Grantors, Recorded in Book 7-S,
Page 9, Wilkinson County, Mississippi.
Tract #6: 428.20 Rods; Sections 19 and 30, T1N, R2W, Wilkinson County,
Mississippi; David L. McCraine et al, Grantors; Recorded in Book 7-
R, Page 633, Wilkinson County, Mississippi.
Tract #7: 553.91 Rods; Sections 19, T1N, R2W, Sections 25, 27, 28 and 48,
T1N, R1W, Wilkinson County, Mississippi, Robert M. Redhead, Jr. and
Hugh C. Redhead, Grantors; Recorded in Book 7-R, Page 723,
Wilkinson County, Mississippi.
Tract #8: 35.74 Rods; Section 21, T1N, R2W, Wilkinson County, Mississippi,
Florence Pohlmann Grantor; Recorded in Book 7-T, Page 109,
Wilkinson County, Mississippi.
Tract #9: 151.27 Rods; Section 28, T1N, R2W, Wilkinson County,
Mississippi, Leonard B. Stockett, Jr., Grantor; Recorded in Book 7-
T, Page 112, Wilkinson County, Mississippi.
Tract #10: 132.53 Rods; Sections 28 and 38, T1N, R2W, Wilkinson County,
Mississippi; Alice R. Stockett, Grantor.
Highway Crossing Permit: U.S. Highway 61, Recorded in State Highway
Commission's Minute Book 100, Pages 469 and 470, Dated May 24,
1977; Approved by John R. Tabb, Director, Mississippi State Highway
Department.
RIGHTS-OF-WAY, PERMITS AND LICENSES
WILKINSON COUNTY LATERAL GEI: 88-1
WILKINSON COUNTY, MISSISSIPPI
Tract #1: 60.80 Rods; Section 21, T1N, R2W, Wilkinson County,
Mississippi; August Martens and wife Susie M. Martens, Grantors.
Recorded in Book 9-K, Page 628, Wilkinson County, Mississippi.
Tract #2: 204.94 Rods; Section 22, TIN, R2W, Wilkinson County,
Mississippi; Harold Daves, Grantor, unsigned, base lease.
Tract #3: 221.68 Rods; Sections 22 and 23, T1N, R2W, Wilkinson
County, Mississippi; Dan DeLee, Grantor. Recorded in Book 9-K, Page
647, Wilkinson County, Mississippi.
Tract #4: 30.23 Rods; Section 23, T1N, R2W, Wilkinson County,
Mississippi; Eva B. Stockett, Margaret Stockett Falkenheiner and
Margaret Lyn Falkenheiner, Grantors.
RIGHTS-OF-WAY, PERMITS AND LICENSES
GREENWOOD SPRINGS SYSTEM (GEI-102)
County Road Permit, Crossing Adair Road, 7/12/82 Monroe County,
Mississippi, Approved by County Engineer S.L. Beyner
County Road Permit, Within and Crossing Sartors Mill Road, 7/12/82,
Monroe County, Mississippi, Approved by County Engineer, S.L.
Beyner.
County Road Permit. Crossing Wolfe Road, 7/12/82 Monroe County
Mississippi. Approved by County Engineer S.L. Beyner.
Tract 1 158.08 Rods; Right-of-Way, SE 1/4 of NW 1/4, Section 14,
T14S, R17W, Mrs. Hazel Wise, Robert B. Wise, William George Wise,
Recorded in Deed of Records Vol 272, Page 202, Monroe County,
Mississippi.
Tract 2: 87.95 Rods; Right-to-Way, Section 11, T14S, Rl7W, Grady
W. Irvin, Recorded In Deed of Records, Vol 272, Page 204, Monroe
County, Mississippi.
Tract 3: 33.82 Rods; Right-of-Way, Section 32, T14S, R16W, Ray
Reeves, Recorded in Deed of Records Vol 270, Page 502, Monroe Co.,
Mississippi.
Tract 4: 30.18 Rods; Right-of-Way, Section 31, T14S, R16W, Thomas
Payne Gilbert, Recorded in Deed of Records Vol 270, Page 505,
Monroe Co., MS.
Tract 5: 115.03 Rods; Right-of-Way, Section 30, T14S, R16W, E & G
Forest Products, Inc., Recorded in Deed of Records Vol. 270, Page
508, Monroe Co., MS.
Tract 6: 30.85 Rods; Right-of-Way, Section 30, T14S, R16W, F.R.
Murff, et ux, Recorded in Deed of Records Vol. 270, Page 511,
Monroe Co., MS.
Tract 7: 89.64 Rods; Right-of-Way, Section 30, T14S, R16W, Stephen
N. Murff, et ux. Recorded in Deed of Records Vol. 270, Page 514,
Monroe Co., MS.
Tract 8: 118.l2 Rods; Right-of-Way, Section 25, T14S, R16W, Renley
Boyette, Recorded in Deed of Records Vol. 270, Page 517, Monroe
Co., MS.
Tract 9: 118.85 Rods; Right-of-Way, Section 25, T14S, R17W, Lena
Boyette Windle, Recorded in Deed or Records Vol. 270, Page 520.
Monroe Co., MS.
Tract 10: 14.91 Rods; Right-of-Way, Section 23, T14S, R17W, W.E.
Lockhart & Bolin Hamilton, Recorded in Deed of Records Vol. 270,
Page 527, Monroe Co., MS.
Tract 11: 228.67 Rods; Right-of-Way, Section 15, T14S, Rl7W, Ollie
Lucille Easter, Recorded in Deed of Records Vol. 210, Page 523,
Monroe Co., MS.
Tract 12: 124.61 Rods, Right-of-Way, Section 16, T14S, R17W, Monroe
County School, Recorded in Deed of Records Vol. 270, Page 530,
Monroe Co., MS.
Tract 13: 59.27 Rods; Right-of-Way, Section 10 T14S, R17W, John Lee
Davis , Recorded in Deed of Records, Vol. 270, Page 638, Monroe
Co., MS.
Tract 14: 774.55 Rods; Right-of-Way, Sections 30, 31, 32, T14S-R16W
& Section 14, 15, 23, 24, T14S-R17W, Weyerhauser Company, Approved
by Forest Land Use Manager. D. W. Wilbur. Recorded in Deed of
Records, Volume 277, Page 186, Monroe County, Mississippi.
RIGHT OF WAY, PERMITS AND LICENSES
HEIDELBURG SYSTEM (GEI-184)
100 Feet; Right-of-Way for Highway 11, Mississippi Highway
Department.
60 Feet; Right-of-Way for Highway 528, Mississippi Highway
Department.
60 Feet; Right-of-Way for Highway 528, Mississippi Highway
Department.
35.6 Rods; 587 Feet Right of Way, City of Heidelburg.
Alabama Great Southern Railroad, Right-of-Way for a 4 1/2-Inch Gas
Pipeline Within and Crossing M.P. 40, Heidelburg, Mississippi,
Dated November 13, 1989.
Tract 1: 89.4 Rods; SW/4 of Section 34, Township 1 North, Range 13
East, William Paul Rowell and Stephen E. Rowell, Dated October 23,
1989. Recorded in Book 70, Pages 247-250.
Tract 2: SW/4 to Section 34, Township 1 North, Range 13 East, Paul
Rowell, Jasper Co., MS, Dated November 7, 1989 (not recorded).
Tract 3: 80.8 Rods; SE/4 to Section 33, Township 1 North, Range 13
East, Margaret Young, Jasper Co., MS, Dated November 7, 1989.
Recorded in Book 70, Pages 256-258.
Tract 4: 30.3 Rods; Section 32, T1N, R13E, John David Lyon, Jr.
Jasper Co., MS, Dated January l6, 1990. Recorded in Book 71, Pages
648-650.
Tract 5: 43.8 Rods; Section 32, T1N, R13E, Elizabeth Morrison Carr,
Jasper Co., MS, Dated April 3, 1990, Recorded in Book 71, Pages
651-653.
Tract 6: 20.4 Rods; Section 32, T1N, R13E, J.E. King, Doris King
Carlisle and Julius W. King, Jasper Co., MS, Dated January 26,
1990, Recorded in Book 71, Pages 628-630.
Tract 7: 47.1 Rods; Section 32 NE/4 NW/4, TIN, R13E, John Jones
Estate by S. Graham, Jasper Co., MS, Dated April 9, 1990, Recorded
in Book 71, Pages 643-645.
Tract 8: 64.2 Rods; Section 29 SE/4 SW/4; Section 32 NE/4 NW/4,
T1N, R13E, Jerry Roberts, Jasper Co., MS, Dated February 16, 1990.
Recorded in Book 71, Pages 637-639.
Tract 9: 71.4 Rods; Section 29, T1N, R13E, Frances Morrison, Jasper
Co., MS. Dated February 1, 1990. Recorded in Book 71, Page 640-
642.
Tract 10: 30.4 Rods; Section 29 SW/A SE/4, T1N, R13E, Frances
Morrison, Jasper Co., MS, Dated 10/25/91, Recorded in Book 139,
Pages 787-789
Tract 11: 15.1Rods, Section 32 NE/4 NW/4; section 29, SE/4 SW/4,
T1N, R13E, Dorothy Lindsey, Jasper Co., MS, Dated 3/15/90, Recorded
in Book 71, Pages 634-636.
Tract 12: 44.4 Rods; Section J2, T1N, R13E, Archie Jones, Jasper
Co., MS, Dated 1/1//90, Recorded in Book 71, Page 631-633
Tract 13: 44.9 Rods; Section 32 SE/4 NW/4, T1 N, R13E, E. Francis
Jones, Jasper Co., MS, Dated 1/12/90. Recorded in Book 71, Pages
625-627.
Tract 14: 26.6 Rods; Section 32, SE/4 NW/4, T1N, R13E, Campbell
Read, Jasper Co., MS, Dated 2/13/90, Recorded in Book 71, Pages
622-624
Tract 15: 13.8 Rods; Section 32 SE/4 NW/4, T1N, R13E, Harold
Andrews, Jasper Co., MS, Dated 2/14/90, Recorded in Book 71, Pages
619-621
Tract 16: 5.34 Rods; Section 29 SW/4 NE/4, T1N, R13E, Dempsey Jones
and Wife, Ora J. Jones, Jasper Co., MS, Dated 10/24/90, Recorded in
Book 139, Pages 775-777.
Tract 17: 14.73 Rods; Section 29 SW/4 NE/4 and NW/4 SE/4, T1N,
R13E, Cynthia B. Lacey, Jasper Co., MS, Dated 11/5/90, Recorded in
Book 139, Pages 781-783.
Tract 18: 14.73 Rods; Section 29 SW/4 NE/4 and NW/4 SE/4, T1N,
R13E, Cathryn B. Sheppard, Jasper Co., MS, Dated 11/6/90, Recorded
in Book 139, Pages 778-780.
Tract 19: 14.73 Rods; Section 29 SW/4 NE/4 and NW/4 SE/4,T1N,
R13E, Betty Ann Harris, Jasper Co., MS, Dated 11/5/90, Recorded in
Book 139, Pages 784-786.
(GEI-185)
Tract 1: 150' x 150' Surface Site; Maso Newell.
Tract 2. 97.4 Rods; 1607 Feet; Maso Newell.
Tract 3: 93.8 Rods; 1547 Feet; T. D. Lewis Estate.
Tract 4: 55.2 Rods; 910.59 Feet; Heidelburg Est.
Tract 5: 27.8 Rods; 458.07 Feet; Jasper Co., MS.
RIGHTS-OF-WAY, PERMITS AND LICENSES
(GEI 186)
Tract 1: 9.2 Rods: T1N, R16, Sections 10 & 15, Cavenham Forest
Industries, Recorded in Book 9-T, Page 361, Lamar Co., MS.
Tract 2: 101.2 Rods; T1N, R16, Section 10, Cavenham Forest
Industries, Recorded in Book 9-T, Page 355, Lamar Co., MS.
(GEI 187)
Tract 1: 54.54 Rods; Assigned Right-of-Way, T1N, R17W. W. E.
Walker, Recorded in Book 931, Page 16, Marion Co., MS.
Tract 2: 10.9 Rods; T1N, R17W, Section 12, Carol Robbins, (pending
recording), Marion Co., MS.
Tract 3: l67.9 Rods, T1N, R17W, Section 12, M. Mille, Recorded in
Book 1082, Page 357, Marion Co., MS.
Tract 4: C. L. Caruthers laid P/L on Base Lease, No Right-of-Way
obtained. Paid Damages only (934.46 Feet), Marion Co., MS.
END OF EXHIBIT "C"
EXHIBIT "D"
CONTRACTS AND PERMITS
1. AL07-2035-F
a. Gas Sales Contract dated 11/3/86 between Coronado Transmission
Company, "Seller" and The Gas Board of the City of Fayette,
Alabama, "Buyer" in Fayette County, Alabama.
b. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
2. AL07-1031-F
a. Gas Purchase Contract dated 7/8/86 between Coronado
Transmission Company, "Buyer" and Browning & Welch, Inc. on various
wells located in Fayette County, Alabama.
b. Change of Company Name to Encina Transmission Company
effective 4/l/92.
c. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
3. AL07-1001-F
a. Gas Purchase Contract dated 8/8/80 between Coronado
Transmission Company, "Buyer" and Charles L. Cherry & Associates,
Inc., "Seller" in Fayette County, Alabama.
b. Amendment dated 10/8/85 whereby Cherry ratifies the Gas Sales
Agreement of Terra (AL07-1005-L) on the Sanders 33-9.
c. Change of Company Name to Encina Transmission Company
effective 4/l/92.
d. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
4. AL29-1039-F
a. Gas Purchase Contract dated 9/4/87 between CTC Gas Marketing,
"Buyer" and Carless Resources Inc., "Seller" on the Nolen 6-5 in
Fayette County, Alabama.
b. Ratification Agreement dated 11/l/87 adding 50% of the
released volumes from the Johnson 36-6. (Ref. AL07-1029-F)
c. Correspondence received 2/5/90 stating that the contract was
acquired by Espero Energy Corporation effective 4/l/89.
d. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
5. AL07-1024-F
a. Gas Purchase Contract dated 12/14/85 between Coronado
Transmission Company, "Buyer" and Fairland Energy Corporation,
"Seller" on the gas from the Woodward 25-5, 26-9, and Fullerton 25-
13 wells in Fayette County, Alabama.
b. Division of Interest listing receive 9/25/86 on the Browning
& Welch Hocutt 2-1 well.
c. Ratification Agreements dated 9/18/87, effective 8/l/87
whereby Mix Energy Ltd, II and Hugh C. Mix interest in the Walton
30-12, Woodward 25-5 and Johnson 30-11 wells is transferred to be
covered under this contract.
d. Assignment dated 12/20/89, effective 1/l/90 whereby Mix
Energy's interest is taken over by Bay City Consolidated Partners,
Ltd.
e. Change of Company Name to Encina Transmission Company
effective 4/l/92.
f. Correspondence stating that Middle Bay Oil Company, Inc. took
over Bay City's interest in the contract effective 1/l/93.
g. Assignment dated 11/1/94 whereby Middle Bay Oil Company's
interest is taken over by Green River Resources.
h. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
i. Letters dated 1/17/96 ratifying Texas Southeastern Gas
Gathering Company that Browing & Welch, as Operator of well, has
placed a lien on Fairland's oil & gas rights, and instructing TSEGG
to pay Browning & Welch directly for all gas effective December 1,
1995 until further notice.
6. AL07-1002-F
a. Operating Agreement dated 4/3/73 between Warrior Drilling and
Engineering Co., "Operator" and Lone Star Producing Company, "Non-
Operator" in Fayette County, Alabama.
b. Gas Purchase Contract dated 6/18/76 between Coronado
Transmission Company, "Buyer" and Enserch Exploration, Inc.,
"Seller" (EEI-GS-11001) in Fayette County, Alabama.
c. Letter Agreement dated 6/18/76 stating additional provisions
to the contract.
d. Letter Agreement dated 6/18/76 on Option to Purchase Gas.
e. Letter Agreement dated 11/16/76 reaffirming CTC's intentions
to maintain the intrastate status of any gas purchased under the
Contract stated in #2.
f. Right of Way Agreement dated 3/30/77 between the Smiths and
CTC.
g. Letter dated 7/16/85 stating that effective 4/30/85
(assignment attached) Enserch operating Company took over the
original contract dated 6/18/76.
h. Partial Release of GPC dated 6/2/86 on the Gravelee 13-14 #1
and AMC 14-15 #1 wells operated by Terra and the Grace Anders 13-15
#1 well operated by Browning & Welch, Inc.
i. Partial Release of Gravalee 13-12 #1 operated by Terra
Resources dated 8/l/86.
j. Change of Company Name to Encina Transmission Company
effective 4/l/92.
k. Letter dated 5/3/94 stating part of this contract was acquired
by Roundtree & Associates, Inc. effective 1/l/94. (Roundtree
#AL07-1069-F).
1. Assignments dated 2/10/94, effective 1/l/94 where Roundtree &
Associates acquires several leases from Enserch.
m. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
n. Assignment from Texas Southeastern Gas Gathering Company to
Roundtree of Compressor Lease with Warrior; Rental Agreement
between Roundtree and TSEGG for Roundtree's lease of certain
equipment in Fayette County, AL.
7. AL29-1065-F
a. Gas Purchase Agreement dated 11/18/92 between Encina Gas
Marketing, Inc., "Buyer" and Natural Gas & Oil, Inc., "Seller" for
gas from the Sanders 18-7 well in Fayette County, Alabama.
b. Letter dated 5/19/93 from Sanford regarding Sanders 18-6 & 18-
7 working interest.
c. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
8. AL07-2010-F
a. Gas Sales Agreement dated 7/12/83 (executed on 7/18/83)
between Coronado Transmission Company, "Seller" and Northwest
Alabama Gas District, "Buyer" in Fayette County, Alabama.
b. Notification of Company Name Change to ETC on 3/2/92.
c. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
9. AL07-1029-F
a. Gas Purchase Contract dated 1/29/86 between Coronado
Transmission Company, "Buyer" and Carless Resources, Inc., "Seller"
on the Weyerhaeuser 36-13, Moore 2513 and Hocutt 1-3 wells in
Fayette County, Alabama.
Ratification and Construction Agreements dated 1/29/86 between the
above parties and various Working Interest Owners.
c. Letter Agreement dated 11/9/87, effective 11/l/87 releasing
50% of volumes from the Johnson 36-6 to CTCGMI contract AL29-1039-F
d. Letter dated 12/18/89 assigning interest to Espero Energy
Corporation effective 4/l/89.
e.Change of Company Name to Encina Transmission Company effective
4/l/92.
f. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
10. AL07-1055-F
a. Letter Agreement dated 2/4/92 regarding purchasing gas 2/l/92
from the Watkins 6-16 well. The agreement will be between Coronado
Transmission Company, "Buyer" and Lomak Production Company,
"Seller".
b. Gas Purchase Agreement dated 2/l/92 between Encina
Transmission Company, "Buyer" and Lomak Production Company
"Seller". This contract will replace AL071001-F & AL07-1018-F
contracts with Charles Cherry.
c. Letter dated 7/9/92 whereby Merrimac Energy Corp. takes over
the interest of Lomak. Nomination #1 for 7/92.
d. Gas Purchase Contract dated 7/l/92 between Merrimac Energy
Corp., "Seller" and Encina Gas Marketing, Inc., "Buyer" on the 75%
interest on the Airhart Watkins 6-16 ---- Contract No. AL29-1061-F
e. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
11. AL29-1061-F
a. Gas Purchase Agreement dated 7/l/92 between Encina Gas
Marketing, Inc., "Buyer" and Merrimac Energy Corp., "Seller" for
the 75% interest on the Airhart Watkins 6-16 in Fayette County,
Alabama.
b. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
12. AL07-1048-F
a. Gas Purchase Agreement dated 11/l/90 between Coronado
Transmission Company, "Buyer" and Bill W. Newton, "Seller" for gas
from the Brasher 13-14 well in Fayette County, Alabama.
b. Change of Company Name to Encina Transmission Company
effective 4/l/92.
c. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
13. AL07-1034-F
a. Gas Purchase Contract dated 1/22/86 between Coronado
Transmission Company, "Buyer" and Howell Petroleum Corporation,
"Seller" on the gas from the Fowler 212 and 11-4 wells in Fayette
County, Alabama.
b. Letter dated 4/10/92 stating our name change to ETC.
c. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
14. AL29-1044-F
a. Gas Purchase Agreement dated 5/3/88 between CTC Gas Marketing,
Inc., "Buyer" and Morrow Oil & Gas Company, "Agent" on the gas from
the Fowler 2-12, Moore 25-13, and Weyerhaeuser 36-13 in Fayette
County, Alabama.
b. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
15. AL07-3053-F
a. Gas Gathering Agreement dated 3/l/91 between Coronado
Transmission Company, "Transporter" and Triangle Operating Co.,
Inc., "Shipper" in Fayette County, Alabama.
b. Notification of Company Name Change to ETC on 3/2/92.
c. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
16. AL29-1040-F
a. Letter Agreement dated 9/28/87 between CTC Gas Marketing,
Inc., "Buyer" and MWJ Producing Company, "Seller" on the excess gas
from the Walton 30-12 and Woodward 25-5 in Fayette County, Alabama.
b. Change of Company Name to Encina Gas Marketing, Inc. effective
4/l/92.
c. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
17. AL07-3062-F
a. Gas Transportation and Compression Agreement dated 10/l/92
between Encina Transmission Company, "Transporter" and Morrow Oil
& Gas Company, "Gatherer" on the gas from the Cannon 18-13 and
Johnson 30-11 wells in Fayette, Alabama.
b. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
18. AL07-3068-F
a. Gas Transportation Agreement dated 11/4/91 between Encina
Transmission Company, "Transporter" and Hughes Eastern Corporation,
"Shipper" in Fayette County, Alabama.
b. Name Change to Encina Gas Marketing, Inc., 4/l/92.
c. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
19. AL07-3013-F
a. Gas Transportation Agreement dated 8/31/76 between Northwest
Alabama Gas District and The Gas Board of the City of Fayette, as
Transporter and Coronado Transmission Company.
b. Gas Transportation Agreement dated 11/25/80.
c. Letter Agreement dated 7/12/83 regarding fee to be charged for
volumes which CTC tenders to NWAG for redelivery to CTC in
Tuscaloosa County, which in turn are delivered to Southern for
Cajun's account.
d. Letter dated 6/25/85 stating effective 8/31/85 NWAGD will not
accept gas for transportation under c, above.
e. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
20. AL07-1069-F
a. Operating Agreement dated 4/3/73 between warrior Drilling and
Engineering Co., "Operator" and Lone Star Producing Company, "Non-
Operator" in Fayette County, Alabama. (Reference only; see AL07-
1002-F for original).
b. Gas Purchase Contract dated 6/18/76 between Coronado
Transmission Company, "Buyer" and Enserch Exploration, Inc.,
"Seller" (EEI-GS-11001) in Fayette County, Alabama. (Reference
only; see AL07-1002-F for original).
c. Documentation where Enserch assigned part of this contract to
Germany Oil Company.
21. AL07-1066-F
a. Gas Purchase Contract dated 3/l/94 between Encina Transmission
Company, "Buyer" and Morrow Oil and Gas Company, "Seller" on the
Bobo well in Fayette County, Alabama.
b. Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
22. AL29-1067-F
a.Documentation where Viola Production, Inc. acquires Howell
Petroleum's interest in the Fowler 2-12 effective 1/l/94.
b.Gas Purchase Contract dated 1/l/94 between Viola Production, Inc.,
"Seller" and Encina Gas Marketing, Inc., "Buyer" for gas in
Fayette, Alabama.
c.Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
23.AL07-1019-L
a.Gas Purchase Contract dated 11/17/86, effective 9/l/86 between
Coronado Transmission Company, "Buyer" and Morrow Oil and Gas
Company, "Seller" on the Allman 14-4 in Lamar County, Alabama.
b.Change of Company Name to Encina Transmission Company effective
4/l/92.
c.Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
24.AL07-3082-L
a.Gas Transportation Agreement dated 1/31/92, effective 11/1/90
between Coronado Transmission Company, "Transporter" and Grace
Petroleum Corp., "Gatherer" in Lamar County, Alabama.
b.Letter stating the contract was acquired by Encina Transmission
Company effective 3/2/92.
c.Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
25. AL07-2001
a.Gas Sales Contract dated 8/13/76 between Alabama Gas Corporation,
"Buyer" and Coronado Transmission Company, "Seller" covering the
gas in various counties of Alabama.
b.Temporary Emergency Gas Purchase Agreement dated 2/16/77.
c.Gas Sales Contract dated 9/l/78 reaffirming the parties' respective
rights in and to the contract dated 8/13/76 in light of the accords
reached respecting settlement of Civil Action No. CV-77-069 in the
Circuit Court of Fayette County, Alabama.
d.Amendment dated 9/l/78 more accurately setting forth the rights and
obligations of the parties respecting that gas purchased by CTC
from Grace because certain anomolies exist between the gas
purchased by CTC from Grace and the restated GSC dated 9/l/78 (#5).
e.Assignment, Sale and Property Transfer Agreement dated 9/15/79
assigning all intrastate contracts to Alasgasco Pipeline.
f.Assignment dated 11/l/79 where CTC assigns unto Alasgasco an
undivided 50 percent of its interest in certain facilities at its
McConnel Compressor Station.
g.Assignment dated 11/l/79 where Alasgasco assigns unto CTC an
undivided 50 percent of Alagasco's interest in certain facilities
at its McConnel Compressor Station.
h.Assignment dated 11/l/79 where CTC assigns unto GEI all of its
interest in and to those facilities at the site of the
interconnection with Southern's facilities at its McConnell
Compressor Station located at Tuscaloosa County, Alabama.
i.Assignment dated 11/179 where CTC assigns unto GEI all of interests
in the compressor facilities and pipeline which comprise the
interconnection near MP259 on Southern's 22" North mainline in
Tuscaloosa County, Alabama.
j.Assignment dated 11/l/79 where GEI assigns unto Southern all of its
interest in the pipeline which connects the compressor facilities
of GEI to Southern's 22" North mainline near MP259 in Tuscaloosa
County, Alabama.
k.Assignment and Bill of Sale dated 7/15/80 where GEI is Grantor and
Alagasco Pipeline Company is Grantee. This Assignment replaces
#12.
l.Letter Agreement dated 4/28/81 where Alagasco requests that CTC
deliver to Southern, for Alagasco's account, 100% of CTC's delivery
capability.
m.Letter Agreement dated 7/9/81 between Alagasco and CTC which is
supplementary to the Settlement Agreement between Grace, CTC and
Alagasco.
n.Settlement Agreement dated 7/14/81 between Grace, CTC and Alagasco.
o.Title Opinion and Right of Way Agreement dated 9/20/82 on GEI's
pipeline, Southern Natural interconnect in Tuscaloosa County,
Alabama.
p.Correction Assignment and Bill of Sale from GEI to Alagasco dated
7/3/84.
q.Letter dated 3/29/85 stating that effective 3/31/85 Alagasco can no
longer purchase gas from CTC.
r.Contract release letter dated 8/23/85.
s.Notice dated 10/7/85, effective 10/l/85 changing the name to
TAURUS.
t.Amendment dated 12/l/87 regarding the release (12/l/87 to 12/l/88)
and price on the gas from the Fowler 5-16.
u.Consent for Seller to assign contract to Texas Southeastern Gas
Gathering Company dated 12/29/94.
v.Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
26. AL07-3058
a.Gas Gathering and Transportation Agreement dated 9/l/90 between
Coronado Transmission Company and CTC LTD., "Transporters" and
Grace Petroleum Corporation, "Shipper".
b.Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
27. AL07-3056
a.Gas Gathering and Transportation Agreement dated 8/24/90, effective
3/l/90 between Coronado Transmission Company, "Transporter" and
Associated Natural Gas, Inc., "Shipper".
b.Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
28. AL07-3059
a.Gas Gathering Letter Agreement dated 6/18/90 between Coronado
Transmission Company and Associated Natural Gas, Inc. on the Fowler
18-14 well.
b.Letter dated 2/15/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
29. AL29-1034
a.Gas Purchase Agreement dated 4/l/87 between CTC Gas Marketing,
Inc., "Buyer" and Terra Resources, Inc., "Seller" on the wells
listed on Exhibit "A" in Fayette and Lamar Counties, Alabama.
b.Documentation changing the contract to Pacific Enterprises Oil
Company (USA) effective 5/l/89.
c.Documentation received 1/14/93, effective 4/l/92 changing the
contract to Hunt Oil Company.
d.Letter dated 2/15/95 giving notice of assignment by Buyer to TSEGG,
and letter from Hunt Oil Company dated 2/23/95 giving notice of
assignment by Seller to Germany Oil Company
30.AL29-1060-F
a.Gas Purchase Agreement dated 2/22/92 between CTC Gas marketing,
Inc, "Buyer" and Sanford Resources Corporation, "Seller" on the
Sanders 18-6 well in Fayette County, Alabama.
