U.S.SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Event Reported: 10/31/97
MIDCOAST ENERGY RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-8898 76-0378638
(State or other Commission (I.R.S. Employer
jurisdiction of File Number Identification No.)
incorporation)
Suite 2950, 1100 Louisiana Street, Houston, Texas 77002
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 713/650-8900
MIDCOAST ENERGY RESOURCES, INC.
Item 2. Acquisition of Assets.
On October 31, 1997, Midcoast Energy Resources Inc. completed its
acquisition through merger of Republic Gas Partners L.L.C. ("Republic"), which
owns Mid Louisiana Gas Company ("MIDLA"), Mid Louisiana Gas Transportation
Company ("MLTC") and Mid Louisiana Marketing Company ("MLMC"). Under the
terms of the merger agreement, the Republic partners will receive $3,210,000
cash, 350,000 shares of Midcoast common stock, warrants for 100,000 common
shares and an additional 25,000 warrants issued subject to certain
contingencies. Midcoast also repaid approximately $19.1 million in Republic
bank debt. The acquisition was made pursuant to the Agreement and Plan of Merger
dated October 2, 1997.
MIDLA owns a 386 mile 22" interstate gas pipeline which runs from the Monroe
gas field in northern Louisiana, southward through Mississippi to Baton Rouge,
Louisiana. The system includes two compressor stations with a total of 5,875
horsepower, and has a throughput capacity of 200 Mmcf/day. MIDLA serves a
number of large industrial markets and municipalities including Entergy Gulf
States, Inc., the local distribution company for Baton Rouge; Mississippi
Valley Gas Company, the local distribution company for Natchez, Mississippi
and several surrounding communities; International Paper's facility near
Natchez and Exxon's Baton Rouge Complex. In addition, MIDLA has an agreement
to expand its natural gas service in the Baton Rouge area to serve a new
cogeneration facility. The agreement calls for MIDLA to transport a minimum of
50,000 Mcf/Day and will require an approximate $10.0 million expansion for a
high pressure pipeline. The pipeline is expected to be completed no later
than the fourth quarter of 1998. MIDLA also owns four offshore gathering
systems. MLTC is an intrastate pipeline company which owns two onshore
pipelines which serve two industrial plants. MLMC is a natural gas marketing
company which provides gas supply, transportation, storage and related services
primarily for customers on the MIDLA and MLTC systems.
The acquisition was partially funded with $21.8 million of additional
borrowings under the Company's credit agreement with Bank One, Texas N.A.
("Bank One") Concurrent with the acquisition, new amendments to the credit
agreement were entered into which increased the Company's borrowing
availability from $46.5 million to $80.0 million. The amendments also
eliminated principal reduction requirements,lowered the interest rate on
borrowings, and extended the maturity one year to August 22, 2000.
Of the $80.0 million in borrowing availability, Bank One has committed to
lending, in the aggregate, up to $60.0 million. If required, the additional
$20.0 million may be obtained using a bank syndication. The revised credit
agreement provides borrowing availability as follows: (i) a $15.0 million LC
Line of Credit Facility, of which $3.0 million can be used for working
capital needs and $12.0 million of which is available for issuance of
letters of credit, (ii) a $60.0 million Revolver which expires in
August 2000 and (iii) a $5.0 million MIT Revolver expiring August 2000.
When borrowings under the amended credit agreement are less than 50% of the
$80.0 million borrowing base, at the Company's option, interest will accrue at
the London Interbank Offering Rate ("LIBOR") plus 1.5% per annum or the Bank
One base rate. When borrowings are greater than 50% of available credit, an
additional .25% will be added to the above rates. These rates reflect a 1%
reduction in the LIBOR option and a .25% reduction in the Bank One base rate
option, which became effective September 2, 1997. All other terms and
conditions of the credit agreement remain substantially the same.
Item 7. Financial Statements and Exhibits.
a) Financial Statements of Business Acquired
Republic Gas Partners, L.L.C.
Statement of Operations for the nine and twelve months ended
September 30, 1997 and December 31, 1996, respectively. **
Balance Sheet at September 30, 1997 and December 31, 1996. **
b) Pro Forma Financial Information
Midcoast Energy Resources, Inc.Pro forma balance sheet as of
September 30, 1997. **
Midcoast Energy Resources, Inc.Pro forma Statements of
Operations for the nine and twelve months ended September 30, 1997
and for the year ended December 31, 1996.**
c) Exhibits
2.2 Agreement and plan of Merger dated October 2, 1997 by and between
Republic Gas Partners, L.L.C. and Midcoast Energy resources, Inc.
10.11 Second Amendment to Credit Agreement dated October 31, 1997, by and
between Bank One, Texas N.A. and Midcoast Energy Resources, Inc.;
MagnoliaPipeline Corporation; H&W Pipeline Corporation; Magnolia
Resources, Inc.;Magnolia Gathering, Inc.; Midcoast Holdings No. One,
Inc.; Midcoast Gas Pipeline, Inc.; Nugget Drilling Corporation; Midcoast
Marketing, Inc.; Alatenn Energy Marketing Company; Tennessee River
Intrastate Gas Co.; Mid Louisiana Gas Company; Mid Louisiana Marketing
Company; Mid Louisiana Gas Transmission Company; and Midla Energy
Services Company.
10.12 First Amendment to Credit Agreement dated October 31, 1997, by and
between Bank One, Texas N.A. and Midcoast Interstate Transmission,
Inc., f/k/a Alabama Tennessee Natural Gas Company.
** To be filed by amendment within 60 days of this filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
MIDCOAST ENERGY RESOURCES, INC.
Date: November 13, 1997 By: /s/Richard A. Robert
Treasurer
Principal Financial Officer
Principal Accounting Officer
<PAGE>
Exhibit 2.2
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") dated as of October
_____, 1997, is made by and among Midcoast Energy Resources, Inc., a Nevada
corporation ("Midcoast"), Republic Gas Partners, L.L.C., a Delaware limited
liability company ("Republic Gas"), Cortez Natural Gas, Inc., a Texas
corporation ("Cortez"), Republic Gas Corp., a Texas corporation ("RGC"), and
Riverbend Gas Company, a Delaware corporation ("Riverbend"). Cortez, RGC and
Riverbend are sometimes hereinafter collectively referred to as the "Republic
Gas Owners".
W I T N E S S E T H:
WHEREAS, Republic Gas Partners, L.L.C. is a limited liability company taxed as
a corporation, and is owned by Cortez Natural Gas, Inc., Republic Gas Corp.
and Riverbend Gas Company; Republic Gas Partners, L.L.C. owns all of the
issued and outstanding shares of stock of the following Delaware corporations:
Mid Louisiana Gas Company; Mid Louisiana Marketing Company; Mid Louisiana Gas
Transmission Company; and MIDLA Energy Services Company (collectively, the
"Midla Subsidiaries"); and
WHEREAS, Republic Gas Partners, L.L.C. and its owners, Cortez Natural Gas,
Inc., Republic Gas Corp. and Riverbend Gas Company, desire to merge Republic
Gas Partners, L.L.C. with and into Midcoast Energy Resources, Inc., with
Midcoast Energy Resources, Inc. as the surviving entity, subject to the terms
and conditions of this Agreement; and
WHEREAS, Midcoast Energy Resources, Inc. desires for Republic Gas Partners,
L.L.C. to merge with and into Midcoast Energy Resources, Inc., with Midcoast
Energy Resources, Inc. as the surviving corporation, subject to the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, all of the aforenamed parties to this Agreement
(hereinafter sometimes collectively referred to as the "Parties" and
individually as a "Party"), hereby agree as follows:
Article I.
MERGER
1.1 Merger
Subject to the terms of this Agreement, at the Closing (as hereinafter
defined), Midcoast and Republic Gas shall duly execute, and Midcoast shall
promptly file with the Secretary of State of the State of Nevada, articles of
merger, inclusive of a plan of merger, consistent with the provisions of this
Agreement, whereby Republic Gas is merged with and into Midcoast, with
Midcoast as the surviving entity, and the separate existence of Republic Gas
shall cease. At the Closing, the effect of the merger shall be as provided
under the Nevada Revised Statutes Title 7 and the Delaware Limited Liability
Company Act. At the Closing, by virtue of the merger and without any action
on the part of Midcoast, Republic Gas or the Republic Gas Owners, the
outstanding membership interests of Republic Gas shall be converted into the
right to receive that portion of the consideration under Section 1.2 as
provided therein. Without limiting the generality of the foregoing, as of the
effective time of the merger: (a) all property, rights, privileges, policies
and franchises of Republic Gas and Midcoast, together with all causes of
action, proceedings and claims of Republic Gas and Midcoast, shall vest in
Midcoast (and to the extent any of the foregoing are not vested by operation
of law the same shall thereupon be deemed automatically assigned by Republic
Gas to Midcoast without further act or deed) and all debts, liabilities and
duties of Republic Gas and Midcoast shall become the debts, liabilities and
duties of Midcoast as the surviving corporation of the merger; and (b) the
Articles of Incorporation and Bylaws of Midcoast, as in effect immediately
prior to the Closing, shall remain its Articles of Incorporation and Bylaws
thereafter, unless and until amended in accordance with their terms and as
provided by law.
1.2 Consideration to the Republic Gas Owners
Subject to the terms of this Agreement, at the Closing, Midcoast shall:
(a)issue and deliver collectively to the Republic Gas Owners:
(i)350,000 shares of common stock, par value $.01 per share, of Midcoast
(the "Midcoast Common Stock"), in the respective share amounts set forth
opposite the respective Republic Gas Owners names as designated in writing by
the Republic Gas Owners to Midcoast prior to Closing;
(ii)Warrants in the form of Exhibit B and Exhibit C (the "Warrants") to
purchase 25,000 and 100,000 shares of Midcoast Common Stock, respectively, in
the respective amounts set forth opposite the respective Republic Gas Owners
names as designated in writing by the Republic Gas Owners to Midcoast prior to
Closing; and
(b)pay to the Republic Gas Owners, in the amounts as designated in writing
by the Republic Gas Owners to Midcoast prior to Closing, by wire transfer
pursuant to the wiring instructions set forth on Exhibit A, a cash sum of
money equal to the difference between (A) three million two hundred ten
thousand dollars ($3,210,000) and (B) the total amount, if any, that the
indebtedness (principal and accrued interest) of Republic Gas and the Midla
Subsidiaries to Union Bank (as defined herein) is in excess of nineteen
million one hundred twenty thousand dollars ($19,120,000) on the Closing Date
(the "Preliminary Cash Consideration"), subject however, to the post closing
adjustment provided for under Sections 1.3 and 1.4 of this Agreement.
1.3 Adjustments to the Preliminary Cash Consideration
The Preliminary Cash Consideration shall be adjusted as follows:
(a)If the Working Capital (as defined below) of Republic Gas and the Midla
Subsidiaries on the Determination Date (as defined below) is less than one
dollar ($1.00), downward by an amount equal to such deficiency; and
(b)If the Working Capital of Republic Gas and the Midla Subsidiaries on the
Determination Date is greater than one dollar ($1.00), upward by an amount
equal to such excess;
The "Determination Date" as used herein shall mean the last day of the month
which is closest to the Closing Date. "Working Capital" as used herein shall
mean the positive or negative difference between current assets and current
liabilities, as determined in accordance with generally accepted accounting
principles, excluding however, (i) all indebtedness (principal and accrued
interest and any other fees) owing to Union Bank by Republic Gas and its
affiliates, and (ii) the receivable from Coho Energy, Inc. ("Coho") under
Section 3 of the Stock Purchase Agreement, dated April 3, 1996 between
Republic Gas, Coho, and Interstate Natural Gas Company (regardless of how
Republic Gas accounts for such item), as finally determined pursuant to
Section 1.4. The Midcoast Value (as defined below) shall be paid by the
appropriate Party to the other Party within three (3) business days of its
determination under Section 1.4(a) in immediately available funds by wire
transfer, and the final amount owing under this provision (the difference
between (a) the Midcoast Value and (b) the agreed Working Capital number or
Actual Value) by any Party by reason of the adjustment to the Preliminary Cash
Consideration as determined pursuant to Section 1.4(a) and (b) shall be paid
in immediately available funds by wire transfer or other means within three
(3) business days after such determination has been made. For purposes of the
determination of Working Capital, the Parties agree that the items listed on
Schedule 1.3 shall not be included in the calculation of Working Capital.
1.4Working Capital Determination
(a)Within sixty (60) days after the Closing Date, Midcoast shall prepare
and deliver to Republic Gas Owners a draft consolidated balance sheet for
Republic Gas and Midla Subsidiaries as of 7:00 a.m. Central Time on the
Determination Date (the "Draft Closing Date Balance Sheet"). The Draft
Closing Date Balance Sheet will be prepared in accordance with generally
accepted accounting principles applied on a basis consistent with the
preparation of the consolidated balance sheet of Republic Gas and the Midla
Subsidiaries attached hereto as Schedule 2.8, and shall have a schedule
calculating the Working Capital (the "Midcoast Value").
(b)If the Republic Gas Owners have any objections to the Draft Closing Date
Balance Sheet and the Midcoast Value calculation, they shall deliver a
detailed statement describing their objections to Midcoast within thirty (30)
days after receiving the Draft Closing Date Balance Sheet and the Midcoast
Value calculation (the Republic Gas determination of Working Capital shall be
called the "Republic Gas Value"). The Republic Gas Owners and Midcoast shall
use reasonable efforts to resolve any such objections themselves. If they do
not resolve such objection within thirty (30) days after Republic Gas Owners
have delivered their statement of objections, Midcoast and Republic Gas Owners
shall select an accounting firm mutually acceptable to them which shall
resolve any remaining objections. If they are unable to agree on the choice
of an accounting firm, they shall select a nationally-recognized accounting
firm by lot (after excluding their respective regular outside accounting
firms), which such selection shall occur no later than ten (10) days following
the expiration of the foregoing thirty (30) day time period. The
determinations made by the accounting firm so selected shall be set forth in
writing and shall be conclusive and binding upon the Parties (the "Actual
Value"). The Actual Value as determined by the accounting firm shall be
delivered to the Parties by the selected accounting firm no later than thirty
(30) days following its selection. Midcoast shall revise the Draft Closing
Date Balance Sheet as appropriate to reflect the resolution of any objections
thereto pursuant to this Section 1.4.
