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ASSET SALE AND PURCHASE AGREEMENT
By and Among
SOUTHWESTERN ENERGY COMPANY,
ARKANSAS WESTERN GAS COMPANY
and
ATMOS ENERGY CORPORATION
Dated as of October 15, 1999
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TABLE OF CONTENTS
Page
I. DEFINITIONS.............................................................1
II. SALE AND PURCHASE.......................................................5
2.1. Sale and Purchase of Assets..........................................5
2.2. Excluded Assets......................................................6
2.3. Purchase Price; Adjustment...........................................7
2.4. Assumption of Liabilities............................................9
2.5. Closing.............................................................10
2.6. Nonassignable Contracts.............................................11
III. REPRESENTATIONS AND WARRANTIES OF SELLERS..............................11
3.1. Corporate Existence.................................................11
3.2. Authorization and Validity of Agreement.............................12
3.3. No Contravention....................................................12
3.4. Title to Assets; Adequacy; Condition................................12
3.5. Material Contracts..................................................12
3.6. Real Property.......................................................13
3.7. Permits.............................................................13
3.8. Litigation..........................................................13
3.9. Compliance with Laws................................................13
3.10. Governmental Consents............................................13
3.11. Tax Matters......................................................13
3.12. Financial Statements.............................................14
3.13. Employee Matters.................................................14
3.14. Brokerage........................................................15
3.15. Environmental Matters............................................15
3.16. No Undisclosed Liabilities; No Material Adverse Effect...........16
3.17. Customers; Suppliers.............................................16
3.18. Books and Records................................................16
3.19. Insurance........................................................16
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3.20. Accounts Receivable..............................................16
3.21. Y2K Compliance...................................................16
3.22. No Other Representations.........................................16
IV. REPRESENTATIONS AND WARRANTIES OF BUYER................................17
4.1. Organization........................................................17
4.2. Authorization and Validity of Agreement.............................17
4.3. No Contravention....................................................17
4.4. Consents............................................................17
4.5. Brokerage...........................................................17
4.6. Litigation..........................................................17
4.7. Financing...........................................................17
V. OBLIGATIONS OF SELLERS.................................................17
5.1. Consents............................................................18
5.2. Conduct of Business.................................................18
5.3. Access Before Closing...............................................18
5.4. Clearance Certificate...............................................18
VI. OBLIGATIONS OF BUYER...................................................18
6.1. Consents............................................................18
VII. EMPLOYEE MATTERS....................................................19
7.1. Employment of Employees.............................................19
7.2. Severance Benefits..................................................19
7.3. Transfer of Pension Assets and Liabilities..........................19
7.4. Savings Plan........................................................20
7.5. Indemnification for Plan Liabilities................................20
7.6. Service Credit......................................................21
7.7. Medical and Dental Plans............................................21
7.8. Vacation and Sick Day Benefits Accrued Through Closing Date.........22
7.9. Welfare Benefits....................................................22
7.10. Long Term Disability.............................................22
7.11. Flexible Spending Accounts.......................................22
7.12. WARN Act Liability...............................................22
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7.13. Health Care Continuation Coverage................................22
7.14. Employment Taxes.................................................22
VIII. ADDITIONAL RIGHTS AND OBLIGATIONS...................................23
8.1. Access After Closing................................................23
8.2. Further Assurances..................................................23
8.3. Confidentiality.....................................................23
8.4. Schedules...........................................................23
8.5. Tax Matters.........................................................23
8.6. Use of Name and Logos...............................................24
8.7. Environmental Matters...............................................24
8.8. Abstracts...........................................................24
8.9. Y2K.................................................................25
IX. CONDITIONS TO BUYER'S OBLIGATIONS......................................25
9.1. Representations, Warranties and Covenants of Sellers................25
9.2. No Prohibition......................................................25
9.3. Further Action......................................................25
9.4. No Material Adverse Effect..........................................25
9.5. Abstracts...........................................................25
9.6. Omnibus Gas Transportation and Supply Agreement.....................26
9.7. Other Documents.....................................................26
X. CONDITIONS TO SELLERS' OBLIGATIONS.....................................26
10.1. Representations, Warranties and Covenants of Buyer...............26
10.2. No Prohibition...................................................26
10.3. Further Action...................................................26
10.4. Omnibus Gas Transportation and Supply Agreement..................26
10.5. Other Documents..................................................26
XI. TERMINATION PRIOR TO CLOSING...........................................26
11.1. Termination......................................................26
11.2. Effect of Termination............................................27
XII. INDEMNIFICATION AND SURVIVAL........................................27
12.1. Indemnification by Sellers.......................................27
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12.2. Indemnification by Buyer.........................................27
12.3. Limitations on Liability.........................................27
12.4. Indemnification Procedure........................................28
12.5. Exclusive Remedies...............................................29
XIII. MISCELLANEOUS.......................................................29
13.1. Entire Agreement.................................................29
13.2. Waiver of Bulk Transfer Requirements.............................29
13.3. Successors and Assigns...........................................29
13.4. Counterparts.....................................................29
13.5. Headings.........................................................29
13.6. Modification and Waiver..........................................29
13.7. No Third-Party Beneficiary Rights................................30
13.8. Sales and Transfer Taxes.........................................30
13.9. Expenses.........................................................30
13.10. Waiver of Conditions.............................................30
13.11. Notices..........................................................30
13.12. Knowledge of Sellers.............................................31
13.13. Governing Law....................................................31
13.14. Waiver of Jury Trial.............................................31
13.15. Announcements....................................................31
13.16. Severability.....................................................32
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SCHEDULES
2.1.1 - Owned Property
2.1.2 - Leased Property
2.1.4 - List of Machinery, Equipment, etc.
2.1.6 - Contracts
2.1.13 - Intellectual Property
2.2(c) - Names and Logos
2.2(k) - Other Excluded Assets
2.3.3 - Financial Principles
2.4 - Certain Excluded Liabilities
2.5.2(c) - Gas Transportation and Supply Matters
3.3 - Sellers' Third Party Consents
3.4 - Encumbrances on Transferred Assets
3.5 - Material Contracts
3.6 - Real Property
3.7 - Permits
3.8 - Litigation
3.9 - Compliance with Laws
3.10 - Seller Governmental Consents
3.12 - Financial Statements
3.13.1 - Employee Benefit Plans
3.13.2 - Pension Plans
3.13.4 - Labor Matters
3.15 - Environmental Matters
3.16 - Certain Liabilities
3.19 - Insurance Policies
3.20 - Accounts Receivable
4.4 - Buyer's Consents
7.1 - Transferred Employees
7.2 - Severance Benefits
7.3.2 - Accumulated Benefit Obligation and Calculation Assumption
7.11 - Flexible Spending Accounts
9.3 - Required Non-Governmental Third Party Consents
ASSET SALE AND PURCHASE AGREEMENT
ASSET SALE AND PURCHASE AGREEMENT (the "Agreement") dated as of October
15, 1999, by and among SOUTHWESTERN ENERGY COMPANY, a corporation organized
under the laws of the state of Arkansas ("Parent"), ARKANSAS WESTERN GAS
COMPANY, a corporation organized under the laws of the state of Arkansas ("AWG"
and, together with Parent, the "Sellers"), and ATMOS ENERGY CORPORATION, a
corporation organized under the laws of Texas and Virginia ("Buyer").
BACKGROUND
Sellers desire to sell and assign to Buyer, and Buyer desires to
purchase and assume from Sellers, the Transferred Assets (as defined
hereinafter) and the Assumed Liabilities (as defined hereinafter), all on the
terms and subject to the conditions of this Agreement.
TERMS
NOW, THEREFORE, intending to be legally bound hereby, the parties agree
as follows:
I. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
following meanings:
"Affiliate" means, when used with respect to a specified Person,
another Person that, either directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Person specified.
"Abstracts" has the meaning specified in Section 8.8.
"Agreement" has the meaning specified in the first paragraph.
"Assumed Contracts" has the meaning specified in Section 2.1.6.
"Assumed Liabilities" has the meaning specified in Section 2.4.
"Assumption Agreement" has the meaning specified in Section 2.5.3.
"AWG" has the meaning specified in the first paragraph.
"Business" means the gas distribution and transmission business and the
unregulated operations conducted by AWG's Associated Natural Gas Company
Division in the State of Missouri immediately prior to the date hereof; provided
that the Business shall not be deemed to include any operations of the Sellers
conducted in the State of Arkansas.
"Buyer" has the meaning specified in the first paragraph.
"Buyer Medical Plan" has the meaning specified in Section 7.7.1.
"Buyer's Pension Plan" has the meaning specified in Section 7.3.1.
"Buyer's Post-Retirement Trusts" has the meaning specified in Section
7.7.3.
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"Buyer's Savings Plan" has the meaning specified in Section 7.4.
"Closing" and "Closing Date" have the meanings specified in Section
2.5.1.
"Closing Purchase Price" has the meaning specified in Section 2.3.1.
"Closing Statement" has the meaning specified in Section 2.3.3.
"Code" has the meaning specified in Section 7.3.1.
"Current Assets" means the current assets of the Sellers reported as
(i) accounts receivable, (ii) inventory, (iii) stores expense undistributed,
(iv) deferred gas purchases and (v) (to the extent not exceeding $100,000) other
current assets that are included in the Transferred Assets, all as determined in
accordance with the Financial Principles applied consistently with the Financial
Statements.
"Current Liabilities" means the current liabilities of the Sellers
reported as (i) accounts payable, (ii) other taxes payable, (iii) deferred gas
purchases, (iv) customer deposits, (v) accrued vacation payable and (vi) (to the
extent not exceeding $50,000) other current liabilities that are Assumed
Liabilities, all as determined in accordance with the Financial Principles
applied consistently with the Financial Statements.
"Current Period" has the meaning specified in Section 2.3.4.
"Eligible Transferred Employee" has the meaning specified in Section
7.4.
"Encumbrances" has the meaning specified in Section 2.1.
"Environmental Laws" means any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, order, common law, and any
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, writ, consent decree or judgment, relating: to
(a) emissions, discharges, releases or threatened releases of Hazardous
Materials into the natural environment, including into ambient air, soil,
sediments, land surface or subsurface, buildings or facilities, surface water,
groundwater, publicly-owned treatment works, septic systems or land; (b) the
generation, treatment, storage disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Materials; (c) occupational health and
safety; or (d) otherwise relating to the pollution or protection of the
environment, health, safety or natural resources; provided that "Environmental
Laws" shall not mean or refer to any of the foregoing except to the extent in
existence and in full force and effect on and as of the Closing Date and,
accordingly, shall not include any of the foregoing as it may be enacted,
promulgated, amended, changed or altered (by statute, judicial interpretation,
official interpretation or otherwise) at any time with effect after the Closing
Date.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under or issued pursuant to any
Environmental Law.
"ERISA" has the meaning specified in Section 3.13.2.
"Excluded Assets" has the meaning specified in Section 2.2.
"Excluded Liabilities" has the meaning specified in Section 2.4.
"Financial Principles" has the meaning specified in Section 2.3.3.
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"Financial Statements" has the meaning specified in Section 3.12.
