EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into this 19th day of July, 1996, by and between ATMOS ENERGY
CORPORATION, a Texas corporation ("Atmos"), and UNITED CITIES GAS COMPANY, an
Illinois and Virginia corporation ("United Cities").
In consideration of the mutual agreements herein contained, Atmos and United
Cities agree to carry out a plan of reorganization providing for a statutory
merger under the applicable laws of Texas, Illinois and Virginia whereby:
A. United Cities will be merged with and into Atmos, with Atmos as the
surviving corporation incorporated and existing under the laws of the
States of Texas and Virginia;
B. the shareholders of United Cities, upon exchange of their shares of
common stock of United Cities, will receive shares of common stock of
Atmos; and
C. all of the assets, properties, and business of United Cities, together
with all of the obligations and liabilities of United Cities, shall
thereupon be transferred to and assumed by Atmos;
all subject to the following terms and conditions:
ARTICLE 1
Representations and Warranties of United Cities
United Cities hereby represents and warrants to Atmos that the statements
set forth in this Article 1 are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date
as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article 1, except as otherwise set
forth in the United Cities Disclosure Schedule attached hereto as Exhibit A;
provided, that each matter set forth in the United Cities Disclosure Schedule
shall be deemed to be an exception only to those representations and
warranties that are specifically referenced by Section number in the United
Cities Disclosure Schedule in connection with such matter.
Section 1.1 Organization and Qualification.
(a) United Cities is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdictions of its incorporation and has
all requisite corporate power and authority and possesses all franchises,
grants, authorizations, licenses, permits, easements, consents, certificates,
approvals, and orders (collectively, "Governmental Authorizations") necessary
to own, lease, and operate its properties and assets and to carry on its
business as it is now being conducted except where the failure to have any of
such Governmental Authorizations would not have a material adverse effect on
the business, operations, properties, condition (financial or otherwise),
assets or liabilities, of the United Cities Entities, taken as a whole. United
Cities is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction in which the character of the
property owned, leased, or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in
such jurisdictions (if any) where the failure to be duly qualified or licensed
does not and would not have a material adverse effect on the business,
operations, properties, condition (financial or otherwise), assets or
liabilities, of the United Cities Entities, taken as a whole.
(b) United Cities has not been a subsidiary or division of another
corporation or entity at any time during the two-year period prior to the date
of this Agreement.
(c) United Cities has heretofore delivered to Atmos true, correct, and
complete copies of United Cities' Articles of Incorporation and Bylaws,
including all amendments thereto.
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Section 1.2 Subsidiaries.
(a) United Cities does not directly or indirectly own any equity or similar
interest in any corporation, partnership, joint venture, or other business
association or entity, except as set forth in Section 1.2(b), other than (i)
United Cities Energy Corporation, a Delaware corporation that is wholly owned
by United Cities, (ii) United Cities Gas Storage Company, a Delaware
corporation that is wholly owned by United Cities, (iii) United Cities Propane
Gas of Tennessee, Inc., a Tennessee corporation that is wholly owned by United
Cities Energy Corporation, and (iv) United Cities Leasing, Inc., a Georgia
corporation that is wholly owned by United Cities Energy Corporation
(collectively, the "United Cities Subsidiaries"). (United Cities and the
United Cities Subsidiaries are referred to collectively in this Agreement as
the "United Cities Entities.") United Cities is the sole record and beneficial
owner of, and has good and valid title to, all of the outstanding shares of
capital stock of United Cities Energy Corporation and United Cities Gas
Storage Company, and United Cities Energy Corporation is the sole record and
beneficial owner of, and has good and valid title to, all of the outstanding
capital stock of United Cities Propane Gas of Tennessee, Inc. and United
Cities Leasing, Inc., in each case free and clear of all liens, mortgages,
pledges, security interests or other encumbrances. All of the outstanding
capital stock of each of the United Cities Subsidiaries has been duly
authorized and validly issued, is fully paid and nonassessable.
(b) United Cities Energy Corporation owns a 45% equity interest in Xxxxxxxx
Marketing, L.L.C., free and clear of all liens, mortgages, pledges, security
interests and other encumbrances. The equity ownership interest held by United
Cities Energy Corporation in Xxxxxxxx Marketing, L.L.C. has been duly
authorized and validly issued, is fully paid and nonassessable.
(c) Each of the United Cities Subsidiaries is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and authority and
possesses all Governmental Authorizations necessary to own, lease, and operate
its properties and assets and to carry on its business as it is now being
conducted except where the failure to have any of such Governmental
Authorizations would not have a material adverse effect on the business,
operations, properties, condition (financial or otherwise), assets or
liabilities, of the United Cities Entities, taken as a whole. Each of the
United Cities Subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction in
which the character of the property owned, leased, or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions (if any) where the failure to be duly
qualified or licensed does not and would not have a material adverse effect on
the business, operations, properties, condition (financial or otherwise),
assets or liabilities of the United Cities Entities, taken as a whole.
(d) Xxxxxxxx Marketing, L.L.C. is a limited liability company duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has all requisite limited liability company power and
authority to own, lease, and operate its properties and assets and to carry on
its business as it is now being conducted and is duly qualified as foreign
limited liability company in the State of Texas.
(e) United Cities has heretofore delivered to Atmos true, correct and
complete copies of the Articles of Incorporation and Bylaws, including all
amendments thereto, of the United Cities Subsidiaries, and of the charter
documents and Limited Liability Company Agreement of Xxxxxxxx Marketing,
L.L.C.
Section 1.3 Capitalization. The entire authorized capital stock of United
Cities consists of 40,000,000 shares of common stock, no par value ("United
Cities Stock"), and 200,000 shares of preferred stock, no par value
("Preferred Stock"). As of June 30, 1996, (a) 13,102,913 shares of United
Cities Stock were issued and outstanding, all of which were duly authorized,
validly issued, fully paid, and nonassessable and free of preemptive rights,
(b) no shares of Preferred Stock were issued and outstanding, and (c) no
shares of United Cities Stock or Preferred Stock were held in the treasury of
United Cities. Except as set forth on the United Cities SEC Reports, there are
no options, warrants, or other rights, agreements, arrangements, or
commitments of any character relating to the issued or unissued capital stock
of the United Cities Entities or obligating the
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United Cities Entities to issue or sell any shares of capital stock of, or any
securities convertible into or evidencing the right to purchase any shares of
capital stock of or other equity interests in, the United Cities Entities.
There are no obligations, contingent or otherwise, of the United Cities
Entities to repurchase, redeem, or otherwise acquire any shares of capital
stock or other equity interests in any of the United Cities Entities.
Section 1.4 Authority Relative to this Agreement. United Cities has all
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby, subject to the approval of United Cities shareholders as
contemplated in this Agreement and the terms and conditions of this Agreement.
The execution and delivery of this Agreement by United Cities and the
consummation by United Cities of the transactions contemplated hereby have
been duly and validly authorized by United Cities' Board of Directors and,
except for the approval of the shareholders of United Cities, no other
corporate proceedings on the part of United Cities are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by United Cities
and constitutes the legal, valid, and binding obligation of United Cities and
is enforceable against United Cities in accordance with its terms, subject to
bankruptcy, insolvency, moratorium and other laws generally affecting
creditors' rights.
Section 1.5 No Conflict; Required Filings and Consents. The execution,
delivery, and performance of this Agreement by United Cities and the
consummation by United Cities of the transactions contemplated hereby in
accordance with the terms and conditions hereof, including the Merger, do not
and will not:
(a) conflict with the Articles of Incorporation or Bylaws of the United
Cities Entities or the Certificate of Formation or Limited Liability
Company Agreement of Xxxxxxxx Marketing, L.L.C.;
(b) conflict with or violate any law, rule, regulation, order, judgment,
or decree applicable to any of the United Cities Entities or by which any
of them or any of their respective properties is bound or affected;
(c) except for those consents and waivers required to be obtained
pursuant to Section 3.5, require from any person other than a governmental
or regulatory authority any consent, approval, or notice under, or violate,
result in any breach of, constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration, or cancellation of, or
result in the creation of a lien or encumbrance on any of the property or
assets of any of the United Cities Entities pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, or other
instrument or obligation to which any of the United Cities Entities is a
party or by which any of the United Cities Entities or any of their
respective properties is bound or affected; or
(d) require any consent, approval, authorization, or permit of, or filing
with or notification to, any governmental or regulatory authority except
(i) the applicable requirements of federal and state securities laws, (ii)
the filing requirements under the Xxxx-Xxxxx-Xxxxxx Act, (iii) the filing
and recordation of appropriate merger or other documents as required by the
Texas Business Corporation Act, the Illinois Business Corporation Act, and
the Virginia Stock Corporation Act, (iv) approvals of the applicable state
public utility commissions in the states in which United Cities or Atmos is
doing business, and (v) approval of the Federal Energy Regulatory
Commission.
Section 1.6 Compliance. None of the United Cities Entities is in breach,
default, or violation of, and no event has occurred or is occurring that with
notice or lapse of time or both would become a breach, default, or violation
of, (a) any of the United Cities Entities' Articles of Incorporation or Bylaws
or the Certificate of Formation or Limited Liability Company Agreement of
Xxxxxxxx Marketing, L.L.C., (b) any law, rule, regulation, order, judgment, or
decree applicable to any of the United Cities Entities or by which any of them
or any of their respective properties is bound or affected, or (c) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise, or other instrument or obligation to which any of the United Cities
Entities is a party or by which any of them or any of their respective
properties is bound or affected, nor have any of them received and not finally
resolved any complaint, citation, or notice of a breach, default, or violation
of any of the foregoing nor are any threatened.
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Section 1.7 Environmental Matters.
(a) No Hazardous Materials are now located in, on, at, upon, or under the
Subject Property currently owned or operated by any of the United Cities
Entities or have migrated or emanated, or threaten to migrate or emanate, to
adjacent property in a quantity or manner that is required to be reported
under any Environmental Requirements, or that is in violation of any
Environmental Requirements, or for which any of the United Cities Entities
will be liable under any Environmental Requirements for the cost of
remediation or other response if such costs are incurred by an Environmental
Agency; and no Hazardous Materials have been located in, on, at, upon, or
under the Subject Property, or migrated or emanated from the Subject Property
at any time prior to or during the Use of the Subject Property by any of the
United Cities Entities in a quantity or manner that is required to be reported
under any Environmental Requirements, or that is in violation of any
Environmental Requirements, or for which any of the United Cities Entities
will be liable under any Environmental Requirements for the cost of
remediation or other response if such costs are incurred by an Environmental
Agency.
(b) No Hazardous Materials have been generated, stored, transported,
disposed of on-site, or sent off-site from, in, on, at, or upon the Subject
Property at any time during the Use of the Subject Property by any of the
United Cities Entities (or prior to the Use of the Subject Property by any of
the United Cities Entities) in a quantity or manner that is required to be
reported under any Environmental Requirements, or that is in violation of any
Environmental Requirements, or for which any of the United Cities Entities
will be liable under any Environmental Requirements for the cost of
remediation or other response if such costs are incurred by an Environmental
Agency.
(c) There are no off-site locations where Hazardous Materials generated or
transported from the Subject Property have been stored, treated, recycled, or
disposed of by any of the United Cities Entities or their agents, employees,
or representatives in a quantity or manner that is required to be reported
under any Environmental Requirements, or that is in violation of any
Environmental Requirements, or for which any of the United Cities Entities
will be liable under any Environmental Requirements for the cost of
remediation or other response if such costs are incurred by an Environmental
Agency.
(d) Each of the United Cities Entities has all permits, licenses, or
authorizations from any Environmental Agency that it is required to have by
any Environmental Requirement in order to operate any aspect of the Subject
Property currently operated by it or the business currently conducted at the
Subject Property; the Use of the Subject Property currently Used by each of
the United Cities Entities, including but not limited to any and all
Environmental Activity, and all Environmental Conditions, is and has been in
compliance with all Environmental Requirements during the Use of the Subject
Property by each of the United Cities Entities and at all times prior to its
Use by each of the United Cities Entities.
(e) No Environmental Costs have been suffered by any of the United Cities
Entities or by any third party prior to or during the Use of the Subject
Property by any of the United Cities Entities, and United Cities is not aware
of, and has not received notice of, any past or present events, conditions,
circumstances, activities, practices, incidents, actions, or plans that may
result in Environmental Costs or that may give rise to any common law or legal
liability based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling or the emission,
discharge, release, or threatened release into the environment, of any
pollutant, contaminant, chemical, or industrial toxic or hazardous substance
or waste or Hazardous Materials.
(f) None of the United Cities Entities has Used, in the past, any facilities
that could reasonably be expected to subject any of the United Cities Entities
to Environmental Costs.
(g) All of the manufactured gas plants now or formerly Used by any of the
United Cities Entities and all locations where waste from these plants was
disposed of are set forth in the United Cities SEC Reports.
(h) All of the underground storage tanks located on the Subject Property are
set forth in the United Cities SEC Reports.
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Section 1.8 Contracts. United Cities has made available to Atmos all
material contracts, loan agreements, indentures, commitments, and other
agreements or documents to which any of the United Cities Entities is a party
or by which any of the United Cities Entities or any of their respective
properties is bound or affected. All such contracts and instruments are in
full force and effect and no party thereto is in default thereunder and no
default is threatened thereunder.
Section 1.9 SEC Filings; Financial Statements; Absence of Undisclosed
Liabilities.
(a) United Cities has filed all forms, reports, and documents required to be
filed with the SEC since January 1, 1993, and has heretofore delivered or made
available to Atmos, in the form filed with the SEC, (i) its Annual Reports on
Form 10-K for the fiscal years ended December 31, 1993 through 1995, (ii) its
Quarterly Report on Form 10-Q for the period ended Xxxxx 00, 0000, (xxx) all
proxy statements relating to United Cities' meetings of shareholders (whether
annual or special) held since January 1, 1993, (iv) all Forms 8-K filed by
United Cities with the SEC since January 1, 1993, (v) all other reports or
registration statements filed by United Cities with the SEC since January 1,
1993, and (vi) all amendments and supplements to all such reports,
registration statements and proxy statements filed by United Cities with the
SEC since January 1, 1993 (collectively, the "United Cities SEC Reports"). As
of their respective dates, the United Cities SEC Reports were prepared in
substantial compliance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of the United Cities Entities other than United
Cities is subject to the reporting requirements of the Exchange Act.
(b) United Cities has heretofore delivered or made available to Atmos its
audited consolidated financial statements for its fiscal years ended December
31, 1993 through 1995 and its unaudited consolidated financial statements for
the period ended March 31, 1996. All such financial statements of United
Cities that have been delivered or made available to Atmos have been prepared
in accordance with generally accepted accounting principles applied (except as
otherwise noted therein) on a consistent basis throughout the periods covered
thereby (subject, in the case of any such financial statements that are
unaudited, to year-end adjustments in such amount and of such type as are or
will be consistent with adjustments made in prior fiscal years). The
consolidated financial statements (together with the related notes thereto)
fairly present in all material respects the consolidated financial condition
and consolidated results of operation of United Cities as of and for the
respective dates indicated.
(c) None of the United Cities Entities has any liabilities or obligations
(whether accrued, absolute, contingent, known or unknown, or otherwise) that
(i) are not accrued or reserved against in the consolidated balance sheet of
United Cities as at March 31, 1996 or reflected in the notes thereto in
accordance with generally accepted accounting principles consistently applied
or (ii) were incurred after the date of such balance sheet outside of the
ordinary course of business of any of the United Cities Entities.
Section 1.10 Books and Records. United Cities has made available to Atmos,
and will continue to make available to Atmos, all of the United Cities
Entities' books, records, and certificates. All of such books, records, and
certificates are true, complete, and correct.
Section 1.11 Conduct of Business in Ordinary Course; Absence of Certain
Changes or Events. Since March 31, 1996, each of the United Cities Entities
has conducted its business only in the ordinary course; and, since such date,
there has not been any adverse change in the business, operations, properties,
condition (financial or otherwise), assets or liabilities of any of the United
Cities Entities, taken as a whole, or any condition, event, or development
that will result in an adverse change in the business, operations, properties,
condition (financial or otherwise), assets or liabilities of the United Cities
Entities, taken as a whole.
Section 1.12 Litigation. There are no material claims, actions, suits,
investigations, or proceedings pending or threatened against or affecting any
of the United Cities Entities or any of their respective properties
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or rights at law or in equity before or by any court, arbitrator, or
administrative, governmental, or regulatory authority or body. None of the
United Cities Entities nor any of their respective properties is subject to
any order, writ, judgment, injunction, decree, determination, or award.
Section 1.13 Title to, and Condition of, Assets. Each of the United Cities
Entities has good and marketable title to, or a valid leasehold interest in,
all of its assets and properties, real and personal, including the properties,
assets, and leasehold interests reflected in the United Cities balance sheet
dated March 31, 1996 referred to in Section 1.9 of this Agreement (except for
any properties or assets disposed of in the ordinary course of business since
the date of such balance sheet), necessary or appropriate for the operation of
its business, free and clear of all liens, mortgages, pledges, security
interests, or other encumbrances (except for matters set forth in the notes to
such balance sheet and the notes to the December 31, 1995 balance sheet). All
of the United Cities Entities' properties and assets are in good condition and
repair (ordinary wear and tear excepted) and are adequate and sufficient for
the conduct of the United Cities Entities' businesses.
Section 1.14 Intellectual Property. The United Cities Entities own or
possess, or can acquire on reasonable terms, the patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names presently employed by them in
connection with the business now operated by them, and none of the United
Cities Entities has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in any material adverse change in the business,
operations, properties, condition (financial or otherwise), assets or
liabilities of the United Cities Entities, taken as a whole.
Section 1.15 Taxes. All Tax Returns of or relating to any Taxes that are
required to be filed with respect to United Cities and the United Cities
Subsidiaries or any of their income, properties, or operations have been duly
filed on a timely basis and were true, complete, and correct. All Taxes
attributable to United Cities and the United Cities Subsidiaries or any of
their income, properties, or operations that are or were due and payable have
been timely paid, and United Cities and the United Cities Subsidiaries have no
liability for any Taxes other than with respect to their current taxable year
for which adequate provisions have been made and are reflected in United
Cities' consolidated financial statements in accordance with generally
accepted accounting principles.
Section 1.16 Employee Benefit Plans.
(a) United Cities has previously delivered or made available to Atmos true,
correct and complete copies of (i) each Plan that is a "multiemployer plan,"
as defined in ERISA Section 4001, (ii) each other employee benefit plan as
defined in Section 3(3) of ERISA with respect to which a United Cities Entity
or any Group Member is a "Party in Interest," as defined in Section 3(14) of
ERISA, and (iii) each other Employee Benefit Arrangement.
(b) Each United Cities Entity, each Group Member, and each Plan is now, and
has been from its inception, in compliance with the provisions of ERISA and
the Code insofar as ERISA and the Code are applicable to such Plans. Each Plan
intended to be qualified under Section 401(a) of the Code has been determined
to be so qualified by the IRS and nothing has occurred since the date of the
last such determination which resulted or is likely to result in the
revocation of such determination. All required reports and descriptions of
each Plan have been timely filed and distributed as required by ERISA.
(c) There has not occurred with respect to any Plan any non-exempt
"Prohibited Transaction," as defined in either Section 406 of ERISA or Section
4975 of the Code.
(d) There has not occurred with respect to any Plan any "Reportable Event,"
as defined in Section 4043 of ERISA. No Plan has applied for or obtained a
waiver from the IRS of any minimum funding requirement under Section 412 of
the Code.
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(e) (i) No Plan has been terminated, and no withdrawal from any
"multiemployer plan," as defined in Section 4001 of ERISA, has occurred since
the inception of any Plan under circumstances that have given rise to, or
would give rise to, any actual or potential liability to the PBGC or any other
person (excluding liabilities to participants (other than any liability for
unpaid benefits) for benefits payable in the normal course of events pursuant
to any such termination or withdrawal), (ii) no event or condition exists
which presents a risk of termination of any Plan by the PBGC, and (iii) there
is no actual or potential liability to the PBGC or any other person expected
by the United Cities Entities or any Group Member to be incurred with respect
to any Plan, including, but not limited to, any liability for premium
payments, for any accumulated funding deficiency as defined in Section 302 of
ERISA or for any minimum funding contribution under Section 302 of ERISA.
(f) The current value (as defined in Section 4062(b)(1)(A) of ERISA) of all
accrued benefits (as defined in Section 3 of ERISA) under each Plan which is a
plan subject to the provisions of Title IV of ERISA does not, as of January 1,
1996, exceed the current value of the assets of such Plan allocable to such
accrued benefits, by an amount which is more than $1,500,000.
(g) No lien imposed under Section 412(n) of the Code exists in favor of any
Plan upon any property belonging to a Group Member.
(h) United Cities has previously delivered or made available to Atmos true,
correct and complete copies of the annual reports and actuarial reports for
the preceding two plan years (1993 and 1994) filed with respect to each such
Plan and Employee Benefit Arrangement, summary plan descriptions and other
communications to employees relating to each such Plan and Employee Benefit
Arrangement, any related trust or third-party funding vehicle documents and
related financial statements, and all letters from the IRS, if any, confirming
the tax-exempt status or qualification under Section 401(a) of the Code of any
Plan. There are no Plans or Employee Benefit Arrangements other than those
previously delivered and made available to Atmos.
(i) Neither (i) the United Cities Entities, or any director, officer,
employee, or agent of a United Cities Entity, has, with respect to any Plan,
nor (ii) any Plan or trust created thereunder or trustee or administrator
thereof has, engaged in any conduct that would result in any penalties under
Section 502(i) of ERISA or any liability under Section 409 of ERISA for breach
of fiduciary duty. No civil or criminal action or claim (other than
uncontested claims for benefits) is pending or threatened with respect to any
Plan.
(j) None of the United Cities Entities, any Group Member, or any director,
officer, or employee of any of the foregoing have taken any elective action
that would commit a United Cities Entity to continue any Plan or Employee
Benefit Arrangement or any benefit thereunder for any present or former
employee of a United Cities Entity or that would prevent such United Cities
Entity from changing or terminating any such benefit or plan; provided, that
this representation shall not be construed to apply with respect to any
express provision of a document which provides for such effect without further
action or election by such persons.
(k) No United Cities Entity now has in effect, or previously had in effect,
any welfare benefit plan, commitment, understanding, or arrangement providing
for medical or death benefits (whether insured or uninsured) with respect to
current or former employees beyond their date of retirement or other
termination of service (other than coverage mandated by Section 4980B of the
Code and Section 601 of ERISA, the cost of which is fully paid by the former
employee or his or her dependents).
(l) For purposes of this Section 1.16, the terms "Employee Benefit
Arrangement," "Group Member," and "Plan" shall be interpreted to exclude all
reference to Atmos Entities under Section 8.1(l), (v) and (hh) hereof.
Section 1.17 Labor Matters. United Cities has previously delivered or made
available to Atmos true, correct and complete copies of all labor contracts
and collective bargaining agreements. Except as set forth in the United Cities
SEC Reports, there are no employee activities or controversies (including, but
not limited to, any labor organizing activities, election petitions or
proceedings preparatory thereto, unfair labor practice complaints, labor
strikes, disputes, slowdowns, or work stoppages) pending or, to United Cities'
knowledge, threatened, between any of the United Cities Entities and any of
their employees.
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Section 1.18 Disclosure; Information in the Proxy Statement/Prospectus. No
representation or warranty by United Cities in this Agreement and no statement
contained in any certificate furnished or to be furnished by United Cities to
Atmos pursuant to the provisions of this Agreement contains or will contain
any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it is made,
in order to make the statements herein or therein not misleading. Any written
information supplied by United Cities specifically for inclusion or
incorporation by reference in the Proxy Statement/Prospectus and which is
included or incorporated by reference therein shall not, at the date the Proxy
Statement/Prospectus (or any amendment thereof or supplement thereto) is filed
with the SEC, at the time of the Atmos Shareholders Meeting, at the time of
the United Cities Shareholders Meeting, and at the time the Proxy
Statement/Prospectus becomes effective with the SEC as a registration
statement, be false or misleading with respect to any material fact, omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under
which they are made, not misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Atmos Shareholders Meeting or the
United Cities Shareholders Meeting that has become materially false or
misleading. If at any time prior to the Effective Time any event relating to
any of the United Cities Entities or any of their respective directors or
officers should be discovered by United Cities which should be set forth in a
supplement to the Proxy Statement/Prospectus, United Cities shall promptly
inform Atmos in writing. Notwithstanding the foregoing, United Cities makes no
representation or warranty with respect to any information to be contained in
the Proxy Statement/Prospectus other than information provided in writing by
United Cities specifically for inclusion or incorporation by reference in the
Proxy Statement/Prospectus.
Section 1.19 Insurance. United Cities has not failed to give any notice or
present any claim under any insurance policies or binders maintained by any of
the United Cities Entities with respect to their properties and business in
due and timely fashion. None of the United Cities Entities has received notice
of cancellation or nonrenewal of any such policy or binder.
Section 1.20 Broker's Fees. No broker, finder, or investment banker (other
than PaineWebber Incorporated) is entitled to any brokerage, finder's, or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of any of the
United Cities Entities.
Section 1.21 No United Cities Investment in Atmos Stock. None of the United
Cities Entities has acquired or is the beneficial owner of any Atmos Stock.
Section 1.22 Board Recommendation. The Board of Directors of United Cities
has, by resolutions duly adopted by the requisite vote of directors present at
a meeting of such Board duly called and held on July 19, 1996, determined that
the Merger in accordance with the terms of this Agreement and the Plan of
Merger is fair and in the best interests of its shareholders and has
recommended that the shareholders of United Cities approve the Merger and Plan
of Merger, and ratify this Agreement.
Section 1.23 PUHCA. Neither United Cities nor any other of the United Cities
Entities is required to register under PUHCA, or the rules and regulations
thereunder.
Section 1.24 Regulation as a Utility. United Cities is a regulated public
utility in the States of Tennessee, Illinois, Missouri, Georgia, South
Carolina, Virginia, Iowa, and Kansas and in no other state. Neither United
Cities nor any United Cities Entity is subject to regulation as a public
utility or public service company (or similar designation) by any other state
in the United States, by the United States or any agency or instrumentality of
the United States or by any foreign country, other than the Federal Energy
Regulatory Commission.