31. US29-1062
a.Gas Purchase Contract between Encina Gas Marketing, Inc., "Buyer"
and Premier Gas Company, "Seller" dated 9/1/93.
b.Letter dated 1/25/96 changing Seller's name to Samson Production
Services Company.
32. US29-1005
a.Gas Purchase Contract between Encina Gas Marketing, Inc., "Buyer"
and Morrow Oil & Gas Company, "Seller" dated 4/l/92.
33. US29-1013
a.Gas Purchase Contract between Encina Gas Marketing, Inc., "Buyer"
and Roundtree & Associates, Inc. dated 9/l/92.
34.AL29-3065
a.Gas Gathering Agreement dated August, 1990 between Encina Gas
Marketing, Inc., "Shipper" and Associated Natural Gas, Inc.,
Gatherer".
b.Assignment from Encina Transmission Company to Texas Southeastern
Gas Gathering Company dated April 19, 1995, effective September 1,
1994.
c.Letter dated February 15, 1995 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
35.AL29-1059-F
a.Gas Purchase Agreement dated 3/1/92 between CTC Gas Marketing,
Inc., "Buyer" and Flare, Inc., "Seller" in Fayette County, Alabama.
b.Change of Company Name to Encina Gas Marketing, Inc. effective
4/1/92.
c.Letter dated 8/12/93 stating the Kirkland 36-3 and Barnes 35-3
wells have been acquired from Browning & Welch, MS29-1002-J.
d.Assignment from Encina Transmission Company to Texas Southeastern
Gas Gathering Company dated April 19, 1995, effective September 1,
1994.
e.Assignment and Bill of Sale from Flare, Inc. to Bowen and
Roundtree, Inc. dated February 1, 1995 for the U.S. Steele 31-13
well in Fayette County, Alabama.
36.AL10-3085-L
a.Gas Transportation Agreement dated 7/1/95 between Premier Gas
Marketing Company, "Shipper" and Texas Southeastern Gas Gathering
Company, "Transporter" in Lamar County, Alabama.
b.Letter dated November 30, 1995 requesting consent to assign this
contract from Premier Gas Marketing Company to Samson Hydrocarbons
Company.
37.Koch Operating Agreement
a.Tie-In Agreement dated 8/16/90 between Galaxy Energies, Inc.
(GEI),"Gatherer" and United Gas Pipe Line (UGPL), "Pipeline" on the
Dixie Minerals Corp. Gas Unit #1 in Lamar County, Mississippi.
b.Operation and Maintenance Agreement dated 9/5/90 between GEI and
UGPL on the Carroway 19-7 and Lloyd 20-14 wells in Jasper County,
Mississippi.
c.Tie-In Agreement dated 10-9-90 between GEI and UGPL on the Carroway
11-1 well in Marion County, Mississippi.
d.Letter dated 8/17/95 notifying Koch of assignment to Texas
Southeastern Gas Gathering Company effective 1/19/95.
38.Compressor Maintenance Agreement
a.Compressor Maintenance Letter Agreement dated March 23, 1995
between Texas Southeastern Gas Gathering Company and Encina
Transmission Company regarding compressor known as Unit #50 in
Fayette County, Alabama.
39.Compressor Maintenance Agreement
a.Compressor Maintenance Letter Agreement dated August 4, 1995
between Texas Southeastern Gas Gathering Company and Safco
regarding two compressors located at the Barton, Alabama compressor
station.
40.AL07-0000-L
a.Agreement to purchase gas between Texas Southeastern Gas Gathering
Company, "Buyer" and Triangle Operating Co., Inc., "Seller" on the
Crump Estate #1 20-15 well in Lamar County, Alabama.
41.AL29-0000
a.Agreement to purchase gas between Texas Southeastern Gas Gathering
Company, "Buyer" and Browning & Welch, Inc., "Seller" on various
wells in Fayette County, Alabama.
MISSISSIPPI
1.MS06-3001-J
a.Gas Gathering Agreement dated 9/20/89 between Galaxy Energies,
Inc., "Transporter" and Browning & Welch, Inc., "Shipper" for gas
from B. B. Lyon et al gas Unit #1 in Jasper County, Mississippi.
b.Pipeline Construction Agreement dated 9/20/89 between the parties
mentioned in #1.
c.Agreement dated 11/13/89 between The Alabama Great Southern
Railroad Company and Galaxy Energies, Inc. regarding the 4 1/2"
pipeline crossing at a point 671' North of Milepost 40.
d.Request to install, maintain and operate compression letter
agreement dated 1/11/90.
e.Letter dated 2/16/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
2.MS06-3002-MO
a.Gas Gathering Agreement dated 11/08/90 between Galaxy Energies,
Inc., "Transporter" and Pruet Production Co., "Shipper" in Monroe
County, Mississippi.
b.Letter dated 2/16/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
c.Notices of Change of Operator on Davis 10-13 and Board of
Supervisors 16-8 wells to Hughes Eastern Corporation.
3.MS06-3002-WL
a.Gas Transportation Agreement dated 12/11/84 between Galaxy
Energies, Inc., "Transporter" and Justiss Oil Company, "Customer"
on the P. M. Stockett, et al Unit #1 in Wilkinson County,
Mississippi.
b.Pipeline Lease Agreement with Millbrook Gas Gathering L.P. dated
1/24/92; amendment to same lease agreement dated 5/14/92.
c.Letter dated 2/16/95 giving notice of assignment to Texas
Southeastern Gas Gathering Company.
4.MS10-3010-J
a.Gas Transportation Agreement dated 8/15/95 between Texas
Southeastern Gas Gathering Company "Transporter" and Tellus Energy
Group, L.L.C., "Shipper" in Jasper County, Mississippi.
END OF EXHIBIT "D"
<PAGE>
EXHIBIT "E"
SHOP STOCK
1 WATER MANO
2 DEAD WEIGHT TESTER COMPLETE W/WEIGHTS (3 SETS l000# EACH)
2 H2S DETECTOR W/DRAGER TUBES
1 ORBIT VALVE LUBE GUN
3 GRAVITOMETER
2 MECO DEW POINT MACHINE
1 MECO DEW POINT MACHINE - NOT COMPLETE
2 PIPELINE DETECTORS
1 STIHL FS 80 WEEDEATER
1 HOTTOT GAS HEATER
1 BRIGGS 5HP PUSH LAWN MOWER
1 PORTABLE AIR TANK
1 FIRE EXTINGUISHERS
1 3000# PRESSURE RECORDER
1 PK METER TESTER W/AIR COMPRESSOR
1 AIR COMPRESSOR
1 RIDGID PIPE VISE W/STAND
1 RIDGID 1-3" PIPE CUTTERS
1 SET RIDGID PIPE THREADERS (1/2, 1, 1-1/4, 2")
STOCK IN SHED**
**CONSTANTLY CHANGING
3 6" FLANGES
3 2" CHECK VALVE
2 3" CHECK VALVE
1 4" CHECK VALVE
1 I" DUMP VALVE (NEW)
1 2" BIG JOE (NEW)
1 2" F/F SINGER FILTER HOUSING
1 1" RELIEF (NEW) SERIES 80 SRV
2 3" BLINDS
1 4" F/F VALVE
1 1" MASONEILAN CONTROL VALVE W/CONTROLLER
1 2" FISHER V-BALL VALVE
2 2 " LEVEL CONTROLS
2 2" F/F PISTON CHECK VALVE
2 1" CONTROL VALVE
1 BELLOWS (BARTON)
1 2-PEN BARTON METERS AND BELLOWS
1 GLYCOL PUMP (USED)
2 3-PEN BARTON METER AND BELLOWS
2 BARTON BELLOWS - USED
1 BARTON DIFFERENTIAL CONTROL - USED
1 BARTON PRESSURE CONTROL - NOT COMPLETE
1 BARTON 3-PEN W/AUTO DROP
1 BARTON 2-PEN W/AUTO DROP
1 2" SENIOR METER RUN - DANIELS
3 F/F 600# ORBIT VALVE
20 SIGN POSTS, 5'
ASSORTED FITTINGS (2",3",4",6")
ASSORTED ORIFICE PLATES AND SEALS (2",3",4",6")
ASSORTED METER PARTS (STATIC SPRINGS, RANGE SPRINGS, ETC.)
MISC.1" SRW 90, T, VALVES, NIPPLES
MISC METER SADDLES
ASSORTED WELD FITTINGS (6"-2")
OFFICE FURNITURE AND EQUIPMENT
BUILDING: 45'X 64' (INCLUDING SHOP) 2880 SQ,FT. **RENTAL**
1 CANNON NP-155Z COPIER
1 XEROX 485 TELECOPIER W/PHONE
1 HEWLETT-PACKARD LASER JET PRINTER HP2686A
1 KAYPRO KPC COMPUTER - KAYPRO MONITOR KP-1252G W/MANUALS
2 TEXAS INSTRUMENT TI-5030II CALCULATOR
1 FORD 333 CODE-A-PHONE ANSWERING MACHINE
1 SHARP COMPET QS-2184 CALCULATOR
1 SHARP COMPET QS-1604 CALCULATOR
1 IBM CORRECTING SELECTRIC III TYPEWRITER
9 DESKS
17 CHAIRS (5 EXECUTIVE, 3 SECRETARY)
4 END TABLES
1 COFFEE TABLE
4 LAMPS
1 CONFERENCE TABLE W/6 CHAIRS
1 CONFERENCE TABLE W/4 CHAIRS
1 KITCHEN TABLE
2 COUCHES
7 4-DRAWER FILING CABINETS
2 2-DRAWER FILING CABINETS
3 FREE STANDING BOOK SHELVES
2 BUILT-IN BOOK SHELVES
3 CREDENZAS
1 DRAFTING TABLE W/STOOL
1 KELVINATOR REFRIGERATOR
1 VACUUM CLEANER
1 CENTREX PHONE SYSTEM W/7 STATIONS (LEASED)
1 2-WAY SYSTEM WITH
2 REPEATERS (LAMAR AND FAYETTE COUNTY) LEASED TOWERS
1 ITT PHONE SYSTEM W/4 PHONES
3 EXECUTIVE SERIES 8-1 PHONES
1 MINOLTA 310 COPIER
1 MTI 700 AUTOMATIC TELEPHONE INTERCONNECT
1 PANASONIC KX-Pl595 MULTI-MODE PRINTER
1 PRINTER STAND
2 QUIP 1000 SERIES TELECOPIER SYSTEM
1 TEXAS INSTRUMENT TI-5155 CALCULATOR
1 SHARP CS-1152F CALCULATOR
1 CANON FAX 225
1 IBM SELECTRIC TYPEWRITER
1 BUNN COFFEE MAKER
END OF EXHIBIT "E"
<PAGE>
EXHIBIT "F"
TRUCK INVENTORY
1FTJF35MXMNA35928 1FTEF14N1JKA05696
TAG NO. 32AHZ72 TAG NO. 32AHZ73
1 3/4" C/R TORQUE WRENCH
1 1/2" C/R TORQUE WRENCH
1 HONE
1 GRACO BARREL PUMP
1 AC/DC INVERTER
1 TIMING LIGHT
1 TUBING BENDER
1 GREASE GUN
1 BOOST BOX
2 DIAL INDICATORS
1 MAGNETIC BASE
1 0-1" MICROMETER
1 4-1/211 MICROMETER
COOLING SYSTEM LEAK TESTER
1FTDF15N5KPB19845 1FTEF26YXKNB30810
TAG NO. 32AHZ74 TAG NO. 32AHZ75
1 POWER INVERTER
1 CRESCENT WRENCH
1 GREASE GUN
1 TEST GAUGE 0-1000#
1 MERIAM TEST MANOMETER
W/CARRY TOTE BOX
END OF EXHIBIT "F"
EXHIBIT "G"
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated effective as of January 1, 1996,
(this "Assumption Agreement"), between TEXAS SOUTHEASTERN GAS
GATHERING COMPANY, a Texas corporation ("TSGGC"), ("Seller") and
MAGNOLIA PIPELINE CORPORATION, an Alabama corporation,
("Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase and Sale Agreement dated
effective as of January 1, 1996, (the "Purchase Agreement") between
Seller and Purchaser, Seller has agreed to sell to Purchaser, and
Purchaser has agreed to purchase from Seller, the Purchased Assets,
as further defined in the Purchase Agreement on the terms and
subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the transactions pursuant
to the Purchase Agreement, the receipt and sufficiency of which are
hereby acknowledged, Purchaser does hereby assume, and agree to
perform, pay or discharge, the following liabilities of Seller
(capitalized terms used but not defined herein shall have the
respective meanings assigned thereto in the Purchase Agreement):
(1)the liabilities and obligations under the Contracts specifically
set forth on Exhibit A hereto arising from and after the Effective
Time, except for any liabilities and/or obligations arising after
the Effective Time by reason of any breach or breaches of the
Contracts prior to the Effective Time;
(2)all utility charges, prepaid expenses, insurance, general taxes, ad
valorem and similar taxes, Department of Transportation charges and
other similar items, subject to ratable adjustment from and after
the Effective Time pursuant to Section 4.2 of the Purchase
Agreement;
(3)all expenses relating to the Purchased Assets arising from the
operation of the Purchased Assets from and after the Effective
Time.
Except as otherwise provided above, Purchaser does not assume
or agree to pay, perform or discharge, and shall not be responsible
for, any other liabilities or obligations of Seller, whether
accrued, absolute, contingent or otherwise, including, without
limitation, liabilities or obligations based on, arising out of or
in connection with:
(1)Any Federal, state, local or foreign income, sales, real or
personal property or other taxes, assessments, fees, levies
imposts, duties, deductions or other charges of any nature
whatsoever (including without limitation interest and penalties)
imposed by any law, rule or regulation which are attributable or
relating to the Purchased Assets for any period ending on or before
the Effective Time;
(2)Any claims or conditions arising under or relating to Environmental
Laws or similar legal requirements attributable or relating to the
Purchased Assets (including, without limitation, the operation
thereof) or the business of Sellers arising prior to the Effective
Time;
(3)Any note, account payable or other obligation to any Sellers or any
Affiliate thereof.
Seller and Purchaser agree that this Assumption Agreement is
subject to the terms and conditions of the Purchase Agreement and
that, notwithstanding anything contained herein to the contrary,
this Assumption Agreement shall not be deemed to limit, enlarge or
extinguish any obligation of Seller or Purchaser under the Purchase
Agreement, all of which obligations shall survive the delivery of
this Assumption Agreement in accordance with the terms of the
Purchase Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Assumption Agreement as of the date first above written.
SELLER:
TEXAS SOUTHEASTERN GAS GATHERING COMPANY
SAM L. BANKS, CHAIRMAN
PURCHASER:
MAGNOLIA PIPELINE CORPORATION
DAN C. TUTCHER
VICE PRESIDENT, TREASURER AND ASSISTANT SECRETARY
END OF EXHIBIT "G"
EXHIBIT "H"
OFFICE FURNITURE 5,000
VEHICLES 5,000
FAYETTE SYSTEM 180,000
MOORES BRIDGE SYSTEM 80,000
DETROIT SYSTEM 15,000
SIZEMORE SYSTEM 6,000
HAPPY HILLS SYSTEM 16,000
MILLBROOK SYSTEM 26,000
GREENWOOD SPRINGS SYSTEM 12,000
HEIDELBERG-TENNESSEE SYSTEM 45,000
HEIDELBERG -KOCH SYSTEM 8,000
BAXTERVILLE SYSTEM 10,000
CARAWAY SYSTEM 7,000
END OF EXHIBIT "H"
EXHIBIT "I"
NONE REQUIRED.
END OF EXHIBIT "I"
EXHIBIT "J"
NONE. (NOTE: these are exceptions to reps and warranties to be
listed by Seller at time of entering into the contract.
END OF EXHIBIT "J"
EXHIBIT "K"
ASSIGNMENT, BILL OF SALE AND SPECIAL WARRANTY DEED
This Assignment, Bill of Sale and Special Warranty Deed (this
"Assignment"), effective as of January 1, 1996, local time, (the
"Effective Time") is between TEXAS SOUTHEASTERN GAS GATHERING
COMPANY, a Texas corporation, having an address at 1177 West Loop
South, Houston, Texas ("Assignor") and MAGNOLIA PIPELINE
CORPORATION, an Alabama corporation, having an address at 1100
Louisiana, Suite 2950, Houston, Texas 77002 ("Assignee").
W I T N E S S E T H:
For the sum of Ten Dollars ($10.00), paid in cash, and other good
and valuable consideration; the receipt and sufficiency of which
are hereby acknowledged by Assignor, Assignor hereby assigns,
grants and conveys unto Assignee, effective as of the Effective
Time, all of Assignor's right, title and interest in to the
following (the "Property"):
1. Pipelines, etc. The gathering lines and pipelines associated
with the gathering systems and the compressors, meter stations,
dehydrators, tanks, equipment, tools, testing equipment, and other
tangible assets located and in use on the Gathering Systems as
specifically described on Exhibit 1, together with all of Seller's
beneficial interest in and to the property and rights incident
thereto.
2. Property Rights. The easements, rights of way, leases,
licenses, permits and other agreements owned or held by Seller in
connection with the ownership and operation of the Pipeline
Property, including without limitation the real property interests
and other interests specifically set forth on Exhibit 2.
3. Contract Rights. All existing and effective contracts related
to the Gathering Systems or any of the Pipeline Property,
including, without limitation, gas gathering contracts, gas
transportation contracts, gas purchase contracts, gas sales
contracts, and other written agreements relating to the Gathering
Systems or any of the Pipeline Property as specifically set forth
in Exhibit 3.
4. Records. All files, books, maps, documents, records, data and
information of, or relating to, the Pipeline Property, the Property
Rights, the Contracts or the Gathering Systems.
5. Permits. All licenses, permits, orders and other governmental
authorizations owned or held by Seller in connection with the
ownership or operation of the Gathering Systems, to the extent
assignable, including without limitation, the permits, licenses,
orders and other governmental authorizations listed on Exhibit 5.
6. Office Furniture and Stock in Alabama. The office furniture and
stock in trade located in Alabama as set forth on Exhibit 6.
7. Vehicles. The vehicles, including phones, radios, tools, testing
equipment and other personal property of Seller located therein and
used in connection with the business, listed on Exhibit 7.
In addition to the foregoing, Assignor assigns, grants and conveys
all of its right, title and interest in and to the Property and all
rights incident even if the same are not completely or accurately
described in the Exhibits attached to this Assignment, it being the
intention of Assignor to convey to Assignee pursuant to this
Assignment all of Assignor's right, title and interest in and to
any of Assignor's assets reasonably necessary to operate and
maintain the Property as currently operated and maintained by
Assignor.
TO HAVE AND TO HOLD the Property, together with all and singular
the rights and appurtenances thereto in anywise belonging unto
Grantee, Grantee's executors, administrators, successors, or
assigns forever; and Grantors do hereby bind Grantors and Grantors'
executors, administrators, and successors to WARRANT AND FOREVER
DEFEND, all and singular, the Property unto Grantee and Grantee's
heirs, executors, administrators, successors, and assigns, against
every person whomsoever lawfully claiming or to claim the same or
any part thereof, by, through or under Grantors, but not otherwise.
Grantee shall have the right to substitution and subrogation in and
to all of Grantor's, rights and actions in warranty. This
Assignment is made subject to all of the terms and conditions of
the instruments and matters described or referred to above as well
as to all matters that are of public record prior to the recording
of this Assignment, but only insofar as same are valid and
subsisting and affect the Property.
This Assignment may be executed in any number of original
counterparts, and each counterpart hereof shall be deemed to be an
original instrument but all such counterparts shall constitute but
one assignment. For recording purposes, various counterparts have
been executed and there may be attached to each such counterpart an
exhibit containing only the description of the Property, or
portions thereof, which relates to the county or state in which the
particular counterpart is to be recorded. A complete original
counterpart of this instrument with a complete exhibit may be
obtained from Assignee. Each of such counterparts shall for all
purposes be deemed to be an original and all such counterparts
shall together constitute but one and the same instrument.
Reference is made to the Exhibits attached hereto and made a part
hereof for all purposes, provided, that such reference shall not be
deemed to ratify or create any rights in favor of any third party.
EXECUTED as of ______, 1996, but to be effective for all purposes
as of the Effective Time.
SIGNATURE BLANKS AND ACKNOWLEDGMENTS
AND ATTACH THE APPROPRIATE EXHIBITS
Exhibit 1 - Pipelines, etc.
Exhibit 2 - Property Rights
Exhibit 3 - Contract Rights
Exhibit 5 - Permits
Exhibit 6 - Office Furniture and Stock in Alabama
Exhibit 7 - Vehicles
END OF EXHIBIT "K"
<PAGE>
EXHIBIT "L"
LITIGATION (SELLER)
NONE
END OF EXHIBIT "L"
EXHIBIT "M"
OPERATING INFORMATION TO BE SUPPLIED BY GAS ACCOUNTING
END OF EXHIBIT "M"
EXHIBIT "N"
MATERIAL CONTRACTS (CONSENTS)
CONTRACT
DESCRIPTION DATE
- - --------------------------------- ------------
AL07-2001 Alabama Gas Corp. 08/13/76
AL07-3056 Associated Natural Gas, Inc. 03/01/90
AL29-3065 Associated Natural Gas, Inc. 08/01/90
AL07-2035-F Gas Board of the City of Fayette 11/03/86
AL29-1034 Germany Oil 04/01/87
AL07-1069-F Germany Oil 06/18/76
AL29-1061-F Merrimac Energy Corp. 07/01/92
AL07-1055-F Merrimac Energy Corp. 02/01/92
AL07-1001-F Michigan Oil Co. 08/08/80
AL29-1044-F Morrow Oil & Gas Co. 05/03/88
AL07-1066-F Morrow Oil & Gas Co. 03/01/94
US29-1005 Morrow Oil & Gas Co. 04/01/92
AL07-3062-F Morrow Oil & Gas Co. 10/01/92
AL29-1065-F Natural Gas & Oil, Inc. 11/18/92
AL07-2010-F Northwest Alabama Gas District 07/12/83 (notice only)
AL07-3013-F Northwest Alabama Gas District 01/01/81 (notice only)
AL07-3058 Premier Gas Co. 09/01/90
AL07-1002-F Roundtree & Associates, Inc. 06/18/76
US29-1013 Roundtree & Associates, Inc. 09/01/92
AL29-1059-F Roundtree & Associates, Inc. 03/01/92
AL10-3085-L Samson Hydrocarbons 07/01/95
US29-1062 Samson Production Services Co. 09/01/93
AL29-1060-F Sanford Resources Corp. 02/22/92
AL07-3053-F Triangle Operating Co., Inc. 03/01/91
AL29-1067-F Viola Production, Inc. 01/01/94
MS06-3001-J Browning & Welch 09/20/89
MS06-3002-MO Hughes Eastern 11/08/90
MS06-3002-WL Millbrook Gas Gathering L.P. 01/24/92
MS10-3010-J Tellus Energy Group, LLC 08/15/95
END OF EXHIBIT "N"
EXHIBIT "O"
BALANCING - TO BE SUPPLIED BY GAS ACCOUNTING.
END OF EXHIBIT "O"
EXHIBIT "P"
GOVERNMENTAL CONSENTS
NONE REQUIRED
END OF EXHIBIT "P"
EXHIBIT "Q"
LITIGATION (PURCHASER)
END OF EXHIBIT "Q"
EXHIBIT "R"
AFFIDAVIT OF USE AND POSSESSION
COUNTY OF HARRIS
STATE OF TEXAS
Affiant on oath swears the following statements are true:
My name is _________ and I am ________ of TEXAS SOUTHEASTERN GAS
GATHERING COMPANY. I am over the age of 18 and am personally
acquainted with the possession and use of the pipeline system owned
by TSGGC which is more particularly described in Exhibit A attached
hereto and made a part hereof for all purposes (the "Pipeline
System").
I know of my own personal knowledge that TSGGC's possession of
the Pipeline System has been continuous since its acquisition from
Encina Transmission Company having used and occupied the Pipeline
System, maintaining the Pipeline System and performing all of the
usual acts of ownership and asserting claims of right to the
Pipeline System at all times.
I have seen no adverse claims made against TSGGC by others who
have claimed ownership and possession of the Pipeline system and
am not aware of any such claims
Further Affiant sayeth not.
Affiant
SIGNATURE AND ACKNOWLEDGMENT
END OF EXHIBIT "R"
Exhibit "S"
ESCROW AGREEMENT
This Escrow Agreement (herein "Agreement") entered into on the __
day of ___, 1996 by and between MAGNOLIA PIPELINE CORPORATION,
(herein "Buyer or Magnolia"), TEXAS SOUTHEASTERN GAS GATHERING
COMPANY, 1177 West Loop South, Suite 1825, Houston, Texas 77027-
9008 (herein "Seller or TSGGC"), and Compass Bank, a state banking
association (the "Escrow Agent"), all being duly authorized to
execute and deliver this Agreement.
RECITALS
WHEREAS, Seller and Buyer requested Escrow Agent to be engaged as
agent to hold ______ Thousand and 00/100 Dollars in accordance with
the terms and conditions hereof. Said account maintained with the
Escrow Agent and designated as the "TSGGC/MAGNOLIA ESCROW" (the
"Escrow Account"); and
WHEREAS, Escrow Agent is willing to perform such services in
accordance with the terms and conditions hereof and has established
the Escrow Account hereunder;
NOW, THEREFORE, in consideration of the foregoing and of the
agreements hereinafter set forth and for other good and valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
TERMS
SECTION 1. THE ESCROW AGENT.
A.Seller and Buyer hereby designate and appoint the Escrow Agent
their agent hereunder to serve in accordance with the terms and
conditions of this Agreement. Escrow Agent hereby accepts such
appointment and agrees to act as such agent in accordance with such
terms and conditions.
B.The duties and responsibilities of the Escrow Agent shall be
limited to those expressly set forth in this Agreement including
the duties set forth in Exhibit A. Notwithstanding anything herein
to the contrary, the Escrow Account shall be the sole source of
funds for any payment made by the Escrow Agent pursuant to this
Agreement. No implied duties of the Escrow Agent shall be read
into this Agreement and the Escrow Agent shall not be subject to,
or obliged to recognize any other agreement between, or direction
or instruction of, any or all the parties hereto even though
reference thereto may be made herein.
C.The Escrow Agent is authorized, in its sole discretion, to
disregard any and all notices or instructions given by any other
party hereto or by any other person, firm or corporation, except
only such notices or instructions as are herein provided for and
orders or process of any court entered or issued with or without
jurisdiction. If any property subject hereto is at any time
attached, garnished, or levied upon under any court order or in
case the payment, assignment, transfer, conveyance or delivery of
any such property shall be stayed or enjoined by any court order,
or in case any order, judgment or decree shall be made or entered
by any court affecting such property or any part hereof, then and
in any of such events the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ,
judgment or decree with which it is advised by legal counsel of its
own choosing is binding upon it, and if it complies with any such
order, writ, judgment or decree it shall not be liable to any other
party hereto or to any other person, firm or corporation by reason
of such compliance even though such order, writ, judgment or decree
may be subsequently reversed, modified, annulled, set aside or
vacated.
