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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 Report (Date of earliest event reported) JUNE 20, 1995
(JUNE 6, 1995)
CORNERSTONE NATURAL GAS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-11994 74-1952257
(Commission (IRS Employer
File Number) Identification No.)
8080 N. CENTRAL EXPRESSWAY
SUITE 1200
DALLAS, TEXAS 75206
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 691-5536
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ITEM 5. OTHER EVENTS
On June 6, 1995, but effective as of April 2, 1995, Cornerstone
Pipeline Company ("CPC"), a wholly owned subsidiary of Cornerstone Natural Gas,
Inc. ("Cornerstone") pursuant to a Securities Purchase Agreement dated as of
June 6, 1995, purchased all of the capital stock of Energy Transfer Corporation,
a Texas corporation ("ETC") and all of the limited partnership interest of
Energy Transfer I, Ltd., a Texas limited partnership ("ETI") for a total
purchase price of $2,880,000; and on June 15, 1995, but effective as of July 1,
1995, subject to a Securities Purchase Agreement dated June 15, 1995, CPC
purchased all of the limited partnership interest of Energy Transfer II, Ltd., a
Texas limited partnership ("ETII") for a total purchase price of $320,000. ETC
is a 2% general partner of both ETI and ETII.
Mr. Kelcy Warren ("Warren"), President and Chief Operating Officer of
Cornerstone, received $57,600 as the sole owner of the stock of ETC and
$1,411,200 as owner of 50% of the limited partnership interest of ETI and
$160,000 as owner of 50% of the limited partnership interest of ETII. Mr. Ray
Davis ("Davis"), Chairman of the Board and Chief Executive Officer of
Cornerstone and Mr. Ben H. Cook ("Cook"), a director of Cornerstone, each
received $705,600 from the sale of limited partnership interest in ETI. Davis,
in addition, received $80,000 from the sale of the limited partnership of ETII.
CPC will pay Warren an additional $100,000 and Davis an additional $50,000 as
limited partners of ETII if additional gas is dedicated to the system by January
1, 1996.
Warren was a director of Cornerstone, but neither Davis nor Cook were
officers or directors when ETI and ETII were formed to own and operate the
System. In addition, as a condition to the sale, Warren has agreed to remain as
President of ETC.
ETI and ETII are limited partnerships that own the Oletha Gas
Gathering System ("System") located in Limestone County, Texas. The System is
approximately 15 miles of gathering facilities which currently gathers in
excess of 30 MMCFD. Cornerstone has operated the System for the last two years
for ETI and ETII under a management contract for $5,000 a month.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired - not applicable
(b) Pro forma financial information - not applicable
(c) Exhibits
10.1 Securities Purchase Agreement by and between Kelcy L. Warren,
Individually as the Sole Shareholder of Energy Transfer Corporation
and as a Limited Partner of Energy Transfer I, Ltd., and Flowstone
L.P., as a Limited Partner of Energy Transfer I, Ltd. and Cornerstone
Pipeline Company dated June 6, 1995.
10.2 Securities Purchase Agreement by and between Kelcy L. Warren,
Individually, as a Limited Partner of Energy Transfer II, Ltd., Ray
Davis, Individually, as a Limited Partner of Energy Transfer II, Ltd.,
and TMcD, Ltd., as a Limited Partner of Energy Transfer II, Ltd., and
Cornerstone Pipeline Company dated June 15, 1995.
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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 hereunto duly authorized.
CORNERSTONE NATURAL GAS, INC.
(Registrant)
Dated: June 20, 1995 /s/ Ray C. Davis
-------------------------------------
Ray C. Davis
Chairman of the Board and
Chief Executive Officer
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SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
Kelcy L. Warren,
Individually as the Sole Shareholder of
Energy Transfer Corporation and as a
Limited Partner of Energy Transfer I, Ltd.
and
Flowstone L.P., as a
Limited Partner of Energy Transfer I, Ltd.
AND
CORNERSTONE PIPELINE COMPANY
Dated June 6, 1995
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TABLE OF CONTENTS
Page
RECITALS OF THE PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 TRANSFER OF SECURITIES AND PURCHASE PRICE; CLOSING . . . . . . 1
Section 1.1 Sale of Securities . . . . . . . . . . . . . . . . . 1
Section 1.2 Purchase Price . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Post-Closing Adjustment. . . . . . . . . . . . . . . 2
Section 1.4 Manner of Payment. . . . . . . . . . . . . . . . . . 2
Section 1.5 Closing. . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF WARREN . . . . . . . . . . . 2
Section 2.1 ETC Organization . . . . . . . . . . . . . . . . . . 3
Section 2.2 Powers of Attorney . . . . . . . . . . . . . . . . . 3
Section 2.3 Capitalization . . . . . . . . . . . . . . . . . . . 3
Section 2.4 Title to ETC Shares. . . . . . . . . . . . . . . . . 3
Section 2.5 No Subsidiaries; Absence of Certain Agreements . . . 3
Section 2.6 No Violations or Consents. . . . . . . . . . . . . . 3
Section 2.7 Title to Assets and Property . . . . . . . . . . . . 4
Section 2.8 Litigation . . . . . . . . . . . . . . . . . . . . . 4
Section 2.9 Limitation on ETC's Powers . . . . . . . . . . . . . 4
Section 2.10 Absence of Changes . . . . . . . . . . . . . . . . . 4
Section 2.11 Undisclosed Liabilities; Commitments . . . . . . . . 5
Section 2.12 Environmental Matters. . . . . . . . . . . . . . . . 5
Section 2.13 Employee Benefits. . . . . . . . . . . . . . . . . . 5
Section 2.14 Labor Matters. . . . . . . . . . . . . . . . . . . . 5
Section 2.15 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.16 Third Party Obligations. . . . . . . . . . . . . . . 6
Section 2.17 No Brokers . . . . . . . . . . . . . . . . . . . . . 6
Section 2.18 Books and Records. . . . . . . . . . . . . . . . . . 6
Section 2.19 Accounts Payable . . . . . . . . . . . . . . . . . . 6
Section 2.20 Insurance Policies . . . . . . . . . . . . . . . . . 6
Section 2.21 Transactions with Affiliates . . . . . . . . . . . . 6
Section 2.22 Prohibited Practices . . . . . . . . . . . . . . . . 7
Section 2.23 No Default . . . . . . . . . . . . . . . . . . . . . 7
Section 2.24 Copies of Documents. . . . . . . . . . . . . . . . . 7
Section 2.25 Disclosure . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. . . . . . . . . 8
Section 3.1 ETLP Organization. . . . . . . . . . . . . . . . . . 8
Section 3.2 Powers of Attorney . . . . . . . . . . . . . . . . . 8
Section 3.3 Authority Relative to this Agreement . . . . . . . . 8
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Section 3.4 Capitalization . . . . . . . . . . . . . . . . . . . 8
Section 3.5 Title to ETLP Interests. . . . . . . . . . . . . . . 9
Section 3.6 No Subsidiaries; Absence of Certain Agreements . . . 9
Section 3.7 No Violations or Consents. . . . . . . . . . . . . . 9
Section 3.8 Title to Assets and Property . . . . . . . . . . . . 9
Section 3.9 Litigation . . . . . . . . . . . . . . . . . . . . . 10
Section 3.10 Limitation on ETLP's Powers. . . . . . . . . . . . . 10
Section 3.11 Absence of Changes . . . . . . . . . . . . . . . . . 10
Section 3.12 Undisclosed Liabilities; Commitments . . . . . . . . 10
Section 3.13 Environmental Matters. . . . . . . . . . . . . . . . 10
Section 3.14 Employee Benefits. . . . . . . . . . . . . . . . . . 11
Section 3.15 Labor Matters. . . . . . . . . . . . . . . . . . . . 11
Section 3.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.17 Third Party Obligations. . . . . . . . . . . . . . . 12
Section 3.18 No Brokers . . . . . . . . . . . . . . . . . . . . . 12
Section 3.19 Books and Records. . . . . . . . . . . . . . . . . . 12
Section 3.20 Accounts Payable . . . . . . . . . . . . . . . . . . 12
Section 3.21 Insurance Policies . . . . . . . . . . . . . . . . . 12
Section 3.22 Transactions with Affiliates . . . . . . . . . . . . 12
Section 3.23 Prohibited Practices . . . . . . . . . . . . . . . . 12
Section 3.24 No Default . . . . . . . . . . . . . . . . . . . . . 12
Section 3.25 Copies of Documents. . . . . . . . . . . . . . . . . 13
Section 3.26 Disclosure . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . 13
Section 4.1 Authority Relative to this Agreement . . . . . . . . 13
Section 4.2 No Brokers . . . . . . . . . . . . . . . . . . . . . 14
Section 4.3 Due Diligence and Accuracy of Sellers'
Representations . . . . . . . . . . . . . . . . . . 14
ARTICLE 5 ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 14
Section 5.1 Conduct of Business of ETC and ETLP. . . . . . . . . 14
Section 5.2 Investigation of Business and Properties . . . . . . 14
Section 5.3 Public Announcements . . . . . . . . . . . . . . . . 14
Section 5.4 Agreement to Consummate; Further Assurances. . . . . 15
Section 5.5 Agreement Regarding Brokers. . . . . . . . . . . . . 15
Section 5.6 Notice . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.7 Indemnification. . . . . . . . . . . . . . . . . . . 15
Section 5.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . 17
Section 5.9 Assignment of Purchase Option. . . . . . . . . . . . 18
Section 5.10 Warren Agreements. . . . . . . . . . . . . . . . . . 18
Section 5.11 Limitation of Liability. . . . . . . . . . . . . . . 19
Section 5.12 Use of ETC Name. . . . . . . . . . . . . . . . . . . 19
ARTICLE 6 CONDITIONS PRECEDENT TO CLOSING. . . . . . . . . . . . . . . . 19
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Section 6.1 General Conditions . . . . . . . . . . . . . . . . . 19
Section 6.2 Conditions to Closing in Favor of the Sellers. . . . 20
Section 6.3 Conditions to Closing in Favor of the Buyer. . . . . 20
ARTICLE 7 AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . 21
Section 7.1 Amendment. . . . . . . . . . . . . . . . . . . . . . 21
Section 7.2 Extension; Waiver. . . . . . . . . . . . . . . . . . 21
ARTICLE 8 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.1 Notices. . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.2 Fees and Expenses. . . . . . . . . . . . . . . . . . 23
Section 8.3 Interpretation . . . . . . . . . . . . . . . . . . . 23
Section 8.4 Counterparts . . . . . . . . . . . . . . . . . . . . 23
Section 8.5 Miscellaneous. . . . . . . . . . . . . . . . . . . . 23
Section 8.6 Survival . . . . . . . . . . . . . . . . . . . . . . 23
LIST OF EXHIBITS
Exhibit A Assignment of Limited Partnership Interests by Kelcy L. Warren
Exhibit B Assignment of Limited Partnership Interests by Flowstone, L.P.
Exhibit C Assignment of Rights
LIST OF SCHEDULES
Schedule A Warren Disclosure Schedule
Schedule B Sellers' Disclosure Schedule
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made June 6,
1995, by and between Kelcy Warren, individually ("Warren"), Flowstone L.P., a
Texas limited partnership ("Flowstone") (Warren and Flowstone are
collectively referred to as the "Sellers") and Cornerstone Pipeline Company,
a Delaware corporation (the "Buyer").
RECITALS OF THE PARTIES:
WHEREAS, Warren and Flowstone together own all of the limited
partnership interests (the "ETLP Interests") of Energy Transfer I, Ltd., a
Texas limited partnership ("ETLP");
WHEREAS, Warren owns all of the issued and outstanding shares (the "ETC
Shares") of the capital stock of Energy Transfer Corporation, a Texas
corporation ("ETC") and the general partner of ETLP;
WHEREAS, ETLP owns a portion of the Oletha gas gathering system (the
"System") in Limestone County, Texas (the "Business"), which system is
currently operated and managed by Cornerstone Natural Gas, Inc., the parent
of Buyer ("Cornerstone"), for the benefit of ETLP and Energy Transfer II,
Ltd., a Texas limited partnership ("ETLP-2");
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers, the ETC Shares and the ETLP Interests on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements contained herein, the parties
hereto agree as follows:
ARTICLE 1
TRANSFER OF SECURITIES AND PURCHASE PRICE; CLOSING
SECTION 1.1 SALE OF SECURITIES. On the terms and subject to the
conditions herein expressed and based on the representations, warranties,
covenants and agreements contained herein, at the Closing (as hereinafter
defined), Warren agrees to sell, transfer and assign the ETC Shares and
Warren and Flowstone each agree to sell, transfer and assign the ETLP
Interests (collectively the ETC Shares and ETLP Interests are sometimes
referred to herein as the "Securities") to Buyer and Buyer agrees to purchase
such ETC Shares and the ETLP Interests from Sellers. The effective date of
the transactions contemplated by this Agreement is April 2, 1995 (the
"Effective Date"), and the effective date for federal income tax purposes
(the "Tax Effective Date") with respect to the transactions contemplated in
this Agreement is the Closing Date.
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SECTION 1.2 PURCHASE PRICE. The aggregate purchase price payable to
Sellers by Buyer (the "Purchase Price") for the Securities shall be Two
Million, Eight Hundred Eighty Thousand Dollars ($2,880,000).
SECTION 1.3 POST-CLOSING ADJUSTMENT. Within 60 days after Closing,
Buyer and Sellers shall agree to an accounting whereby Sellers receive all
revenues generated by operations prior to April 2, 1995, attributable to ETC
and ETLP, less expenses, costs and expenditures incurred prior to April 2,
1995 and Buyer receives all revenues generated by operations on and after
April 2, 1995, attributable to ETC and ETLP, less expenses, costs and
expenditures incurred on and after April 2, 1995. Within 30 days after such
accounting, any amounts due by one party to another shall be paid in full.
SECTION 1.4 MANNER OF PAYMENT. The Purchase Price for the Securities
shall be payable in the manner set forth in this Agreement by immediately
available funds to each of the Sellers at Closing. All components of the
Purchase Price shall be payable to the Sellers in the following percentages
and amounts:
<TABLE>
<CAPTION>
Percentage of Amount of
Securities Sold Sellers Purchase Price Purchase Price
--------------- ------- --------------- ---------------
<S> <C> <C> <C>
ETC Shares Kelcy L. Warren 2% $ 57,600
ETLP Interests Kelcy L. Warren 49% $1,411,200
ETLP Interests Flowstone L.P. 49% $1,411,200
</TABLE>
SECTION 1.5 CLOSING. The closing of this Agreement shall occur at
the offices of Cornerstone Pipeline Company, 8080 N. Central Expressway,
Suite 1200, Dallas, Texas 75206 10:00 a.m. on June 6, 1995 or such other
date, time or place on which the parties hereto mutually agree, but in no
event later than June 30, 1995. The time and date on which the closing
hereunder occurs is herein called the "Closing" or the "Closing Date." At
the Closing, Warren shall deliver to Buyer, stock certificates representing
the ETC Shares, duly endorsed in blank, or accompanied by stock powers duly
endorsed in blank, and ETC shall immediately cancel such stock certificates
and issue new stock certificates for an aggregate of 500 shares to Buyer.