Section 1.25 Vote Required. The approval of the Merger by holders of a
majority of the shares of outstanding United Cities Stock is the only vote of
the holders of any class or series of the capital stock of United Cities
required to approve this Agreement, the Plan of Merger, the Merger, and the
other transactions contemplated hereby.
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Section 1.26 Opinion of Financial Advisor. United Cities has received the
opinion of PaineWebber Incorporated, dated the date hereof, to the effect
that, as of the date hereof, the exchange ratio set forth in the Plan of
Merger is fair from a financial point of view to the holders of United Cities
Stock.
ARTICLE 2
Representations and Warranties of Atmos
Atmos hereby represents and warrants to United Cities that the statements
set forth in this Article 2 are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date
as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article 2, except as otherwise set
forth in the Atmos Disclosure Schedule attached hereto as Exhibit B; provided,
that each matter set forth in the Atmos Disclosure Schedule shall be deemed to
be an exception only to those representations and warranties that are
specifically referenced by Section number in the Atmos Disclosure Schedule in
connection with such matter.
Section 2.1 Organization and Qualification.
(a) Atmos is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdictions of its incorporation and has all
requisite corporate power and authority and possesses all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates,
approvals, and orders (collectively, "Governmental Authorizations") necessary
to own, lease, and operate its properties and assets and to carry on its
business as it is now being conducted except where the failure to have any of
such Governmental Authorizations would not have a material adverse effect on
the business, operations, properties, condition (financial or otherwise),
assets or liabilities of the Atmos Entities, taken as a whole. Atmos is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction in which the character of the property owned,
leased, or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions (if
any) where the failure to be duly qualified or licensed does not and would not
have a material adverse effect on the business, operations, properties,
condition (financial or otherwise), assets or liabilities of the Atmos
Entities, taken as a whole.
(b) Atmos has not been a subsidiary or division of another corporation or
entity at any time during the two-year period prior to the date of this
Agreement.
(c) Atmos has heretofore delivered to United Cities true, correct, and
complete copies of Atmos' Articles of Incorporation and Bylaws, including all
amendments thereto.
Section 2.2 Subsidiaries.
(a) Atmos does not directly or indirectly own any equity or similar interest
in any corporation, partnership, joint venture, or other business association
or entity other than (i) Atmos Energy Services, a Delaware corporation that is
wholly owned by Atmos, (ii) EGASCO, Inc., a Texas corporation that is wholly
owned by Atmos, (iii) EnerMart, Inc., a Delaware corporation that is wholly
owned by Atmos, (iv) EnerMart Trust, a Pennsylvania business trust that is
wholly owned by EnerMart, Inc., (v) Trans Louisiana Industrial Gas Company,
Inc., a Louisiana corporation that is wholly owned by Atmos, and (vi) Western
Kentucky Gas Resources Company, a Delaware corporation that is wholly owned by
Atmos (collectively, the "Atmos Subsidiaries"). (Atmos and the Atmos
Subsidiaries are referred to collectively in this Agreement as the "Atmos
Entities.") Atmos is the sole record and beneficial owner of, and has good and
valid title to, all of the outstanding shares of capital stock of the Atmos
Subsidiaries other than EnerMart Trust, and EnerMart, Inc. is the sole record
and beneficial owner of, and has good and valid title to, all of the
outstanding equity ownership interests in EnerMart Trust, in each case free
and clear of all liens, mortgages, pledges, security interests or other
encumbrances. All of the outstanding capital stock of each of the Atmos
Subsidiaries that is a corporation, and, in the case of EnerMart Trust, the
equity ownership interest held by EnerMart, Inc., has been duly authorized and
validly issued, is fully paid and nonassessable.
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(b) Each of the Atmos Subsidiaries (other than EnerMart Trust) is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority and possesses all Governmental Authorizations necessary to
own, lease, and operate its properties and assets and to carry on its business
as it is now being conducted except where the failure to have any of such
Governmental Authorizations would not have a material adverse effect on the
business, operations, properties, condition (financial or otherwise), assets
or liabilities of the Atmos Entities, taken as a whole. Each of the Atmos
Subsidiaries (other than EnerMart Trust) is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of the property owned, leased, or operated
by it or the nature of the business conducted by it makes such qualification
or licensing necessary, except in such jurisdictions (if any) where the
failure to be duly qualified or licensed does not and would not have a
material adverse effect on the business, operations, properties, condition
(financial or otherwise), assets or liabilities of the Atmos Entities, taken
as a whole.
(c) EnerMart Trust is a business trust duly organized, validly existing and
in good standing under the laws of the State of Pennsylvania and has all
requisite business trust power and authority to own, lease, and operate its
properties and assets and to carry on its business as it is now being
conducted.
(d) Atmos has heretofore delivered to United Cities true, correct and
complete copies of the Articles of Incorporation and Bylaws, including all
amendments thereto, of the Atmos Subsidiaries, and the organizational
documents of EnerMart Trust.
Section 2.3 Capitalization. The entire authorized capital stock of Atmos
consists of 75,000,000 shares of common stock, no par value ("Atmos Stock").
As of June 30, 1996, (a) 15,982,304 shares of Atmos Stock were issued and
outstanding, all of which were duly authorized, validly issued, fully paid,
and nonassessable and free of preemptive rights, and (b) no shares of Atmos
Stock were held in the treasury of Atmos. There are no options, warrants, or
other rights, agreements, arrangements, or commitments of any character
relating to the issued or unissued capital stock of the Atmos Entities or
obligating the Atmos Entities to issue or sell any shares of capital stock of,
or any securities convertible into or evidencing the right to purchase any
shares of capital stock of or other equity interests in, the Atmos Entities.
There are no obligations, contingent or otherwise, of the Atmos Entities to
repurchase, redeem, or otherwise acquire any shares of capital stock or other
equity interests in any of the Atmos Entities.
Section 2.4 Authority Relative to this Agreement. Atmos has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby, subject to the approval of Atmos shareholders as
contemplated in this Agreement and the terms and conditions of this Agreement.
The execution and delivery of this Agreement by Atmos and the consummation by
Atmos of the transactions contemplated hereby have been duly and validly
authorized by Atmos' Board of Directors and, except for the approval of the
shareholders of Atmos, no other corporate proceedings on the part of Atmos are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by Atmos and constitutes the legal, valid, and binding obligation of Atmos and
is enforceable against Atmos in accordance with its terms, subject to
bankruptcy, insolvency, moratorium and other laws generally affecting
creditors' rights.
Section 2.5 No Conflict; Required Filings and Consents. The execution,
delivery, and performance of this Agreement by Atmos and the consummation by
Atmos of the transactions contemplated hereby in accordance with the terms and
conditions hereof, including the Merger, do not and will not:
(a) conflict with the Articles of Incorporation or Bylaws of the Atmos
Entities or, in the case of EnerMart Trust, its organizational documents;
(b) conflict with or violate any law, rule, regulation, order, judgment, or
decree applicable to any of the Atmos Entities or by which any of them or any
of their respective properties is bound or affected;
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(c) except for those consents and waivers required to be obtained pursuant
to Section 4.6, require from any person other than a governmental or
regulatory authority any consent, approval, or notice under, or violate,
result in any breach of, constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration, or cancellation of, or result
in the creation of a lien or encumbrance on any of the property or assets of
any of the Atmos Entities pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, or other instrument or obligation to
which any of the Atmos Entities is a party or by which any of the Atmos
Entities or any of their respective properties is bound or affected; or
(d) require any consent, approval, authorization, or permit of, or filing
with or notification to, any governmental or regulatory authority except (i)
the applicable requirements of federal and state securities laws, (ii) the
filing requirements under the Xxxx-Xxxxx-Xxxxxx Act, (iii) the filing and
recordation of appropriate merger or other documents as required by the Texas
Business Corporation Act, the Illinois Business Corporation Act, and the
Virginia Stock Corporation Act, (iv) approvals of the applicable state public
utility commissions in the states in which Atmos or United Cities is doing
business, and (v) approval of the Federal Energy Regulatory Commission.
Section 2.6 Compliance. None of the Atmos Entities is in breach, default, or
violation of, and no event has occurred or is occurring that with notice or
lapse of time or both would become a breach, default, or violation of, (a) any
of the Atmos Entities' Articles of Incorporation or Bylaws, or, in the case of
EnerMart Trust, its organizational documents, (b) any law, rule, regulation,
order, judgment, or decree applicable to any of the Atmos Entities or by which
any of them or any of their respective properties is bound or affected, or (c)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, or other instrument or obligation to which any of the Atmos
Entities is a party or by which any of them or any of their respective
properties is bound or affected, nor have any of them received and not finally
resolved any complaint, citation, or notice of a breach, default, or violation
of any of the foregoing nor are any threatened.
Section 2.7 Environmental Matters.
(a) No Hazardous Materials are now located in, on, at, upon, or under the
Subject Property currently owned or operated by any of the Atmos Entities or
have migrated or emanated, or threaten to migrate or emanate, to adjacent
property in a quantity or manner that is required to be reported under any
Environmental Requirements, or that is in violation of any Environmental
Requirements, or for which any of the Atmos Entities will be liable under any
Environmental Requirements for the cost of remediation or other response if
such costs are incurred by an Environmental Agency; and no Hazardous Materials
have been located in, on, at, upon, or under the Subject Property, or migrated
or emanated from the Subject Property at any time prior to or during the Use
of the Subject Property by any of the Atmos Entities in a quantity or manner
that is required to be reported under any Environmental Requirements, or that
is in violation of any Environmental Requirements, or for which any of the
Atmos Entities will be liable under any Environmental Requirements for the
cost of remediation or other response if such costs are incurred by an
Environmental Agency.
(b) No Hazardous Materials have been generated, stored, transported,
disposed of on-site, or sent off-site from, in, on, at, or upon the Subject
Property at any time during the Use of the Subject Property by any of the
Atmos Entities (or prior to the Use of the Subject Property by any of the
Atmos Entities) in a quantity or manner that is required to be reported under
any Environmental Requirements, or that is in violation of any Environmental
Requirements, or for which any of the Atmos Entities will be liable under any
Environmental Requirements for the cost of remediation or other response if
such costs are incurred by an Environmental Agency.
(c) There are no off-site locations where Hazardous Materials generated or
transported from the Subject Property have been stored, treated, recycled, or
disposed of by any of the Atmos Entities or their agents, employees, or
representatives in a quantity or manner that is required to be reported under
any Environmental Requirements, or that is in violation of any Environmental
Requirements, or for which any of the Atmos Entities
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will be liable under any Environmental Requirements for the cost of
remediation or other response if such costs are incurred by an Environmental
Agency.
(d) Each of the Atmos Entities has all permits, licenses, or authorizations
from any Environmental Agency that it is required to have by any Environmental
Requirement in order to operate any aspect of the Subject Property currently
operated by it or the business currently conducted at the Subject Property;
the Use of the Subject Property currently Used by each of the Atmos Entities,
including but not limited to any and all Environmental Activity, and all
Environmental Conditions, is and has been in compliance with all Environmental
Requirements during the Use of the Subject Property by each of the Atmos
Entities and at all times prior to its Use by each of the Atmos Entities.
(e) No Environmental Costs have been suffered by any of the Atmos Entities
or by any third party prior to or during the Use of the Subject Property by
any of the Atmos Entities, and Atmos is not aware of, and has not received
notice of, any past or present events, conditions, circumstances, activities,
practices, incidents, actions, or plans that may result in Environmental Costs
or that may give rise to any common law or legal liability based on or related
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling or the emission, discharge, release, or
threatened release into the environment, of any pollutant, contaminant,
chemical, or industrial toxic or hazardous substance or waste or Hazardous
Materials.
(f) None of the Atmos Entities has Used, in the past, any facilities that
could reasonably be expected to subject any of the Atmos Entities to
Environmental Costs.
(g) All of the manufactured gas plants now or formerly Used by any of the
Atmos Entities and all locations where waste from these plants was disposed of
are set forth in the Atmos SEC Reports.
(h) All of the underground storage tanks located on the Subject Property are
set forth in the Atmos SEC Reports.
Section 2.8 Contracts. Atmos has made available to United Cities all
material contracts, loan agreements, indentures, commitments, and other
agreements or documents to which any of the Atmos Entities is a party or by
which any of the Atmos Entities or any of their respective properties is bound
or affected. All such contracts and instruments are in full force and effect
and no party thereto is in default thereunder and no default is threatened
thereunder.
Section 2.9 SEC Filings; Financial Statements; Absence of Undisclosed
Liabilities.
(a) Atmos has filed all forms, reports, and documents required to be filed
with the SEC since January 1, 1993, and has heretofore delivered or made
available to Atmos, in the form filed with the SEC, (i) its Annual Reports on
Form 10-K for the fiscal years ended September 30, 1993 through 1995, (ii) its
Quarterly Report on Form 10-Q for the periods ended December 31, 1995 and
Xxxxx 00, 0000, (xxx) all proxy statements relating to Atmos' meetings of
shareholders (whether annual or special) held since January 1, 1993, (iv) all
Forms 8-K filed by Atmos with the SEC since January 1, 1993, (v) all other
reports or registration statements filed by Atmos with the SEC since January
1, 1993, and (vi) all amendments and supplements to all such reports,
registration statements and proxy statements filed by Atmos with the SEC since
January 1, 1993 (collectively, the "Atmos SEC Reports"). As of their
respective dates, the Atmos SEC Reports were prepared in substantial
compliance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
the Atmos Entities other than Atmos is subject to the reporting requirements
of the Exchange Act.
(b) Atmos has heretofore delivered or made available to United Cities its
audited consolidated financial statements for its fiscal years ended September
30, 1993 through 1995 and its unaudited consolidated financial
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statements for the periods ended December 31, 1995 and March 31, 1996. All
such financial statements of Atmos that have been delivered or made available
to United Cities have been prepared in accordance with generally accepted
accounting principles applied (except as otherwise noted therein) on a
consistent basis throughout the periods covered thereby (subject, in the case
of any such financial statements that are unaudited, to year-end adjustments
in such amount and of such type as are or will be consistent with adjustments
made in prior fiscal years). The consolidated financial statements (together
with the related notes thereto) fairly present in all material respects the
consolidated financial condition and consolidated results of operation of
Atmos as of and for the respective dates indicated.
(c) None of the Atmos Entities has any liabilities or obligations (whether
accrued, absolute, contingent, known or unknown, or otherwise) that (i) are
not accrued or reserved against in the consolidated balance sheet of Atmos as
at March 31, 1996 or reflected in the notes thereto in accordance with
generally accepted accounting principles consistently applied or (ii) were
incurred after the date of such balance sheet outside of the ordinary course
of business of any of the Atmos Entities.
Section 2.10 Books and Records. Atmos has made available to United Cities,
and will continue to make available to United Cities, all of the Atmos
Entities' books, records, and certificates. All of such books, records, and
certificates are true, complete, and correct.
Section 2.11 Conduct of Business in Ordinary Course; Absence of Certain
Changes or Events. Since March 31, 1996, each of the Atmos Entities has
conducted its business only in the ordinary course; and, since such date,
there has not been any adverse change in the business, operations, properties,
condition (financial or otherwise), assets or liabilities of the Atmos
Entities, taken as a whole, or any condition, event, or development that will
result in an adverse change in the business, operations, properties, condition
(financial or otherwise), assets or liabilities of the Atmos Entities, taken
as a whole.
Section 2.12 Litigation. There are no material claims, actions, suits,
investigations, or proceedings pending or threatened against or affecting any
of the Atmos Entities or any of their respective properties or rights at law
or in equity before or by any court, arbitrator, or administrative,
governmental, or regulatory authority or body. None of the Atmos Entities nor
any of their respective properties is subject to any order, writ, judgment,
injunction, decree, determination, or award.
Section 2.13 Title to, and Condition of, Assets. Each of the Atmos Entities
has good and marketable title to, or a valid leasehold interest in, all of its
assets and properties, real and personal, including the properties, assets,
and leasehold interests reflected in the Atmos balance sheet dated March 31,
1996 referred to in Section 2.9 of this Agreement (except for any properties
or assets disposed of in the ordinary course of business since the date of
such balance sheet), necessary or appropriate for the operation of its
business, free and clear of all liens, mortgages, pledges, security interests,
or other encumbrances (except for matters set forth in the notes to such
balance sheet and the notes to the December 31, 1995 balance sheet). All of
the Atmos Entities' properties and assets are in good condition and repair
(ordinary wear and tear excepted) and are adequate and sufficient for the
conduct of the Atmos Entities' businesses.
Section 2.14 Intellectual Property. The Atmos Entities own or possess, or
can acquire on reasonable terms, the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names presently employed by them in
connection with the business now operated by them, and none of the Atmos
Entities has received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in any material adverse change in the business, operations, properties,
condition (financial or otherwise), assets or liabilities, of the Atmos
Entities, taken as a whole.
Section 2.15 Taxes. All Tax Returns of or relating to any Taxes that are
required to be filed with respect to Atmos and the Atmos Subsidiaries or any
of their income, properties, or operations have been duly filed on a
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timely basis and were true, complete, and correct. All Taxes attributable to
Atmos and the Atmos Subsidiaries or any of their income, properties, or
operations that are or were due and payable have been timely paid, and Atmos
and the Atmos Subsidiaries have no liability for any Taxes other than with
respect to their current taxable year for which adequate provisions have been
made and are reflected in Atmos' consolidated financial statements in
accordance with generally accepted accounting principles.
Section 2.16 Employee Benefit Plans.
(a) Atmos has previously delivered or made available to United Cities true,
correct and complete copies of (i) each Plan that is a "multiemployer plan,"
as defined in ERISA Section 4001, (ii) each other employee benefit plan as
defined in Section 3(3) of ERISA with respect to which an Atmos Entity or any
Group Member is a "Party in Interest," as defined in Section 3(14) of ERISA,
and (iii) each other Employee Benefit Arrangement.
(b) Each Atmos Entity, each Group Member, and each Plan is now, and has been
from its inception, in compliance with the provisions of ERISA and the Code
insofar as ERISA and the Code are applicable to such Plans. Each Plan intended
to be qualified under Section 401(a) of the Code has been determined to be so
qualified by the IRS and nothing has occurred since the date of the last such
determination which resulted or is likely to result in the revocation of such
determination. All required reports and descriptions of each Plan have been
timely filed and distributed as required by ERISA.
(c) There has not occurred with respect to any Plan any non-exempt
"Prohibited Transaction," as defined in either Section 406 of ERISA or Section
4975 of the Code.
(d) There has not occurred with respect to any Plan any "Reportable Event,"
as defined in Section 4043 of ERISA. No Plan has applied for or obtained a
waiver from the IRS of any minimum funding requirement under Section 412 of
the Code.
(e) (i) No Plan has been terminated, and no withdrawal from any
"multiemployer plan," as defined in Section 4001 of ERISA, has occurred since
the inception of any Plan under circumstances that have given rise to, or
would give rise to, any actual or potential liability to the PBGC or any other
person (excluding liabilities to participants (other than any liability for
unpaid benefits) for benefits payable in the normal course of events pursuant
to any such termination or withdrawal), (ii) no event or condition exists
which presents a risk of termination of any Plan by the PBGC, and (iii) there
is no actual or potential liability to the PBGC or any other person expected
by the Atmos Entities or any Group Member to be incurred with respect to any
Plan, including, but not limited to, any liability for premium payments, for
any accumulated funding deficiency as defined in Section 302 of ERISA or for
any minimum funding contribution under Section 302 of ERISA.
(f) The current value (as defined in Section 4062(b)(1)(A) of ERISA) of all
accrued benefits (as defined in Section 3 of ERISA) under each Plan which is a
plan subject to the provisions of Title IV of ERISA does not, as of the date
of the most recent actuarial report for such Plan exceed the current value of
the assets of such Plan allocable to such accrued benefits, except with
respect to the Greeley Gas Company Employees' Pension Plan.
(g) No lien imposed under Section 412(n) of the Code exists in favor of any
Plan upon any property belonging to a Group Member.
(h) Atmos has previously delivered or made available to United Cities true,
correct and complete copies of the annual reports and actuarial reports for
the preceding two plan years (1993 and 1994) filed with respect to each such
Plan and Employee Benefit Arrangement, summary plan descriptions and other
communications to employees relating to each such Plan and Employee Benefit
Arrangement, any related trust or third-party funding vehicle documents and
related financial statements, and all letters from the IRS, if any, confirming
the tax-exempt status or qualification under Section 401(a) of the Code of any
Plan. There are no Plans or Employee Benefit Arrangements other than those
previously delivered and made available to United Cities.
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(i) Neither (i) the Atmos Entities, or any director, officer, employee, or
agent of an Atmos Entity, has, with respect to any Plan, nor (ii) any Plan or
trust created thereunder or trustee or administrator thereof has, engaged in
any conduct that would result in any penalties under Section 502(i) of ERISA
or any liability under Section 409 of ERISA for breach of fiduciary duty. No
civil or criminal action or claim (other than uncontested claims for benefits)
is pending or threatened with respect to any Plan.
(j) None of the Atmos Entities, any Group Member, or any director, officer,
or employee of any of the foregoing have taken any elective action that would
commit an Atmos Entity to continue any Plan or Employee Benefit Arrangement or
any benefit thereunder for any present or former employee of an Atmos Entity
or that would prevent such Atmos Entity from changing or terminating any such
benefit or plan; provided, that this representation shall not be construed to
apply with respect to any express provision of a document which provides for
such effect without further action or election by such persons.
(k) No Atmos Entity now has in effect, or previously had in effect, any
welfare benefit plan, commitment, understanding, or arrangement providing for
medical or death benefits (whether insured or uninsured) with respect to
current or former employees beyond their date of retirement or other
termination of service (other than coverage mandated by Section 4980B of the
Code and Section 601 of ERISA, the cost of which is fully paid by the former
employee or his or her dependents), except as otherwise provided under the
Atmos Energy Corporation Retiree Medical Plan.
(l) For purposes of this Section 2.16, the terms "Employee Benefit
Arrangement," "Group Member" and "Plan" shall be interpreted to exclude all
reference to United Cities Entities under Section 8.1(l), (v) and (hh) hereof.
Section 2.17 Labor Matters. Atmos has no labor contracts or collective
bargaining agreements. There are no employee activities or controversies
(including, but not limited to, any labor organizing activities, election
petitions or proceedings preparatory thereto, unfair labor practice
complaints, labor strikes, disputes, slowdowns, or work stoppages) pending or,
to Atmos' knowledge, threatened, between any of the Atmos Entities and any of
their employees.
Section 2.18 Disclosure; Information in the Proxy Statement/Prospectus. No
representation or warranty by Atmos in this Agreement and no statement
contained in any certificate furnished or to be furnished by Atmos to United
Cities pursuant to the provisions of this Agreement contains or will contain
any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it is made,
in order to make the statements herein or therein not misleading. Any written
information supplied by Atmos specifically for inclusion or incorporation by
reference in the Proxy Statement/Prospectus and which is included or
incorporated by reference therein shall not, at the date the Proxy
Statement/Prospectus (or any amendment thereof or supplement thereto) is filed
with the SEC, at the time of the Atmos Shareholders Meeting, at the time of
the United Cities Shareholders Meeting, and at the time the Proxy
Statement/Prospectus becomes effective with the SEC as a registration
statement, be false or misleading with respect to any material fact, omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under
which they are made, not misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Atmos Shareholders Meeting or the
United Cities Shareholders Meeting that has become materially false or
misleading. If at any time prior to the Effective Time any event relating to
any of the Atmos Entities or any of their respective directors or officers
should be discovered by Atmos which should be set forth in a supplement to the
Proxy Statement/Prospectus, Atmos shall promptly inform United Cities in
writing. Notwithstanding the foregoing, Atmos makes no representation or
warranty with respect to any information to be contained in the Proxy
Statement/Prospectus and provided in writing by United Cities specifically for
inclusion or incorporation by reference in the Proxy Statement/Prospectus.
Section 2.19 Insurance. Atmos has not failed to give any notice or present
any claim under any insurance policies or binders maintained by any of the
Atmos Entities with respect to their properties and
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business in due and timely fashion. None of the Atmos Entities has received
notice of cancellation or nonrenewal of any such policy or binder.
Section 2.20 Broker's Fees. No broker, finder, or investment banker (other
xxxx Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated) is entitled to any
brokerage, finder's, or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Atmos Entities.
Section 2.21 No Atmos Investment in United Cities Stock. None of the Atmos
Entities has acquired or is the beneficial owner of any United Cities Stock.
Section 2.22 Board Recommendation. The Board of Directors of Atmos has, by
resolutions duly adopted by the requisite vote of directors present at a
meeting of such Board duly called and held on July 19, 1996, determined that
the Merger in accordance with the terms of this Agreement and the Plan of
Merger is fair and in the best interests of its shareholders and has
recommended that the shareholders of Atmos approve the Merger and Plan of
Merger, and ratify this Agreement.
Section 2.23 PUHCA. Neither Atmos nor any other of the Atmos Entities is
required to register under PUHCA, or the rules and regulations thereunder.
Section 2.24 Regulation as a Utility. Atmos is a regulated public utility in
the States of Texas, Louisiana, Kentucky, Colorado, Missouri and Kansas and in
no other state. Neither Atmos nor any Atmos Entity is subject to regulation as
a public utility or public service company (or similar designation) by any
other state in the United States, by the United States or any agency or
instrumentality of the United States or by any foreign country.
Section 2.25 Vote Required. The approval of the Merger by holders of two-
thirds of the shares of outstanding Atmos Stock is the only vote of the
holders of any class or series of the capital stock of Atmos required to
approve this Agreement, the Plan of Merger, the Merger, and the other
transactions contemplated hereby.
Section 2.26 Opinion of Financial Advisor. Atmos has received the opinion of
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, dated the date hereof, to
the effect that, as of the date hereof, the exchange ratio set forth in the
Plan of Merger is fair from a financial point of view to the holders of Atmos
Stock.