(c)In the event Midcoast and the Republic Gas Owners submit any unresolved
objections to an accounting firm for resolution as provided in Section 1.4(b)
above, they shall share responsibility for the fees and expenses of the
accounting firm as follows:
(i)if the accounting firm resolves all of the unresolved objections in
favor of Midcoast, the Republic Gas Owners shall be responsible for all of the
fees and expenses of the accounting firm;
(ii)if the accounting firm resolves all of the unresolved objections in
favor of the Republic Gas Owners, Midcoast shall be responsible for all of the
fees and expenses of the accounting firm;
(iii)if the accounting firm resolves some of the unresolved objections in
favor of Midcoast and the rest of the unresolved objections in favor of the
Republic Gas Owners, Midcoast shall be responsible for the fraction of the
fees and expenses of the accounting firm equal to (x) the difference between
the Actual Value and the Midcoast Value, divided by (y) the difference between
the Republic Gas Value and the Midcoast Value.
Example #1:
If the Midcoast Value is 100, the Actual Value is 125, and the Republic Gas
Value is 175, then Midcoast shall pay 25/75 or 1/3 of the fees and expenses of
the accounting firm, and the Republic Gas Owners shall pay the remaining 2/3.
125-100=25or1/3
175-10075
Example #2:
If the Midcoast Value is 50, the Actual Value is 150, and the Republic Gas
Value is 200, then Midcoast shall pay 100/150 or 2/3 of the fees and expenses
of the accounting firm, and the Republic Gas Owners shall pay the remaining
1/3.
150-50=100or2/3
200-50150
(d)Midcoast shall make the books and records of Republic Gas and the Midla
Subsidiaries available for inspection, review and copying to the Republic Gas
Owners and their accountants and other representatives. Midcoast shall
cooperate with the Republic Gas Owners and will make the work papers and
backup materials used in preparing the Draft Closing Date Balance Sheet
available to the Republic Gas Owners and their accountants and other
representatives, in each case at reasonable times and upon reasonable notice
at any time during (A) the preparation by Midcoast of the Draft Closing Date
Balance Sheet, (B) the review by the Republic Gas Owners of the Draft Closing
Date Balance Sheet, and (C) the resolution by the Parties of any objections
thereto.
1.5Tax and Accounting Treatment
The parties hereto acknowledge and agree that the merger contemplated hereby
shall be treated for accounting purposes as a purchase and for tax purposes as
a tax-free reorganization under Section 368 of the Code and agree to take all
actions necessary to cause such treatment to occur.
1.6Procedures at the Closing
At the Closing, the Parties agree that the following shall occur:
(a)Republic Gas and the Republic Gas Owners shall have satisfied each of
the conditions set forth in Section 7.1 and shall deliver to Midcoast the
documents and certificates required by Section 7.1.
(b)Midcoast shall have satisfied each of the conditions set forth in
Section 7.2 and shall deliver to Republic Gas and Republic Gas Owners the
documents and certificates required by Section 7.2.
1.7Short Period Tax Returns
After the Closing, the Parties agree that the Republic Gas Owners shall, with
the cooperation and assistance of Midcoast and the employees of the Midla
Subsidiaries (at no cost to the Republic Gas Owners), prepare and file, at the
cost and expense of the Republic Gas Owners, all federal, state and other tax
returns due for Republic Gas and the Midla Subsidiaries for all fiscal periods
from April 1, 1996 and ended on or before the Closing Date. Midcoast shall
provide access to all books and records of Republic Gas and the Midla
Subsidiaries to facilitate the preparation of such tax returns, and shall keep
and maintain such information until the applicable statute of limitations with
respect to such returns has expired.
Article II
REPRESENTATIONS AND WARRANTIES OF THE REPUBLIC GAS OWNERS
All of the following representations and warranties in this Article II are
made by Cortez to Midcoast, to the best of Cortez's knowledge and belief,
after due inquiry. With respect to the representations and warranties set
forth in Sections 2.8 through 2.19, in addition to being to the best of
Cortez's knowledge and belief, after due inquiry, such representations and
warranties are only applicable and shall be strictly limited to any events,
actions or circumstances or other items requiring disclosure which relate
solely to Republic Gas' ownership of the Midla Subsidiaries which is April
3,1996 through the date of this Agreement (the "Ownership Period"), and except
as otherwise made as of a specific date; it being the intent of the Parties
that such representations and warranties shall only cover the time period of
Republic Gas' ownership of the Midla Subsidiaries and as otherwise limited by
reference to a specific date, and shall not cover any events, actions,
contracts, accounting issues, litigation, regulatory or any other issues which
are the subject of the following representations and warranties existing,
occurring or relating to the time period prior to Republic Gas' acquisition of
the Midla Subsidiaries on April 3, 1996.
2.8Corporate Status
Republic Gas, the Republic Gas Owners, and the Midla Subsidiaries are a
limited liability company or corporation, as the case may be, duly organized,
validly existing and in good standing under the laws of the state of their
respective organization and have the requisite power and authority to carry on
their business as now being conducted. The Midla Subsidiaries are wholly
owned subsidiaries of Republic Gas. Republic Gas and the Midla Subsidiaries
are legally qualified to do business as a foreign corporation in each of the
jurisdictions where the nature of their properties and the conduct of their
business require such qualification, and are in good standing in each of the
jurisdictions in which they are so qualified. There is no pending or, to the
knowledge of Republic Gas Owners, threatened proceeding for the dissolution,
liquidation, insolvency or rehabilitation of Republic Gas or any of the
Republic Gas Owners or Midla Subsidiaries.
2.9Power and Authority
Republic Gas and each of the Republic Gas Owners have the power and authority
to execute and deliver this Agreement to perform their obligations hereunder
and to consummate the transactions contemplated hereby. Republic Gas and the
Republic Gas Owners have taken all action necessary to authorize the execution
and delivery of this Agreement, the performance of its obligations hereunder,
and the consummation of the transactions contemplated hereby.
2.10Enforceability
This Agreement has been duly executed and delivered by Republic Gas and each
of the Republic Gas Owners, and constitutes the legal, valid and binding
obligation of each of them, enforceable against each of them in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
2.11Capitalization
(a)Schedule 2.4 sets forth, as of the date hereof, with respect to Republic
Gas, (i) the number of authorized membership interests (hereinafter referred
to as shareholder interests), and (ii) the number of issued and outstanding
shareholder interests. All of the issued and outstanding shareholder
interests of Republic Gas have been duly authorized and validly issued and are
fully paid and non-assessable. No preemptive rights or rights of first
refusal exist with respect to the shareholder interests of Republic Gas and no
such rights arise or become exercisable by virtue of or in connection with the
transactions contemplated hereby, except as provided in the Amended and
Restated Regulations of Republic Gas. There are no outstanding or authorized
rights, options, warrants, convertible securities, subscription rights,
conversion rights, exchange rights or other agreements or commitments of any
kind that could require Republic Gas to issue or sell any shareholder
interests (or securities convertible into or exchangeable for shareholder
interests). Except as provided in the Amended and Restated Regulations of
Republic Gas, there are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer of the shareholder
interests of Republic Gas.
(b)Schedule 2.4 sets forth, as of the date hereof, with respect to each of
the Midla Subsidiaries (i) the number of authorized shares of each class of
its capital stock, (ii) the number of issued and outstanding shares of each
class of its capital stock, and (iii) the number of shares of each class of
its capital stock which are held in treasury. All of the issued and
outstanding shares of capital stock of each of the respective Midla
Subsidiaries have been duly authorized and validly issued and are fully paid
and non-assessable. No preemptive rights or rights of first refusal exist
with respect to the shares of capital stock of the Midla Subsidiaries and no
such rights arise or become exercisable by virtue of or in connection with the
transactions contemplated hereby. There are no outstanding or authorized
rights, options, warrants, convertible securities, subscription rights,
conversion rights, exchange rights or other agreements or commitments of any
kind that could require the Midla Subsidiaries to issue or sell any shares of
their capital stock (or securities convertible into or exchangeable for shares
of their capital stock). There are no proxies, voting rights or other
agreements or understandings with respect to the voting or transfer of the
capital stock of the Midla Subsidiaries.
2.12Shareholders of Republic Gas
Schedule 2.5 sets forth, with respect to Republic Gas, the name, address and
federal taxpayer identification number of, each of the shareholders of record
as of the close of business on the date of this Agreement. The Republic Gas
Owners constitute all of the holders of all issued and outstanding shareholder
interests of Republic Gas, and except as set forth on Schedule 2.5, all of
such shareholder interests are free and clear of all liens, security
interests, restrictions and claims of any kind.
2.13No Violation
Except as set forth in Schedule 2.6, the execution and delivery of this
Agreement by Republic Gas and the Republic Gas Owners, the performance by each
of Republic Gas and the Republic Gas Owners of their obligations hereunder and
the consummation by them of the transactions contemplated by this Agreement
will not (a) contravene any provision of the regulations, or other
organizational or governing documents of any of them, (b) violate or conflict
with any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any governmental authority or of any arbitration award
which is either applicable to, binding upon or enforceable against Republic
Gas or the Republic Gas Owners, (c) conflict with, result in any breach of, or
constitute a default (or an event which would with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
of payment under or the right to terminate, amend, modify, abandon or
accelerate, any contract which is applicable to, binding upon or enforceable
against Republic Gas or the Republic Gas Owners, (d) result in or require the
creation or imposition of any lien, security, interest or other encumbrance
upon or with respect to any of the properties or assets of Republic Gas or any
Republic Gas Owner, (e) give to any individual or entity a right or claim
against Republic Gas or any Republic Gas Owner, or (f) require the consent,
approval, authorization or permit of, or filing with or notification to, any
governmental authority, any court or tribunal or any other person, except any
applicable filings required under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act") and any Securities and Exchange
Commission ("SEC") and other filings required to be made by Midcoast.
2.14Subsidiaries
Except as set forth on Schedule 2.7, and except for the Midla Subsidiaries,
Republic Gas does not own, directly or indirectly, any outstanding voting
securities of or other interests in, or control, any other corporation,
partnership, joint venture, or other business entity.
2.15Financial Statements
The Republic Gas Owners have delivered to Midcoast copies of the following
consolidated financial statements of Republic Gas and the Midla Subsidiaries
attached hereto as Schedule 2.8:
(1)Consolidated Balance Sheet (audited) as of December 31, 1996;
(2)Consolidated Statement of Income (audited) for the period from inception
(March 1, 1996) through December 31, 1996;
(3)Consolidated Statement of Members' Equity (audited) for the period from
inception (March 1, 1996) through December 31, 1996;
(4)Consolidated Statement of Cash Flows (audited) from the period of
inception (March 1, 1996) through December 31, 1996;
(5)Consolidated Balance Sheet (unaudited) as of July 31, 1997;
(6)Consolidated Statement of Members' Equity (unaudited) for the period
from January 1, 1997 through July 31, 1997;
(7)Consolidated Statement of Cash Flows (unaudited) for the period from
January 1, 1997 through July 31, 1997; and
(8)Consolidated Statement of Income (unaudited) for the period from January
1, 1997 through July 31, 1997.
The audited financial statements have been prepared in accordance with
generally accepted accounting principles and present fairly the financial
condition of Republic Gas and the Midla Subsidiaries as of their respective
dates and the unaudited financial statements reflect all adjustments, which
were of a normal recurring nature, however, 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. The related consolidated balance
sheets, statements of income, members' equity and cash flows present fairly
the results of Republic Gas and the Midla Subsidiaries' operations for the
periods covered. Except as and to the extent (1) reflected or reserved
against in these financial statements, (2) disclosed in one or more of the
Exhibits or Schedules to this Agreement, or (3) of liabilities and obligations
incurred in the ordinary course of business since December 31, 1996, or as
otherwise reflected in the foregoing unaudited financial statements, none of
Republic Gas and the Midla Subsidiaries, as of the date of this Agreement, has
any material liability or obligation of any nature (whether absolute, accrued,
contingent or otherwise) which should be reflected as a liability on these
financial statements under generally accepted accounting principles
consistently applied.
2.16Liabilities
The Republic Gas Owners have delivered to Midcoast an accurate list, attached
hereto as Schedule 2.9, of all liabilities of Republic Gas and each of the
Midla Subsidiaries, which were incurred or have arisen during the Ownership
Period and which are outstanding as of July 31, 1997, in excess of fifteen
thousand dollars ($15,000), whether absolute, accrued, contingent, or
otherwise.
2.17Leases
The Republic Gas Owners have delivered to Midcoast a list and description,
attached hereto as Schedule 2.10, accurate and complete as of July 31, 1997,
of all leases of real property and personal property entered into during the
Ownership Period by Republic Gas and the Midla Subsidiaries and which have not
otherwise been terminated or expired, of a cumulative future obligation of
fifteen thousand dollars ($15,000) or more. All of said leases are in full
force and effect and are valid agreements between the parties to them.
2.18Financial Instruments
The Republic Gas Owners have delivered to Midcoast a list, attached hereto as
Schedule 2.11, accurate and complete as of the date of this Agreement, setting
forth as to Republic Gas and each of the Midla Subsidiaries the following
items which have occurred during the Ownership Period and which are still
outstanding: (1) a description of all open commodity futures contracts,
options, puts, derivatives and other financial instruments owned or held by
each of them, (2) the date of its purchase, (3) its purchase price, (4) its
market price as of the date of this Agreement, (5) its expiration date, and
(6) the particular physical transaction or contract(s) as to which it is being
utilized as a hedge, if applicable.
2.19Contracts
The Republic Gas Owners have delivered to Midcoast a list, attached hereto as
Schedule 2.12, accurate and complete as of July 31, 1997, of the following
executory contracts: gas purchase contracts, gas sales contracts, gas storage
contracts, gas transportation contracts, employment contracts, employee
benefit plans and policies, and all other contracts of any nature whatsoever
providing for an obligation against, or a benefit to, Republic Gas or any of
the Midla Subsidiaries of fifteen thousand dollars ($15,000) or more (although
contracts with no fixed value of obligation or benefit are also listed) which
were entered into by Republic Gas or any of the Midla Subsidiaries during the
Ownership Period. Except as set forth on Schedule 2.12, none of these
contracts obligates Republic Gas or any of the Midla Subsidiaries by virtue of
a prepayment arrangement, a "take-or-pay" arrangement or any other
arrangement, to transport or deliver hydrocarbons at some future time without
then or thereafter receiving full payment therefor, or to pay for hydrocarbons
or their transportation without then receiving such hydrocarbons. Except as
stated on Schedule 2.12 attached hereto, Republic Gas and the Midla
Subsidiaries have performed in all material respects all obligations under all
these contracts that required performance on or before the date of this
Agreement and they have not received any written notice from any other party
indicating any intent to rescind or dishonor any provisions of these
contracts, to curtail future gas purchases or gas sales, to reduce gas
consumption, or to close any facilities.