Warren and Flowstone shall deliver to Buyer, fully executed and acknowledged
Assignments of Limited Partnership Interests in the forms attached hereto as
EXHIBIT A and EXHIBIT B, respectively, and ETLP shall immediately reflect
such assignment on the books and records of ETLP. Also, at the Closing,
Sellers shall deliver to Buyer the documents required by Section 6.3 hereof.
At the Closing, the Buyer shall deliver to the Sellers the Purchase Price and
the documents required by Section 6.2 hereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF WARREN
Except as expressly set forth in the disclosure schedule delivered to
Buyer by Warren contemporaneously with the execution hereof and attached
hereto as SCHEDULE A (the "Warren Disclosure Schedule"), Warren hereby
represents and warrants to Buyer as follows:
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SECTION 2.1 ETC ORGANIZATION. ETC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
Warren has heretofore delivered to Buyer complete and correct copies of the
Articles of Incorporation, Bylaws, minute book(s) and stock records of ETC as
such are currently in effect.
SECTION 2.2 POWERS OF ATTORNEY. There are no parties holding powers
of attorney from ETC with respect to any matter.
SECTION 2.3 CAPITALIZATION. The authorized capital stock of ETC
consists of 5,000 shares of common stock, par value $1.00 per share (the "ETC
Common Stock"), of which, as of the date hereof, 500 shares of Common Stock
are validly issued and outstanding, fully paid and nonassessable. At the date
of this Agreement, there are no shares of Common Stock held in the treasury
of ETC and there are no other shares of the capital stock of ETC. At the
date hereof, there are no outstanding options, warrants, rights or other
commitments to issue or sell any shares of capital stock or any securities or
obligations convertible into or exchangeable for, or giving any person any
right to acquire from ETC, any shares of its capital stock. No shares of
ETC's capital stock have been issued in violation of any preemptive rights or
applicable federal or state securities laws. There are no outstanding
obligations of ETC to repurchase, redeem or otherwise acquire any capital
stock or other securities of ETC.
SECTION 2.4 TITLE TO ETC SHARES. Immediately prior to and at the
Closing, Warren shall be the lawful owner of an aggregate of 500 shares of
Common Stock (representing all of the outstanding shares of capital stock of
ETC) and, on the Closing Date, shall hold all such shares free and clear of
all liens, encumbrances or adverse claims of any kind or character. The ETC
Shares were duly authorized, and are validly issued and outstanding, fully
paid and non-assessable.
SECTION 2.5 NO SUBSIDIARIES; ABSENCE OF CERTAIN AGREEMENTS. ETC does
not have any Subsidiaries other than ETLP and Energy Transfer II, Ltd. As
used in this Agreement, "Subsidiary" or "Subsidiaries" with respect to any
entity shall mean any other entity of which at least a majority of the
securities having by their terms ordinary voting power to elect a majority of
the Board of Directors or similar governing body of such other entity is at
the time directly or indirectly owned or controlled by such first entity, or
by such first entity and one or more of its Subsidiaries. ETC is not subject
to any joint venture, partnership or other arrangement that is created as a
partnership for federal income tax purposes other than ETLP and Energy
Transfer II, Ltd., and ETC is the general partner of both. There are no
voting trusts, buy-sell agreements or other agreements by and between or
among ETC or Warren or any other party, whether or not ETC is a party
thereto, imposing any restrictions upon the transfer or voting of or
otherwise pertaining to the securities of ETC (including, but not limited to
the ETC Common Stock) or the ownership thereof.
SECTION 2.6 NO VIOLATIONS OR CONSENTS. Except as specified on the
Warren Disclosure Schedule, neither the execution, delivery nor performance
of this Agreement by Warren, the consummation by Warren of the transactions
contemplated hereby nor compliance by Warren with any of the provisions
hereof will (a) conflict with or result in any breach or violation of any
provision of the Articles of Incorporation or Bylaws of ETC,
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(b) result in a default, or give rise to any right of termination,
cancellation or acceleration or loss of any material benefit (with or without
the giving of notice or lapse of time or both), or, except for requirements
for compliance, if any, with the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder
(the "HSR Act"), require the consent, approval, waiver or other action by any
person under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, trust (constructive or otherwise), agreement,
lease (of real or personal property) or other instrument or obligation to
which ETC is a party or by which ETC may be bound, (c) result in the creation
or imposition of any claim, lien, pledge, security interest, obligation,
restriction or other encumbrance on any of the property of ETC, or (d)
violate any judgment, order, writ, injunction, decree, statute, rule or
regulation applicable to ETC.
SECTION 2.7 TITLE TO ASSETS AND PROPERTY. To the actual knowledge of
Warren, the title (or other ownership interest) held by ETC and ETLP (either
directly or indirectly) in all assets used in the operation of the System are
free and clear of all liens and encumbrances except as set forth on the
Warren Disclosure Schedule. Further, except as disclosed in the Warren
Disclosure Schedule, to the actual knowledge of Warren, neither Warren nor
ETC has received any notice of any action, suit or proceeding, pending or
threatened against ETC, adverse to the ownership of ETC or ETLP and the right
of ETC or ETLP to operate such gathering system under any permit, right of
way, easement or lease under or on which such gathering system is located.
SECTION 2.8 LITIGATION. Except as set forth on the Warren Disclosure
Schedule, there is no action, order, claim, suit, proceeding, litigation,
investigation, inquiry, review or notice ("Proceeding") pending or threatened
against, or to the actual knowledge of Warren contemplated, relating to or in
any way affecting any of ETC's properties or assets or any officer, director
or shareholder of ETC relating to ETC, at law or in equity, before any
federal, state, municipal or other governmental department, commission,
board, bureau, agency, instrumentality, court or authority (a "Governmental
Body"). ETC does not have any of its properties or assets subject to any
order, judgment, writ, decree or injunction. ETC is not subject to any
administrative order from any regulatory or bank supervisory agency or
engaged in any administrative proceeding.
SECTION 2.9 LIMITATION ON ETC'S POWERS. To the actual knowledge of
Warren, there no Proceedings or other actions pending by any federal or state
regulatory body having authority over ETC to limit or impair any of ETC's
powers, rights and privileges or to dissolve ETC.
SECTION 2.10 ABSENCE OF CHANGES. Since January 1, 1995, the business
of ETC has been operated in the ordinary course consistent with past practice
and there has not been (a) any material adverse change in the business,
operations, properties, condition (financial or otherwise), prospects, assets
or liabilities of ETC; (b) any dividend declared or paid or distribution made
on the capital stock of ETC, or any capital stock of ETC redeemed or
repurchased; (c) any occurrence of long-term debt by ETC; (d) any salary,
bonus or compensation increases to any officers, employees or agents of ETC;
(e) any pending or threatened litigation or disputes affecting ETC; or (f)
any other change in the nature of, or the manner of conducting, the business
of ETC, other than changes that neither have had,
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nor reasonably may be expected to have, a material adverse effect on the
condition (financial or otherwise), business, assets, liabilities,
capitalization, financial position, operations, results of operations or
prospects (a "Material Adverse Effect") on ETC.
SECTION 2.11 UNDISCLOSED LIABILITIES; COMMITMENTS. ETC does not have
any debts, guaranties, liabilities or obligations, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that in the
aggregate have or can reasonably be expected to have a Material Adverse
Effect on ETC. ETC has in all material respects performed all contracts,
agreements and commitments to which it is a party, and there is not under any
such contracts, agreements or commitments any existing default or event of
default or event which with notice or lapse of time or both would constitute
a default. The Warren Disclosure Schedule sets forth all accrued liabilities
for capital expenditures, work in progress or similar matters for which ETC
is liable under any contract, authority for expenditures ("AFE") or similar
binding commitment.
SECTION 2.12 ENVIRONMENTAL MATTERS. Since the acquisition by ETLP of
its portion of the System, to the actual knowledge of Warren, ETC has duly
complied with, and its business, operations, assets, equipment, leaseholds
and other facilities are in compliance with, the provisions of all federal,
state and local environmental, health and safety laws, codes and ordinances
and all rules and regulations promulgated thereunder, governing (a) air
emissions, (b) discharges to surface water or ground water, (c) solid or
liquid waste disposal, (d) the use, storage, generation, handling, transport,
discharge, release, or disposal of toxic or hazardous substances or wastes,
or (e) other environmental, health or safety matters. To the actual
knowledge of Warren, there is no Proceeding pending or threatened against ETC
or contemplated, relating to the environment. ETC has not received written
notice of any violation of any federal, state or local environmental, health
or safety laws, codes or ordinances, and any rules or regulations promulgated
thereunder, which relate to the use, ownership or occupancy of the property
or the operation of the business of ETC, or obligate (or potentially
obligate) ETC to remedy, stabilize neutralize or otherwise alter the
environmental condition of any property or to be responsible for any such
action.
SECTION 2.13 EMPLOYEE BENEFITS. ETC does not maintain any employee
bonus, deferred compensation, stock purchase, stock option, severance pay,
pension, profit sharing, stock bonus or thrift plan or any other employee
benefit plan (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")).
SECTION 2.14 LABOR MATTERS. ETC has been and continues to be in
material compliance with all federal, state and other applicable laws,
domestic or foreign, regarding employment and employment practices, terms and
conditions of employment and wages and hours. No employment-related liability
with respect to the termination of any employee, consultant or agent exists.
There is neither pending nor threatened Proceedings with respect to any
employment-related contract, agreement, covenant or obligation.
SECTION 2.15 TAXES. All taxes, assessments and other governmental
charges have been timely paid, and ETC has timely filed (and, through the
Closing Date, will timely file) all federal, state and other tax returns
required by law to be filed by it. All such tax reports or returns are true,
complete and correct in all material respects with regard to ETC for the
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periods covered thereby. ETC is not delinquent in the payment of any tax,
assessment or governmental charge, there is no tax deficiency asserted
against ETC, and there is no unpaid assessment, deficiency or delinquency in
the payment of any of the taxes of ETC or, to the actual knowledge of Warren,
any proposal for additional taxes or any violation of any federal, state,
local or foreign tax law asserted by any taxing authority. There are no tax
liens upon any properties or assets of ETC. No Internal Revenue Service,
state or local audit, investigation or Proceeding of ETC is pending or
threatened, or to the actual knowledge of Warren contemplated. ETC has not
granted any extension to any taxing authority of the limitation period during
which any tax liability may be asserted. ETC has not committed any violation
of any federal, state, local or foreign tax laws. All monies required for
the payment of taxes not yet due and payable with respect to the operations
of ETC through and including the Closing Date have been approved, reserved
against and entered upon ETC's books. All monies required to be withheld by
ETC from employees or collected from customers for income taxes, social
security and unemployment insurance taxes and sales, excise and use taxes,
and the portion of any such taxes to be paid by ETC to governmental agencies
or set aside in accounts for such purpose have been approved, reserved
against and entered upon ETC's books.
SECTION 2.16 THIRD PARTY OBLIGATIONS. ETC is not obligated as a
guarantor or surety or indemnitor under any contract or agreement and has not
entered into any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any person or entity.
SECTION 2.17 NO BROKERS. Warren has not employed any broker, agent or
finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
SECTION 2.18 BOOKS AND RECORDS. The respective minute books, books of
account, stock record books and other records of or relating to ETC, all of
which have been or will be made available to Buyer, contain accurate and
complete records of all corporate actions of the shareholders and Board of
Directors (and committees thereof) of ETC during the periods of time in which
such books and records were maintained.
SECTION 2.19 ACCOUNTS PAYABLE. The Warren Disclosure Schedule
contains a complete and accurate list of all ETC's accounts payable at the
date of the Latest ETC Balance Sheet, showing the name of each account
creditor and the amount due to each by invoice number and date.
SECTION 2.20 INSURANCE POLICIES. The Warren Disclosure Schedule
identifies all insurance policies of ETC in effect as of the date hereof by
policy number, type, carrier and expiration. Warren has delivered to Buyer
true, accurate and complete copies of all insurance policies of ETC. Each
such policy is in full force and effect, with all premiums due on such
policies on or prior to the Closing Date having been paid as and when due.
SECTION 2.21 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Warren Disclosure Schedule, ETC has not engaged in any loans, leases,
contracts or other
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transactions with Warren or any Seller, director, officer or employee of ETC,
or any member of any such individual's family or any other affiliate of ETC.
SECTION 2.22 PROHIBITED PRACTICES. Since the inception of ETC, there
have been no violations of the Foreign Corrupt Practices Act, Money
Laundering Control Act of 1986 or any similar state or federal statute
relating to bribery, commercial bribery, money laundering or similar offenses
by ETC or any of its agents. Neither ETC nor any officer, director, employee
or agent of ETC (or any person acting on behalf of any of the foregoing) has
since the date of ETC's inception, given or agreed to give any gift or
similar benefit of more than nominal value to any customer, supplier,
governmental employee or official, or any other person or entity who is or
may be in a position to help or hinder ETC or assist ETC in connection with
any actual or proposed transaction, or engaged in any transaction that would
constitute money laundering under any of the foregoing statutes.
SECTION 2.23 NO DEFAULT. ETC is not in default under and no condition
exists that with notice or lapse of time or both would constitute a default
under (a) its Articles of Incorporation or Bylaws; (b) any mortgage, loan,
agreement, contract, arrangement, lease, lease purchase, indenture or other
evidences of indebtedness for borrowed money or other instrument to which ETC
is now a party or by which ETC or any of the assets of ETC is bound; or (c)
any judgment, order, writ, injunction, or decree, of any court, arbitrator,
agency, official, authority or other Governmental Body.
SECTION 2.24 COPIES OF DOCUMENTS. Warren has delivered or made
available to Buyer true, correct and complete copies of all documents listed
on the Warren Disclosure Schedule.
SECTION 2.25 DISCLOSURE.
(a) Warren has fully provided the Buyer or its representatives
with all the information that the Buyer has requested for deciding
whether to consummate the purchase of the Securities pursuant to the
terms and conditions of this Agreement.
(b) No representation or warranty of Warren contained in this
Agreement or made pursuant to this Agreement or statement in the Warren
Disclosure Schedule contains any untrue statement or omits to state a
material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made,
not misleading.
(c) No supplement to the Warren Disclosure Schedule will contain
any untrue statement or will omit to state a material fact necessary in
order to make the statements therein or in this Agreement, in light of
the circumstances under which they were made, not misleading.