"FSA's" has the meaning specified in Section 7.11.
"Hazardous Material" means (a) any petroleum, petroleum hydrocarbons,
gas, gas liquids, or any other petroleum products, by-products or breakdown
products, radioactive materials, asbestos-containing materials in any form or
condition or polychlorinated biphenyls in any form or condition or (b) any
solid, chemical, material or substance regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any Environmental Law.
"Knowledge of Sellers" has the meaning specified in Section 13.12.
"Leased Property" has the meaning specified in Section 2.1.2.
"Leave" has the meaning specified in Section 7.1.
"Losses" has the meaning specified in Section 12.1.
"Material Adverse Effect" means any change in, or effect on, the
Business or the Transferred Assets that is or is reasonably likely to be
materially adverse to the Transferred Assets taken as a whole or the assets,
liabilities, operations, results of operations or financial condition of the
Business taken as a whole, except for any such changes or effects resulting from
(i) changes in general economic, regulatory or political conditions or changes
that affect the industry in general and (ii) this Agreement or the transactions
contemplated hereby .
"Material Contracts" has the meaning specified in Section 3.5.
"Matters of Environmental Concern" has the meaning specified in Section
8.7(a).
"Measurement Period" has the meaning specified in Section 2.3.3.
"Names and Logos" has the meaning specified in Section 2.2(c).
"Net Working Capital" has the meaning specified in Section 2.3.3.
"Non-Assigned Contracts" has the meaning specified in Section 2.6.
"Omnibus Gas Transportation and Supply Agreement" has the meaning
specified in Section 2.5.2.
"Owned Property" has the meaning specified in Section 2.1.1.
"Parent" has the meaning specified in the first paragraph.
"Pension Plans" has the meaning specified in Section 3.13.2.
"Permits" has the meaning specified in Section 3.7.
"Permitted Encumbrances" has the meaning specified in Section 3.4.
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"Person" means any individual, partnership, firm, corporation,
association, trust, limited liability company, unincorporated organization,
governmental authority or other entity.
"Plans" has the meaning specified in Section 3.13.1.
"Post-Retirement Benefits" has the meaning specified in Section 7.7.3.
"Pre-Closing Returns" has the meaning specified in Section 8.5.
"Purchase Price" has the meaning specified in Section 2.3.1.
"Returns" has the meaning specified in Section 3.11.
"Seller Medical Plans" has the meaning specified in Section 7.7.1.
"Seller Pension Plan" has the meaning specified in Section 7.3.1.
"Seller Pension Plan Trust" has the meaning specified in Section 7.3.1.
"Seller Savings Plan" has the meaning specified in Section 7.4.
"Sellers" has the meaning specified in the first paragraph.
"Seller's Post-Retirement Trusts" has the meaning specified in Section
7.7.3.
"SFAS 106 Obligations" has the meaning specified in Section 3.13.5.
"System Property" has the meaning specified in Section 2.1.3.
"Taxes" means all federal, state, local and other taxes and similar
levies, fees, charges and assessments imposed by a governmental authority,
including without limitation, income, gross receipts, sales, use, transfer,
business and occupation, franchise, profits, license, lease, service, service
use, duties, excise, severance, stamp, occupation, ad valorem, real and personal
property, withholding, payroll, and value added taxes.
"Threshold" has the meaning specified in Section 8.7.
"Transfer Taxes" has the meaning specified in Section 13.8.
"Transferred Assets" has the meaning specified in Section 2.1.
"Transferred Employee" and "Transferred Employees" have the meanings
specified in Section 7.1.
"Transferred Pension Plan Participants" has the meaning specified in
Section 7.3.1.
"Transition Services Agreement" has the meaning specified in Section
2.5.2.
"WARN Act" has the meaning specified in Section 7.12.
"Welfare Plans" has the meaning specified in Section 3.13.3.
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II. SALE AND PURCHASE.
2.1. Sale and Purchase of Assets. Subject to the terms and conditions
of this Agreement, at the Closing, each Seller shall sell, transfer and assign
to Buyer, free and clear of any lien, pledge, option, security interest, claim,
charge or other encumbrance ("Encumbrances"), except Permitted Encumbrances, and
Buyer shall purchase and assume from each Seller, the Transferred Assets. For
purposes of this Agreement, "Transferred Assets" shall mean the following
assets:
2.1.1. The real property owned in fee by Sellers and listed on
Schedule 2.1.1 (the "Owned Property"), together with all improvements,
fixtures, rights, and other appurtenances thereto of Sellers;
2.1.2. The leasehold interests of Sellers in all possessory
leases of real property listed on Schedule 2.1.2 (the "Leased
Property");
2.1.3. All rights of way, easements, appurtenances and similar
realty interests of Sellers relating to the Owned Property or the
Leased Property or necessary for or relating primarily to the Business
(the "System Property");
2.1.4. Machinery, equipment, tools and fixed assets owned by
Sellers listed on Schedule 2.1.4, subject to such additions,
substitutions or deletions thereto as shall have occurred in the
ordinary course of the conduct of the Business prior to the Closing
Date that is consistent with past practice;
2.1.5. All vehicles and other tangible assets of Sellers which
are used primarily in or related primarily to the Business;
2.1.6. All rights of Sellers under the contracts listed on
Schedule 2.1.6, subject to such additions, substitution or deletions
thereto as shall have occurred in the ordinary course of Sellers'
conduct of the Business prior to the Closing Date that is consistent
with past practice (the "Assumed Contracts");
2.1.7. To the extent assignable to Buyer, all of the
governmental permits, franchises, licenses, consents or other
authorizations issued or given to Sellers which relate primarily to the
Business or any of the Transferred Assets and which are required in
connection with the conduct, use, operation or ownership thereof;
2.1.8. Copies of all customer, supplier and personnel records
and other records as are in either Seller's possession or control which
are used primarily in or related primarily to the Business;
2.1.9. Accounts and notes receivable of Sellers which arose
from the operations of the Business (other than accounts and notes
receivable relating to inter-company accounts between the Sellers,
which accounts and notes receivable shall not be included on the
Closing Statement);
2.1.10. All inventories of gas, materials and spare parts of
Sellers used primarily in or relating primarily to the Business;
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2.1.11. All prepaid expenses of Sellers relating primarily to
the Business, except for prepaid expenses attributable to any Excluded
Asset or Excluded Liability;
2.1.12. To the extent the rights and benefits thereunder are
assignable to Buyer, all rights and benefits under any manufacturer's,
subcontractor's, supplier's, repairman's or other third-party
warranties, guarantees, and service and replacement programs, and all
rights of indemnification, insurance proceeds, claims against insurers
and similar rights of Sellers relating to the Transferred Assets or the
Business, except to the extent any such rights or benefits relate to
Excluded Assets or losses or conditions which Sellers have fully
remedied prior to the Closing;
2.1.13. All patents, patent rights, trademarks, trade names
and logos used in the Business listed on Schedule 2.1.13, other than
the name "Associated Natural Gas" or "ANG" or variants thereof and the
associated logos; and
2.1.14. All of either Seller's other assets, properties,
franchises, interests, and rights and privileges of every kind and
description, real, personal or mixed, tangible or intangible, necessary
for, or primarily used by the Sellers in, the operation of the
Business.
2.2. Excluded Assets. Anything herein to the contrary
notwithstanding, the Transferred Assets shall not include the following (the
"Excluded Assets"):
(a) all cash on hand, cash equivalents,
investments, and bank accounts of Sellers as of the Closing
Date;
(b) all negotiable instruments (other than
notes receivable of the type included in the Transferred
Assets pursuant to Section 2.1.9) and chattel paper of Sellers
as of the Closing Date;
(c) all rights to the name "Associated Natural
Gas" (or any derivative thereof) or the logos identified
on Schedule 2.2(c) (the "Names and Logos"), subject to the
provisions of Section 8.6;
(d) refunds or claims for refunds due from
federal, state, local and foreign taxing authorities with
respect to taxes paid or to be paid by Sellers;
(e) all insurance policies of Sellers, except
to the extent provided in Section 2.1.12, and any related
unearned premiums;
(f) Sellers' rights under this Agreement;
(g) each Seller's corporate charter, minute and
stock record books and corporate seal;
(h) each Seller's ledgers, journals and tax
returns;
(i) any assets relating to any benefits
provided or plans maintained by Sellers for any employees,
subject to the provisions of Article VII;
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(j) any assets of Sellers primarily used in
Sellers' gas distribution and transmission business
conducted in the State of Arkansas; and
(k) the assets identified on Schedule 2.2(k).
2.3. Purchase Price; Adjustment.
2.3.1. Determination and Payment. In addition to the
assumption of the Assumed Liabilities contemplated by Section 2.4, the
consideration to be paid by Buyer for the Transferred Assets will be
$32,000,000 (the "Closing Purchase Price"), payable at Closing by wire
transfer of immediately available funds to an account designated by
Sellers. The Closing Purchase Price shall be subject to adjustment
after Closing pursuant to Section 2.3.3 (as so adjusted, the "Purchase
Price").
2.3.2. Allocation. Within ninety (90) days after the Closing
Date, the Purchase Price and the value of the Assumed Liabilities will
be allocated among the Transferred Assets by Buyer and Sellers in a
mutually acceptable manner which is consistent with Section 1060 of the
Code and the regulations thereunder. The parties agree that they will
report the federal, state and local and other tax consequences of the
purchase and sale hereunder (including, without limitation, in filings
on Internal Revenue Service Form 8594) in a manner consistent with such
allocation and that they will not take any position inconsistent
therewith in connection with any tax return, refund claim, litigation
or otherwise. The provisions of this Section 2.3.2 shall apply to any
subsequent adjustments to the Purchase Price, including, without
limitation, adjustment pursuant to Sections 2.3.3 and 13.8 of this
Agreement.
2.3.3. Post-Closing Adjustments. Within 90 days after the
Closing Date, Sellers shall deliver to Buyer a statement (the "Closing
Statement") of (i) the net amount of the Current Assets minus the
Current Liabilities ("Net Working Capital") as at the Closing Date and
(ii) capital expenditures with respect to the Business and depreciation
with respect to the Business during the period from the date hereof to
and including the Closing Date ("Measurement Period"), in each case in
accordance with the accounting principles and assumptions set forth in,
and in the form provided in, the document entitled Financial Principles
which is included as Schedule 2.3.3 hereto (the "Financial
Principles").
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If Net Working Capital is more than $1,600,000, the Closing
Purchase Price shall be increased by the amount by which Net Working
Capital exceeds $1,600,000. If Net Working Capital is less than
$1,600,000, the Closing Purchase Price shall be decreased by the amount
by which Net Working Capital is less than $1,600,000. If capital
expenditures with respect to the Business during the Measurement Period
exceed depreciation with respect to the Business during the Measurement
Period, the Closing Purchase Price shall be increased by the amount by
which such capital expenditures exceed such depreciation, but this
amount shall not exceed $1,000,000. If depreciation with respect to the
Business during the Measurement Period exceeds capital expenditures
with respect to the Business during the Measurement Period, the Closing
Purchase Price shall be decreased by the amount by which such
depreciation exceeds such capital expenditures. If the Purchase Price,
as adjusted as provided above, exceeds the Closing Purchase Price,
Buyer shall pay the amount of such excess to Sellers. If the Purchase
Price, as adjusted as provided above, is less than the Closing Purchase
Price, then Sellers shall pay the amount of such deficit to Buyer. Any
such payment shall be made by wire transfer of immediately available
funds within 15 days after Buyer's written notification to Sellers of
Buyer's acceptance of the Closing Statement or within 15 days after
Buyer is deemed to have accepted the Closing Statement as provided in
this Section 2.3.3. The amount of any payment required by this Section
2.3.3 shall bear interest from the Closing Date through the date of
actual payment at the rate of 30-day LIBOR plus 50 basis points.