D.The Escrow Agent may rely, and shall be protected in acting or
refraining from acting upon any instrument furnished to it
hereunder and believed by it to be genuine and believed by it to
have been signed or presented by the appropriate party or parties
including without limitation, with respect to any party which is a
corporation, any instrument purporting, to have been signed on its
behalf by an authorized officer listed on Exhibit B hereto (which
list may from time to time be revised by such corporation).
E.Unless otherwise specifically indicated herein, the Escrow Agent
shall proceed as soon as practicable to collect any checks or other
collection items at any time deposited or received hereunder. All
such collections shall be subject to the usual collection agreement
regarding items received by its commercial banking department for
deposit or collection. It shall not be required or have a duty to
(i) notify anyone of any payment or maturity under the terms of any
instrument deposited or received hereunder, or (ii) take any legal
action to enforce payment of any check, note or security deposited
or received hereunder . In the event that any funds, including
cleared funds, deposited in the Escrow Account prove uncollectible
after the funds represented thereby have been released by the
Escrow Agent pursuant to this Agreement, the Buyer shall
immediately reimburse the Escrow Agent upon request for the face
amount of such check or checks, together with reasonable and
customary charges and expenses related thereto, and the Escrow
Agent shall deliver the returned checks or other instruments to
Buyer. Buyer acknowledges that its obligation in the preceding
sentence shall survive the termination of this Agreement.
F.The Escrow Agent may consult with legal counsel of its own choosing
with respect to any matter concerning this Agreement and shall be
fully protected in acting or refraining from acting in good faith
and in accordance with the opinion of such counsel. Any such fees
and expenses of such legal counsel shall be considered part of the
fees and expenses of Escrow Agent described in Section 3 below.
G.Upon receipt of the funds, the Escrow Agent shall immediately place
the funds in an interest bearing account at approximately six
percent (6%) interest, or invest the funds in a Certificate of
Deposit, Money Market Account or as otherwise directed in writing
by TSGGC. All income or interest earned shall be added back to the
remaining escrowed funds.
SECTION 2. NOTICES.
Any notices which the Escrow Agent is required or desires to give
hereunder to any other party hereto shall be in writing and may be
given by mailing the same to the address indicated below opposite
the signature of such party (or to such other address as such party
has theretofore substituted therefore by written notification to
the Escrow, Agent), by United States mail, postage prepaid. For
all purposes hereof any notice so mailed shall be as effectual as
though served upon the person of the party to whom it was mailed at
the time it is deposited in the United States mail by the Escrow
Agent. Notices to the Escrow Agent shall be in writing and shall
not be deemed to be given until actually received by the Escrow
Agent's Corporate Trust department employee or officer who
administers the Escrow Account pursuant to this Agreement.
Whenever under the terms hereof the time for giving a notice or
performing an act falls upon a Saturday, Sunday or Bank Holiday,
such time shall be extended to the next day on which the Escrow
Agent is open for business.
SECTION 3. FEES AND EXPENSES OF ESCROW AGENT.
Seller and Buyer agree to pay initial setup fee of $500.00 for the
escrow. Seller and Buyer agree to pay the fees, costs and expenses
(including counsel fees and expenses) of the Escrow Agent in
accordance with Exhibit C and upon immediate receipt of an invoice.
The Escrow Agent shall have a first lien on any property held
hereunder for payment of such fees, costs and expenses . If such
fees, costs and expenses are not promptly paid, the Escrow Agent
shall have the right to (a) sell the property held hereunder and
reimburse itself from the proceeds of such sale, or (b) reimburse
itself from the cash held hereunder.
SECTION 4. LIMITED LIABILITY OF ESCROW AGENT
The Escrow Agent shall not be responsible for the sufficiency or
accuracy or the form, execution, validity or genuineness, of
documents or securities now or hereafter deposited or received
hereunder, or of any endorsement thereon, or for any lack of
endorsement thereon, or for any description therein, nor shall it
be responsible or liable in any respect on account of the identity,
authority or rights of any person executing, depositing or
delivering or purporting to execute, deposit or deliver any such
document, security or endorsement or this Agreement, or on account
of or by reason of forgeries, false representations, or the
exercise of its discretion in any particular manner, nor shall the
Escrow Agent be liable for any mistake of fact or of law or any
error of judgment, or for any act or omission, except as a result
of its gross negligence or willful malfeasance. The Escrow Agent's
liability for any grossly negligent performance or non-performance
shall not exceed its fees and charges in connection with the
services provided hereunder. Under no circumstances shall Escrow
Agent be liable for any general or consequential damages caused, in
whole or in part, by the action or inaction of Seller and Buyer or
any of their respective agents or employees. Escrow Agent shall
not be liable for any damage, loss, liability, or delay caused by
accidents, strikes, fire, flood, war, riot, equipment breakdown,
electrical or mechanical failure, acts of God or any cause which is
reasonably unavailable or beyond its reasonable control.
SECTION 5. RIGHTS OF ESCROW AGENT CONCERNING DISAGREEMENTS
In the event that the Escrow Agent, in good faith, is in doubt (for
any reason) as to an action to be taken pursuant to this Agreement,
the Escrow Agent shall have the absolute right at its election to
do any or all of the following: (i) refuse to comply with any
claims or any demands made on it; (ii) withhold and stop all
further proceeding in, and performance of, this Agreement and the
escrow made the basis hereof; or (iii) file a suit in interpleader
in a court of competent jurisdiction and obtain an order from the
court requiring the parties to interplead and litigate in such
court their several claims and rights among themselves. In any
such event, the Escrow Agent shall not be or become liable in any
way or to any person for its failure or refusal to act, and the
Escrow Agent shall be entitled to continue to refrain from acting
until (i) the rights of all parties shall have been fully and
finally adjudicated by a court of competent jurisdiction or (ii)
all differences shall have been adjusted and all doubt resolved by
agreement among all the interested persons, and the Escrow Agent
shall have been notified thereof in writing signed by all such
persons. The rights of the Escrow Agent under this paragraph are
cumulative of all other rights which it may have by law or
otherwise. In the event such interpleader action is brought, the
Escrow Agent shall be fully released and discharged from all
obligations and all duties or obligations imposed upon it by this
Agreement as it relates to the Escrow Account, or any portion
thereof, so interpleaded.
SECTION 6. INDEMNIFICATION OF ESCROW AGENT
Seller and Buyer hereby agree jointly and severally to protect,
defend, indemnify and hold harmless the Escrow Agent against and
from any and all costs, losses, liabilities, expenses (including
counsel fees and expenses) and claims imposed upon or asserted
against the Escrow Agent on account of any action taken or omitted
to be taken in connection with its acceptance of or performance of
its duties and obligations under this Agreement as well as the
costs and expenses of defending itself against any claim or
liability arising out of or relating to this Agreement. In case
any action or proceeding is brought against the Escrow Agent by
reason of any such claim, Seller and Buyer covenant upon notice
from the Escrow Agent to resist or defend such action or proceeding
at Seller's and Buyer's expense. This indemnification shall
survive the release, discharge, termination, and/or satisfaction of
the Agreement.
SECTION 7. RESIGNATION OF ESCROW AGENT,
It is understood that the Escrow Agent reserves the right to resign
as Escrow Agent at any time by giving written notice of its
resignation, specifying the effective date thereof, to each other
party hereto. Within thirty (30) days after receiving the
aforesaid notice, the other party or parties hereto shall appoint
a successor Escrow Agent to which the Escrow Agent may distribute
the property then held hereunder, less its fees, costs and expenses
(including counsel fees and expenses) which may remain unpaid at
that time. If a successor Escrow Agent has not been appointed and
has not accepted such appointment by the end of such thirty (30)
day period, the Escrow Agent may apply to a court of competent
jurisdiction for the appointment of a successor Escrow Agent and
the fees, costs and expenses (including counsel fees and expenses)
which it incurs in connection with such a proceeding shall be paid
by Seller and Buyer.
SECTION 8. TERMINATION.
Escrow Agent, having delivered all of the property contained in the
Escrow Account pursuant to the terms of this Escrow Agreement,
shall thereafter be discharged from any further obligation
hereunder. If, by its terms, this Agreement shall not have been
previously terminated, then it, shall terminate on December 31,
1996, at which time the property then held hereunder, less the
Escrow Agent's fees, costs and expenses (including legal counsel
fees and expenses) shall be distributed in the following manner:
a.The Escrow Agent shall release escrowed funds to Magnolia Pipeline
Corporation.
b.This Escrow Agreement shall terminate earlier pursuant to Exhibit
"A" attached hereto.
SECTION 9. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement and understanding
among the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements and understandings, written and
oral, among the parties with respect to such subject matter. Escrow
Agent is not a party to, nor is it bound by, nor need it give
consideration to the terms or provisions of, any other agreement or
undertaking between Seller and Buyer or between either of them and
any other persons. Unless otherwise provided in this Agreement,
Escrow Agent shall have no duty to determine or inquire into the
happening or occurrence of any event or contingency or the
performance or failure of performance of any party to this
Agreement with respect to arrangements or contracts with each other
or with others.
SECTION 10. MODIFICATION.
None of the terms or conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in
writing duly signed by Seller, Buyer and Escrow Agent.
SECTION 11. ENFORCEABILITY.
A.Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
B.This Agreement shall be binding upon, and inure to the benefit of,
and be enforceable by and against the respective successors and
assigns of the parties to this Agreement.
C.This Agreement shall be construed, enforced and administered in
accordance with the laws of the State of Texas.
D.This Agreement is entered into expressly for the benefit of Seller
and Buyer, who shall have, and be entitled to enforce, the rights
granted to them herein. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any other person, firm or
corporation any rights or remedies under or by reason of this
Agreement
SECTION 12. HEADINGS DESCRIPTIVE
The headings of the several sections of the Agreement are inserted
for convenience only and shall not in any way affect the meaning or
construction of any provision of this agreement.
SECTION 13. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed an original, but all of
which shall together constitute one and the same instrument.
IN WITNESS WHEREOF, Seller, Buyer, and Escrow Agent have caused
this agreement to be executed by their authorized representatives
as of the date first above written.
SELLER
TEXAS SOUTHEASTERN GAS GATHERING COMPANY
BY: SAM L. BANKS, CHAIRMAN
BUYER
MAGNOLIA PIPELINE CORPORATION
BY:
ESCROW AGENT
BY:
Its:
EXHIBIT "A"
AUTHORIZATION AND DIRECTION TO RELEASE AND DISBURSE ESCROW PROPERTY
The undersigned do hereby authorize and direct COMPASS BANK to
release and disburse ______ Dollars ($___) of the funds in Escrow
Account No. _________ to.
The undersigned parties do hereby forever release and discharge
COMPASS BANK from any and all liability, whenever or however
arising, by virtue of its capacity as Escrow Agent under the terms
of the written Escrow Agreement between the parties to which this
transaction pertains.
EXECUTED on this the ___ day of ____, 199__.
MAGNOLIA PIPELINE CORPORATION
TEXAS SOUTHEASTERN GAS
GATHERING COMPANY
EXHIBIT "B"
AUTHORIZED OFFICERS OF THE PARTIES
____________________________ - BUYER
SAM L. BANKS, CHAIRMAN - SELLER
EXHIBIT "C"
ESCROW AGENT FEES AND EXPENSES
ESCROW AGENT WILL BE PAID A TOTAL OF $500 AS AN ACCEPTANCE FEE
FOR SERVICES RENDERED UNDER THIS ESCROW AGREEMENT.
IN ADDITION, ESCROW AGENT WILL BE ENTITLED TO THE FOLLOWING:
Out-of-Pocket Expenses: The cost of all business expenses
including, but not limited to, legal counsel fees and expenses,
travel, postage, checks, stationary, printing, messenger delivery
or other direct or indirect expenses which can be allocated will be
added to our regular service.
The fees quoted in this schedule apply to services ordinarily
rendered in administering an escrow account and are subject to
reasonable adjustment when the Escrow Agent is called upon to
undertake unusual duties or as changes in the law, procedures or
the cost of doing business demand. Fees for extraordinary
administrative time may be charged in the event the Escrow Agent
performs duties not contemplated at the time of execution of this
agreement.
Unless otherwise agreed upon, the Acceptance Fee is payable upon
the execution of the Agreement whether or not the escrow account is
funded. The Acceptance Fee is not refundable.
END OF EXHIBITS TO ESCROW AGREEMENT
EXHIBIT "T"
TITLE DEFECTS
This Amendment to Purchase and Sale Agreement (Amendment Agreement)
is entered into as of the 8th day of May, 1996, by and between
Texas Southeastern Gas Gathering Company, a Texas corporation
("Seller"), and Magnolia Pipeline Corporation, an Alabama
corporation ("Purchaser").
INTRODUCTION
A. Seller and Purchaser have entered into a Purchase and Sale
Agreement dated March 12, 1996 (the "Agreement") pursuant to which
Seller has agreed to sell, and Purchaser has agreed to buy, certain
of Seller's assets currently used by Seller in connection with its
gas gathering transmission business.
B. Purchaser has, in accordance with Section 6 of the Agreement
identified various Title Defects and Title Defect Property (as such
terms are defined in the Agreement) with respect to property being
conveyed by Seller to Purchaser.
C. Purchaser and Seller desire to amend the Agreement to provide
that Purchaser shall waive all title defects, excepting the John
McDonald, Jr. Title Defect affecting System Number GEI-184
(Heidelberg System) in Jasper County, Mississippi, with a
corresponding reduction in the Purchase Price of $25,000. The total
purchase price for the Purchased Assets will be, therefore, reduced
from $415,000 to $390,000, subject to Seller's agreement to
indemnify Purchaser for any loss sustained by Purchaser arising out
of the McDonald Title Defect up to a maximum aggregate sum of
$45,000 (the value of the Heidelberg System as set out on Exhibit
H of the Purchase and Sale Agreement) in accordance with the terms
and conditions of this Amendment Agreement.
D. Seller has not obtained all consents for the transfer and
assignment of the Contracts and Permits requiring a consent to
assignment, which is a condition to the obligation of Purchaser to
close. Therefore, Seller and Purchaser desire to amend the
Agreement to provide for Closing on May 8, 1996, and to provide for
Seller's indemnity to Purchaser for any claims related to consents
to assign on the right of ways listed in subsection e hereof.
Seller will continue to make a good faith effort to obtain all
remaining consents for assignment of right of ways needed on the
systems. Seller shall undertake to have such restrictions removed
or satisfied and shall, in the interim and at the request of
Purchaser give Purchaser written confirmation (in recordable form)
of its beneficial interest.
NOW, THEREFORE, in consideration of the premises and the covenants
and agreements contained in this Amendment Agreement and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
WITNESSETH:
1. Capitalized terms used in this Amendment Agreement shall have
the same defined meanings which are set forth in the Agreement.
2. The Agreement is amended as follows:
a. Waiver of Certain Title Defects. Seller and Purchaser agree
that all title defects are waived, excepting the McDonald, Jr.
Title Defect affecting System Number GEI-184 (Heidelberg System) in
Jasper County, Mississippi, as set out on Exhibit "A" hereto.
b. Reduction of Purchase Price. Seller and Purchaser agree that
the total Purchase Price for the Purchased Assets pursuant to
Article 4.1 of the Purchase and Sale Agreement shall be amended to
be $390,000. Wherever the phrase "Base Purchase Price" appears it
shall reference this $390,000 rather than $415,000, and the
provisions providing for accrual of an additional amount based upon
the prime rate of interest are hereby deleted.
c. Purchase of Title Defect Property. Purchaser has identified
on Exhibit "A" attached hereto certain Title Defect Property (the
"Indemnified Property") which Purchaser (i) has elected to include
within the purchase and sale contemplated by this Agreement, and
(ii) has agreed to pay the Allocated Value for such Indemnified
Property, in consideration of Seller's agreement to indemnify
Purchaser with respect to said property up to the sum of $45,000,
as hereinafter provided.
d. Indemnification as to McDonald Claims. Seller hereby agrees
that on and after the Closing, Seller shall, subject to the
aggregate limit of $45,000:
(i) indemnify, and save and hold harmless Purchaser, its
successors and assigns, and their respective directors, officers,
employees and agents against any and all losses, damages
(compensatory, special, punitive and otherwise), claims, demands,
suits, costs, expenses, and liabilities, including, without
limitation, reasonable attorneys' fees and disbursements, court
costs and costs of investigation resulting from, arising out of, or
in any way connected with assertions of John McDonald, Jr. and/or
other parties that a portion of the Heidelberg System is on lands
owned or partially owned by him (them) for which no right-of-way,
easement or license has been granted by him (them) to Seller or
Seller's predecessors in ownership of said pipeline, and, as such,
he (they) have suffered damages and/or otherwise should be
compensated therefor, and/or that the pipeline should be removed
therefrom (collectively, the "McDonald Claims");
(ii) pay, when billed, all costs incurred or to be incurred by
Purchaser, its successors and assigns, in the removal and/or
abandonment of, and/or relocating of, any portion of the
Heidelberg System pursuant to, by reason of or arising out of any
judgment, injunction, decree or other court order, at law or in
equity, rendered in connection with the McDonald Claims, and
reimburse Seller, its successors or assigns, on a monthly basis,
for all losses suffered during any period the Heidelberg system is
shut-in or shut down by reason of any such removal and/or
abandonment, and/or relocation of a portion thereof;
(iii) reimburse, on a monthly basis, all attorneys' fees and
disbursements, costs of court, and costs of litigation, including,
without limitation, actual out-of-pocket expenses incurred by
Purchaser's corporate representatives for attendance at deposition,
trial, and conference with counsel, incurred by Purchaser, its
successors or assigns, arising out of all litigation involving the
McDonald Claims;
(iv) pay all judgments against Purchaser, its successors or
assigns, arising out of the McDonald Claims prior to the time any
such judgment becomes subject to execution, and without any
obligation on the part of Purchaser, its successors or assigns, to
first make payment of all or any part of such judgment; and
(v) pay all settlement amounts agreed upon by Purchaser, its
successors or assigns, with respect to the McDonald claims, whether
any such settlement is made before or after the commencement of
litigation; provided, however, no such individual settlement shall
be made by Purchaser, its successors or assigns, in excess of
$2,000, nor shall the aggregate amount of all such settlements
exceed $20,000 unless the prior written consent of Seller shall
have first been obtained, which consent shall not be unreasonably
withheld.
If Purchaser believes it is entitled to indemnification under the
foregoing provisions hereto, it shall give prompt notice (the
"Indemnity Notice") to Seller, describing in reasonable detail (i)
the relevant Indemnified Property and Title Defect, (ii) the third
party claim giving rise to the right to indemnity and (iii) the
amounts, if then known, to be paid by Seller by reason of such
indemnity.
The indemnity provisions set forth in Section 14.2 of the
Agreement, including, but not limited to, the time and monetary
limitations set forth therein, shall not be applicable to the
McDonald claims; it being expressly intended that the foregoing
indemnity provisions shall be applicable to the McDonald Claims.
e. Indemnification as to consents to assign. Seller hereby
agrees that, on and after the Closing, Seller shall, subject to the
aggregate limit of $20,000:
(i) indemnify, and save and hold harmless Purchaser, its
successors and assigns, and their respective directors, officers,
employees and agents against any and all losses, damages
(compensatory, special, punitive and otherwise), claims, demands,
suits, costs, expenses, and liabilities, including, without
limitation, reasonable attorneys' fees and disbursements, court
costs and costs of investigation resulting from, arising out of, or
in any way connected with the following (collectively, the "Right
of Way Claims"): (a) Seller's failure prior to Closing to obtain a
consent to assignment to Purchaser of any Permits listed below
providing for a consent to assignment; (b) services or benefits
demanded by a landowner in consideration for or as a result of his
granting a consent to assign; or (c) any and all breaches at any
time or times prior to Closing of any of the terms relating to
consents to assign of the following rights-of-way agreements by
Seller or its predecessors in title to said rights-of-way, to-
wit:
Agreement Recording
System Name Date Data
Millbrook David L. McCraine, et al 06/23/81
Millbrook Robert Redhead/ Hugh Redhead 07/03/81
Millbrook August & Susie Martens 03/10/83
Millbrook Eva S. Stockett, et al 03/01/83
Heidelberg 184 Town of Heidelberg 11/03/89
Heidelberg 184 The Alabama Great Southern Railroad Company 11/13/89
Baxterville Cavenham Forest Industries 09/13/90
Baxterville Cavenham Forest Industries 12/10/90
Fayette Champion International Corp. 12/04/85
Fayette Champion International Corp. 02/04/86
(ii) pay, when billed, all costs incurred or to be incurred
by Purchaser, its successors and assigns, in curing or attempting
to cure any breaches prior to closing of claims relating to
consents to assign on the above listed right of ways or in
providing services and benefits to a landowner in consideration for
or as a result of his granting or Seller's request to him for a
consent to assign;
(iii) reimburse, on a monthly basis, all attorneys' fees and
disbursements, costs of court, and costs of litigation, including,
without limitation, actual out-of-pocket expenses incurred
by Purchaser's corporate representatives for attendance at
deposition, trial, and conference with counsel, incurred by
Purchaser, its successors or assigns, arising out of all
litigation involving Right of Way Claims;
(iv) pay all judgments against Purchaser, its successors or
assigns, arising out of the Right of Way Claims prior to the time
any such judgment becomes subject to execution, and without any
obligation on the part of Purchaser, its successors or assigns, to
first make payment of all or any part of such judgment; and
(v) pay all settlement amounts agreed upon by Purchaser, its
successors or assigns, with respect to Right of Way Claims, whether
any such settlement is made before or after the commencement of
litigation; provided, however, no such individual settlement shall
be made by Purchaser, its successors or assigns, in excess of
$2,000, nor shall the aggregate amount of all such settlements
exceed $10,000 unless the prior written consent of seller shall
have first been obtained, which consent shall not be unreasonably
withheld.
If Purchaser believes it is entitled to indemnification under the
foregoing provisions hereto, it shall give prompt notice (the
"Indemnity Notice") to Seller, describing in reasonable detail (i)
the relevant right-of-way property, (ii) the third party claim
giving rise to the right to indemnity and (iii) the amounts, if
then known, to be paid by Seller by reason of such indemnity.
The indemnity provisions set forth in Section 14.2 of the
Agreement, including, but not limited to, the time and monetary
limitations set forth therein, shall not be applicable to the Right
of Way Claims; it being expressly intended that only the foregoing
indemnity provisions shall be applicable to Right of Way Claims.
Except as specifically provided in this Section 2e for Right of Way
Claims, the provisions of Section 14.2 shall remain in effect for
any claims pertaining to the aforesaid rights of way that come
under the terms and conditions of Section 14.2 of the Agreement.
f. Survivability, Termination: and Release. The right to
indemnification set forth in this Amendment Agreement shall survive
(i) the delivery of the Bill of Sale and any other conveyance
documents and (ii) the due diligence of Purchaser. Purchaser's
right to indemnify under this Amendment Agreement shall terminate
as to any claim for which an Indemnity Notice has not been given by
Purchaser to Seller prior to December 31, 2001. Purchaser agrees to
execute and deliver to Seller a release of any indemnity obligation
as to which Purchaser is satisfied that the underlying matter
giving rise to such indemnity has been cured or remedied or no
longer exists.
g. Sole and Exclusive Remedy. Purchaser's right to indemnity
under this Amendment Agreement shall be Purchaser's sole and
exclusive remedy with respect to the McDonald Claims and the Right
of Way Claims.
h. Section 13 of the Agreement is deleted in its entirety.
3. Except as amended by this Amendment Agreement, the Purchase
and Sale Agreement will remain in full force and effect in
accordance with its terms as originally written.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first above written.
SELLER:
TEXAS SOUTHEASTERN GAS GATHERING COMPANY
Sam L. Banks, Chairman
PURCHASER:
MAGNOLIA PIPELINE CORPORATION
I. J. Berthelot II, Executive Vice President
FIRST AMENDMENT AND SUPPLEMENT TO
CREDIT AGREEMENT
BY AND BETWEEN
MAGNOLIA PIPELINE CORPORATION,
as Borrower,
COMPASS BANK-HOUSTON,
as Lender,
Effective as of May 8, 1996
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
Section 1.01Terms Defined Above 1
Section 1.02Terms Defined in Credit Agreement 1
Section 1.03Other Definitional Provisions 1
ARTICLE II. AMENDMENTS TO CREDIT AGREEMENT
Section 2.01Amendments and Supplements to Definitions 2
Section 2.02Amendments and Supplements to Article II 2
Section 2.03Amendments and Supplements to Article VIII 3
Section 2.04Amendments and Supplements to Article IX 3
ARTICLE III. CONDITIONS
Section 3.01Loan Documents 3
Section 3.02Corporate Proceedings of Loan Parties 4
Section 3.03Representations and Warranties 4
Section 3.04No Default 4
Section 3.05No Change 4
Section 3.06Security Instruments 4
Section 3.08Other Instruments or Documents 4
ARTICLE IV. MISCELLANEOUS
Section 4.01Adoption, Ratification and Confirmation of Credit Agreement 5
Section 4.02Successors and Assigns 5
Section 4.03Counterparts 5
Section 4.04Number and Gender 5
Section 4.05Entire Agreement 5
Section 4.06Invalidity 5
Section 4.07Titles of Articles, Sections and Subsections 5
Section 4.08Governing Law 6
Section 4.08Security 6
Exhibit A - Form of Note
Exhibit B - Security Instruments
FIRST AMENDMENT AND SUPPLEMENT TO
CREDIT AGREEMENT
This FIRST AMENDMENT AND SUPPLEMENT TO CREDIT AGREEMENT (this
"First Amendment") executed effective as of the 8th day of May,
1996 (the "Effective Date"), is by and between MAGNOLIA PIPELINE
CORPORATION, an Alabama corporation ("Borrower") and COMPASS BANK-
HOUSTON, a Texas State Chartered Banking Institution ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender are parties to that certain
Credit Agreement dated as of December 20, 1995 (the "Credit
Agreement"), pursuant to which Lender agreed to make loans to and
extensions of credit on behalf of Borrower;
WHEREAS, Borrower has requested that Lender, among other
things, increase the amount of the loan facility under the Credit
Agreement and Lender has agreed to such request upon the terms and
conditions set forth herein; and
WHEREAS, Borrower and Lender desire to amend the Credit
Agreement in the particulars hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as
follows:
ARTICLE I. DEFINITIONS
Section 1.01 Terms Defined Above. As used in this First
Amendment, each of the terms "Borrower", "Credit Agreement",
"Effective Date", "First Amendment", and "Lender" shall have the
meaning assigned to such term hereinabove.
Section 1.02 Terms Defined in Credit Agreement. Each term
defined in the Credit Agreement and used herein without definition
shall have the meaning assigned to such term in the Credit
Agreement, unless expressly provided to the contrary.
Section 1.03 Other Definitional Provisions.
(a) The words "hereby", "herein", "hereinafter",
"hereof", "hereto" and "hereunder" when used in this
First Amendment shall refer to this First Amendment as a
whole and not to any particular Article, Section,
subsection or provision of this First Amendment.
(b) Section, subsection and Exhibit references
herein are to such Sections, subsections and Exhibits to
this First Amendment unless otherwise specified.
ARTICLE II. AMENDMENTS TO CREDIT AGREEMENT
Borrower and Lender agree that the Credit Agreement is hereby
amended, effective as of the Effective Date, in the following
particulars.
Section 2.01 Amendments and Supplements to Definitions.
(a) The following terms, which are defined in
Section 1.02 of the Credit Agreement, are hereby amended
in their entirety to read as follows:
"Agreement" shall mean this Credit Agreement, as
amended and supplemented by the First Amendment and as
the same may from time to time be further amended or
supplemented.
"First Amendment" shall mean that certain First
Amendment and Supplement to Credit Agreement dated as of
May 8, 1996, by and between Borrower and Lender.
"Maximum Credit Amount" shall mean an amount at any
time equal to $1,778,560, subject to reductions in such
amount pursuant to Section 2.03.
Section 2.02 Amendments and Supplements to Article II.