(d) Other than facts which are known by Buyer or which should have
been discovered by Buyer through a diligent review of ETC's books and
records, there is no fact known to Warren which has specific application
to ETC (other than general economic or industry conditions) and which
materially adversely affects or, so far as
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any Seller can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition or results of operations of
ETC, which has not been set forth in this Agreement or the Warren
Disclosure Schedule.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as expressly set forth in the disclosure schedule delivered to
Buyer by Sellers contemporaneously with the execution hereof and attached
hereto as SCHEDULE B (the "Sellers' Disclosure Schedule"), Sellers hereby
severally represent and warrant to Buyer as follows:
SECTION 3.1 ETLP ORGANIZATION. ETLP is a limited partnership duly
organized, validly existing and in good standing under the laws of the State
of Texas. Sellers have heretofore delivered to Buyer complete and correct
copies of the Certificate of Limited Partnership and Agreement of Limited
Partnership of ETLP as such are currently in effect.
SECTION 3.2 POWERS OF ATTORNEY. There are no parties holding powers
of attorney from ETLP with respect to any matter. ETLP does not maintain any
securities or commodity trading account or other brokerage account.
SECTION 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the
Sellers has full power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by Sellers of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly and validly authorized
by all necessary parties. Each of the Sellers will take or cause to be taken
all action that is necessary for the Sellers to complete the transactions to
be completed by them pursuant to this Agreement. This Agreement has been
duly and validly executed and delivered by each of the Sellers and
constitutes a legal, valid and binding obligation of each of the Sellers, in
their respective capacities, enforceable against each of them in accordance
with the terms of this Agreement.
SECTION 3.4 CAPITALIZATION. The general and limited partnership
interests of ETLP (the "ETLP Interests") are validly issued and outstanding,
fully paid and nonassessable except as set forth in the ETLP Certificate of
Limited Partnership and Agreement of Limited Partnership. At the date of
this Agreement, ETC is the sole general partner of ETLP and no ETLP Interests
are held by anyone other than Warren and Flowstone and there are no other
interests of ETLP. At the date hereof, there are no outstanding options,
warrants, rights or other commitments to issue or sell any interests or any
securities or obligations convertible into or exchangeable for, or giving any
person any right to acquire from ETLP, any interests. No interests have been
issued in violation of any preemptive rights or applicable federal or state
securities laws. There are no outstanding obligations of ETLP to repurchase,
redeem or otherwise acquire any interests or other securities of ETLP.
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SECTION 3.5 TITLE TO ETLP INTERESTS. Immediately prior to and at the
Closing, ETC, Warren and Flowstone shall be the lawful owners of all of the
partnership interests of ETLP (ETC owning 100% of the general partnership
interest and Warren and Flowstone each owning 50% of the limited partnership
interests) and, on the Closing Date, shall hold all such interests free and
clear of all liens, encumbrances or adverse claims of any kind or character.
The ETLP partnership interests were duly authorized, and are validly issued
and outstanding, fully paid and non-assessable except as set forth in the
ETLP Certificate of Limited Partnership and Agreement of Limited Partnership.
The ETLP partnership interests are not subject to any preemptive rights.
SECTION 3.6 NO SUBSIDIARIES; ABSENCE OF CERTAIN AGREEMENTS. ETLP
does not have any Subsidiaries. As used in this Agreement, "Subsidiary" or
"Subsidiaries" with respect to any entity shall mean any other entity of
which at least a majority of the securities having by their terms ordinary
voting power to elect a majority of the Board of Directors or similar
governing body of such other entity is at the time directly or indirectly
owned or controlled by such first entity, or by such first entity and one or
more of its Subsidiaries. ETLP is not subject to any joint venture,
partnership or other arrangement that is created as a partnership for federal
income tax purposes other than the ETLP Certificate of Limited Partnership
and Agreement of Limited Partnership. There are no voting trusts, buy-sell
agreements or other agreements by and between or among ETLP or any of the
Sellers or any other party, whether or not ETLP is a party thereto, imposing
any restrictions upon the transfer or voting of or otherwise pertaining to
the interests or securities of ETLP or the ownership thereof other than the
ETLP Certificate of Limited Partnership and Agreement of Limited Partnership.
SECTION 3.7 NO VIOLATIONS OR CONSENTS. Except as set forth on the
Sellers' Disclosure Statement, neither the execution, delivery nor
performance of this Agreement by the Sellers, the consummation by the Sellers
of the transactions contemplated hereby nor compliance by the Sellers with
any of the provisions hereof will (a) conflict with or result in any breach
or violation of any provision of the Certificate of Limited Partnership or
Agreement of Limited Partnership of ETLP, (b) result in a default, or give
rise to any right of termination, cancellation or acceleration or loss of any
material benefit (with or without the giving of notice or lapse of time or
both), or, except for requirements for compliance with the HSR Act, if any,
require the consent, approval, waiver or other action by any person under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, trust (constructive or otherwise), agreement, lease (of
real or personal property) or other instrument or obligation to which any
Seller or ETLP is a party or by which any Seller or ETLP may be bound, (c)
result in the creation or imposition of any claim, lien, pledge, security
interest, obligation, restriction or other encumbrance on any of the property
of any of the Sellers, or (d) violate any judgment, order, writ, injunction,
decree, statute, rule or regulation applicable to any of the Sellers or ETLP.
SECTION 3.8 TITLE TO ASSETS AND PROPERTY. To the actual knowledge of
Sellers, the title (or other ownership interest) held by ETLP (either
directly or indirectly) in all assets used in the operation of the System are
free and clear of all liens and encumbrances except as set forth on the
Sellers' Disclosure Schedule. Further, except as disclosed in the Sellers'
Disclosure Schedule, to the actual knowledge of Sellers, neither Sellers nor
ETLP has
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received any notice of any action, suit or proceeding, pending or
threatened against ETLP, adverse to the ownership of ETLP and the right of
ETLP to operate such gathering system under any permit, right of way,
easement or lease under or on which such gathering system is located.
SECTION 3.9 LITIGATION. Except as set forth on the Sellers'
Disclosure Schedule, there is no Proceeding pending or threatened against, or
to the actual knowledge of each of the Sellers contemplated, relating to or
in any way affecting any of the Sellers, ETLP or any of ETLP's properties or
assets or any partner of ETLP relating to ETLP, at law or in equity, before
any Governmental Body. ETLP does not have any of its properties or assets
subject to any order, judgment, writ, decree or injunction. ETLP is not
subject to any administrative order from any regulatory agency or engaged in
any administrative proceeding.
SECTION 3.10 LIMITATION ON ETLP'S POWERS. To the actual knowledge of
Sellers, there are no Proceedings or other actions pending by any
Governmental Body having authority over ETLP to limit or impair any of ETLP's
powers, rights and privileges, to terminate deposit insurance or to dissolve
ETLP.
SECTION 3.11 ABSENCE OF CHANGES. Since January 1, 1995, the business
of ETLP has been operated in the ordinary course consistent with past
practice and there has not been (a) any material adverse change in the
business, operations, properties, condition (financial or otherwise),
prospects, assets or liabilities of ETLP; (b) any distribution declared or
paid or made on the ETLP Interests or the ETLP general partnership interest,
or any interests of ETLP redeemed or repurchased; (c) any occurrence of
long-term debt by ETLP; (d) any salary, bonus or compensation increases to
any partners, employees or agents of ETLP; (e) any pending or threatened
litigation or disputes affecting ETLP; or (f) any other change in the nature
of, or the manner of conducting, the business of ETLP, other than changes
that neither have had, nor reasonably may be expected to have, a Material
Adverse Effect on ETLP.
SECTION 3.12 UNDISCLOSED LIABILITIES; COMMITMENTS. ETLP does not have
any debts, guaranties, liabilities or obligations, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that in the
aggregate have or can reasonably be expected to have a Material Adverse
Effect on ETLP. ETLP has in all material respects performed all contracts,
agreements and commitments to which it is a party, and there is not under any
such contracts, agreements or commitments any existing default or event of
default or event which with notice or lapse of time or both would constitute
a default. The Sellers' Disclosure Schedule sets forth all accrued
liabilities for capital expenditures, work in progress or similar matters for
which ETLP is liable under any contract, AFE or similar business commitment.
SECTION 3.13 ENVIRONMENTAL MATTERS. Since the acquisition by ETLP of
its portion of the System, to the actual knowledge of Sellers, ETLP has duly
complied with, and its business, operations, assets, equipment, leaseholds
and other facilities are in compliance with, the provisions of all federal,
state and local environmental, health and safety laws, codes and ordinances
and all rules and regulations promulgated thereunder, governing (a)
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air emissions, (b) discharges to surface water or ground water, (c) solid or
liquid waste disposal, (d) the use, storage, generation, handling, transport,
discharge, release, or disposal of toxic or hazardous substances or wastes,
or (e) other environmental, health or safety matters. To the actual
knowledge of each of the Sellers, there is no Proceeding pending or
threatened against ETLP or contemplated, relating to the environment. ETLP
has not received written notice of any violation of any federal, state or
local environmental, health or safety laws, codes or ordinances, and any
rules or regulations promulgated thereunder, which relate to the use,
ownership or occupancy of the property or the operation of the business of
ETLP, or obligate (or potentially obligate) ETLP to remedy, stabilize,
neutralize or otherwise alter the environmental condition of any property or
to be responsible for any such action.
SECTION 3.14 EMPLOYEE BENEFITS. ETLP does not maintain any employee
bonus, deferred compensation, stock purchase, stock option, severance pay,
pension, profit sharing, stock bonus or thrift plan or any other employee
benefit plan (within the meaning of Section 3(3) of ERISA).
SECTION 3.15 LABOR MATTERS. ETLP has been and continues to be in
compliance with all federal, state and other applicable laws, domestic or
foreign, regarding employment and employment practices, terms and conditions
of employment and wages and hours. No employment-related grievance or
liability with respect to the termination of any employee, consultant or
agent exists. There is neither pending nor threatened Proceedings with
respect to any employment-related contract, agreement, covenant or obligation.
SECTION 3.16 TAXES. All taxes, assessments and other governmental
charges have been timely paid, and ETLP has timely filed (and, through the
Closing Date, will timely file) all federal, state and other tax returns
required by law to be filed by it. All such tax reports or returns are true,
complete and correct in all material respects with regard to ETLP for the
periods covered thereby. ETLP is not delinquent in the payment of any tax,
assessment or governmental charge, there is no tax deficiency asserted
against ETLP, and there is no unpaid assessment, deficiency or delinquency in
the payment of any of the taxes of ETLP or, to the actual knowledge of each
of the Sellers, any proposal for additional taxes or any violation of any
federal, state, local or foreign tax law asserted by any taxing authority.
There are no tax liens upon any properties or assets of ETLP. No Internal
Revenue Service, state or local audit, investigation or Proceeding of ETLP is
pending or threatened, or to the actual knowledge of each of the Sellers
contemplated. ETLP has not granted any extension to any taxing authority of
the limitation period during which any tax liability may be asserted. ETLP
has not committed any violation of any federal, state, local or foreign tax
laws. All monies required for the payment of taxes not yet due and payable
with respect to the operations of ETLP through and including the Closing Date
have been approved, reserved against and entered upon ETLP's books. All
monies required to be withheld by ETLP from employees or collected from
customers for income taxes, social security and unemployment insurance taxes
and sales, excise and use taxes, and the portion of any such taxes to be paid
by ETLP to governmental agencies or set aside in accounts for such purpose
have been approved, reserved against and entered upon ETLP's books.
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SECTION 3.17 THIRD PARTY OBLIGATIONS. ETLP is not obligated as a
guarantor or surety or indemnitor under any contract or agreement and has not
entered into any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any person or entity.
SECTION 3.18 NO BROKERS. None of the Sellers has employed any broker,
agent or finder or incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated hereby.
SECTION 3.19 BOOKS AND RECORDS. The respective partnership books,
books of account, and other records of or relating to ETLP, all of which have
been or will be made available to Buyer, contain accurate and complete
records of all partnership actions of the general and limited partners of
ETLP during the periods of time in which such books and records were
maintained.
SECTION 3.20 ACCOUNTS PAYABLE. The Sellers' Disclosure Schedule
contains a complete and accurate list of all ETLP's accounts payable at the
date of the Latest ETLP Balance Sheet, showing the name of each account
creditor and the amount due to each by invoice number and date.
SECTION 3.21 INSURANCE POLICIES. The Sellers' Disclosure Schedule
identifies all insurance policies of ETLP in effect as of the date hereof by
policy number, type, carrier and expiration. The Sellers have delivered to
Buyer true, accurate and complete copies of all insurance policies of ETLP.
Each such policy is in full force and effect, with all premiums due such
policies on or prior to the Closing Date having been paid as and when due.
SECTION 3.22 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Sellers' Disclosure Schedule, ETLP has not engaged in any loans, leases,
contracts or other transactions with any Seller, director, officer or
employee of ETLP, or any member of any such individual's family or any other
Affiliate of ETLP.
SECTION 3.23 PROHIBITED PRACTICES. Since the inception of ETLP, there
have been no violations of the Foreign Corrupt Practices Act, Money
Laundering Control Act of 1986 or any similar state or federal statute
relating to bribery, commercial bribery, money laundering or similar offenses
by ETLP or any of its agents. Neither ETLP nor any officer, director,
employee or agent of ETLP (or any person acting on behalf of any of the
foregoing) has since the date of ETLP's inception, given or agreed to give
any gift or similar benefit of more than nominal value to any customer,
supplier, governmental employee or official, or any other person or entity
who is or may be in a position to help or hinder ETLP or assist ETLP in
connection with any actual or proposed transaction, or engaged in any
transaction that would constitute money laundering under any of the foregoing
statutes.
SECTION 3.24 NO DEFAULT. ETLP is not in default under and no
condition exists that with notice or lapse of time or both would constitute a
default under (a) its Certificate or Agreement of Limited Partnership; (b)
any mortgage, loan, agreement, contract, arrangement, lease, lease purchase,
indenture or other evidences of indebtedness for
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borrowed money or other instrument to which ETLP is now a party or by which
ETLP or any of the assets of ETLP is bound; or (c) any judgment, order, writ,
injunction, or decree, of any court, arbitrator, agency, official, authority
or other Governmental Body.
SECTION 3.25 COPIES OF DOCUMENTS. The Sellers have delivered or made
available to Buyer true, correct and complete copies of all documents listed
on the Sellers' Disclosure Schedule.
SECTION 3.26 DISCLOSURE.
(a) Sellers have fully provided the Buyer or its representatives
with all the information that the Buyer has requested for deciding whether
to consummate the purchase of the Securities pursuant to the terms and
conditions of this Agreement.
(b) No representation or warranty of Sellers contained in this
Agreement or made pursuant to this Agreement or statement in the Sellers'
Disclosure Schedule contains any untrue statement or omits to state a
material fact necessary in order to make the statements herein or therein,
in light of the circumstances under which they were made, not misleading.
(c) No supplement to the Sellers' Disclosure Schedule will contain
any untrue statement or will omit to state a material fact necessary in
order to make the statements therein or in this Agreement, in light of
the circumstances under which they were made, not misleading.