After delivery of the Closing Statement, Sellers shall permit
Buyer and Buyer's independent accountants access, upon reasonable
notice and during reasonable business hours, to review their work
papers and all books and records of Sellers relevant to the items
covered by the Closing Statement, and Sellers shall permit such
accountants to perform such tests as they may reasonably require to
confirm the accuracy of such items.
In the event Buyer disputes any matter or matters on the
Closing Statement, Buyer may within forty-five (45) days after the
delivery of the Closing Statement notify Sellers of such dispute in a
writing setting forth in reasonable detail the nature of such dispute
and the facts upon which it is based, together with the application or
treatment proposed by Buyer and the reasons supporting the use of such
application or treatment rather than that used by Sellers. If both the
Closing Statement as delivered by Sellers to Buyer and the Closing
Statement as proposed by Buyer would require a payment by the same
party pursuant to the second paragraph of this Section 2.3.3, then such
party shall make a payment of the lesser amount reflected on the
respective Closing Statements within 15 days of delivery of Buyer's
proposed Closing Statement to Sellers, together with interest thereon
as provided by such paragraph. If no such notice is given by Buyer
within the time specified, the Closing Statement shall be deemed
accepted by Buyer.
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If the parties have not resolved all matters in dispute
relating to the Closing Statement within forty-five (45) days after
Sellers' receipt of such notice from Buyer, then any party may notify
the others in writing that it elects to submit all remaining issues to
resolution by a neutral accounting firm of national reputation. Within
ten (10) days after receipt of such notice of election by a party, the
parties shall agree upon the selection of a neutral accounting firm or,
if they are unable to agree, Sellers and Buyer shall each submit the
names of two neutral firms and a firm shall be selected at random from
among them. A firm shall be considered neutral if it has not within the
past three years performed and does not currently perform or
contemplate performing any accounting, consulting or other services for
any of the parties and their respective Affiliates having an aggregate
value in excess of $250,000.
As soon as reasonably practicable, the firm selected shall
resolve all matters remaining in dispute solely on the basis of the
Financial Principles and the provisions of this Section 2.3.3. Such
firm shall not be required to follow any particular rules of procedure,
it being the intention of the parties to create a feasible, practical
and expeditious method for resolving any disagreement hereunder. The
decision of such firm hereunder shall be final and binding and shall
not be subject to review or challenge of any kind. The appropriate
party shall pay to the other any disputed amount that is determined to
be due within 15 days after such determination, together with interest
thereon as provided in the second paragraph of this Section 2.3.3. The
fees and expenses of such firm shall be borne equally by Buyer, on the
one hand, and Sellers, on the other.
If the parties resolve all matters in dispute relating to the
Closing Statement, then the Closing Statement shall be adjusted as
required by the agreement resolving the matters in dispute and the
Closing Statement as modified shall be deemed accepted by Buyer.
2.3.4. Proration of Certain Expenses. To the extent not
reflected on the Closing Statement, real property, personal property
and other ad valorem Taxes, rents, utility charges and similar expenses
of Sellers related to the Transferred Assets shall be allocated between
Buyer, on the one hand, and Sellers, on the other, on the basis of a
daily proration and the net amount owing from Buyer to Sellers or from
Sellers to Buyer on account of such proration shall be paid at such
time as the post-closing adjustment is paid pursuant to Section 2.3.3.
If an assessment for the period that includes the Closing Date (the
"Current Period") has not been made by the time that payment is due
under the preceding sentence, a tentative payment shall be made at that
time based on the assessment for the immediately preceding tax period,
and Buyer or Sellers, as the case may be, shall make an appropriate
adjusting payment within 10 days following receipt of the assessment
for the Current Period.
2.4. Assumption of Liabilities. In addition to the payment of the
Purchase Price in accordance with Section 2.3.1, Buyer shall assume and pay,
perform and discharge in accordance with the terms thereof the following
liabilities and obligations (the "Assumed Liabilities"):
2.4.1. The obligations of Sellers not required to be performed
prior to or as of the Closing Date under the Assumed Contracts;
2.4.2. The Current Liabilities included in the determination
of Net Working Capital;
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2.4.3. The obligations of Sellers not required to be performed
prior to or as of the Closing Date under the governmental permits,
franchises, consents or other authorizations included in the
Transferred Assets pursuant to Section 2.1.7;
2.4.4. The obligations of Sellers not required to be performed
prior to or as of the Closing Date under the agreements and
arrangements giving rise to the rights and benefits included in the
Transferred Assets pursuant to Section 2.1.12; and
2.4.5. The obligations of Sellers to customers providing
advances for construction to refund portions of such advances to the
extent additional amounts are received by Buyer after the Closing Date
from other customers with respect to reimbursement of such advances.
Notwithstanding the foregoing, the Assumed Liabilities shall not
include any of the following (collectively, the "Excluded Liabilities"): (a) any
liabilities that AWG's Associated Natural Gas Company Division owes to either of
the Sellers or any of its other Affiliates (other than those arising under an
Assumed Contract for the payment of natural gas or transportation services to
the extent not disallowed by any regulatory agency); (b) any liabilities or
obligations that relate primarily to the Excluded Assets; (c) any liabilities or
obligations of Sellers with respect to any legal, administrative or other
action, proceeding or governmental investigation pending or threatened on or
prior to the Closing Date; (d) any Taxes attributable to Tax periods that close
on or before the Closing Date, or to the extent a Tax period closes after the
Closing Date but includes the period on or before the Closing Date, any Taxes
attributable to the portion of such Tax period that is on or before the Closing
Date; (e) any liability relating to employee benefits or employment except as
provided in Article VII; (f) any liability or obligation identified on Schedule
2.4; and (g) any other contingent liability or obligation, whether known or
unknown, of either Seller to the extent arising out of or relating to the
operation or conduct of the Business on or prior to the Closing Date or the
ownership of the Transferred Assets on or prior to the Closing Date which is not
a liability or obligation specifically referred to in Section 2.4.1, 2.4.2,
2.4.3, 2.4.4 or 2.4.5. For the avoidance of doubt, the provisions of this
paragraph are not intended to qualify the obligations of Buyer to the extent
provided in Section 2.3.4, Article VII, Section 8.7 or Section 13.8. The Sellers
shall retain and pay, perform or discharge when due, all of the Excluded
Liabilities.
2.5. Closing.
2.5.1. Time and Place. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of
Parent, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 11:00 a.m.,
Central Time (or at such other place and time as Buyer and Sellers
shall agree), on the last day of the month in which all of the
conditions specified in Articles IX and X hereof have been satisfied or
waived (the "Closing Date").
2.5.2. Sellers' Deliveries at Closing. At the Closing,
Sellers shall deliver to Buyer:
(a) Such bills of sale and instruments of conveyance,
transfer and assignment, dated the Closing Date, as Buyer
shall reasonably request to vest in Buyer the Transferred
Assets;
(b) An agreement (the "Transition Services
Agreement") requiring Sellers to furnish to Buyer post-Closing
information technology, human resources, billing, call center
and other transition services to be mutually agreed upon by
Sellers and Buyer for a
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period not to exceed ninety (90) days following the Closing
Date for consideration and upon such other terms to be
mutually agreed upon by Sellers and Buyer;
(c) An agreement (the "Omnibus Gas Transportation and
Supply Agreement") relating to certain arrangements regarding
gas transportation contracts and related matters, including
those matters identified on Schedule 2.5.2(c), on terms to be
mutually agreed upon by Sellers and Buyer; and
(d) The closing certificates and documents required
by this Agreement and such other documents and instruments as
may be reasonably requested by Buyer.
2.5.3. Buyer's Deliveries at Closing. At the Closing, Buyer
shall deliver to Sellers:
(a) By wire transfer, the Closing Purchase Price
in the manner specified in Section 2.3.1 hereof;
(b) An instrument of assumption of liabilities,
dated the Closing Date, in a form reasonably acceptable to
Sellers (the "Assumption Agreement");
(c) An executed counterpart of each of the
Transition Services Agreement and the Omnibus Gas
Transportation and Supply Agreement; and
(d) The closing certificates and documents required
by this Agreement and such other documents and instruments as
may be reasonably requested by Sellers.
2.6. Nonassignable Contracts. In the case of any contract or other
agreement (other than agreements described in Section 2.1.7) that would be
included in the Transferred Assets but which by its terms or by virtue of its
subject matter is not assignable to Buyer as of the Closing Date (collectively,
the "Non-Assigned Contracts"), such Non-Assigned Contracts shall not be
transferred or assigned to Buyer, and Sellers agree to use commercially
reasonable efforts to obtain, as soon as is reasonably practicable following the
Closing Date, any consents necessary to convey to Buyer the benefit thereof, it
being understood that such efforts shall not include any requirement to offer or
grant any material financial accommodations to any third party or to remain
secondarily liable with respect to any such Non-Assigned Contract. Sellers agree
to use commercially reasonable efforts to provide Buyer with the same economic
and other benefits of each Non-Assigned Contract as if such contracts had been
assigned on the Closing Date. Nothing in this Agreement shall be construed as an
attempt or an agreement to assign or cause the assignment of any Non-Assigned
Contract which is not assignable without the consent of the other party or
parties thereto, unless such consent shall have been given, or as to which all
the remedies for the enforcement thereof enjoyed by Sellers would not, as a
matter of law, pass to Buyer as an incident of the assignments provided by this
Agreement. The provision of benefits under this Section 2.6 shall not constitute
satisfaction of the conditions in Articles IX and X.
III. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers, jointly and severally, hereby represent and warrant to Buyer
as follows:
3.1. Corporate Existence. Each Seller (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Arkansas, (b) has the requisite power and authority to
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enter into and perform its obligations under this Agreement, and (c) is duly
qualified to do business as a foreign corporation, and is in good standing in
each jurisdiction where the Business makes such qualification necessary, except
where the failure to be so qualified or in good standing would not reasonably be
expected to have a Material Adverse Effect.
3.2. Authorization and Validity of Agreement. The execution, delivery
and performance by each Seller of this Agreement have been duly authorized by
all necessary corporate action. This Agreement has been duly and validly
executed and delivered by each Seller and constitutes a valid and binding
obligation enforceable against each Seller in accordance with its terms, except
to the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally, or (ii) is subject to general principles of equity.