ARTICLE 3
Covenants of United Cities
Section 3.1 Conduct of Business by United Cities Pending the Merger. United
Cities covenants and agrees that, between the date of this Agreement and the
Effective Time, unless Atmos shall otherwise agree in writing, each of the
United Cities Entities shall conduct its business only in the ordinary course
of business and in a manner consistent with past practice; and United Cities
shall use its best efforts to maintain the corporate existence of each of the
United Cities Entities and preserve substantially intact the business and
organization of each of the United Cities Entities, to keep available the
services of its present officers, employees, and consultants, and to preserve
the relationships and goodwill of each of the United Cities Entities with its
customers, suppliers, and other persons with which it has significant business
relations. By way of amplification but not limitation, United Cities shall not
and shall not permit any of the United Cities Subsidiaries, between the date
of this Agreement and the Effective Time, directly or indirectly, to do, agree
to do, or propose to do any of the following without the prior written consent
of Atmos:
(a) amend or otherwise change its Articles of Incorporation, Bylaws,
Certificate of Formation or Limited Liability Company Agreement;
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(b) issue, sell, pledge, dispose of, or encumber, or authorize the
issuance, sale, pledge, disposition, or encumbrance of, (i) any shares of
capital stock of any class, or any options, warrants, convertible
securities, or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest, of any of the United Cities
Entities (other than in the ordinary course of business pursuant to United
Cities' Long-Term Stock Plan of 1989, Non-Employee Director Stock Plan,
Employee Stock Purchase Plan, Customer Stock Purchase Plan, Dividend
Reinvestment and Stock Purchase Plan, and 401(k) Savings Plan), except that
United Cities may issue shares of its common stock upon the exercise or
conversion in accordance with their terms of any options, warrants,
convertible securities or other rights to acquire such stock that were
outstanding on the date of this Agreement and disclosed in the United
Cities Disclosure Schedule or (ii) any assets of any of the United Cities
Entities (except for sales of assets in the ordinary course of business and
in a manner consistent with past practice);
(c) declare, set aside, make, or pay any dividend or other distribution,
payable in cash, stock, property, or otherwise, with respect to any of its
capital stock, except for regular quarterly cash dividends declared and
paid by United Cities in a manner and amount consistent with past practice,
and dividends declared and paid by the United Cities Subsidiaries;
(d) reclassify, combine, split, subdivide or redeem, purchase, or
otherwise acquire or offer to acquire, directly or indirectly, any of its
capital stock;
(e) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership, or other business organization or division
thereof, except for acquisitions, the fair market value of the
consideration for which exceeds $3,000,000 individually or $10,000,000 in
the aggregate, or acquire any shares of Atmos Stock;
(f) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee, or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans or advances (except for indebtedness incurred under existing
lines of credit in the ordinary course of business consistent with past
practice and except for indebtedness issued under United Cities' currently
effective shelf registration statement in a principal amount not to exceed
$15,000,000 in the aggregate), or mortgage, pledge or subject to any lien
or other encumbrance any assets of any of the United Cities Entities;
(g) enter into or amend any contract, agreement, commitment, or
arrangement other than in the ordinary course of business;
(h) authorize any capital expenditures that are in excess of (i) $500,000
for any single project and (ii) $30,000,000 in the aggregate since July 1,
1996;
(i) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of non-
officer employees of the United Cities Entities in accordance with past
practices or grant any severance or termination pay or stock options to, or
enter into any employment or severance agreement with any director,
officer, or other employee of any of the United Cities Entities, or
establish, adopt, enter into, or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance, or other plan, agreement, trust, fund, policy, or arrangement
for the benefit of any current or former directors, officers, or employees;
(j) make any loan or advance (except for normal business expense
advances) to any of the United Cities Entities' directors, officers,
employees, or shareholders (of United Cities), or to any other person or
entity or cancel without payment in full any note, loan, or other
obligation receivable from any director, officer, employee, or shareholder
of any of the United Cities Entities or any member of their families or
from any corporation or other entity in which any director, officer,
employee, or shareholder or any member of their families has any direct or
indirect interest known to United Cities;
(k) take any action other than in the ordinary course of business and in
a manner consistent with past practice (none of which actions shall be
unreasonable or unusual) with respect to accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable);
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(l) make any tax election or settle or compromise any material federal,
state, local, or foreign income tax liability or settle, waive, or
compromise any other material claim, including litigation;
(m) pay, discharge, or satisfy any claims, liabilities, or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than as may be paid, discharged, or satisfied in the ordinary course of
business and consistent with past practice;
(n) take any action or omit to take any necessary action, which action or
omission results in any breach of or constitutes a default (or an event
that with notice or lapse of time or both would become a default) under any
material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligation to which any
of the United Cities Entities is a party or by which any of the United
Cities Entities or any of their respective properties is bound or affected;
or
(o) cause any circumstance that might result in a Material adverse change
in the business, operations, properties, condition (financial or
otherwise), assets or liabilities of the United Cities Entities, taken as a
whole.
Section 3.2 No Solicitation of Competing Transaction. Subject to the
provisions of Section 3.11 below, United Cities agrees that it shall (a) not,
and that it shall not permit any of the United Cities Subsidiaries or any of
its or their respective officers, directors, employees, agents and
representatives (including, without limitation, any investment banker,
attorney or accountant) to, initiate, solicit or encourage (including by way
of furnishing information or assistance), or take any other action to
facilitate, any inquiries concerning, or the making or implementation of, any
proposal relating to, or that may reasonably be expected to lead to any
Competing Transaction, or engage in any negotiations concerning, agree to or
endorse, provide any confidential information or data to, or have any
discussions with, any person relating to, a Competing Transaction; and (b)
notify Atmos promptly if any such inquiries or proposals are received by, any
such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, United Cities or any of the
United Cities Subsidiaries, or any of its or their officers, directors,
employees, agents and representatives (such notification to include the terms
of the inquiry or proposal, the identity of the parties making such inquiry or
proposal and, if such inquiry or proposal is in writing, a copy of the inquiry
or proposal).
Section 3.3 Access to Information. From the date hereof to the Effective
Time, United Cities will, and will cause its directors, officers, employees,
and agents to, permit and afford Atmos and its representatives full and
complete access at all reasonable times to the employees, offices, properties,
books, and records of the United Cities Entities, including the audit work
papers of, and all correspondence with, its certified public accountants, and
will furnish Atmos with all financial, operating, and other data and
information as Atmos, through its officers, employees, or representatives, may
reasonably request.
Section 3.4 Environmental Audit and Covenants.
(a) Upon execution of this Agreement, United Cities and Atmos shall
cooperate to provide such information, files and documents as United Cities
and Atmos shall reasonably request of the other party concerning the
Environmental Activities and Environmental Condition of the respective
parties. Within sixty (60) days ("Initial Environmental Inspection Period")
after the date of this Agreement, United Cities and Atmos shall meet and
mutually agree upon a site assessment and environmental compliance audit of
the Subject Property currently Used by each of the United Cities Entities and
any Subject Property formerly Used by any of the United Cities Entities and
described in the United Cities Disclosure Schedule pursuant to Section 1.7(f),
which assessment and audit shall be in scope, form, and substance ("Scope"),
and prepared by an independent, competent, and qualified engineer, reasonably
satisfactory to United Cities and to Atmos (the "Environmental Audit"). United
Cities shall not withhold its agreement to a Scope that does not involve any
invasive or subsurface testing, provided that such Scope is reasonable based
upon the information obtained during the Initial Environmental Inspection
Period. The terms of the engagement of the engineer shall be approved by
United Cities and Atmos. The engagement agreement shall provide that the
Environmental Audit shall be issued to United Cities and Atmos and that United
Cities and Atmos shall have all of the same rights as United Cities
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under the engagement agreement. Any investigation conducted by Atmos prior to
the earlier of the expiration of the Initial Environmental Inspection Period
or the agreement upon the Scope will be at the expense of Atmos. Within ninety
(90) days ("Additional Environmental Investigation Period") of the end of the
Initial Environmental Inspection Period, United Cities shall cause to be
prepared and submit to Atmos the Environmental Audit at the sole cost and
expense of the United Cities Entities.
(b) In the event that United Cities and Atmos cannot agree upon a Scope for
the Environmental Audit, then Atmos, at its sole discretion, may during the
Initial Environmental Inspection Period, commission at its sole cost and
expense such additional investigation and assessment work as Atmos determines
is reasonable, but which United Cities does not approve ("Additional
Assessment"), and this Additional Assessment will be part of the Scope;
provided, however, in no event shall surface or subsurface soil or groundwater
sampling or assessment ("Sampling") of a Subject Property previously or
currently held as a manufacturing gas plant be a part of the Scope. The United
Cities Entities will pay the agreed upon portions of the Scope and Atmos will
pay the costs of the Additional Assessment. United Cities agrees to permit
Atmos to enter upon the Subject Property within United Cities' control to
perform the Additional Assessment, provided, however, that United Cities shall
have the right, and Atmos' permission to enter is so limited, to refuse to
permit Atmos to enter upon any Subject Property previously or currently held
as a manufactured gas plant to perform Additional Assessment work that
involves Sampling.
(c) The Environmental Audit shall include a "Disclosure Summary" that
specifically addresses any exceptions to the representations and warranties
set forth in Section 1.7 of this Agreement and shall include a "Conclusion"
section that states whether there is a low, medium, or high probability of
environmental impairment or liability associated with a Subject Property,
whether the current operations of each United Cities Entity at a Subject
Property are in compliance with Environmental Requirements, and whether
further investigation is recommended. If further investigation is recommended
by the initial Environmental Audit, the scope and extent of this investigation
and the engineer performing the investigation must be mutually approved by
United Cities and Atmos. All costs of the further investigation shall be paid
by United Cities. Except in connection with the right to refuse access to any
Subject Property previously used as a manufactured gas plant, the agreement of
United Cities to any additional investigation will not be unreasonably
withheld.
(d) United Cities further agrees that prior to Closing it shall:
(i) comply with all applicable Environmental Requirements relating to the
Subject Property currently Used by United Cities and the Use of such
Subject Property by United Cities, and not engage in or permit others to
engage in any Environmental Activity in violation of any applicable
Environmental Requirements;
(ii) deliver to Atmos no later than three (3) days following the
occurrence of any such event, written notice of the discovery by United
Cities of any event, the occurrence of which would render any
representation or warranty contained in Section 1.7 of this Agreement
incorrect in any material respect if made at the time of such discovery;
and
(iii) cause any party who Uses the Subject Property currently Used by
United Cities to comply with this Section 3.4(d).
Section 3.5 Consents and Approvals.
(a) United Cities shall use all reasonable efforts to obtain all consents,
waivers, approvals, authorizations, and orders of all third parties and local,
state, and federal governmental authorities (including, but not limited to,
the approvals of the Iowa Utility Board, Kansas Corporation Commission,
Missouri Public Service Commission, Illinois Commerce Commission, Tennessee
Regulatory Authority, Georgia Public Service Commission, South Carolina Public
Service Commission, Virginia State Corporation Commission and the Federal
Energy Regulatory Commission required in connection with the authorization,
execution, and delivery of this Agreement and the consummation of the
transactions contemplated hereby. United Cities shall attend all proceedings
of, and file all documents with, the Iowa Utility Board, Kansas Corporation
Commission, Missouri Public Service Commission, Illinois Commerce Commission,
Tennessee Regulatory Authority, Georgia Public Service Commission,
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South Carolina Public Service Commission, Virginia State Corporation
Commission and the Federal Energy Regulatory Commission that are necessary to
obtain each of such commissions' approval of the Merger. United Cities shall
also cooperate with and assist Atmos in all proceedings before and in the
preparation and filing of any documents it is required to file with the
Colorado Public Utilities Commission, Kansas Corporation Commission, Kentucky
Public Service Commission, and Missouri Public Service Commission, and with
respect to the preparation of the Proxy Statement/Prospectus and Listing
Application to the NYSE.
(b) United Cities shall, as soon as practicable after the date of this
Agreement, file any Notification and Report Forms and related material that it
may be required to file with the Federal Trade Commission and the Antitrust
Division of the Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, shall
use its reasonable efforts to obtain an early termination of the applicable
waiting period, and shall make any further filings pursuant thereto that may
be necessary, proper, or advisable and respond as promptly as practicable to
all inquiries received from the Federal Trade Commission or the Antitrust
Division of the Department of Justice for additional information or
documentation.
(c) United Cities shall use all reasonable efforts to arrange for the
transfer to Atmos on the Closing Date of all permits required by Environmental
Requirements for the Use of the Subject Property and all other permits
material to the continued operation of United Cities' business.
Section 3.6 Meeting of United Cities Shareholders. As soon as practicable
following the approval by the SEC of the Proxy Statement/Prospectus, United
Cities shall take all action necessary in accordance with the Illinois
Business Corporation Act and Virginia Stock Corporation Act and its Articles
of Incorporation and Bylaws to convene a meeting of its shareholders promptly
to consider and vote upon approval of the Merger and the Plan of Merger, and
the ratification of this Agreement. United Cities shall, subject to Section
3.11, use its reasonable efforts to solicit from the shareholders of United
Cities proxies in favor of such approval and ratification and take all other
action reasonably necessary or, in the reasonable opinion of United Cities,
helpful to secure a vote of the shareholders of United Cities in favor of the
Merger and the Plan of Merger, and the ratification of this Agreement.
Section 3.7 Shareholder Appraisal Rights. United Cities shall not settle or
compromise any claim for shareholder appraisal rights in respect of the Merger
prior to the Effective Time without the prior written consent of Atmos.
Section 3.8 Insurance. Through the Effective Time, United Cities shall
maintain in full force and effect all of the policies of insurance of the
United Cities Entities that were in effect on the date hereof or insurance
comparable to the coverage afforded by such policies.
Section 3.9 Agreement of Certain United Cities Shareholders Regarding Rule
145 Compliance. At or prior to the Closing Date, United Cities shall deliver
to Atmos a certificate identifying each of its shareholders who in United
Cities' reasonable judgment is an affiliate of United Cities for purposes of
SEC Rule 145 and shall use all reasonable efforts to obtain from such
affiliates a written agreement, in form and substance satisfactory to Atmos,
not to offer to sell, sell, or otherwise dispose of any shares of Atmos Stock
received in the Merger (a) except pursuant to an effective registration
statement under the Securities Act or in compliance with SEC Rule 145, as
amended from time to time, or in a transaction which, in the opinion of legal
counsel (such opinion and counsel being reasonably satisfactory to Atmos) is
exempt from the registration requirements of the Securities Act and (b) in no
event at any time prior to the public release and dissemination by Atmos of
financial results covering at least thirty (30) days of the combined
operations of Atmos and United Cities. Such agreement shall also include the
agreement and acknowledgement of each of such shareholders that his or her
shares of Atmos Stock received in the Merger shall contain a legend setting
forth the restrictions that such shares may be sold only as provided in this
Section 3.9.
Section 3.10 Cooperation in Registration of Atmos Stock. United Cities shall
cooperate fully with Atmos and shall furnish such information concerning
United Cities as Atmos shall request in connection with
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the registration with the SEC by Atmos of the Atmos Stock and the preparation
and filing with the SEC by Atmos of the Proxy Statement/Prospectus in
connection with the Atmos Shareholders Meeting. In addition, United Cities
shall obtain the consent of Xxxxxx Xxxxxxxx LLP to the inclusion of such
audited financial statements of United Cities in the Proxy
Statement/Prospectus as may be necessary or desirable, as determined by Atmos.
Section 3.11 Fiduciary Limitations.
(a) Nothing contained in this Agreement, including without limitation
Sections 3.1, 3.2 and 5.6(b) hereof, shall prohibit United Cities from (i)
furnishing information to, or entering into discussions or negotiations with,
any person or entity that makes an unsolicited contact in connection with a
bona fide Competing Transaction, if, and only to the extent that,
(A) the Board of Directors of United Cities determines in good faith,
based on, among other matters, the written advice of independent legal
counsel (which for the purposes of this Agreement includes Xxxxxxx and
Xxxxxx), that such action is required for the Board of Directors to comply
with its fiduciary duties to shareholders imposed by law;
(B) prior to United Cities furnishing any confidential information to
such other person, such other person executes a confidentiality agreement
with United Cities in customary form;
(C) prior to furnishing such information to, or entering into discussions
(other than responding to an initial inquiry) or negotiations with, such
person or entity, United Cities provides written notice to Atmos to the
effect that it is furnishing information to, or entering into discussions
or negotiations with, such person or entity; and
(D) United Cities keeps Atmos reasonably informed of the status of any
such discussions or negotiations; or
(ii) taking or disclosing to the shareholders of United Cities a
position with respect to any such Competing Transaction, or the Merger that, in
the judgment of the Board of Directors of United Cities, as determined in good
faith based on, among other matters, the written advice of independent legal
counsel, is required for the Board of Directors to comply with its fiduciary
duties to shareholders imposed by law, and, to the extent applicable, complying
with Rule 14e-2 promulgated under the Exchange Act with regard to a Competing
Transaction.
(b) Nothing in this Section 3.11 shall (i) permit United Cities to terminate
this Agreement (except as specifically provided in Section 7.1 hereof), or
(ii) permit United Cities to enter into any agreement with respect to a
Competing Transaction during the term of this Agreement (it being agreed that
during the term of this Agreement, United Cities shall not enter into any
agreement with any person that provides for, or in any way facilitates, a
Competing Transaction (other than a confidentiality agreement in customary
form)).
Section 3.12 Delivery of Monthly Financials. United Cities shall deliver to
Atmos, as promptly as practicable following the end of each calendar month
after the date of this Agreement, its consolidated monthly financial
statements prepared in the ordinary course of its business.
Section 3.13 Termination of Supplemental Executive Retirement Plan. Prior to
Closing, United Cities shall have (a) terminated the United Cities and
Subsidiaries Supplemental Executive Retirement Plan and all accompanying
Joinder Agreements, (b) obtained waivers and releases from all "active
participants" (as defined in such Plan), with respect to any and all rights
and benefits to which they were entitled thereunder and (c) in order to cover
all obligations currently in pay status under such Plan, purchased an annuity
for Mr. Xxxxx Xxxxxx (in an amount equal to the most favorable commercial rate
available from an "excellent" rated insurance company) and, in consideration
therefor, obtained his release with respect to any further rights and benefits
to which he is entitled under such Plan. In consideration for such waivers and
releases (other than those obtained from Xx. Xxxxxx), United Cities shall pay
to each such participant (other than Xx. Xxxxxx) an amount equal to one dollar
less than three hundred percent (300%) of the average of such participant's
compensation paid by United Cities and included in his or her gross income for
Federal income tax purposes for the five (5)-year period
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ending on the December 31 immediately preceding the Closing Date; provided
that, the aggregate of all such payments shall not exceed $5,000,000.
Notwithstanding the preceding provisions of this Section 3.13, Xx. Xxxx Xxxxxx
shall, prior to the Closing Date, be given the option to (i) provide a waiver
and release with respect to his rights and benefits under the United Cities
Gas and Subsidiaries Supplemental Executive Retirement Plan, in which event he
shall receive payment pursuant to the immediately preceding sentence of
$2,247,434 or (ii) continue to participate in such Plan. If Xx. Xxxxxx elects
to provide such a waiver, then the aggregate amount of payments made to all
participants shall be increased by the payment made to Xx. Xxxxxx in
consideration for such waiver.
Section 3.14 Directors' and Officers' Insurance. United Cities shall use its
best efforts to procure a policy of directors' and officers' liability
insurance, to be effective for a period of five (5) years, with respect to
matters involving United Cities and occurring prior to the consummation of the
Merger, and, if United Cities does obtain such a policy, to use its best
efforts to assign the benefits of such policy to Atmos following the
consummation of the Merger.
ARTICLE 4
Covenants of Atmos
Section 4.1 Conduct of Business by Atmos Pending the Merger. Atmos covenants
and agrees that, between the date of this Agreement and the Effective Time,
unless United Cities shall otherwise agree in writing, each of the Atmos
Entities shall conduct its business only in the ordinary course of business
and in a manner consistent with past practice; and Atmos shall use its best
efforts to maintain the corporate existence of each of the Atmos Entities that
is a corporation and preserve substantially intact the business and
organization of each of the Atmos Entities. Atmos shall not and shall not
permit any of the Atmos Subsidiaries, between the date of this Agreement and
the Effective Time, directly or indirectly, to do, agree to do, or propose to
do any of the following without the prior written consent of United Cities:
(a) except as otherwise contemplated by this Agreement, amend or
otherwise change its Articles of Incorporation or Bylaws;
(b) issue, sell, pledge, dispose of, or encumber, or authorize the
issuance, sale, pledge, disposition, or encumbrance of, (i) any shares of
capital stock of any class, or any options, warrants, convertible
securities, or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest, of any of the Atmos Entities (other
than in the ordinary course of business pursuant to Atmos' Restricted Stock
Grant Plan, Dividend Reinvestment and Stock Purchase Plan, Employee Stock
Ownership Plan and Directors' Stock for Fee Plan), except that Atmos may
issue shares of its common stock upon the exercise or conversion in
accordance with their terms of any options, warrants, convertible
securities or other rights to acquire such stock that were outstanding on
the date of this Agreement and disclosed in the Atmos Disclosure Schedule
or (ii) any assets of any of the Atmos Entities (except for sales of assets
in the ordinary course of business and in a manner consistent with past
practice);
(c) declare, set aside, make, or pay any dividend or other distribution,
payable in cash, stock, property, or otherwise, with respect to any of its
capital stock, except for regular quarterly cash dividends declared and
paid in a manner and amount consistent with past practice;
(d) reclassify, combine, split, subdivide or redeem, purchase, or
otherwise acquire or offer to acquire, directly or indirectly, any of its
capital stock;
(e) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership, or other business organization or division
thereof, except for acquisitions the consideration for which exceeds
$10,000,000 individually or $20,000,000 in the aggregate, or acquire any
shares of United Cities Stock;
(f) make any loan or advance (except for normal business expense
advances) to any of the Atmos Entities' directors, officers, employees, or
shareholders (of Atmos), or to any other person or entity or cancel
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without payment in full any note, loan, or other obligation receivable from
any director, officer, employee, or shareholder of any of the Atmos
Entities or any member of their families or from any corporation or other
entity in which any director, officer, employee, or shareholder or any
member of their families has any direct or indirect interest known to
Atmos;
(g) take any action other than in the ordinary course of business and in
a manner consistent with past practice (none of which actions shall be
unreasonable or unusual) with respect to accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable);
(h) take any action or omit to take any necessary action, which action or
omission results in any breach of or constitutes a default (or an event
that with notice or lapse of time or both would become a default) under any
material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligation to which any
of the Atmos Entities is a party or by which any of the Atmos Entities or
any of their respective properties is bound or affected; or
(i) cause any circumstance that might result in a Material adverse change
in the business, operations, properties, condition (financial or
otherwise), assets or liabilities of the Atmos Entities, taken as a whole.
Section 4.2 Meeting of Atmos Shareholders. As soon as practicable following
the approval by the SEC of the Proxy Statement/Prospectus, Atmos shall take
all action necessary in accordance with the Texas Business Corporation Act and
its Articles of Incorporation and Bylaws to convene a meeting of its
shareholders promptly to consider and vote upon approval of the Merger and the
Plan of Merger, the ratification of this Agreement, and the approval of the
issuance of the Atmos Stock to the United Cities shareholders. Atmos will use
its reasonable efforts to solicit from the shareholders of Atmos proxies in
favor of such approvals and ratification and will take all other action
reasonably necessary or, in the reasonable opinion of Atmos, helpful to secure
a vote of the shareholders of Atmos in favor of the Merger and the Plan of
Merger, the ratification of this Agreement, and the issuance of Atmos Stock
contemplated hereby and thereby.
Section 4.3 Registration and Listing of Atmos Stock. As soon as practicable
after the date of this Agreement, Atmos will file a registration statement on
Form S-4 with the SEC under the Securities Act with respect to the offering,
sale, and delivery of the shares of Atmos Stock to be issued to United Cities'
shareholders pursuant to this Agreement and the Plan of Merger; and Atmos will
use all reasonable efforts to cause such registration statement to become
effective as promptly as practicable after filing and to cause the shares of
Atmos Stock registered thereby to be duly listed for trading on the NYSE.
Atmos shall also use all reasonable efforts to take any action required to be
taken under state securities laws with respect to the Atmos Stock.
Section 4.4 Access to Information. From the date hereof to the Effective
Time, Atmos will, and will cause its directors, officers, employees, and
agents to, permit and afford United Cities and its representatives full and
complete access at all reasonable times to the employees, offices, properties,
books, and records of the Atmos Entities, including the audit work papers of,
and all correspondence with, its certified public accountants, and will
furnish United Cities with all financial, operating, and other data and
information as United Cities, through its officers, employees, or
representatives, may reasonably request.
Section 4.5 Environmental Covenants. Atmos agrees that prior to Closing it
shall:
(a) comply with all applicable Environmental Requirements relating to the
Subject Property currently Used by Atmos and the Use of such Subject
Property by Atmos, and not engage in or permit others to engage in any
Environmental Activity in violation of any applicable Environmental
Requirements;
(b) deliver to United Cities no later than three (3) days following the
occurrence of any such event, written notice of the discovery by Atmos of
any event, the occurrence of which would render any representation or
warranty contained in Section 2.7 of this Agreement incorrect in any
material respect if made at the time of such discovery; and
(c) cause any party who Uses the Subject Property currently Used by Atmos
to comply with this Section 4.5.
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Section 4.6 Consents and Approvals.
(a) Atmos shall use all reasonable efforts to obtain all consents, waivers,
approvals, authorizations, and orders of all third parties and local, state,
and federal governmental authorities (including, but not limited to, the
approvals of the Colorado Public Utilities Commission, Kansas Corporation
Commission, Kentucky Public Service Commission, and Missouri Public Service
Commission) required in connection with the authorization, execution, and
delivery of this Agreement and the consummation of the transactions
contemplated hereby. Atmos shall attend all proceedings of, and file all
documents with, the Colorado Public Utilities Commission, Kansas Corporation
Commission, Kentucky Public Service Commission, and Missouri Public Service
Commission that are necessary to obtain each of such commissions' approval of
the Merger. Atmos shall also cooperate with and assist United Cities in all
proceedings before and in the preparation and filing of any documents it is
required to file with the Iowa Utility Board, Kansas Corporation Commission,
Missouri Public Service Commission, Illinois Commerce Commission, Tennessee
Regulatory Authority, Georgia Public Service Commission, South Carolina Public
Service Commission, Virginia State Corporation Commission and the Federal
Energy Regulatory Commission.
(b) Atmos shall, as soon as practicable after the date of this Agreement,
file any Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust Division
of the Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, shall use its
reasonable efforts to obtain an early termination of the applicable waiting
period, and shall make any further filings pursuant thereto that may be
necessary, proper, or advisable and respond as promptly as practicable to all
inquiries received from the Federal Trade Commission or the Antitrust Division
of the Department of Justice for additional information or documentation.
Section 4.7 Employees and Employee Benefits.