(d) Other than facts which are known by Buyer or which should have
been discovered by Buyer through a diligent review of ETLP's books,
records and properties, there is no fact known to any Seller which has
specific application to any Seller or ETLP (other than general economic
or industry conditions) and which materially adversely affects or, so far
as any Seller can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition or results of operations of ETLP
which has not been set forth in this Agreement or the Sellers' Disclosure
Schedule.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows, regardless
of what investigations, if any, Sellers shall have made prior hereto:
SECTION 4.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer is a
corporation duly organized and in good standing under the laws of the state
of its incorporation, and Buyer has full power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. Buyer acknowledges that (i) Warren is an officer and
director of Cornerstone and an officer and director of Buyer, (ii) Ray Davis
is an officer and director of Cornerstone and a director of Buyer and (iii)
Ben Cook is a
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director of Cornerstone and both Messrs. Davis and Cook own interests in
Flowstone L.P. The relationship and financial interests of Sellers in this
transaction have been fully disclosed to the Board of Directors of Buyer, and
after such disclosure, this Agreement has been duly and validly authorized,
executed and delivered by Buyer and constitutes a legal, valid and binding
obligation of Buyer, enforceable against it in accordance with its terms.
SECTION 4.2 NO BROKERS. The Buyer has not employed any broker, agent
or finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
SECTION 4.3 DUE DILIGENCE AND ACCURACY OF SELLERS' REPRESENTATIONS.
Buyer has undertaken a diligent review of ETC's and ETLP's records, files and
properties, and Buyer is managing and operating, and has managed and
operated, the System. Buyer does not have actual knowledge that any
representations or warranty made by Sellers in this Agreement or in any other
document delivered in connection herewith that is inaccurate or untrue.
ARTICLE 5
ADDITIONAL AGREEMENTS
SECTION 5.1 CONDUCT OF BUSINESS OF ETC AND ETLP. After the date
hereof and prior to the Closing Date, ETC and ETLP shall, unless prior
written consent of the Buyer is received, conduct their respective operations
according to their respective normal courses of business.
SECTION 5.2 INVESTIGATION OF BUSINESS AND PROPERTIES. Warren, with
respect to ETC, and, to the extent reasonably possible as limited partners of
ETLP, Warren and Flowstone, with respect to ETLP, have and shall continue to
provide Buyer or a designee of Buyer the opportunity to review, observe and
examine the business and operations of ETC and ETLP, as the case may be, as
so conducted. Buyer may make or cause to be made such continuing
investigation of the business and properties of ETC or ETLP and of their
respective financial and legal condition as Buyer deems appropriate or
advisable to familiarize himself therewith, provided such investigation shall
not unreasonably interfere with the normal operations of ETC or ETLP.
Sellers agree to permit, or as appropriate, request that ETC permit, as
general partner, the Buyer and its accountants, counsel and other
representatives to have reasonable access to the premises, books and records
of ETC and ETLP, as the case may be. Sellers shall cause ETC and ETLP, as
the case may be, or as appropriate, request that ETC permit, as general
partner, furnish Buyer with such financial and operating data and other
information with respect to the business and properties of ETC and ETLP, as
the case may be, as Buyer shall from time to time reasonably request in
accordance with this Section.
SECTION 5.3 PUBLIC ANNOUNCEMENTS. The parties hereto shall consult
with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the transactions
contemplated hereby, shall not issue any such press release or make any such
public statement prior to such consultation, and shall consult
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with each other as to form and substance of other public disclosures related
thereto; provided however, that nothing contained herein shall prohibit
either party from making any disclosure that is required by law.
SECTION 5.4 AGREEMENT TO CONSUMMATE; FURTHER ASSURANCES. Subject to
the terms and conditions herein provided, each of the parties hereto agrees
to use its best efforts to do all things necessary, proper or advisable under
applicable laws and regulations to satisfy the conditions in Article VI
hereof and to consummate and make effective, as soon as reasonably
practicable, the transactions contemplated by this Agreement, including, but
not limited to, providing information and making application for, and the
obtaining of, all consents, authorizations, orders, notices and approvals of
any Governmental Body required in connection therewith and initiating or
defending any legal action that is necessary or appropriate to permit the
transactions contemplated hereby to be consummated. At any time after the
Closing Date, if any further action is necessary, proper or advisable to
carry out the purposes of this Agreement, then, as soon as is reasonably
practicable, each party to this Agreement shall take, or cause its proper
officers to take, such action. No party to this Agreement shall take or
cause to be taken any action that would cause the representations, warranties
or statements expressed herein to be untrue or incorrect on the Closing Date
or to prevent compliance with any of the covenants or agreements expressed in
this Agreement.
SECTION 5.5 AGREEMENT REGARDING BROKERS. Each party agrees that it
will pay or dispute, and indemnify and hold the other parties harmless from,
any claims of brokers or others for finder's or brokerage fees asserted as a
result of representations by such party to such brokers or others, regardless
of whether the existence of such brokers or others are disclosed herein.
SECTION 5.6 NOTICE. Each of the Sellers shall promptly give notice
to the Buyer upon becoming aware of the occurrence or failure to occur, or
the impending or threatened occurrence or failure to occur, of any event that
would cause or constitute, any of the Sellers' representations, warranties or
statements herein being or becoming untrue. The Buyer shall promptly give
notice to each of the Sellers upon becoming aware of the occurrence or
failure to occur, of any event that would cause or constitute, any of the
Buyer's representations, warranties, or statements herein being or becoming
untrue.
SECTION 5.7 INDEMNIFICATION.
(a) Subject to the terms of Section 5.11 below, including, without
limitation, the limitation of liability as set forth therein, each Seller
shall severally, and not jointly, indemnify and hold Buyer and its
assignees harmless from and against, and promptly reimburse the Buyer and
its assignees for, any and all loss, claim, expense, damage, deficiency,
penalty, interest, fine, clean-up cost, liability or obligation, including
investigative and settlement costs and attorneys' fees and court costs,
imposed on, incurred by or asserted against the Buyer or its assignees in
any way arising out of or in connection with any breach of any covenant or
agreement of such Seller or the failure of such Seller to perform any of
its respective obligations contained herein or any breach of any
representation or warranty contained herein, including, in the case of
Warren, any breach of any representation or warranty of
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Warren contained in Article 2 hereof and including any breach of any
representations or warranty of a Seller contained in Article 3 hereof, or
in any document delivered pursuant hereto (each, an "Action").
(b) Promptly, or in any event within ten (10) days (in the case of
service of legal process) or within thirty (30) days (in the case of any
other claim) of receipt by Buyer (the Buyer, for such purposes, being
hereinafter referred to as an "INDEMNIFIED PARTY") of notice of any Action
against such Indemnified Party that might give rise to a claim for
indemnification of such Indemnified Party pursuant to the terms of this
Agreement, the Indemnified Party shall give written notice thereof to the
Sellers (each Seller, for purposes of this Section 5.7, being hereinafter
referred to as an "INDEMNIFYING PARTY") indicating the nature of such
Action and the basis therefor. Failure to give any notice provided
hereunder shall in no way be deemed a forfeiture of any Indemnified
Party's rights to be indemnified hereunder unless the failure to give
any such notice materially prejudices the Indemnifying Party.
(c) At any time after any Indemnified Party gives notice to an
Indemnifying Party of an Action being made against such Indemnifying Party
for which a claim for indemnity is being asserted, to the extent that
such Action is not being defended by any third party under the terms of
any applicable insurance policies, the Indemnified Party shall permit the
Indemnifying Party, at the option and expense of the Indemnifying Party,
to assume the complete defense of such Action with full authority to
conduct such defense and to settle or otherwise dispose of the same
(except as hereinafter provided) and the Indemnified Party will reasonably
cooperate in such defense. In order to assume such defense, the
Indemnifying Party must notify the Indemnified Party in writing of its
election to do so within twenty (20) days of receipt of notice of the
Action from the Indemnified Party; in the event that the Indemnifying
Party does not so notify the Indemnified Party within such twenty (20) day
period, the Indemnifying Party shall be deemed to have elected not to
assume such defense. The Indemnifying Party will not, in defense of any
such Action, except with the consent of the Indemnified Party, consent to
the entry of any judgment or enter into any settlement that does not
include, as an unconditional term thereof, the giving by the claimant or
plaintiff to the Indemnified Party of an unconditional release from all
claims and/or liability in respect thereof. After notice to the
Indemnified Party of the Indemnifying Party's election to assume the
defense of such Action, as provided above, the Indemnifying Party shall
be liable to the Indemnified Party for such legal or other expenses
subsequently incurred at the request of the Indemnifying Party by the
Indemnified Party in connection with the defense thereof. As to those
Actions with respect to which the Indemnifying Party does not elect to
assume control of the defense, (a) the Indemnified Party will afford the
Indemnifying Party an opportunity to participate in such defense, at the
Indemnifying Party's own cost and expense; (b) the Indemnified Party will
not settle or otherwise dispose of any of the same without the consent of
the Indemnifying Party; and (c) the Indemnifying Party agrees to
reasonably cooperate in such defense. The Indemnifying Party shall make
payments to the Indemnified Party, pursuant to the provisions hereof,
with respect to Actions of third parties as follows: with respect to
out-of-pocket expenses of the Indemnified Party, on demand as incurred,
and, with
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respect to amounts and fees owed to third parties, to the extent not
paid directly to such third parties by the Indemnifying Party, on demand
at the time of payment by the Indemnified Party to such third party.
SECTION 5.8 TAX MATTERS. (a) BUYER INDEMNIFICATION. Buyer shall
indemnify and hold harmless Sellers against any federal income tax liability
realized (including without limitation, deficiencies, interest and penalties)
relating to ETC or ETLP for any taxable period commencing after the Tax
Effective Date.
(b) SELLERS INDEMNIFICATION. Sellers shall be liable for and shall
indemnify and hold harmless Buyer from and against all amounts of any
realized liabilities for federal income taxes (including without limitation,
deficiencies, interest and penalties) of ETC or ETLP for any taxable period
ending before or including the Tax Effective Date.
(c) PREPARATION OF INCOME TAX RETURNS. Sellers and Buyer shall
cooperate in the preparation and filing in a timely fashion, all appropriate
and necessary federal, state and other income tax returns, reports and
estimates, the filing of which is required for the lawful conduct of business
("Income Tax Returns") which include the results of operation of ETC or ETLP
("Operations") for all periods ending prior to or on the Tax Effective Date.
Sellers shall pay or discharge any and all federal, state and local income
taxes assessments, interests, penalties or deficiencies for which ETC or ETLP
may be held liable as a result of Income Tax Returns required to be filed by
or on behalf of ETC or ETLP ("Tax") with respect to any taxable periods or
years ending prior to or on the Tax Effective Date.
(d) TAX AUDITS. Sellers shall be responsible for any audit or other
proceeding involving a taxing period ending on or prior to the Tax Effective
Date which involves a federal income tax or any other tax liability of ETC or
ETLP. Sellers and Buyer shall cooperate with each other in the conduct of
any audit or other proceedings.
(e) COOPERATION. Buyer agrees to give to Sellers prompt written notice
of any claim, demand, action, suit, proceeding, audit or assessment raised,
brought, threatened, made or commenced against ETC or ETLP that relates to
any matter to which the foregoing indemnification provisions shall apply and
agrees further, except as provided below, not to make any admission or effect
any settlement with respect to any such claim without the written consent of
Sellers.
(f) DEFENSE BY SELLERS. If any claim shall be made or any action or
proceeding shall be commenced against Buyer, ETC or ETLP in respect of any
liability, obligation or claim to which the foregoing indemnity relates,
Sellers shall have the right, at their own expense, to undertake the defense
of any such claim, action or proceeding by written notice given to Buyer at
any time before the final determination thereof, and Sellers shall further
have the right in their sole discretion to settle any such claim, action or
proceeding by payment to the complainant.
(g) ASSUMPTION OF DEFENSE. If Sellers shall, within a reasonable time
after receipt of notice by Buyer, fail to defend a claim subject to this
indemnification, Buyer shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle
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<PAGE>
(exercising reasonable business judgment) the claim or other matter on
behalf, for the account, and at the risk, of Sellers.
(h) OTHER TAX MATTERS. Sellers and Buyer hereby covenant and agreed
that, except as otherwise provided above, Buyer, ETC or ETLP shall timely
prepare and file, or cause to be timely prepared and filed, all applicable
state and local tax returns or other similar reports for all taxes of ETC
and/or ETLP which relate to taxable periods ending subsequent to the Tax
Effective Date and are due subsequent to the Tax Effective Date, but which
relate to periods or transactions which elapsed or occurred on or prior to
the preceding sentence. Sellers shall reimburse ETC or ETLP, as the case may
be, for any taxes paid in connection with returns filed pursuant to this
Section 5.8(h) attributable to state and local taxes for operations of
Sellers and their respective affiliates prior to or including the Tax
Effective Date.
SECTION 5.9 ASSIGNMENT OF PURCHASE OPTION. ETLP owns that portion of
the System, which was acquired by ETLP pursuant to the terms of that certain
Bill of Sale, Assignment and Deed (with Vendor's Lien Reserved) dated April
1, 1993 (the "Assignment") from Ben H. Cook, H&S Production, Inc., Palo Verde
Oil Company, Sandollar Oil & Gas, Inc., S&P Co. and Gary S. Swindell
(collectively, the "Assignors") to ETLP. Pursuant to paragraph 6 of the
Assignment, Assignors reserved certain rights, including, among other things,
an option to purchase the System (the "Purchase Option") in the event (a) the
System or any interest in the System is sold or otherwise transferred by ETLP
(whether voluntary, involuntary or by operation of law), (b) ETC should for
any reason cease to be the sole general partner of ETLP or (c) Warren should
for any reason cease to be the President of ETC, actively serving as such.
The obligations of ETLP under the Assignment are secured by that certain Deed
of Trust and Security Agreement - Financing Statement dated April 1, 1993
("Deed of Trust") from ETLP to Jon P. Stephenson covering the System and by
that certain Security Agreement and Collateral Assignment (Financing
Statement) dated April 1, 1993 ("Collateral Agreement") covering certain
collateral. The Buyer acknowledges the restrictions on the System imposed by
the Assignment, Deed of Trust and Collateral Assignment and other related
documents. In connection and concurrently with the sale of Securities
contemplated hereby, Sellers agree to obtain an assignment of the rights,
title and interest in the Purchase Option of at least 55% in interest of the
Assignors, such assignment to be in the form of the Assignment of Rights
attached hereto as EXHIBIT C.