3.3. No Contravention. The execution, delivery and performance by each
Seller of this Agreement and the consummation by each Seller of the transactions
contemplated on its part hereby will not, subject to obtaining the consents,
approvals, authorizations, exemptions or waivers identified on Schedule 3.3, 3.7
or 3.10, (i) violate any provision of law, rule or regulation to which either
Seller is subject, (ii) violate any order, judgment or decree applicable to
either Seller or (iii) conflict with, or result in a breach or default under,
any term or condition of any of the charter or bylaws of either Seller or any
material term or condition of any contract, agreement or instrument (including
the Assumed Contracts) to which it is a party or by which it or any of the
Transferred Assets may be bound.
3.4. Title to Assets; Adequacy; Condition. Each Seller has good title
to the Transferred Assets to be sold by it hereunder, subject to no Encumbrance,
except Permitted Encumbrances. For purposes of this Agreement, "Permitted
Encumbrances" shall mean (i) liens for Taxes and assessments not yet due or
being contested in good faith by appropriate proceedings, (ii) such minor
imperfections of title and encumbrances that do not secure monetary obligations
which individually or in the aggregate are not substantial and do not materially
detract from the value or impair the use of the Transferred Assets and (iii)
such encumbrances as set forth in Schedule 3.4. The Transferred Assets include
all assets and properties that are necessary for the supply and servicing of the
customers of the Business in accordance in all material respects with the
historical supply and service standards of the Sellers, except for the functions
subject to the Transition Services Agreement and the Omnibus Gas Transportation
and Supply Agreement. The tangible assets included in the Transferred Assets are
in good operating condition, reasonable wear and tear excepted, and are adequate
for the uses to which they are being put in the conduct of the Business.
3.5. Material Contracts. Schedule 3.5 contains a list of each Assumed
Contract in existence as of September 30, 1999, (i) which is a gas supply,
transportation or storage agreement relating to the Business involving a minimal
annual payment of more than $50,000, (ii) which involves a minimum annual
payment to or by a Seller relating to the Business of more than $50,000, (iii)
the loss of which would have a Material Adverse Effect, (iv) pursuant to which
either Seller is subject to take-or-pay obligations with respect to gas
purchases or gas marketing in connection with the Business which impose minimum
obligations of more than $50,000 over the remaining term thereof or (v) which is
otherwise material to the Business or the Transferred Assets (collectively, the
"Material Contracts"). Except as set forth in Schedule 3.5, each of the Material
Contracts is in full force and effect and is valid and enforceable in accordance
with its terms, subject as to enforceability to the effects of any bankruptcy or
similar laws. Except as set forth in Schedule 3.5, each Seller is in material
compliance with all applicable terms of each Material Contract, and to the
Knowledge of each Seller, each other party thereto
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is in material compliance with all applicable terms of each Material Contract.
Neither Seller has given to or received from any other party to any Material
Contract any notice or other written communication regarding any actual or
alleged material breach of or default under any Material Contract that has not
been withdrawn, settled, or otherwise resolved.
3.6. Real Property. To the Knowledge of each Seller, no condemnation,
expropriation, eminent domain or similar proceeding is pending or contemplated
with respect to the Owned Property, the Leased Property or the System Property.
Except as set forth in Schedule 3.6, each Seller is in compliance, in all
material respects, with all covenants, restrictions, rights of way, easements
and similar realty interests benefiting or encumbering the Real Property, the
Leased Property and the System Property. The Real Property, the Leased Property
and the System Property, and all improvements thereon, do not violate in any
material respect any applicable zoning, construction code or other governmental
restriction.
3.7. Permits. Except with regard to Environmental Permits, as to which
the Sellers' sole representations and warranties are set forth in Section 3.15,
each Seller holds all material permits, franchises and other authorizations
necessary to conduct the Business as currently conducted by such Seller. The
Sellers are in compliance, in all material respects, with all of such permits,
franchises and other authorizations. A list of all material permits, franchises
and other authorizations, other than Environmental Permits, relating to the
Business is set forth in Schedule 3.7 (the "Permits").
3.8. Litigation. Except as set forth in Schedule 3.8, there is no
legal, administrative or other action, proceeding or, to the Knowledge of each
Seller, governmental investigation either pending or, to the Knowledge of each
Seller, threatened (i) against either Seller with respect to the Business or the
Transferred Assets, or (ii) which seeks to enjoin or obtain damages in respect
of the consummation of the transactions contemplated hereby, which, in either
case, if decided adversely, would reasonably be expected to have a Material
Adverse Effect.
3.9. Compliance with Laws. Except as set forth in Schedule 3.9, each
Seller is in compliance, in all material respects, with all laws, rules,
regulations, ordinances, judgments, injunctions, orders and decrees applicable
to the Transferred Assets or the Business, excluding, however, Environmental
Laws, as to which the Sellers' sole representations and warranties are set forth
in Section 3.15.
3.10. Governmental Consents. Except as set forth in Schedule 3.10, no
consent, approval or authorization of, or exemption by, or declaration,
registration or filing with, any governmental or regulatory authority is
required in connection with the execution, delivery and performance by Sellers
of this Agreement or the taking of any other action contemplated hereby,
excluding, however, consents, approvals, authorizations, exceptions and filings,
if any, where the failure to obtain or make the same would not impair in any
material respect the consummation of the transactions contemplated by this
Agreement and would not materially affect the use or operation of the
Transferred Assets after the Closing Date.
3.11. Tax Matters.
(a) Tax Returns. All federal, state, local and other Tax returns,
declarations, statements, reports or other documents required to be filed with
respect to Taxes ("Returns") by Sellers on or before the Closing Date have been
filed or will be filed on a timely basis with the appropriate governmental
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agencies in all jurisdictions in which such Returns are required to be filed.
All such Returns are true, complete and correct in all material respects and all
Taxes shown on such Returns as being due, or otherwise due, in respect of
material Taxes either (i) have been or will be fully paid or adequately provided
for or (ii) are being contested in good faith by appropriate proceedings.
(b) Transferred Asset Status. None of the Transferred Assets (i)
secures any debt the interest on which is tax-exempt under Section 103 of the
Code, (ii) is "tax-exempt use property" within the meaning of Section 168(h) of
the code, (iii) is "tax-exempt bond financing property" within the meaning of
Section 168(g)(5) of the Code, (iv) is "limited use property" within the meaning
of Revenue Procedure 76-30, or (v) is required to be treated as being owned by
any other Person pursuant to the provisions of former section 168(f)(8) of the
Code.
3.12. Financial Statements. Attached hereto as Schedule 3.12 are a
balance sheet and a statement of income for the Business as of and for the nine
months ended September 30, 1999 and a balance sheet and a statement of income
for the Business for the year ended December 31, 1998 (the "Financial
Statements"). The Financial Statements have been prepared in accordance with the
Financial Principles and with the books and records of Sellers. To the extent
relevant to the Financial Statements, in all material respects the books and
records of Sellers are true, accurate and complete; have been maintained in
accordance with good accounting practices; and, except as set forth in the
Financial Principles, have been maintained on a consistent basis. The Financial
Statements make adequate provision, in accordance with the Financial Principles,
for any material contracts (or material group of similar contracts) reasonably
expected to be performed at a loss. The Financial Statements fairly present, in
all material respects, the financial position and the results of operations of
the Business as of and for such dates and periods in accordance with the
Financial Principles consistently applied. Since September 30, 1999, the Sellers
have not made any capital expenditures outside the ordinary course of business
or inconsistent with past practice with respect to the Business, entered into
any material contracts (or material group of similar contracts) reasonably
expected to be performed at a loss, or experienced any material damage,
destruction or loss (whether or not covered by insurance) to the assets or
properties used in the conduct of the Business.
3.13. Employee Matters.
3.13.1. Schedule 3.13.l contains a list, which is true and
complete in all material respects, of (a) each employment agreement
with any Transferred Employee, written or oral, and (b) each bonus,
deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, change in control, disability, medical, dental,
life or other insurance, supplemental unemployment benefits, profit
sharing, pension or retirement plan, program, agreement or arrangement
(collectively, the "Plans") sponsored, maintained or contributed to or
required to be contributed to by either Seller or with respect to which
Seller has any liability for the benefit of any Transferred Employee
(as hereinafter defined) or any former employee of the Business.
3.13.2. Each Seller maintains, sponsors or contributes to only
those employee pension benefit plans (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not excluded from coverage under specific Titles or
Subtitles of ERISA) established or maintained for the benefit of
employees or former employees of the Business that are described in
Schedule 3.13.2 (the "Pension Plans"), none of which is a
multi-employer plan (within the meaning of Section 3(37) of ERISA).
Except as set forth on
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Schedule 3.13.2, each Pension Plan that is intended to be tax qualified
under Sections 401(a) and 501(a) of the Code is so qualified, has
received one or more favorable IRS determination letters as to its
qualification, covering such plan from its inception, and nothing has
occurred that could jeopardize such tax qualified status.
3.13.3. Each Seller maintains, sponsors or contributes to only
those employee welfare benefit plans (as defined in Section 3(1) of
ERISA, whether or not excluded from coverage under specific Titles or
Subtitles of ERISA) for the benefit of employees or former employees of
the Business that are described in Schedule 3.13.1 (the "Welfare
Plans"), none of which is a multi-employer plan (within the meaning of
Section 3(37) of ERISA).
3.13.4. Except as set forth on Schedule 3.13.4, neither Seller
is a party to any collective bargaining or labor agreement relating to
the Business, and there is not, as of the date of this Agreement, any
strike, work stoppage or material labor controversy or dispute pending
or, to the best of the Knowledge of each Seller, threatened relating to
the Business.
3.13.5 The post-retirement health and life obligations of
Sellers for Transferred Employees and former employees of the Business
("SFAS 106 Obligations") for the year ended December 31, 1998 did not
exceed by more than $20,000 the amount included in rate recovery for
the Business with respect to SFAS 106 Obligations pursuant to Sellers'
most recent Missouri rate case (effective January 10, 1998). That
portion of all rates reflecting the SFAS 106 Obligations paid to
Sellers relating to the Business has been deposited in the trusts
created to fund the SFAS 106 Obligations.
3.13.6 Prior to January 10, 1998, there were no
post-retirement health or life obligations of Sellers for employees or
former employees of the Business included in rate recovery, other than
"pay-as-you-go" obligations.
3.14. Brokerage. No broker or finder has acted directly or indirectly
for either Seller in connection with this Agreement or the transactions
contemplated hereby, and no broker or finder is entitled to any brokerage or
finder's fee or other commission in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of either
Seller.