(a) Section 2.03(a) of the Credit Agreement is
hereby amended in its entirety to read as follows:
"(a) Commencing on June 1, 1996 and on the first day
of each calendar month thereafter, the Maximum Credit
Amount shall be reduced by an amount equal to $23,000.00.
The amount of such reduction in the Maximum Credit Amount
may be adjusted from time to time based upon semi-annual
reviews performed by Lender at its option."
(b) Section 2.05 of the Credit Agreement is hereby
amended in its entirety to read as follows:
Section 2.05 Note. The Loans shall be evidenced by a single
promissory note of Borrower in substantially the form of Exhibit A
attached to the First Amendment, dated the effective date of the
First Amendment, payable to the order of Lender in a principal
amount equal to the Commitment and otherwise duly completed. The
date and amount of each Loan and all payments made on account of
the principal thereof, shall be recorded by Lender on its books for
the Note, and, prior to any transfer, endorsed by Lender on the
schedule attached to such Note or any continuation thereof. Such
records shall be deemed conclusive absent manifest error."
Section 2.03 Amendments and Supplements to Article VIII. Article
VIII of the Credit Agreement is hereby amended and supplemented by
adding thereto a new Section, being Section 8.09, as follows:
"Section 8.09 Tuscaloosa County, Alabama Mortgage. Within 30 days
after the effective date of the First Amendment, Borrower shall
provide Lender with an exhibit describing its Properties comprising
the Magnolia Pipeline System located in Tuscaloosa County, Alabama
and a cover page for a Mortgage, Assignment of Proceeds, Security
Agreement and Financing Statement, each in form and substance
legally sufficient for recording in Tuscaloosa County, Alabama and
perfecting a Lien in such Property in favor of Lender."
Section 2.04 Amendments and Supplements to Article IX.
Section 9.11 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"Section 9.11 Tangible Net Worth. From and after March 31, 1996,
Borrower will not permit its Tangible Net Worth to be less than
$3,100,000 at any time, with such minimum amount being permanently
increased by an amount equal to 50% of positive net income of
Borrower for each fiscal quarter of Borrower, and 100% of equity
received by Borrower subsequent to March 31, 1996; provided,
however such minimum amount shall not be decreased as a result of
any losses or negative net income of Borrower."
ARTICLE III. CONDITIONS
The enforceability of this First Amendment against Lender is
subject to the satisfaction of the following conditions precedent:
Section 3.01 Loan Documents. Lender shall have received the
following:
(a) multiple original counterparts, as requested by Lender,
of this First Amendment and each of the other Security Instruments
described or referred to in attached Exhibit B, executed and
delivered by a duly authorized officer of Borrower, MERI and
Lender, and each other Guarantor, as applicable; and
(b) the Note, duly completed and executed by Borrower.
Section 3.02 Corporate Proceedings of Loan Parties. Lender shall
have received multiple copies, as requested by Lender, of the
resolutions, in form and substance reasonably satisfactory to
Lender, of the Boards of Directors of Borrower and MERI,
authorizing the execution, delivery and performance of this First
Amendment, the Note and any other Security Instrument to which they
are respectively a party, each such copy being attached to an
original certificate of the Secretary or an Assistant Secretary of
Borrower or as applicable, dated as of the Effective Date,
certifying (i) that the resolutions attached thereto are true,
correct and complete copies of resolutions duly adopted by written
consents or at meetings of the Boards of Directors, (ii) that such
resolutions constitute all resolutions adopted with respect to the
transactions contemplated hereby, (iii) that such resolutions have
not been amended, modified, revoked or rescinded as of the
Effective Date, (iv) that the respective articles of incorporation
and bylaws of Borrower and MERI have not been amended or otherwise
modified since the effective date of the Credit Agreement, except
pursuant to any amendments attached thereto, and (v) as to the
incumbency and signature of the officers of Borrower or MERI, as
applicable, executing this First Amendment, the Note and/or any
Security Instrument executed pursuant hereto.
Section 3.03 Representations and Warranties. Except as affected
by the transactions contemplated in the Credit Agreement and this
First Amendment, each of the representations and warranties made by
Borrower and the Guarantors in or pursuant to the Security
Instruments, including the Credit Agreement, shall be true and
correct in all material respects as of the Effective Date, as if
made on and as of such date.
Section 3.04 No Default. No Default or Event of Default shall
have occurred and be continuing as of the Effective Date.
Section 3.05 No Change. No event shall have occurred since
September 8, 1995, which, in the reasonable opinion of Lender,
could have a material adverse effect on the condition (financial or
otherwise), business, operations or prospects of Borrower.
Section 3.06 Security Instruments. All of the Security
Instruments shall be in full force and effect and provide to Lender
the security intended thereby to secure the Indebtedness, as
amended and supplemented hereby.
Section 3.07 Facility Fee. Without in any manner limiting or
negating any obligation of Borrower for the payment of other fees
pursuant to the Credit Agreement, contemporaneously with the
execution of this First Amendment, Borrower shall pay to Lender a
facility fee of $3,500.
Section 3.08 Other Instruments or Documents. Lender or its
counsel shall receive such other instruments or documents as they
may reasonably request.
ARTICLE IV. MISCELLANEOUS
Section 4.01 Adoption, Ratification and Confirmation of Credit
Agreement. Borrower and Lender each hereby adopt, ratify and
confirm the Credit Agreement, as amended hereby, and acknowledges
and agrees that the Credit Agreement, as amended hereby, is and
remains in full force and effect.
Section 4.02 Successors and Assigns. This First Amendment shall
be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns permitted pursuant to the
Credit Agreement.
Section 4.03 Counterparts. This First Amendment may be executed
by one or more of the parties hereto in any number of separate
counterparts, and all of such counterparts taken together shall be
deemed to constitute one and the same instrument and shall be
enforceable as of the Effective Date upon the execution of one or
more counterparts hereof by Borrower, the Guarantor, Lender and
Lender. In this regard, each of the parties hereto acknowledges
that a counterpart of this First Amendment containing a set of
counterpart execution pages reflecting the execution of each party
hereto shall be sufficient to reflect the execution of this First
Amendment by each necessary party hereto and shall constitute one
instrument.
Section 4.04 Number and Gender. Whenever the context requires,
reference herein made to the single number shall be understood to
include the plural; and likewise, the plural shall be understood to
include the singular. Words denoting sex shall be construed to
include the masculine, feminine and neuter, when such construction
is appropriate; and specific enumeration shall not exclude the
general but shall be construed as cumulative. Definitions of terms
defined in the singular or plural shall be equally applicable to
the plural or singular, as the case may be, unless otherwise
indicated.
Section 4.05 Entire Agreement. This First Amendment constitutes
the entire agreement among the parties hereto with respect to the
subject hereof. All prior understandings, statements and
agreements, whether written or oral, relating to the subject hereof
are superseded by this First Amendment.
Section 4.06 Invalidity. In the event that any one or more of
the provisions contained in this First Amendment shall for any
reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other provision of this First Amendment.
Section 4.07 Titles of Articles, Sections and Subsections. All
titles or headings to Articles, Sections, subsections or other
divisions of this First Amendment or the exhibits hereto, if any,
are only for the convenience of the parties and shall not be
construed to have any effect or meaning with respect to the other
content of such Articles, Sections, subsections, other divisions or
exhibits, such other content being controlling as the agreement
among the parties hereto.
Section 4.08 Governing Law. This First Amendment shall be deemed
to be a contract made under and shall be governed by and construed
in accordance with the internal laws of the State of Texas.
Section 4.09 Security. The $1,778,560.00 Note is part of the
Indebtedness under the Credit Agreement, as amended and supplement-
ed hereby, and as such is and shall be secured by all of the
Property in which the Lender has a Lien pursuant to the Security
Instruments without the necessity to formally amend any such
Security Instruments to specifically describe the $1,778,560.00
Note.
This First Amendment, the Credit Agreement, as supplemented and
amended hereby, the Notes, and the other Security Instruments
represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties.
There are no unwritten oral agreements between the parties.
[SIGNATURES BEGIN NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed and delivered by their proper and
duly authorized officers as of the Effective Date.
BORROWER: MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
LENDER: COMPASS BANK-HOUSTON
By:
Name:
Title:
EXHIBIT A
FORM OF NOTE
$1,778,560.00 May 8, 1996
FOR VALUE RECEIVED, MAGNOLIA PIPELINE CORPORATION, an Alabama
corporation (the "Borrower"), hereby promises to pay to the order
of COMPASS BANK- HOUSTON (the "Lender"), at its Principal Office at
24 Greenway Plaza, P.O. Box 4444, Houston, Texas, 77210-4444, the
principal sum of ONE MILLION SEVEN HUNDRED SEVENTY-EIGHT THOUSAND
FIVE HUNDRED SIXTY AND NO/100 Dollars ($1,778,560.00) (or such
lesser amount as shall equal the aggregate unpaid principal amount
of the Loans made by Lender to Borrower under the Credit Agreement,
as hereinafter defined), in lawful money of the United States of
America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such
office, in like money and funds, for the period commencing on the
date of such Loan until such Loan shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement.
The date, amount, and maturity of each Loan made by Lender to
Borrower, and each payment made on account of the principal
thereof, shall be recorded by Lender on its books and, prior to any
transfer of this Note, endorsed by Lender on the schedule attached
hereto or any continuation thereof.
This Note is the note referred to in the Credit Agreement
dated as of December 20, 1995 between Borrower and Lender, as
amended, and evidences Loans made by Lender thereunder (such Credit
Agreement as the same may be amended or supplemented from time to
time, the "Credit Agreement"). Capitalized terms used in this Note
have the respective meanings assigned to them in the Credit
Agreement.
This Note is issued pursuant to the Credit Agreement and is
entitled to the benefits provided for in the Credit Agreement and
the Security Instruments. The Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of
certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this
Note.
This Note is issued in replacement of and substitution for
that certain $1,500,000.00 note dated December 20, 1995, executed
by Borrower and payable to the order of Lender ("Replaced Note"),
and to the extent of $1,428,560.00, this Note represents a renewal
and rearrangement of the principal balance now owing upon the
Replaced Note. The balance of this Note represents additional
funds advanced by Lender to Borrower.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.
MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
<PAGE>
EXHIBIT B
SECURITY INSTRUMENTS
1.First Amendment and Supplement to Security Agreement executed by
Borrower in favor of Lender.
2.UCC-3 Financing Statement relating to item no. 1.
3.Amended and Restated Guaranty Agreement (Dan C. Tutcher)
4.Amended and Restated Guaranty Agreement (Kenneth B. Holmes, Jr.)
5.Amended and Restated Guaranty Agreement (Stevens G. Herbst)
6.Amended and Restated Guaranty Agreement (MERI)
Signature
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MIDCOAST ENERGY RESOURCES, INC.
(Registrant)
BY: /s/ Dan C. Tutcher
Dan C. Tutcher
Chairman of the Board
Chief Executive Officer
and President
Date: November 14, 1995
This Amendment to Purchase and Sale Agreement (Amendment Agreement)
is entered into as of the 8th day of May, 1996, by and between
Texas Southeastern Gas Gathering Company, a Texas corporation
("Seller"), and Magnolia Pipeline Corporation, an Alabama
corporation ("Purchaser").
INTRODUCTION
A. Seller and Purchaser have entered into a Purchase and Sale
Agreement dated March 12, 1996 (the "Agreement") pursuant to which
Seller has agreed to sell, and Purchaser has agreed to buy, certain
of Seller's assets currently used by Seller in connection with its
gas gathering transmission business.
B. Purchaser has, in accordance with Section 6 of the Agreement
identified various Title Defects and Title Defect Property (as such
terms are defined in the Agreement) with respect to property being
conveyed by Seller to Purchaser.
C. Purchaser and Seller desire to amend the Agreement to provide
that Purchaser shall waive all title defects, excepting the John
McDonald, Jr. Title Defect affecting System Number GEI-184
(Heidelberg System) in Jasper County, Mississippi, with a
corresponding reduction in the Purchase Price of $25,000. The
total purchase price for the Purchased Assets will be, therefore,
reduced from $415,000 to $390,000, subject to Seller's agreement to
indemnify Purchaser for any loss sustained by Purchaser arising out
of the McDonald Title Defect up to a maximum aggregate sum of
$45,000 (the value of the Heidelberg System as set out on Exhibit
H of the Purchase and Sale Agreement) in accordance with the terms
and conditions of this Amendment Agreement.
D. Seller has not obtained all consents for the transfer and
assignment of the Contracts and Permits requiring a consent to
assignment, which is a condition to the obligation of Purchaser to
close. Therefore, Seller and Purchaser desire to amend the
Agreement to provide for Closing on May 8, 1996, and to provide for
Seller's indemnity to Purchaser for any claims related to consents
to assign on the right of ways listed in subsection e hereof.
Seller will continue to make a good faith effort to obtain all
remaining consents for assignment of right of ways needed on the
systems. Seller shall undertake to have such restrictions removed
or satisfied and shall, in the interim and at the request of
Purchaser give Purchaser written confirmation (in recordable form)
of its beneficial interest.
NOW, THEREFORE, in consideration of the premises and the covenants
and agreements contained in this Amendment Agreement and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
WITNESSETH:
1. Capitalized terms used in this Amendment Agreement shall have
the same defined meanings which are set forth in the Agreement.
2. The Agreement is amended as follows:
a. Waiver of Certain Title Defects. Seller and Purchaser agree
that all title defects are waived, excepting the McDonald, Jr.
Title Defect affecting System Number GEI-184 (Heidelberg System) in
Jasper County, Mississippi, as set out on Exhibit "A" hereto.
b. Reduction of Purchase Price. Seller and Purchaser agree that
the total Purchase Price for the Purchased Assets pursuant to
Article 4.1 of the Purchase and Sale Agreement shall be amended to
be $390,000. Wherever the phrase "Base Purchase Price" appears it
shall reference this $390,000 rather than $415,000, and the
provisions providing for accrual of an additional amount based upon
the prime rate of interest are hereby deleted.
c. Purchase of Title Defect Property. Purchaser has identified
on Exhibit "A" attached hereto certain Title Defect Property (the
"Indemnified Property") which Purchaser (i) has elected to include
within the purchase and sale contemplated by this Agreement, and
(ii) has agreed to pay the Allocated Value for such Indemnified
Property, in consideration of Seller's agreement to indemnify
Purchaser with respect to said property up to the sum of $45,000,
as hereinafter provided.
d. Indemnification as to McDonald Claims. Seller hereby agrees
that on and after the Closing, Seller shall, subject to the
aggregate limit of $45,000:
(i) indemnify, and save and hold harmless Purchaser, its
successors and assigns, and their respective directors, officers,
employees and agents against any and all losses, damages
(compensatory, special, punitive and otherwise), claims, demands,
suits, costs, expenses, and liabilities, including, without
limitation, reasonable attorneys' fees and disbursements, court
costs and costs of investigation resulting from, arising out of, or
in any way connected with assertions of John McDonald, Jr. and/or
other parties that a portion of the Heidelberg System is on lands
owned or partially owned by him (them) for which no right-of-way,
easement or license has been granted by him (them) to Seller or
Seller's predecessors in ownership of said pipeline, and, as such,
he (they) have suffered damages and/or otherwise should be
compensated therefor, and/or that the pipeline should be removed
therefrom (collectively, the "McDonald Claims");
(ii) pay, when billed, all costs incurred or to be incurred by
Purchaser, its successors and assigns, in the removal and/or
abandonment of, and/or relocating of, any portion of the
Heidelberg System pursuant to, by reason of or arising out of any
judgment, injunction, decree or other court order, at law or in
equity, rendered in connection with the McDonald Claims, and
reimburse Seller, its successors or assigns, on a monthly basis,
for all losses suffered during any period the Heidelberg system is
shut-in or shut down by reason of any such removal and/or
abandonment, and/or relocation of a portion thereof;
(iii) reimburse, on a monthly basis, all attorneys' fees and
disbursements, costs of court, and costs of litigation, including,
without limitation, actual out-of-pocket expenses incurred by
Purchaser's corporate representatives for attendance at deposition,
trial, and conference with counsel, incurred by Purchaser, its
successors or assigns, arising out of all litigation involving the
McDonald Claims;
(iv) pay all judgments against Purchaser, its successors or
assigns, arising out of the McDonald Claims prior to the time any
such judgment becomes subject to execution, and without any
obligation on the part of Purchaser, its successors or assigns, to
first make payment of all or any part of such judgment; and
(v) pay all settlement amounts agreed upon by Purchaser, its
successors or assigns, with respect to the McDonald claims, whether
any such settlement is made before or after the commencement of
litigation; provided, however, no such individual settlement shall
be made by Purchaser, its successors or assigns, in excess of
$2,000, nor shall the aggregate amount of all such settlements
exceed $20,000 unless the prior written consent of Seller shall
have first been obtained, which consent shall not be unreasonably
withheld.
If Purchaser believes it is entitled to indemnification under the
foregoing provisions hereto, it shall give prompt notice (the
"Indemnity Notice") to Seller, describing in reasonable detail (i)
the relevant Indemnified Property and Title Defect, (ii) the third
party claim giving rise to the right to indemnity and (iii) the
amounts, if then known, to be paid by Seller by reason of such
indemnity.
The indemnity provisions set forth in Section 14.2 of the
Agreement, including, but not limited to, the time and monetary
limitations set forth therein, shall not be applicable to the
McDonald claims; it being expressly intended that the foregoing
indemnity provisions shall be applicable to the McDonald Claims.
e. Indemnification as to consents to assign. Seller hereby agrees that,
on and after the Closing, Seller shall, subject to the aggregate limit of
$20,000:
(i) indemnify, and save and hold harmless Purchaser, its successors and
assigns, and their respective directors, officers, employees and agents
against any and all losses, damages (compensatory, special, punitive and
otherwise), claims, demands, suits, costs, expenses, and liabilities,
including, without limitation, reasonable attorneys' fees and
disbursements, court costs and costs of investigation resulting from,
arising out of, or in any way connected with the following (collectively,
the "Right of Way Claims"): (a) Seller's failure prior to Closing to
obtain a consent to assignment to Purchaser of any Permits listed below
providing for a consent to assignment; (b) services or benefits
demanded by a landowner in consideration for or as a result of his
granting a consent to assign; or (c) any and all breaches at any time or
times prior to Closing of any of the terms relating to consents to assign
of the following rights-of-way agreements by Seller or its predecessors
in title to said rights-of-way, to-wit:
Agreement Recording
System Name Date Data
Millbrook David L. McCraine, et al 06/23/81
Millbrook Robert Redhead/ Hugh Redhead 07/03/81
Millbrook August & Susie Martens 03/10/83
Millbrook Eva S. Stockett, et al 03/01/83
Heidelberg 184 Town of Heidelberg 11/03/89
Heidelberg 184 The Alabama Great Southern
Railroad Company 11/13/89
Baxterville Cavenham Forest Industries 09/13/90
Baxterville Cavenham Forest Industries 12/10/90
Fayette Champion International Corp. 12/04/85
Fayette Champion International Corp. 02/04/86
(ii) pay, when billed, all costs incurred or to be incurred by Purchaser,
its successors and assigns, in curing or attempting to cure any breaches
prior to closing of claims relating to consents to assign on the above
listed right of ways or in providing services and benefits to a landowner
in consideration for or as a result of his granting or Seller's
request to him for a consent to assign;
(iii) reimburse, on a monthly basis, all attorneys' fees and disbursements,
costs of court, and costs of litigation, including, without limitation,
actual out-of-pocket expenses incurred by Purchaser's corporate
representatives for attendance at deposition, trial, and conference
with counsel,incurred by Purchaser, its successors or assigns, arising
out of all litigation involving Right of Way Claims;
(iv) pay all judgments against Purchaser, its successors or assigns, arising
out of the Right of Way Claims prior to the time any such judgment
becomes subject to execution, and without any obligation on the part of
Purchaser, its successors or assigns, to first make payment of all or
any part of such judgment; and
(v) pay all settlement amounts agreed upon by Purchaser, its successors or
assigns, with respect to Right of Way Claims, whether any such
settlement is made before or after the commencement of litigation;
provided, however, no such individual settlement shall be made by
Purchaser, its successors or assigns, in excess of $2,000, nor shall the
aggregate amount of all such settlements exceed $10,000 unless the prior
written consent of seller shall have first been obtained, which consent
shall not be unreasonably withheld.
If Purchaser believes it is entitled to indemnification under the foregoing
provisions hereto, it shall give prompt notice (the "Indemnity Notice") to
Seller, describing in reasonable detail (i) the relevant right-of-way property,
(ii) the third party claim giving rise to the right to indemnity and (iii)
the amounts, if then known, to be paid by Seller by reason of such indemnity.
The indemnity provisions set forth in Section 14.2 of the Agreement, including,
but not limited to, the time and monetary limitations set forth therein, shall
not be applicable to the Right of Way Claims; it being expressly intended that
only the foregoing indemnity provisions shall be applicable to Right of Way
Claims. Except as specifically provided in this Section 2e for Right of Way
Claims, the provisions of Section 14.2 shall remain in effect for any claims
pertaining to the aforesaid rights of way that come under the terms and
conditions of Section 14.2 of the Agreement.
f. Survivability, Termination: and Release. The right to indemnification
set forth in this Amendment Agreement shall survive (i) the delivery of the
Bill of Sale and any other conveyance documents and (ii) the due diligence of
Purchaser. Purchaser's right to indemnify under this Amendment Agreement shall
terminate as to any claim for which an Indemnity Notice has not been given
by Purchaser to Seller prior to December 31, 2001. Purchaser agrees to
execute and deliver to Seller a release of any indemnity obligation as to
which Purchaser is satisfied that the underlying matter giving rise to such
indemnity has been cured or remedied or no longer exists.
g. Sole and Exclusive Remedy. Purchaser's right to indemnity under this
Amendment Agreement shall be Purchaser's sole and exclusive remedy with respect
to the McDonald Claims and the Right of Way Claims.
h. Section 13 of the Agreement is deleted in its entirety.
3. Except as amended by this Amendment Agreement, the Purchase and Sale
Agreement will remain in full force and effect in accordance with its terms
as originally written.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
SELLER:
TEXAS SOUTHEASTERN GAS GATHERING COMPANY
Sam L. Banks, Chairman
PURCHASER:
MAGNOLIA PIPELINE CORPORATION
I. J. Berthelot II, Executive Vice President
EXHIBIT 10.52
FIRST AMENDMENT AND SUPPLEMENT TO
CREDIT AGREEMENT
BY AND BETWEEN
MAGNOLIA PIPELINE CORPORATION,
as Borrower,
COMPASS BANK-HOUSTON,
as Lender,
Effective as of May 8, 1996
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
Section 1.01 Terms Defined Above 1
Section 1.02 Terms Defined in Credit Agreement 1
Section 1.03 Other Definitional Provisions 1
ARTICLE II. AMENDMENTS TO CREDIT AGREEMENT
Section 2.01 Amendments and Supplements to Definitions 2
Section 2.02 Amendments and Supplements to Article II 2
Section 2.03 Amendments and Supplements to Article VIII 3
Section 2.04 Amendments and Supplements to Article IX 3
ARTICLE III. CONDITIONS
Section 3.01 Loan Documents 3
Section 3.02 Corporate Proceedings of Loan Parties 4
Section 3.03 Representations and Warranties 4
Section 3.04 No Default 4
Section 3.05 No Change 4
Section 3.06 Security Instruments 4
Section 3.08 Other Instruments or Documents 4
ARTICLE IV. MISCELLANEOUS
Section 4.01 Adoption, Ratification and Confirmation
of Credit Agreement 5
Section 4.02 Successors and Assigns 5
Section 4.03 Counterparts 5
Section 4.04 Number and Gender 5
Section 4.05 Entire Agreement 5
Section 4.06 Invalidity 5
Section 4.07 Titles of Articles, Sections and Subsections 5
Section 4.08 Governing Law 6
Section 4.08 Security 6
Exhibit A - Form of Note
Exhibit B - Security Instruments
FIRST AMENDMENT AND SUPPLEMENT TO
CREDIT AGREEMENT
This FIRST AMENDMENT AND SUPPLEMENT TO CREDIT AGREEMENT (this
"First Amendment") executed effective as of the 8th day of May,
1996 (the "Effective Date"), is by and between MAGNOLIA PIPELINE
CORPORATION, an Alabama corporation ("Borrower") and COMPASS BANK-
HOUSTON, a Texas State Chartered Banking Institution ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender are parties to that certain
Credit Agreement dated as of December 20, 1995 (the "Credit
Agreement"), pursuant to which Lender agreed to make loans to and
extensions of credit on behalf of Borrower;
WHEREAS, Borrower has requested that Lender, among other
things, increase the amount of the loan facility under the Credit
Agreement and Lender has agreed to such request upon the terms and
conditions set forth herein; and
WHEREAS, Borrower and Lender desire to amend the Credit
Agreement in the particulars hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as
follows:
ARTICLE I. DEFINITIONS
Section 1.01 Terms Defined Above. As used in this First
Amendment, each of the terms "Borrower", "Credit Agreement",
"Effective Date", "First Amendment", and "Lender" shall have the
meaning assigned to such term hereinabove.
Section 1.02 Terms Defined in Credit Agreement. Each term
defined in the Credit Agreement and used herein without definition
shall have the meaning assigned to such term in the Credit
Agreement, unless expressly provided to the contrary.
Section 1.03 Other Definitional Provisions.
(a) The words "hereby", "herein", "hereinafter",
"hereof", "hereto" and "hereunder" when used in this
First Amendment shall refer to this First Amendment as a
whole and not to any particular Article, Section,
subsection or provision of this First Amendment.
(b) Section, subsection and Exhibit references
herein are to such Sections, subsections and Exhibits to
this First Amendment unless otherwise specified.
ARTICLE II. AMENDMENTS TO CREDIT AGREEMENT
Borrower and Lender agree that the Credit Agreement is hereby
amended, effective as of the Effective Date, in the following
particulars.
Section 2.01 Amendments and Supplements to Definitions.
(a) The following terms, which are defined in
Section 1.02 of the Credit Agreement, are hereby amended
in their entirety to read as follows:
"Agreement" shall mean this Credit Agreement,
as amended and supplemented by the First Amendment
and as the same may from time to time be further
amended or supplemented.
"First Amendment" shall mean that certain
First Amendment and Supplement to Credit Agreement
dated as of May 8, 1996, by and between Borrower
and Lender.
"Maximum Credit Amount" shall mean an amount
at any time equal to $1,778,560, subject to
reductions in such amount pursuant to Section 2.03.
Section 2.02 Amendments and Supplements to Article II.
(a) Section 2.03(a) of the Credit Agreement is
hereby amended in its entirety to read as follows:
"(a) Commencing on June 1, 1996 and on the
first day of each calendar month thereafter, the
Maximum Credit Amount shall be reduced by an amount
equal to $23,000.00. The amount of such reduction
in the Maximum Credit Amount may be adjusted from
time to time based upon semi-annual reviews
performed by Lender at its option."
(b) Section 2.05 of the Credit Agreement is hereby
amended in its entirety to read as follows:
Section 2.05 Note. The Loans shall be evidenced by a single
promissory note of Borrower in substantially the form of Exhibit A
attached to the First Amendment, dated the effective date of the
First Amendment, payable to the order of Lender in a principal
amount equal to the Commitment and otherwise duly completed. The
date and amount of each Loan and all payments made on account of
the principal thereof, shall be recorded by Lender on its books for
the Note, and, prior to any transfer, endorsed by Lender on the
schedule attached to such Note or any continuation thereof. Such
records shall be deemed conclusive absent manifest error."
Section 2.03 Amendments and Supplements to Article VIII. Article
VIII of the Credit Agreement is hereby amended and supplemented by
adding thereto a new Section, being Section 8.09, as follows:
"Section 8.09 Tuscaloosa County, Alabama Mortgage. Within 30 days
after the effective date of the First Amendment, Borrower shall
provide Lender with an exhibit describing its Properties comprising
the Magnolia Pipeline System located in Tuscaloosa County, Alabama
and a cover page for a Mortgage, Assignment of Proceeds, Security
Agreement and Financing Statement, each in form and substance
legally sufficient for recording in Tuscaloosa County, Alabama and
perfecting a Lien in such Property in favor of Lender."