2.20Litigation
Except as set forth on Schedule 2.13 attached hereto, there are no pending
suits, actions or proceedings against or involving any of Republic Gas or the
Midla Subsidiaries, and there are no investigations or threatened suits,
actions or proceedings against or involving Republic Gas or any of the Midla
Subsidiaries, which arose during the Ownership Period, and there are no
violations of laws, rules or orders of governmental authority during the
Ownership Period which might reasonably be expected to give rise to a suit,
action or proceeding against or involving Republic Gas or any of the Midla
Subsidiaries.
2.21Tax Returns
Except as set forth on Schedule 2.14, Republic Gas and each of the Midla
Subsidiaries have filed or will cause to be filed all requisite federal, state
and other tax returns due for all fiscal periods from April 1, 1996 and ended
on or before the date of the Agreement. Except as set forth on Schedule 2.14
attached hereto, there are no claims against Republic Gas or any of the Midla
Subsidiaries for federal, state or other taxes for any period or periods from
April 1, 1996 to and including July 31, 1997. Except only as disclosed on
Schedule 2.14 attached hereto, the amounts shown as provisions for taxes on
the consolidated financial statements of Republic Gas and each of the Midla
Subsidiaries delivered to Midcoast are sufficient for the payment of all taxes
of all kinds for all fiscal periods ended on or before that date. Copies of
the federal, state and local income tax returns of Republic Gas and each of
the Midla Subsidiaries for its last three (3) fiscal years have been delivered
to Midcoast.
2.22Material Misstatements or Omissions
No statement, representation, warranty or covenant made by the Republic Gas
Owners in this Agreement, or in any exhibit or schedule to this Agreement,
contains any untrue statement of a material fact or omits any material fact
necessary in order to make the statements herein or therein, in the light of
the circumstances under which they were made, not misleading.
2.23Investment Representation
The Republic Gas Owners are acquiring the shares and warrants of Midcoast for
investment purposes only and not with a view to any distribution thereof in
violation of the Securities Act of 1933, as amended, or any applicable state
securities law. The Republic Gas Owners have such knowledge and experience in
business and financial affairs in general, and of the businesses of Midcoast
and its subsidiaries as conducted and regulated in the states where they are
located in particular, as to be capable of evaluating the merits and risks of
acquiring the shares and the warrants.
2.24Tariffs
Except as set forth in Schedule 2.17 attached hereto, to the extent that the
operations of Republic Gas or any of the Midla Subsidiaries are subject to a
tariff approved by FERC, those operations are in compliance with each such
tariff, except where such noncompliance would not materially affect the
assets, operations or financial condition of Republic Gas or any of the Midla
Subsidiaries. There are no refund claims of any customers nor any refund
obligations of Republic Gas or any of the Midla Subsidiaries imposed under an
order issued by FERC and, except as set forth in Schedule 2.17 attached
hereto, there are no facts or circumstances which might reasonably be expected
to give rise to any such refund claim or refund obligation. Except as set
forth in Schedule 2.17 attached hereto, there are no customer complaints
pending or threatened against Republic Gas or any of the Midla Subsidiaries
before FERC.
2.25Pipeline Rights-of-Way
Republic Gas and the Midla Subsidiaries have received no notice of deficiency
in any rights-of-way, licenses, leases, permits or easements with respect to
the entire route of all pipelines owned and used or held for use by them in
their businesses. Other than sales or assignments to their customers and
among themselves, Republic Gas and the Midla Subsidiaries have not sold or
assigned any rights-of-way, licenses, leases, permits or easements, in whole
or in part, or any undivided interest therein, to any parties whatsoever
during the Ownership Period, except as disclosed in said Schedule 2.18
attached hereto.
2.26Gas Imbalances
Attached hereto as Schedule 2.19 is a list of all gas imbalances as of July
31, 1997 for which Republic Gas or the Midla Subsidiaries, or any of them,
shall have any liability or other obligation which is not offset by a
corresponding receivable. All gas imbalances through the Determination Date
will be taken into account in determining the adjustment to the Preliminary
Cash Consideration pursuant to Section 1.3.
2.27No Other Representations and Warranties
Except as expressly set forth in this Article II, Cortez, Republic Gas and the
Republic Gas Owners make no representation or warranty, express or implied, at
law or in equity, in respect of Republic Gas or the Midla Subsidiaries, or as
to any of their respective assets, liabilities or operations, including,
without limitation, with respect to merchantability or fitness for any
particular purpose, and any such other representations or warranties are
hereby expressly disclaimed. Any disclosure provided herein to as to any
particular Schedule shall be deemed made for all other applicable Schedules.
All terms not otherwise defined in the Schedules, shall have the same meaning
as in this Agreement.
2.28Due Diligence
Republic Gas has conducted due diligence on Midcoast. Midcoast has provided
certain information requested by Republic Gas in the course of its due
diligence. Republic Gas has relied solely on its own independent
investigation, information contained in filings by Midcoast under the
Securities Act (as hereinafter defined) and the Exchange Act (as hereinafter
defined), and Midcoast's representations and warranties in Article V herein,
in determining to enter into this Agreement.
Article III
COVENANTS OF THE REPUBLIC GAS OWNERS
3.1Covenants Prior to Closing
Continuing from the date of this Agreement to Closing or until the termination
of this Agreement, the Republic Gas Owners covenant and agree that:
(a)they will permit the officers and authorized representatives of Midcoast
access to the premises and records of Republic Gas and the Midla Subsidiaries
and will provide Midcoast with such additional information about the business
and property of Republic Gas and the Midla Subsidiaries as Midcoast may
reasonably request;
(b)they will exercise all powers allowed them to cause Republic Gas and the
Midla Subsidiaries to:
(1)carry on their businesses as it was previous to this Agreement;
(2)introduce no new methods of management, operation, or accounting;
(3)maintain all property in as good condition as at the date of this
Agreement, ordinary wear and tear excepted;
(4)perform in all material respects their obligations under contracts;
(5)maintain current insurance policies and comparable coverage; and
(6)use reasonable efforts to preserve their organization, retain employees,
and maintain business relationships; and
(c)except for those matters listed on Schedule 3.1, they will not allow
Republic Gas or any of the Midla Subsidiaries, without the prior written
consent of Midcoast, to:
(1)make any change in the articles of incorporation;
(2)issue securities;
(3)declare dividends or make payments to shareholders;
(4)buy, redeem, or retire for value any shares of Republic Gas or the Midla
Subsidiaries;
(5)enter into contracts, make expenditures, or incur liabilities except in
the ordinary course of business;
(6)increase the compensation of, or award bonuses to, officers, employees,
or agents;
(7)mortgage, pledge, or otherwise encumber any property owned or acquired;
(8)dispose of any property, except in the ordinary course of business; or
(9)agree to merge or to consolidate with any other corporation.
3.2Nondisclosure of Confidential Information
The Republic Gas Owners acknowledge that they have access to certain
confidential information of Midcoast and the subsidiaries of Midcoast, such as
lists of customers and costs, that are valuable assets of Midcoast's business.
The Republic Gas Owners agree, on behalf of themselves and the respective
shareholders, directors, officers, employees and representatives of
themselves, Republic Gas and the Midla Subsidiaries, that none of them will
disclose this information to anyone except authorized representatives of
Republic Gas. In the event of a breach or threatened breach by Republic Gas
Owners or the shareholders, directors, officers, employees or representatives
of themselves, Republic Gas and the Midla Subsidiaries of the provisions of
this paragraph, Midcoast shall be entitled to an injunction restraining such
party or parties from disclosing the information, except to the extent any
disclosure is required pursuant to applicable law, or is otherwise available
to the public. Midcoast is not prohibited from pursuing any other available
remedy for such breach or threatened breach.
3.3HSR Act Filing
The Republic Gas Owners shall promptly after the execution of this Agreement
diligently seek the approval of the consummation of this Agreement by the
Federal Trade Commission and the U.S. Department of Justice pursuant to the
Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, seeking
early termination of the applicable waiting period, and shall pay one-half
(1/2) of the required forty-five thousand dollar ($45,000) filing fee.
3.4Covenants After Closing
Midcoast shall, within sixty (60) days after Closing, cause audited financial
statements of Republic Gas and the Midla Subsidiaries to be prepared for
inclusion in Midcoast's next SEC Form 8-K filing, covering the twelve month
periods ending on December 31, 1995 and December 31, 1996, and December 31,
1994, if required, and unaudited financial statements on said entities for the
nine month period ending on September 30, 1997. Republic Gas Owners shall pay
the cost of the foregoing described audit, up to a maximum amount of $50,000.
3.5Further Assurances
The Republic Gas Owners shall execute and deliver such additional instruments
and other documents and shall take such further actions as may be necessary or
appropriate to effectuate, carry out and comply with all of the terms of this
Agreement and the transactions contemplated hereby.
3.6Cooperation
The Republic Gas Owners agree to cooperate with Midcoast in the preparation
and filing of all forms, notifications, reports and information, if any,
required or reasonably deemed advisable pursuant to any law, rule or
regulation in connection with the transactions contemplated by this Agreement
and to use reasonable commercial efforts to overcome any objections by any
governmental authority to any such transactions.
3.7Other Actions
The Republic Gas Owners shall use their reasonable commercial efforts to take,
or cause to be taken, all appropriate actions, and to do, or cause to be done,
all things necessary, proper or advisable to cause the conditions set forth in
Article VII to be satisfied and to consummate and make effective the
transactions contemplated herein, including, without limitation, using
reasonable commercial efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of any governmental
authority as are necessary for the consummation of the transactions
contemplated hereby. The Republic Gas Owners shall make on a prompt and
timely basis all governmental or regulatory notifications and filings required
to be made by it for the consummation of the transactions contemplated hereby.
Article IV
INDEMNITY OBLIGATIONS
4.8Indemnity Obligations
(a)Cortez agrees that it will indemnify Midcoast, its subsidiaries and
affiliates (inclusive of the Midla Subsidiaries) after the Closing against:
(i)all federal, state or local tax liability (offset by any tax benefit)
with respect to Republic Gas or any of the Midla Subsidiaries which accrued
between April 1, 1996 and the Closing Date (whether or not then due and
payable), which is not expressly reserved for on the Consolidated Balance
Sheet attached hereto as Schedule 2.8, or otherwise reflected in the
adjustment made to the Preliminary Cash Consideration under Section 1.3 of
this Agreement;
(ii)all liabilities of and claims of and claims against Republic Gas
or any of the Midla Subsidiaries, whether accrued, absolute, contingent or
otherwise, resulting, directly or indirectly, from errors or omissions of
Republic Gas or any of the Midla Subsidiaries occurring at any time during the
Ownership Period and which relate to any of the matters covered by the
representations and warranties of Cortez set forth under Article II of this
Agreement; provided however, no liability shall arise under this provision to
the extent any such error or omissions are disclosed on the Schedules provided
under Article II;
(iii)any material misrepresentation, breach of warranty, or
nonfulfillment of any agreement on the part of Cortez and the Republic Gas
Owners under this Agreement or any material misrepresentation in or omission
from any list, schedule, certificate, or other instrument furnished or to be
furnished to Midcoast pursuant to the terms of this Agreement; and
(iv)all actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including reasonable third party attorney's fees and
expenses of investigation) incident to any of the foregoing.
(b)Midcoast agrees that it will indemnify Republic Gas Owners, and their
subsidiaries and affiliates, after the Closing against:
(i)any material misrepresentation, breach of warranty, or non-fulfillment
of any agreement on the part of Midcoast under this Agreement or any material
misrepresentation in or omission from a list, schedule, certificate or other
instrument furnished or to be furnished to Republic Gas Owners pursuant to the
terms of this Agreement; and
(ii)all actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including reasonable third party attorney fees and
expenses of investigation) incident to any of the foregoing.
4.9Liability Limitations
(a)The Parties agree that any claims which are or could be covered by
the terms of Section 4.1(a)(iii) shall be the sole responsibility and
liability obligations of Cortez, and not RGC and Riverbend, and that Riverbend
and RGC shall have no liability under this Agreement for such claims, and
further that all claims and liability under this Agreement shall be solely
borne by Cortez and subject to the liability limitations under this Section
4.2. Cortez (and no other Republic Gas Owner) shall only be liable under the
indemnity obligations of Section 4.1(a) of this Agreement (the "Cortez
Indemnity Obligations") to the extent the cumulative amount of the Losses (as
hereinafter defined) exceeds two hundred thousand dollars ($200,000) (the
"Threshold Amount"). Cortez liability for Cortez Indemnity Obligations shall
not exceed, in the aggregate, two million five hundred thousand dollars
($2,500,000) and, except as hereinafter provided, its liability for any Cortez
Indemnity Obligations shall terminate as to any matter that is not the subject
of a written claim made within twenty-four (24) calendar months following the
Closing; provided however, that such time limitation shall not apply to
covenants or agreements required to be performed following Closing, nor shall
it apply to any Cortez Indemnity Obligation under Section 4.1(a)(i).
Furthermore, Cortez at its election may satisfy any Cortez Indemnity
Obligations under Section 4.1 either by a cash payment or by delivery of
Midcoast Common Stock, or any combination thereof; provided, however, any
delivery of Midcoast Common Stock to satisfy an Cortez Indemnity Obligation
under Section 4.1 shall be valued at its then current market value on the date
transferred to Midcoast in satisfaction or partial satisfaction of any Cortez
Indemnity Obligations. The term "Losses" means any and all liabilities, loss,
cost, damage, or expense to Midcoast, Midcoast's subsidiaries and affiliates,
and the Midla Subsidiaries, arising directly or indirectly under Section
4.1(a), including, without limitation, reasonable third party attorney's fees
and expenses in connection with any action, claim or proceeding relating
thereto, net of the overall tax effect of all such items. For example, an
undisclosed liability which results in a tax deduction in a later period or
periods shall be reduced by the tax benefit to Midcoast or any of its
subsidiaries or affiliates, or Republic Gas or any of the Midla Subsidiaries
of such deduction; a disallowed deduction for a period which will result in a
tax deduction in the same or a greater amount in a prior period or periods not
barred by the statute of limitations at the time of such disallowance or in a
future period shall not be treated as a Loss. Midcoast and the Republic Gas
Owners will exercise reasonable diligence in first defending against any such
loss and also pursuing all practical legal and equitable remedies against
third parties who may be obligated to reimburse or indemnify Midcoast,
Midcoast's subsidiaries and affiliates and the Midla Subsidiaries for amounts
which would otherwise be a Loss before seeking indemnity from the Republic Gas
Owners, and the amount of any Loss shall take into account any claims paid by
third parties including, but not limited to, claims paid by insurance
companies; provided, however, that the claims paid by third parties shall be
reduced by any costs and expenses (including reasonable attorneys' fees and
expenses of investigation) paid by Midcoast or any of its subsidiaries or
affiliates, in connection with the collection of such claims against these
third parties.