3.15. Environmental Matters. Except as disclosed in Schedule 3.15, each
Seller holds all Environmental Permits that are required for the operation of
the Business. Except as disclosed in Schedule 3.15, each Seller's conduct of the
Business, and the condition of all properties and improvements included in the
Transferred Assets (and, to the Knowledge of each Seller, any off-site storage
or disposal of any Hazardous Materials from such operations), is in compliance,
in all material respects, with all Environmental Laws. Except as disclosed on
Schedule 3.15, neither Seller is currently in receipt of any written claim,
demand, notice or complaint alleging material violation of, or material
liability under, any Environmental Law relating to the operation of the Business
or the Transferred Assets. Except as described on Schedule 3.15, to the
Knowledge of each Seller, neither of Sellers has incurred any material liability
or obligation in connection with any release or threatened release of any
Hazardous Material in the environment or any material reclamation or remediation
requirements under any Environmental Law, in each case relating to the operation
of the Business or the Transferred Assets. No Seller has been named as a
potential responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any corresponding state
laws. Except
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as described on Schedule 3.15, to the Knowledge of each Seller, no Hazardous
Materials were incorporated in the Real Property, the Leased Property or the
System Property prior to the acquisition thereof by such Seller. There are no
sites, locations or operations at which any Seller is currently undertaking, or
has completed, any remedial or response action relating to the disposal or
release of a Hazardous Material, as required by Environmental Laws, with respect
to the Business. Buyer acknowledges that (i) the representations and warranties
contained in this Section 3.15 are the only representations and warranties being
made with respect to compliance with or liability under Environmental Laws or
with respect to any environmental, health or safety matter, including natural
resources, related in any way to this Agreement or its subject matter and (ii)
no other representation contained in this Agreement shall apply to any such
matters and no other representation or warranty, express or implied, is being
made with respect thereto.
3.16. No Undisclosed Liabilities; No Material Adverse Effect. There are
no material liabilities or obligations of the Business or of either Seller
arising out of or relating to the Business or the Transferred Assets, except (i)
Excluded Liabilities, (ii) liabilities and obligations reflected in the
Financial Statements, (iii) liabilities and obligations arising since September
30, 1999 in the ordinary course of business that are not inconsistent with the
types and amounts of such liabilities and obligations historically incurred in
the Business, and (iv) liabilities and obligations identified on Schedule 3.16
or another Schedule hereto. Since September 30, 1999, there has not occurred any
event resulting in a Material Adverse Effect.
3.17. Customers; Suppliers. Neither of Sellers has been involved
in any material controversy with any group of similarly situated customers of
the Business or with any material suppliers of the Business during the last two
years.
3.18. Books and Records. All books and records of each Seller with
respect to the Business or the Transferred Assets have been prepared, assembled
and maintained in accordance in all material respects with the usual and
customary policies and procedures and accurately reflect, in reasonable detail,
the assets and transactions of each Seller relating to the Business or the
Transferred Assets.
3.19. Insurance. Schedule 3.19 identifies each material insurance
policy of Sellers relating to the Transferred Assets.
3.20. Accounts Receivable. Except as set forth on Schedule 3.20,
the accounts and notes receivable included in the Transferred Assets: (a) arose
from bona fide sales or contracting transactions by Sellers in the ordinary
course of business consistent with past practices; and (b) represent bona fide
indebtedness of the respective debtors.
3.21. Y2K Compliance. Sellers have put into effect reasonable and
customary practices and programs designed to enable all material software,
hardware and equipment that are owned or utilized by Sellers in the operation of
the Business to be capable, by December 31, 1999, of accounting for all
calculations using a century and date sensitive algorithm for the year 2000
without any material interruption caused by the occurrence of the year 2000.
3.22. No Other Representations. Except as set forth in this
Article III or made pursuant to Section 9.1, Sellers make no representation or
warranty whatsoever to Buyer.
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IV. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Sellers as follows:
4.1. Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas and the
Commonwealth of Virginia and has all requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby.
4.2. Authorization and Validity of Agreement. The execution, delivery
and performance by Buyer of this Agreement have been duly authorized by all
necessary corporate action. This Agreement has been duly and validly executed
and delivered by Buyer and constitutes a valid and binding obligation
enforceable against Buyer in accordance with its terms, except to the extent
that such enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally, or (ii) is subject to general principles of equity.
4.3. No Contravention. The execution, delivery and performance by Buyer
of this Agreement and the consummation of the transactions contemplated on its
part hereby will not, subject to obtaining any required consents, approvals,
authorizations, exemptions or waivers, (i) violate any provision of law, rule or
regulation to which it is subject, (ii) violate any order, judgment or decree
applicable to it, or (iii) conflict with, or result in a breach or default
under, any term or condition of Buyer's articles of incorporation or bylaws, or
any contract, agreement or other instrument to which it is a party or by which
it may be bound.
4.4. Consents. Except as set forth on Schedule 4.4, no consent,
approval or authorization of, or exemption by, or declaration, registration or
filing with, any governmental or regulatory authority is required in connection
with the execution, delivery and performance by Buyer of this Agreement, or the
taking of any other action contemplated hereby.
4.5. Brokerage. No broker or finder has acted directly or indirectly
for Buyer in connection with this Agreement or the transactions contemplated
hereby, and no broker or finder is entitled to any brokerage or finder's fee or
other commission in respect thereof based in any way on agreements, arrangements
or understandings made by or on behalf of Buyer.
4.6. Litigation. There is no legal, administrative or other action,
proceeding or, to Buyer's knowledge, governmental investigation pending or, to
Buyer's knowledge, threatened (i) against Buyer with respect to which there is a
reasonable likelihood of a determination which would have a material adverse
effect on the ability of Buyer to perform its obligations under this Agreement
or (ii) which seeks to enjoin or obtain damages in respect of the consummation
of the transactions contemplated hereby.
4.7. Financing. Buyer has all funds necessary to consummate the
transactions contemplated by this Agreement.
V. OBLIGATIONS OF SELLERS.
Sellers hereby covenant and agree with Buyer as follows:
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5.1. Consents. Each Seller will use commercially reasonable efforts,
and will cooperate with Buyer, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties, including
governmental authorities, as shall be required in order to enable Sellers to
effect the transactions contemplated on their part hereby. It is understood that
such efforts do not require Sellers to offer or grant financial accommodations
to any third party or to remain secondarily liable with respect to any Assumed
Liability.
5.2. Conduct of Business. Except as may be otherwise contemplated by
this Agreement or required by any of the documents listed in any Schedule hereto
or except as Buyer may otherwise consent in writing, between the date hereof and
the Closing Date Sellers will: (i) in all material respects, conduct the
Business only in the ordinary course consistent with past practice; (ii) use
commercially reasonable efforts to preserve intact the Business and the goodwill
of its customers, suppliers, employees and any other Persons having business
relations with them with respect to the Business; (iii) maintain the properties,
machinery and equipment included in the Transferred Assets in sufficient
operating condition and repair to enable Buyer to conduct the Business as
currently conducted by Sellers; and (iv) use commercially reasonable efforts to
conduct the Business in such a manner so that the representations and warranties
of the Sellers contained herein shall continue to be true and correct at all
times prior to the Closing Date as if made on and as of such times. Without
limiting the generality of the foregoing, except as Buyer may otherwise consent
in writing, Sellers shall not (i) enter into any contract which would be a
Material Contract, or amend or modify any existing Material Contract, not in the
ordinary course of business consistent with past practice or (ii) except for
budgeted compensation increases, adopt, amend or terminate any Plan, increase
any salary, bonus or other compensation or benefit, or promise or commit to do
any of the foregoing, except in a manner which individually or in the aggregate
will not result in a material increase in benefits or compensation expense.
5.3. Access Before Closing. From the date of this Agreement until the
Closing Date, Sellers will permit Buyer and its representatives reasonable
access on reasonable notice during normal business hours to the properties,
personal property, personnel, books and records, contracts, and commitments of
the Business, including the right to make copies of such books and records,
contracts, and commitments. In the event that any record or other information
requested by Buyer is subject to a confidentiality agreement with a third party,
attorney-client privilege, or other legal restriction or privilege, Sellers and
Buyer will endeavor to find means of disclosing as much information as
practicable that is needed by Buyer to prepare for the transfer of the Business,
but Sellers will not be obligated to breach such restriction or privilege. Buyer
shall return all copies of such books and records, contracts, and commitments
promptly upon the request of Sellers if for any reason the Closing does not
occur.
5.4. Clearance Certificate. On or prior to the Closing Date, Sellers
shall use commercially reasonable efforts to provide Buyer, at Buyer's request,
with all clearance certificates or similar documents that may be required by any
state, local or other taxing authority in order to relieve Buyer of any
obligation to withhold or escrow any portion of the Purchase Price.
VI. OBLIGATIONS OF BUYER.
Buyer hereby covenants and agrees with Sellers as follows:
6.1. Consents. Buyer will use commercially reasonable efforts, and will
cooperate with Sellers, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third
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parties, including governmental authorities, as shall be required in order to
enable Buyer to effect the transactions contemplated hereby. It is understood
that such efforts do not require Buyer to offer or grant financial
accommodations to any third party or to become liable with respect to any
Excluded Liability.
VII. EMPLOYEE MATTERS.
7.1. Employment of Employees. As of the Closing Date, Buyer shall offer
to employ each employee listed in Schedule 7.1 (which Schedule shall be updated
as of the Closing Date with appropriate deletions and additions thereto to
reflect the then current employees of the Business, but not including any
employee then on long-term disability, short-term disability or not actively at
work other than those employees on vacation, bereavement leave, short-term sick
leave or other short-time due to non-medical reasons which are not scheduled to
last more than ten (10) business days ("Leave"), unless and until such employee
returns to full-time work from such long-term disability, short-term disability
or Leave after the Closing Date) at a base salary or hourly rate not less than
the base salary or hourly rate then applicable to such employee and to provide
such benefits, holidays, vacation days, and similar benefits as are, in the
aggregate, substantially comparable to those then in effect for such employees,
except that Buyer shall not be required to provide a 401(k) savings plan. Each
such employee as of the Closing Date (or for an employee on long-term or
short-term disability or Leave as of the Closing Date, who returns from such
disability or Leave after the Closing Date), who becomes employed by Buyer is
herein referred to individually as a "Transferred Employee" and collectively as
the "Transferred Employees".
7.2. Severance Benefits. For a period of one year after the
Closing Date, Buyer shall provide to each Transferred Employee who is
involuntarily terminated not for cause by Buyer the severance benefits set forth
on Schedule 7.2 hereto.
7.3. Transfer of Pension Assets and Liabilities.
7.3.1. Transfer. Subject to the review of Sellers' plan
documents, as soon as practicable following the Closing Date, but not
earlier than thirty (30) days following the filing of appropriate Forms
5310A, if applicable, with the Internal Revenue Service, Parent shall
cause to be transferred (i) from the Southwestern Energy Company
Pension Plan (the "Seller Pension Plan") to the pension plan sponsored
by or to be established by Buyer ("Buyer's Pension Plan"), and Buyer's
Pension Plan shall assume, the accrued benefits liability as of the
Closing Date for each of the Transferred Employees who participated in
the Seller Pension Plan prior to the Closing Date (the "Transferred
Pension Plan Participants"), and (ii) from the Southwestern Energy
Company Pension Trust (the "Seller Pension Plan Trust") to Buyer's
Pension Plan trust, an amount in cash equal to the projected benefit
obligation to the Transferred Pension Plan Participants on the Closing
Date under the Seller Pension Plan, increased by interest at the plan's
actuarial rate from Closing to the actual date of transfer and
decreased by the amount of any benefit payments to Transferred Pension
Plan Participants after the Closing Date but before the date of
transfer. Parent shall not be obligated to cause any amount to be
transferred to any plan or trust designated by Buyer until Buyer
provides evidence (such as a favorable determination letter from the
Internal Revenue Service, an opinion of counsel or other reasonably
satisfactory evidence) reasonably acceptable to Parent that (i) such
plan and trust satisfy the requirements for qualification under Section
40l(a) of the Internal Revenue Code (the "Code") and (ii) such plan
provides that each Transferred Pension Plan Participant is entitled to
a nonforfeitable accrued
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benefit under such plan that is not less than the nonforfeitable
accrued benefit to which such Transferred Pension Plan Participant was
entitled under the Seller Pension Plan on the Closing Date.