Section 2.04 Amendments and Supplements to Article IX.
Section 9.11 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"Section 9.11 Tangible Net Worth. From and after March 31, 1996,
Borrower will not permit its Tangible Net Worth to be less than
$3,100,000 at any time, with such minimum amount being permanently
increased by an amount equal to 50% of positive net income of
Borrower for each fiscal quarter of Borrower, and 100% of equity
received by Borrower subsequent to March 31, 1996; provided,
however such minimum amount shall not be decreased as a result of
any losses or negative net income of Borrower."
ARTICLE III. CONDITIONS
The enforceability of this First Amendment against Lender is
subject to the satisfaction of the following conditions precedent:
Section 3.01 Loan Documents. Lender shall have received the
following:
(a) multiple original counterparts, as requested by
Lender, of this First Amendment and each of the other Security
Instruments described or referred to in attached Exhibit B,
executed and delivered by a duly authorized officer of
Borrower, MERI and Lender, and each other Guarantor, as
applicable; and
(b) the Note, duly completed and executed by Borrower.
Section 3.02 Corporate Proceedings of Loan Parties. Lender shall
have received multiple copies, as requested by Lender, of the
resolutions, in form and substance reasonably satisfactory to
Lender, of the Boards of Directors of Borrower and MERI,
authorizing the execution, delivery and performance of this First
Amendment, the Note and any other Security Instrument to which they
are respectively a party, each such copy being attached to an
original certificate of the Secretary or an Assistant Secretary of
Borrower or as applicable, dated as of the Effective Date,
certifying (i) that the resolutions attached thereto are true,
correct and complete copies of resolutions duly adopted by written
consents or at meetings of the Boards of Directors, (ii) that such
resolutions constitute all resolutions adopted with respect to the
transactions contemplated hereby, (iii) that such resolutions have
not been amended, modified, revoked or rescinded as of the
Effective Date, (iv) that the respective articles of incorporation
and bylaws of Borrower and MERI have not been amended or otherwise
modified since the effective date of the Credit Agreement, except
pursuant to any amendments attached thereto, and (v) as to the
incumbency and signature of the officers of Borrower or MERI, as
applicable, executing this First Amendment, the Note and/or any
Security Instrument executed pursuant hereto.
Section 3.03 Representations and Warranties. Except as affected
by the transactions contemplated in the Credit Agreement and this
First Amendment, each of the representations and warranties made by
Borrower and the Guarantors in or pursuant to the Security
Instruments, including the Credit Agreement, shall be true and
correct in all material respects as of the Effective Date, as if
made on and as of such date.
Section 3.04 No Default. No Default or Event of Default shall
have occurred and be continuing as of the Effective Date.
Section 3.05 No Change. No event shall have occurred since
September 8, 1995, which, in the reasonable opinion of Lender,
could have a material adverse effect on the condition (financial or
otherwise), business, operations or prospects of Borrower.
Section 3.06 Security Instruments. All of the Security
Instruments shall be in full force and effect and provide to Lender
the security intended thereby to secure the Indebtedness, as
amended and supplemented hereby.
Section 3.07 Facility Fee. Without in any manner limiting or
negating any obligation of Borrower for the payment of other fees
pursuant to the Credit Agreement, contemporaneously with the
execution of this First Amendment, Borrower shall pay to Lender a
facility fee of $3,500.
Section 3.08 Other Instruments or Documents. Lender or its
counsel shall receive such other instruments or documents as they
may reasonably request.
ARTICLE IV. MISCELLANEOUS
Section 4.01 Adoption, Ratification and Confirmation of Credit
Agreement. Borrower and Lender each hereby adopt, ratify and
confirm the Credit Agreement, as amended hereby, and acknowledges
and agrees that the Credit Agreement, as amended hereby, is and
remains in full force and effect.
Section 4.02 Successors and Assigns. This First Amendment shall
be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns permitted pursuant to the
Credit Agreement.
Section 4.03 Counterparts. This First Amendment may be executed
by one or more of the parties hereto in any number of separate
counterparts, and all of such counterparts taken together shall be
deemed to constitute one and the same instrument and shall be
enforceable as of the Effective Date upon the execution of one or
more counterparts hereof by Borrower, the Guarantor, Lender and
Lender. In this regard, each of the parties hereto acknowledges
that a counterpart of this First Amendment containing a set of
counterpart execution pages reflecting the execution of each party
hereto shall be sufficient to reflect the execution of this First
Amendment by each necessary party hereto and shall constitute one
instrument.
Section 4.04 Number and Gender. Whenever the context requires,
reference herein made to the single number shall be understood to
include the plural; and likewise, the plural shall be understood to
include the singular. Words denoting sex shall be construed to
include the masculine, feminine and neuter, when such construction
is appropriate; and specific enumeration shall not exclude the
general but shall be construed as cumulative. Definitions of terms
defined in the singular or plural shall be equally applicable to
the plural or singular, as the case may be, unless otherwise
indicated.
Section 4.05 Entire Agreement. This First Amendment constitutes
the entire agreement among the parties hereto with respect to the
subject hereof. All prior understandings, statements and
agreements, whether written or oral, relating to the subject hereof
are superseded by this First Amendment.
Section 4.06 Invalidity. In the event that any one or more of
the provisions contained in this First Amendment shall for any
reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other provision of this First Amendment.
Section 4.07 Titles of Articles, Sections and Subsections. All
titles or headings to Articles, Sections, subsections or other
divisions of this First Amendment or the exhibits hereto, if any,
are only for the convenience of the parties and shall not be
construed to have any effect or meaning with respect to the other
content of such Articles, Sections, subsections, other divisions or
exhibits, such other content being controlling as the agreement
among the parties hereto.
Section 4.08 Governing Law. This First Amendment shall be deemed
to be a contract made under and shall be governed by and construed
in accordance with the internal laws of the State of Texas.
Section 4.09 Security. The $1,778,560.00 Note is part of the
Indebtedness under the Credit Agreement, as amended and supplement-
ed hereby, and as such is and shall be secured by all of the
Property in which the Lender has a Lien pursuant to the Security
Instruments without the necessity to formally amend any such
Security Instruments to specifically describe the $1,778,560.00
Note.
This First Amendment, the Credit Agreement, as supplemented and
amended hereby, the Notes, and the other Security Instruments
represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties.
There are no unwritten oral agreements between the parties.
[SIGNATURES BEGIN NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed and delivered by their proper and
duly authorized officers as of the Effective Date.
BORROWER: MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
LENDER: COMPASS BANK-HOUSTON
By:
Name:
Title:
EXHIBIT A
FORM OF NOTE
$1,778,560.00 May 8, 1996
FOR VALUE RECEIVED, MAGNOLIA PIPELINE CORPORATION, an Alabama
corporation (the "Borrower"), hereby promises to pay to the order
of COMPASS BANK- HOUSTON (the "Lender"), at its Principal Office at
24 Greenway Plaza, P.O. Box 4444, Houston, Texas, 77210-4444, the
principal sum of ONE MILLION SEVEN HUNDRED SEVENTY-EIGHT THOUSAND
FIVE HUNDRED SIXTY AND NO/100 Dollars ($1,778,560.00) (or such
lesser amount as shall equal the aggregate unpaid principal amount
of the Loans made by Lender to Borrower under the Credit Agreement,
as hereinafter defined), in lawful money of the United States of
America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such
office, in like money and funds, for the period commencing on the
date of such Loan until such Loan shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement.
The date, amount, and maturity of each Loan made by Lender to
Borrower, and each payment made on account of the principal
thereof, shall be recorded by Lender on its books and, prior to any
transfer of this Note, endorsed by Lender on the schedule attached
hereto or any continuation thereof.
This Note is the note referred to in the Credit Agreement
dated as of December 20, 1995 between Borrower and Lender, as
amended, and evidences Loans made by Lender thereunder (such Credit
Agreement as the same may be amended or supplemented from time to
time, the "Credit Agreement"). Capitalized terms used in this Note
have the respective meanings assigned to them in the Credit
Agreement.
This Note is issued pursuant to the Credit Agreement and is
entitled to the benefits provided for in the Credit Agreement and
the Security Instruments. The Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of
certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this
Note.
This Note is issued in replacement of and substitution for
that certain $1,500,000.00 note dated December 20, 1995, executed
by Borrower and payable to the order of Lender ("Replaced Note"),
and to the extent of $1,428,560.00, this Note represents a renewal
and rearrangement of the principal balance now owing upon the
Replaced Note. The balance of this Note represents additional
funds advanced by Lender to Borrower.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.
MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
EXHIBIT B
SECURITY INSTRUMENTS
I. First Amendment and Supplement to Security Agreement executed
by Borrower in favor of Lender.
II. UCC-3 Financing Statement relating to item no. 1.
III. Amended and Restated Guaranty Agreement (Dan C. Tutcher)
IV. Amended and Restated Guaranty Agreement (Kenneth B. Holmes,
Jr.)
V. Amended and Restated Guaranty Agreement (Stevens G. Herbst)
VI. Amended and Restated Guaranty Agreement (MERI)
FIRST AMENDMENT AND SUPPLEMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT AND SUPPLEMENT TO SECURITY AGREEMENT
(this "First Amendment") is executed as of the 8th day of May,
1996, by and between MAGNOLIA PIPELINE CORPORATION, an Alabama
corporation, with its chief place of business and its chief
executive office located at 1100 Louisiana, Suite 3030, Houston,
Texas 77002 ("Debtor"), and COMPASS BANK - HOUSTON, a Texas State
Chartered Banking Institution with banking quarters at 24 Greenway
Plaza, Suite 1401, Houston, Texas 77046 ("Secured Party").
W I T N E S S E T H:
WHEREAS, on December 20, 1995, Debtor and Secured Party
entered into that certain Credit Agreement (the "Existing Credit
Agreement"), whereby, pursuant to the terms and conditions
contained therein, Secured Party agreed to make loans to and
extensions of credit on behalf of Debtor; and
WHEREAS, to satisfy one of the terms and conditions of the
Credit Agreement, Debtor executed that certain Security Agreement
dated as of December 20, 1995 (the "Security Agreement"), whereby,
pursuant to the terms and conditions contained therein, Debtor did
grant to Secured Party a security interest in, a general lien upon,
and a right of set-off against, the "Collateral" (as defined and
described in the Security Agreement); and
WHEREAS, Debtor and Secured Party have amended and supplement-
ed the Credit Agreement by entering into that certain First
Amendment and Supplement to Credit Agreement dated as of May 8,
1996, whereby, pursuant to the terms and conditions contained
therein, Secured Party agreed to renew, rearrange, increase and
modify the indebtedness outstanding under the Existing Credit
Agreement (the "First Amendment and Supplement to Credit Agree-
ment") (the Existing Credit Agreement, as so amended and supple-
mented, and as the same may from time to time be further amended or
supplemented, hereinafter called the "Credit Agreement"); and
WHEREAS, one of the conditions for Secured Party entering into
the Fourth Amendment and Supplement to Credit Agreement is the
execution and delivery by Debtor of this First Amendment, and
Debtor has agreed to enter into this First Amendment;
NOW, THEREFORE, for and in consideration of the premises and
the agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, Debtor and Secured Party hereby agree that the
Security Agreement is hereby amended and supplemented as follows:
1. The term "Credit Agreement", as defined in the Security
Agreement, is hereby amended to mean the Existing Credit Agreement,
as amended and supplemented by the First Amendment and Supplement
to Credit Agreement, and as the same may from time to time be
further amended, supplemented and/or restated.
2. Subsection 1.02(c) of the Security Agreement is hereby
amended and restated in its entirety to read as follows:
"(c) All of Debtor's interest in and rights under
(whether now owned or hereafter acquired by operation of
law or otherwise) all presently existing and hereafter
created operating agreements, equipment leases, produc-
tion agreements, sales agreements, purchase and/or
exchange agreements, transportation agreements, delivery
contracts, and other contracts and/or agreements, and all
renewals, amendments, supplements and modifications
thereof and substitutions and replacements therefor,
including, without limitation, the contracts and/or
agreements described or referred to on Schedule 1.02(c)
attached to the First Amendment and made a part thereof
for all purposes, as such Schedule 1.02(c) may be amended
or supplemented from time to time."
3. Certain terms which are defined in Section 2.02 of the
Security Agreement are hereby amended as follows:
(a) the term "Obligations" is hereby amended by amending
and restating paragraph (a) thereof to read in its entirety as
follows:
"(a) The payment and performance of all
indebtedness, obligations (including reim-
bursement obligations) and liabilities of
Debtor to Secured Party, now or hereafter
existing under or in connection with the
Credit Agreement including, without limita-
tion, such indebtedness, obligations (includ-
ing reimbursement obligations) and liabilities
arising out of, pursuant to, or evidenced by
(i) the Note, being that certain promissory
note dated May 8, 1996, in the principal
amount of $1,778,560, issued or to be issued
by Debtor under the Credit Agreement, payable
to Secured Party as therein provided, with
final maturity on December 1, 1998 (the
"Note"), which, to the extent of $1,428,560
represents a renewal, extension and rearrange-
ment of that certain $1,500,000 promissory
note dated December 20, 1995, issued by Debtor
under the Credit Agreement, and payable to the
order of the Secured Party as therein provid-
ed, (ii) any and all renewals, extensions for
any period, rearrangements, increases and/or
modifications of any or all of the Note, (iii)
any Letters of Credit issued or to be issued
by Secured Party for the account of Debtor and
described or referred to in the Credit Agree-
ment, (iv) any and all renewals, extensions,
amendments and/or reissues of any such Letters
of Credit, and (v) any and all other Loan
Documents or other documents executed in
connection with or as security for the Credit
Agreement, the Note and the Letters of Cred-
it."
(b) the term "Security Agreement" is hereby amended to
mean the Security Agreement, as amended and supplemented by
this First Amendment, and as the same may from time to time be
further amended or supplemented.
4. All capitalized terms used but not defined in this First
Amendment which are defined in the Security Agreement or the Credit
Agreement shall have the same meanings herein as therein unless the
context otherwise requires.
5. Section 2.02 of the Security Agreement is hereby further
amended and supplemented by adding thereto the following new
definition:
"First Amendment" shall mean that certain First
Amendment and Supplement to Security Agreement dated as
of May 8, 1996, by and between Debtor and Secured Party.
6. Debtor hereby confirms that it has granted and does
hereby grant to Secured Party a security interest in, a general
lien upon, and a right of set-off against all of the Collateral
including, without limitation, all of Debtor's right, title and
interest in and to the contracts or other agreements described or
referred to in Schedule 1.02(c) attached to this First Amendment,
and all other Property relating thereto, arising therefrom, or in
any way connected therewith.
7. Debtor represents and warrants to Secured Party that (i)
there exists no default or event of default or any condition or act
which constitutes, or with notice or lapse of time would constitute
an Event of Default under the Security Agreement, as amended and
supplemented hereby; (ii) Debtor has performed and complied with
all covenants, agreements and conditions contained in the Security
Agreement, as amended and supplemented hereby, required to be
performed or complied with by it; and (iii) the representations and
warranties of Debtor contained in the Security Agreement, as
amended and supplemented hereby, were true and correct when made
and are true and correct in all material respects as of the time of
delivery of this First Amendment.
8. On and after the date on which this First Amendment
becomes effective, the terms "Security Agreement", "hereof",
"herein", "hereunder" and terms of like import, when used in the
Security Agreement shall, except where the context otherwise
requires, refer to the Security Agreement, as amended and supple-
mented hereby.
9. Except as amended and supplemented by this First
Amendment, the Security Agreement shall remain in full force and
effect, and Debtor hereby reaffirms all covenants, representations
and warranties made in the Security Agreement, as amended and
supplemented hereby.
10. This First Amendment shall benefit and bind the parties
hereto and their respective assigns, successors and legal represen-
tatives.
WITNESS THE EXECUTION HEREOF as of the 8th day of May 1996.
DEBTOR: MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
By:
Name:
Title:
SECURED PARTY: COMPASS BANK - HOUSTON
By:
Name:
Title:
Schedule 1.02(c) - Contracts and Permits
FINANCING STATEMENT
(AMENDMENT)
This Financing Statement (Amendment) is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
The name and address of the Debtor is:
MAGNOLIA PIPELINE CORPORATION
1100 Louisiana, Suite 3030
Houston, Texas 77002
11. The name and address of the Secured Party is:
COMPASS BANK-HOUSTON
24 Greenway Plaza, Suite 1401
Houston, Texas 77046
12. This statement refers to original Financing Statement No. B96-
01162, filed with the Alabama Secretary of State, on January
1, 1996 (the "Original Financing Statement").
13. The Original Financing Statement is hereby amended to add to
the Collateral described in and covered thereby, the following
additional Collateral:
All of Debtor's interest in and rights under (whether now
owned or hereafter acquired by operation of law or otherwise)
all presently existing and hereafter created operating
agreements, equipment leases, production agreements, sales
agreements, purchase and/or exchange agreements, transporta-
tion agreements, delivery contracts, and other contracts
and/or agreements, and all renewals, amendments, supplements
and modifications thereof and substitutions and replacements
therefor, including, without limitation, the contracts and/or
agreements described or referred to on Schedule 1.02(c)
attached hereto and made a part hereof for all purposes, as
such Schedule 1.02(c) may be amended or supplemented from time
to time.
DEBTOR:
MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
SECURED PARTY:
COMPASS BANK-HOUSTON
By:
Name:
Title:
<PAGE>
AMENDED AND RESTATED GUARANTY AGREEMENT
Between
DAN C. TUTCHER
and
COMPASS BANK-HOUSTON
May 8, 1996
<PAGE>
AMENDED AND RESTATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED GUARANTY AGREEMENT is by DAN C.
TUTCHER (hereinafter called "Guarantor"), in favor of COMPASS BANK-HOUSTON, a
Texas State Chartered Banking Institution, having banking quarters at 24
Greenway Plaza, Suite 1401, Houston, Texas 77046 (hereinafter called "Lender");
W I T N E S S E T H:
WHEREAS, on December 20, 1995, Magnolia Pipeline Corporation, an
Alabama corporation (the "Borrower") and Lender entered into that certain Credit
Agreement (the "Existing Credit Agreement"), whereby, pursuant to the terms and
conditions contained therein,Lender agreed to make loans to and extensions of
credit on behalf of Borrower; and
WHEREAS, to satisfy one of the terms and conditions of the Credit
Agreement, Guarantor executed that certain Guaranty Agreement dated as of
December 20, 1995 in favor of Lender (the "Existing Guaranty Agreement"); and
WHEREAS, Borrower and Lender have amended and supplemented the Existing
Credit Agreement by entering into that certain First Amendment and Supplement
to Credit Agreement dated as of May 8, 1996 (the "First Amendment and
Supplement to Credit Agreement"),whereby, pursuant to the terms and conditions
contained therein, Lender agreed to renew, rearrange, increase and modify the
indebtedness outstanding under the Existing Credit Agreement (the Existing
Credit Agreement, as so amended and supplemented, and as the same may from
time to time be further amended or supplemented, hereinafter called the
"Credit Agreement"); and
WHEREAS, one of the conditions for Lender entering into the First
Amendment and Supplement to Credit Agreement is the execution and delivery by
Guarantor of this Guaranty Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and conditions
of the Credit Agreement, (ii) to induce Lender, at its option, at any time or
from time to time, to loan monies, with or without security to or for the
account of Borrower, (iii) at the special insistence and request of Lender,
and (iv) for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Guarantor and Lender hereby agree
to amend and restate the Existing Guaranty Agreement in its entirety as
follows:
ARTICLE I
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty Agreement,
the terms "Borrower," "Credit Agreement," "Guarantor" and "Lender" and shall
have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty Agreement,
the following terms shall have the following meanings, unless the context
otherwise requires:
"Collateral" shall have the meaning indicated in Section 4.1.
"Guaranty Agreement" shall mean this Amended and Restated Guaranty
Agreement, as the same may from time to time be amended or supplemented.
"Liabilities" shall have the meaning indicated in Section 2.1.
Section 1.3 Credit Agreement Definitions. Unless otherwise defined
herein, all terms beginning with a capital letter which are defined in the
Credit Agreement shall have the same meanings herein as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed; Maximum Liability. (a) Guarantor
hereby unconditionally and irrevocably guarantees the prompt payment when due,
whether at maturity or otherwise, of the following (hereinafter called the
"Liabilities"):
(i) All indebtedness, obligations including reimbursement obligations and
liabilities of any kind of Borrower to Lender and the due fulfillment and
performance of all obligations now or hereafter owed by Borrower to Lender
(and also to others to the extent of participations granted them by Lender)
arising out of and pursuant to the Credit Agreement, now outstanding or owing
or which may hereafter be existing or incurred, directly between Borrower and
Lender or acquired outright as a participation, conditionally or as
collateral security from another by Lender, absolute or contingent,
joint and/or several, secured or unsecured, due or not due, arising by
operation of law or otherwise, or direct or indirect, including indebtedness,
obligations and liabilities to Lender of Borrower as a member of any
partnership, syndicate, association or other group, and whether incurred
by Borrower as principal, surety, endorser, guarantor, accommodation party or
otherwise, including, without limitation, the Indebtedness, as
defined in the Credit Agreement, including without limitation (A) the Note,
being that certain promissory note of even date herewith in the amount of
$1,778,560.00, executed by Borrower and payable to the order of Lender;
(B) any and all renewals, extensions for any period, rearrangements increases
and/or modifications of the Note; (C) any Letters of Credit issued or to be
issued by the Lender for the account of Borrower and described or referred to
in the Credit Agreement, and any and all renewals, extensions, amendments
and/or reissues of any such Letters of Credit; and (D) any and all other
Loan Documents or other documents executed in connection with or as security
for the Credit Agreement, the Note and/or the Letters of Credit;
(ii) All interest, charges, expenses, attorneys' or other fees and any other
sums payable to or incurred by Lender in connection with the execution,
administration or enforcement of Lender's rights and remedies under the Credit
Agreement, the Note, the Letters of Credit or any other Loan Documents or other
agreements with Borrower; and
(iii) All post-petition interest on the Liabilities in the event of a
bankruptcy or insolvency of the Borrower.
Section 2.2 Nature of Guaranty. This is an irrevocable, absolute,
unconditional, completed and continuing guaranty of payment and not a guaranty
of collection, and no notice of the Liabilities or any extension of credit
already or hereafter contracted by or extended to Borrower need be given
to Guarantor. The fact that the Liabilities may be rearranged, increased,
reduced, extended for any period and/or renewed from time to time or paid in
full without notice to Guarantor shall not release, discharge or reduce the
obligation of Guarantor with respect to the Liabilities, and Guarantor shall
remain fully bound hereunder. In the event that Lender must rescind or
restore any payment received by Lender in satisfaction of the Liabilities,
as set forth herein, any prior release or discharge from the terms of this
Guaranty Agreement given to Guarantor by Lender shall be without effect, and
this Guaranty Agreement shall remain in full force and effect. It is the
intention of Borrower and Guarantor that Guarantor's obligations hereunder
shall not be discharged except by Guarantor's performance of such
obligations and then only to the extent of such performance. This Guaranty
Agreement may be enforced by Lender and any subsequent holder of the Liabilities
and shall not be dis-charged by the assignment or negotiation of all or part of
the Liabilities. This Guaranty Agreement may not be revoked by Guarantor and
shall continue to be effective or be reinstated, as the case may be, if at
any time any payment of any of the Liabilities is rescinded or must otherwise
be returned by Lender upon the insolvency, bankruptcy, reorganization,
receivership or other debtor relief proceeding involving Borrower, or after any
attempted revocation by Guarantor and after Guarantor's death (in which event
this Guaranty Agreement shall be binding upon Guarantor's estate and Guarantor's
heirs and legal representatives), all as though such payment had not been
made. Guarantor hereby expressly waives notice of intent to accelerate,
notice of acceleration, presentment, demand, notice of non-payment, protest,
notice of protest and dishonor or any other notice whatsoever on any and all
forms of such Liabilities, and also notice of acceptance of this Guaranty
Agreement, acceptance on the part of Lender being conclusively presumed by its
request for this Guaranty Agreement and delivery of the same to it.
Section 2.3 Lender's Rights. Guarantor authorizes Lender, without notice or
demand and without affecting Guarantor's liability hereunder, to take and hold
security for the payment of this Guaranty Agreement and/or any of the
Liabilities, and exchange, enforce, waive and release any such security; and
to apply such security and direct the order or manner of sale thereof as
Lender in its discretion may determine; and to obtain a guaranty of the
Liabilities from any one or more Persons and at any time or times to enforce,
waive, rearrange, modify,limit or release any of such other Persons from their
obligations under such guaranties, and Guarantor hereby acknowledges and
agrees that the obligations of all Persons to pay and satisfy the Liabilities
pursuant to their respective guaranties (including Guarantor's obligations
under this Guaranty Agreement) shall be joint and several. It is hereby
understood and agreed that whether and when and in what order to exercise any of
the remedies of Lender under the Credit Agreement, the Note, or any other Loan
Document executed in connection with the Liabilities, shall be in the sole and
absolute discretion of Lender, and no delay by Lender to enforce any remedy,
including delay in conducting a foreclosure sale or other disposition of
collateral, shall be a defense to Guarantor's liability under this Guaranty
Agreement.
Section 2.4 Guarantor's Waivers. Guarantor waives any right to require Lender
(and it shall not be necessary for Lender, in order to enforce such payment by
Guarantor to first)
(a) to proceed against Borrower or any other Person liable on the Liabilities,
(b) to proceedagainst or exhaust any security given to secure the Liabilities,
(c) to have Borrower joined with Guarantor in any suit arising out of this
Guaranty Agreement and/or any of the Liabilities,
(d) to enforce its rights against any other guarantor of the Liabilities,
(e) to pursue or exhaust any other remedy in Lender's power whatsoever, or
(f) to preserve or perfect any liens or security interests against any
collateral whatsoever. Lender shall not be required to mitigate damages
or take any action to reduce, collect or enforce the Liabilities. Guarantor w
aives any defense or right to the marshalling of any security given to secure
the Liabilities. Guarantor waives any defense arising by reason of any
disability, lack of corporate authority or power, or other defense of
Borrower or any other guarantor of any of the Liabilities, and shall remain
liable hereon regardless of whether Borrower or any other guarantor be found not
liable thereon for any reason. Until all the Liabilities shall have been paid
in full, Guarantor shall have no right of subrogation, waives all of its rights
at law or in equity (including, without limitation, any law subrogating
Guarantor to the rights of Lender) to seek contribution, indemnification or any
other form of reimbursement from or to enforce any remedy which Lender now has
or may hereafter have against Borrower or any other Person primarily or
secondarily liable for any of the Liabilities and waives any benefit of and any
right to participate in any security now or hereafter held by Lender to
secure directly or indirectly all or any of the Liabilities. Guarantor waives
any and all defenses which might otherwise be available (but only to the
extent permitted by law) by virtue of any valuation, stay, moratorium law or
similar law now or hereafter in effect.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees that
if the maturity of any Liabilities is accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to Guarantor. Guarantor will pay,
forthwith upon notice from Lender of Borrower's failure to pay any
Liabilities at maturity, to Lender at Lender's banking quarters in Houston,
Harris County, Texas, the amount due and unpaid by Borrower and guaranteed
hereby. The failure of Lender to give this notice shall not in any way release
Guarantor hereunder.
Section 2.6 Lender's Expenses. If Guarantor fails to pay the
Liabilities after notice from Lender of Borrower's failure to pay any
Liabilities at maturity, and if Lender obtains the services of an attorney
for collection of amounts owing by Guarantor hereunder, or obtains
advise of counsel in respect of any of its rights hereunder, or if suit is
filed to enforce this Guaranty Agreement, or if proceedings are had in any
bankruptcy, probate, receivership or otherjudicial proceedings for the
establishment or collection of any amount owing by Guarantor hereunder,
or if any amount owing by Guarantor hereunder is collected through such
proceedings, Guarantor agrees to pay Lender at Lender's banking quarters all
court costs and Lender's reasonable attorneys' fees.