4.10Notices, etc.
Each Party entitled to indemnification hereunder (the "Indemnified Party")
agrees that upon obtaining knowledge of facts indicating that it may have a
basis for a claim, including receipt by it of notice of any demand, assertion,
claim or proceeding by any third person (any such third person proceeding
being referred to as an "Action") with respect to any matter as to which it
may be entitled to indemnity hereunder, it will give prompt notice thereof in
writing to the other Party (the "Indemnifying Party") together with a
statement of such information respecting any of the foregoing as it shall then
have; provided, however, the failure to give any such notice shall not affect
the rights of the Indemnified Party to indemnification hereunder unless (i)
the Indemnified Party has proceeded to contest, defend or settle the Action
with respect to which it has failed to give prior notice to the Indemnifying
Party or (ii) the Indemnifying Party is otherwise harmed or damaged by such
failure.
4.11Right to Contest and Defend
The Indemnifying Party shall be given the opportunity, at its cost and
expense, to contest and defend by all appropriate legal proceedings any Action
with respect to which it is called upon to indemnify the Indemnified Party
under the provisions of this Agreement; provided, however, that notice of the
intention so to contest and defend shall be delivered by the Indemnifying
Party to the Indemnified Party within thirty (30) days following receipt of
the notice provided for in Section 4.3 above. If the Indemnifying Party does
not give notice to the Indemnified Party of its election to contest and defend
any such Action within such period then the Indemnifying Party shall be bound
by the result obtained with respect thereto by the Indemnified Party and shall
be responsible for all costs incurred in connection therewith. The
proceedings with respect to any such Action which the Indemnifying Party
elects to contest and defend may be conducted in the name and on behalf of the
Indemnifying Party or the Indemnified Party as may be appropriate. Such
proceedings shall be conducted by counsel employed by the Indemnifying Party,
but the Indemnified Party shall have the right to participate in such
proceedings and to be represented by counsel of its own choosing at its cost
and expense. If the Indemnified Party joins in any such proceedings, the
Indemnifying Party shall have full authority to determine all action to be
taken with respect thereto; provided that if the Indemnifying Party reserves
its rights with respect to its indemnification obligations under this
Agreement as to such proceedings, then the Indemnified Party shall have the
full authority to determine all action to be taken with respect thereto. At
any time after the commencement of defense of any Action, the Indemnifying
Party may request the Indemnified Party to agree in writing to the abandonment
of such contest or to the payment or compromise by the Indemnifying Party of
the asserted Action, provided the Indemnifying Party agrees in writing to be
solely liable for all losses relating to such Action; whereupon such action
shall be taken unless the Indemnified Party determines that the contest should
be continued and notifies the Indemnifying Party in writing within fifteen
(15) days of such request from the Indemnifying Party. In the event that the
Indemnified Party determines that the contest should be continued, the amount
for which the Indemnifying Party would otherwise be liable hereunder shall not
exceed the amount which the Indemnifying Party had agreed to pay in payment or
consideration of such Action, provided the other party to the contested Action
had offered in writing to accept such amount in payment or compromise of the
Action as of the time the Indemnifying Party made its request therefor to the
Indemnified Party.
4.12Cooperation
If requested by the Indemnifying Party, the Indemnified Party agrees to
cooperate with the Indemnifying Party and its counsel in contesting any Action
which the Indemnifying Party elects to contest or, if appropriate, in making
any counterclaim against the person asserting the Action, or any
cross-complaint against any person; provided that the Indemnifying Party will
reimburse the Indemnified Party for any reasonable third party expenses
incurred by it in so cooperating at the request of the Indemnifying Party.
The Parties agree that they shall take reasonable steps to preserve and
maintain such files and records of Republic Gas and the Midla Subsidiaries in
their respective possessions or obtained as a result of consummation of the
transactions contemplated hereby as may be reasonable, necessary or
appropriate so as not to disadvantage the Indemnifying Party in contesting any
Action.
4.13Right to Participate
The Indemnified Party agrees to afford the Indemnifying Party and its counsel
the opportunity, at the Indemnifying Parties expense, to be present at, and to
participate in, conferences with all parties, asserting any Action against the
Indemnified Party and conferences with representatives of or counsel for such
persons.
Article V
REPRESENTATIONS AND WARRANTIES OF MIDCOAST.
Midcoast represents and warrants to the Republic Gas Owners, as of the date of
this Agreement and as of the Closing Date, to the best of its knowledge and
belief, after due inquiry, except with respect to Section 5.7 which shall not
be qualified by the knowledge and belief of Midcoast, as follows:
5.1Corporate Status
Midcoast is a corporation duly organized, validly existing and in good
standing under the laws of the state of Nevada, and has the requisite power
and authority to carry on its business as now being conducted. Midcoast is
legally qualified to do business as a foreign corporation in each of the
jurisdictions where the nature of its properties and the conduct of its
business requires such qualification, and is in good standing in each of the
jurisdictions in which it is so qualified. There is no pending or, to the
knowledge of Midcoast, threatened proceeding for the dissolution, liquidation,
insolvency or rehabilitation of Midcoast or any of its subsidiaries.
5.2Power and Authority
Midcoast has the power and authority to execute and deliver this Agreement to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Midcoast has taken all action necessary to authorize the
execution and delivery of this Agreement, the performance of its obligations
hereunder, and the consummation of the transactions contemplated hereby. A
vote and approval of the Midcoast shareholders is not required to approve the
terms and conditions of this Agreement.
5.3Enforceability
This Agreement has been duly executed and delivered by Midcoast and
constitutes the legal, valid and binding obligation enforceable against
Midcoast, in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
5.4Midcoast Common Stock
Upon consummation of the transactions contemplated hereby and the issuance and
delivery of certificates representing the Midcoast Common Stock and Warrants
as provided in Section 1.2 to the Republic Gas Owners, the Midcoast Common
Stock and Warrants as provided in Section 1.2 will be validly issued, fully
paid, nonassessable shares or Warrants, as the case may be, free and clear of
all liens, security interests, claims and other like encumbrances. Midcoast
Common Stock representing the number of shares of Midcoast Common Stock into
which the Warrants as issued pursuant to or as a condition to the Closing of
this Agreement, have been authorized and reserved by Midcoast for issuance
upon exercise of such Warrants, and when issued upon exercise of such
Warrants, such Midcoast Common Stock will have been validly issued, fully
paid, and nonassessable.
5.5Capitalization
As of the date hereof, the authorized capital stock of Midcoast consists of
10,000,000 shares of Midcoast Common Stock. As of September 15, 1997, (i)
4,815,000 shares of Midcoast Common Stock were validly issued and outstanding,
fully paid and nonassessable, and (ii) no shares of preferred stock were
issued and outstanding. No preemptive rights or rights of first refusal exist
with respect to the shares of capital stock of Midcoast and no such rights
arise or become exercisable by virtue of or in connection with the
transactions contemplated hereby. Except as set forth on Schedule 5.5 hereto,
there are no outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require Midcoast to issue or
sell any shares of their capital stock (or securities convertible into or
exchangeable for shares of their capital stock), and there are no proxies,
voting rights or other agreements or understandings with respect to the voting
or transfer of the capital stock of Midcoast.
5.6No Violation
The execution and delivery of this Agreement by Midcoast, the performance by
Midcoast of its obligations hereunder and the consummation by Midcoast of the
transactions contemplated by this Agreement will not (a) contravene any
provision of the Articles of Incorporation or Bylaws of Midcoast, (b) violate
or conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any governmental authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against Midcoast, (c) conflict with, result in any breach of, or constitute a
default (or an event which would with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right of
payment under or the right to terminate, amend, modify, abandon or accelerate,
any contract which is applicable to, binding upon or enforceable against
Midcoast, (d) result in or require the creation or imposition of any lien upon
or with respect to any of the property or assets of Midcoast, (e) give to any
individual or entity a right or claim against Midcoast, which would materially
affect Midcoast, or (f) require the consent, approval, authorization or permit
of, or filing with or notification to, any governmental authority, any court
or tribunal or any other party, except (i) pursuant to the Securities and
Exchange Act of 1934, as amended ("Exchange Act"), and the Securities Act of
1933, as amended ("Securities Act"), and applicable inclusion requirements of
the American Stock Exchange ("AMEX"), (ii) filings required under the
securities or blue sky laws of the various states, and (iii) filings required
under the HSR Act.
5.7Reports and Financial Statements
From January 1, 1997 until the date hereof, Midcoast has filed all reports,
registrations and statements, together with any required amendments thereto,
that it was required to file with the SEC, including, but not limited to any
Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements (collectively, the
"Midcoast Reports") and has delivered all such reports to Republic Gas Owners.
As of their respective dates (but taking into account any amendments filed
prior to the date of this Agreement), the Midcoast Reports complied in all
respects with all the rules and regulations promulgated by the SEC and did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Midcoast included in the Midcoast
Reports comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Securities and
Exchange Commission with respect thereto, have been prepared in accordance
with generally accepted accounting principles consistently applied during the
periods presented (except, as noted therein, or, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present (subject,
in the case of the unaudited statements, to normal adjustments) the financial
position of Midcoast and its consolidated subsidiaries as of the date thereof
and the results of their operations and their cash flows for the period then
ended. Since the date of the latest Midcoast Report, there has not occurred
any material adverse change in its financial condition, business, properties
or operations of Midcoast or its subsidiaries. Midcoast is listed on the AMEX
and has complied with all listing and other AMEX requirements.
5.8Material Misstatements or Omissions
No statement, representation, warranty or covenant made by Midcoast in this
Agreement or in any exhibit or schedule to this Agreement, contains any untrue
statement of material fact or omits to state any material fact necessary in
order to make the statements herein or therein in the light necessary in order
to make the statements herein or therein in the light of circumstances under
which they were made, not misleading.
5.9Due Diligence
Midcoast has conducted due diligence on Republic Gas and the Midla
Subsidiaries to the extent that Midcoast considers appropriate. During such
investigation, Republic Gas and the Midla Subsidiaries have provided to
Midcoast all information and materials that Midcoast has requested. Midcoast
has relied solely on its own independent investigation of Republic Gas and the
Midla Subsidiaries and the representations and warranties set forth in Article
II in determining to enter into this Agreement.
Article VI
COVENANTS OF MIDCOAST
6.1Covenants Prior to Closing
Continuing from the date of this Agreement to the Closing, Midcoast covenants
and agrees that:
(a)it will permit the officers and authorized representatives of Republic
Gas access to the premises and records of Midcoast and all its subsidiaries
and will provide Republic Gas such additional information about the business
and property of Midcoast and all its subsidiaries as Republic Gas may
reasonably request;
(b)it will exercise all powers necessary to cause it and all of its
subsidiaries to:
(1)carry on their business as it was previous to this Agreement;
(2)introduce no new methods of management, operation, or accounting;
(3) maintain all property in as good condition as at the effective date of
this Agreement, ordinary wear and tear excepted;
(4)perform it's obligations under contracts;
(5)maintain current insurance policies and comparable coverage; and
(6)use reasonable efforts to preserve their organization, retain employees
and maintain business relationships; and
(c)neither it, nor any of its subsidiaries, will, without the prior,
written consent of Republic Gas:
(1)make any change in the articles of incorporation;
(2)issue securities;
(3)declare dividends or make payments to shareholders other than those
consistent with past practices;
(4)buy, redeem, or retire for value any Midcoast shares;
(5)enter into contracts, make expenditures, or incur liabilities except in
the ordinary course of business;
(6)increase the compensation of, or award bonuses to, officers, employees,
or agents;
(7)mortgage, pledge, or otherwise encumber any property owned or acquired;
(8)dispose of any property, except in the ordinary course of business; or
(9)agree to merge or to consolidate with any other corporation.
6.2Nondisclosure of Confidential Information
Midcoast acknowledges that it will have access to certain confidential
information of Republic Gas and the Midla Subsidiaries such as lists of
customers and costs, that are valuable assets of its business. Midcoast
agrees, on behalf of itself and its shareholders, directors, officers,
employees and representatives, that they will not disclose this information to
anyone except authorized representatives of Midcoast. In the event of a
breach or threatened breach by Midcoast, its directors, officers, employees or
representatives, of the provisions of this paragraph, Republic Gas shall be
entitled to an injunction restraining such parties from disclosing the
information, except to the extent any disclosure is required by applicable law
or is otherwise available to the public. Republic Gas is not prohibited from
pursuing any other available remedy for such breach or threatened breach.
6.3HSR Act Filing
Midcoast shall promptly after the execution of this Agreement diligently seek
the approval of the consummation of this Agreement by the Federal Trade
Commission and the Department of Justice pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, seek early termination of the
applicable waiting period, and pay one-half (1/2) of the required filing fee.
6.4Further Assurances
Midcoast shall execute and deliver such additional instruments and other
documents and shall take such further actions as may be necessary or
appropriate to effectuate, carry out and comply with all of the terms of this
Agreement and the transactions contemplated hereby.
6.5Cooperation
Midcoast agrees to cooperate with the Republic Gas Owners in the preparation
and filing of all forms, notifications, reports and information, if any,
required or reasonably deemed advisable pursuant to any law, rule or
regulation in connection with the transactions contemplated by this Agreement
and to use reasonable best efforts to agree jointly with the Republic Gas
Owners on a method to overcome any objections by any governmental authority to
any such transactions.
6.6Other Actions
Midcoast shall use its reasonable commercial efforts to take, or cause to be
taken, all appropriate actions, and to do, or cause to be done, all things
necessary, proper or advisable to cause the conditions set forth in Article
VII to be satisfied and to consummate and make effective the transactions
contemplated herein, including, without limitation, using reasonable
commercial efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of any governmental authority as are
necessary for the consummation of the transactions contemplated hereby and to
cooperate and provide all relevant information requested by any of the parties
which are the subject of proposals by Republic Gas or its affiliates as listed
and described on Schedule 3.1(1), (2) and (4) hereto. Midcoast shall make on
a prompt and timely basis all governmental or regulatory notifications and
filings required to be made by it for the consummation of the transactions
contemplated hereby.