(a) At the Effective Time, all employees of the United Cities Entities shall
become employees of Atmos. Such employees' titles and job duties will be
determined by Atmos in its sole discretion. Except as otherwise set forth in
Section 4.7(b) hereof, Atmos agrees to retain all of such employees for a
period of one (1) year following the Effective Time at their approved rate of
pay as in effect immediately prior to such Effective Time; provided, however,
that Atmos shall have the right to terminate any such employee for cause;
provided, further, that no such employee who is a former officer of any of the
United Cities Entities shall be terminated for cause during such one (1)-year
period without having been given a reasonable opportunity to cure and correct,
to the satisfaction of Atmos, the deficiencies or other circumstances giving
rise to such cause. Following such one (1)-year period, such employees will be
employed by Atmos on an "at will" basis.
(b) At the Closing, Atmos will enter into an employment contract with each
of Messrs. Xxxxx X. Xxxx and Xxxxxx X. Xxxxx, Xx. for a term of three (3)
years, which contracts shall be in substantially the forms of Exhibits C-1 and
C-2, respectively, to this Agreement. In addition, at the Closing, Atmos will
enter into an employment contract with Xx. Xxxx X. Xxxxxx for a term of six
(6) months, which contract shall be in substantially the form of Exhibit C-3
to this Agreement.
(c) During the one (1)-year period described in Section 4.7(a) hereof and
except as otherwise provided in Section 3.13 hereof, any employee of a United
Cities Entity who continues his or her employment with Atmos as set forth in
such Section 4.7(a) and who was a participant in a Plan or Employee Benefit
Arrangement maintained by a United Cities Entity shall continue to participate
in such Plan or Employee Benefit Arrangement which shall be maintained by
Atmos during such one (1)-year period; provided, however, that, during such
period, Atmos shall have the right to merge or terminate any such Plan or
Employee Benefit Arrangement if, in its sole judgment, Atmos determines that
the same or better benefits are available to the employees covered thereunder
under a Plan or Employee Benefit Arrangement which provides the same or
similar benefits, which was maintained by Atmos before the Effective Time (and
continues to be so maintained) and under which immediate coverage for such
employees can be provided. Atmos will credit all employees of the United
Cities
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Entities who continue their employment with Atmos as set forth in Section
4.7(a) and (b) above for service performed as employees of the United Cities
Entities prior to the Effective Time for eligibility, participation and
vesting (but not benefit accrual) purposes in any employee plan or program
maintained by Atmos at or after the Effective Time for which such employees
are eligible (it being understood that employees who continue to be covered
under any Plan or Employee Benefit Arrangement previously maintained by any
United Cities Entity will not, during the period of such coverage, be eligible
to participate in any Plan or Employee Benefit Arrangement which provides the
same or similar benefits and which was maintained by Atmos before the
Effective Time). Certain key management employees as selected by Atmos will be
eligible to participate in Atmos' Annual Performance Bonus Plan for Key
Management Employees and Atmos' Mini-Med Plan. Subject to the foregoing, the
rights of any employees of the United Cities Entities at or after the
Effective Time shall be governed by the terms, as may be amended or modified
from time to time, of any Atmos Plan or Employee Benefit Arrangement in which
they participate. Those employees of the United Cities Entities, if any, who
become participants in one of Atmos' defined benefit pension plans will have
no rights in or claims against Atmos' pension or retirement funds, except with
respect to contributions made for their benefit subsequent to the Effective
Time.
(d) It is expressly understood by the parties hereto that, except as
otherwise provided in Section 4.7(c) hereof, Atmos assumes no responsibility,
and makes no commitment, for the maintenance and continuation, after the
Closing, of any Plan or Employee Benefit Arrangement previously adopted or
maintained by any United Cities Entity or any United Cities Group Member,
provided that a decision to discontinue any such Plan or Employee Benefit
Arrangement shall not be based solely on the status of the participants
thereunder as former employees of the United Cities Entities.
(e) Atmos shall provide coverage for each individual (other than Xx. Xxxx
Xxxxxx) who was an active participant in the United Cities Gas and
Subsidiaries Supplemental Executive Retirement Plan immediately prior to the
date on which this Agreement was signed, under a "death benefit only" plan
providing the same "survivor benefit" as provided under, and defined in,
Section 4.4 of the United Cities and Subsidiaries Supplemental Executive
Retirement Plan; provided that United Cities shall have, prior to the
Effective Time, transferred ownership of any and all insurance policies
described in Section 7.12(b) of such Plan to Atmos.
Section 4.8 Declaration of Dividends. Atmos will take appropriate action, at
the first regularly scheduled meeting of Atmos' Board of Directors after the
Effective Time, to cause to be declared and paid, for a period of not less
than four (4) quarters, quarterly cash dividends at an indicated annual rate
of not less than $1.02 per share (subject to adjustment for any stock split,
stock dividend, combination of shares or other similar event), except to the
extent that the ability of Atmos' Board of Directors to declare, and Atmos'
ability to pay, such dividends are limited by applicable state statutory
requirements of the state or states in which Atmos is incorporated or by such
directors' fiduciary duties to Atmos and its shareholders, as such fiduciary
duties are determined by Atmos and its counsel in their sole discretion.
Section 4.9 Options. Following the consummation of the Merger, Atmos agrees
to continue in effect the United Cities Gas Company Long-Term Stock Plan of
1989, as amended. Persons holding options under such plan shall be allowed to
exercise their options for Atmos Stock at the exchange rate set forth in the
Plan of Merger. Persons holding stock appreciation rights under such plan
shall be allowed to exercise such rights based on the price of Atmos Stock
taking into account the exchange rate set forth in the Plan of Merger.
Section 4.10 Indemnification. Atmos agrees that all rights to
indemnification and advancement of expenses existing in favor of the present
or former directors, officers, employees, fiduciaries and agents of the United
Cities Entities (collectively, the "Indemnified Parties") as provided in
United Cities' Articles of Incorporation or Bylaws as in effect as of the date
hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect for a period of
not less than the statutes of limitations applicable to such matters.
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Section 4.11 Insurance. Through the Effective Time, Atmos shall maintain in
full force and effect all of the policies of insurance of the Atmos Entities
that were in effect on the date hereof or insurance comparable to the coverage
afforded by such policies.
Section 4.12 Cooperation in Preparation of Proxy Statement/Prospectus. Atmos
shall cooperate fully with United Cities and shall furnish such information
concerning Atmos as United Cities shall request in connection with the
preparation and filing with the SEC by United Cities of the Proxy
Statement/Prospectus in connection with the United Cities Shareholders
Meeting. In addition, Atmos shall obtain the consent of Ernst & Young LLP to
the inclusion of such audited financial statements of Atmos in the Proxy
Statement/Prospectus as may be necessary or desirable, as determined by Atmos.
Section 4.13 Delivery of Monthly Financials. Atmos shall deliver to United
Cities, as promptly as practicable following the end of each calendar month
after the date of this Agreement, its consolidated monthly financial
statements prepared in the ordinary course of its business.
ARTICLE 5
Mutual Covenants of Atmos and United Cities
Section 5.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, Atmos and United
Cities agree to enter into a statutory merger under the applicable laws of the
States of Texas, Illinois and Virginia whereby United Cities will be merged
with and into Atmos, with Atmos as the surviving corporation (the "Merger");
and Atmos and United Cities hereby respectively agree that the terms and
conditions of such Merger, the mode of carrying the same into effect, the
manner of converting the shares of capital stock of United Cities into shares
of Atmos Stock, and other necessary or proper details and provisions relating
to such Merger shall be as contained in the form of Plan of Merger attached
hereto as Exhibit D (the "Plan of Merger"). Notwithstanding anything to the
contrary contained in this Agreement or the Plan of Merger, if any state
authority or commission requires that the survivor pursuant to the Merger be a
corporation incorporated under the laws of such state, each party agrees to
take all necessary actions prior to the mailing of the Proxy
Statement/Prospectus to comply with such requirement and provide that such
survivor will be incorporated in such state, including, without limitation,
making any necessary amendments to the Plan of Merger, as authorized by the
respective Board of Directors of United Cities and Atmos by approval of this
Agreement.
(b) At any time before approval of this Agreement and the Plan of Merger by
the respective shareholders of Atmos and United Cities and prior to the
Closing Date, this Agreement and the Plan of Merger may be amended in writing
by Atmos and United Cities in accordance with the provisions of Section 7.3.
(c) The closing of the transactions contemplated hereby (the "Closing")
shall take place at 10:00 a.m., local time, within fifteen (15) business days
following the latest to occur of (i) the meeting of shareholders of Atmos held
pursuant to Section 4.2 of this Agreement, (ii) the meeting of shareholders of
United Cities held pursuant to Section 3.6 of this Agreement, (iii) the
expiration or termination of the waiting period (and any extension thereof)
applicable to the consummation of the Merger under the Xxxx-Xxxxx-Xxxxxx Act,
or (iv) the date all approvals contemplated by Section 6.1(c) of this
Agreement have been granted, and each of the other conditions set forth in
Article VI hereof have been satisfied, or at such other date and time as Atmos
and United Cities shall agree upon in writing (the "Closing Date"). The
Closing shall take place at the office of Xxxxx Xxxxxxx Rain Xxxxxxx (A
Professional Corporation) at 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000
or at such other place as Atmos and United Cities shall agree upon in writing.
(d) The "Paying Agent" referred to in the Plan of Merger shall be Boston
EquiServe Limited Partnership or such other party as Atmos and United Cities
may mutually agree.
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Section 5.2 Execution, Filing, and Recording of Merger Documents. Subject to
the terms and conditions of this Agreement and upon approval and adoption of
the Plan of Merger by the respective shareholders of United Cities and Atmos
in accordance with the laws of Texas, Illinois and Virginia, as applicable,
relating to statutory mergers, Atmos and United Cities each agree to properly
execute and deliver the Plan of Merger in compliance with the laws of Texas,
Illinois and Virginia, as well as the requisite certificate(s) and articles of
merger in compliance with the laws of Texas, Illinois and Virginia, as
applicable, and to cause the requisite filing and recording of the
certificate(s) and articles of merger in accordance with the laws of the
States of Texas, Illinois and Virginia, as applicable, all with a view of
making the Merger effective at the Closing Date.
Section 5.3 Notice of Certain Events. Each of the parties hereto shall give
prompt written notice to the other party of (a) the occurrence, or non-
occurrence, of any event, the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate and (b) any failure of such party to
comply with or satisfy any cost, condition, or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.3 shall not limit or otherwise affect the
remedies available hereunder to the other party hereto.
Section 5.4 Expenses. Except as otherwise provided in this Section 5.4, all
costs and expenses incurred in connection with this Agreement, the Plan of
Merger, and the transactions contemplated hereby and thereby (including
without limitation any fees, commissions or expenses of the type referred to
in Sections 1.20 and 2.20 above) shall be paid by the party incurring such
expense. The SEC filing fee for registering the Atmos Stock on Form S-4 and
the expenses incurred in connection with printing and mailing the Proxy
Statement/Prospectus shall be shared equally by Atmos and United Cities.
Notwithstanding the foregoing, if
(a) this Agreement is terminated
(i) by United Cities, because of the failure of Atmos to satisfy the
conditions to closing set forth in Sections 6.1(a), 6.3(a), 6.3(b), or
6.3(c) or the failure of Atmos to obtain the opinion described in
Section 6.2(d) hereof; or
(ii) by Atmos, because of the failure of United Cities to satisfy the
conditions to closing set forth in Sections 6.1(a), 6.2(a), 6.2(b),
6.2(c), or 6.2(g) or the failure of United Cities to obtain the opinion
described in Section 6.3(d) hereof,
then the terminating party shall be reimbursed, by the party failing to
satisfy such condition(s), for its reasonable expenses (including attorneys,
accountants and investment bankers fees (as accrued as of the date of
termination)) incurred in connection with this Agreement and the transactions
contemplated hereby; and
(b) if this Agreement is terminated by United Cities under Section
7.1(k), by Atmos under Section 7.1(c), or by Atmos because United Cities'
shareholders have approved a Competing Transaction involving United Cities,
then United Cities will pay to Atmos a fee in immediately available funds
equal to $15,000,000 promptly, but in no event later than two (2) business
days, after such termination.
Section 5.5 Public Announcements. Atmos and United Cities shall consult with
one another before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except
as may be required by law, under Atmos' listing agreement with the NYSE or
under United Cities' listing agreement with Nasdaq.
Section 5.6 Further Action. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall (a) promptly make its respective
filings, and thereafter make any other required submissions, and (b) use all
reasonable efforts to take, or cause to be taken, all appropriate action, and
to do or cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Plan of Merger, including,
without limitation, using all reasonable efforts to obtain all Governmental
Authorizations and all consents of parties to contracts
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with Atmos and United Cities as are necessary for the consummation of the
transactions contemplated by this Agreement and the Plan of Merger and to
fulfill the conditions of the Merger. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the parties to this Agreement shall use all reasonable efforts
to take all such necessary action.
ARTICLE 6
Conditions to Consummation of the Merger
Section 6.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) Shareholder Approvals. The issuance of the Atmos Stock to the
shareholders of United Cities shall have been approved by the requisite
vote of the shareholders of Atmos as required by the rules of the NYSE, and
the Merger shall have been approved by the requisite vote of the
shareholders of Atmos in accordance with the provisions of the Texas
Business Corporation Act and by the requisite vote of the shareholders of
United Cities in accordance with the provisions of the Illinois Business
Corporation Act, the Virginia Stock Corporation Act and Nasdaq.
(b) Securities Act Registration, Blue Sky Registration or Exemption and
NYSE Listing. The shares of Atmos Stock to be issued to United Cities'
shareholders pursuant to this Agreement and the Plan of Merger shall have
been registered with the SEC under the Securities Act by means of an
effective registration statement, shall have been registered under or shall
be exempt from registration under all applicable state securities or blue
sky laws, and shall have been approved for listing, upon official notice of
issuance, on the NYSE.
(c) Utility Commission Approvals. All necessary approvals of the state
public utility commissions for which approval is required shall have been
granted by final order and all applicable appeal and waiting periods shall
have expired and such orders shall not contain any condition which, in the
reasonable judgment of Atmos, would result in a material adverse change in
the business, operations, properties, condition (financial or otherwise),
assets or liabilities of the United Cities Entities, taken as a whole, or
the Atmos Entities, taken as a whole.
(d) Xxxx-Xxxxx-Xxxxxx Act. The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the Xxxx-Xxxxx-Xxxxxx
Act shall have expired or been terminated.
(e) Consents Obtained. All consents and waivers required to be obtained
for the authorization, execution, and delivery of this Agreement and the
consummation of the transactions contemplated hereby other than those
consents and waivers the failure of which to obtain would not have a
material adverse effect on Atmos or United Cities, as the case may be,
shall have been obtained, including required consents, waivers and releases
from each of Atmos' and United Cities' lenders and creditors and from
Xxxxxxxx Marketing, L.L.C., in form and substance reasonably satisfactory
to Atmos and United Cities.
(f) Litigation. No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation,
(iii) materially affect adversely the right of Atmos to own the former
assets and to operate the former business of United Cities and the United
Cities Subsidiaries, or (iv) materially affect adversely the right of any
of the United Cities Entities to own its assets and to operate its business
(and no such injunction, judgment, order, decree, ruling, or charge shall
be in effect).
(g) Pooling Letter. Atmos shall have received from Ernst & Young LLP a
written opinion dated the Closing Date, in form and substance satisfactory
to Atmos, to the effect that pooling of interests accounting treatment by
Atmos is required for the Merger.
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(h) Comfort Letters.
(i) Immediately prior to the time that the Registration Statement on
Form S-4 becomes effective, Atmos and United Cities shall have received
from Ernst & Young LLP a letter dated such date, in form and substance
satisfactory to Atmos.
(ii) Immediately prior to the time that the Registration Statement on
Form S-4 becomes effective, Atmos and United Cities shall have received
from Xxxxxx Xxxxxxxx LLP a letter dated such date, in form and
substance satisfactory to Atmos.
(iii) Atmos and United Cities shall have received from Ernst & Young
LLP a letter, dated as of the Closing Date, to the effect that they
reaffirm the statements made in the letter furnished pursuant to
subsection (i) of this Section 6.1(h), except that the specified date
referred to shall be a date not more than five (5) days prior to the
Closing Date.
(iv) Atmos and United Cities shall have received from Xxxxxx Xxxxxxxx
LLP a letter, dated as of the Closing Date, to the effect that they
reaffirm the statements made in the letter furnished pursuant to
subsection (ii) of this Section 6.1(h), except that the specified date
referred to shall be a date not more than five (5) days prior to the
Closing Date.
Section 6.2 Additional Conditions to Obligations of Atmos. The obligations
of Atmos to issue the Atmos Stock to United Cities' shareholders and to effect
the Merger are, at the option of Atmos, also subject to the satisfaction at or
prior to the Closing Date of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of United Cities contained in Sections 1.1, 1.2, 1.3, 1.4,
1.5(a), 1.5(b), 1.5(d), 1.6(a), 1.6(b), 1.9(a) (except with respect to the
second sentence of Section 1.9(a) as it relates to financial statements),
1.10, 1.14, 1.17, 1.18, 1.21, 1.22, 1.23, 1.24, 1.25 and 1.26 of this
Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date with the same force and effect
as if made at and as of the Closing Date, and (ii) all of the other
representations and warranties of United Cities contained in this Agreement
shall be true and correct as of the date of this Agreement and as of the
Closing Date with the same force and effect as if made at and as of the
Closing Date, except where the failure of such representation(s) or
warranty(ies) to be true and correct and would not have a Material (as
defined in Section 8.1(bb)) adverse effect on the United Cities Entities,
taken as a whole. Atmos shall have received a certificate signed by the
Chief Executive Officer and the Chief Financial Officer of United Cities
dated as of the Closing Date to the foregoing effect.
(b) Agreements and Covenants. United Cities shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or
prior to the Closing Date and Atmos shall have received a certificate
signed by the Chief Executive Officer of United Cities and dated as of the
Closing Date to that effect.
(c) Material Adverse Changes. Since the date of this Agreement, no
Material adverse change in the business, operations, properties, condition
(financial or otherwise), assets or liabilities of any of the United Cities
Entities shall have occurred; and Atmos shall not have discovered or become
aware of any fact, error, misstatement or omission materially adverse to
the business, operations, properties, condition (financial or otherwise),
assets or liabilities of any of the United Cities Entities that has not
been disclosed by United Cities to Atmos in the United Cities Disclosure
Schedule which would result in a Material adverse change.
(d) Opinion of Investment Banker. The Board of Directors of Atmos shall
have received from Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated a
written opinion, dated as of the mailing date of the Proxy
Statement/Prospectus, in form and substance satisfactory to Atmos, to the
effect that the Merger is fair to the shareholders of Atmos from a
financial point of view.
(e) Opinion of Tax Counsel. Atmos shall have received from Xxxxx Xxxxxxx
Rain Xxxxxxx (A Professional Corporation) a written opinion dated the
Closing Date, in form and substance satisfactory to Atmos, to the effect
that the Merger will constitute a tax-free reorganization pursuant to
Section 368(a)(1)(A) of the Code.
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(f) Opinion of United Cities' Counsel. Atmos shall have received an
opinion of Xxxxxxx and Xxxxxx, counsel to United Cities, dated the Closing
Date, regarding the United Cities Entities and the Merger, in form and
substance satisfactory to Atmos.
(g) Dissenting United Cities Shareholders. Written objections to the
Merger shall not have been made by the holders of ten (10%) percent or more
of the outstanding shares of the common stock of United Cities, pursuant to
the provisions of the Illinois Business Corporation Act or the Virginia
Stock Corporation Act, respecting rights of dissenting shareholders.
Section 6.3 Additional Conditions to Obligations of United Cities. The
obligations of United Cities to effect the Merger are, at the option of United
Cities, also subject to the satisfaction at or prior to the Closing Date of
the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Atmos contained in Sections 2.1, 2.2, 2.3, 2.4, 2.5(a),
2.5(b), 2.5(d), 2.6(a), 2.6(b), 2.9(a) (except with respect to the second
sentence of Section 2.9(a) as it relates to financial statements), 2.10,
2.14, 2.17, 2.18, 2.21, 2.22, 2.23, 2.24, 2.25 and 2.26 of this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date, and (ii) all of the other
representations and warranties of Atmos contained in this Agreement shall
be true and correct as of the date of this Agreement and as of the Closing
Date with the same force and effect as if made at and as of the Closing
Date, except where the failure of such representation(s) and warranty(ies)
to be true and correct would not have a Material (as defined in Section
8.1(cc)) adverse effect on the Atmos Entities taken as a whole. United
Cities shall have received a certificate signed by the Chief Operating
Officer and Chief Financial Officer of Atmos dated as of Closing Date to
the foregoing effect.
(b) Agreements and Covenants. Atmos shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date and United Cities shall have received a certificate signed by the
Chief Operating Officer of Atmos and dated as of the Closing Date to that
effect.
(c) Material Adverse Changes. Since the date of this Agreement, no
Material adverse change in the business, operations, properties, condition
(financial or otherwise), assets or liabilities of any of the Atmos
Entities shall have occurred; and United Cities shall not have discovered
or become aware of any fact, error, misstatement or omission materially
adverse to the business, operations, properties, condition (financial or
otherwise), assets or liabilities of any of the Atmos Entities that has not
been disclosed by Atmos to United Cities in the Atmos Disclosure Schedule
which would result in a Material adverse change.
(d) Opinion of Investment Banker. The Board of Directors of United Cities
shall have received from PaineWebber Incorporated a written opinion, dated
as of the mailing date of the Proxy Statement/Prospectus, in form and
substance satisfactory to United Cities, to the effect that the Merger is
fair to the shareholders of United Cities from a financial point of view.
(e) Opinion of Tax Counsel. United Cities shall have received from
Xxxxxxx and Xxxxxx a written opinion dated the Closing Date, in form and
substance satisfactory to United Cities, to the effect that the Merger will
constitute a tax-free reorganization pursuant to Section 368(a)(1)(A) of
the Code.
(f) Opinion of Atmos' Counsel. United Cities shall have received from
Xxxxx Xxxxxxx Rain Xxxxxxx (A Professional Corporation) a written opinion
dated the Closing Date regarding the Atmos Entities and the Merger, in form
and substance satisfactory to United Cities.
(g) Employment Agreements. Atmos shall have executed employment contracts
with Messrs. Xxxxx X. Xxxx, Xxxxxx X. Xxxxx, Xx. and Xxxx X. Xxxxxx
substantially in the forms of Exhibits C-1, C-2 and C-3, respectively.
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XXXXXXX 0
Xxxxxxxxxxx, Xxxxxxxxx, and Waiver
Section 7.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the shareholders of Atmos or United
Cities:
(a) by mutual written consent duly authorized by the Boards of Directors
of Atmos and United Cities;
(b) by Atmos or United Cities if the Merger shall not have been
consummated on or before March 31, 1997, or such later date as may be
agreed to in writing by the parties; provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available
to any party whose willful failure to fulfill any material obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date;
(c) by Atmos if the Board of Directors of United Cities has, pursuant to
Section 3.11, taken a position recommending a Competing Transaction, or
whereby it fails to recommend the Merger, to the shareholders of United
Cities;
(d) by Atmos or United Cities if a federal or state court of competent
jurisdiction or a federal or state governmental regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and
such order, decree or ruling or other action shall have become final and
nonappealable; provided, that the party seeking to terminate this Agreement
pursuant to this Section 7.1(d) shall have used all reasonable efforts to
remove such injunction, order or decree;
(e) by Atmos if the shareholders of United Cities have not approved the
matters specified in Section 3.6 hereof at the vote taken thereon at the
meeting of shareholders of United Cities convened pursuant to Section 3.6
hereof or any adjournment thereof;
(f) by United Cities if the shareholders of Atmos have not approved the
matters specified in Section 4.2 hereof at the vote taken thereon at the
meeting of shareholders of Atmos convened pursuant to Section 4.2 hereof or
any adjournment thereof;
(g) by Atmos if there has occurred (i) a material breach by United Cities
of any of its representations or warranties contained in Sections 1.1, 1.2,
1.3, 1.4, 1.5(a), 1.5(b), 1.5(d), 1.6(a), 1.6(b), 1.9(a) (except with
respect to the second sentence of Section 1.9(a) as it relates to financial
statements), 1.10, 1.14, 1.17, 1.18, 1.21, 1.22, 1.23, 1.24, 1.25 or 1.26
of this Agreement or of any of the covenants or agreements, contained in
this Agreement or the Plan of Merger, or (ii) a Material (as defined in
Section 8.1(bb)) breach by United Cities of any of its other
representations or warranties contained in this Agreement or the Plan of
Merger, if the same has not been cured within twenty (20) days after
written notice of such breach has been given to United Cities by Atmos;
(h) by United Cities if there has occurred (i) a material breach by Atmos
of any of its representations or warranties contained in Sections 2.1, 2.2,
2.3, 2.4, 2.5(a), 2.5(b), 2.5(d), 2.6(a), 2.6(b), 2.9(a) (except with
respect to the second sentence of Section 2.9(a) as it relates to financial
statements), 2.10, 2.14, 2.17, 2.18, 2.21, 2.22, 2.23, 2.24, 2.25 and 2.26
of this Agreement or any of the covenants or agreements contained in this
Agreement or the Plan of Merger or (ii) a Material (as defined in Section
8.1(cc)) breach by Atmos of any of its other representations or warranties
contained in this Agreement or the Plan of Merger, if the same has not been
cured within twenty (20) days after written notice of such breach has been
given to Atmos to United Cities;
(i) by Atmos, prior to the expiration of the Initial Environmental
Inspection Period, in its sole discretion, because of (i) the failure of
United Cities and Atmos to agree upon a Scope for the Environmental Audit,
or (ii) the results of the preliminary review of information about the
Environmental Activities or Environmental Condition of United Cities are
not satisfactory to Atmos;
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(j) by Atmos, prior to the expiration of twenty (20) days from and after
a period of forty (40) days from the date of this Agreement, in its sole
discretion, in the event United Cities fails to terminate all liabilities
of United Cities under the United Cities and Subsidiaries Supplemental
Executive Retirement Plan for an aggregate amount of not more than
$5,000,000; provided, however, that United Cities shall not be required to
include in such amount any amount in respect to United Cities' liability to
Xxxx X. Xxxxxx under the United Cities and Subsidiaries Supplemental
Executive Retirement Plan; or
(k) by United Cities, in the exercise of United Cities' Board of
Directors' fiduciary duties pursuant to Section 3.11 with respect to a
Competing Transaction.