Section 2.7 Primary Liability. It is expressly agreed that the
liability of Guarantor for the payment of the Liabilities guaranteed hereby
shall be primary and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
following, and agrees that Guarantor's obligations under this Guaranty Agreement
shall not be released, diminished, impaired, reduced or adversely affected by
any of the following, and waives any rights (including, without limitation,
rights to notice) which Guarantor might otherwise have as a result
of or in connection with any of the following:
(a) Modifications, etc. Any modification, amendment, supplement, renewal,
extension for any period, increase, decrease, alteration or
rearrangement of all or any part of the Liabilities, or of the Note,
or the Credit Agreement or any other Loan Document executed in
connection therewith, or any contract or understanding between
Borrower and Lender, or any other Person, pertaining to the
Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance or compromise
that might be granted or given by Lender to Borrower or Guarantor or
any other Person liable on the Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability,
dissolution or lack of power of Borrower or any other Person at any
time liable for the payment of all or part of the Liabilities; or any
dissolution of Borrower or any sale, lease or transfer of any or
all of the assets of Borrower or Guarantor, or any changes in the
shareholders or members of Borrower; or any reorganization of Borrower;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any
document or agreement executed in connection with the Liabilities, for
any reason whatsoever, including without limitation the fact that
(i) the Liabilities, or any part thereof, exceeds the amount permitted
by law, (ii) the act of creating the Liabilities or any part thereof is
ultra vires, (iii) the officers or representatives executing the
documents or otherwise creating the Liabilities acted in
excess of their authority, (iv) the Liabilities or any part thereof
violate applicable usury laws, (v) the Borrower or any other Person at
any time liable for the payment of all or any part of the
Liabilities has valid defenses, claims or offsets (whether at law or in
equity, by agreement or by statute) which render the Liabilities
wholly or partially uncollectible from Borrower, (vi) the creation,
performance or repayment of the Liabilities (or the execution, delivery
and performance of any document or instrument representing part of the
Liabilities or executed in connection with the Liabilities, or given
to secure the repayment of the Liabilities) is illegal, uncollectible,
legally impossible or unenforceable, or (vii) the Credit Agreement,any
other Loan Document, or any other document or instrument pertaining
to the Liabilities has been forged or otherwise is irregular or not
genuine or authentic;
(e) Release of Obligors. Any full or partial release of the liability of
Borrower on the Liabilities or any part thereof, or of any
co-guarantors, or any other Person now or hereafter liable, whether
directly or indirectly, jointly, severally, or jointly and
severally, to pay, perform, guarantee or assure the payment of the
Liabilities or any part thereof; it being recognized, acknowledged and
agreed by Guarantor that Guarantor may be required to pay the
Liabilities in full without assistance or support of any other
Person, and Guarantor has not been induced to enter into this Guaranty
Agreement on the basis of a contemplation, belief, understanding or
agreement that any other Person will be liable to perform the
Liabilities, or Lender will look to any other Person to perform the
Liabilities;
(f) Other Security. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any
part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including,
without limitation, negligent, willful, unreasonable or unjustifiable
impairment) of any collateral, property or security, at any time
existing in connection with, or assuring or securing payment of, all
or any part of the Liabilities;
(h) Care and Diligence. The failure of Lender or any other Person to
exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of
such collateral, property or security;
(i) Status of Liens. The fact that any collateral, security or Lien
contemplated or intended to be given, created or granted as security
for the repayment of the Liabilities shall not be properly perfected or
created, or shall prove to be unenforceable or subordinate to any
other Lien; it being recognized and agreed by Guarantor that
Guarantor is not entering into this Guaranty Agreement in reliance on,
or in contemplation of the benefits of, the validity, enforceability,
collectibility or value of any of the collateral for the Liabilities;
(j) Preference. Any payment by Borrower to Lender is held to constitute a
preference under bankruptcy laws, or for any reason Lender is required
to refund such payment or pay such amount to Borrower or someone else;
or
(k) Other Actions Taken or Omitted. Any other action taken or omitted to
be taken with respect to the Credit Agreement, any other Loan Document,
the Liabilities, or the security and collateral therefor, whether or
not such action or omission prejudices Guarantor or increases the
likelihood that Guarantor will be required to pay the Liabilities
pursuant to the terms hereof; it is the unambiguous and unequivocal
intention of Guarantor that Guarantor shall be obligated to pay the
Liabilities when due, notwithstanding any occurrence, circumstance,
event, action, or omission whatsoever, whether contemplated or
uncontemplated, and whether or not otherwise or particularly
described herein, except for the full and final payment and
satisfaction of the Liabilities.
ARTICLE 3
Representations, Warranties and Financial Information
Section 3.1 Representations and Warranties. In order to induce Lender to
accept this Guaranty Agreement, Guarantor represents and warrants to Lender
(which representations and warranties will survive the creation of the
Liabilities and any extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to this Guaranty
Agreement reasonably has benefitted or may be expected to benefit,
directly or indirectly, Guarantor.
(b) Binding Obligations. This Guaranty Agreement constitutes valid and
binding obligations of Guarantor, enforceable in accordance with its
terms (except that enforcement may be subject to any applicable
bankruptcy, insolvency or similar laws generally affecting the
enforcement of creditors' rights).
(c) No Legal Bar or Resultant Lien. This Guaranty Agreement will not
violate any contract, agreement, law, regulation, order, injunction,
judgment, decree or writ to which Guarantor is subject, or result in
the creation or imposition of any Lien upon any Properties of Guarantor
(other than those, if any, granted hereby or permitted
by the Credit Agreement).
(d) No Consent. Guarantor's execution, delivery and performance of this
Guaranty Agreement does not require the consent or approval of any
other Person,including without limitation any regulatory authority or
governmental body of the United States or any state thereof or any
political subdivision of the United States or any state
thereof.
(e) Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial
condition of the Borrower and is familiar with the value of any and
all collateral intended to be created as security for the
payment of the Note and Liabilities; provided, however, Guarantor is
not relying on such financial condition or the collateral as an
inducement to enter into this Guaranty Agreement.
(f) No Representation. Neither Lender nor any other Person has made any
representation, warranty or statement to Guarantor with regard to the
Borrower or any Person liable for the payment of all or any part of
the Liabilities, or their respective financial condition in order to
induce Guarantor to execute this Guaranty Agreement.
(g) Solvency. Guarantor hereby represents that (i) it is not insolvent
as of the date hereof and will not be rendered insolvent as a result of
this Guaranty Agreement, (ii) it is not engaged in business or a
transaction, or about to engage in a business or a
transaction, for which any property or assets remaining with such
Guarantor is unreasonably small capital, and (iii) it does not intend
to incur, or believe it will incur, debts that
will be beyond its ability to pay as such debts mature.
Section 3.2 Financial Information. Guarantor will furnish to Lender such
information respecting the condition, financial or otherwise, of Guarantor as
Lender may from time to time request and will furnish to Lender as soon as
available and in any event within 120 days after the end of each calendar year
the personal financial statement of Guarantor for such year, including
statements of contingent liabilities and cash flow, certified by Guarantor.
ARTICLE 4
Security
Section 4.1 Grant of Security Interest. As security for Guarantor's
obligations hereunder, Guarantor hereby grants to Lender a security interest
in, a general lien upon and/or right of set-off against the following (herein
referred to as the Collateral): the balance of every deposit account,
now or hereafter existing, of Guarantor with Lender and any other claim of
Guarantor against Lender, now or hereafter existing, and all money, instruments,
securities, documents, chattel paper, credits, claims, demands and any other
property, rights and interest of Guarantor, which at any time shall come into
the possession or custody or under the control of Lender or any of its agents or
affiliates, for any purpose, and shall include the proceeds,
products and accessions of and to any thereof. Lender shall be deemed to have
possession of any of the Collateral in transit to or set apart for it or any of
its agents or affiliates.
Section 4.2 Financing Statements. The right is expressly granted to Lender,
at its discretion, to file one or more financing statements or a copy of this
Guaranty Agreement under the Uniform Commercial Code naming Guarantor, as
Debtor, and Lender, as Secured Party, and indicating therein the types or
describing the items of Collateral.
Section 4.3 Remedies. In the event of default under this Guaranty Agreement,
Lender may sell or cause to be sold in Harris County, Texas, or elsewhere, in
one or more sales or parcels, at such price as Lender may deem best, and for
cash or on credit or for future delivery, without assumption of any credit
risk, all or any of the Collateral at any broker's board or at
public or private sale, without demand or performance or notice of intention to
sell or of time or place of sale (except such notice as is required by
applicable statute and cannot be waived), and Lender or anyone else may be the
purchaser of any or all of the Collateral so sold and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind, including
any equity of redemption of Guarantor, any such demand, notice or right and
equity being hereby expressly waived and released.
Section 4.4 Rights. The grant of the above security interest and lien shall
not in any way limit or be construed as limiting Lender to collect payment of
Guarantor's obligations hereunder only out of the Collateral, but it is
expressly understood and provided that all such obligations shall constitute
the absolute and unconditional obligations of Guarantor. Lender shall
not be required to take any steps necessary to preserve any rights against prior
parties to any of the Collateral.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement is and shall be in
every particular available to the successors and assigns of Lender and is and
shall always be fully binding upon the legal representatives, successors and
assigns of Guarantor, notwithstanding that
some or all of the monies, the repayment of which this Guaranty Agreement
applies, may be actually advanced after any bankruptcy, receivership,
reorganization or other event affecting Guarantor.
Section 5.2 Notices. Lender's address for notice hereunder shall be 24
Greenway Plaza,
Suite 1401, Houston, Texas 77046, until Borrower has received express written
notice of a change of address. Guarantor's address for notice hereunder shall
be the address given under Guarantor's signature below, until Lender has
received express written notice of a change ofaddress. Any notice
or demand to Guarantor under or in connection with this Guaranty
Agreement may be given and shall conclusively be deemed and considered to have
been given and received upon the deposit thereof, in writing, duly stamped and
addressed to Guarantor at the address of Guarantor appearing on the records of
Lender, in the U.S. mail, but actual notice,
however given or received, shall always be effective.
Section 5.3 Applicable Law. This Guaranty Agreement is a contract made
under and shall be construed in accordance with and governed by the laws of
the State of Texas.
Section 5.4 Jurisdiction. All actions or proceedings with respect to this
Guaranty Agreement may be instituted in the courts of the State of Texas, the
United States District Court for the Southern District of Texas (Houston
Division), or elsewhere to the extent that jurisdiction
shall exist apart from the provisions of this Section, as Lender may elect, and
by execution and delivery of this Guaranty Agreement, Guarantor irrevocably and
unconditionally submits to the
jurisdiction (both subject matter and personal) of such court, and irrevocably
and unconditionally waives (a) any objection Guarantor may now or hereafter have
to the laying of venue in any of such courts, and (b) any claim that any action
or proceeding brought in any of such courts has been brought in an inconvenient
forum. However, Guarantor does not waive its right to remove
any cause of action brought in State Court to the United States District Court
for the Southern District of Texas (Houston Division). This submission to
jurisdiction and venue is nonexclusive
and does not prevent Lender from obtaining jurisdiction in any court otherwise
having jurisdiction or venue. Guarantor hereby designates and appoints Richard
Robert, 1100 Louisiana, Ste 3030, Houston, Texas 77002 as its authorized agent
in the State of Texas to accept and acknowledge on its behalf service of any
and all process which may be served in any
suit, action or proceeding in the State of Texas, and Guarantor agrees that any
service of process upon such agent shall be deemed in every respect effective
service upon Guarantor. Guarantor agrees that so long as Guarantor shall be
obligated to Lender under this Guaranty Agreement,
Guarantor shall maintain duly appointed agents satisfactory to Lender for the
service of process in the State of Texas and shall keep Lender advised in
writing of the identity and location of such agents. The failure of such agents
to give notice to Guarantor of any such service shall not
impair or affect the validity of such service or of any judgment rendered in any
action or proceeding based thereon.
Section 5.5 Complete Agreement.
This Guaranty Agreement represents the final agreement between the
parties and may not be contradicted by evidence of prior, contemporane-
ous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
WITNESS THE EXECUTION HEREOF, as of the 8th day of May, 1996.
By:
DAN C. TUTCHER
Address:
Accepted as of the 8th day of May, 1996.
COMPASS BANK-HOUSTON
By:
Name:
Title:
<PAGE>
AMENDED AND RESTATED GUARANTY AGREEMENT
Between
KENNETH B. HOLMES, JR.
and
COMPASS BANK-HOUSTON
May 8, 1996
<PAGE>
AMENDED AND RESTATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED GUARANTY AGREEMENT is by KENNETH
B. HOLMES, JR. (hereinafter called "Guarantor"), in favor of COMPASS
BANK-HOUSTON, a Texas State Chartered Banking Institution, having banking
quarters at 24 Greenway Plaza, Suite 1401, Houston, Texas 77046 (hereinafter
called "Lender");
W I T N E S S E T H:
WHEREAS, on December 20, 1995, Magnolia Pipeline Corporation, an Alabama
corporation (the "Borrower") and Lender entered into that certain Credit
Agreement (the "Existing Credit Agreement"), whereby, pursuant to the terms and
conditions contained therein,
Lender agreed to make loans to and extensions of credit on behalf of Borrower;
and
WHEREAS, to satisfy one of the terms and conditions of the Credit Agreement,
Guarantor executed that certain Guaranty Agreement dated as of December 20,
1995 in favor of Lender (the "Existing Guaranty Agreement"); and
WHEREAS, Borrower and Lender have amended and supplemented the Existing Credit
Agreement by entering into that certain First Amendment and Supplement to Credit
Agreement dated as of May 8, 1996 (the "First Amendment and Supplement to Credit
Agreement"), whereby, pursuant to the terms and conditions contained therein,
Lender agreed to renew, rearrange, increase and modify the indebtedness
outstanding under the Existing Credit
Agreement (the Existing Credit Agreement, as so amended and supplemented, and
as the same may from time to time be further amended or supplemented,
hereinafter called the "Credit Agreement"); and
WHEREAS, one of the conditions for Lender entering into the First Amendment and
Supplement to Credit Agreement is the execution and delivery by Guarantor of
this Guaranty Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and conditions of the
Credit Agreement, (ii) to induce Lender, at its option, at any time or from time
to time, to loanmonies, with or without security to or for the account of
Borrower, (iii) at the special insistence and request of Lender, and (iv) for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Guarantor and Lender hereby agree
to amend and restate the Existing Guaranty Agreement in its entirety as follows:
ARTICLE I
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty Agreement, the
terms "Borrower," "Credit Agreement," "Guarantor" and "Lender" and shall have
the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Collateral" shall have the meaning indicated in Section 4.1.
"Guaranty Agreement" shall mean this Amended and Restated Guaranty
Agreement, as the same may from time to time be amended or supplemented.
"Liabilities" shall have the meaning indicated in Section 2.1.
Section 1.3 Credit Agreement Definitions. Unless otherwise defined herein,
all terms beginning with a capital letter which are defined in the Credit
Agreement shall have the same meanings herein as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed; Maximum Liability. (a) Guarantor hereby
unconditionally and irrevocably guarantees the prompt payment when due,
whether at maturity or otherwise, of the following (hereinafter called the
"Liabilities"):
(i) All indebtedness, obligations including reimbursement obligations and
liabilities of any kind of Borrower to Lender and the due fulfillment and
performance of all obligations now or hereafter owed by Borrower to Lender
(and also to others to the extent of participations granted them by Lender)
arising out of and pursuant to the Credit
Agreement, now outstanding or owing or which may hereafter be existing or
incurred, directly between Borrower and Lender or acquired outright as a
participation,conditionally or as collateral security from another by Lender,
absolute or contingent, joint and/or several, secured or unsecured, due or not
due, arising by operation of law or otherwise, or direct or indirect, including
indebtedness, obligations and liabilities to Lender of Borrower as a member
of any partnership, syndicate, association or other group, and whether
incurred by Borrower as principal, surety, endorser, guarantor,
accommodation party or otherwise, including, without limitation, the
Indebtedness, as defined in the Credit Agreement, including without limitation
(A) the Note, being that certain promissory note of even date herewith in the
amount of $1,778,560.00, executed by Borrower and payable to the order of
Lender; (B) any and all renewals, extensions for any period, rearrangements
increases and/or modifications of the Note; (C) any
Letters of Credit issued or to be issued by the Lender for the account of
Borrower and described or referred to in the Credit Agreement, and any and all
renewals, extensions, amendments and/or reissues of any such Letters of Credit;
and (D) any and all otherLoan Documents or other documents executed in
connection with or as security for the
Credit Agreement, the Note and/or the Letters of Credit;
(ii) All interest, charges, expenses, attorneys' or other fees and any other
sums payable to or incurred by Lender in connection with the execution,
administration or enforcement of Lender's rights and remedies under the Credit
Agreement, the Note, the Letters of Credit or any other Loan Documents or
other agreements with Borrower; and
iii) All post-petition interest on the Liabilities in the event of a bankruptcy
or insolvency of the Borrower.
Section 2.2 Nature of Guaranty. This is an irrevocable, absolute,
unconditional, completed and continuing guaranty of payment and not a guaranty
of collection, and no notice
of the Liabilities or any extension of credit already or hereafter contracted by
or extended to Borrower need be given to Guarantor. The fact that the
Liabilities may be rearranged, increased, reduced, extended for any period and/
or renewed from time to time or paid in full
without notice to Guarantor shall not release, discharge or reduce the
obligation of Guarantor
with respect to the Liabilities, and Guarantor shall remain fully bound
hereunder. In the event
that Lender must rescind or restore any payment received by Lender in
satisfaction of the
Liabilities, as set forth herein, any prior release or discharge from the terms
of this Guaranty Agreement given to Guarantor by Lender shall be without
effect, and this Guaranty Agreement shall remain in full force and effect.
It is the intention of Borrower and Guarantor that Guarantor's obligations
hereunder shall not be discharged except by Guarantor's performance
of such obligations and then only to the extent of such performance.
This Guaranty Agreement may be enforced by Lender and any subsequent holder of
the Liabilities and shall not be discharged by the assignment or negotiation of
all or part of the Liabilities. This Guaranty Agreement may not be revoked by
Guarantor and shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Liabilities is rescinded or must
otherwise be returned by Lender upon the insolvency, bankruptcy,
reorganization, receivership or other debtor relief proceeding involving
Borrower, or after any attempted revocation by Guarantor and after Guarantor's
death (in which event this Guaranty Agreement shall be binding
upon Guarantor's estate and Guarantor's heirs and legal representatives), all
as though such payment had not been made. Guarantor hereby expressly waives
notice of intent to accelerate, notice of acceleration, presentment, demand,
notice of non-payment, protest, notice of protest and dishonor or any other
notice whatsoever on any and all forms of such Liabilities, and also notice
of acceptance of this Guaranty Agreement, acceptance on the part of Lender
being conclusively presumed by its request for this Guaranty Agreement and
delivery of the same to it.
Section 2.3 Lender's Rights. Guarantor authorizes Lender, without notice or
demand and without affecting Guarantor's liability hereunder, to take and hold
security for the payment of this Guaranty Agreement and/or any of the
Liabilities, and exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale thereof as Lender
in its discretion may determine; and to obtain a guaranty of the Liabilities
from any one or more Persons and at any time or times to enforce, waive,
rearrange, modify, limit or release any of such other Persons from their
obligations under such guaranties, and Guarantor hereby acknowledges and agrees
that the obligations of all Persons to pay and satisfy the Liabilities
pursuant to their respective guaranties (including Guarantor's obligations
under this Guaranty Agreement) shall be joint and several. It is hereby
understood and agreed that whether and when and in what order to exercise any of
the remedies of Lender under the Credit Agreement, the Note, or any other Loan
Document executed in connection with the Liabilities,
shall be in the sole and absolute discretion of Lender, and no delay by Lender
to enforce any remedy, including delay in conducting a foreclosure sale or other
disposition of collateral, shall be a defense to Guarantor's liability under
this Guaranty Agreement.
Section 2.4 Guarantor's Waivers. Guarantor waives any right to require Lender
(and it shall not be necessary for Lender, in order to enforce such payment by
Guarantor to first) (a) to proceed against Borrower or any other Person liable
on the Liabilities, (b) to proceed against or exhaust any security given to
secure the Liabilities, (c) to have Borrower joined with Guarantor in any suit
arising out of this Guaranty Agreement and/or any of the Liabilities, (d) to
enforce its rights against any other guarantor of the Liabilities, (e) to
pursue or exhaust any other remedy in Lender's power whatsoever, or (f) to
preserve or perfect any liens or security interests against any collateral
whatsoever. Lender shall not be required to mitigate damages
or take any action to reduce, collect or enforce the Liabilities. Guarantor
waives any defense or right to the marshalling of any security given to secure
the Liabilities. Guarantor waives any defense arising by reason of any
disability, lack of corporate authority or power, or other
defense of Borrower or any other guarantor of any of the Liabilities, and shall
remain liable hereon regardless of whether Borrower or any other guarantor be
found not liable thereon for any reason. Until all the Liabilities shall have
been paid in full, Guarantor shall have no right of subrogation, waives all of
its rights at law or in equity (including, without limitation, any law
subrogating Guarantor to the rights of Lender) to seek contribution,
indemnification or any other form of reimbursement from or to enforce any remedy
which Lender now has or may hereafter have against Borrower or any other Person
primarily or secondarily liable for any of the Liabilities and waives any
benefit of and any right to participate in any security now or hereafter
held by Lender to secure directly or indirectly all or any of the Liabilities.
Guarantor waives any and all defenses which might otherwise be available (but
only to the extent permitted by law) by virtue of any valuation, stay,
moratorium law or similar law now or hereafter in effect.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees that if the
maturity of any Liabilities is accelerated by bankruptcy or otherwise, such
maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to Guarantor. Guarantor will pay, forthwith
upon notice from Lender of Borrower's failure to pay any Liabilities at
maturity, to Lender at Lender's banking quarters in Houston, Harris County,
Texas, the amount due and unpaid by Borrower and guaranteed hereby. The failure
of Lender to give this notice shall not in any way release Guarantor hereunder.
Section 2.6 Lender's Expenses. If Guarantor fails to pay the Liabilities after
notice from Lender of Borrower's failure to pay any Liabilities at maturity, and
if Lender obtains the services of an attorney for collection of amounts owing by
Guarantor hereunder, or obtains advise of counsel in respect of any of its
rights hereunder, or if suit is filed to enforce this Guaranty Agreement, or if
proceedings are had in any bankruptcy, probate, receivership or other
judicial proceedings for the establishment or collection of any amount owing by
Guarantor hereunder, or if any amount owing by Guarantor hereunder is collected
through such proceedings, Guarantor agrees to pay Lender at Lender's banking
quarters all court costs and Lender's reasonable attorneys' fees.
Section 2.7 Primary Liability. It is expressly agreed that the liability of
Guarantor for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging Guarantor's
Obligations. Guarantor hereby consents and agrees to each of the following,
and agrees that Guarantor's obligations under this Guaranty Agreement shall not
be released, diminished, impaired, reduced or adversely affected by any of the
following, and waives any rights (including, without limitation, rights to
notice) which Guarantor might otherwise have as a result of or in connection
with any of the following:
(a) Modifications, etc. Any modification, amendment, supplement, renewal,
extension for any period, increase, decrease, alteration or rearrangement of all
or any part of the Liabilities, or of the Note, or the Credit Agreement or any
other Loan Document executed in connection therewith, or any contract or
understanding between Borrower and Lender, or any other Person, pertaining to
the Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance or compromise
that might be granted or given by Lender to Borrower or Guarantor or any other
Person liable on the Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution or
lack of power of Borrower or any other Person at any time liable for the payment
of all or part of the Liabilities; or any dissolution of Borrower or any sale,
lease or transfer of any or all of the assets of Borrower or Guarantor, or any
changes in the shareholders or members of Borrower; or any reorganization of
Borrower;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any document or
agreement executed in connection with the Liabilities, for any reason
whatsoever,including without limitation the fact that (i) the Liabilities, or
any part thereof, exceeds the amount permitted by law, (ii) the act
of creating the Liabilities or any part thereof is ultra vires, (iii) the
officers or representatives executing the documents or otherwise creating the
Liabilities acted in excess of their authority, (iv) the Liabilities or any part
thereof violate applicable usury laws, (v) the Borrower or any other Person at
any time liable for the payment of all or any part of the Liabilities has valid
defenses, claims or offsets (whether at law or in equity, by agreement or by
statute) which render the Liabilities wholly or partially uncollectible from
Borrower, (vi) the creation, performance or repayment of the Liabilities
(or the execution, delivery and performance of any document or instrument
representing part of the Liabilities or executed in connection with the
Liabilities, or given to secure the repayment of the Liabilities) is illegal,
uncollectible, legally impossible or unenforceable, or (vii) the Credit
Agreement, any other Loan Document, or any other document or instrument
pertaining to the Liabilities has been forged or otherwise is irregular or
not genuine or authentic;
(e) Release of Obligors. Any full or partial release of the liability of
Borrower on the Liabilities or any part thereof, or of any co-guarantors, or
any other Person now or hereafter liable, whether directly or indirectly,
jointly, severally, or jointly and severally, to pay, perform, guarantee or
assure the payment of the Liabilities or any part thereof; it being recognized,
acknowledged and agreed by Guarantor that Guarantor may be required to pay the
Liabilities in full without assistance or support of any other Person, and
Guarantor has not been induced to enter into this Guaranty Agreement on the
basis of a contemplation, belief, understanding or agreement that any
other Person will be liable to perform the Liabilities, or Lender will look to
any other Person to perform the Liabilities;
(f) Other Security. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part of
the Liabilities;
(g) Release of Collateral, etc. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including, without
limitation, negligent, willful, unreasonable or unjustifiable impairment) of
any collateral, property or security, at any time existing in connection with,
or assuring or securing payment of, all or any part of the Liabilities;
(h) Care and Diligence. The failure of Lender or any other Person to
exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of such
collateral, property or security;
(i) Status of Liens. The fact that any collateral, security or Lien
contemplated or intended to be given, created or granted as security for the
repayment of the Liabilities shall not be properly perfected or created, or
shall prove to be unenforceable or subordinate to any other Lien; it being
recognized and agreed by Guarantor that Guarantor is not entering into this
Guaranty Agreement in reliance on, or in contemplation of the benefits of, the
validity, enforceability, collectibility or value of any of the
collateral for the Liabilities;
(j) Preference. Any payment by Borrower to Lender is held to constitute
a preference under bankruptcy laws, or for any reason Lender is required to
refund such payment or pay such amount to Borrower or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken or omitted to
be taken with respect to the Credit Agreement, any other Loan Document, the
Liabilities, or the security and collateral therefor, whether or not such
action or omission prejudices Guarantor or increases the likelihood that
Guarantor will be required to pay the Liabilities pursuant to the terms hereof;
it is the unambiguous and unequivocal intention of Guarantor that Guarantor
shall be obligated to pay the Liabilities when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever,
whether contemplated or uncontemplated, and whether or not otherwise or
particularly described herein, except for the full and final payment and
satisfaction of the Liabilities.
ARTICLE 3
Representations, Warranties and Financial Information
Section 3.1 Representations and Warranties. In order to induce Lender to
accept this Guaranty Agreement, Guarantor represents and warrants to Lender
(which representations and warranties will survive the creation of the
Liabilities and any extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to this Guaranty
Agreement reasonably has benefitted or may be expected to benefit, directly or
indirectly, Guarantor.
(b) Binding Obligations. This Guaranty Agreement constitutes valid and
binding obligations of Guarantor, enforceable in accordance with its terms
(except that enforcement may be subject to any applicable bankruptcy, insolvency
or similar laws generally affecting the enforcement of creditors' rights).