7.3.2. Benefit Calculations. The projected benefit obligation
to Transferred Pension Plan Participants shall be determined using the
projected benefit obligation methodology of Statement of Financial
Accounting Standards No. 87, on the basis of (i) each participant's
age, service for benefit accrual purposes and average compensation and
the terms of the Seller Pension Plan in effect on the Closing Date, and
(ii) the actuarial assumptions and method used for determining the
projected benefit obligation as set forth in Schedule 7.3.2. In no
event shall each amount transferred pursuant to this Section 7.3 be
less than the amount required to be transferred to meet the
requirements of Sections 401(a)(12) and 414(1) of the Code. The
calculation of projected benefit obligation required for purposes of
this Section 7.3.2 shall be made in accordance with the assumptions set
forth on Schedule 7.3.2.
7.3.3. Plan Termination. Subject to the requirements of
applicable law, in the event of the termination of Buyer's Pension Plan
within five (5) years after the Closing Date, all of the assets
transferred to such plan pursuant to this Section 7.3, adjusted for
earnings, gains or losses after the date of such transfer, shall be
used to provide benefits to Transferred Pension Plan Participants and
their beneficiaries who are entitled to benefits under such plan at the
time of its termination.
7.4. Savings Plan. Subject to the review of Sellers' plan documents, as
soon as practicable following the Closing Date, to the extent that Buyer
sponsors a 401(k) savings plan (which it shall not be required to do), Parent
shall cause to be transferred (i) from the Southwestern Energy Company 401(k)
savings plan (the "Seller Savings Plan") to the 401(k) savings plan sponsored by
Buyer ("Buyer's Savings Plan"), and the Buyer's Savings Plan shall assume, the
account balance liability as of the date of transfer for each Transferred
Employee who participated in the Seller Savings Plan prior to the Closing Date,
who is employed by Buyer on the date of transfer (the "Eligible Transferred
Employee"), and (ii) from the trust relating to the Seller Savings Plan, an
amount in cash or other property, including participant loans, acceptable to the
trustee of the Buyer's Savings Plan equal to the sum of the account values (as
of the date of transfer) of each Eligible Transferred Employee. Parent shall not
be obligated to cause any amount to be transferred to the Buyer's Savings Plan
or the trust thereunder until Buyer provides evidence (such as a favorable
determination letter from the Internal Revenue Service, an opinion of counsel or
other reasonably satisfactory evidence) reasonably acceptable to Parent that
such plan and trust satisfy the requirements for qualification under Section
40l(a) of the Code. Each Eligible Transferred Employee shall be entitled on the
date of transfer to a nonforfeitable account balance under the Buyer's Savings
Plan that is not less than such Eligible Transferred Employee's nonforfeitable
account balance under the Seller Savings Plan immediately prior to such
transfer. Buyer agrees to permit any Eligible Transferred Employee who has an
unpaid loan balance under the Seller Savings Plan to continue to repay such loan
under the Buyer's Savings Plan under the same terms as such loan was required to
be repaid under the Seller Savings Plan. However, nothing herein shall require
Buyer to sponsor or establish a Savings Plan, in which case this Section 7.4
shall not apply. Buyer shall permit the Transferred Employees to participate in
Buyer's Employee Stock Ownership Plan.
7.5. Indemnification for Plan Liabilities. From the dates of the
transfers of assets referred to in Sections 7.3 and 7.4, Buyer shall indemnify
and hold Sellers and Seller Savings Plan and Seller
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Pension Plan harmless for any loss that Sellers or said plans may incur in
respect of any obligation or liability transferred under Sections 7.3 and 7.4 to
the applicable plan of Buyer designated under such Sections.
7.6. Service Credit. For purposes of vesting, benefit accrual, benefit
calculation, participation, eligibility (including for optional forms of
benefits or early retirement or disability retirement under Buyer's Pension
Plan), and matching contribution benefits, if any, Buyer shall, with respect to
each benefit required to be provided under the terms of this Article 7, credit
each Transferred Employee with all service credited to the Transferred Employee
under each Seller's corresponding plan, policy, program, or arrangement
applicable to such Transferred Employee as of the Closing Date.
7.7. Medical and Dental Plans.
7.7.1. Effective as of the Closing Date, Buyer shall make
enrollment available to all Transferred Employees and their eligible
dependents without any waiting period in a Buyer plan or plans
providing medical and dental benefits (the "Buyer Medical Plan"), to
the extent such individuals were covered under Seller's Medical Plan,
as contemplated by Section 7.1. Such Buyer Medical Plan shall waive any
restrictions and limitations for pre-existing conditions for all
Transferred Employees, to the extent such restrictions did not apply
under Seller's Medical Plan, and shall give credit to each Transferred
Employee for any deductibles and out-of-pocket expenses paid during the
current plan year by such Transferred Employee under Sellers'
applicable medical and dental Plans (hereinafter collectively referred
to as the "Seller Medical Plans").
7.7.2. Buyer shall be responsible for medical and dental
expenses covered under the terms of the Buyer Medical Plan incurred on
the later of (i) the Closing Date or (ii) the date such person becomes
a Transferred Employee, by a Transferred Employee and/or his covered
dependents who are enrolled in the Buyer Medical Plan. Sellers shall be
responsible only for medical and dental expenses covered under the
terms of the Seller Medical Plans incurred prior to the Closing Date
(or if later, for the period from the Closing Date until the date such
person becomes a Transferred Employee) by a Transferred Employee and/or
his covered dependents. If a Transferred Employee or a covered
dependent of a Transferred Employee enrolled in the Seller Medical
Plans is hospitalized on the Closing Date, the Seller Medical Plans
shall continue to provide coverage for such person until he or she is
discharged from the hospital, to the extent coverage is provided under
the terms of the Seller Medical Plans.
7.7.3. As soon as possible following the Closing Date, but in
no event later than 30 days following the later of the Closing Date or
the establishment of Buyer's Post-Retirement Trusts (as defined below),
Parent shall cause to be transferred to Buyer, either through the
transfer from the trusts or other vehicles (the "Seller's
Post-Retirement Trusts") funding the post-retirement medical and other
welfare benefits (the "Post Retirement Benefits") for all Transferred
Employees listed on Schedule 7.1 and not greater than thirty-five (35)
former employees of the Business (to be listed on a Schedule to be
provided by Sellers to Buyer within five days of the date hereof, and
updated as of the Closing Date) to the trust or trusts established or
maintained by Buyer (the "Buyer's Post-Retirement Trusts") for the
funding of post-retirement medical and other welfare benefits or
through a direct payment to Buyer, an amount equal to the difference
between (a) the amount of the Post-Retirement Benefits which has been
recovered by Seller in
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rates on or after January 10, 1998, and (b) the amount of the
Post-Retirement Benefits paid by Seller in the form of benefit payments
between January 10, 1998 and the Closing Date. In the event the
representations and warranties of Sellers in Section 3.13.6 do not
continue to be true and correct, Sellers shall pay to Buyer the amount
by which the rate recovery with respect to the Business for periods
prior to January 10, 1998 exceeded the "pay-as-you-go" obligations of
the Business for periods prior to January 10, 1998.
7.8. Vacation and Sick Day Benefits Accrued Through Closing Date. Buyer
shall credit each Transferred Employee with any vacation and sick days accrued
as of the Closing Date in accordance with the terms of Sellers' vacation and
sick day policies in effect as of such date.
7.9. Welfare Benefits. Sellers shall be liable for claims incurred
under the Welfare Plans prior to the Closing Date.
7.10. Long Term Disability. Buyer shall not assume sponsorship of,
or any liabilities under, the Southwestern Energy Company Long Term Disability
Plan. Any and all such liabilities shall remain solely with Sellers.
7.11. Flexible Spending Accounts. As soon as possible following the
Closing Date, Sellers shall transfer to Buyer, and Buyer agrees to accept, those
amounts which represent the Transferred Employees' debit and credit balances
under the Southwestern Energy Company Salary Conservation Plan (the "FSA's"), a
schedule of which is attached hereto as Schedule 7.11. Buyer agrees to
administer the FSA's (consistent with the terms of the flex plan applicable to
Buyer's employees) such that Transferred Employees will be able to defer
additional compensation (in accordance with the terms of the applicable Buyer
plan) and to submit claims against the FSA within the time period permitted by
applicable law.
7.12. WARN Act Liability. Sellers shall pay and be solely liable for
all liability under the Worker Adjustment and Retraining Notification Act ("WARN
Act"), in each case, arising from any act or omission of Sellers on or before
the Closing Date. Buyer shall pay and be solely liable for all liability under
the WARN Act, in each case, arising from any act or omission of Buyer or its
Affiliates after the Closing Date.
7.13. Health Care Continuation Coverage. Sellers shall be responsible
for compliance with all requirements under Section 4980B of the Code and Section
601 et seq. of ERISA with respect to any (a) Transferred Employee or (b) family
member of such Transferred Employee, in each case who becomes a qualified
beneficiary within the meaning of Section 4980B(g)(1) of the Code as a result of
any "qualifying event" within the meaning of Section 4980B(f)(3) of the Code
which occurs on or prior to the Closing Date. Buyer shall be responsible for
compliance with all requirements under Section 4980B of the Code and Section 601
et seq. of ERISA with respect to any (a) Transferred Employee or (b) family
member of such Transferred Employee, in each case who becomes a qualified
beneficiary within the meaning of Section 4980B(g)(1) of the Code as a result of
any "qualifying event" within the meaning of Section 4980B(f)(3) of the Code
which occurs after the Closing Date.
7.14. Employment Taxes. Sellers hereby acknowledge that, for FICA and
FUTA tax purposes, Buyer qualifies as a successor employer with respect to the
Transferred Employees. In connection with the foregoing, the parties agree to
follow the "Alternative Procedures" set forth in Section 5 of Revenue Procedure
96-60, 1996-2-C.B.399. In connection with the application of the "Alternative
Procedures,"
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(i) Sellers and Buyer each shall report on a predecessor-successor basis as set
forth in such Revenue Procedure, (ii) provided that Sellers provide to Buyer all
necessary payroll records for the calendar year that includes the Closing Date,
Sellers shall be relieved from furnishing Forms W-2 to employees of Sellers that
become employees of Buyer, and (iii) provided that Sellers provide to Buyer
all necessary payroll records for the calendar year that includes the Closing
Date, Buyer shall assume the obligations of Sellers to furnish such Forms W-2 to
such employees for the full calendar year in which the Closing occurs.