Section 7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, except as otherwise expressly provided for
in this Section 7.2, this Agreement shall forthwith become void and, except as
otherwise expressly provided for in this Section 7.2, there shall be no
liability on the part of any party hereto, provided, however, that nothing
herein shall relieve any party from liability for any intentional or willful
breach hereof, provided, further, that the obligations of the parties under
Section 5.4, the Confidentiality Agreement and the Standstill Agreement shall
remain in full force and effect.
Section 7.3 Amendment. This Agreement may be amended by mutual action taken
by or on behalf of the respective Boards of Directors of the parties hereto at
any time prior to the Closing Date; provided, however, that, after approval by
the shareholders of either party of the Merger, no amendment may be made which
would increase or decrease the amount or change the type of consideration into
which each share of United Cities Stock shall be converted upon consummation
of the Merger, and provided further that any amendments required by Section
5.1(a) do not require further approval of the respective Boards of Directors.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or parties to be
bound thereby and shall be applicable only with respect to the particular
condition or provision as extended or waived and not to any other condition or
provision herein.
ARTICLE 8
Miscellaneous
Section 8.1 Definitions. For purposes of this Agreement, the following terms
used herein shall have the meanings set forth below:
(a)"Additional Assessment" has the meaning set forth in Section 3.4(b)
above.
(b)"Additional Environmental Investigation Period" has the meaning set
forth in Section 3.4(a) above.
(c)"Atmos SEC Reports" has the meaning set forth in Section 2.9(a) above.
(d)"Atmos Shareholders Meeting" means the special meeting of Atmos'
shareholders called for the purpose of considering and voting upon the
Merger and the issuance of Atmos Stock to United Cities' shareholders as
consideration for the Merger in accordance with and pursuant to the terms
and provisions of this Agreement.
(e)"Atmos Stock" has the meaning set forth in Section 2.3(a) above.
(f)"Closing" means the closing of the Merger as set forth in Section
5.1(c) of this Agreement.
(g)"Closing Date" means the date of the Closing as set forth in Section
5.1(c) of this Agreement.
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(h) "Competing Transaction" means any of the following (other than the
transactions contemplated by this Agreement) involving United Cities or any
United Cities Entity: (i) any merger, consolidation, share exchange,
business combination or similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of twenty percent
(20%) or more of the assets of the United Cities Entities; (iii) any tender
offer or exchange offer for twenty percent (20%) or more of the outstanding
shares of capital stock of United Cities; (iv) any person acquiring
beneficial ownership of, or any group (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) being formed which beneficially owns or has the right to
acquire beneficial ownership of, twenty percent (20%) of more of the
outstanding shares of capital stock of United Cities; or (v) any public
announcement of a proposal, plan or intention to do any of the foregoing or
any agreement to engage in any of the foregoing; provided, that this shall
not apply to transactions permitted under Section 3.1(e).
(i) "Confidentiality Agreement" means the Confidentiality Agreement dated
July 5, 1996 by and between United Cities and Atmos .
(j) "Code" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
(k) "Effective Time" means the effective time of the Merger, determined
in accordance with the Plan of Merger.
(l) "Employee Benefit Arrangement" means any plan, agreement, or
arrangement which is not an employee benefit plan within the meaning of
Section 3(3) of ERISA but which provides benefits to any one or more of the
officers or other employees of any United Cities Entity or Atmos Entity, as
the case may be, such as a bonus, incentive, stock purchase, stock option,
or stock appreciation rights plan, or any employment or consulting
agreement.
(m) "Environmental Activity" means any storage, holding, manufacture,
emission, discharge, generation, processing, treatment, abatement, removal,
disposition, handling, transportation, or disposal, or any actual,
proposed, or threatened release of any Hazardous Materials from, under,
into, or on any Subject Property or otherwise relating to any Subject
Property or the Use of any Subject Property, including but not limited to
(i) the migration or emanation of Hazardous Materials from the Subject
Property onto or into the environment beyond the physical boundaries of the
Subject Property; (ii) the off-site disposal of Hazardous Materials from
any Subject Property; and (iii) including but not limited to activity
occurring in connection with ambient air, surface, and subsurface soil
conditions, and all surface and subsurface waters.
(n) "Environmental Agency" means any federal, state, or local entity or
agency with jurisdiction over Environmental Requirements.
(o) "Environmental Audit" has the meaning set forth in Section 3.4(a)
above.
(p) "Environmental Condition" means (i) the presence or existence in, on,
at, or under the Subject Property of any Hazardous Materials, underground
or above-ground storage tanks, xxxxx, covered-over surface impoundments or
similar areas, any "facility," as that term is defined under applicable
Environmental Requirements, or wetlands and (ii) the presence or existence
in, on, at, or under the environment beyond the physical boundaries of the
Subject Property of any Hazardous Materials, which migrated or emanated
from the Subject Property.
(q) "Environmental Costs" means any of the following which arise in any
manner in connection with Environmental Activity or an Environmental
Condition, regardless of whether based in contract, tort, implied or
express warranty, strict liability, Environmental Requirement, or
otherwise: all liabilities, losses, judgments, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including,
without limitation, the reasonable fees and disbursements of legal counsel
and environmental consultants, all costs related to the performance of any
required or necessary assessments, investigations, remediation, response,
containment, closure, restoration, repair, cleanup, or detoxification of
any Subject Property or any part thereof, the preparation and
implementation of any maintenance, monitoring, closure, remediation,
abatement, or other plans required by an Environmental Agency or by
Environmental Requirements and any other costs recovered or recoverable
under any Environmental Requirement), fines,
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penalties, or monetary sanctions. Environmental Costs shall include without
limitation: (i) damages for personal injury or death, or injury to property
or to natural resources; (ii) damage to the Subject Property or damage
resulting from the loss of the Use of all or any part of the Subject
Property, including but not limited to business loss; (iii) the cost of any
demolition, rebuilding, or repair of the Subject Property or other
property, required by Environmental Requirements or necessary to restore
the Subject Property or such other property to its condition prior to
damage caused by an Environmental Condition, Environmental Activity, or by
the remediation of an Environmental Activity, or by the remediation of an
Environmental Condition or Environmental Activity; and (iv) diminution in
value of the Subject Property or other property.
(r) "Environmental Requirements" means all laws, ordinances, statutes,
codes, rules, regulations, agreements, judgments, orders, and decrees now
or hereafter enacted, promulgated, or amended, of the United States, the
states, the counties, the cities, or any other political subdivisions in
which a Subject Property is located, and any other political subdivision,
agency, or instrumentality exercising jurisdiction over any of the United
Cities Entities, any Subject Property, or the Use of the Subject Property,
relating to pollution, the protection or regulation of human health,
natural resources, or the environment, or the emission, discharge, release
or threatened release of pollutants, contaminants, chemicals, or
industrial, toxic, or hazardous substances or waste or Hazardous Materials
into the environment (including, without limitation, ambient air, surface
water, ground water, or land or soil).
(s) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(t) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(u) "Governmental Authorizations" has the meaning set forth in Section
1.1(a) above.
(v) "Group Member" means any member of any "affiliated service group," as
defined in Section 414(m) of the Code, that includes any United Cities
Entity or Atmos Entity, as the case may be, any member of any "controlled
group of corporations," as defined by Section 1563 of the Code, that
includes any United Cities Entity or Atmos Entity, as the case may be, or
any member of any group of "trades or businesses under common control," as
defined in Section 414(c) of the Code, that includes any United Cities
Entity or Atmos Entity, as the case may be.
(w) "Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
(x) "Hazardous Material" means any substance which is or contains (i) any
"hazardous substance" as now or hereafter defined in (S) 101(14) of the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended ("CERCLA") (42 U.S.C. (S) 9601 et seq.) or any regulations
promulgated under CERCLA; (ii) any "hazardous waste" as now or hereafter
defined in the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901
et seq.) ("RCRA") or regulations promulgated under RCRA; (iii) any
substance regulated by the Toxic Substances Control Act (15 U.S.C. (S) 2601
et seq.); (iv) gasoline, diesel fuel, or other petroleum hydrocarbons; (v)
asbestos and asbestos containing materials, in any form, whether friable or
non-friable; (vi) polychlorinated biphenyls; or (vii) radon gas; and any
additional substances or materials which are now or hereafter classified or
considered to be hazardous or toxic under Environmental Requirements or the
common law, or any other applicable laws relating to the Subject Property.
Hazardous Materials shall include, without limitation, any substance, the
presence of which on any Subject Property (A) requires reporting,
investigation, or remediation under Environmental Requirements; (B) causes
or threatens to cause a nuisance on any Subject Property or adjacent
property or poses or threatens to pose a hazard to the health or safety of
persons on any Subject Property or adjacent property; or (C) which, if it
emanated or migrated from the Subject Property, could constitute a
trespass.
(y) "Indemnified Parties" has the meaning set forth in Section 4.10
above.
(z) "Initial Environmental Inspection Period" has the meaning set forth
in Section 3.4(a) above.
(aa) "IRS" means the Internal Revenue Service.
(bb) "Material" with respect to United Cities means that the effect of
any untrue statement, misrepresentation or omission of United Cities
contained in this Agreement on, or of any breach or failure
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to perform by United Cities of any of its covenants, warranties, agreements
or obligations contained in this Agreement on, or the occurrence of any
event affecting, the business, operations, properties, conditions
(financial or otherwise), assets or liabilities of United Cities that
result, individually or in the aggregate, in an reduction on a pro forma
basis of $2,000,000 or more in the net profit of United Cities on an
annualized basis for a twelve (12)-month period, or a reduction on a pro
forma basis of $12,500,000 or more in the stockholders equity of United
Cities as of the most recent audited balance sheet; provided, however, that
no amounts shall be included in determining the foregoing amounts which
arise with respect to any former manufactured gas plant site or the Kansas
Department of Health and Environment mercury meter proceeding, except to
the extent that such amounts arise from events or occurrences arising after
the Initial Environmental Inspection Period; provided, further, that for
purposes of calculating any such effect on the net profit of United Cities,
there shall not be taken into account any item that would reduce such net
profit on a pro forma basis by less than $5,000. In the event of any
dispute between the parties as to the determination of whether any such
matter is Material, the parties agree to submit such dispute to Xxxxxx
Xxxxxxxx LLP ("AA") and Ernst & Young LLP ("EY") for resolution on a joint
basis. In the event AA and EY are unable to resolve such dispute within ten
(10) days, then the parties agree to submit the dispute to Coopers &
Xxxxxxx LLC whose determination shall be final and binding on the parties.
(cc)"Material" with respect to Atmos means that the effect of any untrue
statement, misrepresentation or omission of Atmos contained in this
Agreement on, or of any breach or failure to perform by Atmos of any of its
covenants, warranties, agreements or obligations contained in this
Agreement on, or the occurrence of any event affecting, the business,
operations, properties, conditions (financial or otherwise), assets or
liabilities of Atmos that result, individually or in the aggregate, in an
reduction on a pro forma basis of $2,000,000 or more in the net profit of
Atmos on an annualized basis for a twelve (12)-month period, or a reduction
on a pro forma basis of $12,500,000 or more in the stockholders equity of
Atmos as of the most recent audited balance sheet; provided, however, that
for purposes of calculating any such effect on the net profit of Atmos,
there shall not be taken into account any item that would reduce such net
profit on a pro forma basis by less than $5,000. In the event of any
dispute between the parties as to the determination of whether any such
matter is Material, the parties agree to submit such dispute to Xxxxxx
Xxxxxxxx LLP ("AA") and Ernst & Young LLP ("EY") for resolution on a joint
basis. In the event AA and EY are unable to resolve such dispute within ten
(10) days, then the parties agree to submit the dispute to Coopers &
Xxxxxxx LLC whose determination shall be final and binding on the parties.
(dd)"Merger" and "Plan of Merger" have the meanings set forth in Section
5.1(a) above.
(ee)"Nasdaq" means the Nasdaq National Market.
(ff)"NYSE" means the New York Stock Exchange.
(hh)"PBGC" means the Pension Benefit Guaranty Corporation.
(ii)"Plan" means at any time any employee benefit plan as defined in
Section 3(3) of ERISA (i) which is either (1) maintained by a United Cities
Entity (or an Atmos Entity, as the case may be) or any Group Member or (2)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and (ii)
to which any of the United Cities Entities (or Atmos Entities, as the case
may be) or any Group Member is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
(jj)"Proxy Statement/Prospectus" means the joint proxy which constitutes
(i) a proxy statement to be delivered to Atmos' shareholders in connection
with the Atmos Shareholders Meeting, (ii) a registration statement on Form
S-4 to be filed by Atmos with the SEC to register the Atmos Stock that will
be received by the shareholders of United Cities in the Merger, and (iii) a
joint proxy statement and prospectus to be delivered to United Cities'
shareholders in connection with the Atmos Stock and the United Cities'
Shareholders Meeting with respect to the Merger.
(kk)"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
(ll)"Sampling" has the meaning set forth in Section 3.4(a) above.
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(mm)"Scope" has the meaning set forth in Section 3.4(a) above.
(nn)"SEC" means the Securities and Exchange Commission.
(oo)"Securities Act" means the Securities Act of 1933, as amended.
(pp)"Standstill Agreement" means the Standstill Agreement dated as of
July 13, 1996 by and between United Cities and Atmos.
(qq)"Subject Property" means the real property currently or formerly Used
by any of the United Cities Entities or any of their current or former
subsidiaries and all improvements, fixtures, equipment, and personal
property now or hereafter located on such real property.
(rr)"Taxes" means all taxes, charges, fees, levies, imports, or other
assessments by any federal, state, local, or foreign taxing authority,
including, but not limited to, income, excise, property, sales, transfer,
employment, payroll, franchise, and withholding taxes, and any interest,
penalties, or additions attributable thereto, imposed thereon, or with
respect thereof.
(ss)"Tax Returns" means any return, report, information return, or other
document (including any related or supporting information) filed or
required to be filed with any federal, state, local, or foreign taxing
authority in connection with the determination, assessment, or collection
of any Tax.
(tt)"United Cities Pension Plan" means the Retirement Plan for Employees
of United Cities.
(uu)"United Cities SEC Reports" has the meaning set forth in Section
1.9(a) above.
(vv)"United Cities Shareholders Meeting" means the special meeting of
United Cities' shareholders called for the purpose of considering and
voting upon the Merger in accordance with and pursuant to the terms and
provisions of this Agreement.
(ww)"Use" means use, ownership, tenancy, development, construction,
maintenance, management, operation, or occupancy and when referring to Use
by United Cities shall also be deemed to include Use by the United Cities
Subsidiaries or any other current or former subsidiaries of any of the
United Cities Entities.
Section 8.2 Non-Survival of Representations, Warranties, and Agreements. The
representations, warranties, and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 7.1, as the case may be, except that the agreements set forth in
Sections 4.7, 4.8, 4.9, 4.10 and 5.4 shall survive the Merger or the
termination of this Agreement.
Section 8.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or mailed if delivered personally or by
facsimile or mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to Atmos:
Atmos Energy Corporation
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxxxxxx
With a copy to:
Xxxxx Xxxxxxx Rain Xxxxxxx (A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xx. Xxx Xxxxxx
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(b) If to United Cities:
United Cities Gas Company
0000 Xxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx
With a copy to:
Xxxxxxx and Xxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X'Xxxxx
Section 8.4 Assignment. This Agreement is not assignable by any of the
parties hereto.
Section 8.5 Severability. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
Section 8.6 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit, or remedy of any nature whatsoever under or by
reason of this Agreement other than officers, directors and employees of
United Cities who are third party beneficiaries pursuant to Sections 4.7, 4.9
and 4.10.
Section 8.7 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement and the Standstill Agreement, both between Atmos and
United Cities, which shall survive in accordance with their respective terms),
both written and oral, between the parties, with respect to the subject matter
hereof and is not intended to confer upon any other person any rights or
remedies hereunder.
Section 8.8 Specific Performance. The parties hereto agree that, if for any
reason any party hereto shall have failed to perform its obligations under
this Agreement, then the other party hereto seeking to enforce this Agreement
against such non-performing party shall be entitled to specific performance
and injunctive and other equitable relief, and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that any party
hereto may have against the other party hereto for any willful failure to
perform its obligations under this Agreement.
Section 8.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas; provided,
however, that all provisions of this Agreement relating to (a) the rights,
duties and conduct of Board of Directors of United Cities with respect to this
Agreement and the transactions hereby, pursuant to Sections 3.2 and 3.11
hereof and (b) whether Atmos shall be required to be an Illinois corporation
as the survivor under Merger, shall be governed by, and construed in
accordance with the laws of the State of Illinois.
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Section 8.10 Construction; Headings. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 8.11 Incorporation of Exhibits. The Exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof for all
purposes.
Section 8.12 Counterparts. This Agreement may be executed in counterparts,
each of which will be an original, but all of which together will constitute
one and the same agreement.
IN WITNESS WHEREOF, Atmos and United Cities have executed this Agreement and
Plan of Reorganization on the date first written above by their respective
officers thereunto duly authorized.
Atmos Energy Corporation
/s/ Xxxxxx X. Xxxxxxxx
By: _________________________________
Xxxxxx X. Xxxxxxxx
President and Chief Operating
Officer
United Cities Gas Company
/s/ Xxxx X. Xxxxxx
By: _________________________________
Xxxx X. Xxxxxx
President and Chief Executive
Officer
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Draft of July 19, 1996
EXHIBIT C-1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
day of , by and between ATMOS ENERGY CORPORATION, a corporation
(the "Company"), and XXXXX X. XXXX.
WITNESSETH:
WHEREAS, on , 199 , United Cities Gas Company, then an Illinois and
Virginia corporation ("United Cities"), merged with and into the Company (the
"Merger"); and
WHEREAS, at the time of the Merger of United Cities and the Company, Xxxxx
X. Xxxx was the Senior Vice President and Treasurer of United Cities; and
WHEREAS, the Company now desires to retain Xxxxx X. Xxxx in its employ as
the Senior Vice President--Finance of the Company;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Employment and Duties.
(a) The Company hereby employs Xxxxx X. Xxxx, and Xxxxx X. Xxxx hereby
agrees to render his services to the Company, as Senior Vice President--
Finance for a period of three years commencing on the date of this Agreement
(the "Employment Period").
(b) Xxxxx X. Xxxx'x duties as Senior Vice President--Finance shall include
and such other duties and functions as the Company may, from time to time,
assign to Xxxxx X. Xxxx, with such assigned duties and functions being
commensurate with those duties and functions normally delegated to a senior
vice-president of the Company. Xxxxx X. Xxxx agrees that he will perform his
duties hereunder to the best of his ability, in a good, faithful, workmanlike,
and competent manner and with reasonable care and diligence.
(c) Initially, Xxxxx X. Xxxx'x office shall be located at Dallas, Texas,
subject, however, to any relocation thereof that may be mutually agreed upon
by the parties.
2. Salary, Benefits, and Expense Reimbursements.
(a) In consideration for Xxxxx X. Xxxx'x services under this Agreement, the
Company agrees to pay to Xxxxx X. Xxxx an initial salary at the rate of $
per year, less any applicable adjustments and withholding as are required by
law or agreed to by Xxxxx X. Xxxx and the Company. Xxxxx X. Xxxx'x salary
shall, during the term hereof, never be less than the amount set forth above
as Xxxxx X. Xxxx'x initial salary, and Xxxxx X. Xxxx'x initial salary is
subject to annual raises as provided in and in accordance with the Company's
Salary Administration Plan, as may be amended from time to time. Such salary
shall be paid by the Company semi-monthly in accordance with its current or
hereinafter established normal procedures and times for payment of its other
full-time salaried employees.
(b) In addition to Xxxxx X. Xxxx'x salary, Xxxxx X. Xxxx shall, during the
term hereof, be entitled to the following benefits:
(i) Coverage under the Company's Mini-Med Plan (as restated effective
April 1, 1989), subject, however, to any amendments or modifications or
restatements thereof as the Company may, from time to time, make and to the
Company's right, in its sole discretion, to terminate such plan in its
entirety.
1
(ii) Participation in the Company's Annual Performance Bonus Plan for
Corporate Officers, subject, however, to any amendments or modifications
thereof as the Company may, from time to time, make and to the Company's
right, in its sole discretion, to terminate such plan in its entirety.
(iii) Participation in the Company's Restricted Stock Grant Plan,
subject, however, to any amendments or modifications thereof as the Company
may, from time to time, make and to the Company's right, in its sole
discretion, to terminate such plan in its entirety.
(iv) Participation in the Company's Supplemental Executive Benefits Plan
(the "SEBP"), subject, however, to any amendments or modifications thereof
as the Company may, from time to time, make and to the Company's right, in
its sole discretion, to terminate such plan in its entirety. The Company
will not credit Xxxxx X. Xxxx for services performed as an officer of
United Cities prior to the effective time of the Merger for eligibility,
participation and vesting purposes in the SEBP.
(v) Participation in the Company's pension, employee stock ownership,
welfare benefit and other similar plans to the same extent that the Company
makes such plans available to other senior vice-presidents of the Company,
with the understanding that the award of any discretionary bonus,
compensation or benefit under such plans will be made using the same
criteria and decision-making process as is used in making awards to the
Company's other senior vice-presidents who are eligible for such awards.
(vi) A car allowance to the same extent that such benefit is provided to
the Company's other senior vice presidents.
(vii) An office and secretarial staff, in each case to the same extent
that such are provided to Company's other senior vice-presidents.
(c) In connection with Xxxxx X. Xxxx'x relocation to Dallas, Texas, Xxxxx X.
Xxxx will be entitled to receive relocation benefits as set forth in the Atmos
[Relocation Benefits Policy and Plan], for actual expenses incurred during the
first thirty (30) days following Xxxxx X. Xxxx'x relocation and for the next
ninety (90) days of his relocation, Xxxxx X. Xxxx will be paid one thousand
dollars ($1,000) every thirty (30) days.
(d) In addition to the compensation described above, the Company agrees to
reimburse Xxxxx X. Xxxx for any and all reasonable expenses incurred by him on
behalf of the Company, subject to such rules and procedures for reimbursement
as may, from time to time, be specified by the Company.
(e) In addition to the compensation described above, Xxxxx X. Xxxx shall be
entitled to an employee retention payment of $60,000 if on the expiration of 6
months following the date on which the Merger closed: (i) Xxxxx X. Xxxx is an
employee of the Company; or (ii) Xxxxx X. Xxxx is not an employee of the
Company due to Xxxxx X. Xxxx'x employment being terminated by the Company for
reasons other than Cause, Xxxxx X. Xxxx resigning for Good Reason, or Xxxxx X.
Xxxx having taken normal retirement at age 65.
3. Exclusive Services. During the term of this Agreement, Xxxxx X. Xxxx
shall devote his full working time, ability, and attention to the business of
the Company, except for time spent on those charitable and civic duties that
do not interfere with the Company's business.
4. Confidentiality of Business Information. Xxxxx X. Xxxx agrees that all
documents, records, and other information relating to the Company or the
Company's business that may hereafter come into his possession may be
confidential and proprietary to the Company. Xxxxx X. Xxxx specifically agrees
to keep confidential and not to divulge to any other party any of such
confidential or proprietary information. All documents and records relating to
the Company or the Company's business that are developed by Xxxxx X. Xxxx or
used by him during his employment with the Company shall be deemed to be and
are the sole and exclusive property of the Company.
5. Covenant Not to Compete. During the period Xxxxx X. Xxxx is employed by
the Company, Xxxxx X. Xxxx shall not, in any city, town, community, or other
area being served by the Company in the states in which the Company is doing
business, directly or indirectly, engage or participate in any activity that
is intended to or
2
has the effect of competing with the Company for any existing or prospective
customer except on behalf of the Company.
6. Survival of Covenants and Remedies Upon Default. The terms and provisions
of Section 4 above shall survive and remain in full force and effect beyond
the expiration or termination of this Agreement. In the event of a breach or a
threatened breach by Xxxxx X. Xxxx of any provision of Section 4 or 5, the
Company shall be entitled, as an absolute right and without the necessity of
proving irreparable injury or damages, to an injunction restraining Xxxxx X.
Xxxx from such breach. Nothing herein shall be construed as prohibiting or
restricting the Company from pursuing any other remedies available to it for
such breach, including, but not limited to, the recovery of damages from Xxxxx
X. Xxxx.
7. Termination of the Agreement.
(a) This Agreement shall cease and terminate upon the occurrence of the
first to occur of any of the following events: (i) the close of business on [3
years after Merger]; (ii) Xxxxx X. Xxxx'x death; (iii) Xxxxx X. Xxxx'x
voluntary resignation of employment with the consent of the Company; or (iv)
the discharge of Xxxxx X. Xxxx by the Company for Cause.
(b) Termination by the Company of Xxxxx X. Xxxx'x employment for "Cause" is
defined to mean termination upon (i) the willful and continued failure by
Xxxxx X. Xxxx to perform his duties with the Company (other than any such
failure resulting from his incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of
Termination by Xxxxx X. Xxxx for Good Reason) after a written demand for
performance is delivered to Xxxxx X. Xxxx by the Company's Board of Directors,
which demand specifically identifies the manner in which the Board believes
that Xxxxx X. Xxxx has not performed his duties, or (ii) the willful engaging
by Xxxxx X. Xxxx in conduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise. For purposes of this Subsection, no act,
or failure to act, on Xxxxx X. Xxxx'x part shall be deemed "willful" unless
done, or omitted to be done, by Xxxxx X. Xxxx not in good faith and without
reasonable belief that Xxxxx X. Xxxx'x action or omission was in the best
interest of the Company. Notwithstanding the foregoing, Xxxxx X. Xxxx shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to Xxxxx X. Xxxx a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice to Xxxxx X. Xxxx and an opportunity for Xxxxx X. Xxxx,
together with Xxxxx X. Xxxx'x counsel, to be heard before the Board), finding
that in the good faith opinion of the Board Xxxxx X. Xxxx was guilty of
conduct set forth above in clauses (i) or (ii) of the first sentence of this
Subsection and specifying the particulars thereof in detail.