6.7Bank Fees
The Republic Gas Partners shall be responsible for all fees and expenses
payable to Union Bank that are related to the discharge and extinguishment by
Midcoast of the Union Bank indebtedness owed by Republic Gas, including but
not limited to any prepayment penalty, costs associated with the early
termination of the interest rate swap agreement and legal fees of counsel to
Union Bank. Midcoast shall be responsible for all fees and expenses payable
to its lending bank for funds utilized in the discharge and extinguishment of
the Union Bank indebtedness by Midcoast, including but not limited to,
origination fees and legal fees of counsel to its lenders.
6.8Board Seats
Prior to or at Closing, Midcoast shall (i) increase the number of the members
of the board of Directors of Midcoast to seven (7) members, and (ii) appoint
Ted Collins and Jerry Langdon as interim directors to serve until the 1998
Midcoast shareholders meeting. Thereafter, subject to fiduciary obligations
under applicable law, Midcoast shall use its best efforts to take all actions
necessary to nominate, support the election of, and elect Ted Collins and
Jerry Langdon as directors of Midcoast for a term or terms totaling two (2)
years beginning from the 1998 Midcoast annual shareholders meeting. In the
event that (a) the Republic Gas Owners and their affiliates outstanding stock
ownership is less than 50% from that owned on the Closing Date, then the Board
of Directors may ask for the resignation of one of the foregoing board members
and such resignation shall be delivered by such board member, and (b) in the
event Republic Gas Owners and their affiliates outstanding stock ownership
drops another 25%, to 25% from that originally issued hereunder, then the
board of directors may request and shall receive the resignation of the
remaining board member as appointed and elected hereunder.
6.9Union Bank Debt
At the Closing and subject to the fulfillment of the conditions to Closing by
Republic Gas under Section 7.1 and the other terms of this Agreement, Midcoast
shall either (i) pay-off and extinguish all of the indebtedness of Republic
Gas and its affiliates to Union Bank, a Division of Union Bank of California,
N.A. ("Union Bank") or, (ii) at the election of Midcoast, assume all
obligations of such indebtedness to Union Bank. In either event, the Republic
Gas Owners and their respective shareholders and affiliates shall be fully and
completely released from all obligations pertaining to said indebtedness of
Republic Gas to Union Bank, in form and substance reasonably satisfactory to
the Republic Gas Owners, which such complete and full releases shall include,
without limitation, releases of all obligations of the Republic Gas Owners and
their affiliates under that certain (i) Contingent Equity Support Agreement,
as amended, dated as of April 3, 1996 between Republic Gas, Republic Gas
Owners and Union Bank, (ii) Second Contingent Equity Support Agreement, as
amended, dated as of November 15, 1996, between Republic Gas, Republic Gas
Owners and Union Bank, (iii) Guaranty dated March 6, 1997 by Ted Collins, Jr.
and Herbert E. Ware, Jr. in favor of Union Bank, (iv) Limited Reducing
Guaranty dated as of December 3, 1996 by Collins & Ware, Inc. in favor of
Republic Gas, and (v) Debt Service Support Agreement, as amended, dated March
6, 1997 by Republic Gas, Republic Gas Owners and Union Bank.
Article VII
CONDITIONS PRECEDENT TO OBLIGATIONS
7.1Conditions Precedent to Obligations of Midcoast
The obligations of Midcoast under this Agreement including, without
limitation, with respect to the merger of Republic Gas and Midcoast, the
issuance of shares and warrants, the payment of other consideration payable to
the Republic Gas Owners under Article I of this Agreement and the payoff or
assumption of indebtedness under Section 6.9 of this Agreement, is subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions:
(a)Representations and Warranties. All of the representations and
warranties of Cortez contained in this Agreement shall be true and correct in
all material respects when and as made and as of the Closing Date as if made
on such date, except (a) for changes specifically permitted by this Agreement,
and (b) such representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date.
(b)Covenants. The Republic Gas Owners shall have complied with and
performed in all material respects all of the agreements, covenants and
conditions required by this Agreement to be performed or complied with by them
on or prior to the Closing Date.
(c)Legal Opinion. Midcoast shall have been furnished with an opinion of
the counsel for Republic Gas and the Republic Gas Owners, dated the Closing
Date, in the form of Exhibit D attached hereto.
(d)No Litigation. There shall not have been instituted by any creditor of
Republic Gas or the Midla Subsidiaries or other third party any suit or
proceeding seeking to restrain or invalidate this transaction which would
involve expense or lapse of time that would be materially adverse to the
interest of Midcoast.
(e)Material Adverse Change. There shall not be any Material Adverse Change
to Republic Gas and/or the Midla Subsidiaries, individually or collectively.
The term "Material Adverse Change," as used in this Section 7.1(e) means a
change or changes in the condition (financial or otherwise), properties,
assets, liabilities (accrued, absolute, contingent or otherwise), rights,
obligations, operations, or business of Republic Gas and/or the Midla
Subsidiaries from that represented by the consolidated financial statements
attached hereto as Schedule 2.8 and the representations and warranties of
Cortez to Midcoast under Article II of this Agreement, which change or changes
result in losses, damages and/or expenses to Republic Gas and/or the Midla
Subsidiaries in the amount of five hundred thousand dollars ($500,000) or
more. For purposes of the foregoing definition, (i) the representations and
warranties of Cortez under Article II of this Agreement shall be deemed to
have been made by Cortez without any qualifications or other limitations
(except as to any time limitations), (ii) any change in the working capital of
Republic Gas and the Midla Subsidiaries as to which an adjustment is to be
made to the Preliminary Cash Consideration pursuant to Section 1.3 shall not
be used in the determination of whether a Material Adverse Change has
occurred, and (iii) any change resulting from Item 6, Schedule 3.1.
(f)Certificates. At the Closing, Republic Gas shall have furnished to
Midcoast: (1) a certificate dated the Closing Date signed by the President of
Republic Gas and the Republic Gas Owners certifying as to representations,
warranties and conditions contained in Section 7.1(a) and (b); (2) separate
certificates from each of the specified officers provided in Schedule 7.1(f)
of the Midla Subsidiaries certifying as to those representations and
warranties set forth in Article II which are within their respective area or
areas of responsibility; (3) Certificates of Good Standing of Republic Gas and
each of Midla Subsidiaries, issued by the Secretary of State where organized
and the Secretary of State of each state where permitted to conduct business,
stating that such entity is duly organized or duly permitted to do business,
as applicable, and is in good standing as of the date of the Certificate; and
(4) Certificates of Good Standing of Republic Gas and each of the Midla
Subsidiaries, issued by the state comptroller or department of revenue of the
state where organized, and each state where permitted to conduct business,
stating that all taxes have been paid by such entity (through a recent date)
and that it is in good standing.
(g)Regulatory Approvals. All regulatory approvals shall have been obtained
and all applicable waiting periods (and any extensions thereof) under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have
expired or otherwise been terminated by the Parties.
(h)Resignations. Midcoast shall have received the resignations of the
directors, officers and managers of Republic Gas Partners, LLC, and the Midla
Subsidiaries listed on Schedule 7.1(h).
(i)Non Compete Agreements. Midcoast shall have received the non-compete
agreement from Ted Collins, Jerry Langdon and Jim Wright, in the form attached
hereto as Exhibits E, F, and G, for such individuals respectively.
(j)Letter from Ted Collins. Midcoast shall have received from Ted Collins
a guaranty in the form attached hereto as Exhibit H, duly executed by him.
7.2Conditions Precedent to Obligations of Republic Gas Owners
The obligations of Republic Gas and Republic Gas Owners under this Agreement
with respect to the merger of Republic Gas and Midcoast shall be subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions:
(a)Representations and Warranties. All of the representations and
warranties by Midcoast contained in this Agreement shall be true and correct
in all material respects when and as made and as of the Closing Date as if
made on such date, except (a) for changes specifically permitted by this
Agreement, and (b) such representations and warranties which address matters
only as of a particular date shall remain true and correct as of such date.
(b)Covenants. Midcoast shall have complied with and performed in all
material respects all of the agreements, payments, assumptions, covenants and
conditions required by this Agreement to be performed and complied with by it
on or prior to the Closing Date.
(c)Legal Opinion. Republic Gas Owners shall have been furnished with an
opinion of Midcoast's counsel, dated the Closing Date, in the form of Exhibit
I attached hereto.
(d)No Litigation. There shall not have been instituted by any creditor of
Midcoast any suit or proceeding to restrain or invalidate this transaction
which would involve expense or lapse of time that would be materially adverse
to the interest of Republic Gas Owners. In addition, there shall not have
been instituted by any third party any suit or proceeding to restrain or
invalidate this transaction which would involve expense or lapse of time that
would be materially adverse to the interest of Republic Gas Owners.
(e)Certificates. At the Closing, Midcoast shall have furnished to the
Republic Gas Owners, (1) a certificate dated the Closing Date signed by the
President of Midcoast, certifying as to the satisfaction of the
representations and warranties and conditions set forth in Section 7.2(a) and
(b) and that all covenants and conditions required by this Agreement have been
performed or satisfied by Midcoast on or prior to Closing and (2) Certificate
of Existence and Good Standing issued by the Secretary of State of Nevada,
stating that Midcoast is duly incorporated, and is in good standing as of the
date of the certificate.
(f)Regulatory Approvals. All regulatory approvals shall have been obtained
and all applicable waiting periods (and any extensions thereof) under the
Hart-Scott-Rodino Antitrust Improvements Acts of 1976, as amended, shall have
expired or otherwise been terminated by the Parties.
(g)Financial. Midcoast shall have satisfied the requirements of Section
6.9.
(h)Aggregate Consideration. At the Closing, Midcoast shall have (a) issued
all of the Midcoast Common Stock and Warrants provided under Section 1.2, and
shall have delivered to the Republic Gas Owners certificates representing the
Midcoast Common Stock and Warrants issued to them hereunder and as described
in Section 1.2, (b) paid the cash portion of the consideration as provided
under Section 1.2. and (c) satisfied all other conditions of Section 1.2.
(i)Registration Rights Agreement. Midcoast shall have executed and
delivered to the Republic Gas Owners, the Registration Rights Agreement in the
form attached hereto as Exhibit J.
(j)No Material Adverse Change. There shall not be any Material Adverse
Change to Midcoast. The term "Material Adverse Change," as used in this
Section 7.2(j) means a change or changes in the condition (financial or
otherwise), properties, assets, liabilities, (accrued, absolute, contingent or
otherwise), rights, obligations, operations, or business of Midcoast from that
represented by the representations and warranties of Midcoast under Article V
of this Agreement, which change or changes result in losses, damages and/or
expenses to Midcoast in the collective amount of five hundred thousand dollars
($500,000) or more. For purposes of the foregoing definition, (i) the
representations and warranties of Midcoast under Article V of this Agreement
shall be deemed to have been made by Midcoast without any qualification or
other limitation (except as to any time limitations) and (ii) changes in the
market value of the Midcoast Common Stock and Warrants shall not be used in
the determination of whether a Material Adverse change has occurred.
Article VIII
CLOSING AND TERMINATION
8.3Closing
The closing ("Closing") shall be held at the offices of Midcoast, 1100
Louisiana, Suite 2950, Houston, Texas 77002 at 10:00 a.m. local time on the
earlier of November 14, 1997, or on or before three (3) business days after
all of the conditions to Closing as set forth in Section 7 herein have been
satisfied or waived, but in no event no earlier than October 8, 1997, or on
such other date and/or at such other place as the Parties may otherwise
mutually agree (the "Closing Date").
8.4Termination
(a)Termination by Midcoast. If on November 14, 1997, any of the conditions
precedent to the obligation of Midcoast to close set forth under Section 7.1
of this Agreement have not been satisfied by Republic Gas Owners or waived in
writing by Midcoast, then Midcoast may, at such time or at any time thereafter
prior to the fulfillment of all such conditions precedent, terminate this
Agreement, provided that Midcoast is not then in breach of any provision of
this Agreement.
(b)Termination by the Republic Gas Owners. If on November 14, 1997, any of
the conditions precedent to the obligation of Republic Gas Owners to close set
forth under Section 7.2 of this Agreement have not been satisfied by Midcoast
or waived in writing by the Republic Gas Owners, then the Republic Gas Owners
may, at such time or at any time thereafter prior to the fulfillment of all
such conditions precedent, terminate this Agreement, provided that the
Republic Gas Owners are not then in breach of any provision of this Agreement.
(c)Mutual Termination. Midcoast and the Republic Gas Owners may mutually
terminate this Agreement by an instrument in writing signed by them at any
time prior to Closing.
(d)Effect of Termination. In the event of termination of this Agreement
pursuant to this Section 8, this Agreement shall forthwith become void and of
no further force and effect, and the Parties shall be released from any and
all obligations hereunder; provided, however, that nothing herein shall
relieve any Party from liability for the breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
Article IX
PUBLIC ANNOUNCEMENTS
9.1Press Releases
The Parties shall issue a joint press release or, at the election of the
Parties, separate press releases mutually acceptable to the Parties,
announcing the execution and delivery of this Agreement and the closing of the
transaction contemplated hereby; provided however, after the execution of this
Agreement and prior to the issuance of a press release regarding the execution
of this Agreement, the Parties agree that the Republic Gas Owners shall either
meet with or contact representatives of the parties which are the subject of
proposals as described under Schedule 3.1(1), (2) and (4). The Republic Gas
Owners agree to meet or contact with such representatives as soon as possible
following the execution of this Agreement. Each Party shall have a reasonable
opportunity to review, comment on and approve any press release. Except for
any such mutually agreed press releases, the Parties shall not issue or make
any press release or make any public statement prior to or in connection with
the Closing (the "Public Announcements") with respect to this Agreement or the
transactions contemplated hereby without the other Party's prior written
consent, except as may be required by law in the opinion of such Party's
counsel. In the event the foregoing exception regarding press releases
required by applicable law is applicable, no Public Announcement will be made
without written notice and a copy of the proposed Public Announcements being
provided to the other parties to this Agreement no less than three (3)
business days prior to the issuance of such Public Announcements.
Article X
MEDIATION AND ARBITRATION
The Parties acknowledge and agree that any dispute, controversy or claim of
any kind or nature which may arise between the Parties including any dispute,
controversy or claim of any kind or nature which may arise between the Parties
with respect to this Agreement or the transactions contemplated hereby
(including any dispute, controversy or claim relating to the validity of this
dispute resolution clause) shall be settled by alternative dispute resolution
if said dispute cannot be settled through negotiation between the Parties.
The Parties agree first to try in good faith to settle each dispute by
mediation in Houston, Harris County, Texas, under the Commercial Mediation
Rules of the American Arbitration Association, before resorting to
arbitration. The mediation shall be conducted by a professional mediator who
is a licensed attorney in the state of Texas, who is mutually agreeable to the
Parties, and who is not affiliated, directly or indirectly, with any of the
Parties. If the Parties are unable to agree on an mediator, then the mediator
shall be selected by the American Arbitration Association. If mediation is
unsuccessful at resolving the dispute between the Parties, the dispute shall
be finally settled by binding arbitration as provided below.