VIII. ADDITIONAL RIGHTS AND OBLIGATIONS.
8.1. Access After Closing. Buyer will permit Sellers and their
representatives reasonable access on reasonable notice during normal business
hours, for a period of three years following the Closing Date and for such
longer period as may be required in connection with any pending or threatened
tax audit or judicial or administrative proceeding, (i) to the books and records
of Sellers included in the Transferred Assets, including the right to make
copies thereof, and to personnel (for reasonable inquiry and testimony), and
(ii) to any computerized data included in the Transferred Assets. All
information so obtained shall be kept confidential by the Sellers, unless such
information otherwise becomes publicly available or disclosure of such
information is required by applicable law.
8.2. Further Assurances. At any time and from time to time after the
Closing Date, Sellers shall, at the request of Buyer, and Buyer shall, at the
request of Sellers, execute and deliver any further instruments or documents and
take all such further action as the other party may reasonably request in order
to consummate and make effective the sale of the Transferred Assets and the
assumption of the Assumed Liabilities pursuant to this Agreement or to fulfill
any other of such party's obligations hereunder.
8.3. Confidentiality. The terms of the Confidentiality Agreement dated
June 15, 1999 between Parent and Buyer are hereby incorporated herein by
reference and shall continue in full force and effect until the Closing, at
which time such Confidentiality Agreement and the obligations of Buyer under
this Section 8.3 shall terminate. If this Agreement is, for any reason,
terminated prior to the Closing, the Confidentiality Agreement shall continue in
full force and effect.
8.4. Schedules. Certain information set forth in the Schedules is
included solely for informational purposes and may not be required to be
disclosed pursuant to this Agreement. The disclosure of any information shall
not be deemed to constitute an acknowledgment that such information is required
to be disclosed in condition with the representations and warranties made by
Sellers in this Agreement. .
8.5. Tax Matters. Sellers shall prepare or cause to be prepared and
timely file or cause to be timely filed all required Tax Returns relating to
Transfer Taxes imposed on Sellers for (i) all taxable periods ending on or
before the Closing Date for which Returns shall not have been filed as of the
Closing Date, and (ii) all taxable periods ending following the Closing Date
that include the Closing Date (all such Returns referred to in clause (i) and
(ii) being "Pre-Closing Returns"). All such Pre-Closing Returns shall be
prepared on a basis consistent with prior practice unless a different treatment
is required by a change in applicable law.
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8.6. Use of Name and Logos.
8.6.1. Buyer agrees to cease using the Names and Logos on its
literature, inventory, products, labels, packaging or materials as soon
as available supplies thereof are exhausted and in any event within six
months after the Closing Date with respect to inventory and products,
and within 90 days after the Closing Date with respect to literature.
8.6.2. For thirty days after Closing, Buyer may use, as is,
any of Sellers' receipts, bags, boxes, stationery, purchase order
forms, bills or other similar paper goods on hand or order at Closing.
After such time, Buyer shall not use any such supplies which state or
otherwise indicate thereon that the business operated by Buyer is a
subsidiary, division or unit of either Seller without first crossing
out or marking over such statement or indication or otherwise clearly
indicating on such supplies that the business operated by Buyer is no
longer a subsidiary, division or unit of either Seller.
8.7. Environmental Matters.
(a) Sellers jointly and severally agree to indemnify and hold Buyer
harmless against any and all Losses incurred by Buyer resulting from Matters of
Environmental Concern (as hereinafter defined); provided that: (i) any claim by
Buyer for indemnification pursuant to this clause 8.7(a) must be made by written
notice given within three (3) years after the Closing Date; (ii) Sellers will
have no obligation to indemnify Buyer for such Losses except to the extent that
such Losses, taken together, exceed $200,000 in the aggregate (the "Threshold"),
and then only to the extent of the excess that has not and will not be
recoverable through rates; and (iii) any clean-up, remediation, reclamation or
other costs with respect to the Transferred Assets for which a claim is made by
Buyer under this Section 8.7(a) shall be borne, after giving effect to the
Threshold, 50% by Sellers and 50% by Buyer. "Matters of Environmental Concern"
means (i) any failure by Sellers to have complied prior to the Closing Date with
applicable Environmental Laws or (ii) any handling, use, storage, generation,
release, discharge, disposal, dumping or migration of any Hazardous Materials
(whether legal, illegal, accidental or intentional) on, to, from or beneath the
Real Property, the Leased Real Property, the System Property or any other
Transferred Asset to the extent occurring prior to the Closing Date.
(b) If Buyer or either Seller has or may have the right to recover
Losses indemnified by Sellers or borne by Buyer pursuant to clause (a) of this
Section 8.7 from a party in addition to Sellers, Buyer and each Seller, as the
case may be, shall assign such right to the other (in proportion to the relative
amounts indemnified against or borne) and shall reasonably cooperate in pursuing
any rights against such third party.
8.8. Abstracts. Within 60 days after the date hereof, Sellers shall
cause to be prepared by a title abstractor reasonably acceptable to Buyer and
delivered to Buyer abstracts of title for the Real Property and the Leased
Property (other than office and warehouse space) and the System Property (the
"Abstracts") showing, in customary detail, the state of title to such
Transferred Assets, including the legal description and any other identification
of such Transferred Assets, the instruments creating or evidencing such
Transferred Assets and the encumbrances affecting such Transferred Assets.
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8.9. Y2K. To the extent, if any, that the information technology
included in the Transferred Assets (including components of the Transferred
Assets that interface with or whose operation is dependent upon the operation of
information technology systems) will not operate without error relating to date
data that references different centuries or more than one century, Sellers shall
use commercially reasonable efforts, at Sellers' expense, to modify or replace
such information technology so it will so operate without error. Any
modification or replacement will be made as promptly as practicable after
Buyer's request; provided that Buyer's request is made not later than six months
after the Closing Date.
IX. CONDITIONS TO BUYER'S OBLIGATIONS.
The obligations of Buyer under this Agreement to purchase the
Transferred Assets and to consummate the other transactions contemplated hereby
shall be subject to the satisfaction (or waiver by Buyer) on or prior to the
Closing Date of all of the following conditions:
9.1. Representations, Warranties and Covenants of Sellers. Sellers
shall have complied in all material respects with their agreements and covenants
contained herein to be performed on or prior to the Closing Date, and all the
representations and warranties of Sellers contained herein shall be (a) true and
correct on and as of the date hereof and (b) true and correct in all material
respects on and as of the Closing Date with the same effect as though made on
and as of the Closing Date, (i) except to the extent that such representations
and warranties were made as of a specified date, and as to such representations
and warranties the same shall continue on the Closing Date to have been true and
correct in all material respects as of the specified date and (ii) in the case
of clause (b) above, except for changes after the date hereof resulting from the
conduct of the Business in the ordinary course of business that do not result
from a violation of Section 5.2, if such changes could not adversely affect the
Buyer, the Transferred Assets or the use or operations thereof in any material
respect. Buyer shall have received a certificate of Sellers, dated as of the
Closing Date and signed by an officer of each Seller, certifying as to the
fulfillment of the condition set forth in this Section 9.1.
9.2. No Prohibition. No statute, rule or regulation or order of
any court or administrative agency shall be in effect which prohibits Buyer from
consummating the transactions contemplated hereby.
9.3. Further Action. All consents and approvals of governmental
authorities referred to in Schedule 3.10 or 4.4 hereto, the granting of which
are necessary to consummate the transactions contemplated hereby, shall have
been obtained and shall not (a) result in rate adjustments with respect to the
Business which would be materially less favorable in the aggregate to Buyer than
the rates currently in effect on the date hereof, (b) prevent or adversely
affect the operation of the Transferred Assets (or the results of operations
therefrom) after the Closing Date in a manner consistent with the Business or
(c) contain any other terms materially adverse to the Buyer. The consents and
approvals of third parties (other than governmental authorities) identified on
Schedule 9.3 shall have been obtained and shall be reasonably satisfactory to
Buyer.
9.4. No Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any event resulting in a Material Adverse Effect.
9.5. Abstracts. Buyer shall have received the Abstracts, and the
Abstracts reflect a state of title that is reasonably satisfactory to Buyer.
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9.6. Omnibus Gas Transportation and Supply Agreement. The parties
shall have reached agreement on, and executed, the Omnibus Gas Transportation
and Supply Agreement.
9.7. Other Documents. The Sellers shall have delivered to Buyer
such certificates, documents and instruments, including certified resolutions,
authorizations and confirmations of incumbency, as Buyer may reasonably request
to effect or confirm the transactions contemplated hereby.
X. CONDITIONS TO SELLERS' OBLIGATIONS.
The obligations of Sellers under this Agreement to sell the Transferred
Assets and to consummate the other transactions contemplated hereby shall be
subject to the satisfaction (or waiver by Sellers) on or prior to the Closing
Date of all of the following conditions:
10.1. Representations, Warranties and Covenants of Buyer. Buyer shall
have complied in all material respects with all of its agreements and covenants
contained herein to be performed on or prior to the Closing Date, and all of the
representations and warranties of Buyer contained herein shall be (a) true and
correct on and as of the date hereof and (b) true and correct in all material
respects on and as of the Closing Date with the same effect as though made on
and as of the Closing Date, except to the extent that such representations and
warranties were made as of a specified date, and as to such representations and
warranties the same shall continue on the Closing Date to have been true and
correct in all material respects as of the specified date. Sellers shall have
received a certificate of Buyer, dated as of the Closing Date and signed by an
officer of Buyer, certifying as to the fulfillment of the condition set forth is
this Section 10.1.
10.2. No Prohibition. No statute, rule, regulation or order of any
court or administrative agency shall be in effect which prohibits Sellers from
consummating the transactions contemplated hereby.
10.3. Further Action. All consents and approvals of governmental
authorities, referred to in Schedule 3.10 or Schedule 4.4 hereto, the granting
of which are necessary to consummate the transactions contemplated hereby, shall
have been obtained.
10.4. Omnibus Gas Transportation and Supply Agreement. The parties
shall have reached agreement on, and executed, the Omnibus Gas Transportation
and Supply Agreement.
10.5. Other Documents. Buyer shall have delivered to Sellers such
certificates, documents and instruments, including certified resolutions,
authorizations and confirmations of incumbency, as Sellers may reasonably
request to effect or confirm the transactions contemplated hereby.
XI. TERMINATION PRIOR TO CLOSING.
11.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(i) By the mutual written consent of Buyer and Sellers;
or
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(ii) By either Buyer or Sellers, if the Closing shall have
not occurred on or before December 31, 2000;
provided, however, that the right to terminate this
Agreement under this subclause (ii) shall not be
available to any party whose failure to fulfill any
obligation under this Agreement shall have been the
cause of, or resulted in, the failure of the Closing
to occur on or before such date.
11.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 11.1, this Agreement shall forthwith become
void; provided, however, that such termination shall not relieve any party of
its obligations under Section 8.3, Section 13.9 and Section 13.15 nor relieve
any party from liability for any breach hereof. Upon any termination of this
Agreement, each party hereto will return all documents, work papers and other
material of the other party relating to the transactions contemplated hereby and
all copies of such materials, whether so obtained before or after the execution
hereof, to the party furnishing the same.