(c) No Legal Bar or Resultant Lien. This Guaranty Agreement will not
violate any contract, agreement, law, regulation, order, injunction, judgment,
decree or writ to which Guarantor is subject, or result in the creation or
imposition of any Lien upon any Properties of Guarantor (other than those, if
any, granted hereby or permitted by the Credit Agreement).
(d) No Consent. Guarantor's execution, delivery and performance of this
Guaranty Agreement does not require the consent or approval of any other Person,
including without limitation any regulatory authority or governmental body of
the United States or any state thereof or any political subdivision of the
United States or any state thereof.
(e) Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of
the Borrower and is familiar with the value of any and all collateral intended
to be created as security for the payment of the Note and Liabilities; provided,
however, Guarantor is not relying on such financial condition or the collateral
as an inducement to enter into this Guaranty Agreement.
(f) No Representation. Neither Lender nor any other Person has made any
representation, warranty or statement to Guarantor with regard to the Borrower
or any Person liable for the payment of all or any part of the Liabilities, or
their respective financial condition in order to induce Guarantor to execute
this Guaranty Agreement.
(g) Solvency. Guarantor hereby represents that (i) it is not insolvent as
of the date hereof and will not be rendered insolvent as a result of this
Guaranty Agreement, (ii) it is not engaged in business or a transaction, or
about to engage in a business or a transaction, for which any property or assets
remaining with such Guarantor is unreasonably small capital, and (iii) it does
not intend to incur, or believe it will incur, debts that will be beyond its
ability to pay as such debts mature.
Section 3.2 Financial Information. Guarantor will furnish to Lender such
information respecting the condition, financial or otherwise, of Guarantor as
Lender may from time to time request and will furnish to Lender as soon as
available and in any event within 120 days after the end of each calendar year
the personal financial statement of Guarantor for such year,
including statements of contingent liabilities and cash flow, certified by
Guarantor.
ARTICLE 4
Security
Section 4.1 Grant of Security Interest. As security for Guarantor's
obligations hereunder, Guarantor hereby grants to Lender a security interest
in, a general lien upon and/or right of set-off against the following (herein
referred to as the Collateral): the balance of every deposit account, now
or hereafter existing, of Guarantor with Lender and any other claim of
Guarantor against Lender, now or hereafter existing, and all money, instruments,
securities,documents, chattel paper, credits, claims, demands and any other
property, rights and interest of Guarantor, which at any time shall come into
the possession or custody or under the control of Lender or any of its
agents or affiliates, for any purpose, and shall include the proceeds,
products and accessions of and to any thereof. Lender shall be deemed to have
possession of any of the Collateral in transit to or set apart for it or any of
its agents or affiliates.
Section 4.2 Financing Statements. The right is expressly granted to Lender,
at its discretion, to file one or more financing statements or a copy of this
Guaranty Agreement under the Uniform Commercial Code naming Guarantor, as
Debtor, and Lender, as Secured Party, and indicating therein the types or
describing the items of Collateral.
Section 4.3 Remedies. In the event of default under this Guaranty Agreement,
Lender may sell or cause to be sold in Harris County, Texas, or elsewhere, in
one or more sales or parcels, at such price as Lender may deem best, and for
cash or on credit or for future delivery, without assumption of any credit
risk, all or any of the Collateral at any broker's board or at public or private
sale, without demand or performance or notice of intention to sell or of time
or place of sale (except such notice as is required by applicable statute and
cannot be waived), and Lender or anyone else may be the purchaser of any or all
of the Collateral so sold and thereafter hold the same absolutely, free from any
claim or right of whatsoever kind, including any equity of redemption of
Guarantor, any such demand, notice or right and equity being hereby expressly
waived and released.
Section 4.4 Rights. The grant of the above security interest and lien shall
not in any way limit or be construed as limiting Lender to collect payment of
Guarantor's obligations hereunder only out of the Collateral, but it is
expressly understood and provided that all such obligations shall constitute
the absolute and unconditional obligations of Guarantor. Lender shall
not be required to take any steps necessary to preserve any rights against prior
parties to any of the Collateral.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement is and
shall be in every particular available to the successors and assigns of Lender
and is and shall always be fully binding upon the legal representatives,
successors and assigns of Guarantor, notwithstanding that
some or all of the monies, the repayment of which this Guaranty Agreement
applies, may be actually advanced after any bankruptcy, receivership,
reorganization or other event affecting Guarantor.
Section 5.2 Notices. Lender's address for notice hereunder shall be 24
Greenway Plaza, Suite 1401, Houston, Texas 77046, until Borrower has received
express written notice of a change of address. Guarantor's address for notice
hereunder shall be the address given under Guarantor's signature below,
until Lender has received express written notice of a change of
address. Any notice or demand to Guarantor under or in connection with this
Guaranty Agreement may be given and shall conclusively be deemed and considered
to have been given and received upon the deposit thereof, in writing, duly
stamped and addressed to Guarantor at the address of Guarantor appearing on the
records of Lender, in the U.S. mail, but actual notice, however given or
received, shall always be effective.
Section 5.3 Applicable Law. This Guaranty Agreement is a contract made
under and shall be construed in accordance with and governed by the laws of
the State of Texas.
Section 5.4 Jurisdiction. All actions or proceedings with respect to this
Guaranty Agreement may be instituted in the courts of the State of Texas,
the United States District Court for the Southern District of Texas (Houston
Division), or elsewhere to the extent that jurisdiction shall exist apart
from the provisions of this Section, as Lender may elect, and by execution and
delivery of this Guaranty Agreement, Guarantor irrevocably and unconditionally
submits to the jurisdiction (both subject matter and personal) of such court,
and irrevocably and unconditionally waives (a) any objection Guarantor may now
or hereafter have to the laying of venue in any of such courts, and (b) any
claim that any action or proceeding brought in any of such courts has
been brought in an inconvenient forum. However, Guarantor does not waive its
right to remove any cause of action brought in State Court to the United States
District Court for the Southern District of Texas (Houston Division). This
submission to jurisdiction and venue is nonexclusive and does not prevent
Lender from obtaining jurisdiction in any court otherwise having
jurisdiction or venue. Guarantor hereby designates and appoints Richard Robert,
1100 Louisiana, Ste 3030, Houston, Texas 77002 as its authorized agent in the
State of Texas to accept and acknowledge on its behalf service of any and all
process which may be served in any suit, action or proceeding in the State of
Texas, and Guarantor agrees that any service of process
upon such agent shall be deemed in every respect effective service upon
Guarantor. Guarantor agrees that so long as Guarantor shall be obligated to
Lender under this Guaranty Agreement, Guarantor shall maintain duly appointed
agents satisfactory to Lender for the service of process in the State of
Texas and shall keep Lender advised in writing of the identity and location of
such agents. The failure of such agents to give notice to Guarantor of any such
service shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon.
Section 5.5 Complete Agreement.
This Guaranty Agreement represents the final agreement between the
parties and may not be contradicted by evidence of prior, contemporane-
ous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
WITNESS THE EXECUTION HEREOF, as of the 8th day of May, 1996.
By:
KENNETH B. HOLMES, JR.
Address:
Accepted as of the 8th day of May, 1996.
COMPASS BANK-HOUSTON
By:
Name:
Title:
<PAGE>
AMENDED AND RESTATED GUARANTY AGREEMENT
Between
STEVENS G. HERBST
and
COMPASS BANK-HOUSTON
May 8, 1996
<PAGE>
AMENDED AND RESTATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED GUARANTY AGREEMENT is by STEVENS G.
HERBST (hereinafter called "Guarantor"), in favor of COMPASS BANK-HOUSTON,
a Texas State Chartered Banking Institution, having banking quarters at 24
Greenway Plaza, Suite 1401, Houston, Texas 77046 (hereinafter called "Lender");
W I T N E S S E T H:
WHEREAS, on December 20, 1995, Magnolia Pipeline Corporation, an Alabama
corporation (the "Borrower") and Lender entered into that certain Credit
Agreement (the "Existing Credit Agreement"), whereby, pursuant to the terms and
conditions contained therein, Lender agreed to make loans to and extensions of
credit on behalf of Borrower; and
WHEREAS, to satisfy one of the terms and conditions of the Credit Agreement,
Guarantor executed that certain Guaranty Agreement dated as of December 20,
1995 in favor of Lender (the "Existing Guaranty Agreement"); and
WHEREAS, Borrower and Lender have amended and supplemented the Existing Credit
Agreement by entering into that certain First Amendment and Supplement to
Credit Agreement dated as of May 8, 1996 (the "First Amendment and Supplement
to Credit Agreement"), whereby, pursuant to the terms and conditions contained
therein, Lender agreed to renew, rearrange, increase and modify the indebtedness
outstanding under the Existing Credit Agreement (the Existing Credit Agreement,
as so amended and supplemented, and as the same may from time to time be further
amended or supplemented, hereinafter called the "Credit Agreement"); and
WHEREAS, one of the conditions for Lender entering into the First Amendment and
Supplement to Credit Agreement is the execution and delivery by Guarantor of
this Guaranty Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and conditions of the
Credit Agreement, (ii) to induce Lender, at its option, at any time or from time
to time, to loan monies, with or without security to or for the account of
Borrower, (iii) at the special insistence and request of Lender, and (iv) for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Guarantor and Lender hereby agree to amend and
restate the Existing Guranty Agreement in its entirety as follows:
ARTICLE I
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty Agreement, the
terms "Borrower," "Credit Agreement," "Guarantor" and "Lender" and shall have
the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Collateral" shall have the meaning indicated in Section 4.1.
"Guaranty Agreement" shall mean this Amended and Restated Guaranty
Agreement, as the same may from time to time be amended or supplemented.
"Liabilities" shall have the meaning indicated in Section 2.1.
Section 1.3 Credit Agreement Definitions. Unless otherwise defined herein, all
terms beginning with a capital letter which are defined in the Credit Agreement
shall have the same meanings herein as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed; Maximum Liability. (a) Guarantor hereby
unconditionally and irrevocably guarantees the prompt payment when due,
whether at maturity or otherwise, of the following (hereinafter called the
"Liabilities"):
(i) All indebtedness, obligations including reimbursement obligations and
liabilities of any kind of Borrower to Lender and the due fulfillment
and performance of all obligations now or hereafter owed by Borrower to
Lender (and also to others to the extent of participations granted them
by Lender) arising out of and pursuant to the Credit Agreement, now
outstanding or owing or which may hereafter be existing or incurred,
directly between Borrower and Lender or acquired outright as a
participation, conditionally or as collateral security from another by
Lender, absolute or contingent,joint and/or several, secured or
unsecured, due or not due, arising by operation of law
or otherwise, or direct or indirect, including indebtedness,
obligations and liabilities to Lender of Borrower as a member of any
partnership, syndicate, association or other group, and whether
incurred by Borrower as principal, surety, endorser, guarantor,
accommodation party or otherwise, including, without limitation, the
Indebtedness, as defined in the Credit Agreement, including without
limitation (A) the Note, being that certain promissory note of even
date herewith in the amount of $1,778,560.00, executed
by Borrower and payable to the order of Lender; (B) any and all
renewals, extensions for any period, rearrangements increases and/or
modifications of the Note; (C) any Letters of Credit issued or to be
issued by the Lender for the account of Borrower and
described or referred to in the Credit Agreement, and any and all
renewals, extensions, amendments and/or reissues of any such Letters of
Credit; and (D) any and all other Loan Documents or other documents
executed in connection with or as security for the Credit Agreement,
the Note and/or the Letters of Credit;
(ii) All interest, charges, expenses, attorneys' or other fees and any other
sums payable to or incurred by Lender in connection with the execution,
administration or enforcement of Lender's rights and remedies under the Credit
Agreement, the Note, the Letters of Credit or any other Loan Documents or other
agreements with Borrower; and
(iii) All post-petition interest on the Liabilities in the event of a bankruptcy
or insolvency of the Borrower.
Section 2.2 Nature of Guaranty. This is an irrevocable, absolute,
unconditional, completed and continuing guaranty of payment and not a guaranty
of collection, and no notice of the Liabilities or any extension of credit
already or hereafter contracted by or extended to Borrower need be given to
Guarantor. The fact that the Liabilities may be rearranged, increased,
reduced, extended for any period and/or renewed from time to time or paid in
full without notice to Guarantor shall not release, discharge or reduce the
obligation of Guarantor with respect to the Liabilities, and Guarantor shall
remain fully bound hereunder. In the event that Lender must rescind or restore
any payment received by Lender in satisfaction of the Liabilities, as set forth
herein, any prior release or discharge from the terms of this Guaranty
Agreement given to Guarantor by Lender shall be without effect, and this
Guaranty Agreement shall remain in full force and effect. It is the intention
of Borrower and Guarantor that Guarantor's obligations hereunder shall not be
discharged except by Guarantor's performance of such obligations and then only
to the extent of such performance. This Guaranty Agreement may be enforced
by Lender and any subsequent holder of the Liabilities and shall not be dis-
charged by the assignment or negotiation of all or part of the Liabilities.
This Guaranty Agreement may not be revoked by Guarantor and shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Liabilities is rescinded or must otherwise be returned by Lender
upon the insolvency, bankruptcy, reorganization, receivership or other debtor
relief proceeding involving Borrower, or after any attempted revocation by
Guarantor and after Guarantor's death (in which event this Guaranty Agreement
shall be binding upon Guarantor's estate and Guarantor's heirs and legal
representatives), all as though such payment had not been made. Guarantor
hereby expressly waives notice of intent to accelerate, notice of
acceleration, presentment, demand, notice of non-payment, protest, notice of
protest and dishonor or any other notice whatsoever on any and all forms of such
Liabilities, and also notice of acceptance of this Guaranty Agreement,
Acceptance on the part of Lender being conclusively presumed by its request for
this Guaranty Agreement and delivery of the same to it.
Section 2.3 Lender's Rights. Guarantor authorizes Lender, without notice or
demand and without affecting Guarantor's liability hereunder, to take and hold
security for the payment of this Guaranty Agreement and/or any of the
Liabilities, and exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale thereof as Lender in
its discretion may determine; and to obtain a guaranty of the Liabilities
from any one or more Persons and at any time or times to enforce, waive,
rearrange, modify, limit or release any of such other Persons from their
obligations under such guaranties, and Guarantor hereby acknowledges and agrees
that the obligations of all Persons to pay and satisfy the Liabilities pursuant
to their respective guaranties (including Guarantor's obligations under
this Guaranty Agreement) shall be joint and several. It is hereby understood
and agreed that whether and when and in what order to exercise any of the
remedies of Lender under the Credit Agreement, the Note, or any other Loan
Document executed in connection with the Liabilities, shall be in the sole and
absolute discretion of Lender, and no delay by Lender to enforce any
remedy, including delay in conducting a foreclosure sale or other disposition of
collateral, shall be a defense to Guarantor's liability under this Guaranty
Agreement.
Section 2.4 Guarantor's Waivers. Guarantor waives any right to require Lender
(and it shall not be necessary for Lender, in order to enforce such payment by
Guarantor to first) (a) to proceed against Borrower or any other Person liable
on the Liabilities, (b) to proceed against or exhaust any security given to
secure the Liabilities, (c) to have Borrower joined with Guarantor in any suit
arising out of this Guaranty Agreement and/or any of the Liabilities, (d) to
enforce its rights against any other guarantor of the Liabilities, (e) to pursue
or exhaust any other remedy in Lender's power whatsoever, or (f) to preserve or
perfect any liens or security interests against any collateral whatsoever.
Lender shall not be required to mitigate damages or take any action to reduce,
collect or enforce the Liabilities. Guarantor waives any defense
or right to the marshalling of any security given to secure the Liabilities.
Guarantor waives any defense arising by reason of any disability, lack of
corporate authority or power, or other defense of Borrower or any other
guarantor of any of the Liabilities, and shall remain liable hereon regardless
of whether Borrower or any other guarantor be found not liable thereon for
any reason. Until all the Liabilities shall have been paid in full, Guarantor
shall have no right of subrogation, waives all of its rights at law or in equity
(including, without limitation, any law subrogating Guarantor to the rights of
Lender) to seek contribution, indemnification or any other form of reimbursement
from or to enforce any remedy which Lender now has or may hereafter have against
Borrower or any other Person primarily or secondarily liable for any of the
Liabilities and waives any benefit of and any right to participate in any
security now or hereafter held by Lender to secure directly or indirectly all or
any of the Liabilities. Guarantor waives any and all defenses which might
otherwise be available (but only to the extent permitted by law)
by virtue of any valuation, stay, moratorium law or similar law now or
hereafter in effect.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees that if the
maturity of any Liabilities is accelerated by bankruptcy or otherwise, such
maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to Guarantor.
Guarantor will pay, forthwith upon notice from Lender of Borrower's failure to
pay any Liabilities at maturity, to Lender at Lender's banking quarters in
Houston, Harris County, Texas, the amount due and unpaid by Borrower and
guaranteed hereby. The failure of Lender to give this notice shall not in any
way release Guarantor hereunder.
Section 2.6 Lender's Expenses. If Guarantor fails to pay the Liabilities after
notice from Lender of Borrower's failure to pay any Liabilities at maturity, and
if Lender obtains the services of an attorney for collection of amounts owing by
Guarantor hereunder, or obtains advise of counsel in respect of any of its
rights hereunder, or if suit is filed to enforce this Guaranty Agreement, or if
proceedings are had in any bankruptcy, probate, receivership or other
judicial proceedings for the establishment or collection of any amount owing by
Guarantor hereunder, or if any amount owing by Guarantor hereunder is collected
through such proceedings, Guarantor agrees to pay Lender at Lender's banking
quarters all court costs and Lender's reasonable attorneys' fees.
Section 2.7 Primary Liability. It is expressly agreed that the liability of
Guarantor for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging Guarantor's
Obligations. Guarantor hereby consents and agrees to each of the following,
and agrees that Guarantor's obligations under this Guaranty Agreement shall not
be released, diminished, impaired, reduced or adversely affected by any of the
following, and waives any rights (including, without limitation, rights to
notice) which Guarantor might otherwise have as a result of or in connection
with any of the following:
(a) Modifications, etc. Any modification, amendment, supplement, renewal,
extension for any period, increase, decrease, alteration or rearrangement of all
or any part of the Liabilities, or of the Note, or the Credit Agreement or any
other Loan Document executed in connection therewith, or any contract or
understanding between Borrower and Lender, or any other Person, pertaining to
the Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance or compromise
that might be granted or given by Lender to Borrower or Guarantor or any other
Person liable on the Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution
or lack of power of Borrower or any other Person at any time liable for the
payment of all or part of the Liabilities; or any dissolution of Borrower or any
sale, lease or transfer of any or all of the assets of Borrower or Guarantor, or
any changes in the shareholders or members of Borrower; or any reorganization of
Borrower;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any document or
agreement executed in connection with the Liabilities,for any reason whatsoever,
including without limitation the fact that
(i) the Liabilities, or any part thereof, exceeds the amount permitted by law,
(ii) the act of creating the Liabilities or any part thereof is ultra vires,
(iii) the officers or representatives executing the documents or otherwise
creating the Liabilities acted in excess of their authority, (iv) the
Liabilities or any part thereof violate applicable usury laws, (v) the Borrower
or any other Person at any time liable for the payment of all or
any part of the Liabilities has valid defenses, claims or offsets (whether at
law or in equity, by agreement or by statute) which render the Liabilities
wholly or partially uncollectible from Borrower, (vi) the creation, performance
or repayment of the Liabilities (or the execution, delivery and performance of
any document or instrument representing part of the Liabilities or executed in
connection with the Liabilities, or given to secure the repayment of the
Liabilities) is illegal, uncollectible, legally impossible or unenforceable, or
(vii) the Credit Agreement, any other Loan Document, or any other document or
instrument pertaining to the Liabilities has been forged or otherwise is
irregular or not genuine or authentic;
(e) Release of Obligors. Any full or partial release of the liability of
Borrower on the Liabilities or any part thereof, or of any co-guarantors, or any
other Person now or hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform, guarantee or assure the
payment of the Liabilities or any part thereof; it being recognized,
acknowledged and agreed by Guarantor that Guarantor may be required to pay the
Liabilities in full without assistance or support of any other Person, and
Guarantor has not been induced to enter into this Guaranty
Agreement on the basis of a contemplation, belief, understanding or agreement
that any other Person will be liable to perform the Liabilities, or Lender will
look to any other Person to perform the Liabilities;
(f) Other Security. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part of
the Liabilities;
(g) Release of Collateral, etc. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including, without
limitation, negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the Liabilities;
(h) Care and Diligence. The failure of Lender or any other Person to
exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of such
collateral, property or security;
(i) Status of Liens. The fact that any collateral, security or Lien
contemplated or intended to be given, created or granted as security for the
repayment of the Liabilities shall not be properly perfected or created, or
shall prove to be unenforceable or subordinate to any other Lien; it being
recognized and agreed by Guarantor that Guarantor is not entering into this
Guaranty Agreement in reliance on, or in contemplation of the benefits of, the
validity, enforceability, collectibility or value of any of the
collateral for the Liabilities;
(j) Preference. Any payment by Borrower to Lender is held to constitute a
preference under bankruptcy laws, or for any reason Lender is required to refund
such payment or pay such amount to Borrower or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken or omitted to
be taken with respect to the Credit Agreement, any other Loan Document, the
Liabilities, or the security and collateral therefor, whether or not such action
or omission prejudices Guarantor or increases the likelihood that Guarantor
will be required to pay the Liabilities pursuant to the terms hereof; it is the
unambiguous and unequivocal intention of Guarantor that Guarantor shall be
obligated to pay the Liabilities when due, notwithstanding any occurrence,
circumstance, event, action, or omission whatsoever, whether contemplated
or uncontemplated, and whether or not otherwise or particularly
described herein, except for the full and final payment and satisfaction of the
Liabilities.
ARTICLE 3
Representations, Warranties and Financial Information
Section 3.1 Representations and Warranties. In order to induce Lender to
accept this Guaranty Agreement, Guarantor represents and warrants to Lender
(which representations andwarranties will survive the creation of the
Liabilities and any extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to this Guaranty
Agreement reasonably has benefitted or may be expected to benefit, directly or
indirectly, Guarantor.
(b) Binding Obligations. This Guaranty Agreement constitutes valid and
binding obligations of Guarantor, enforceable in accordance with its terms
(except that enforcement may be subject to any applicable bankruptcy, insolvency
or similar laws generally affecting the enforcement of creditors' rights).
(c) No Legal Bar or Resultant Lien. This Guaranty Agreement will not
violate any contract, agreement, law, regulation, order, injunction,
judgment, decree or writ to which Guarantor is subject, or result in the
creation or imposition of any Lien upon any Properties of Guarantor (other than
those, if any, granted hereby or permitted by the Credit Agreement).
(d) No Consent. Guarantor's execution, delivery and performance of this
Guaranty Agreement does not require the consent or approval of any other Person,
including without limitation any regulatory authority or governmental body of
the United States or any state thereof or any political subdivision of the
United States or any state thereof.
(e) Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of
the Borrower and is familiar with the value of any and all collateral intended
to be created as security for the payment of the Note and Liabilities;
provided, however, Guarantor is not relying on such financial condition
or the collateral as an inducement to enter into this Guaranty Agreement.
(f) No Representation. Neither Lender nor any other Person has made any
representation, warranty or statement to Guarantor with regard to the Borrower
or any Person liable for the payment of all or any part of the Liabilities, or
their respective financial condition in order to induce Guarantor to execute
this Guaranty Agreement.
(g) Solvency. Guarantor hereby represents that (i) it is not insolvent as
of the date hereof and will not be rendered insolvent as a result of this
Guaranty Agreement, (ii) it is not engaged in business or a transaction, or
about to engage in a business or a transaction, for which any property or assets
remaining with such Guarantor is unreasonably small capital, and (iii) it does
not intend to incur, or believe it will incur, debts that will be beyond its
ability to pay as such debts mature.
Section 3.2 Financial Information. Guarantor will furnish to Lender such
information respecting the condition, financial or otherwise, of Guarantor as
Lender may from time to time request and will furnish to Lender as soon as
available and in any event within 120 days after the end of each calendar year
the personal financial statement of Guarantor for such year,including
statements of contingent liabilities and cash flow, certified by Guarantor.
ARTICLE 4
Security
Section 4.1 Grant of Security Interest. As security for Guarantor's
obligations hereunder, Guarantor hereby grants to Lender a security interest in,
a general lien upon and/or right of set-off against the following (herein
referred to as the Collateral): the balance of every deposit account, now
or hereafter existing, of Guarantor with Lender and any other claim of
Guarantor against Lender, now or hereafter existing, and all money,
instruments, securities, documents, chattel paper, credits, claims, demands and
any other property, rights and interest of Guarantor, which at any time shall
come into the possession or custody or under the control of Lender or any
of its agents or affiliates, for any purpose, and shall include the proceeds,
products and accessions of and to any thereof. Lender shall be deemed to have
possession of any of the Collateral in transit to or set apart for it or any of
its agents or affiliates.
Section 4.2 Financing Statements. The right is expressly granted to Lender,
at its discretion, to file one or more financing statements or a copy of this
Guaranty Agreement under the Uniform Commercial Code naming Guarantor, as
Debtor, and Lender, as Secured Party, and indicating therein the types or
describing the items of Collateral.
Section 4.3 Remedies. In the event of default under this Guaranty Agreement,
Lender may sell or cause to be sold in Harris County, Texas, or elsewhere, in
one or more sales or parcels, at such price as Lender may deem best, and for
cash or on credit or for future delivery, without assumption of any credit risk,
all or any of the Collateral at any broker's board or at public or private sale,
without demand or performance or notice of intention to sell or of time
or place of sale (except such notice as is required by applicable statute and
cannot be waived), and Lender or anyone else may be the purchaser of any or all
of the Collateral so sold and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any equity of redemption of
Guarantor, any such demand, notice or right and equity being
hereby expressly waived and released.
Section 4.4 Rights. The grant of the above security interest and lien shall
not in any way limit or be construed as limiting Lender to collect payment of
Guarantor's obligations hereunder only out of the Collateral, but it is
expressly understood and provided that all such obligations shall constitute
the absolute and unconditional obligations of Guarantor. Lender shallnot be
required to take any steps necessary to preserve any rights against prior
parties to any of
the Collateral.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement is and
shall be in every particular available to the successors and assigns of Lender
and is and shall always be fully binding upon the legal representatives,
successors and assigns of Guarantor, notwithstanding that some or all of the
monies, the repayment of which this Guaranty Agreement applies, may be
actually advanced after any bankruptcy, receivership, reorganization or other
event affecting Guarantor.
Section 5.2 Notices. Lender's address for notice hereunder shall be 24
Greenway Plaza, Suite 1401, Houston, Texas 77046, until Borrower has received
express written notice of a change of address. Guarantor's address for notice
hereunder shall be the address given under Guarantor's signature below, until
Lender has received express written notice of a change of address. Any notice
or demand to Guarantor under or in connection with this Guaranty Agreement
may be given and shall conclusively be deemed and considered to have been given
and received upon the deposit thereof, in writing, duly stamped and addressed
to Guarantor at the address of Guarantor appearing on the records of Lender, in
the U.S. mail, but actual notice, however given or received, shall always be
effective.
Section 5.3 Applicable Law. This Guaranty Agreement is a contract made
under and shall be construed in accordance with and governed by the laws of
the State of Texas.