The Parties acknowledge and agree that this Agreement and the performance of
the transactions contemplated hereby evidence transactions which involve a
substantial nexus with interstate commerce. Accordingly, any dispute,
controversy or claim of any kind or nature which may arise between the Parties
including any dispute, controversy or claim of any kind or nature which may
arise between the Parties with respect to this Agreement or the transactions
contemplated hereby (including any dispute, controversy or claim relating to
the validity of this arbitration clause), shall in the event a resolution is
not reached under the preceding paragraph, be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Such arbitration
proceedings shall be held in Houston, Texas, and shall be heard by an
arbitrator mutually agreeable to the Parties and, to the extent practicable,
who is knowledgeable and experienced in the type of matter that is the subject
of the dispute. If the Parties are unable to agree on an arbitrator, then the
arbitrator shall be selected by the American Arbitration Association. The
Parties understand and agree that the decision of the arbitrator shall be
final and binding upon both of them, and that the arbitrator shall have all
powers provided by law, and may award any legal or equitable relief,
including, without limitation, money damages, declaratory relief and
injunctive relief. The arbitrator shall charge all fees and expenses of the
arbitration equally to the Parties, except that each Party shall bear and pay
all of its own attorneys' fees, accountants' fees, expert witness fees and
other fees and costs incurred by it in connection with its preparation for and
participation in the arbitration.
Article XI
PROHIBITED ACTIVITIES OF REPUBLIC GAS OWNERS
Midcoast recognizes and acknowledges that Ted Collins ("Collins") and Jerry
Langdon ("Langdon") and their respective affiliates currently own or may have
investment or business interests that are engaged in the same general
activities as Midcoast and its affiliates. Moreover, pursuant to Section 6.8,
Midcoast has agreed to appoint and nominate Collins and Langdon to the Board
of Directors of Midcoast. It is contemplated that Collins and Langdon will
serve as Directors to Midcoast for some period of time following the Closing
Date. Midcoast agrees that during the pendency of such service as a director,
the director's fiduciary duties are sufficient to adequately protect the
interests of Midcoast and its shareholders. Further, Midcoast agrees that the
agreements provided pursuant to Section 7.1(i) with respect to Langdon,
Collins and Jimmy Wright shall suffice to protect the interests of Midcoast.
Article XII
GENERAL
12.1Additional Documents
The Parties to this Agreement shall cause to be delivered on the Closing Date,
or at such other times and places as shall be agreed upon, such additional
documents as a Party may reasonably require for the purpose of carrying out
this Agreement. The Parties shall exert best efforts in coordinating such
requests, and shall direct officers, directors, employees and representatives
to furnish information, evidence, testimony, and other assistance in
connection with resolution of any disputes arising from this Agreement.
12.2Assignment
This Agreement and the rights accorded the Parties pursuant to it may not be
assigned, except by operation of law. Midcoast shall have the right
subsequent to the merger to transfer ownership of the shares of the Midla
Subsidiaries to a wholly-owned subsidiary of Midcoast.
12.3Entire Agreement
This Agreement, including its schedules and exhibits, is the entire Agreement
of the Parties. All prior agreements and understandings are superseded by it
and are not to be considered in interpreting it. This Agreement may be
amended only by a writing executed by all Parties. Oral modification is
expressly disallowed.
12.4Counterparts
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be considered an original, and each constituting part of
the same Agreement. It shall not be necessary for each counterpart to be
executed separately by all Parties, so long as at least one counterpart is
executed by each Party.
12.5Fees
Notwithstanding whether the transactions contemplated by this Agreement occur:
(1) Midcoast will pay the fees and other expenses of Midcoast and its agents
and other representatives incurred in connection with its performance or
attempted performance of this Agreement and any amendments, including, but not
limited to, those of its investment bankers, attorneys and accountants; and
(2) Republic Gas will pay the fees and other expenses of Republic Gas and the
Republic Gas Owners (the "Republic Gas Fees") incurred in connection with
their performance or attempted performance of this Agreement, including, but
not limited to, those of its investment bankers, attorneys and accountants
retained by any of them. Provided, however, if Closing occurs, and the
Working Capital on the Determination Date after the adjustments made pursuant
to Section 1.3 and 1.4 (inclusive of adjustments for the Republic Gas Fees)
exceeds the amount of the Preliminary Cash Consideration, the Republic Gas
Owners shall pay the amount of the excess, not to exceed the total amount of
the Republic Gas Fees.
12.6Notices
Any notice or communication required or permitted by this Agreement shall be
sufficiently given if sent by first class mail, postage prepaid, guaranteed
overnight delivery or facsimile transmission if such transmission is
confirmed, to the following addresses and telecopy numbers (or to such other
addresses or telecopy numbers which such party shall designate in writing to
the other party):
IF TO REPUBLIC GAS OWNERS:Cortez National Gas Company
508 West Wall Street, Suite 1200
Midland, Texas 79701
Attn: Ted Collins, Jr.
Fax: (915) 686-0302
Republic Gas Corp.
11701 Monica Lane
Houston, Texas 77024
Attn: Jerry Langdon
Fax: (713) 785-3493
Riverbend Gas Company
1507 Riverbend Crossing
Sugarland, Texas 77478
Attn: Jimmy D. Wright
With a copy to:Rick L. Burdick, P.C.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1900 Pennzoil Place - South Tower
711 Louisiana
Houston, Texas 77002
Fax: (713) 236-0822
IF TO MIDCOAST:Midcoast Energy Resources, Inc.
1100 Louisiana, Suite 2950
Houston, Texas 77002
Attn: Dan C. Tutcher,
President
Fax: (713) 650-3232
With a copy to:Ronald L. Chachere, Esq.
Suite 970
Mercantile Tower MT 115
Corpus Christi, Texas 78477
Fax: (512) 883-2357
12.7Durability of Representations and Warranties
All representations and warranties in this Agreement shall survive the
Closing, any investigation of the Parties and execution of documents
contemplated by this Agreement for a period of two (2) years from the Closing
Date and no claims based on such representations and warranties shall be made
after such time. The Parties executing and carrying out the terms of this
Agreement are relying on the terms contained in this Agreement and any writing
delivered pursuant to the provisions of this Agreement.
12.8Law
This Agreement shall be construed in accordance with the laws of the state of
Texas, without regard to any conflict-of-laws provision thereof that would
otherwise require the application of the law of any other jurisdiction.
12.9Waiver
No failure or delay by any party hereto in exercising any right, power or
privilege hereunder (and no course of dealing between or among the any of the
Parties) shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of any such right,
power or privilege shall preclude the further or full exercise thereon. No
waiver of any right, power or privilege hereunder shall be enforceable unless
in writing and executed by the Party against whom such enforcement is sought.
The waiver by any Party hereto of any of the conditions precedent to its
obligations under this Agreement shall not preclude it from seeking redress
for breach of this Agreement other than with respect to the condition so
waived.
12.10Including
Wherever terms such as "include" or "including" are used in this Agreement,
they shall mean include or including without limiting the generality of any
description or word preceding such term.
12.11Gender
Throughout this Agreement, wherever the context so permits, the masculine
gender shall be deemed to include the feminine gender and vice versa, and both
shall be deemed to include the neuter and vice-versa, and the singular shall
be deemed to include the plural and vice-versa.
12.12Captions
The captions or headings in this Agreement are made for convenience and
general reference only and shall not be construed to describe, define or limit
the scope or intent of the provisions of this Agreement.
12.13Severability
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall continue in full force and effect and shall in no way be
affected, impaired or invalidated.
12.14No Third Party Beneficiary
Except as otherwise provided in this Agreement, this Agreement does not confer
upon any person not a party hereto any rights or remedies hereunder.
12.15Definitions
As used in this Agreement, "affiliates" shall have the meaning ascribed
to in Rule 12b-2 of the General Rules and Regulations under the Exchange Act,
as in effect on the date hereof.
12.16No Consequential Damages
No Party shall be liable to the other Party for any consequential or punitive
damages for any breach of this Agreement or in connection with the
transactions contemplated hereby.
THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY DELETED.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
written above.
REPUBLIC GAS PARTNERS, L.L.C.
By:_________________________________
Its _________________________________
CORTEZ NATURAL GAS, INC.
By:_________________________________
Its President
REPUBLIC GAS CORP.
By:_________________________________
Its President
RIVERBEND GAS COMPANY
By:___________________________
Its President
MIDCOAST ENERGY RESOURCES, INC.
By:___________________________
Dan C. Tutcher,
Its President
Exhibit 10.11
SECOND AMENDMENT TO
CREDIT AGREEMENT
among
MIDCOAST ENERGY RESOURCES, INC.
MAGNOLIA PIPELINE CORPORATION
H & W PIPELINE CORPORATION
MAGNOLIA RESOURCES, INC.
MAGNOLIA GATHERING, INC.
MIDCOAST HOLDINGS NO. ONE, INC.
MIDCOAST GAS PIPELINE, INC.
NUGGET DRILLING CORPORATION
MIDCOAST MARKETING, INC.
ALATENN ENERGY MARKETING COMPANY
TENNESSEE RIVER INTRASTATE GAS CO.
MID LOUISIANA GAS COMPANY
MID LOUISIANA MARKETING COMPANY
MID LOUISIANA GAS TRANSMISSION COMPANY
MIDLA ENERGY SERVICES COMPANY
and
BANK ONE, TEXAS, N.A.
Effective as of
October 31, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I.DEFINITIONS 1
1.01Terms Defined Above 1
1.02Terms Defined in Agreement 2
1.03References 2
1.04Articles and Sections 2
1.05Number and Gender 2
ARTICLE II.AMENDMENTS 2
2.01Amendment of Section 1.2 2
2.02Global Amendments5
2.03Amendment of Section 2.8 5
2.04Amendment of Section 5.3 6
2.05Amendment of Section 5.46
2.06Amendment of Section 6.13 6
2.07Amendment of Section 7.16
ARTICLE III.CONDITIONS 6
3.01Receipt of Documents 6
3.02Accuracy of Representations and Warranties 7
3.03Matters Satisfactory to Lender 7
ARTICLE IV.REPRESENTATIONS AND WARRANTIES 8
ARTICLE V.RATIFICATION 8
ARTICLE VI.MISCELLANEOUS 8
6.01Scope of Amendment 8
6.02Agreement as Amended 8
6.03Parties in Interest 8
6.04Rights of Third Parties 8
6.05ENTIRE AGREEMENT 8
6.06GOVERNING LAW 9
6.07JURISDICTION AND VENUE 9
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second Amendment") is
made and entered into effective as of October 31, 1997, among MIDCOAST ENERGY
RESOURCES, INC., a Nevada corporation ("Midcoast"); MAGNOLIA PIPELINE
CORPORATION, an Alabama corporation ("Magnolia Pipeline"); H&W PIPELINE
CORPORATION, an Alabama corporation ("H&W"); MAGNOLIA RESOURCES, INC., a
Mississippi corporation ("Magnolia Resources"); MAGNOLIA GATHERING, INC., an
Alabama corporation ("Magnolia Gathering"); MIDCOAST HOLDINGS NO. ONE, INC., a
Delaware corporation "Midcoast Holdings"); MIDCOAST GAS PIPELINE, INC., a
Texas corporation "Midcoast Gas Pipeline"); NUGGET DRILLING CORPORATION, a
Minnesota corporation ("Nugget"); MIDCOAST MARKETING, INC., a Texas
corporation ("Midcoast Marketing"); ALATENN ENERGY MARKETING COMPANY, an
Alabama corporation ("Atemco"); TENNESSEE RIVER INTRASTATE GAS CO., an Alabama
corporation ("Trigas"); MID LOUISIANA GAS COMPANY, a Delaware corporation
("Mid LA"); MID LOUISIANA MARKETING COMPANY, a Delaware corporation ("MLM");
MID LOUISIANA GAS TRANSMISSION COMPANY, a Delaware corporation ("MLT"); and
MIDLA ENERGY SERVICES COMPANY, a Delaware corporation ("MLESCO"), together
with Midcoast, Magnolia Pipeline, H&W, Magnolia Resources, Magnolia Gathering,
Midcoast Holdings, Midcoast Gas Pipeline, Nugget, Midcoast Marketing, Atemco,
Trigas, Mid LA, MLM and MLT, collectively the "Borrower") and BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association (the "Lender").
W I T N E S S E T H:
WHEREAS, the above named parties did execute and exchange counterparts
of that certain Credit Agreement dated August 22, 1996, as amended by that
certain First Amendment to Credit Agreement dated May 30, 1997 (collectively,
the "Agreement"), to which reference is here made for all purposes;
WHEREAS, in contemplation of the proposed merger of Republic Gas
Partners, L.L.C., a Delaware limited liability company ("Republic Gas") and
Midcoast pursuant to which Mid LA, MLM, MLT and MLESCO will become wholly
owned subsidiaries of Midcoast, the parties subject to and bound by the
Agreement are desirous of amending the Agreement in the particulars
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties to the Agreement, as set forth therein, and the mutual
covenants and agreements of the parties hereto, as set forth in this Second
Amendment, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.01Terms Defined Above. As used herein, each of the terms
"Agreement," "Borrower," "Second Amendment," and "Lender" shall have the
meaning assigned to such term hereinabove.
1.02Terms Defined in Agreement. As used herein, each term defined in
the Agreement shall have the meaning assigned thereto in the Agreement, unless
expressly provided herein to the contrary.
1.03References. References in this Second Amendment to Article or
Section numbers shall be to Articles and Sections of this Second Amendment,
unless expressly stated herein to the contrary. References in this Second
Amendment to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow,"
"hereof," and "hereunder" shall be to this Second Amendment in its entirety
and not only to the particular Article or Section in which such reference
appears.
1.04Articles and Sections. This Second Amendment, for convenience
only, has been divided into Articles and Sections and it is understood that
the rights, powers, privileges, duties, and other legal relations of the
parties hereto shall be determined from this Second Amendment as an entirety
and without regard to such division into Articles and Sections and without
regard to headings prefixed to such Articles and Sections.
1.05Number 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 and plural shall be equally applicable to the
plural or singular, as the case may be.
ARTICLE II.