SECTION 5.10 WARREN AGREEMENTS. Warren agrees to actively serve as
President of ETC until the 10 year anniversary of this Agreement. Warren
agrees to indemnify and hold harmless the Buyer, ETC, ETLP and Cornerstone
from and against all losses and damages incurred or suffered by the Buyer,
ETC, ETLP and/or Cornerstone by reason of, in connection with, or arising out
of, Warren's ceasing to be and actively serving as President of ETC for any
reason other than (a) death, (b) an extended or permanent physical or mental
disability preventing Warren from actively serving as President of ETC, (c)
termination of Warren's agreement set forth above, including, but not limited
to damages, costs or losses suffered or incurred by reason of the exercise by
Assignors of the Purchase Option contained in paragraph 6 of the Assignment;
provided, however, in no event shall Warren have any liability for the
failure to actively serve as the President of ETC after the Purchase Option
has, by its terms, terminated; provided further that in no event shall
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Warren's aggregate liability under this Agreement exceed Warren's share of
the Purchase Price as set forth in Section 1.4.
SECTION 5.11 LIMITATION OF LIABILITY. Notwithstanding any other
provision of this Agreement to the contrary, (a) each Seller shall be
severally liable, but not jointly liable, for any and all claims against such
Seller relating to this Agreement ("Claims"); (b) any Seller's liability for
any Claim shall be limited to, in the aggregate, and shall in no
circumstances exceed, the amount of the Purchase Price received by such
Seller under Section 1.4 hereof; and (c) except with respect to claims
against Warren under Section 5.10 (which claims are not limited as provided
in this Section 5.11(c)), the maximum liability for any Claim under Section
5.11(b) for any particular Seller shall be further reduced by the proportion
of the earnings before interest, taxes and depreciation ("EBITD") generated
by the System for the Buyer and its successors and permitted assigns since
the Effective Date that is equal to the proportionate interest of such Seller
in the Purchase Price as set forth in Section 1.4 hereof.
SECTION 5.12 USE OF ETC NAME. Upon 30 days written notice, Warren
shall have the right to require that Buyer effect a change of name for ETC
and Warren shall thereafter have the right to use the name Energy Transfer
Corporation or a similar name; provided, however, that in no event shall
Buyer be required to effect a name change if the name change would result in
the triggering of any Assignor's right to exercise their respective Purchase
Option.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING
SECTION 6.1 GENERAL CONDITIONS. Consummation of the transactions
contemplated hereby shall be subject to the fulfillment at the Closing Date
of each of the following conditions:
(a) NO INJUNCTION. No court having jurisdiction shall have
issued, to the knowledge of any of the Sellers or the Buyer, an
injunction preventing the consummation of the transactions contemplated
hereby that shall not have been stayed or dissolved at the Closing Date.
(b) PROCEEDINGS. All proceedings taken or to be taken in
connection with the transactions contemplated hereby, and all documents
incident thereto shall be reasonably satisfactory in form and substance
to the parties and their counsel, and the parties and their counsel
shall have received all such counterpart originals or certified or other
copies of such documents as the parties or their counsel may reasonably
request.
(c) HSR ACT. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
(d) ASSIGNMENT OF PURCHASE OPTION. Buyer has received executed
assignments of the Purchase Option in the form and percentages required
pursuant to Section 5.9 have been obtained.
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SECTION 6.2 CONDITIONS TO CLOSING IN FAVOR OF THE SELLERS. Consummation
of the transactions contemplated hereby shall be subject to the fulfillment, to
the satisfaction of the Sellers, or written waiver, at or before the Closing
Date, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The
representations, warranties and statements of the Buyer contained in this
Agreement and the Exhibits hereto shall be true, correct and complete in
all material respects as of the date of this Agreement and shall also be
true, correct and complete in all material respects at and as of the
Closing Date, except for changes contemplated by this Agreement, as if
made on the Closing Date; and the Buyer shall have performed or complied
with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing Date.
(b) BUYER' CERTIFICATE. The Buyer shall have delivered to Sellers
a certificate, dated the Closing Date, on behalf of the Buyer to the
effect that (i) it is familiar with the provisions of this Agreement,
(ii) the conditions specified in Section 6.1 and in paragraph (a) of
this Section 6.2 have been satisfied in all material respects and
(iii) Buyer has complied with all material respects with its covenants
and agreements contained herein.
SECTION 6.3 CONDITIONS TO CLOSING IN FAVOR OF THE BUYER.
Consummation of the transactions contemplated hereby shall be subject to the
fulfillment, to the satisfaction of the Buyer, or written waiver, at or
before the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The
representations, warranties and statements of the Sellers contained in
this Agreement, the Exhibits hereto and the Sellers' Disclosure Schedule
and of Warren in the Warren Disclosure Schedule shall be true, correct
and complete in all material respects as of the date of this Agreement
and shall also be true, correct and complete in all material respects at
and as of the Closing Date, except for changes contemplated by this
Agreement, as if made at and as of the Closing Date; and the Sellers
shall have performed or complied with all agreements and covenants
required by this Agreement to be performed or complied with by them at
or prior to the Closing Date.
(b) WARREN CERTIFICATE. Warren shall have delivered to the Buyer
a certificate, dated the Closing Date, to the effect that (i) he is
familiar with the provisions of this Agreement, (ii) the conditions
specified in Section 6.1 and in paragraph (a) of this Section 6.3 have
been fully satisfied, (iii) the Warren Disclosure Schedule and the
Sellers' Disclosure Schedule are true, correct and complete as of the
Closing Date and (iv) Warren has complied in all material respects with
his covenants and agreements contained herein.
(c) FLOWSTONE CERTIFICATE. Flowstone shall have delivered to the
Buyer a certificate, dated the Closing Date, to the effect that (i) it
is familiar with the provisions of this Agreement, (ii) the conditions
specified in Section 6.1 and in
20
<PAGE>
paragraph (a) of Section 6.3 have been fully satisfied, (iii) the
Sellers' Disclosure Schedule is true, correct and complete as of the
Closing Date and (iv) Sellers have complied in all material respects
with their respective covenants and agreements contained herein.
(d) GOVERNMENTAL CONSENTS, AUTHORIZATIONS, ETC. All consents,
authorizations, orders or approvals of, and filings or registrations
with, and any permits, licenses or other authorizations required by,
any applicable Governmental Body that are required for or in connection
with, the operating or business of ETC and ETLP shall have been obtained
or will be made, all on terms and conditions acceptable to Buyer in its
sole discretion.
(e) LEGISLATION. No law or legally binding regulation shall have
been enacted that does or would prohibit, restrict or delay consummation
of the transactions contemplated hereby or any of the conditions to the
consummation of the transactions contemplated hereby or that does or
would have a Material Adverse Effect on either ETC or ETLP.
(f) FINANCING. Buyer shall have obtained financing for the
purchase of the ETC Shares and ETLP Interests on terms and conditions
satisfactory to Buyer in its sole discretion.
(g) PURCHASE OF ALL SECURITIES. Buyer shall receive (i)
certificates evidencing all of the ETC Shares and (ii) Assignments
of Limited Partnership Interests transferring all of the ETLP Interests.
ARTICLE 7
AMENDMENT AND WAIVER
SECTION 7.1 AMENDMENT. This Agreement and the Exhibits and Schedules
hereto may be amended by the parties hereto at any time; provided, however,
that any amendment must be by an instrument or instruments in writing signed
and delivered on behalf of each of the parties hereto.
SECTION 7.2 EXTENSION; WAIVER. At any time prior to the Closing
Date, any corporate party hereto that is entitled to the benefits hereof, by
action taken by its Board of Directors or a duly authorized officer, may (a)
extend the time for the performance of any of the obligations or other acts
of any of the other parties to this Agreement, (b) in whole or in part, waive
any inaccuracy in the representations and warranties of any of the other
parties to the Agreement contained herein or in any Exhibit or Schedule to
this Agreement or in any document delivered pursuant hereto or thereto, and
(c) in whole or in part, waive compliance with any of the agreements of any
of the other parties to this Agreement or conditions contained in this
Agreement. Any agreement on the part of any party to this Agreement to any
such extension or waiver shall be valid as set forth in an instrument in
writing signed and delivered on behalf of such party.
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<PAGE>
ARTICLE 8
GENERAL PROVISIONS
SECTION 8.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if and when delivered
personally or transmitted by telex, telecopy or telegram, mailed by
registered or certified mail (return receipt requested) or sent by a
recognized next business day courier to the persons at the following
addresses (or at such other address for a party as shall be specified by like
notice).
(a) If to Warren:
Mr. Kelcy L. Warren
8080 North Central Expressway, Suite 1200
Dallas, Texas 75206
Telecopy: (214) 739-8251
with a copy to:
Worsham, Forsythe & Wooldridge
Energy Plaza
1601 Bryan, 30th Floor
Dallas, Texas 75201
Attention: Mr. Scott H. Matheson
Telecopy: (214) 880-0011
(b) If to Flowstone:
Mr. Ray Davis
8080 North Central Expressway, Suite 1200
Dallas, Texas 75206
Telecopy: (214) 739-8251
(c) If to Buyer:
Cornerstone Pipeline Company
8080 North Central Expressway, Suite 1200
Dallas, Texas 75206
Attention: Kelly Jameson
Telecopy: (214) 739-8251
with a copy to:
Arter, Hadden, Johnson & Bromberg
1717 Main Street, Suite 4100
Dallas, Texas 75201
Attention: Joseph A. Hoffman, Esq.
Telecopy: (214) 741-7139
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<PAGE>
SECTION 8.2 FEES AND EXPENSES. Except as otherwise provided herein,
each party to this Agreement shall bear his, their or its own expenses in
negotiating, executing and delivering this Agreement and any related
documents and in preparing for the Closing.
SECTION 8.3 INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. Terms such as "herein," "hereof,"
"hereinafter" refer to this Agreement as a whole and not to the particular
sentence or paragraph where they appear, unless the context otherwise
requires. Terms used in the plural include the singular, and vice versa,
unless the context otherwise requires.
SECTION 8.4 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 8.5 MISCELLANEOUS. This Agreement, including the Exhibits
and Schedules hereto, (a) constitutes the entire agreement and supersedes all
other prior and contemporaneous agreements and understandings, both written
and oral, among the parties, or any of them, with respect to the subject
matter hereof; (b) is not intended to and shall not confer upon any other
person any rights or remedies hereunder or otherwise with respect to the
subject matter hereof, except for rights that may expressly arise as a
consequence of the transactions contemplated hereby; (c) shall not be
assigned by operation of law or otherwise; (d) has been drafted by all of the
parties to this Agreement and should not be construed against any of the
parties hereto; and (e) shall be governed in all respects, including
validity, interpretation and effect by the substantive laws of the State of
Texas without regard to conflict of law provisions.
SECTION 8.6 SURVIVAL. Except for the obligations of and agreements
of Warren under Section 5.10 which are for a ten (10) year period, each
representation, warranty, obligation, covenant and agreement of the
respective parties shall survive the Closing for a period of two (2) years.
The parties hereof agree that any action, suit or proceeding brought in
connection with this Agreement must be brought prior to two (2) years from
the date of Closing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers or by themselves individually.
SELLERS:
WARREN:
___________________________________
Kelcy L. Warren
FLOWSTONE:
Flowstone L.P.
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<PAGE>
By: ________________________________
Ray Davis, General Partner
AND
BUYER:
CORNERSTONE PIPELINE COMPANY
By:
________________________________
Name: Robert L. Cavnar
________________________________
Title: Senior Vice President,
Chief Financial Officer
24
<PAGE>
EXHIBIT A
ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST
BY KELCY WARREN
EXHIBIT B
ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST
BY FLOWSTONE L.P.
EXHIBIT C
ASSIGNMENT OF RIGHTS
<PAGE>
SCHEDULE A
WARREN DISCLOSURE SCHEDULE
SCHEDULE B
SELLERS' DISCLOSURE SCHEDULE
<PAGE>
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
KELCY L. WARREN, INDIVIDUALLY, AS A
LIMITED PARTNER OF ENERGY TRANSFER II, LTD.,
RAY DAVIS, INDIVIDUALLY, AS A LIMITED PARTNER
OF ENERGY TRANSFER II, LTD.
AND
TMcD, LTD., AS A LIMITED PARTNER OF ENERGY TRANSFER II, LTD.
AND
CORNERSTONE PIPELINE COMPANY
DATED JUNE 15, 1995
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 TRANSFER OF SECURITIES AND PURCHASE PRICE; CLOSING . . . . . . 1
Section 1.1 Sale of Securities . . . . . . . . . . . . . . . . . 1
Section 1.2 Purchase Price . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Adjustment to Purchase Price . . . . . . . . . . . . 1
Section 1.4 Post-Closing Adjustment. . . . . . . . . . . . . . . 2
Section 1.5 Manner of Payment. . . . . . . . . . . . . . . . . . 2
Section 1.6 Closing. . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. . . . . . . . . 2
Section 2.1 ETLP-II Organization . . . . . . . . . . . . . . . . 2
Section 2.2 Powers of Attorney . . . . . . . . . . . . . . . . . 3
Section 2.3 Authority Relative to this Agreement . . . . . . . . 3
Section 2.4 Capitalization . . . . . . . . . . . . . . . . . . . 3
Section 2.5 Title to ETLP-II Interests . . . . . . . . . . . . . 3
Section 2.6 No Subsidiaries; Absence of Certain Agreements . . . 3
Section 2.7 No Violations or Consents. . . . . . . . . . . . . . 4
Section 2.8 Title to Assets and Property . . . . . . . . . . . . 4
Section 2.9 Litigation . . . . . . . . . . . . . . . . . . . . . 4
Section 2.10 Limitation on ETLP-II's Powers . . . . . . . . . . . 5
Section 2.11 Absence of Changes . . . . . . . . . . . . . . . . . 5
Section 2.12 Undisclosed Liabilities; Commitments . . . . . . . . 5
Section 2.13 Environmental Matters. . . . . . . . . . . . . . . . 5
Section 2.14 Employee Benefits. . . . . . . . . . . . . . . . . . 6
Section 2.15 Labor Matters. . . . . . . . . . . . . . . . . . . . 6
Section 2.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.17 Third Party Obligations. . . . . . . . . . . . . . . 6
Section 2.18 No Brokers . . . . . . . . . . . . . . . . . . . . . 6
Section 2.19 Books and Records. . . . . . . . . . . . . . . . . . 6
Section 2.20 Accounts Payable . . . . . . . . . . . . . . . . . . 7
Section 2.21 Insurance Policies . . . . . . . . . . . . . . . . . 7
Section 2.22 Transactions with Affiliates . . . . . . . . . . . . 7
Section 2.23 Prohibited Practices . . . . . . . . . . . . . . . . 7
Section 2.24 No Default . . . . . . . . . . . . . . . . . . . . . 7
Section 2.25 Copies of Documents. . . . . . . . . . . . . . . . . 7
Section 2.26 Disclosure . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . 8
Section 3.1 Authority Relative to this Agreement . . . . . . . . 8
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<PAGE>
Section 3.2 No Brokers . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3 Due Diligence and Accuracy of Sellers'
Representations. . . . . . . . . . . . . . . . . . . 9
ARTICLE 4 ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 9
Section 4.1 Conduct of Business of ETLP-II . . . . . . . . . . . 9
Section 4.2 Investigation of Business and Properties . . . . . . 9
Section 4.3 Public Announcements . . . . . . . . . . . . . . . . 9
Section 4.4 Agreement to Consummate; Further Assurances. . . . . 9
Section 4.5 Agreement Regarding Brokers. . . . . . . . . . . . . 10
Section 4.6 Notice . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.7 Indemnification. . . . . . . . . . . . . . . . . . . 10
Section 4.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . 11
Section 4.9 Limitation of Liability. . . . . . . . . . . . . . . 12
ARTICLE 5 CONDITIONS PRECEDENT TO CLOSING. . . . . . . . . . . . . . . . 13
Section 5.1 General Conditions . . . . . . . . . . . . . . . . . 13
Section 5.2 Conditions to Closing in Favor of the Sellers. . . . 13
Section 5.3 Conditions to Closing in Favor of the Buyer. . . . . 14
ARTICLE 6 AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . 15
Section 6.1 Amendment. . . . . . . . . . . . . . . . . . . . . . 15
Section 6.2 Extension; Waiver. . . . . . . . . . . . . . . . . . 15
ARTICLE 7 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.1 Notices. . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.2 Fees and Expenses. . . . . . . . . . . . . . . . . . 16
Section 7.3 Interpretation . . . . . . . . . . . . . . . . . . . 16
Section 7.4 Counterparts . . . . . . . . . . . . . . . . . . . . 16
Section 7.5 Miscellaneous. . . . . . . . . . . . . . . . . . . . 17
Section 7.6 Survival . . . . . . . . . . . . . . . . . . . . . . 17
LIST OF EXHIBITS
Exhibit A Assignment of Limited Partnership Interests by Kelcy L. Warren
Exhibit B Assignment of Limited Partnership Interests by Ray Davis
Exhibit C Assignment of Limited Partnership Interests by TMcD, Ltd.