(c) It is also agreed that in the event of Xxxxx X. Xxxx'x disability prior
to , and such disability being of such nature that the Company cannot
"reasonably accommodate" the disability, Xxxxx X. Xxxx shall be compensated
under the Company's applicable disability plan, if any, as then in effect. At
the time of such disability, this Agreement shall terminate and no further
payments shall be due Xxxxx X. Xxxx hereunder. Disability is defined to mean
that if, as a result of Xxxxx X. Xxxx'x incapacity due to physical or mental
illness, Xxxxx X. Xxxx shall have been absent from the full-time performance
of his duties with the Company for twelve (12) consecutive months, and within
thirty (30) days after written notice of termination is given, Xxxxx X. Xxxx
shall not have returned to the full-time performance of his duties.
(d) If Xxxxx X. Xxxx is terminated by the Company for Cause, then Xxxxx X.
Xxxx'x participation and entitlement to benefits in the plans mentioned in
Section 2(b) above, does not automatically terminate unless such termination
normally occurs pursuant to the terms and conditions of such plans.
(e) If Xxxxx X. Xxxx is terminated by the Company for reasons other than for
Cause or disability, or if Xxxxx X. Xxxx resigns for Good Reason, then such
termination shall constitute a breach of contract by the Company and during
the period commencing on the date of such termination and ending on the third
anniversary of the date hereof the Company shall: continue to pay Xxxxx X.
Xxxx the salary provided in Section 2(a) hereof, payable monthly, at the same
annual level as was payable to Xxxxx X. Xxxx immediately prior to such
termination;
3
continue to provide Xxxxx X. Xxxx with all of the benefits described in
Section 2(b) hereof at the same levels as were provided to Xxxxx X. Xxxx prior
to such termination; continue to make contributions on behalf of Xxxxx X. Xxxx
to all pension, retirement, supplemental executive retirement and other plans
and programs maintained by the Company and in which Xxxxx X. Xxxx participated
prior to such termination equal to the amount of the largest contribution with
respect to each such plan or program which the Company contributed on behalf
of Xxxxx X. Xxxx during any of the three calendar years preceding the calendar
year wherein such termination occurs; and be liable to Xxxxx X. Xxxx for any
actual damages sustained by Xxxxx X. Xxxx as a result of any such breach of
contract.
(i) Mitigation of Damages. If Xxxxx X. Xxxx'x employment is terminated
pursuant to Section 7(e) hereof, Xxxxx X. Xxxx shall have no duty to use
his reasonable efforts to mitigate his damages by seeking other employment.
(ii) Death. If Xxxxx X. Xxxx'x employment is terminated by reason of
Xxxxx X. Xxxx'x death during the Employment Period, this Agreement shall
terminate without further obligations by the Company to Xxxxx X. Xxxx'x
legal representatives under this Agreement other than for payment of the
compensation set forth under Section 2 hereof accrued up to the date of
Xxxxx X. Xxxx'x death.
(iii) Disability. If Xxxxx X. Xxxx'x employment is terminated by reason
of Xxxxx X. Xxxx'x Disability during the Employment Period, this Agreement
shall terminate without further obligations by the Company to Xxxxx X. Xxxx
under this Agreement other than for payment of the compensation set forth
in Section 2 hereof accrued up to the Date of Termination.
(iv) Cause; Other than for Good Reason. If Xxxxx X. Xxxx'x employment
shall be terminated for Cause during the Employment Period, this Agreement
shall termination without further obligations of the Company to Xxxxx X.
Xxxx under this Agreement other than the payment of the compensation set
forth in Section 2 hereof accrued up to the Date of Termination. If Xxxxx
X. Xxxx voluntarily terminates his employment during the Employment Period,
excluding a termination for Good Reason, this Agreement shall terminate
without further obligations of the Company to Xxxxx X. Xxxx under this
Agreement other than the payment of the compensation set forth in Section 2
hereof accrued up to the Date of Termination.
(v) Good Reason. Xxxxx X. Xxxx shall be entitled to terminate his
employment for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without Xxxxx X. Xxxx'x express written consent, the occurrence
of any of the following circumstances unless, in the case of Paragraphs
(A), (E), (F), (G), or (H), such circumstances are fully corrected prior to
the Date of Termination specified in the Notice of Termination, as defined
in Subsections (vi) and (vii), respectively, given in respect thereof:
(A) the assignment to Xxxxx X. Xxxx of any duties inconsistent with
his status as a senior vice-president of the Company or a substantial
and adverse alteration in the nature or status of his responsibilities
from those in effect immediately prior to the change in control of the
Company;
(B) a reduction by the Company in Xxxxx X. Xxxx'x annual base salary
as in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary reductions similarly
affecting all of the Company's senior vice-presidents and all senior
vice-presidents of any person in control of the Company;
(C) the Company's requiring Xxxxx X. Xxxx to be based anywhere other
than the identified in Section 1(c) of this Agreement except for
required travel on the Company's business to an extent substantially
consistent with his present business travel obligations;
(D) the failure by the Company, without Xxxxx X. Xxxx'x consent, to
pay to Xxxxx X. Xxxx any portion of his current compensation except
pursuant to an across-the-board compensation deferral similarly
affecting all senior vice-presidents of the Company and all senior
vice-presidents of any person in control of the Company, or to pay to
Xxxxx X. Xxxx any portion of an installment of deferred compensation
under any deferred compensation program of the Company, within seven
days of the date such compensation is due;
(E) the failure by the Company to continue in effect any compensation
plan identified in Section 2(b) of this Agreement, including, but not
limited to, the Company's Retirement Plan, Employee Stock
4
Ownership Plan, Supplemental Executive Benefits Plan and Excess Medical
Expense Insurance Plan (otherwise known as the "Mini-Med Plan") or any
substitute plans, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to
such plan, or the failure by the Company to continue Xxxxx X. Xxxx'x
participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount of
benefits provided and the level of Xxxxx X. Xxxx'x participation
relative to other participants, as existed as of the date of this
Agreement;
(F) the failure by the Company to continue to provide Xxxxx X. Xxxx
with benefits substantially similar to those enjoyed by him under any
of the Company's pension, life insurance, medical, health and accident,
or disability plans identified in Section 2(b) of this Agreement, the
taking of any action by the Company which would directly or indirectly
materially reduce or deprive Xxxxx X. Xxxx of any of such benefits or
the failure by the Company to provide Xxxxx X. Xxxx with the number of
paid vacation days to which he is entitled on the basis of years of
service with the Company in accordance with the Company's normal
vacation policy;
(G) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement; or
(H) any purported termination of Xxxxx X. Xxxx'x employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (vi) below (and, if applicable, the
requirements of Section 7(b) and (c) above); for purposes of this
Agreement, no such purported termination shall be effective.
Xxxxx X. Xxxx'x right to terminate his employment pursuant to this
Subsection shall not be affected by his incapacity due to physical or
mental illness. The continued employment of Xxxxx X. Xxxx shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
(vi) Notice of Termination. Any purported termination of his employment
by the Company or by Xxxxx X. Xxxx shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 8(b)
hereof. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of Xxxxx
X. Xxxx'x employment under the provision so indicated.
(vii) Date of Termination, Etc. "Date of Termination" shall mean thirty
(30) days after Notice of Termination is given.
8. Miscellaneous.
(a) Each provision in this Agreement is intended to be severable. If any
term or provision hereof is adjudged by any court of competent jurisdiction to
be invalid or unenforceable for any reason whatsoever, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement. To the extent that any provision of this
Agreement, including, but not limited to, any of the provisions of Sections 4
and 5 above, is adjudged to be invalid or unenforceable, such provision shall
be construed or limited in such a manner so as to allow the maximum benefit of
such provision provided by law.
(b) Any notice required or permitted by this Agreement shall be in writing
and shall be sufficient if sent by registered mail, return receipt requested,
to the last known address of the party to whom such notice is to be given. Any
notice may be waived in writing by the party entitled to receive it.
(c) No waiver by any party hereto of any provision of this Agreement shall
be deemed to have been made unless expressed in writing and signed by such
party. The waiver by either party hereto of a breach of any term or provision
of this Agreement shall not operate or be construed as a waiver of a
subsequent breach of the same provision by either party or of the breach of
any other term or provision of this Agreement.
5
(d) The parties hereto may amend and supplement this Agreement only by an
instrument in writing that is signed by both parties hereto.
(e) Xxxxx X. Xxxx acknowledges and agrees that the services to be rendered
by him hereunder are unique and personal. Accordingly, neither Xxxxx X. Xxxx
nor the Company may assign any of his or its rights or delegate any of his or
its duties under this Agreement.
(f) This Agreement constitutes the entire agreement between the Company and
Xxxxx X. Xxxx with respect to the subject matter hereof and supersedes any
prior agreements and understanding, oral or written, between the Company and
Xxxxx X. Xxxx.
(g) This Agreement is the product of negotiations during which both parties
hereto have had an opportunity to consult with counsel and to request
alterations, changes, and deletions to the text and understanding hereof. This
Agreement shall be construed as if drafted jointly by both parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of such party's particular role in preparing any preliminary or
final draft of this Agreement or in drafting any of the provisions of this
Agreement.
(h) This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by the parties hereto and their respective heirs,
representatives, successors, and permitted assigns.
(i) This Agreement shall be governed by and construed in accordance with the
laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date first written above.
Atmos Energy Corporation
------------------------------------- By: _________________________________
XXXXX X. XXXX
6
Draft of July 19, 1996
EXHIBIT C-2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
day of , by and between ATMOS ENERGY CORPORATION, a
corporation (the "Company"), and XXXXXX X. XXXXX.
WITNESSETH:
WHEREAS, on , 199 , United Cities Gas Company, then an Illinois and
Virginia corporation ("United Cities"), merged with and into the Company (the
"Merger"); and
WHEREAS, at the time of the Merger of United Cities and the Company, Xxxxxx
X. Xxxxx was the Senior Vice President--Operations and Engineering of United
Cities; and
WHEREAS, the Company now desires to retain Xxxxxx X. Xxxxx in its employ as
the President of the United Cities operating division of Atmos and as a Vice-
President of the Company;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Employment and Duties.
(a) The Company hereby employs Xxxxxx X. Xxxxx, and Xxxxxx X. Xxxxx hereby
agrees to render his services to the Company, as President of the United
Cities operating division and as a Vice-President of the Company for a period
of three years commencing on the date of this Agreement (the "Employment
Period").
(b) Xxxxxx X. Xxxxx'x duties as President of the United Cities operating
division shall include having the same executive management authority over the
United Cities Division commensurate to that authority held by other division
presidents of the Company and such other duties and functions as the Company
may, from time to time, assign to Xxxxxx X. Xxxxx, with such assigned duties
and functions being commensurate with those duties and functions normally
delegated to a division president of the Company. Xxxxxx X. Xxxxx agrees that
he will perform his duties hereunder to the best of his ability, in a good,
faithful, workmanlike, and competent manner and with reasonable care and
diligence.
(c) Initially, Xxxxxx X. Xxxxx'x office shall be located at United Cities's
headquarters in Brentwood, Tennessee, subject, however, to any relocation
thereof that may be mutually agreed upon by the parties.
2. Salary, Benefits, and Expense Reimbursements.
(a) In consideration for Xxxxxx X. Xxxxx'x services under this Agreement,
the Company agrees to pay to Xxxxxx X. Xxxxx an initial salary at the rate of
$ per year, less any applicable adjustments and withholding as are required
by law or agreed to by Xxxxxx X. Xxxxx and the Company. Xxxxxx X. Xxxxx'x
salary shall, during the term hereof, never be less than the amount set forth
above as Xxxxxx X. Xxxxx'x initial salary, and Xxxxxx X. Xxxxx'x initial
salary is subject to annual raises as provided in and in accordance with the
Company's Salary Administration Plan, as may be amended from time to time.
Such salary shall be paid by the Company semi-monthly in accordance with its
current or hereinafter established normal procedures and times for payment of
its other full-time salaried employees.
(b) In addition to Xxxxxx X. Xxxxx'x salary, Xxxxxx X. Xxxxx shall, during
the term hereof, be entitled to the following benefits:
(i) Coverage under the Company's Mini-Med Plan (as restated effective
April 1, 1989), subject, however, to any amendments or modifications or
restatements thereof as the Company may, from time to time, make and to the
Company's right, in its sole discretion, to terminate such plan in its
entirety.
1
(ii) Participation in the Company's Annual Performance Bonus Plan for
Corporate Officers, subject, however, to any amendments or modifications
thereof as the Company may, from time to time, make and to the Company's
right, in its sole discretion, to terminate such plan in its entirety.
(iii) Participation in the Company's Restricted Stock Grant Plan,
subject, however, to any amendments or modifications thereof as the Company
may, from time to time, make and to the Company's right, in its sole
discretion, to terminate such plan in its entirety.
(iv) Participation in the Company's Supplemental Executive Benefits Plan
(the "SEBP"), subject, however, to any amendments or modifications thereof
as the Company may, from time to time, make and to the Company's right, in
its sole discretion, to terminate such plan in its entirety. The Company
will not credit Xxxxxx X. Xxxxx for services performed as an officer of
United Cities prior to the effective time of the Merger for eligibility,
participation and vesting purposes in the SEBP.
(v) Participation in the Company's pension, employee stock ownership,
welfare benefit and other similar plans to the same extent that the Company
makes such plans available to other vice-presidents of the Company, with
the understanding that the award of any discretionary bonus, compensation
or benefit under such plans will be made using the same criteria and
decision-making process as is used in making awards to the Company's other
vice-presidents who are eligible for such awards.
(vi) A company car and country club membership, in each case to the same
extent that such benefits are provided to the Company's other division
presidents.
(vii) An office and secretarial staff, in each case to the same extent
that such are provided to the Company's other division presidents.
(c) In addition to the compensation described above, the Company agrees to
reimburse Xxxxxx X. Xxxxx for any and all reasonable expenses incurred by him
on behalf of the Company, subject to such rules and procedures for
reimbursement as may, from time to time, be specified by the Company.
(d) In addition to the compensation described above, Xxxxxx X. Xxxxx shall
be entitled to an employee retention payment of $60,000 if on the expiration
of 6 months following the date on which the Merger closed: (i) Xxxxxx X. Xxxxx
is an employee of the Company; or (ii) Xxxxxx X. Xxxxx is not an employee of
the Company due to Xxxxxx X. Xxxxx'x employment being terminated by the
Company for reasons other than Cause, Xxxxxx X. Xxxxx resigning for Good
Reason, or Xxxxxx X. Xxxxx having taken normal retirement at age 65.
3. Exclusive Services. During the term of this Agreement, Xxxxxx X. Xxxxx
shall devote his full working time, ability, and attention to the business of
the Company, except for time spent on those charitable and civic duties that
do not interfere with the Company's business.
4. Confidentiality of Business Information. Xxxxxx X. Xxxxx agrees that all
documents, records, and other information relating to the Company or the
Company's business that may hereafter come into his possession may be
confidential and proprietary to the Company. Xxxxxx X. Xxxxx specifically
agrees to keep confidential and not to divulge to any other party any of such
confidential or proprietary information. All documents and records relating to
the Company or the Company's business that are developed by Xxxxxx X. Xxxxx or
used by him during his employment with the Company shall be deemed to be and
are the sole and exclusive property of the Company.
5. Covenant Not to Compete. During the period that Xxxxxx X. Xxxxx is
employed by the Company, Xxxxxx X. Xxxxx shall not, in any city, town,
community, or other area being served by the Company in the states in which
the Company is doing business directly or indirectly, engage or participate in
any activity that is intended to or has the effect of competing with the
Company for any existing or prospective customer except on behalf of the
Company.
6. Survival of Covenants and Remedies Upon Default. The terms and provisions
of Section 4 above shall survive and remain in full force and effect beyond
the expiration or termination of this Agreement. In the event
2
of a breach or a threatened breach by Xxxxxx X. Xxxxx of any provision of
Section 4 or 5, the Company shall be entitled, as an absolute right and
without the necessity of proving irreparable injury or damages, to an
injunction restraining Xxxxxx X. Xxxxx from such breach. Nothing herein shall
be construed as prohibiting or restricting the Company from pursuing any other
remedies available to it for such breach, including, but not limited to, the
recovery of damages from Xxxxxx X. Xxxxx.
7. Termination of the Agreement.
(a) This Agreement shall cease and terminate upon the occurrence of the
first to occur of any of the following events: (i) the close of business on [3
years after Merger]; (ii) Xxxxxx X. Xxxxx'x death; (iii) Xxxxxx X. Xxxxx'x
voluntary resignation of employment with the consent of the Company; or (iv)
the discharge of Xxxxxx X. Xxxxx by the Company for Cause.
(b) Termination by the Company of Xxxxxx X. Xxxxx'x employment for "Cause"
is defined to mean termination upon (i) the willful and continued failure by
Xxxxxx X. Xxxxx to perform his duties with the Company (other than any such
failure resulting from his incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of
Termination by Xxxxxx X. Xxxxx for Good Reason) after a written demand for
performance is delivered to Xxxxxx X. Xxxxx by the Board, which demand
specifically identifies the manner in which the Board believes that Xxxxxx X.
Xxxxx has not performed his duties, or (ii) the willful engaging by Xxxxxx X.
Xxxxx in conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise. For purposes of this Subsection, no act, or
failure to act, on Xxxxxx X. Xxxxx'x part shall be deemed "willful" unless
done, or omitted to be done, by Xxxxxx X. Xxxxx not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, Xxxxxx X. Xxxxx shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to Xxxxxx X. Xxxxx a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice to Xxxxxx X. Xxxxx and an opportunity for Xxxxxx X. Xxxxx,
together with Xxxxxx X. Xxxxx'x counsel, to be heard before the Board),
finding that in the good faith opinion of the Board Xxxxxx X. Xxxxx was guilty
of conduct set forth above in clauses (i) or (ii) of the first sentence of
this Subsection and specifying the particulars thereof in detail.
(c) It is also agreed that in the event of Xxxxxx X. Xxxxx'x disability
prior to , and such disability being of such nature that the Company cannot
"reasonably accommodate" the disability, Xxxxxx X. Xxxxx shall be compensated
under the Company's applicable disability plan, if any, as then in effect. At
the time of such disability, this Agreement shall terminate and no further
payments shall be due Xxxxxx X. Xxxxx hereunder. Disability is defined to mean
that if, as a result of Xxxxxx X. Xxxxx'x incapacity due to physical or mental
illness, Xxxxxx X. Xxxxx shall have been absent from the full-time performance
of his duties with the Company for twelve (12) consecutive months, and within
thirty (30) days after written Notice of Termination is given, Xxxxxx X. Xxxxx
shall not have returned to the full-time performance of his duties.
(d) If Xxxxxx X. Xxxxx is terminated by the Company for Cause, then Xxxxxx
X. Xxxxx'x participation and entitlement to benefits in the plans mentioned in
Section 2(b) above, does not automatically terminate unless such termination
normally occurs pursuant to the terms and conditions of such plans.
(e) If Xxxxxx X. Xxxxx is terminated by the Company for reasons other than
for Cause or if Xxxxxx X. Xxxxx resigns for Good Reason, then such termination
shall constitute a breach of contract by the Company and during the period
commencing on the date of such termination and ending on the third anniversary
of the date hereof the Company shall: continue to pay Xxxxxx X. Xxxxx the
salary provided in Section 2(a) hereof, payable monthly, at the same annual
level as was payable to Xxxxxx X. Xxxxx immediately prior to such termination;
continue to provide Xxxxxx X. Xxxxx with all of the benefits described in
Section 2(b) hereof at the same levels as were provided to Xxxxxx X. Xxxxx
prior to such termination; continue to make contributions on behalf of Xxxxxx
X. Xxxxx to all pension, retirement, supplemental executive retirement and
other plans and programs maintained by the Company and in which Xxxxxx X.
Xxxxx participated prior to such termination equal to the
3
amount of the largest contribution with respect to each such plan or program
which the Company contributed on behalf of Xxxxxx X. Xxxxx during any of the
three calendar years preceding the calendar year wherein such termination
occurs; and be liable to Xxxxxx X. Xxxxx for any actual damages sustained by
Xxxxxx X. Xxxxx as a result of any such breach of contract.
(i) Mitigation of Damages. If Xxxxxx X. Xxxxx'x employment is terminated
pursuant to Section 7(e) hereof, Xxxxxx X. Xxxxx shall have no duty to use
his reasonable efforts to mitigate his damages by seeking other employment.
(ii) Death. If Xxxxxx X. Xxxxx'x employment is terminated by reason of
Xxxxxx X. Xxxxx'x death during the Employment Period, this Agreement shall
terminate without further obligations by the Company to Xxxxxx X. Xxxxx'x
legal representatives under this Agreement other than for payment of the
compensation set forth under Section 2 hereof accrued up to the date of
Xxxxxx X. Xxxxx'x death.
(iii) Disability. If Xxxxxx X. Xxxxx'x employment is terminated by reason
of Xxxxxx X. Xxxxx'x Disability during the Employment Period, this
Agreement shall terminate without further obligations by the Company to
Xxxxxx X. Xxxxx under this Agreement other than for payment of the
compensation set forth in Section 2 hereof accrued up to the Date of
Termination.
(iv) Cause; Other than for Good Reason. If Xxxxxx X. Xxxxx'x employment
shall be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations of the Company to Xxxxxx X.
Xxxxx under this Agreement other than the payment of the compensation set
forth in Section 2 hereof accrued up to the Date of Termination. If Xxxxxx
X. Xxxxx voluntarily terminates his employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations of the Company to Xxxxxx X. Xxxxx
under this Agreement other than the payment of the compensation set forth
in Section 2 hereof accrued up to the Date of Termination.
(v) Good Reason. Xxxxxx X. Xxxxx shall be entitled to terminate his
employment for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without Xxxxxx X. Xxxxx'x express written consent, the
occurrence of any of the following circumstances unless, in the case of
Paragraphs (A), (E), (F), (G), or (H), such circumstances are fully
corrected prior to the Date of Termination specified in the Notice of
Termination, as defined in Subsections (vii) and (viii), respectively,
given in respect thereof:
(A) the assignment to Xxxxxx X. Xxxxx of any duties inconsistent with
his status as a vice-president of the Company or a substantial and
adverse alteration in the nature or status of his responsibilities from
those in effect immediately prior to the change in control of the
Company;
(B) a reduction by the Company in Xxxxxx X. Xxxxx'x annual base
salary as in effect on the date hereof or as the same may be increased
from time to time except for across-the-board salary reductions
similarly affecting all vice-presidents of the Company and all vice-
presidents of any person in control of the Company;
(C) the Company's requiring Xxxxxx X. Xxxxx to be based anywhere
other than the offices identified in Section 1(c) of this Agreement
except for required travel on the Company's business to an extent
substantially consistent with his present business travel obligations;
(D) the failure by the Company, without Xxxxxx X. Xxxxx'x consent, to
pay to Xxxxxx X. Xxxxx any portion of his current compensation except
pursuant to an across-the-board compensation deferral similarly
affecting all Company vice-presidents and all vice-presidents of any
person in control of the Company, or to pay to Xxxxxx X. Xxxxx any
portion of an installment of deferred compensation under any deferred
compensation program of the Company, within seven days of the date such
compensation is due;
(E) the failure by the Company to continue in effect any compensation
plan identified in Section 2(b) of this Agreement, including, but not
limited to, the Company's Retirement Plan, Employee Stock Ownership
Plan, Supplemental Executive Benefits Plan and Excess Medical Expense
Insurance Plan (otherwise known as the "Mini-Med" Plan) or any
substitute plans, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to
such plan, or the
4
failure by the Company to continue Xxxxxx X. Xxxxx'x participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of Xxxxxx X. Xxxxx'x participation relative to
other participants, as existed as of the date of this Agreement;
(F) the failure by the Company to continue to provide Xxxxxx X. Xxxxx
with benefits substantially similar to those enjoyed by him under any
of the Company's pension, life insurance, medical, health and accident,
or disability plans identified in Section 2(b) of this Agreement, the
taking of any action by the Company which would directly or indirectly
materially reduce or deprive Xxxxxx X. Xxxxx of any of such benefits,
or the failure by the Company to provide Xxxxxx X. Xxxxx with the
number of paid vacation days to which he is entitled on the basis of
years of service with the Company in accordance with the Company's
normal vacation policy;
(G) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement; or
(H) any purported termination of Xxxxxx X. Xxxxx'x employment which
is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (vi) below (and, if applicable, the
requirements of Sections 7(b) and (c) above); for purposes of this
Agreement, no such purported termination shall be effective.
Xxxxxx X. Xxxxx'x right to terminate his employment pursuant to this
Subsection shall not be affected by his incapacity due to physical or
mental illness. The continued employment of Xxxxxx X. Xxxxx shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
(vi) Notice of Termination. Any purported termination of your employment
by the Company or by Xxxxxx X. Xxxxx shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section
8 hereof. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
Xxxxxx X. Xxxxx'x employment under the provision so indicated.
(vii) Date of Termination, Etc. "Date of Termination" shall mean thirty
(30) days after Notice of Termination is given.
8. Miscellaneous.
(a) Each provision in this Agreement is intended to be severable. If any
term or provision hereof is adjudged by any court of competent jurisdiction to
be invalid or unenforceable for any reason whatsoever, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement. To the extent that any provision of this
Agreement, including, but not limited to, any of the provisions of Sections 4
and 5 above, is adjudged to be invalid or unenforceable, such provision shall
be construed or limited in such a manner so as to allow the maximum benefit of
such provision provided by law.
(b) Any notice required or permitted by this Agreement shall be in writing
and shall be sufficient if sent by registered mail, return receipt requested,
to the last known address of the party to whom such notice is to be given. Any
notice may be waived in writing by the party entitled to receive it.
(c) No waiver by any party hereto of any provision of this Agreement shall
be deemed to have been made unless expressed in writing and signed by such
party. The waiver by either party hereto of a breach of any term or provision
of this Agreement shall not operate or be construed as a waiver of a
subsequent breach of the same provision by either party or of the breach of
any other term or provision of this Agreement.
(d) The parties hereto may amend and supplement this Agreement only by an
instrument in writing that is signed by both parties hereto.
5
(e) Xxxxxx X. Xxxxx acknowledges and agrees that the services to be rendered
by him hereunder are unique and personal. Accordingly, neither Xxxxxx X. Xxxxx
nor the Company may assign any of his or its rights or delegate any of his or
its duties under this Agreement.
(f) This Agreement constitutes the entire agreement between the Company and
Xxxxxx X. Xxxxx with respect to the subject matter hereof and supersedes any
prior agreements and understanding, oral or written, between the Company and
Xxxxxx X. Xxxxx.