XII. INDEMNIFICATION AND SURVIVAL.
12.1. Indemnification by Sellers. Subject to Sections 12.3 and 12.4,
Sellers will jointly and severally indemnify and hold Buyer harmless against any
and all Losses to which Buyer becomes subject or which Buyer suffers or incurs,
insofar as such Losses arise out of or result from (a) the Excluded Liabilities,
(b) the inaccuracy of any representation or warranty of Sellers contained
herein, (c) the breach of any covenant of Sellers contained herein, (d) subject
to Sections 2.3.4 and 13.8, any Tax imposed upon either Seller or the
Transferred Assets for any event or period through the Closing Date and (e) any
failure to comply with any bulk transfer or similar law in connection with the
transactions contemplated hereby or, subject to the provisions of Section 8.7,
the imposition on Buyer of any liability or obligation of Sellers that are not
Assumed Liabilities pursuant to any successor liability law. As used herein,
"Losses" means losses, liabilities, claims, damages, costs and expenses
(including reasonable attorneys' fees and costs of investigation), whether or
not involving a third party claim; provided that Losses shall not include (i)
any multiple, punitive or exemplary damages, except to the extent resulting from
third party claims, (ii) consequential or special damages, except to the extent
proximately resulting from any inability to operate the Transferred Assets in a
manner consistent with the Business, or (iii) any matter to the extent taken
into account on the Closing Statement.
12.2. Indemnification by Buyer. Subject to Sections 12.3 and 12.4,
Buyer will indemnify and hold Sellers harmless against any and all Losses to
which either Seller becomes subject or which either Seller suffers or incurs,
insofar as such Losses arise out of or result from (a) the Assumed Liabilities,
(b) the inaccuracy of any representation or warranty of Buyer contained herein,
(c) the breach of any covenant of Buyer contained herein or (d) expect for
matters as to which Buyer is entitled to indemnification pursuant to Section
12.1, the operation or use of the Transferred Assets subsequent to the Closing
Date.
12.3. Limitations on Liability.
12.3.1. Time Limitations and Survival. The representations,
warranties, covenants and agreements of the parties shall survive the
Closing and any investigation by the parties. Any claim by any party
with respect to any representation or warranty, or any covenant to be
performed on or prior to the Closing Date, by another party for
indemnification must be made by written notice given within twelve (12)
months after the Closing Date; provided that (i) claims with respect to
the representations and warranties contained in Section 3.15 may be
made by
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written notice within three (3) years after the Closing Date and (ii)
claims with respect to the representations and warranties contained
in Section 3.13.6 may be made by written notice until the earlier of
four (4) years after the Closing Date or the conclusion of Buyer's next
rate case with respect to the Business.
12.3.2. Limitation on Amount. Sellers will have no obligation
to indemnify Buyer for any Losses pursuant to clause (b) (other than in
respect of Section 3.13.6) or clause (c) (to the extent relating to
covenants to be performed on or prior to the Closing Date) of Section
12.1, except to the extent that such Losses, taken together, exceed
$100,000 (provided that if a Loss relates to breach of a representation
or warranty contained in Section 3.15 relating to Matters of
Environmental Concern, such Loss shall be subject to the $200,000
deductible provided in Section 8.7(a) and not towards this $100,000
deductible), and then only to the extent of such excess. In no event
shall Sellers be liable for aggregate Losses under Sections 12.1(b)
(other than in respect of Section 3.15 or Section 3.13.6) and 12.1(c)
(but only in respect of the covenants in Section 5.2) of more than $3.2
million.
12.3.3. Other Limitations. If any indemnified party may have
the right to recover Losses from a third party (other than an insurer)
in addition to the indemnifying party, the indemnified party shall
assign to the indemnifying party any such right remaining against such
third party after the indemnified party shall have recovered all of its
Losses, and shall reasonably cooperate (at the expense of the
indemnifying party) in pursuing any rights against such third party.
12.4. Indemnification Procedure. Promptly after receipt by any
indemnified party of notice of the commencement of any action, proceeding, or
claim in respect of which the indemnified party intends to seek indemnification
pursuant to Section 12.1 or 12.2, the indemnified party shall notify the
indemnifying party in writing; provided that the omission to so notify shall not
relieve the indemnifying party of its indemnification obligations except to the
extent the indemnifying party is materially prejudiced thereby. The indemnifying
party shall be entitled to assume control of the defense of such action or claim
with counsel reasonably satisfactory to the indemnified party; provided,
however, that:
(i) the indemnified party shall be entitled to
participate in the defense of such claim and to
employ counsel at its own expense to assist in the
handling of such claim;
(ii) no indemnifying party shall consent to the entry of
any judgment or enter into any settlement that does
not include as an unconditional term thereof the
giving by each claimant or plaintiff to the
indemnified party of a release from all liability in
respect of such claim or if, pursuant to or as a
result of such consent or settlement, injunctive or
other equitable relief would be imposed against the
indemnified party or such judgment or settlement
could materially interfere with the business,
operations or assets of the indemnified party; and
(iii) after written notice by the indemnifying party to the
indemnified party of its election to assume control
of the defense of any such action in accordance with
the foregoing provisions, the indemnifying party
shall not be liable to such indemnified party
hereunder for any legal fees, costs and expenses
subsequently incurred by such indemnified party in
connection with the defense thereof.
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If the indemnifying party does not assume control of the defense of
such claim in accordance with the foregoing provisions, the indemnified party
shall have the right to defend such claim in such manner as it may deem
appropriate at the reasonable cost and expense of the indemnifying party, and
the indemnifying party will promptly reimburse the indemnified party therefore
in accordance with this Section 12.4; provided that the indemnified party shall
not be entitled to consent to the entry of any judgment or enter into any
settlement of such claim without the prior written consent of the indemnifying
party (not to be unreasonably withheld).
12.5. Exclusive Remedies. If the Closing occurs, then the remedies
provided in this Article XII shall constitute the sole and exclusive remedies
with respect to all claims for breach of any representation or warranty, or
covenant to be performed on or prior to the Closing Date, contained in this
Agreement, except for fraud or other willful dishonesty. Notwithstanding the
foregoing, the provisions of this Article XII shall not affect the rights of any
party hereto against any third party (including a third party whose claim
against a party hereto is the basis of a claim for indemnification) and shall
not inure to the benefit of any third party.
XIII. MISCELLANEOUS.
13.1. Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) and the Confidentiality Agreement referred to in Section 8.3
constitute the entire understanding of the parties with respect to the subject
matter hereof and, except as provided in Section 8.3, supersedes all other prior
or contemporaneous oral or written statements by any party with respect thereto.
13.2. Waiver of Bulk Transfer Requirements. Subject to Section 12.1,
Buyer agrees to waive Sellers' compliance with Article 6 of the Uniform
Commercial Code (Bulk Transfers), as in effect in any jurisdiction, or any other
applicable bulk sales law.
13.3. Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors of the parties hereto; provided, however, that this Agreement may not
be assigned by Buyer without the prior written consent of Sellers, which consent
shall not be unreasonably withheld in the case of an assignment to an entity
that is controlled by Buyer.
13.4. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
13.5. Headings. The headings of the sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement or to affect the construction hereof.
13.6. Modification and Waiver. No amendment, modification or alteration
of the terms or provisions of this Agreement shall be binding unless the same
shall be in writing and duly executed by the parties hereto, except that any of
the terms or provisions of this Agreement may be waived in writing at any time
by the party which is entitled to the benefits of such waived terms or
provisions. No waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a waiver of any other provision hereof (whether or not
similar). No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.
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13.7. No Third-Party Beneficiary Rights. This Agreement is not intended
to and shall not be construed to give any person or entity other than the
parties signatory hereto any interest or rights (including, without limitation,
any third party beneficiary rights) with respect to or in connection with any
agreement or provision contained herein or contemplated hereby.
13.8. Sales and Transfer Taxes. Sellers, on the one hand, and Buyer, on
the other, shall each be responsible for and pay one-half (1/2) of all
applicable sales, transfer, documentary, or use taxes and recording and filing
fees ("Transfer Taxes") that may become due or payable as a result of the sale,
conveyance, assignment, transfer or delivery of any of the Transferred Assets or
the transactions contemplated hereby whether levied on Buyer, Sellers or any
Affiliate of Sellers. At the Closing, Sellers shall execute and deliver to Buyer
any certificates or other documents as Buyer may reasonably request to claim
available exemptions from the payment of Transfer Taxes under applicable law.
13.9. Expenses. Except as expressly provided otherwise herein, each of
Sellers and Buyer shall pay all costs and expenses incurred by it or on its
behalf in connection with this Agreement and the transactions contemplated
hereby, including, without limiting the generality of the foregoing, fees and
expenses of its own financial consultants, accountants and counsel.
13.10. Waiver of Conditions. The conditions to each party's
obligations hereunder are for the sole benefit of such party and may be waived
by such party in whole or in part to the extent permitted by applicable law.
13.11. Notices. Any notice, request, instruction or other document to
be given hereunder by either party hereto to the other party shall be in writing
and shall be sent by telefax (with confirmation received of the recipient's
number) to the number stated below or shall be delivered personally or sent by
registered or certified mail (postage prepaid and return receipt requested) to
the address stated below.
If to either Seller, to:
Southwestern Energy Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Buyer, to:
Atmos Energy Corporation
1800 Three Lincoln Center
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other telefax number or address for a party as shall be specified by
like notice. Any notice which is delivered personally in the manner provided
herein shall be deemed to have been duly given to the party to whom it is
directed upon actual receipt by such party. Any notice which is sent by telefax
or addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed on the
date indicated on the telefax confirmation or the postal receipt.
13.12. Knowledge of Sellers. For purposes of this Agreement,
"knowledge of Sellers" or any similar term shall mean the actual knowledge of an
executive officer of Parent or of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President of
AWG, after reasonable inquiry.
13.13. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Arkansas applicable to agreements
made and to be performed wholly within such jurisdiction without regard to the
conflicts of laws provisions thereof. Each of the parties agrees to (i) the
irrevocable designation of the Secretary of State of the State of Arkansas as
its agent upon whom process against it may be served and (ii) personal
jurisdiction in any action brought in any court, Federal or State, within the
State of Arkansas having subject matter jurisdiction over matters arising under
this Agreement. Any suit, action or proceeding arising out of or relating to
this Agreement shall only be instituted in a Federal or State court located in
the State of Arkansas. Each party waives any objection which it may have now or
hereafter to the laying of the venue of such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding.
13.14. Waiver of Jury Trial. Each of Sellers and Buyer hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of Sellers or Buyer in the
negotiations, administration, performance and enforcement thereof.
13.15. Announcements. No party hereto shall make any public statements,
including, without limitation, any press release, with respect to this Agreement
and the transactions contemplated hereby
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without the prior written consent of the other parties, other than as may be
required by law, which consent shall not be unreasonably withheld.
13.16. Severability. If any term or other provision of this Agreement
is held to be invalid, illegal or incapable of being enforced by any court
having jurisdiction, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
SELLERS:
SOUTHWESTERN ENERGY COMPANY
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
ARKANSAS WESTERN GAS COMPANY
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
BUYER:
ATMOS ENERGY CORPORATION
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
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