Section 5.4 Jurisdiction. All actions or proceedings with respect to this
Guaranty Agreement may be instituted in the courts of the State of Texas, the
United States District Court for the Southern District of Texas (Houston
Division), or elsewhere to the extent that jurisdiction shall exist apart
from the provisions of this Section, as Lender may elect, and by execution and
delivery of this Guaranty Agreement, Guarantor irrevocably and unconditionally
submits to the jurisdiction (both subject matter and personal) of such court,
and irrevocably and unconditionally waives (a) any objection Guarantor may now
or hereafter have to the laying of venue in any of such courts, and (b) any
claim that any action or proceeding brought in any of such courts has been
brought in an inconvenient forum. However, Guarantor does not waive its right
to remove any cause of action brought in State Court to the United States
District Court for the Southern District of Texas (Houston Division). This
submission to jurisdiction and venue is nonexclusive and does not prevent
Lender from obtaining jurisdiction in any court otherwise having
jurisdiction or venue. Guarantor hereby designates and appoints Richard Robert,
1100 Louisiana, Ste 3030, Houston, Texas 77002 as its authorized agent in the
State of Texas to accept and acknowledge on its behalf service of any and all
process which may be served in any suit, action or proceeding in the State of
Texas, and Guarantor agrees that any service of process upon such agent shall be
deemed in every respect effective service upon Guarantor. Guarantor
agrees that so long as Guarantor shall be obligated to Lender under this
Guaranty Agreement, Guarantor shall maintain duly appointed agents satisfactory
to Lender for the service of process in the State of Texas and shall keep Lender
advised in writing of the identity and location of such agents. The failure of
such agents to give notice to Guarantor of any such service shall not impair
or affect the validity of such service or of any judgment rendered in any action
or proceeding based thereon.
Section 5.5 Complete Agreement.
This Guaranty Agreement represents the final agreement between the
parties and may not be contradicted by evidence of prior, contemporane-
ous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
WITNESS THE EXECUTION HEREOF, as of the 8th day of May, 1996.
By:
STEVENS G. HERBST
Address:
Accepted as of the 8th day of May, 1996.
COMPASS BANK-HOUSTON
By:
Name:
Title:
<PAGE>
AMENDED AND RESTATED GUARANTY AGREEMENT
Between
MIDCOAST ENERGY RESOURCES, INC.
and
COMPASS BANK-HOUSTON
May 8, 1996
<PAGE>
AMENDED AND RESTATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED GUARANTY AGREEMENT is by MIDCOAST
ENERGY RESOURCES, INC., a Nevada corporation (hereinafter called
"Guarantor"), in favor of COMPASS BANK-HOUSTON, a Texas State
Chartered Banking Institution, having banking quarters at 24
Greenway Plaza, Suite 1401, Houston, Texas 77046 (hereinafter
called "Lender");
W I T N E S S E T H:
14. WHEREAS, on December 20, 1995, Magnolia Pipeline Corporation,
an Alabama corporation (the "Borrower") and Lender entered into
that certain Credit Agreement (the "Existing Credit Agreement"),
whereby, pursuant to the terms and conditions contained therein,
Lender agreed to make loans to and extensions of credit on behalf
of Borrower; and
WHEREAS, to satisfy one of the terms and conditions of the
Credit Agreement, Guarantor executed that certain Guaranty
Agreement dated as of December 20, 1995 in favor of Lender (the
"Existing Guaranty Agreement"); and
WHEREAS, Borrower and Lender have amended and supplemented the
Existing Credit Agreement by entering into that certain First
Amendment and Supplement to Credit Agreement dated as of May ____,
1996 (the "First Amendment and Supplement to Credit Agreement"),
whereby, pursuant to the terms and conditions contained therein,
Lender agreed to renew, rearrange, increase and modify the
indebtedness outstanding under the Existing Credit Agreement (the
Existing Credit Agreement, as so amended and supplemented, and as
the same may from time to time be further amended or supplemented,
hereinafter called the "Credit Agreement"); and
WHEREAS, one of the conditions for Lender entering into the
First Amendment and Supplement to Credit Agreement is the execution
and delivery by Guarantor of this Guaranty Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and
conditions of the Credit Agreement, (ii) to induce Lender, at its
option, at any time or from time to time, to loan monies, with or
without security to or for the account of Borrower, (iii) at the
special insistence and request of Lender, and (iv) for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Guarantor and Lender hereby agree to amend and
restate the Existing Guaranty Agreement in its entirety as follows:
ARTICLE I
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty
Agreement, the terms "Borrower," "Credit Agreement," "Guarantor"
and "Lender" and shall have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty
Agreement, the following terms shall have the following meanings,
unless the context otherwise requires:
"Collateral" shall have the meaning indicated in Section
4.1.
"Guaranty Agreement" shall mean this Amended and Restated
Guaranty Agreement, as the same may from time to time be
amended or supplemented.
"Liabilities" shall have the meaning indicated in Section
2.1.
Section 1.3 Credit Agreement Definitions. Unless otherwise
defined herein, all terms beginning with a capital letter which are
defined in the Credit Agreement shall have the same meanings herein
as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed; Maximum Liability. (a)
Guarantor hereby unconditionally and irrevocably guarantees the
prompt payment when due, whether at maturity or otherwise, of the
following (hereinafter called the "Liabilities"):
(i) All indebtedness, obligations including reimburse-
ment obligations and liabilities of any kind of Borrower to
Lender and the due fulfillment and performance of all obliga-
tions now or hereafter owed by Borrower to Lender (and also to
others to the extent of participations granted them by Lender)
arising out of and pursuant to the Credit Agreement, now
outstanding or owing or which may hereafter be existing or
incurred, directly between Borrower and Lender or acquired
outright as a participation, conditionally or as collateral
security from another by Lender, absolute or contingent, joint
and/or several, secured or unsecured, due or not due, arising
by operation of law or otherwise, or direct or indirect,
including indebtedness, obligations and liabilities to Lender
of Borrower as a member of any partnership, syndicate,
association or other group, and whether incurred by Borrower
as principal, surety, endorser, guarantor, accommodation party
or otherwise, including, without limitation, the Indebtedness,
as defined in the Credit Agreement, including without limita-
tion (A) the Note, being that certain promissory note of even
date herewith in the amount of $1,778,560.00 executed by
Borrower and payable to the order of Lender; (B) any and all
renewals, extensions for any period, rearrangements, increases
and/or modifications of the Note; (C) any Letters of Credit
issued or to be issued by the Lender for the account of
Borrower and described or referred to in the Credit Agreement,
and any and all renewals, extensions, amendments and/or
reissues of any such Letters of Credit; and (D) any and all
other Loan Documents or other documents executed in connection
with or as security for the Credit Agreement, the Note and/or
the Letters of Credit;
(ii) All interest, charges, expenses, attorneys' or other
fees and any other sums payable to or incurred by Lender in
connection with the execution, administration or enforcement
of Lender's rights and remedies under the Credit Agreement,
the Note, the Letters of Credit or any other Loan Documents or
other agreements with Borrower; and
(iii) All post-petition interest on the Liabilities in the
event of a bankruptcy or insolvency of the Borrower.
Section 2.2 Nature of Guaranty. This is an irrevocable,
absolute, unconditional, completed and continuing guaranty of
payment and not a guaranty of collection, and no notice of the
Liabilities or any extension of credit already or hereafter
contracted by or extended to Borrower need be given to Guarantor.
The fact that the Liabilities may be rearranged, increased,
reduced, extended for any period and/or renewed from time to time
or paid in full without notice to Guarantor shall not release,
discharge or reduce the obligation of Guarantor with respect to the
Liabilities, and Guarantor shall remain fully bound hereunder. In
the event that Lender must rescind or restore any payment received
by Lender in satisfaction of the Liabilities, as set forth herein,
any prior release or discharge from the terms of this Guaranty
Agreement given to Guarantor by Lender shall be without effect, and
this Guaranty Agreement shall remain in full force and effect. It
is the intention of Borrower and Guarantor that Guarantor's
obligations hereunder shall not be discharged except by Guarantor's
performance of such obligations and then only to the extent of such
performance. This Guaranty Agreement may be enforced by Lender and
any subsequent holder of the Liabilities and shall not be dis-
charged by the assignment or negotiation of all or part of the
Liabilities. This Guaranty Agreement may not be revoked by
Guarantor and shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Liabili-
ties is rescinded or must otherwise be returned by Lender upon the
insolvency, bankruptcy, reorganization, receivership or other
debtor relief proceeding involving Borrower, or after any attempted
revocation by Guarantor, all as though such payment had not been
made. Guarantor hereby expressly waives notice of intent to
accelerate, notice of acceleration, presentment, demand, notice of
non-payment, protest, notice of protest and dishonor or any other
notice whatsoever on any and all forms of such Liabilities, and
also notice of acceptance of this Guaranty Agreement, acceptance on
the part of Lender being conclusively presumed by its request for
this Guaranty Agreement and delivery of the same to it.
Section 2.3 Lender's Rights. Guarantor authorizes Lender,
without notice or demand and without affecting Guarantor's
liability hereunder, to take and hold security for the payment of
this Guaranty Agreement and/or any of the Liabilities, and
exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale thereof
as Lender in its discretion may determine; and to obtain a guaranty
of the Liabilities from any one or more Persons and at any time or
times to enforce, waive, rearrange, modify, limit or release any of
such other Persons from their obligations under such guaranties,
and Guarantor hereby acknowledges and agrees that the obligations
of all Persons to pay and satisfy the Liabilities pursuant to their
respective guaranties (including Guarantor's obligations under this
Guaranty Agreement) shall be joint and several. It is hereby
understood and agreed that whether and when and in what order to
exercise any of the remedies of Lender under the Credit Agreement,
the Note, or any other Loan Document executed in connection with
the Liabilities, shall be in the sole and absolute discretion of
Lender, and no delay by Lender to enforce any remedy, including
delay in conducting a foreclosure sale or other disposition of
collateral, shall be a defense to Guarantor's liability under this
Guaranty Agreement.
Section 2.4 Guarantor's Waivers. Guarantor waives any right
to require Lender (and it shall not be necessary for Lender, in
order to enforce such payment by Guarantor to first) (a) to proceed
against Borrower or any other Person liable on the Liabilities,
(b) to proceed against or exhaust any security given to secure the
Liabilities, (c) to have Borrower joined with Guarantor in any suit
arising out of this Guaranty Agreement and/or any of the Liabili-
ties, (d) to enforce its rights against any other guarantor of the
Liabilities, (e) to pursue or exhaust any other remedy in Lender's
power whatsoever, or (f) to preserve or perfect any liens or
security interests against any collateral whatsoever. Lender shall
not be required to mitigate damages or take any action to reduce,
collect or enforce the Liabilities. Guarantor waives any defense
or right to the marshalling of any security given to secure the
Liabilities. Guarantor waives any defense arising by reason of any
disability, lack of corporate authority or power, or other defense
of Borrower or any other guarantor of any of the Liabilities, and
shall remain liable hereon regardless of whether Borrower or any
other guarantor be found not liable thereon for any reason. Until
all the Liabilities shall have been paid in full, Guarantor shall
have no right of subrogation, waives all of its rights at law or in
equity (including, without limitation, any law subrogating
Guarantor to the rights of Lender) to seek contribution, indemnifi-
cation or any other form of reimbursement from or to enforce any
remedy which Lender now has or may hereafter have against Borrower
or any other Person primarily or secondarily liable for any of the
Liabilities and waives any benefit of and any right to participate
in any security now or hereafter held by Lender to secure directly
or indirectly all or any of the Liabilities. Guarantor waives any
and all defenses which might otherwise be available (but only to
the extent permitted by law) by virtue of any valuation, stay,
moratorium law or similar law now or hereafter in effect.
Section 2.5 Maturity of Liabilities; Payment. Guarantor
agrees that if the maturity of any Liabilities is accelerated by
bankruptcy or otherwise, such maturity shall also be deemed
accelerated for the purpose of this Guaranty Agreement without
demand or notice to Guarantor. Guarantor will pay, forthwith upon
notice from Lender of Borrower's failure to pay any Liabilities at
maturity, to Lender at Lender's banking quarters in Houston, Harris
County, Texas, the amount due and unpaid by Borrower and guaranteed
hereby. The failure of Lender to give this notice shall not in any
way release Guarantor hereunder.
Section 2.6 Lender's Expenses. If Guarantor fails to pay the
Liabilities after notice from Lender of Borrower's failure to pay
any Liabilities at maturity, and if Lender obtains the services of
an attorney for collection of amounts owing by Guarantor hereunder,
or obtains advise of counsel in respect of any of its rights
hereunder, or if suit is filed to enforce this Guaranty Agreement,
or if proceedings are had in any bankruptcy, probate, receivership
or other judicial proceedings for the establishment or collection
of any amount owing by Guarantor hereunder, or if any amount owing
by Guarantor hereunder is collected through such proceedings,
Guarantor agrees to pay Lender at Lender's banking quarters all
court costs and Lender's reasonable attorneys' fees.
Section 2.7 Primary Liability. It is expressly agreed that
the liability of Guarantor for the payment of the Liabilities
guaranteed hereby shall be primary and not secondary.
Section 2.8 Events and Circumstances Not Reducing or
Discharging Guarantor's Obligations. Guarantor hereby consents and
agrees to each of the following, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released,
diminished, impaired, reduced or adversely affected by any of the
following, and waives any rights (including, without limitation,
rights to notice) which Guarantor might otherwise have as a result
of or in connection with any of the following:
(a) Modifications, etc. Any modification, amendment,
supplement, renewal, extension for any period, increase,
decrease, alteration or rearrangement of all or any part of
the Liabilities, or of the Note, or the Credit Agreement or
any other Loan Document executed in connection therewith, or
any contract or understanding between Borrower and Lender, or
any other Person, pertaining to the Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence,
forbearance or compromise that might be granted or given by
Lender to Borrower or Guarantor or any other Person liable on
the Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation,
disability, dissolution or lack of power of Borrower or any
other Person at any time liable for the payment of all or part
of the Liabilities; or any dissolution of Borrower or Guaran-
tor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the
shareholders or members of Borrower or Guarantor; or any
reorganization of Borrower or Guarantor;
(d) Invalidity of Liabilities. The invalidity, illegal-
ity or unenforceability of all or any part of the Liabilities,
or any document or agreement executed in connection with the
Liabilities, for any reason whatsoever, including without
limitation the fact that (i) the Liabilities, or any part
thereof, exceeds the amount permitted by law, (ii) the act of
creating the Liabilities or any part thereof is ultra vires,
(iii) the officers or representatives executing the documents
or otherwise creating the Liabilities acted in excess of their
authority, (iv) the Liabilities or any part thereof violate
applicable usury laws, (v) the Borrower or any other Person at
any time liable for the payment of all or any part of the
Liabilities has valid defenses, claims or offsets (whether at
law or in equity, by agreement or by statute) which render the
Liabilities wholly or partially uncollectible from Borrower,
(vi) the creation, performance or repayment of the Liabilities
(or the execution, delivery and performance of any document or
instrument representing part of the Liabilities or executed in
connection with the Liabilities, or given to secure the
repayment of the Liabilities) is illegal, uncollectible,
legally impossible or unenforceable, or (vii) the Credit
Agreement, any other Loan Document, or any other document or
instrument pertaining to the Liabilities has been forged or
otherwise is irregular or not genuine or authentic;
(e) Release of Obligors. Any full or partial release of
the liability of Borrower on the Liabilities or any part
thereof, or of any co-guarantors, or any other Person now or
hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform, guaran-
tee or assure the payment of the Liabilities or any part
thereof; it being recognized, acknowledged and agreed by
Guarantor that Guarantor may be required to pay the Liabili-
ties in full without assistance or support of any other
Person, and Guarantor has not been induced to enter into this
Guaranty Agreement on the basis of a contemplation, belief,
understanding or agreement that any other Person will be
liable to perform the Liabilities, or Lender will look to any
other Person to perform the Liabilities;
(f) Other Security. The taking or accepting of any
other security, collateral or guaranty, or other assurance of
payment, for all or any part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender,
exchange, subordination, deterioration, waste, loss or
impairment (including, without limitation, negligent, willful,
unreasonable or unjustifiable impairment) of any collateral,
property or security, at any time existing in connection with,
or assuring or securing payment of, all or any part of the
Liabilities;
(h) Care and Diligence. The failure of Lender or any
other Person to exercise diligence or reasonable care in the
preservation, protection, enforcement, sale or other handling
or treatment of all or any part of such collateral, property
or security;
(i) Status of Liens. The fact that any collateral,
security or Lien contemplated or intended to be given, created
or granted as security for the repayment of the Liabilities
shall not be properly perfected or created, or shall prove to
be unenforceable or subordinate to any other Lien; it being
recognized and agreed by Guarantor that Guarantor is not
entering into this Guaranty Agreement in reliance on, or in
contemplation of the benefits of, the validity, enforceabili-
ty, collectibility or value of any of the collateral for the
Liabilities;
(j) Preference. Any payment by Borrower to Lender is
held to constitute a preference under bankruptcy laws, or for
any reason Lender is required to refund such payment or pay
such amount to Borrower or someone else; or
(k) Other Actions Taken or Omitted. Any other action
taken or omitted to be taken with respect to the Credit
Agreement, any other Loan Document, the Liabilities, or the
security and collateral therefor, whether or not such action
or omission prejudices Guarantor or increases the likelihood
that Guarantor will be required to pay the Liabilities
pursuant to the terms hereof; it is the unambiguous and
unequivocal intention of Guarantor that Guarantor shall be
obligated to pay the Liabilities when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoev-
er, whether contemplated or uncontemplated, and whether or not
otherwise or particularly described herein, except for the
full and final payment and satisfaction of the Liabilities.
ARTICLE 3
Representations, Warranties and Covenants
Section 3.1 Representations and Warranties. In order to
induce Lender to accept this Guaranty Agreement, Guarantor
represents and warrants to Lender (which representations and
warranties will survive the creation of the Liabilities and any
extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant
to this Guaranty Agreement reasonably has benefitted or may be
expected to benefit, directly or indirectly, Guarantor.
(b) Directors' Determination of Benefit. The Board of
Directors of Guarantor, acting pursuant to a duly called and
constituted meeting, after proper notice, or pursuant to a
valid unanimous consent, has determined that this Guaranty
Agreement directly or indirectly benefits and is in the best
interests of Guarantor.
(c) Corporate Existence. Guarantor is a corporation
duly organized, legally existing and in good standing under
the laws of Nevada, and is duly qualified as a foreign
corporation in all jurisdictions wherein the property owned or
the business transacted by it makes such qualification
necessary.
(d) Corporate Power and Authorization. Guarantor is duly
authorized and empowered to execute, deliver and perform this
Guaranty Agreement and all corporate action on Guarantor's
part requisite for the due execution, delivery and performance
of this Guaranty Agreement has been duly and effectively
taken.
(e) Binding Obligations. This Guaranty Agreement
constitutes valid and binding obligations of Guarantor,
enforceable in accordance with its terms (except that enforce-
ment may be subject to any applicable bankruptcy, insolvency
or similar laws generally affecting the enforcement of
creditors' rights).
(f) No Legal Bar or Resultant Lien. This Guaranty
Agreement will not violate any provisions of Guarantor's
articles or certificate of incorporation, bylaws, or any
contract, agreement, law, regulation, order, injunction,
judgment, decree or writ to which Guarantor is subject, or
result in the creation or imposition of any Lien upon any
Properties of Guarantor (other than those, if any, granted
hereby or permitted by the Credit Agreement).
(g) No Consent. Guarantor's execution, delivery and
performance of this Guaranty Agreement does not require the
consent or approval of any other Person, including without
limitation any regulatory authority or governmental body of
the United States or any state thereof or any political
subdivision of the United States or any state thereof.
(h) Authorization. The undersigned, signing for and on
behalf of Guarantor is duly authorized and empowered to
execute this Guaranty Agreement for and on behalf of Guaran-
tor.
(i) Familiarity and Reliance. Guarantor is familiar
with, and has independently reviewed books and records
regarding, the financial condition of the Borrower and is
familiar with the value of any and all collateral intended to
be created as security for the payment of the Note and
Liabilities; provided, however, Guarantor is not relying on
such financial condition or the collateral as an inducement to
enter into this Guaranty Agreement.
(j) No Representation. Neither Lender nor any other
Person has made any representation, warranty or statement to
Guarantor with regard to the Borrower or any Person liable for
the payment of all or any part of the Liabilities, or their
respective financial condition in order to induce Guarantor to
execute this Guaranty Agreement.
(k) Solvency. Guarantor hereby represents that (i) it
is not insolvent as of the date hereof and will not be
rendered insolvent as a result of this Guaranty Agreement,
(ii) it is not engaged in business or a transaction, or about
to engage in a business or a transaction, for which any
property or assets remaining with such Guarantor is unreason-
ably small capital, and (iii) it does not intend to incur, or
believe it will incur, debts that will be beyond its ability
to pay as such debts mature.
(l) Financial Representations. The balance sheets of
Guarantor and its subsidiaries as at December 31, 1995, and
the related statements of operations and retained earnings of
Guarantor and its subsidiaries for the fiscal year then ended,
copies of which have been furnished to Lender, fairly present
the financial condition of Guarantor and its subsidiaries as
at such date and the results of operations of Guarantor and
its subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principals
consistently applied, and since October 31, 1995, there has
been no material adverse change in such condition or opera-
tions.
Section 3.2 Covenants. Guarantor covenants and agrees that,
so long as the Commitment is in effect and until payment in full of
the Liabilities:
(a) Financial Information. Guarantor will furnish to
Lender such information respecting the condition or opera-
tions, financial or otherwise, of Guarantor and of any of its
subsidiaries as Lender may from time to time request and will
furnish to Lender (i) as soon as available and in any event
within 60 days after the end of each calendar month, the
consolidated balance sheets of Guarantor and its subsidiar-
ies as at the end of such month and the consolidated state-
ments of operations of Guarantor and its subsidiaries for the
period commencing at the end of the previous fiscal year and
ending with the end of such month, certified by a Responsible
Officer of Guarantor, (ii) as soon as available and in any
event within 60 days after the end of each of the first three
quarters of each fiscal year of Guarantor, the consolidating
balance sheets of Guarantor and its subsidiaries as at the end
of such quarter and the consolidating statements of operations
of Guarantor and its subsidiaries for the period commencing at
the end of the previous fiscal year and ending with the end of
such quarter, certified by a Responsible Officer of Guarantor,
and (iii) as soon as available and in any event within 120
days after the end of each fiscal year of Guarantor the
audited consolidated (and the unaudited consolidating) balance
sheets of Guarantor and its subsidiaries as at the end of such
year and the audited consolidated (and the unaudited consoli-
dating) statements of operations of Guarantor and its subsid-
iaries for the fiscal year then ended, certified, in the case
of such audited statements, by independent public accountants
acceptable to Lender.
(b) Guarantor will furnish to Lender promptly upon its
becoming available, each financial statement, report, notice
or proxy statement sent by Guarantor to stockholders generally
and each regular or periodic report and any registration
statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by Guarantor
with or received by Guarantor in connection therewith from any
securities exchange or the SEC or any successor agency.
ARTICLE 4
Security
Section 4.1 Grant of Security Interest. As security for
Guarantor's obligations hereunder, Guarantor hereby grants to
Lender a security interest in, a general lien upon and/or right of
set-off against the following (herein referred to as the Collater-
al): the balance of every deposit account, now or hereafter
existing, of Guarantor with Lender and any other claim of Guarantor
against Lender, now or hereafter existing, and all money, instru-
ments, securities, documents, chattel paper, credits, claims,
demands and any other property, rights and interest of Guarantor,
which at any time shall come into the possession or custody or
under the control of Lender or any of its agents or affiliates, for
any purpose, and shall include the proceeds, products and acces-
sions of and to any thereof. Lender shall be deemed to have
possession of any of the Collateral in transit to or set apart for
it or any of its agents or affiliates.
Section 4.2 Financing Statements. The right is expressly
granted to Lender, at its discretion, to file one or more financing
statements or a copy of this Guaranty Agreement under the Uniform
Commercial Code naming Guarantor, as Debtor, and Lender, as Secured
Party, and indicating therein the types or describing the items of
Collateral.
Section 4.3 Remedies. In the event of default under this
Guaranty Agreement, Lender may sell or cause to be sold in Harris
County, Texas, or elsewhere, in one or more sales or parcels, at
such price as Lender may deem best, and for cash or on credit or
for future delivery, without assumption of any credit risk, all or
any of the Collateral at any broker's board or at public or private
sale, without demand or performance or notice of intention to sell
or of time or place of sale (except such notice as is required by
applicable statute and cannot be waived), and Lender or anyone else
may be the purchaser of any or all of the Collateral so sold and
thereafter hold the same absolutely, free from any claim or right
of whatsoever kind, including any equity of redemption of Guaran-
tor, any such demand, notice or right and equity being hereby
expressly waived and released.
Section 4.4 Rights. The grant of the above security interest
and lien shall not in any way limit or be construed as limiting
Lender to collect payment of Guarantor's obligations hereunder only
out of the Collateral, but it is expressly understood and provided
that all such obligations shall constitute the absolute and
unconditional obligations of Guarantor. Lender shall not be
required to take any steps necessary to preserve any rights against
prior parties to any of the Collateral.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement
is and shall be in every particular available to the successors and
assigns of Lender and is and shall always be fully binding upon the
legal representatives, successors and assigns of Guarantor,
notwithstanding that some or all of the monies, the repayment of
which this Guaranty Agreement applies, may be actually advanced
after any bankruptcy, receivership, reorganization or other event
affecting Guarantor.
Section 5.2 Notices. Lender's address for notice hereunder
shall be 24 Greenway Plaza, Suite 1401, Houston, Texas 77046, until
Borrower has received express written notice of a change of
address. Guarantor's address for notice hereunder shall be the
address given under Guarantor's signature below, until Lender has
received express written notice of a change of address. Any notice
or demand to Guarantor under or in connection with this Guaranty
Agreement may be given and shall conclusively be deemed and
considered to have been given and received upon the deposit
thereof, in writing, duly stamped and addressed to Guarantor at the
address of Guarantor appearing on the records of Lender, in the
U.S. mail, but actual notice, however given or received, shall
always be effective.
Section 5.3 Applicable Law. This Guaranty Agreement is a contract
made under and shall be construed in accordance with and governed by the laws
of the State of Texas.
Section 5.4 Jurisdiction. All actions or proceedings with
respect to this Guaranty Agreement may be instituted in the courts
of the State of Texas, the United States District Court for the
Southern District of Texas (Houston Division), or elsewhere to the
extent that jurisdiction shall exist apart from the provisions of
this Section, as Lender may elect, and by execution and delivery of
this Guaranty Agreement, Guarantor irrevocably and unconditionally
submits to the jurisdiction (both subject matter and personal) of
such court, and irrevocably and unconditionally waives (a) any
objection Guarantor may now or hereafter have to the laying of
venue in any of such courts, and (b) any claim that any action or
proceeding brought in any of such courts has been brought in an
inconvenient forum. However, Guarantor does not waive its right to
remove any cause of action brought in State Court to the United
States District Court for the Southern District of Texas (Houston
Division). This submission to jurisdiction and venue is nonexclu-
sive and does not prevent Lender from obtaining jurisdiction in any
court otherwise having jurisdiction or venue. Guarantor hereby
designates and appoints Richard Robert, whose address is c/o
Midcoast Energy Resources, Inc., 1100 Louisiana, Suite 3030,
Houston, Texas 77002, as its authorized agent in the State of Texas
to accept and acknowledge on its behalf service of any and all
process which may be served in any suit, action or proceeding in
the State of Texas, and Guarantor agrees that any service of
process upon such agent shall be deemed in every respect effective
service upon Guarantor. Guarantor agrees that so long as Guarantor
shall be obligated to Lender under this Guaranty Agreement,
Guarantor shall maintain duly appointed agents satisfactory to
Lender for the service of process in the State of Texas and shall
keep Lender advised in writing of the identity and location of such
agents. The failure of such agents to give notice to Guarantor of
any such service shall not impair or affect the validity of such
service or of any judgment rendered in any action or proceeding
based thereon.
Section 5.5 Complete Agreement.
This Guaranty Agreement represents the final agreement between the
parties and may not be contradicted by evidence of prior, contemporane-
ous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
[SIGNATURES BEGIN NEXT PAGE]<PAGE>
WITNESS THE EXECUTION HEREOF, as of the 8th day of May, 1996.
MIDCOAST ENERGY RESOURCES, INC.
By:
Name:
Title:
Address:
1100 Louisiana, Suite 3030
Houston, Texas 77002
Accepted as of the 8th day of May, 1996.
COMPASS BANK-HOUSTON
By:
Name:
Title:
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0
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