LIST OF SCHEDULES
Schedule A Sellers' Disclosure Schedule
-iii-
<PAGE>
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made June 15,
1995, by and between Kelcy Warren, individually ("Warren"), Ray Davis,
individually ("Davis"), and TMcD, Ltd., a Texas limited partnership ("TMcD")
(Warren, Davis and TMcD are collectively referred to as the "Sellers") and
Cornerstone Pipeline Company, a Delaware corporation (the "Buyer").
RECITALS OF THE PARTIES:
WHEREAS, Warren, Davis and TMcD together own all of the limited
partnership interests (the "ETLP-II Interests") of Energy Transfer II, Ltd.,
a Texas limited partnership ("ETLP-II");
WHEREAS, ETLP-II owns a portion of the Oletha gas gathering system (the
"System") in Limestone County, Texas (the "Business"), which system is
currently operated and managed by Cornerstone Natural Gas, Inc., the parent
of Buyer ("Cornerstone"), for the benefit of ETLP-II and Energy Transfer I,
Ltd., a Texas limited partnership ("ETLP-I");
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers, the ETLP-II Interests on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements contained herein, the parties
hereto agree as follows:
ARTICLE 1
TRANSFER OF SECURITIES AND PURCHASE PRICE; CLOSING
SECTION 1.1 SALE OF SECURITIES. On the terms and subject to the
conditions herein expressed and based on the representations, warranties,
covenants and agreements contained herein, at the Closing (as hereinafter
defined), Warren, Davis and TMcD each agree to sell, transfer and assign the
ETLP-II Interests to Buyer and Buyer agrees to purchase such ETLP-II
Interests from Sellers. The effective date of the transactions contemplated
by this Agreement is July 1, 1995 (the "Effective Date"), and the effective
date for federal income tax purposes (the "Tax Effective Date") with respect
to the transactions contemplated in this Agreement is the Closing Date.
SECTION 1.2 PURCHASE PRICE. The aggregate purchase price payable to
Sellers by Buyer (the "Purchase Price") for the Securities shall be Three
Hundred Twenty Thousand Dollars ($320,000).
SECTION 1.3 ADJUSTMENT TO PURCHASE PRICE. The Purchase Price as set
forth in Section 1.2 shall be increased by $200,000 if, prior to January 1,
1996, the Sellers are successful in finalizing and obtaining a contract with
Texaco whereby Texaco would agree
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to dedicate all of its future production from the Oletha prospect in Limestone
County, Texas to the System.
SECTION 1.4 POST-CLOSING ADJUSTMENT. Within 60 days after Closing,
Buyer and Sellers shall agree to an accounting whereby Sellers receive all
revenues generated by operations prior to July 1, 1995, attributable to
ETLP-II, less expenses, costs and expenditures incurred prior to July 1, 1995
and Buyer receives all revenues generated by operations on and after July 1,
1995, attributable to ETLP-II, less expenses, costs and expenditures incurred
on and after July 1, 1995. Within 30 days after such accounting, any amounts
due by one party to another shall be paid in full.
SECTION 1.5 MANNER OF PAYMENT. The Purchase Price for the Securities
shall be payable in the manner set forth in this Agreement by immediately
available funds to each of the Sellers at Closing. All components of the
Purchase Price shall be payable to the Sellers in the following percentages
and amounts:
<TABLE>
<CAPTION>
Percentage of Amount of
Securities Sold Sellers Purchase Price Purchase Price
--------------- ------- --------------- ---------------
<S> <C> <C> <C>
ETLP-II Interests Kelcy L. Warren 50% $ 160,000
ETLP-II Interests Ray Davis 25% $ 80,000
ETLP-II Interests TMcD, Ltd. 25% $ 80,000
</TABLE>
SECTION 1.6 CLOSING. The closing of this Agreement shall occur at
the offices of Cornerstone Pipeline Company, 8080 N. Central Expressway,
Suite 1200, Dallas, Texas 75206 10:00 a.m. on June 15, 1995 or such other
date, time or place on which the parties hereto mutually agree, but in no
event later than June 30, 1995. The time and date on which the closing
hereunder occurs is herein called the "Closing" or the "Closing Date." At
the Closing, Warren, Davis and TMcD shall deliver to Buyer, fully executed
and acknowledged Assignments of Limited Partnership Interests in the forms
attached hereto as EXHIBIT A, EXHIBIT B and EXHIBIT C, respectively, and
ETLP-II shall immediately reflect such assignment on the books and records of
ETLP-II. Also, at the Closing, Sellers shall deliver to Buyer the documents
required by Section 5.3 hereof. At the Closing, the Buyer shall deliver to
the Sellers the Purchase Price and the documents required by Section 5.2
hereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as expressly set forth in the disclosure schedule delivered to
Buyer by Sellers contemporaneously with the execution hereof and attached
hereto as SCHEDULE A (the "Sellers' Disclosure Schedule"), Sellers hereby
severally represent and warrant to Buyer as follows:
SECTION 2.1 ETLP-II ORGANIZATION. ETLP-II is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Texas. Sellers
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have heretofore delivered to Buyer complete and correct copies of the
Certificate of Limited Partnership and Agreement of Limited Partnership of
ETLP-II as such are currently in effect.
SECTION 2.2 POWERS OF ATTORNEY. There are no parties holding powers
of attorney from ETLP-II with respect to any matter. ETLP-II does not
maintain any securities or commodity trading account or other brokerage
account.
SECTION 2.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the
Sellers has full power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by Sellers of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly and validly authorized
by all necessary parties. Each of the Sellers will take or cause to be taken
all action that is necessary for the Sellers to complete the transactions to
be completed by them pursuant to this Agreement. This Agreement has been
duly and validly executed and delivered by each of the Sellers and
constitutes a legal, valid and binding obligation of each of the Sellers, in
their respective capacities, enforceable against each of them in accordance
with the terms of this Agreement.
SECTION 2.4 CAPITALIZATION. The limited partnership interests of
ETLP-II (the "ETLP-II Interests") are validly issued and outstanding, fully
paid and nonassessable except as set forth in the ETLP-II Certificate of
Limited Partnership and Agreement of Limited Partnership. At the date of
this Agreement, Energy Transfer Corporation, a Texas corporation ("ETC"), is
the sole general partner of ETLP-II and no ETLP-II Interests are held by
anyone other than Warren, Davis and TMcD and there are no other interests of
ETLP-II. At the date hereof, there are no outstanding options, warrants,
rights or other commitments to issue or sell any interests or any securities
or obligations convertible into or exchangeable for, or giving any person any
right to acquire from ETLP-II, any interests. No interests have been issued
in violation of any preemptive rights or applicable federal or state
securities laws. There are no outstanding obligations of ETLP-II to
repurchase, redeem or otherwise acquire any interests or other securities of
ETLP-II.
SECTION 2.5 TITLE TO ETLP-II INTERESTS. Immediately prior to and at
the Closing, Warren, Davis and TMcD shall be the lawful owners of all of the
limited partnership interests of ETLP-II (Warren owning 50% of the limited
partnership interest and Davis and TMcD each owning 25% of the limited
partnership interest) and, on the Closing Date, shall hold all such interests
free and clear of all liens, encumbrances or adverse claims of any kind or
character. The ETLP-II partnership interests were duly authorized, and are
validly issued and outstanding, fully paid and non-assessable except as set
forth in the ETLP-II Certificate of Limited Partnership and Agreement of
Limited Partnership. The ETLP-II partnership interests are not subject to
any preemptive rights.
SECTION 2.6 NO SUBSIDIARIES; ABSENCE OF CERTAIN AGREEMENTS. ETLP-II
does not have any Subsidiaries. As used in this Agreement, "Subsidiary" or
"Subsidiaries" with respect to any entity shall mean any other entity of
which at least a majority of the securities having by their terms ordinary
voting power to elect a majority of the Board of Directors or similar
governing body of such other entity is at the time directly or indirectly
owned or controlled
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by such first entity, or by such first entity and one or more of its
Subsidiaries. ETLP-II is not subject to any joint venture, partnership or
other arrangement that is created as a partnership for federal income tax
purposes other than the ETLP-II Certificate of Limited Partnership and
Agreement of Limited Partnership. There are no voting trusts, buy-sell
agreements or other agreements by and between or among ETLP-II or any of the
Sellers or any other party, whether or not ETLP-II is a party thereto,
imposing any restrictions upon the transfer or voting of or otherwise
pertaining to the interests or securities of ETLP-II or the ownership thereof
other than the ETLP-II Certificate of Limited Partnership and Agreement of
Limited Partnership.
SECTION 2.7 NO VIOLATIONS OR CONSENTS. Except as set forth on the
Sellers' Disclosure Statement, neither the execution, delivery nor
performance of this Agreement by the Sellers, the consummation by the Sellers
of the transactions contemplated hereby nor compliance by the Sellers with
any of the provisions hereof will (a) conflict with or result in any breach
or violation of any provision of the Certificate of Limited Partnership or
Agreement of Limited Partnership of ETLP-II, (b) result in a default, or give
rise to any right of termination, cancellation or acceleration or loss of any
material benefit (with or without the giving of notice or lapse of time or
both), or, except for requirements for compliance with the HSR Act, if any,
require the consent, approval, waiver or other action by any person under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, trust (constructive or otherwise), agreement, lease (of
real or personal property) or other instrument or obligation to which any
Seller or ETLP-II is a party or by which any Seller or ETLP-II may be bound,
(c) result in the creation or imposition of any claim, lien, pledge, security
interest, obligation, restriction or other encumbrance on any of the property
of any of the Sellers, or (d) violate any judgment, order, writ, injunction,
decree, statute, rule or regulation applicable to any of the Sellers or
ETLP-II.
SECTION 2.8 TITLE TO ASSETS AND PROPERTY. To the actual knowledge of
Sellers, the title (or other ownership interest) held by ETLP-II (either
directly or indirectly) in all assets used in the operation of the System are
free and clear of all liens and encumbrances except as set forth on the
Sellers' Disclosure Schedule. Further, except as disclosed in the Sellers'
Disclosure Schedule, to the actual knowledge of Sellers, neither Sellers nor
ETLP-II has received any notice of any action, suit or proceeding, pending or
threatened against ETLP-II, adverse to the ownership of ETLP-II and the right
of ETLP-II to operate such gathering system under any permit, right of way,
easement or lease under or on which such gathering system is located.
SECTION 2.9 LITIGATION. Except as set forth on the Sellers'
Disclosure Schedule, there is no action, order, claim, suit, proceeding,
litigation, investigation, inquiry, review or notice (together, a
"Proceeding") pending or threatened against, or to the actual knowledge of
each of the Sellers contemplated, relating to or in any way affecting any of
the Sellers, ETLP-II or any of ETLP-II's properties or assets or any partner
of ETLP-II relating to ETLP-II, at law or in equity, before any federal,
state, municipal or other governmental department, commission, board, bureau,
agency, instrumentality, court or authority (together, a "Governmental
Body"). ETLP-II does not have any of its properties or assets subject to any
order, judgment, writ, decree or injunction. ETLP-II is not subject to any
administrative order from any regulatory agency or engaged in any
administrative proceeding.
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SECTION 2.10 LIMITATION ON ETLP-II'S POWERS. To the actual knowledge
of Sellers, there are no Proceedings or other actions pending by any
Governmental Body having authority over ETLP-II to limit or impair any of
ETLP-II's powers, rights and privileges, to terminate deposit insurance or to
dissolve ETLP-II.
SECTION 2.11 ABSENCE OF CHANGES. Since January 1, 1995, the business
of ETLP-II has been operated in the ordinary course consistent with past
practice and there has not been (a) any material adverse change in the
business, operations, properties, condition (financial or otherwise),
prospects, assets or liabilities of ETLP-II; (b) any distribution declared or
paid or made on the ETLP-II Interests or the ETLP-II general partnership
interest, or any interests of ETLP-II redeemed or repurchased; (c) any
occurrence of long-term debt by ETLP-II; (d) any salary, bonus or
compensation increases to any partners, employees or agents of ETLP-II; (e)
any pending or threatened litigation or disputes affecting ETLP-II; or (f)
any other change in the nature of, or the manner of conducting, the business
of ETLP-II, other than changes that neither have had, nor reasonably may be
expected to have, a material adverse effect on the condition (financial or
otherwise), business, assets, liabilities, capitalization, financial
position, operations, results of operations or prospects (a "Material Adverse
Effect") on ETLP-II.
SECTION 2.12 UNDISCLOSED LIABILITIES; COMMITMENTS. ETLP-II does not
have any debts, guaranties, liabilities or obligations, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, that in
the aggregate have or can reasonably be expected to have a Material Adverse
Effect on ETLP-II. ETLP-II has in all material respects performed all
contracts, agreements and commitments to which it is a party, and there is
not under any such contracts, agreements or commitments any existing default
or event of default or event which with notice or lapse of time or both would
constitute a default. The Sellers' Disclosure Schedule sets forth all
accrued liabilities for capital expenditures, work in progress or similar
matters for which ETLP-II is liable under any contract, authority for
expenditures ("AFE") or similar business commitment.