(g) This Agreement is the product of negotiations during which both parties
hereto have had an opportunity to consult with counsel and to request
alterations, changes, and deletions to the text and understanding hereof. This
Agreement shall be construed as if drafted jointly by both parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of such party's particular role in preparing any preliminary or
final draft of this Agreement or in drafting any of the provisions of this
Agreement.
(h) This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by the parties hereto and their respective heirs,
representatives, successors, and permitted assigns.
(i) This Agreement shall be governed by and construed in accordance with the
laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date first written above.
Atmos Energy Corporation
------------------------------------- By: _________________________________
XXXXXX X. XXXXX
6
Draft of July 19, 1996
EXHIBIT C-3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
day of , by and between ATMOS ENERGY CORPORATION, a corporation
(the "Company"), and XXXX X. XXXXXX.
WITNESSETH:
WHEREAS, on , 199 , United Cities Gas Company, then an Illinois and
Virginia corporation ("United Cities"), merged with and into the Company (the
"Merger"); and
WHEREAS, at the time of the Merger of United Cities and the Company, Xxxx X.
Xxxxxx was the Chairman of the Board, President and Chief Executive Officer of
United Cities; and
WHEREAS, the Company now desires to retain Xxxx X. Xxxxxx in its employ as
the Vice Chairman of the Board of Directors;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Employment and Duties.
(a) The Company hereby employs Xxxx X. Xxxxxx, and Xxxx X. Xxxxxx hereby
agrees to render his services to the Company, as Vice Chairman of the Board of
Directors for a period of six months commencing on the date of this Agreement
(the "Employment Period").
(b) Xxxx X. Xxxxxx'x duties as Vice Chairman of the Board of Directors shall
include merger assimilation duties mutually agreed upon by Xxxx X. Xxxxxx and
the Company's Chairman of the Board of Directors and such other duties and
functions as the Company may, from time to time, assign to Xxxx X. Xxxxxx.
Xxxx X. Xxxxxx agrees that he will perform his duties hereunder to the best of
his ability, in a good, faithful, workmanlike, and competent manner and with
reasonable care and diligence.
(c) Initially, Xxxx X. Xxxxxx'x office shall be located in United Cities's
headquarters in Brentwood, Tennessee, subject, however, to any relocation
thereof that may be mutually agreed upon by the parties.
2. Salary, Benefits, and Expense Reimbursements.
(a) In consideration for Xxxx X. Xxxxxx'x services under this Agreement, the
Company agrees to pay to Xxxx X. Xxxxxx an initial salary at the rate of $
per year, less any applicable adjustments and withholding as are required by
law or agreed to by Xxxx X. Xxxxxx and the Company. Such salary shall be paid
by the Company semi-monthly in accordance with its current or hereinafter
established normal procedures and times for payment of its other full-time
salaried employees.
(b) In addition to Xxxx X. Xxxxxx'x salary, Xxxx X. Xxxxxx shall, during the
term hereof, be entitled to the following benefits:
(i) Coverage under the Company's Mini-Med Plan (as restated effective
April 1, 1989), subject, however, to any amendments or modifications or
restatements thereof as the Company may, from time to time, make and to the
Company's right, in its sole discretion, to terminate such plan in its
entirety.
(ii) Participation in the Company's Annual Performance Bonus Plan for
Corporate Officers, subject, however, to any amendments or modifications
thereof as the Company may, from time to time, make and to the Company's
right, in its sole discretion, to terminate such plan in its entirety.
1
(iii) Participation in the Company's Restricted Stock Grant Plan,
subject, however, to any amendments or modifications thereof as the Company
may, from time to time, make and to the Company's right, in its sole
discretion, to terminate such plan in its entirety.
(iv) Participation in the Company's Supplemental Executive Benefits Plan
(the "SEBP"), subject, however, to any amendments or modifications thereof
as the Company may, from time to time, make and to the Company's right, in
its sole discretion, to terminate such plan in its entirety. The Company
will credit Xxxx X. Xxxxxx for services performed as an officer of United
Cities prior to the effective time of the Merger for eligibility,
participation and vesting purposes in the SEBP. Xxxx X. Xxxxxx, upon his
execution and delivery of this Agreement, hereby waives and relinquishes
all of his rights to receive benefits under any United Cities SEBP or
substantially similar type plan.
(v) Participation in the Company's pension, employee stock ownership,
welfare benefit and other similar plans to the same extent that the Company
makes such plans available to other senior executives of the Company, with
the understanding that the award of any discretionary bonus, compensation
or benefit under such plans will be made using the same criteria and
decision-making process as is used in making awards to the Company's other
senior executives who are eligible for such awards.
(vi) A car allowance and country club membership, in each case to the
same extent that such benefits are provided to the Company's other senior
executives.
(vii) Maintenance of Xxxx X. Xxxxxx'x current office and secretarial
staffing until Xxxx X. Xxxxxx retires from active employment with the
Company.
(viii) Participation in the Company's [Retirement Plan for its Board of
Directors]. Any time spent by Xxxx X. Xxxxxx on United Cities' Board of
Directors will be credited as service time under the Company's [Retirement
Plan for its Board of Directors].
(c) In addition to the compensation described above, the Company agrees to
reimburse Xxxx X. Xxxxxx for any and all reasonable expenses incurred by him
on behalf of the Company, subject to such rules and procedures for
reimbursement as may, from time to time, be specified by the Company.
(d) In addition to the compensation described above, Xxxx X. Xxxxxx shall be
entitled to an employee retention payment of $60,000 if on the expiration of 6
months following the date on which the Merger closed: (i) Xxxx X. Xxxxxx is an
employee of the Company; or (ii) Xxxx X. Xxxxxx is not an employee of the
Company due to Xxxx X. Xxxxxx'x employment being terminated by the Company for
reasons other than Cause, Xxxx X. Xxxxxx resigning for Good Reason, or Xxxx X.
Xxxxxx having taken normal retirement at age 65.
3. Exclusive Services. During the term of this Agreement, Xxxx X. Xxxxxx
shall devote his full working time, ability, and attention to the business of
the Company, except for time spent on those charitable and civic duties that
do not interfere with the Company's business.
4. Confidentiality of Business Information. Xxxx X. Xxxxxx agrees that all
documents, records, and other information relating to the Company or the
Company's business that may hereafter come into his possession may be
confidential and proprietary to the Company. Xxxx X. Xxxxxx specifically
agrees to keep confidential and not to divulge to any other party any of such
confidential or proprietary information. All documents and records relating to
the Company or the Company's business that are developed by Xxxx X. Xxxxxx or
used by him during his employment with the Company shall be deemed to be and
are the sole and exclusive property of the Company.
5. Covenant Not to Compete. During the period that Xxxx X. Xxxxxx is
employed by the Company, Xxxx X. Xxxxxx shall not, in any city, town,
community, or other area being served by the Company in the states in which
the Company is doing business, directly or indirectly, engage or participate
in any activity that is intended to or has the effect of competing with the
Company for any existing or prospective customer except on Behalf of the
Company.
2
6. Survival of Covenants and Remedies Upon Default. The terms and provisions
of Section 4 above shall survive and remain in full force and effect beyond
the expiration or termination of this Agreement. In the event of a breach or a
threatened breach by Xxxx X. Xxxxxx of any provision of Section 4 or 5, the
Company shall be entitled, as an absolute right and without the necessity of
proving irreparable injury or damages, to an injunction restraining Xxxx X.
Xxxxxx from such breach. Nothing herein shall be construed as prohibiting or
restricting the Company from pursuing any other remedies available to it for
such breach, including, but not limited to, the recovery of damages from Xxxx
X. Xxxxxx.
7. Termination of the Agreement.
(a) This Agreement shall cease and terminate upon the occurrence of the
first to occur of any of the following events: (i) the close of business on [6
months after the Merger]; (ii) Xxxx X. Xxxxxx'x death; (iii) Xxxx X. Xxxxxx'x
voluntary resignation of employment; or (iv) the discharge of Xxxx X. Xxxxxx
by the Company for Cause.
(b) Termination by the Company of Xxxx X. Xxxxxx'x employment for "Cause" is
defined to mean termination upon (i) the willful and continued failure by Xxxx
X. Xxxxxx to perform his duties with the Company (other than any such failure
resulting from his incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice of Termination by
Xxxx X. Xxxxxx for Good Reason) after a written demand for performance is
delivered to Xxxx X. Xxxxxx by the Board, which demand specifically identifies
the manner in which the Board believes that Xxxx X. Xxxxxx has not performed
his duties, or (ii) the willful engaging by Xxxx X. Xxxxxx in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise.
For purposes of this Subsection, no act, or failure to act, on Xxxx X.
Xxxxxx'x part shall be deemed "willful" unless done, or omitted to be done, by
Xxxx X. Xxxxxx not in good faith and without reasonable belief that his action
or omission was in the best interest of the Company. Notwithstanding the
foregoing, Xxxx X. Xxxxxx shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to Xxxx X. Xxxxxx a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to Xxxx X. Xxxxxx
and an opportunity for Xxxx X. Xxxxxx, together with Xxxx X. Xxxxxx'x counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board Xxxx X. Xxxxxx was guilty of conduct set forth above in clauses (i) or
(ii) of the first sentence of this Subsection and specifying the particulars
thereof in detail.
(c) If Xxxx X. Xxxxxx is terminated by the Company for Cause, then Xxxx X.
Xxxxxx'x participation and entitlement to benefits in the plans mentioned in
Section 2(b) above, does not automatically terminate unless such termination
normally occurs pursuant to the terms and conditions of such plans.
(d) If Xxxx X. Xxxxxx is terminated by the Company for reasons other than
for Cause or disability, or if Xxxx X. Xxxxxx resigns for Good Reason, then
such termination shall constitute a breach of contract by the Company and
during the period commencing on the date of such termination and ending on the
sixth month anniversary of the date hereof the Company shall: continue to pay
Xxxx X. Xxxxxx the salary provided in Section 2(a) hereof, payable monthly, at
the same annual level as was payable to Xxxx X. Xxxxxx immediately prior to
such termination; continue to provide Xxxx X. Xxxxxx with all of the benefits
described in Section 2(b) hereof at the same levels as were provided to Xxxx
X. Xxxxxx prior to such termination; continue to make contributions on behalf
of Xxxx X. Xxxxxx to all pension, retirement, supplemental executive
retirement and other plans and programs maintained by the Company and in which
Xxxx X. Xxxxxx participated prior to such termination equal to the amount of
the largest contribution with respect to each such plan or program which the
Company contributed on behalf of Xxxx X. Xxxxxx during any of the three
calendar years preceding the calendar year wherein such termination occurs;
and be liable to Xxxx X. Xxxxxx for any actual damages sustained by Xxxx X.
Xxxxxx as a result of any such breach of contract.
(i) Mitigation of Damages. If Xxxx X. Xxxxxx'x employment is terminated
pursuant to Section 7(e) hereof, Xxxx X. Xxxxxx shall have no duty to use
his reasonable efforts to mitigate his damages by seeking other employment.
3
(ii) Death. If Xxxx X. Xxxxxx'x employment is terminated by reason of
Xxxx X. Xxxxxx'x death during the Employment Period, this Agreement shall
terminate without further obligations by the Company to Xxxx X. Xxxxxx'x
legal representatives under this Agreement other than for payment of the
compensation set forth under Section 2 hereof accrued up to the date of
Xxxx X. Xxxxxx'x death.
(iii) Disability. If Xxxx X. Xxxxxx'x employment is terminated by reason
of Xxxx X. Xxxxxx'x Disability during the Employment Period, this Agreement
shall terminate without further obligations by the Company to Xxxx X.
Xxxxxx under this Agreement other than for payment of the compensation set
forth in Section 2 hereof accrued up to the Date of Termination.
(iv) Cause; Other than for Good Reason. If Xxxx X. Xxxxxx'x employment
shall be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations of the Company to Xxxx X.
Xxxxxx under this Agreement other than the payment of the compensation set
forth in Section 2 hereof accrued up to the Date of Termination. If Xxxx X.
Xxxxxx voluntarily terminates his employment during the Employment Period,
excluding a termination for Good Reason, this Agreement shall terminate
without further obligations of the Company to Xxxx X. Xxxxxx under this
Agreement other than the payment of the compensation set forth in Section 2
hereof accrued up to the Date of Termination.
(v) Good Reason. Xxxx X. Xxxxxx shall be entitled to terminate his
employment for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without Xxxx X. Xxxxxx'x express written consent, the
occurrence of any of the following circumstances unless, in the case of
Paragraphs (A), (E), (F), (G), or (H), such circumstances are fully
corrected prior to the Date of Termination specified in the Notice of
Termination, as defined in Subsections (vi) and (vii), respectively, given
in respect thereof:
(A) the assignment to Xxxx X. Xxxxxx of any duties inconsistent with
his status as a senior executive officer of the Company or a
substantial and adverse alteration in the nature or status of his
responsibilities from those in effect immediately prior to the change
in control of the Company;
(B) a reduction by the Company in Xxxx X. Xxxxxx'x annual base salary
as in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary reductions similarly
affecting all senior executives of the Company and all senior
executives of any person in control of the Company;
(C) the Company's requiring Xxxx X. Xxxxxx to be based anywhere other
than the offices identified in Section 1(c) of this Agreement except
for required travel on the Company's business to an extent
substantially consistent with his present business travel obligations;
(D) the failure by the Company, without Xxxx X. Xxxxxx'x consent, to
pay to Xxxx X. Xxxxxx any portion of his current compensation except
pursuant to an across-the-board compensation deferral similarly
affecting all senior executives of the Company and all senior
executives of any person in control of the Company, or to pay to Xxxx
X. Xxxxxx any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within seven days of
the date such compensation is due;
(E) the failure by the Company to continue in effect any compensation
plan identified in Section 2(b) of this Agreement, including, but not
limited to, the Company's Retirement Plan, Employee Stock Ownership
Plan, Supplemental Executive Benefits Plan and Excess Medical Expense
Insurance Plan (otherwise known as the "Mini-Med Plan") or any
substitute plans, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to
such plan, or the failure by the Company to continue Xxxx X. Xxxxxx'x
participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount of
benefits provided and the level of Xxxx X. Xxxxxx'x participation
relative to other participants, as existed as of the date of this
Agreement;
(F) the failure by the Company to continue to provide Xxxx X. Xxxxxx
with benefits substantially similar to those enjoyed by him under any
of the Company's pension, life insurance, medical, health and accident,
or disability plans identified in Section 2(b) of this Agreement, the
taking of any action by the Company which would directly or indirectly
materially reduce or deprive Xxxx X. Xxxxxx of
4
any of such benefits, or the failure by the Company to provide Xxxx X.
Xxxxxx with the number of paid vacation days to which he is entitled on
the basis of years of service with the Company in accordance with the
Company's normal vacation policy;
(G) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement; or
(H) any purported termination of Xxxx X. Xxxxxx'x employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (vi) below (and, if applicable, the
requirements of Sections 7(b) and (c) above); for purposes of this
Agreement, no such purported termination shall be effective.
Xxxx X. Xxxxxx'x right to terminate his employment pursuant to this
Subsection shall not be affected by his incapacity due to physical or
mental illness. The continued employment of Xxxx X. Xxxxxx shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
(vi) Notice of Termination. Any purported termination of his employment
by the Company or by Xxxx X. Xxxxxx shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 8(b)
hereof. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of Xxxx
X. Xxxxxx'x employment under the provision so indicated.
(vii) Date of Termination, Etc. "Date of Termination" shall mean ten days
after Notice of Termination is given.
8. Miscellaneous.
(a) Each provision in this Agreement is intended to be severable. If any
term or provision hereof is adjudged by any court of competent jurisdiction to
be invalid or unenforceable for any reason whatsoever, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement. To the extent that any provision of this
Agreement, including, but not limited to, any of the provisions of Sections 4
and 5 above, is adjudged to be invalid or unenforceable, such provision shall
be construed or limited in such a manner so as to allow the maximum benefit of
such provision provided by law.
(b) Any notice required or permitted by this Agreement shall be in writing
and shall be sufficient if sent by registered mail, return receipt requested,
to the last known address of the party to whom such notice is to be given. Any
notice may be waived in writing by the party entitled to receive it.
(c) No waiver by any party hereto of any provision of this Agreement shall
be deemed to have been made unless expressed in writing and signed by such
party. The waiver by either party hereto of a breach of any term or provision
of this Agreement shall not operate or be construed as a waiver of a
subsequent breach of the same provision by either party or of the breach of
any other term or provision of this Agreement.
(d) The parties hereto may amend and supplement this Agreement only by an
instrument in writing that is signed by both parties hereto.
(e) Xxxx X. Xxxxxx acknowledges and agrees that the services to be rendered
by him hereunder are unique and personal. Accordingly, neither Xxxx X. Xxxxxx
nor the Company may assign any of his or its rights or delegate any of his or
its duties under this Agreement.
(f) This Agreement constitutes the entire agreement between the Company and
Xxxx X. Xxxxxx with respect to the subject matter hereof and supersedes any
prior agreements and understanding, oral or written, between the Company and
Xxxx X. Xxxxxx.
5
(g) This Agreement is the product of negotiations during which both parties
hereto have had an opportunity to consult with counsel and to request
alterations, changes, and deletions to the text and understanding hereof. This
Agreement shall be construed as if drafted jointly by both parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of such party's particular role in preparing any preliminary or
final draft of this Agreement or in drafting any of the provisions of this
Agreement.
(h) This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by the parties hereto and their respective heirs,
representatives, successors, and permitted assigns.
(i) This Agreement shall be governed by and construed in accordance with the
laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date first written above.
Atmos Energy Corporation
------------------------------------- By: _________________________________
XXXX X. XXXXXX
6
EXHIBIT D
PLAN OF MERGER
This PLAN OF MERGER (this "Plan") by and between ATMOS ENERGY CORPORATION, a
Texas corporation ("Atmos"), and UNITED CITIES GAS COMPANY, an Illinois and
Virginia corporation ("United Cities"). Pursuant to this Plan, United Cities
shall be merged with and into Atmos, with Atmos as the surviving corporation
(the "Merger"), and the outstanding capital stock of United Cities shall be
converted into the right to receive shares of capital stock of Atmos.
W I T N E S S E T H:
WHEREAS, Atmos is a corporation duly organized and existing under the laws
of the State of Texas, and United Cities is a corporation duly organized and
existing under the laws of the States of Illinois and Virginia;
WHEREAS, Atmos and United Cities have entered into an Agreement and Plan of
Reorganization dated July 19, 1996, as amended by Amendment No. 1 to Agreement
and Plan of Reorganization dated October 3, 1996 (the "Reorganization
Agreement"), which contemplates the merger of United Cities with and into Atmos,
with Atmos as the surviving corporation as provided in this Plan; and
WHEREAS, the respective Boards of Directors of Atmos and United Cities have
duly authorized the execution of this Plan and have directed that the Merger
be submitted to their respective shareholders for a vote in accordance with
the requirements of the Texas Business Corporation Act, the Illinois Business
Corporation Act, and the Virginia Stock Corporation Act, the Boards of
Directors and shareholders of Atmos and United Cities have approved the
Merger, and the Board of Directors and shareholders of Atmos have authorized
the issuance of shares of the common stock, no par value, of Atmos (the "Atmos
Stock") in connection with the Merger;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
Merger of United Cities into Atmos
Section 1.01 The Merger. In accordance with the Texas Business Corporation
Act, the Illinois Business Corporation Act, and the Virginia Stock Corporation
Act, United Cities shall be merged with and into Atmos at the effective time
of the Merger (the "Effective Time"). Following the Merger, the separate
corporate existence of United Cities shall cease and Atmos shall be the
surviving corporation, organized under the laws of the State of Texas and the
Commonwealth Virginia (the "Surviving Corporation").
Section 1.02 Effects of the Merger.
(a) The Merger shall have the effects set forth in the applicable provisions
of the Texas Business Corporation Act, the Illinois Business Corporation Act,
and the Virginia Stock Corporation Act. Without limiting the generality of the
foregoing sentence, and subject thereto, at the Effective Time, by operation
of law, all of the property, rights, privileges, powers and franchises of
United Cities and Atmos shall vest in the Surviving Corporation, and all
debts, liabilities and obligations of United Cities and Atmos shall be assumed
by the Surviving Corporation and shall become the debts, liabilities and
obligations of the Surviving Corporation.
(b) If, at any time after the Merger, the Surviving Corporation shall deem
it necessary to obtain further assignments or documents to vest, perfect,
confirm or record in the Surviving Corporation title to any property or rights
of United Cities acquired as a result of the Merger, United Cities hereby
authorizes the officers and directors of the Surviving Corporation or its
successors to execute and deliver on behalf of and in the name of United
Cities all such proper deeds, assignments and other instruments and to do all
things necessary and proper to vest, perfect, confirm or record title to such
property or rights in the Surviving Corporation or its successor.
1
Section 1.03 Articles of Incorporation; Bylaws.
(a) The Restated Articles of Incorporation of Atmos, as in effect
immediately prior to the Effective Time, shall be amended as provided herein,
and such Restated Articles of Incorporation, as so amended, shall be the
Articles of Incorporation of the Surviving Corporation, without any other
modification or amendment until thereafter amended as provided by law. A copy
of the Restated Articles of Incorporation of Atmos as amended hereby is
attached hereto as Exhibit A.
(b) The text of Article One, Article Two and Article Three of the Restated
Articles of Incorporation of Atmos shall be amended and restated in their
entirety to read as follows:
"ARTICLE ONE
Atmos Energy Corporation, pursuant to the provisions of
Article 4.07 of the Texas Business Corporation Act, adopted
Restated Articles of Incorporation, which accurately copied
the Articles of Incorporation and all amendments thereto that
were in effect to date and such Restated Articles of
Incorporation contained no change in any provision thereof.
ARTICLE TWO
Such Restated Articles of Incorporation were adopted by
resolution of the board of directors of the corporation on the
8th day of November, 1989.
ARTICLE THREE
The Restated Articles of Incorporation have been further
amended pursuant to that certain Plan of Merger by and between
Atmos Energy Corporation and United Cities Gas Company, an
Illinois and Virginia corporation. The Articles of
Incorporation and all amendments and supplements thereto as
superseded by the Restated Articles of Incorporation and as
amended pursuant to the Plan of Merger are as follows:"
(c) The text of Article II of the Restated Articles of Incorporation of
Atmos shall be amended and restated in its entirety to read as follows:
ARTICLE II.
The purposes for which the Corporation is organized are the
transaction of any or all lawful business for which
corporations may be incorporated under the Texas Business
Corporation Act, including, but not limited to, the
transportation and distribution of natural gas by pipeline as
a public utility, except that with respect to the Commonwealth
of Virginia, the Corporation may only conduct such business as
is permitted to be conducted by a public service company
engaged in the transportation and distribution of natural gas
by pipeline."
(d) The text of Article III of the Restated Articles of Incorporation of
Atmos shall be amended and restated in its entirety to read as follows:
"ARTICLE III.
The Corporation is incorporated in the State of Texas and
the Commonwealth of Virginia. The post office address of
the registered office of this Corporation in the State of
Texas is Three Lincoln Centre, Suite 1800, 0000 XXX Xxxxxxx,
Xxxxxx, Xxxxx 00000, and the registered agent for service of
this Corporation at the same address is Xxxx X. Xxxxxxxx.
The post office address of the registered office of this
Corporation in the Commonwealth of Virginia is Riverfront
Plaza, East Tower, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxx 00000-0000, and the registered agent for service of
this Corporation at the same address is Xxxxx X. Xxxxxxx, III,
such registered agent being a resident of the Commonwealth of
Virginia and a member of the Virginia State Bar."
2
(e) The text of Article VI of the Restated Articles of Incorporation of Atmos
shall be amended and restated in its entirety to read as follows:
"ARTICLE VI.
1. Number of Directors. The number of directors constituting
the present board of directors is fifteen (15); however,
thereafter the number of directors constituting the Board of
Directors shall be fixed by the Bylaws of the Corporation. No
director shall be removed during his term of office except for
cause and by the affirmative vote of the holders of seventy-
five percent (75%) of the shares then entitled to vote at an
election of directors. The names and addresses of the persons
who are to serve as directors until the next annual meeting of
the shareholders or until their successors are duly elected
and qualified are as follows:
NAME ADDRESS
---- -------
Xxxxxx X. Xxxx XX............................. 0000 Xxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
Xxx Xxxxxx.................................... 0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxx............................. 000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx............................. Tusculum College
XxXxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxxx, XX 00000
Xxxx X. Xxxxxx................................ 0000 Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx.............................. Xxxxxxx Office Complex
000 Xxxxx #00, Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxx............................ Western Kentucky University
Xxxxxxx Xxxxx, XX 00000
Xxxxxxx X. Xxxxxx............................. 000 Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, XX 00000
Xxxx X. Xxxxxx, Xx. .......................... X.X. Xxx 000000
Xxxxxx, XX 00000
Xxxxx X. Xxxxxx............................... Three Lincoln Centre
Suite 1800
0000 XXX Xxxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxx................................. 00 Xxxx 00xx Xxxxxx, #0X
Xxx Xxxx, XX 00000
Xxx X. Xxxxxxxxxx............................. 0000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Xxxxxx X. Xxxxxxxx............................ Three Lincoln Centre
Suite 1800
0000 XXX Xxxxxxx
Xxxxxx, XX 00000
3
NAME ADDRESS
---- -------
Xxxxxxx X. Xxxxxxx................................... Three Lincoln Centre
Suite 1800
0000 XXX Xxxxxxx
Xxxxxx, XX 00000
Xxxxxxx Xxxx II...................................... Xxxxx Xxx/Xxx Xxx
Xxxxxxxx, XX 00000
2. Election and Term. The directors shall be divided into
three classes, designated Class I, Class II and Class III.
Each class shall consist, as nearly as may be possible, of
one-third of the total number of directors constituting the
entire Board of Directors. At each annual meeting of
shareholders, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-
year term. Directors shall be elected by a majority vote of
the shares of the Common Stock entitled to vote in the
election of directors and represented in person or by proxy at
a meeting of shareholders at which a quorum is present. If the
number of directors is changed, any increase or decrease shall
be apportioned among the classes so as to maintain the number
of directors in each class as nearly equal as possible, and
any additional director of any class elected by the
shareholders to fill a vacancy resulting from an increase in
such class shall hold office for a term that shall coincide
with the remaining term of that class, but in no case will a
decrease in the number of directors shorten the term of any
incumbent director. A director shall hold office until the
annual meeting for the year in which his term expires and
until his successor shall be duly elected and qualified,
subject, however, to prior death, resignation, retirement,
disqualification or removal from office."