AMENDMENTS
The Borrower and the Lender hereby amend the Agreement in the following
particulars:
2.01Amendment of Section 1.2. Section 1.2 of the Agreement is hereby
amended as follows:
A.The following definitions are added to read as follows:
"Borrower" shall mean, individually and collectively, Midcoast Energy
Resources, Inc., a Nevada corporation, Magnolia Pipeline Corporation, an
Alabama corporation, H&W Pipeline Corporation, an Alabama corporation,
Magnolia Resources, Inc., a Mississippi corporation, Magnolia Gathering, Inc.,
an Alabama corporation, Midcoast Holdings No. One, Inc., a Delaware
corporation, Midcoast Gas Pipeline, Inc., a Texas corporation, Nugget Drilling
Corporation, a Minnesota corporation, Midcoast Marketing, Inc., a Texas
corporation, Alatenn Energy Marketing Company, an Alabama corporation,
Tennessee River Intrastate Gas Co., an Alabama corporation, Mid Louisiana Gas
Company, a Delaware corporation, Mid Louisiana Marketing Company, a Delaware
corporation, Mid Louisiana Gas Transmission Company, a Delaware corporation,
and Midla Energy Services Company, a Delaware corporation.
"LC Line of Credit" shall mean the line of credit up to $15,000,000
which shall include $12,000,000 of Letters of Credit.
"Mid LA Companies" shall mean each of Mid Louisiana Gas Company, a
Delaware corporation, Mid Louisiana Marketing Company, a Delaware corporation,
Mid Louisiana Gas Transmission Company, a Delaware corporation, and Midla
Energy Services Company, a Delaware corporation.
"Mid LA Merger Agreement" shall mean that certain Agreement and Plan of
Merger dated October 2, 1997 by and among Midcoast Energy Resources, Inc.,
Republic Gas Partners, L.L.C., Cortez Natural Gas, Inc., Republic Gas Corp.
and Riverbend Gas Company, including any and all amendments and modifications
thereof.
"Mid LA Obligations" shall mean any and all Indebtedness arising out of
or related to (i) that certain Promissory Note in the original principal
amount of Four Million Four Hundred Thousand Dollars ($4,400,000) dated April
3, 1996, executed by Republic Gas Partners, L.L.C., a Delaware limited
liability company ("Republic Gas"), and payable to the order of Union Bank, a
Division of Union Bank of California, N.A. ("Union Bank"); (ii) that certain
Promissory Note in the original principal amount of Thirteen Million Two
Hundred Thousand Dollars ($13,200,000) dated April 3, 1996, executed by
Republic Gas, and payable to the order of Union Bank; and (iii) that certain
Promissory Note in the original principal amount of Two Million Four Hundred
Thousand Dollars ($2,400,000) dated April 3, 1996 executed by Republic Gas,
and payable to the order of Union Bank.
"Mid LA Security Instruments" shall mean any and all promissory notes,
guarantees, liens, security agreements, mortgages, deeds of trust, and other
similar documents securing the Mid LA Obligations.
"MIT" shall mean Midcoast Interstate Transmission, Inc., an Alabama
corporation f/k/a Alabama Tennessee Natural Gas Company.
"MIT Credit Facility" shall mean that certain Credit Agreement dated May
30, 1997 between MIT and Lender, as amended by that certain First Amendment to
Credit Agreement dated October 31, 1997.
"Reducing Revolving Line of Credit" shall mean the line of credit with a
Borrowing Base as established from time to time in accordance with Section 2.8
hereof.
B.The following definitions are amended to read as follows:
"Applicable Margin" shall mean, for the period from and after September
2, 1997, for the Reducing Revolving Line of Credit and the LC Line of Credit
as to each LIBO Rate Loan, one and one-half percent (1-1/2%) when the Loan
Balance is less than 50% of the Borrowing Base for the Reducing Revolving Line
of Credit and the LC Line of Credit under this Agreement and one and
three-quarters percent (1-3/4%) when the Loan Balance is greater than 50% of
the Borrowing Base for the Reducing Revolving Line of Credit and the LC Line
of Credit under this Agreement.
"Commitment Termination Date" shall mean August 22, 2000.
"Eligible Accounts Receivables" shall mean (i) the accounts receivable
of Borrower related to gas marketing activities, only, not in excess of 30
days past invoice due date; and (ii) for the period from November 1 through
and including March 31 of each year prior to the Commitment Termination Date
an amount equal to volumes of gas sold and delivered by Borrower to third
parties, but not yet invoiced to such third parties; but in each case
excluding all accounts receivable to one customer if fifteen percent (15%) of
the total accounts receivable to such customer are more than 30 days past
invoice due date and provided further that no one customer's accounts
receivable shall constitute more than twenty percent (20%) of the eligible
accounts receivable, but such limitation shall not apply to Westlake, Mapco,
Champions International, Amoco Oil Co., Reynolds Metal Co., Gulf States
Utilities, Exxon, Georgia Pacific, and International Paper, or their
successors.
"Interest Period" shall mean, subject to the limitations set forth in
Section 2.21, with respect to any LIBO Rate Loan, a period commencing on the
date such Loan is made or converted from a Loan of another type pursuant to
this Agreement or the last day of the next preceding Interest Period with
respect to such Loan and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter, as the
Borrower may request in the Borrowing Request for such Loan.
"Obligations" shall mean, without duplication, (a) all Indebtedness
evidenced by the Note, (b) the Reimbursement Obligations, (c) the undrawn,
amount of all outstanding, unexpired Letters of Credit, (d) the obligation of
the Borrower for the payment of Commitment Fees, Facility Fees, Letter of
Credit Fees, and Engineering Fees, any other agreements with the Lender,
including, but not limited to ISDA Master Agreement, dated as of May 30, 1997,
and (e) all other obligations and liabilities of the Borrower and/or MIT to
the Lender, now existing or hereafter incurred, under, arising out of or in
connection with any Loan Document and/or the MIT Credit Facility, and to the
extent that any of the foregoing includes or refers to the payment of amounts
deemed or constituting interest, only so much thereof as shall have accrued,
been earned and which remains unpaid at each relevant time of determination.
"Note" shall mean the promissory note of Borrower, in the form attached
hereto as Exhibit I, together with all renewals, extensions for any period,
increases and arrangements; which Note shall, in part, renew and modify the
Mid LA Obligations.
"Security Instruments" shall mean the Existing Security Instruments, the
Mid LA Security Instruments, the security instruments executed and delivered
in satisfaction of the condition set forth in Section 3.1(g), and all other
documents and instruments at any time executed as security for all or any
portion of the Obligations, as such instruments may be amended, restated, or
supplemented from time to time.
2.02Global Amendments. From and after the effective date of this
Second Amendment, each reference in the Agreement or any Loan Document to
"Reducing Revolving Line of Credit" is hereby deleted and replaced with "LC
Line of Credit" as if each such new definition had been originally
incorporated into the Agreement.
2.03Amendment of Section 2.8. Sections 2.8(a) and (b) of the
Agreement are amended to read as follows:
"2.8Borrowing Base Determinations. (a) The Borrowing Base as of
October 31, 1997 is acknowledged by the Borrower and the Lender to be
$15,000,000 for the LC Line of Credit of which up to $3,000,000 is available
for cash advances and up to $12,000,000 may be used for Letters of Credit and
$60,000,000 for the Reducing Revolving Line of Credit. The Borrowing Base for
the LC Line of Credit is limited to 80% of Eligible Accounts Receivable of the
Borrower and acceptable to the Lender in its sole discretion.
Notwithstanding the foregoing limitations, during the period from November 1
through and including March 31 for each year prior to the Commitment
Termination Date the Borrower may utilize unused availability under the
Reducing Revolving Line of Credit and/or the line of credit available to MIT
under the MIT Credit Facility for additional Letters of Credit, provided,
however, no event of default or potential default has occurred and is
continuing thereunder. The Borrowing Base for the Reducing Revolving Line of
Credit is determined by the Lender in its sole discretion and based on
contracts that are acceptable to the Lender. Commencing on October 31, 1997,
and continuing thereafter on the first day of each calendar month through the
Commitment Termination Date, the amount of the Borrowing Base on the Reducing
Revolving Line of Credit shall be reduced by $0, provided, however, that such
amount is subject to redetermination under Section 2.8(b). Notwithstanding
the foregoing, the maximum exposure to Lender for the Indebtedness of Borrower
and/or its Affiliates under the LC Line of Credit, the Reducing Revolving Line
of Credit, the MIT Credit Facility or any other accommodation to Borrower
and/or its Affiliates made by Lender shall not exceed $60,000,000 in the
aggregate.
(b)The Borrowing Base shall be redetermined monthly for the LC
Line of Credit as evidenced by the delivery to Lender of the Borrowing Base
Certificate substantially in the form of Exhibit VI; and beginning May 1, 1998
and semi-annually thereafter for the Reducing Revolving Line of Credit on the
basis of information supplied by the Borrower in compliance with the
provisions of this Agreement, including, without limitation, engineering
reports as available, contracts in connection with Borrower's pipeline
systems, and all other information available to the Lender. Notwithstanding
the foregoing, the Lender may at its discretion redetermine the Borrowing Base
and the amount by which the Borrowing Base for the Reducing Revolving Line of
Credit shall be reduced each calendar month as set forth in Section 2.8 (a) at
any time and from time to time and the Borrower may request a Borrowing Base
review at any time.
2.04Amendment of Section 5.3. Section 5.3 of the Agreement is amended
to read as follows:
"5.3Annual Financial Statements. Deliver to the Lender, on or
before the 120th day after the close of each fiscal year of the Borrower, a
copy of the annual audited consolidated Financial Statements of the Borrower."
2.05Amendment of Section 5.4. Section 5.4 of the Agreement is amended
to read as follows:
"5.4Monthly Accounts Receivable Report. Deliver to the Lender
30 days after the close of each month during the term of this Agreement, a
report listing all accounts receivable by name, date and amount, and on such
date deliver to the Lender a Borrowing Base Certificate in a form as set forth
on Exhibit VI."
2.06Amendment of Section 6.13. Section 6.13 of the Agreement is
amended to read as follows:
"6.13Cash Flow Coverage. Permit Cash Flow for any fiscal year to
be less than 1.40 times the sum of interest plus current maturities of funded
long term bank debt or 1/10 of the principal balance if the specified
reductions are $0. Such test shall begin September 30, 1997 and for the
immediately preceding four quarters and shall continue on a quarterly basis
thereafter looking back to the immediately preceding four quarters."
2.07Amendment of Section 7.1. Section 7.1 of the Agreement is hereby
amended by adding the following:
"(n)The occurrence of an Event of Default under the MIT Credit
Facility."
ARTICLE III.
CONDITIONS
The obligation of the Lender to amend the Agreement as provided herein
is subject to the fulfillment of the following conditions precedent:
3.01Receipt of Documents. The Lender shall have received, reviewed,
and approved the following documents and other items, appropriately executed
when necessary and in form and substance satisfactory to the Lender:
(a)multiple counterparts of this Second Amendment, as requested by
the Lender;
(b)the Note;
(c)Notice of Final Agreement;
(d)ratifications of and amendments to the Security Instruments, in
form and substance satisfactory to Lender and its counsel;
(e)a certificate from a Responsible Officer of Midcoast certifying
that attached thereto is a true and correct copy of the Agreement and Plan of
Merger dated October 2, 1997 between Midcoast and Republic Gas Partners,
L.L.C. ("Republic Gas");
(f)certified copies of the Articles of Merger filed with the
Secretary of State of Nevada and the Secretary of State of Delaware, which
establishes, to the satisfaction of Lender and its counsel, the merger of
Republic Gas with and into Midcoast;
(g)a legal opinion of the general counsel to Midcoast, in form and
substance satisfactory to Lender and its counsel; and
(h)such other agreements, documents, items, instruments, opinions,
certificates, waivers, consents, and evidence as the Lender may reasonably
request.
3.02Accuracy of Representations and Warranties. The representations
and warranties contained in Article IV of the Agreement and this Second
Amendment shall be true and correct. In addition to the foregoing, Borrower
hereby makes the following representations and warranties to Lender:
Mid LA Merger Agreement. The closing of the transactions contemplated
by the Mid LA Merger Agreement has or will occur with the execution and
delivery of this Second Amendment and the funding of Loans to Borrower
hereunder and Borrower has not waived nor shall waive, or in any way amend,
without the prior written consent of Lender, the terms and conditions of the
Mid LA Merger Agreement, including any condition to the obligations to close
as so set forth therein. A true and complete copy of the Mid LA Merger
Agreement (including all exhibits, schedules and amendments thereto) has been
delivered to Lender, and a true and complete copy of each document delivered
at the closing of the Mid LA Merger Agreement will be delivered to Lender on
the date hereof. Borrower is not in default under the Mid LA Merger Agreement
or under any instrument or document to be delivered in connection with the Mid
LA Merger Agreement. The representations and warranties made in the Mid LA
Merger Agreement by Borrower will be true and correct in all respects (except
for changes expressly provided for therein or herein) on and as of the date
herein as though made on and as of such date.
3.03Matters Satisfactory to Lender. All matters incident to the
consummation of the transactions contemplated hereby shall be satisfactory to
the Lender.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby expressly re-makes, in favor of the Lender, all of
the representations and warranties set forth in Article IV of the Agreement,
and represents and warrants that all such representations and warranties
remain true and unbreached.
ARTICLE V.
RATIFICATION
Each of the parties hereto does hereby adopt, ratify, and confirm the
Agreement and the other Loan Documents, in all things in accordance with the
terms and provisions thereof, as amended by this Second Amendment.
ARTICLE VI.
MISCELLANEOUS
6.01Scope of Amendment. The scope of this Second Amendment is
expressly limited to the matters addressed herein and this Second Amendment
shall not operate as a waiver of any past, present, or future breach, Default,
or Event of Default under the Agreement, except to the extent, if any, that
any such breach, Default, or Event of Default is remedied by the effect of
this Second Amendment.
6.02Agreement as Amended. All references to the Agreement in any
document heretofore or hereafter executed in connection with the transactions
contemplated in the Agreement shall be deemed to refer to the Agreement as
amended by this Second Amendment.
6.03Parties in Interest. All provisions of this Second Amendment
shall be binding upon and shall inure to the benefit of the Borrower, the
Lender and their respective successors and assigns.
6.04Rights of Third Parties. All provisions herein are imposed solely
and exclusively for the benefit of the Lender and the Borrower, and no other
Person shall have standing to require satisfaction of such provisions in
accordance with their terms and any or all of such provisions may be freely
waived in whole or in part by the Lender at any time if in its sole discretion
it deems it advisable to do so.