SECTION 2.13 ENVIRONMENTAL MATTERS. Since the acquisition by ETLP-II
of its portion of the System, to the actual knowledge of Sellers, ETLP-II has
duly complied with, and its business, operations, assets, equipment,
leaseholds and other facilities are in compliance with, the provisions of all
federal, state and local environmental, health and safety laws, codes and
ordinances and all rules and regulations promulgated thereunder, governing
(a) air emissions, (b) discharges to surface water or ground water, (c) solid
or liquid waste disposal, (d) the use, storage, generation, handling,
transport, discharge, release, or disposal of toxic or hazardous substances
or wastes, or (e) other environmental, health or safety matters. To the
actual knowledge of each of the Sellers, there is no Proceeding pending or
threatened against ETLP-II or contemplated, relating to the environment.
ETLP-II has not received written notice of any violation of any federal,
state or local environmental, health or safety laws, codes or ordinances, and
any rules or regulations promulgated thereunder, which relate to the use,
ownership or occupancy of the property or the operation of the business of
ETLP-II, or obligate (or potentially obligate) ETLP-II to remedy, stabilize,
neutralize or otherwise alter the environmental condition of any property or
to be responsible for any such action.
5
<PAGE>
SECTION 2.14 EMPLOYEE BENEFITS. ETLP-II does not maintain any
employee bonus, deferred compensation, stock purchase, stock option,
severance pay, pension, profit sharing, stock bonus or thrift plan or any
other employee benefit plan (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")).
SECTION 2.15 LABOR MATTERS. ETLP-II has been and continues to be in
compliance with all federal, state and other applicable laws, domestic or
foreign, regarding employment and employment practices, terms and conditions
of employment and wages and hours. No employment-related grievance or
liability with respect to the termination of any employee, consultant or
agent exists. There is neither pending nor threatened Proceedings with
respect to any employment-related contract, agreement, covenant or obligation.
SECTION 2.16 TAXES. All taxes, assessments and other governmental
charges have been timely paid, and ETLP-II has timely filed (and, through the
Closing Date, will timely file) all federal, state and other tax returns
required by law to be filed by it. All such tax reports or returns are true,
complete and correct in all material respects with regard to ETLP-II for the
periods covered thereby. ETLP-II is not delinquent in the payment of any tax,
assessment or governmental charge, there is no tax deficiency asserted
against ETLP-II, and there is no unpaid assessment, deficiency or delinquency
in the payment of any of the taxes of ETLP-II or, to the actual knowledge of
each of the Sellers, any proposal for additional taxes or any violation of
any federal, state, local or foreign tax law asserted by any taxing
authority. There are no tax liens upon any properties or assets of ETLP-II.
No Internal Revenue Service, state or local audit, investigation or
Proceeding of ETLP-II is pending or threatened, or to the actual knowledge of
each of the Sellers contemplated. ETLP-II has not granted any extension to
any taxing authority of the limitation period during which any tax liability
may be asserted. ETLP-II has not committed any violation of any federal,
state, local or foreign tax laws. All monies required for the payment of
taxes not yet due and payable with respect to the operations of ETLP-II
through and including the Closing Date have been approved, reserved against
and entered upon ETLP-II's books. All monies required to be withheld by
ETLP-II from employees or collected from customers for income taxes, social
security and unemployment insurance taxes and sales, excise and use taxes,
and the portion of any such taxes to be paid by ETLP-II to governmental
agencies or set aside in accounts for such purpose have been approved,
reserved against and entered upon ETLP-II's books.
SECTION 2.17 THIRD PARTY OBLIGATIONS. ETLP-II is not obligated as a
guarantor or surety or indemnitor under any contract or agreement and has not
entered into any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any person or entity.
SECTION 2.18 NO BROKERS. None of the Sellers has employed any broker,
agent or finder or incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated hereby.
SECTION 2.19 BOOKS AND RECORDS. The respective partnership books,
books of account, and other records of or relating to ETLP-II, all of which
have been or will be made available to Buyer, contain accurate and complete
records of all partnership actions of the
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general and limited partners of ETLP-II during the periods of time in which
such books and records were maintained.
SECTION 2.20 ACCOUNTS PAYABLE. The Sellers' Disclosure Schedule
contains a complete and accurate list of all ETLP-II's accounts payable at
the date of the Latest ETLP-II Balance Sheet, showing the name of each
account creditor and the amount due to each by invoice number and date.
SECTION 2.21 INSURANCE POLICIES. The Sellers' Disclosure Schedule
identifies all insurance policies of ETLP-II in effect as of the date hereof
by policy number, type, carrier and expiration. The Sellers have delivered
to Buyer true, accurate and complete copies of all insurance policies of
ETLP-II. Each such policy is in full force and effect, with all premiums due
such policies on or prior to the Closing Date having been paid as and when
due.
SECTION 2.22 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Sellers' Disclosure Schedule, ETLP-II has not engaged in any loans, leases,
contracts or other transactions with any Seller, director, officer or
employee of ETLP-II, or any member of any such individual's family or any
other Affiliate of ETLP-II.
SECTION 2.23 PROHIBITED PRACTICES. Since the inception of ETLP-II,
there have been no violations of the Foreign Corrupt Practices Act, Money
Laundering Control Act of 1986 or any similar state or federal statute
relating to bribery, commercial bribery, money laundering or similar offenses
by ETLP-II or any of its agents. Neither ETLP-II nor any officer, director,
employee or agent of ETLP-II (or any person acting on behalf of any of the
foregoing) has since the date of ETLP-II's inception, given or agreed to give
any gift or similar benefit of more than nominal value to any customer,
supplier, governmental employee or official, or any other person or entity
who is or may be in a position to help or hinder ETLP-II or assist ETLP-II in
connection with any actual or proposed transaction, or engaged in any
transaction that would constitute money laundering under any of the foregoing
statutes.
SECTION 2.24 NO DEFAULT. ETLP-II is not in default under and no
condition exists that with notice or lapse of time or both would constitute a
default under (a) the ETLP-II Certificate or Agreement of Limited
Partnership; (b) any mortgage, loan, agreement, contract, arrangement, lease,
lease purchase, indenture or other evidences of indebtedness for borrowed
money or other instrument to which ETLP-II is now a party or by which ETLP-II
or any of the assets of ETLP-II is bound; or (c) any judgment, order, writ,
injunction, or decree, of any court, arbitrator, agency, official, authority
or other Governmental Body.
SECTION 2.25 COPIES OF DOCUMENTS. The Sellers have delivered or made
available to Buyer true, correct and complete copies of all documents listed
on the Sellers' Disclosure Schedule.
SECTION 2.26 DISCLOSURE.
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(a) Sellers have fully provided the Buyer or its representatives
with all the information that the Buyer has requested for deciding whether
to consummate the purchase of the ETLP-II Interests pursuant to the terms
and conditions of this Agreement.
(b) No representation or warranty of Sellers contained in this
Agreement or made pursuant to this Agreement or statement in the Sellers'
Disclosure Schedule contains any untrue statement or omits to state a
material fact necessary in order to make the statements herein or therein,
in light of the circumstances under which they were made, not misleading.
(c) No supplement to the Sellers' Disclosure Schedule will contain
any untrue statement or will omit to state a material fact necessary in
order to make the statements therein or in this Agreement, in light of the
circumstances under which they were made, not misleading.
(d) Other than facts which are known by Buyer or which should have
been discovered by Buyer through a diligent review of ETLP-II's books,
records and properties, there is no fact known to any Seller which has
specific application to any Seller or ETLP-II (other than general economic
or industry conditions) and which materially adversely affects or, so
far as any Seller can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition or results of operations of
ETLP-II which has not been set forth in this Agreement or the Sellers'
Disclosure Schedule.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows, regardless
of what investigations, if any, Sellers shall have made prior hereto:
SECTION 3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer is a
corporation duly organized and in good standing under the laws of the state
of its incorporation, and Buyer has full power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. Buyer acknowledges that (i) Warren is an officer and
director of Cornerstone and an officer and director of Buyer, and (ii) Ray
Davis is an officer and director of Cornerstone and a director of Buyer. The
relationship and financial interests of Sellers in this transaction have been
fully disclosed to the Board of Directors of Buyer, and after such
disclosure, this Agreement has been duly and validly authorized, executed and
delivered by Buyer and constitutes a legal, valid and binding obligation of
Buyer, enforceable against it in accordance with its terms.
SECTION 3.2 NO BROKERS. The Buyer has not employed any broker, agent
or finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
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SECTION 3.3 DUE DILIGENCE AND ACCURACY OF SELLERS' REPRESENTATIONS.
Buyer has undertaken a diligent review of ETLP-II's records, files and
properties, and Buyer is managing and operating, and has managed and
operated, the System. Buyer does not have actual knowledge that any
representations or warranty made by Sellers in this Agreement or in any other
document delivered in connection herewith that is inaccurate or untrue.
ARTICLE 4
ADDITIONAL AGREEMENTS
SECTION 4.1 CONDUCT OF BUSINESS OF ETLP-II. After the date hereof
and prior to the Closing Date, ETLP-II shall, unless prior written consent of
the Buyer is received, conduct its operations according to its normal courses
of business.
SECTION 4.2 INVESTIGATION OF BUSINESS AND PROPERTIES. To the extent
reasonably possible as limited partners of ETLP-II, Warren, Davis and TMcD
have and shall continue to provide Buyer or a designee of Buyer the
opportunity to review, observe and examine the business and operations of
ETLP-II, as so conducted. Buyer may make or cause to be made such continuing
investigation of the business and properties of ETLP-II and of its respective
financial and legal condition as Buyer deems appropriate or advisable to
familiarize himself therewith, provided such investigation shall not
unreasonably interfere with the normal operations of ETLP-II. Sellers agree
to permit, or as appropriate, request that ETC permit, as general partner,
the Buyer and its accountants, counsel and other representatives to have
reasonable access to the premises, books and records of ETLP-II. Sellers
shall cause ETLP-II to furnish, or as appropriate, request that ETC furnish,
as general partner, Buyer with such financial and operating data and other
information with respect to the business and properties of ETLP-II, as Buyer
shall from time to time reasonably request in accordance with this Section.
SECTION 4.3 PUBLIC ANNOUNCEMENTS. The parties hereto shall consult
with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the transactions
contemplated hereby, shall not issue any such press release or make any such
public statement prior to such consultation, and shall consult with each
other as to form and substance of other public disclosures related thereto;
provided however, that nothing contained herein shall prohibit either party
from making any disclosure that is required by law.
SECTION 4.4 AGREEMENT TO CONSUMMATE; FURTHER ASSURANCES. Subject to
the terms and conditions herein provided, each of the parties hereto agrees
to use its best efforts to do all things necessary, proper or advisable under
applicable laws and regulations to satisfy the conditions in Article V hereof
and to consummate and make effective, as soon as reasonably practicable, the
transactions contemplated by this Agreement, including, but not limited to,
providing information and making application for, and the obtaining of, all
consents, authorizations, orders, notices and approvals of any Governmental
Body required in connection therewith and initiating or defending any legal
action that is necessary or appropriate to permit the transactions
contemplated hereby to be consummated. At any time after the Closing Date,
if any further action is necessary, proper or advisable to carry out the
purposes of this Agreement, then, as soon as is reasonably practicable, each
party
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to this Agreement shall take, or cause its proper officers to take, such
action. No party to this Agreement shall take or cause to be taken any
action that would cause the representations, warranties or statements
expressed herein to be untrue or incorrect on the Closing Date or to prevent
compliance with any of the covenants or agreements expressed in this
Agreement.
SECTION 4.5 AGREEMENT REGARDING BROKERS. Each party agrees that it
will pay or dispute, and indemnify and hold the other parties harmless from,
any claims of brokers or others for finder's or brokerage fees asserted as a
result of representations by such party to such brokers or others, regardless
of whether the existence of such brokers or others are disclosed herein.
SECTION 4.6 NOTICE. Each of the Sellers shall promptly give notice
to the Buyer upon becoming aware of the occurrence or failure to occur, or
the impending or threatened occurrence or failure to occur, of any event that
would cause or constitute, any of the Sellers' representations, warranties or
statements herein being or becoming untrue. The Buyer shall promptly give
notice to each of the Sellers upon becoming aware of the occurrence or
failure to occur, of any event that would cause or constitute, any of the
Buyer's representations, warranties, or statements herein being or becoming
untrue.
SECTION 4.7 INDEMNIFICATION.
(a) Subject to the terms of Section 4.10 below, including, without
limitation, the limitation of liability as set forth therein, each Seller
shall severally, and not jointly, indemnify and hold Buyer and its
assignees harmless from and against, and promptly reimburse the Buyer and
its assignees for, any and all loss, claim, expense, damage, deficiency,
penalty, interest, fine, clean-up cost, liability or obligation, including
investigative and settlement costs and attorneys' fees and court costs,
imposed on, incurred by or asserted against the Buyer or its assignees in
any way arising out of or in connection with any breach of any covenant or
agreement of such Seller or the failure of such Seller to perform any of
its respective obligations contained herein or any breach of any
representation or warranty contained herein, including, any breach of any
representations or warranty of a Seller contained in Article 2 hereof, or
in any document delivered pursuant hereto (each, an "Action").
(b) Promptly, or in any event within ten (10) days (in the case of
service of legal process) or within thirty (30) days (in the case of any
other claim) of receipt by Buyer (the Buyer, for such purposes, being
hereinafter referred to as an "INDEMNIFIED PARTY") of notice of any Action
against such Indemnified Party that might give rise to a claim for
indemnification of such Indemnified Party pursuant to the terms of this
Agreement, the Indemnified Party shall give written notice thereof to the
Sellers (each Seller, for purposes of this Section 4.7, being hereinafter
referred to as an "INDEMNIFYING PARTY") indicating the nature of such
Action and the basis therefor. Failure to give any notice provided
hereunder shall in no way be deemed a forfeiture of any Indemnified Party's
rights to be indemnified hereunder unless the failure to give any such
notice materially prejudices the Indemnifying Party.