(f) The text of Subsection 2.01 of Article VII of the Restated Articles of
Incorporation of Atmos shall be amended and restated in its entirety as
follows:
"2.01 Subject to the provisions of law, including the Texas
Business Corporation Act and the Virginia Stock Corporation
Act and to the conditions set forth in any resolution of the
Board of Directors of the Corporation, such dividends (payable
in cash, stock or otherwise) as may be determined by the Board
of Directors may be declared and paid on the Common Stock from
time to time out of any funds legally available therefor."
(g) The text of Article X of the Restated Articles of Incorporation of Atmos
shall be amended and restated in its entirety as follows:
"ARTICLE X.
No director of the Corporation shall be personally liable to
the Corporation or its shareholders for monetary damages for
an act or omission in such director's capacity as a director,
except for liability for (i) a breach of the director's duty
of loyalty to the Corporation or its shareholders; (ii) an act
or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law; (iii) a
transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office; (iv) an act
or omission for which the liability of a director is expressly
provided by statute; or (v) an act related to an unlawful
stock repurchase or payment of a dividend. If the laws of the
State of Texas or the Commonwealth of Virginia are hereafter
amended to authorize corporate action further eliminating or
limiting the personal liability of a director of the
Corporation, then the liability of a director of the
Corporation shall thereupon automatically be eliminated or
limited to the fullest extent permitted by the laws of the
State of Texas and the
4
Commonwealth of Virginia. Any repeal or modification of this
Article X by the shareholders of the Corporation shall not
adversely affect any right or protection of a director
existing at the time of such repeal or modification with
respect to such events or circumstances occurring or existing
prior to such time."
(h) The Bylaws of Atmos, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation, without any
modification or amendment until thereafter amended as provided by law.
Section 1.04 Directors and Officers.
(a) At the Effective Time, the number of directors of the Surviving
Corporation shall be fifteen (15), and thereafter shall be set in the manner
provided in the Bylaws of the Surviving Corporation. The directors of the
Surviving Corporation shall be the eleven (11) directors of Atmos in office at
and as of the Effective Time and the following four (4) former directors of
United Cities: Messrs. Xxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxx and
Xxxxxxx X. Xxxxxx. Each of the Atmos directors in office prior to the Effective
Time shall continue to serve in the class and for the term that he was serving
at and as of the Effective Time, and the following directors shall serve in the
classes and for the terms indicated: Xx. Xxxxxx (Class I, with a term expiring
in 1999); Xx. Xxxxx, (Class I, with a term expiring in 1999); Xx. Xxxxxx (Class
II, with a term expiring in 1997); and Xx. Xxxxxxx (Class III, with a term
expiring in 1998). All of such directors shall remain in office until their
respective successors are duly elected or appointed and qualified.
(b) The officers of Atmos in office at and as of the Effective Time shall
remain the officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
ARTICLE II
Conversion and Exchange of Shares
Section 2.01 Conversion of Shares. (a) At and as of the Effective Time, each
outstanding share of the common stock of United Cities (the "United Cities
Stock") automatically shall become and be converted into the right to receive
one (1) share of Atmos Stock (as the same may be adjusted in accordance with
the terms hereof). The exchange ratio set forth in the immediately preceding
sentence shall be appropriately and proportionately adjusted in the event of
any stock dividend on, or stock split or stock combination of, or any other
like change in the Atmos Stock or the United Cities Stock based on a record
date occurring during the period from July 19, 1996 until immediately prior to
the Effective Time.
(b) At and as of the Effective Time, each share of the United Cities Stock
then held in the treasury of United Cities, if any, shall, by virtue of the
Merger and without any action on the part of the holder thereof, be cancelled
without payment of any consideration therefor and without any conversion
thereof.
(c) No fraction of a share of Atmos Stock will be issuable upon the
conversion of shares of United Cities Stock in the Merger. Instead, each
shareholder of United Cities who but for this provision would be entitled to a
fractional share of Atmos Stock shall, upon surrender to Atmos' Paying Agent
(as hereinafter defined) of his certificate or certificates formerly
representing shares of United Cities Stock (each, an "Old Certificate"),
receive in lieu of such fractional share, and without interest, a cash amount
determined by multiplying such fraction by the average of the closing sale
prices for a share of Atmos Stock, as reported on the NYSE, for the five (5)
business days prior to the date on which the Effective Time shall occur.
Section 2.02 Exchange of Certificates. (a) Following the Effective Time, the
shareholders of United Cities shall deliver to the Paying Agent their Old
Certificates. Upon surrender to the Paying Agent of outstanding Old
Certificates, the holder of such Old Certificate or Old Certificates shall
receive in exchange therefor a certificate (a "New Certificate") representing
whole shares of the Atmos Stock (the "Atmos Shares") and cash in lieu of
fractional shares in accordance with the provisions of Sections 2.01(a) and
2.01(c) of this Plan. Until so surrendered and exchanged, each Old Certificate
shall be deemed at and after the Effective Time to represent
5
only the right to receive upon such surrender a New Certificate representing
Atmos Shares and cash in lieu of fractional shares without any interest
thereon. All rights to receive the Atmos Shares into which the shares of
United Cities Stock are converted, and cash in lieu of fractional shares,
pursuant to this Plan shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such United Cities Stock.
(b) The New Certificates representing the Atmos Shares to be issued in
connection with the Merger shall in each case be issued to the person in whose
name the surrendered Old Certificate or Old Certificates is or are registered.
A restrictive legend shall be placed on the New Certificates representing
those Atmos Shares issued to persons who (i) were affiliates of United Cities
prior to the Merger, and/or (ii) become affiliates of Atmos after the Merger,
and a notation shall be made in the appropriate records of Atmos, indicating
that the shares represented thereby are subject to certain restrictions on
transfer.
(c) At the Effective Time, the stock transfer books of United Cities shall
be closed, and there shall be no further registration or transfers of shares
of United Cities Stock thereafter in the records of United Cities.
(d) Unless and until an Old Certificate shall be surrendered to the Paying
Agent as set forth herein, the holder of such Old Certificate shall not
receive any dividends or other distributions payable to record holders of the
Atmos Stock. Upon and after such surrender, there shall be paid (without
interest) to the record holder of the New Certificate issued and exchanged for
such Old Certificate, the amount of any such dividend or other distribution
(the record date for the payment of which was after the Effective Time) not
previously paid to such holder. Holders of New Certificates who shall have
surrendered their Old Certificates prior to any dividend record date will
receive their dividends on the corresponding payment date.
(e) The Atmos Shares issuable in the Merger are hereinafter called the
"Merger Consideration." Immediately following the Effective Time, Atmos shall
deposit or cause to be deposited in trust with a bank or trust company to be
designated by Atmos (the "Paying Agent"), as agent for the holders of the Old
Certificates, the certificates representing the Atmos Shares that constitute
the Merger Consideration. As soon as practicable after the Effective Time, the
Paying Agent shall cause to be mailed, and shall make available at the offices
of the Paying Agent, to each person entitled to receive the Merger
Consideration, a form of a letter of transmittal and instructions for use in
effecting the surrender for payment of the Old Certificates which, immediately
prior to the Effective Time, represented shares of United Cities Stock. Upon
surrender to the Paying Agent of such Old Certificates, together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the Paying Agent shall promptly deliver the Merger
Consideration to the persons entitled thereto, less any amount required to be
withheld under applicable federal income tax regulations. If payment is to be
made to a person other than the registered holder of the Old Certificate
surrendered, it shall be a condition of such payment that the Old Certificate
so surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such payment shall pay any transfer
taxes required by reason of the payment to a person other than the registered
holder of the Old Certificate surrendered or establish to the satisfaction of
Atmos and the Paying Agent that such tax has been paid or is not applicable.
The Paying Agent shall be authorized to deliver the Merger Consideration with
respect to any Old Certificate for United Cities Stock theretofore issued
which has been lost or destroyed, upon receipt of evidence satisfactory to
Atmos and the Paying Agent of ownership of the United Cities Stock represented
thereby and of appropriate indemnification. One year following the Effective
Time, Atmos, as the surviving corporation in the Merger, shall be entitled to
require the Paying Agent to deliver to Atmos any certificates representing
United Cities Stock which have not been disbursed to holders of Old
Certificates representing United Cities Stock outstanding immediately prior to
the Effective Time, and thereafter such holders shall be entitled to look only
to Atmos (subject to abandoned property, escheat, or other similar laws) for
the New Certificates representing Atmos Shares payable upon due surrender of
their Old Certificates representing United Cities Stock. Atmos shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of the Merger Consideration for certificates representing United
Cities Stock.
Section 2.03. Dissenting Shares. Notwithstanding anything in this Plan to
the contrary, shares of United Cities Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by a holder
6
of United Cities Stock who has not voted such shares in favor of adoption of
this Plan and shall have properly demanded dissenters' rights for such shares
in the manner provided in Section 11.70(a) of the Illinois Business
Corporation Act ("United Cities Dissenting Shares") shall not be converted
into the right to receive the Merger Consideration unless and until such
holder becomes ineligible for such dissenters' rights. If such holder becomes
ineligible for such dissenters' rights, then, as of the Effective Time or the
occurrence of such event, whichever occurs last, such shares shall thereupon
cease to be United Cities Dissenting Shares and shall be converted into the
right to receive the Merger Consideration as provided in Section 2.01 hereof.
Section 2.04 Treatment of United Cities Options. Following the consummation
of the Merger, Atmos agrees to continue in effect the United Cities Gas
Company Long-Term Stock Plan of 1989, as amended. Persons holding options
under such plan shall be allowed to exercise their options for Atmos Stock at
the exchange rate set forth in Section 2.01. Persons holding stock
appreciation rights under such plan shall be allowed to exercise such rights
based on the price of Atmos Stock taking into account the exchange rate set
forth in Section 2.01.
ARTICLE III
Effective Time
Section 3.01. Effective Time. The Merger shall become effective upon the
filing of articles of merger or the issuance of a certificate of merger, as
applicable, in accordance with applicable law (the "Effective Time").
Section 3.02 Amendment. At any time before or after the approval of the
Reorganization Agreement and this Plan by the respective shareholders of Atmos
and United Cities and prior to the Effective Time, the Reorganization
Agreement and this Plan may be amended in writing by Atmos and United Cities;
provided, however, that after submission of the Plan to the shareholders of
either party to the Merger, no amendment may be made which would (i) increase
or decrease the amount or change the type of consideration into which each
share of United Cities Stock shall be converted upon consummation of the
Merger or (ii) otherwise be in conflict with (S)13.1-718(I) of the Virginia
Stock Corporation Act. This Plan may not be amended except by an instrument in
writing signed by the parties hereto.
Section 3.03 Abandonment. The Merger may be abandoned at any time prior to
the Effective Time in accordance with the provisions set forth in the
Reorganization Agreement.
7
EXHIBIT A
RESTATED ARTICLES OF INCORPORATION
OF
ATMOS ENERGY CORPORATION
AS AMENDED
ARTICLE ONE
Atmos Energy Corporation, pursuant to the provisions of Article 4.07 of the
Texas Business Corporation Act, adopted Restated Articles of Incorporation,
which accurately copied the Articles of Incorporation and all amendments
thereto that were in effect to date and such Restated Articles of
Incorporation contained no change in any provision thereof.
ARTICLE TWO
Such Restated Articles of Incorporation were adopted by resolution of the
board of directors of the corporation on the 8th day of November, 1989.
ARTICLE THREE
The Restated Articles of Incorporation have been further amended pursuant to
that certain Plan of Merger by and between Atmos Energy Corporation and United
Cities Gas Company, an Illinois and Virginia corporation. The Articles of
Incorporation and all amendments and supplements thereto as superseded by the
Restated Articles of Incorporation and as amended pursuant to the Plan of
Merger are as follows:
ARTICLE I.
The name of the corporation shall be Atmos Energy Corporation (the
"Corporation").
ARTICLE II.
The purposes for which the Corporation is organized are the transaction of
any or all lawful business for which corporations may be incorporated under
the Texas Business Corporation Act, including, but not limited to, the
transportation and distribution of natural gas by pipeline as a public
utility, except that with respect to the Commonwealth of Virginia, the
Corporation may only conduct such business as is permitted to be conducted by
a public service company engaged in the transportation and distribution of
natural gas by pipeline.
ARTICLE III.
The Corporation is incorporated in the State of Texas and the Commonwealth of
Virginia. The post office address of the registered office of this Corporation
in the State of Texas is Three Lincoln Centre, Suite 1800, 0000 XXX Xxxxxxx,
Xxxxxx, Xxxxx 00000, and the registered agent for service of this Corporation at
the same address is Xxxx X. Xxxxxxxx. The post office address of the registered
office of this Corporation in the Commonwealth of Virginia is Riverfront Plaza,
East Tower, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000-0000, and the
registered agent for service of this Corporation at the same address is Xxxxx X.
Xxxxxxx, III, such registered agent being a resident of the Commonwealth of
Virginia and a member of the Virginia State Bar.
1
ARTICLE IV.
The period of the Corporation's duration shall be perpetual.
ARTICLE V.
The Corporation shall not commence business until it has received for the
shares consideration of the value of One Thousand Dollars ($1,000) consisting
of money, labor done or property actually received.
ARTICLE VI.
1. Number of Directors. The number of directors constituting the present
board of directors is fifteen (15); however, thereafter the number of
directors constituting the Board of Directors shall be fixed by the Bylaws of
the Corporation. No director shall be removed during his term of office except
for cause and by the affirmative vote of the holders of seventy-five percent
(75%) of the shares then entitled to vote at an election of directors. The
names and addresses of the persons who are to serve as directors until the
next annual meeting of the shareholders or until their successors are duly
elected and qualified are as follows:
NAME ADDRESS
---- -------
Xxxxxx X. Xxxx XX............................. 0000 Xxxx Xxxx,
Xxxxx 000
Xxxxx, XX 00000
Xxx Xxxxxx.................................... 0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxx............................. 000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx............................. Tusculum College
XxXxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxxx, XX 00000
Xxxx X. Xxxxxx................................ 0000 Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx.............................. Xxxxxxx Office Complex
000 Xxxxx #00, Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxx............................ Western Kentucky University
Xxxxxxx Xxxxx, XX 00000
Xxxxxxx X. Xxxxxx............................. 000 Xxxxxxxx
Xxxxx 0000
Xx. Xxxxx, XX 00000
Xxxx X. Xxxxxx, Xx............................ X.X. Xxx 000000
Xxxxxx, XX 00000
Xxxxx X. Xxxxxx............................... Three Lincoln Centre
Suite 1800
0000 XXX Xxxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxx................................. 00 Xxxx 00xx Xxxxxx, #0X
Xxx Xxxx, XX 00000
Xxx X. Xxxxxxxxxx............................. 0000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
2
NAME ADDRESS
---- -------
Xxxxxx X. Xxxxxxxx................................... Three Lincoln Centre
Suite 1800
0000 XXX Xxxxxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxxx................................... Three Lincoln Centre
Suite 1800
0000 XXX Xxxxxxx
Xxxxxx, XX 00000
Xxxxxxx Xxxx II...................................... Xxxxx Xxx/Xxx Xxx
Xxxxxxxx, XX 00000
2. Election and Term. The directors shall be divided into three classes,
designated Class I, Class II and Class III. Each class shall consist, as
nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. At each annual meeting of
shareholders, successors to the class of directors whose term expires at that
annual meeting shall be elected for a three-year term. Directors shall be
elected by a majority vote of the shares of the Common Stock entitled to vote
in the election of directors and represented in person or by proxy at a
meeting of shareholders at which a quorum is present. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly
equal as possible, and any additional director of any class elected by the
shareholders to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten the
term of any incumbent director. A director shall hold office until the annual
meeting for the year in which his term expires and until his successor shall
be duly elected and qualified, subject, however, to prior death, resignation,
retirement, disqualification or removal from office.
ARTICLE VII.
1. Capitalization.
The aggregate number of shares which the Corporation shall have the
authority to issue is Seventy-Five Million (75,000,000) shares of Common Stock
having no par value.
2. Designation and Statement of Preferences, Limitations and Relative Rights
of Common Stock.
2.01 Subject to the provisions of law, including the Texas Business
Corporation Act and the Virginia Stock Corporation Act and to the conditions
set forth in any law, including resolution of the Board of Directors of the
Corporation, such dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors may be declared and paid on the Common
Stock from time to time out of any funds legally available therefor.
2.02 The holders of the Common Stock shall exclusively possess full voting
power for the election of directors and for all other purposes. In the
exercise of its voting power, the Common Stock shall be entitled to one vote
for each share held.
3. Provisions Applicable to All Classes of Stock.
3.01 Subject to applicable law, the Board of Directors may in its discretion
issue from time to time authorized but unissued shares for such consideration
as it may determine. The shareholders shall have no pre-emptive rights, as
such holders, to purchase any shares or securities of any class which may at
any time be sold or offered for sale by the Corporation.
3
3.02 At each election for directors every shareholder entitled to vote at
any meeting shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected.
Cumulative voting of shares of stock in the election of directors or otherwise
is hereby expressly prohibited.
3.03 The Corporation shall be entitled to treat the person in whose name any
share or other security is registered as the owner thereof, for all purposes,
and shall not be bound to recognize any equitable or other claim to or
interest in such shares or other security on the part of any other person,
whether or not the Corporation shall have notice thereof.
4. Provisions Applicable to Certain Business Combinations.
4.01 The affirmative vote of the holders of not less than seventy-five
percent (75%) of the outstanding shares of "Voting Stock" (as hereinafter
defined) held by stockholders other than a "Substantial Shareholder" (as
hereinafter defined) shall be required for the approval or authorization of
any "Business Combination" (as hereinafter defined) of the Corporation with
any Substantial Shareholder; provided, however, that the seventy-five percent
(75%) voting requirement shall not be applicable if either:
(i) The "Continuing Directors" (as hereinafter defined) of the
Corporation by the affirmative vote of at least a majority (a) have
expressly approved in advance the acquisition of the outstanding shares of
Voting Stock that caused such Substantial Shareholder to become a
Substantial Shareholder, or (b) have expressly approved such Business
Combination either in advance of or subsequent to such Substantial
Shareholder's having become a Substantial Shareholder; or
(ii) The cash or fair market value (as determined by at least a majority
of the Continuing Directors) of the property, securities or other
consideration to be received per share by holders of Voting Stock of the
Corporation in the Business Combination is not less than the "Highest Per
Share Price" or the "Highest Equivalent Price" (as these terms are
hereinafter defined) paid by the Substantial Shareholder in acquiring any
of its holdings of the Corporation's Voting Stock.
4.02 For purposes of this paragraph 4 of Article VII:
(i) The term "Business Combination" shall include, without limitation,
(a) any merger or consolidation of the Corporation, or any entity
controlled by or under common control with the Corporation, with or into
any Substantial Shareholder, or any entity controlled by or under common
control with the Substantial Shareholder, (b) any merger or consolidation
of a Substantial Shareholder, or any entity controlled by or under common
control with the Corporation, (c) any sale, lease, exchange, transfer or
other disposition of all or substantially all of the property and assets of
the Corporation, or any entity controlled by or under common control with
the Corporation, to a Substantial Shareholder, or any entity controlled by
or under common control with the Substantial Shareholder, (d) any purchase,
lease, exchange, transfer or other acquisition of all or substantially all
of the property and assets of a Substantial Shareholder or any entity
controlled by or under common control with the Corporation, (e) any
recapitalization of the Corporation that would have the effect of
increasing the voting power of a Substantial Shareholder, and (f) any
agreement, contract or other arrangement providing for any of the
transactions described in this definition of Business Combination.
(ii) The term "Substantial Shareholder" shall mean and include any
individual, corporation, partnership or other person or entity which,
together with its "Affiliates" and "Associates" (as those terms are defined
in Rule 12b-2 of the General Rules and Regulations promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act") as in effect at the
date of the adoption hereof), "Beneficially Owns" (as defined in Rule 13d-3
of the Exchange Act) an aggregate of 10 percent or more of the outstanding
Voting Stock of the Corporation, and any Affiliate or Associate of any such
individual, corporation, partnership or other person or entity.
(iii) Without limitation, any share of Voting Stock of the Corporation
that any Substantial Shareholder has the right to acquire at any time
(notwithstanding that Rule 13d-3 of the Exchange Act deems such shares to
be beneficially owned only if such right may be exercised within 60 days)
pursuant to any agreement, or upon exercise of conversion rights, warrants
or options, or otherwise, shall be deemed to be Beneficially Owned by the
Substantial Shareholder and to be outstanding for purposes of clause (ii)
above.
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(iv) For the purposes of subparagraph 4.01(ii) of this paragraph 4 of
Article VII, the term "other consideration to be received" shall include,
without limitation, Common Stock or other capital stock of the Corporation
retained by its existing stockholders other than Substantial Shareholders
or other parties to such Business Combination in the event of a Business
Combination in which the Corporation is the surviving corporation.
(v) The term "Voting Stock" shall mean all of the outstanding shares of
Common Stock entitled to vote on each matter on which the holders of record
of Common Stock shall be entitled to vote, and each reference to a
proportion of shares of Voting Stock shall refer to such proposition of the
votes entitled to be cast by such shares.
(vi) The term "Continuing Director" shall mean a Director who was a
member of the Board of Directors of the Corporation immediately prior to
the time that the Substantial Shareholder involved in a Business
Combination became a Substantial Shareholder.
(vii) A Substantial Shareholder shall be deemed to have acquired a share
of the Voting Stock of the Corporation at the time when such Substantial
Shareholder became the Beneficial Owner thereof. With respect to the shares
owned by Affiliates, Associates or other persons whose ownership is
attributed to a Substantial Shareholder under the foregoing definition of
Substantial Shareholder, if the price is paid by such Substantial
Shareholder for such shares is not determinable by a majority of the
Continuing Directors, the price so paid shall be deemed to be the higher of
(a) the price paid upon the acquisition thereof by the Affiliate, Associate
or other person or (b) the market price of the shares in question at the
time when the Substantial Shareholder became the Beneficial Owner thereof.
(viii) The terms "Highest Per Share Price" and "Highest Equivalent Price"
as used in this paragraph 4 of Article VII shall mean the highest price
that can be determined to have been paid at any time by the Substantial
Shareholder for any share or shares of that class of capital stock. If
there is more than one class of capital stock of the Corporation issued and
outstanding, the Highest Equivalent Price shall mean with respect to each
class and series of capital stock of the Corporation the amount determined
by a majority of the Continuing Directors, on whatever basis they believe
is appropriate, to be the highest per share price equivalent to the highest
price that can be determined to have been paid at any time by the
Substantial Shareholder for any share or shares of any class or series of
capital stock of the Corporation. In determining the Highest Per Share
Price and Highest Equivalent Price, all purchases by the Substantial
Shareholder shall be taken into account regardless of whether the shares
were purchased before or after the Substantial Shareholder became a
Substantial Shareholder. The Highest Per Share Price and the Highest
Equivalent Price shall include any brokerage commissions, transfer taxes
and soliciting dealers' fees paid by the Substantial Shareholder with
respect to the shares of capital stock of the Corporation acquired by the
Substantial Shareholder. In the case of any Business Combination with a
Substantial Shareholder, the Continuing Directors shall determine the
Highest Per Share Price or the Highest Equivalent Price for each class and
series of the capital stock of the Corporation.
4.03 The provisions set forth in this paragraph 4 of Article VII may not be
amended, altered, changed or repealed in any respect unless such action is
approved by the affirmative vote of the holders of not less than seventy-five
percent (75%) of the outstanding shares of Voting Stock (as defined in this
Article VII) of the Corporation at a meeting of the shareholders duly called
for the consideration of such amendment, alteration, change or repeal;
provided, however, that if there is a Substantial Shareholder (as defined in
this Article VII), such action must also be approved by the affirmative vote
of the holders of not less than seventy-five percent (75%) of the outstanding
shares of Voting Stock held by the shareholders other than the Substantial
Shareholder.
ARTICLE VIII.
The power to alter, amend or repeal the Corporation's bylaws, and to adopt
new bylaws, is hereby vested in the Board of Directors, subject, however, to
repeal or change by the affirmative vote of the holders of seventy-five
percent (75%) of the outstanding shares entitled to vote thereon.
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ARTICLE IX.
The Corporation shall indemnify, to the fullest extent permitted by law, any
person who was, is, or is threatened to be made a named defendant or
respondent in any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, any appeal in such action, suit, or proceeding, and any inquiry
or investigation that could lead to such an action, suit, or proceeding, by
reason of the fact that such person is or was a director or officer of the
Corporation, or, while such person was a director of the Corporation, is or
was serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise, against judgments, penalties
(including excise and similar taxes), fines, settlements, and reasonable
expenses (including attorney's fees) actually incurred by such person in
connection with such action, suit, or proceeding. In addition to the
foregoing, the Corporation shall, upon request of any such person described
above and to the fullest extent permitted by law, pay or reimburse the
reasonable expenses incurred by such person in any action, suit, or proceeding
described above in advance of the final disposition of such action, suit, or
proceeding.
ARTICLE X.
No director of the Corporation shall be personally liable to the Corporation
or its shareholders for monetary damages for an act or omission in such
director's capacity as a director, except for liability for (i) a breach of
the director's duty of loyalty to the Corporation or its shareholders; (ii) an
act or omission not in good faith or that involves intentional misconduct or a
knowing violation of the law; (iii) a transaction from which the director
received an improper benefit, whether or not the benefit resulted from an
action taken within the scope of the director's office; (iv) an act or
omission for which the liability of a director is expressly provided by
statute; or (v) an act related to an unlawful stock repurchase or payment of a
dividend. If the laws of the State of Texas or the Commonwealth of Virginia
are hereafter amended to authorize corporate action further eliminating or
limiting the personal liability of a director of the Corporation, then the
liability of a director of the Corporation shall thereupon automatically be
eliminated or limited to the fullest extent permitted by the laws of the State
of Texas and the Commonwealth of Virginia. Any repeal or modification of this
Article X by the shareholders of the Corporation shall not adversely affect
any right or protection of a director existing at the time of such repeal or
modification with respect to such events or circumstances occurring or
existing prior to such time.
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