6.05ENTIRE AGREEMENT. THIS SECOND AMENDMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND
SUPERSEDES ANY PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, BETWEEN SUCH PARTIES
REGARDING THE SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS SECOND
AMENDMENT, THE AGREEMENT, THE NOTE, THE SECURITY INSTRUMENTS, AND THE OTHER
WRITTEN DOCUMENTS REFERRED TO IN THE AGREEMENT OR EXECUTED IN CONNECTION WITH
OR AS SECURITY FOR THE NOTE REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG
THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
6.06GOVERNING LAW. THIS SECOND AMENDMENT, THE AGREEMENT AND THE NOTE
SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW; PROVIDED, HOWEVER,
THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE 5069, CHAPTER 15 (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL
NOT APPLY.
6.07JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT
TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR
FROM THIS SECOND AMENDMENT, THE AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
LITIGATED IN COURTS HAVING SITUS IN HARRIS COUNTY, TEXAS. EACH OF THE
BORROWER AND THE LENDER HEREBY SUBMITS TO THE JURISDICTION OF ANY LOCAL,
STATE, OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY
RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY
LITIGATION BROUGHT AGAINST IT BY THE BORROWER OR THE LENDER IN ACCORDANCE WITH
THIS SECTION.
IN WITNESS WHEREOF, this Second Amendment to Credit Agreement is
executed effective the date first hereinabove written.
BORROWER:
MIDCOAST ENERGY RESOURCES, INC.
By:
Richard Robert
Chief Financial Officer and
Treasurer
MAGNOLIA PIPELINE CORPORATION
By:
Richard Robert
Treasurer
H & W PIPELINE CORPORATION
By:
Richard Robert
Treasurer
MAGNOLIA RESOURCES, INC.
By:
Richard Robert
Treasurer
MAGNOLIA GATHERING, INC.
By:
Richard Robert
Treasurer
MIDCOAST HOLDINGS NO. ONE, INC.
By:
Richard Robert
Treasurer
MIDCOAST GAS PIPELINE, INC.
By:
Richard Robert
Treasurer
NUGGET DRILLING CORPORATION
By:
Richard Robert
Treasurer
MIDCOAST MARKETING, INC.
By:
Richard Robert
Treasurer
ALATENN ENERGY MARKETING COMPANY
By:
Richard Robert
Treasurer
TENNESSEE RIVER INTRASTATE GAS CO.
By:
Richard Robert
Treasurer
MID LOUISIANA GAS COMPANY
By:
Richard Robert
Treasurer
MID LOUISIANA MARKETING COMPANY
By:
Richard Robert
Treasurer
MID LOUISIANA GAS TRANSMISSION
COMPANY
By:
Richard Robert
Treasurer
MIDLA ENERGY SERVICES COMPANY
By:
Richard Robert
Treasurer
LENDER:
BANK ONE, TEXAS, N.A.
By:
Charles Kingswell-Smith
Senior Vice President
Exhibit 10.12
FIRST AMENDMENT TO
CREDIT AGREEMENT
between
MIDCOAST INTERSTATE TRANSMISSION, INC.
F/K/A ALABAMA TENNESSEE NATURAL GAS COMPANY
and
BANK ONE, TEXAS, N.A.
Effective as of
October 31, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I.DEFINITIONS 1
1.01Terms Defined Above 1
1.02Terms Defined in Agreement 1
1.03References 1
1.04Articles and Sections 1
1.05Number and Gender 1
ARTICLE II.AMENDMENTS 2
2.01Amendment of Section 1.2 2
2.02Amendment of Section 2.7 3
2.03Amendment of Section 7.14
ARTICLE III.CONDITIONS 4
3.01Receipt of Documents 4
3.02Accuracy of Representations and Warranties 4
3.03Matters Satisfactory to Lender 4
ARTICLE IV. REPRESENTATIONS AND WARRANTIES 4
ARTICLE V.RATIFICATION 4
ARTICLE VI.MISCELLANEOUS 4
6.01Scope of Amendment 5
6.02Agreement as Amended 5
6.03Parties in Interest 5
6.04Rights of Third Parties 5
6.05ENTIRE AGREEMENT 5
6.06GOVERNING LAW 5
6.07JURISDICTION AND VENUE 5
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") is
made and entered into effective as of October 31, 1997, between MIDCOAST
INTERSTATE TRANSMISSION, INC., F/K/A ALABAMA TENNESSEE NATURAL GAS COMPANY, an
Alabama corporation (the "Borrower") and BANK ONE, TEXAS, N.A., a national
banking association (the "Lender").
W I T N E S S E T H:
WHEREAS, the above named parties did execute and exchange counterparts
of that certain Credit Agreement dated May 30, 1997 (the "Agreement"), to
which reference is here made for all purposes;
WHEREAS, the parties subject to and bound by the Agreement are desirous
of amending the Agreement in the particulars hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties to the Agreement, as set forth therein, and the mutual
covenants and agreements of the parties hereto, as set forth in this First
Amendment, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.01Terms Defined Above. As used herein, each of the terms
"Agreement," "Borrower," "First Amendment," and "Lender" shall have the
meaning assigned to such term hereinabove.
1.02Terms Defined in Agreement. As used herein, each term defined in
the Agreement shall have the meaning assigned thereto in the Agreement, unless
expressly provided herein to the contrary.
1.03References. References in this First Amendment to Article or
Section numbers shall be to Articles and Sections of this First Amendment,
unless expressly stated herein to the contrary. References in this First
Amendment to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow,"
"hereof," and "hereunder" shall be to this First Amendment in its entirety and
not only to the particular Article or Section in which such reference appears.
1.04Articles and Sections. This First Amendment, for convenience
only, has been divided into Articles and Sections and it is understood that
the rights, powers, privileges, duties, and other legal relations of the
parties hereto shall be determined from this First Amendment as an entirety
and without regard to such division into Articles and Sections and without
regard to headings prefixed to such Articles and Sections.
1.05Number 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 and plural shall be equally applicable to the
plural or singular, as the case may be.
ARTICLE II.
AMENDMENTS
The Borrower and the Lender hereby amend the Agreement in the following
particulars:
2.01Amendment of Section 1.2. Section 1.2 of the Agreement is hereby
amended as follows:
The following definitions are added to read as follows:
"Borrower" shall mean Midcoast Interstate Transmission, Inc., an Alabama
corporation f/k/a Alabama Tennessee Natural Gas Company.
"Midcoast Credit Facility" shall mean that certain Credit Agreement
dated August 22, 1996, as amended, modified or supplemented from time to time
including, but not limited to, that certain Second Amendment to Credit
Agreement dated October 31, 1997 among Midcoast Energy Resources, Inc., a
Nevada corporation, Magnolia Pipeline Corporation, an Alabama corporation, H&W
Pipeline Corporation, an Alabama corporation, Magnolia Resources, Inc., a
Mississippi corporation, Magnolia Gathering, Inc., an Alabama corporation,
Midcoast Holdings No. One, Inc., a Delaware corporation, Midcoast Gas
Pipeline, Inc., a Texas corporation, Nugget Drilling Corporation, a Minnesota
corporation, Midcoast Marketing, Inc., a Texas corporation, Alatenn Energy
Marketing Company, an Alabama corporation, Tennessee River Intrastate Gas Co.,
an Alabama corporation, Mid Louisiana Gas Company, a Delaware corporation, Mid
Louisiana Marketing Company, a Delaware corporation, Mid Louisiana Gas
Transmission Company, a Delaware corporation, and Midla Energy Services
Company, a Delaware corporation and Lender, as the same may be amended,
modified or supplemented from time to time.
The following definitions are amended to read as follows:
"Applicable Margin" shall mean, for the period from and after September
2, 1997, as to each LIBO Rate Loan one and one-half percent (1-1/2%) when the
Loan Balance is less than 50% of the Borrowing Base and one and three-quarters
percent (1-3/4%) when the Loan Balance is greater than 50% of the Borrowing
Base.
"Commitment Termination Date" shall mean August 22, 2000.
"Interest Period" shall mean, subject to the limitations set forth in
Section 2.19, with respect to any LIBO Rate Loan, a period commencing on the
date such Loan is made or converted from a Loan of another type pursuant to
this Agreement or the last day of the next preceding Interest Period with
respect to such Loan and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter, as the
Borrower may request in the Borrowing Request for such Loan.
"Obligations" shall mean, without duplication, (a) all Indebtedness
evidenced by the Note, (b) the obligation of the Borrower for the payment of
Commitment Fees and Facility Fees, (c) the obligation of the Guarantor under
the Guaranty, (d) the obligations arising out of or related to the Midcoast
Credit Facility, and (e) all other obligations and liabilities of the Borrower
and/or its Affiliates to the Lender, now existing or hereafter incurred,
under, arising out of or in connection with any Loan Document or the Midcoast
Credit Facility, and to the extent that any of the foregoing includes or
refers to the payment of amounts deemed or constituting interest, only so much
thereof as shall have accrued, been earned and which remains unpaid at each
relevant time of determination.
2.02Amendment of Section 2.7. Section 2.7 of the Agreement is amended
to read as follows:
"2.7Borrowing Base Determinations. (a) The Borrowing Base as of
October 31, 1997 is acknowledged by the Borrower and the Lender to be
$5,000,000. The Borrowing Base is determined by the Lender in its sole
discretion and based on contracts that are acceptable to the Lender.
Commencing on the date hereof, and continuing thereafter on the first day of
each calendar month through the Commitment Termination Date, the amount of the
Borrowing Base shall be reduced by $0, provided, however, that such amount is
subject to redetermination under Section 2.8(b).
(b)The Borrowing Base shall be redetermined semi-annually
beginning August 1, 1997, on the basis of information supplied by the Borrower
in compliance with the provisions of this Agreement, including, without
limitation, engineering reports as available, contracts in connection with
Borrower's pipeline systems, and all other information available to the
Lender. Notwithstanding the foregoing, the Lender may at its discretion
redetermine the Borrowing Base.
(c)Upon each determination of the Borrowing Base by the Lender,
the Lender shall notify the Borrower orally (confirming such notice promptly
in writing) of such determination, and the Borrowing Base so communicated to
the Borrower shall become effective upon such oral notification and shall
remain in effect until the next subsequent determination of the Borrowing
Base.
(d)The Borrowing Base shall represent the determination by the
Lender, in accordance with the applicable definitions and provisions herein
contained and its customary lending practices for loans of this nature, of the
value, for loan purposes, of the Mortgaged Properties, subject, in the case of
any increase in the Borrowing Base, to the credit approval process of the
Lender. Furthermore, the Borrower acknowledges that the determination of the
Borrowing Base contains an equity cushion (market value in excess of loan
value), which is acknowledged by the Borrower to be essential for the adequate
protection of the Lender."
2.03Amendment of Section 7.1. Section 7.1 of the Agreement is hereby
amended by adding the following:
"(n)The occurrence of an Event of Default under the Midcoast
Credit Facility."
ARTICLE III.
CONDITIONS
The obligation of the Lender to amend the Agreement as provided herein
is subject to the fulfillment of the following conditions precedent:
3.01Receipt of Documents. The Lender shall have received, reviewed,
and approved the following documents and other items, appropriately executed
when necessary and in form and substance satisfactory to the Lender:
(a)multiple counterparts of this First Amendment, as requested by the
Lender;
(b)Notice of Final Agreement;
3.02Accuracy of Representations and Warranties. The representations
and warranties contained in Article IV of the Agreement and this First
Amendment shall be true and correct.
3.03Matters Satisfactory to Lender. All matters incident to the
consummation of the transactions contemplated hereby shall be satisfactory to
the Lender.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby expressly re-makes, in favor of the Lender, all of
the representations and warranties set forth in Article IV of the Agreement,
and represents and warrants that all such representations and warranties
remain true and unbreached.
ARTICLE V.
RATIFICATION
Each of the parties hereto does hereby adopt, ratify, and confirm the
Agreement and the other Loan Documents, in all things in accordance with the
terms and provisions thereof, as amended by this First Amendment.
ARTICLE VI.
MISCELLANEOUS
6.01Scope of Amendment. The scope of this First Amendment is
expressly limited to the matters addressed herein and this First Amendment
shall not operate as a waiver of any past, present, or future breach, Default,
or Event of Default under the Agreement, except to the extent, if any, that
any such breach, Default, or Event of Default is remedied by the effect of
this First Amendment.
6.02Agreement as Amended. All references to the Agreement in any
document heretofore or hereafter executed in connection with the transactions
contemplated in the Agreement shall be deemed to refer to the Agreement as
amended by this First Amendment.
6.03Parties in Interest. All provisions of this First Amendment shall
be binding upon and shall inure to the benefit of the Borrower, the Lender and
their respective successors and assigns.
6.04Rights of Third Parties. All provisions herein are imposed solely
and exclusively for the benefit of the Lender and the Borrower, and no other
Person shall have standing to require satisfaction of such provisions in
accordance with their terms and any or all of such provisions may be freely
waived in whole or in part by the Lender at any time if in its sole discretion
it deems it advisable to do so.
6.05ENTIRE AGREEMENT. THIS FIRST AMENDMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND
SUPERSEDES ANY PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, BETWEEN SUCH PARTIES
REGARDING THE SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS FIRST
AMENDMENT, THE AGREEMENT, THE NOTE, THE SECURITY INSTRUMENTS, AND THE OTHER
WRITTEN DOCUMENTS REFERRED TO IN THE AGREEMENT OR EXECUTED IN CONNECTION WITH
OR AS SECURITY FOR THE NOTE REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG
THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
6.06GOVERNING LAW. THIS FIRST AMENDMENT, THE AGREEMENT AND THE NOTE
SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW; PROVIDED, HOWEVER,
THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE 5069, CHAPTER 15 (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL
NOT APPLY.
6.07JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT
TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR
FROM THIS FIRST AMENDMENT, THE AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
LITIGATED IN COURTS HAVING SITUS IN HARRIS COUNTY, TEXAS. EACH OF THE
BORROWER AND THE LENDER HEREBY SUBMITS TO THE JURISDICTION OF ANY LOCAL,
STATE, OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY
RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY
LITIGATION BROUGHT AGAINST IT BY THE BORROWER OR THE LENDER IN ACCORDANCE WITH
THIS SECTION.
IN WITNESS WHEREOF, this First Amendment to Credit Agreement is executed
effective the date first hereinabove written.
BORROWER:
MIDCOAST INTERSTATE TRANSMISSION,
INC., F/K/A ALABAMA TENNESSEE
NATURAL GAS COMPANY
By:
Richard Robert
Chief Financial Officer and
Treasurer
LENDER:
BANK ONE, TEXAS, N.A.
By:
Charles Kingswell-Smith
Senior Vice President