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(c) At any time after any Indemnified Party gives notice to an
Indemnifying Party of an Action being made against such Indemnifying
Party for which a claim for indemnity is being asserted, to the extent
that such Action is not being defended by any third party under the
terms of any applicable insurance policies, the Indemnified Party shall
permit the Indemnifying Party, at the option and expense of the
Indemnifying Party, to assume the complete defense of such Action with
full authority to conduct such defense and to settle or otherwise
dispose of the same (except as hereinafter provided) and the Indemnified
Party will reasonably cooperate in such defense. In order to assume
such defense, the Indemnifying Party must notify the Indemnified Party
in writing of its election to do so within twenty (20) days of receipt
of notice of the Action from the Indemnified Party; in the event that the
Indemnifying Party does not so notify the Indemnified Party within such
twenty (20) day period, the Indemnifying Party shall be deemed to have
elected not to assume such defense. The Indemnifying Party will not, in
defense of any such Action, except with the consent of the Indemnified
Party, consent to the entry of any judgment or enter into any settlement
that does not include, as an unconditional term thereof, the giving by the
claimant or plaintiff to the Indemnified Party of an unconditional
release from all claims and/or liability in respect thereof. After
notice to the Indemnified Party of the Indemnifying Party's election to
assume the defense of such Action, as provided above, the Indemnifying
Party shall be liable to the Indemnified Party for such legal or other
expenses subsequently incurred at the request of the Indemnifying Party
by the Indemnified Party in connection with the defense thereof. As to
those Actions with respect to which the Indemnifying Party does not elect
to assume control of the defense, (a) the Indemnified Party will afford
the indemnifying Party an opportunity to participate in such defense, at
the indemnifying Party's own cost and expense; (b) the Indemnified Party
will not settle or otherwise dispose of any of the same without the
consent of the Indemnifying Party; and (c) the Indemnifying Party agrees
to reasonably cooperate in such defense. The Indemnifying Party shall
make payments to the Indemnified Party, pursuant to the provisions hereof,
with respect to Actions of third parties as follows: with respect to
out-of-pocket expenses of the Indemnified Party, on demand as incurred,
and, with respect to amounts and fees owed to third parties, to the extent
not paid directly to such third parties by the Indemnifying Party, on
demand at the time of payment by the Indemnified Party to such third
party.
SECTION 4.8 TAX MATTERS. (a) BUYER INDEMNIFICATION. Buyer shall
indemnify and hold harmless Sellers against any federal income tax liability
realized (including without limitation, deficiencies, interest and penalties)
relating to ETLP-II for any taxable period commencing after the Tax Effective
Date.
(b) SELLERS INDEMNIFICATION. Sellers shall be liable for and shall
indemnify and hold harmless Buyer from and against all amounts of any
realized liabilities for federal income taxes (including without limitation,
deficiencies, interest and penalties) of ETLP-II for any taxable period
ending before or including the Tax Effective Date.
(c) PREPARATION OF INCOME TAX RETURNS. Sellers and Buyer shall
cooperate in the preparation and filing in a timely fashion, all appropriate
and necessary federal, state and
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other income tax returns, reports and estimates, the filing of which is
required for the lawful conduct of business ("Income Tax Returns") which
include the results of operation of ETLP-II ("Operations") for all periods
ending prior to or on the Tax Effective Date. Sellers shall pay or discharge
any and all federal, state and local income taxes assessments, interests,
penalties or deficiencies for which ETLP-II may be held liable as a result of
Income Tax Returns required to be filed by or on behalf of ETLP-II ("Tax")
with respect to any taxable periods or years ending prior to or on the Tax
Effective Date.
(d) TAX AUDITS. Sellers shall be responsible for any audit or other
proceeding involving a taxing period ending on or prior to the Tax Effective
Date which involves a federal income tax or any other tax liability of
ETLP-II. Sellers and Buyer shall cooperate with each other in the conduct of
any audit or other proceedings.
(e) COOPERATION. Buyer agrees to give to Sellers prompt written notice
of any claim, demand, action, suit, proceeding, audit or assessment raised,
brought, threatened, made or commenced against ETLP-II that relates to any
matter to which the foregoing indemnification provisions shall apply and
agrees further, except as provided below, not to make any admission or effect
any settlement with respect to any such claim without the written consent of
Sellers.
(f) DEFENSE BY SELLERS. If any claim shall be made or any action or
proceeding shall be commenced against Buyer or ETLP-II in respect of any
liability, obligation or claim to which the foregoing indemnity relates,
Sellers shall have the right, at their own expense, to undertake the defense
of any such claim, action or proceeding by written notice given to Buyer at
any time before the final determination thereof, and Sellers shall further
have the right in their sole discretion to settle any such claim, action or
proceeding by payment to the complainant.
(g) ASSUMPTION OF DEFENSE. If Sellers shall, within a reasonable time
after receipt of notice by Buyer, fail to defend a claim subject to this
indemnification, Buyer shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising reasonable
business judgment) the claim or other matter on behalf, for the account, and
at the risk, of Sellers.
(h) OTHER TAX MATTERS. Sellers and Buyer hereby covenant and agreed
that, except as otherwise provided above, Buyer or ETLP-II shall timely
prepare and file, or cause to be timely prepared and filed, all applicable
state and local tax returns or other similar reports for all taxes of ETLP-II
which relate to taxable periods ending subsequent to the Tax Effective Date
and are due subsequent to the Tax Effective Date, but which relate to periods
or transactions which elapsed or occurred on or prior to the preceding
sentence. Sellers shall reimburse ETLP-II for any taxes paid in connection
with returns filed pursuant to this Section 4.8(h) attributable to state and
local taxes for operations of Sellers and their respective affiliates prior
to or including the Tax Effective Date.
SECTION 4.9 LIMITATION OF LIABILITY. Notwithstanding any other
provision of this Agreement to the contrary, (a) each Seller shall be
severally liable, but not jointly liable, for any and all claims against such
Seller relating to this Agreement ("Claims"); (b) any Seller's
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liability for any Claim shall be limited to, in the aggregate, and shall in
no circumstances exceed, the amount of the Purchase Price received by such
Seller under Section 1.5 hereof; and (c) the maximum liability for any Claim
under Section 4.9(b) for any particular Seller shall be further reduced by
the proportion of the earnings before interest, taxes and depreciation
("EBITD") generated by the System for the Buyer and its successors and
permitted assigns since the Effective Date that is equal to the proportionate
interest of such Seller in the Purchase Price as set forth in Section 1.5
hereof.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1 GENERAL CONDITIONS. Consummation of the transactions
contemplated hereby shall be subject to the fulfillment at the Closing Date
of each of the following conditions:
(a) NO INJUNCTION. No court having jurisdiction shall have issued,
to the knowledge of any of the Sellers or the Buyer, an injunction
preventing the consummation of the transactions contemplated hereby
that shall not have been stayed or dissolved at the Closing Date.
(b) PROCEEDINGS. All proceedings taken or to be taken in
connection with the transactions contemplated hereby, and all documents
incident thereto shall be reasonably satisfactory in form and substance
to the parties and their counsel, and the parties and their counsel
shall have received all such counterpart originals or certified or
other copies of such documents as the parties or their counsel may
reasonably request.
(c) HSR ACT. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
SECTION 5.2 CONDITIONS TO CLOSING IN FAVOR OF THE SELLERS.
Consummation of the transactions contemplated hereby shall be subject to the
fulfillment, to the satisfaction of the Sellers, or written waiver, at or
before the Closing Date, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The
representations, warranties and statements of the Buyer contained in
this Agreement and the Exhibits hereto shall be true, correct and complete
in all material respects as of the date of this Agreement and shall also
be true, correct and complete in all material respects at and as of the
Closing Date, except for changes contemplated by this Agreement, as if
made on the Closing Date; and the Buyer shall have performed or complied
with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing Date.
(b) BUYER' CERTIFICATE. The Buyer shall have delivered to Sellers
a certificate, dated the Closing Date, on behalf of the Buyer to the
effect that (i) it is
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familiar with the provisions of this Agreement, (ii) the conditions
specified in Section 5.1 and in paragraph (a) of this Section 5.2
have been satisfied in all material respects and (iii) Buyer has
complied with all material respects with its covenants and
agreements contained herein.
SECTION 5.3 CONDITIONS TO CLOSING IN FAVOR OF THE BUYER.
Consummation of the transactions contemplated hereby shall be subject to the
fulfillment, to the satisfaction of the Buyer, or written waiver, at or
before the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The
representations, warranties and statements of the Sellers contained
in this Agreement, the Exhibits hereto and the Sellers' Disclosure
Schedule shall be true, correct and complete in all material respects as
of the date of this Agreement and shall also be true, correct and
complete in all material respects at and as of the Closing Date, except
for changes contemplated by this Agreement, as if made at and as of the
Closing Date; and the Sellers shall have performed or complied with
all agreements and covenants required by this Agreement to be performed
or complied with by them at or prior to the Closing Date.
(b) WARREN CERTIFICATE. Warren shall have delivered to the Buyer
a certificate, dated the Closing Date, to the effect that (i) he is
familiar with the provisions of this Agreement, (ii) the conditions
specified in Section 5.1 and in paragraph (a) of this Section 5.3 have
been fully satisfied, (iii) Sellers' Disclosure Schedule is true,
correct and complete as of the Closing Date and (iv) Warren has complied
in all material respects with his covenants and agreements contained
herein.
(c) DAVIS CERTIFICATE. Davis shall have delivered to the Buyer a
certificate, dated the Closing Date, to the effect that (i) he is
familiar with the provisions of this Agreement, (ii) the conditions
specified in Section 5.1 and in paragraph (a) of this Section 5.3 have
been fully satisfied, (iii) Sellers' Disclosure Schedule is true, correct
and complete as of the Closing Date and (iv) Davis has complied in all
material respects with his covenants and agreements contained herein.
(d) TMCD CERTIFICATE. TMcD shall have delivered to the Buyer a
certificate, dated the Closing Date, to the effect that (i) it is
familiar with the provisions of this Agreement, (ii) the conditions
specified in Section 5.1 and in paragraph (a) of Section 5.3 have been
fully satisfied, (iii) the Sellers' Disclosure Schedule is true, correct
and complete as of the Closing Date and (iv) Sellers have complied in all
material respects with their respective covenants and agreements
contained herein.
(e) GOVERNMENTAL CONSENTS, AUTHORIZATIONS, ETC. All consents,
authorizations, orders or approvals of, and filings or registrations
with, and any permits, licenses or other authorizations required by,
any applicable Governmental Body that are required for or in connection
with, the operating or business of
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ETLP-II shall have been obtained or will be made, all on terms and
conditions acceptable to Buyer in its sole discretion.
(f) LEGISLATION. No law or legally binding regulation shall have
been enacted that does or would prohibit, restrict or delay consummation
of the transactions contemplated hereby or any of the conditions to the
consummation of the transactions contemplated hereby or that does or
would have a Material Adverse Effect on ETLP-II.
(g) FINANCING. Buyer shall have obtained financing for the
purchase of the ETLP-II Interests on terms and conditions satisfactory
to Buyer in its sole discretion.
(h) PURCHASE OF ALL ETLP-II INTERESTS. Buyer shall receive
Assignments of Limited Partnership Interests transferring all of the
ETLP-II Interests.
ARTICLE 6
AMENDMENT AND WAIVER
SECTION 6.1 AMENDMENT. This Agreement and the Exhibits and Schedules
hereto may be amended by the parties hereto at any time; however, that any
amendment must be by an instrument or instruments in writing signed and
delivered on behalf of each of the parties hereto.
SECTION 6.2 EXTENSION; WAIVER. At any time prior to the Closing
Date, any corporate party hereto that is entitled to the benefits hereof, by
action taken by its Board of Directors or a duly authorized officer, may (a)
extend the time for the performance of any of the obligations or other acts
of any of the other parties to this Agreement, (b) in whole or in part, waive
any inaccuracy in the representations and warranties of any of the other
parties to the Agreement contained herein or in any Exhibit or Schedule to
this Agreement or in any document delivered pursuant hereto or thereto, and
(c) in whole or in part, waive compliance with any of the agreements of any
of the other parties to this Agreement or conditions contained in this
Agreement. Any agreement on the part of any party to this Agreement to any
such extension or waiver shall be valid as set forth in an instrument in
writing signed and delivered on behalf of such party.
ARTICLE 7
GENERAL PROVISIONS
SECTION 7.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if and when delivered
personally or transmitted by telex, telecopy or telegram, mailed by
registered or certified mail (return receipt requested) or sent by a
recognized next business day courier to the persons at the following
addresses (or at such other address for a party as shall be specified by like
notice).
(a) If to Warren:
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Mr. Kelcy L. Warren
8080 North Central Expressway, Suite 1200
Dallas, Texas 75206
Telecopy: (214) 739-8251
(b) If to Davis:
Mr. Ray Davis
8080 North Central Expressway, Suite 1200
Dallas, Texas 75206
Telecopy: (214) 739-8251
(c) If to TMcD:
Mrs. Thatcherette McDaniel
P.O. Box 1906
Longview, Texas 75606
Telecopy: (903) 758-0780
(d) If to Buyer:
Cornerstone Pipeline Company
8080 North Central Expressway, Suite 1200
Dallas, Texas 75206
Attention: Kelly Jameson
Telecopy: (214) 739-8251
with a copy to:
Arter, Hadden, Johnson & Bromberg
1717 Main Street, Suite 4100
Dallas, Texas 75201
Attention: Joseph A. Hoffman, Esq.
Telecopy: (214) 741-7139
SECTION 7.2 FEES AND EXPENSES. Except as otherwise provided herein,
each party to this Agreement shall bear his, their or its own expenses in
negotiating, executing and delivering this Agreement and any related
documents and in preparing for the Closing.
SECTION 7.3 INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. Terms such as "herein," "hereof,"
"hereinafter" refer to this Agreement as a whole and not to the particular
sentence or paragraph where they appear, unless the context otherwise
requires. Terms used in the plural include the singular, and vice versa,
unless the context otherwise requires.
SECTION 7.4 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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SECTION 7.5 MISCELLANEOUS. This Agreement, including the Exhibits
and Schedules hereto, (a) constitutes the entire agreement and supersedes all
other prior and contemporaneous agreements and understandings, both written
and oral, among the parties, or any of them, with respect to the subject
matter hereof; (b) is not intended to and shall not confer upon any other
person any rights or remedies hereunder or otherwise with respect to the
subject matter hereof, except for rights that may expressly arise as a
consequence of the transactions contemplated hereby; (c) shall not be
assigned by operation of law or otherwise; (d) has been drafted by all of the
parties to this Agreement and should not be construed against any of the
parties hereto; and (e) shall be governed in all respects, including
validity, interpretation and effect by the substantive laws of the State of
Texas without regard to conflict of law provisions.
SECTION 7.6 SURVIVAL. Each representation, warranty, obligation,
covenant and agreement of the respective parties shall survive the Closing
for a period of two (2) years. The parties hereof agree that any action,
suit or proceeding brought in connection with this Agreement must be brought
prior to two (2) years from the date of Closing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers or by themselves individually.
SELLERS:
WARREN:
____________________________________________
Kelcy L. Warren, Individually
DAVIS:
____________________________________________
Ray Davis, Individually
TMcD:
TMcD, Ltd.
By: _______________________________________
Thatcherette McDaniel, General Partner
AND
BUYER:
CORNERSTONE PIPELINE COMPANY
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By: _______________________________________
_______________________________________
Name: Robert L. Cavnar
_______________________________________
Title: Senior Vice President,
Chief Financial Officer
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EXHIBIT A
ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST
BY KELCY WARREN
EXHIBIT B
ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST
BY RAY DAVIS
EXHIBIT C
ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST
BY TMcD, LTD.
