PURCHASE AND SALE AGREEMENT between SOUTHERN UNION COMPANY and NATIONAL GRID USA Dated as of February 15, 2006
EXECUTION
COPY
between
SOUTHERN
UNION COMPANY
and
NATIONAL
GRID USA
Dated
as of February 15, 2006
TABLE
OF CONTENTS
Page
ARTICLE
I
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DEFINITIONS
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||
Section
1.1
|
Certain
Defined Terms.
|
1
|
Section
1.2
|
Other
Defined Terms.
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11
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ARTICLE
II
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||
PURCHASE
AND SALE
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||
Section
2.1
|
Purchase
and Sale of Assets and Stock.
|
13
|
Section
2.2
|
Assumed
Liabilities.
|
13
|
Section
2.3
|
Retained
Liabilities.
|
14
|
Section
2.4
|
Condition
on Assignment or Assumption of Contracts and
Rights.
|
15
|
Section
2.5
|
Settlement
of Intercompany Accounts.
|
16
|
ARTICLE
III
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||
PURCHASE
PRICE
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||
Section
3.1
|
Purchase
Price.
|
16
|
Section
3.2
|
Adjustment
to Estimated Purchase Price.
|
16
|
ARTICLE
IV
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||
REPRESENTATIONS
AND WARRANTIES OF BUYER
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||
Section
4.1
|
Organization,
Existence and Qualification.
|
17
|
Section
4.2
|
Authority
Relative to this Agreement and Binding Effect.
|
18
|
Section
4.3
|
Governmental
and Other Required Consents.
|
18
|
Section
4.4
|
Availability
of Funds.
|
18
|
Section
4.5
|
Filings.
|
18
|
Section
4.6
|
Brokers.
|
18
|
Section
4.7
|
Litigation.
|
19
|
Section
4.8
|
Independent
Investigation.
|
19
|
Section
4.9
|
Investment
Intent; Investment Experience; Restricted
Securities.
|
19
|
Section
4.10
|
PUHCA.
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19
|
ARTICLE
V
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||
REPRESENTATIONS
AND WARRANTIES OF SELLER
|
||
Section
5.1
|
Organization,
Existence and Qualification.
|
19
|
Section
5.2
|
Authority
Relative to this Agreement and Binding Effect.
|
20
|
Section
5.3
|
Governmental
and Other Required Consents.
|
20
|
Section
5.4
|
Capitalization
of the Subsidiaries; Title to Stock.
|
20
|
Section
5.5
|
Title
to Assets; Encumbrances.
|
21
|
Section
5.6
|
Financial
Statements.
|
21
|
Section
5.7
|
Compliance
with Legal Requirements; Governmental Permits.
|
22
|
Section
5.8
|
Legal
Proceedings; Outstanding Orders.
|
22
|
Section
5.9
|
Taxes.
|
22
|
Section
5.10
|
Intellectual
Property.
|
23
|
Section
5.11
|
Personal
Property.
|
23
|
Section
5.12
|
Material
Contracts.
|
24
|
Section
5.13
|
Employee
Benefit Matters.
|
24
|
Section
5.14
|
Employee
and Labor Matters.
|
26
|
Section
5.15
|
Environmental
Matters.
|
27
|
Section
5.16
|
Absence
of Certain Changes or Events.
|
28
|
Section
5.17
|
Regulatory
Matters.
|
29
|
Section
5.18
|
Brokers.
|
29
|
Section
5.19
|
Disclaimer.
|
29
|
Section
5.20
|
Insurance.
|
30
|
Section
5.21
|
Absence
of Undisclosed Liabilities.
|
30
|
Section
5.22
|
Sufficiency
of Assets.
|
30
|
Section
5.23
|
PUHCA.
|
31
|
Section
5.24
|
Filings.
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31
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ARTICLE
VI
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COVENANTS
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||
Section
6.1
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Covenants
of Seller.
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31
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Section
6.2
|
Covenants
of Buyer.
|
35
|
Section
6.3
|
Governmental
Filings.
|
36
|
Section
6.4
|
Seller
Marks.
|
38
|
Section
6.5
|
Acknowledgment
by Buyer.
|
38
|
Section
6.6
|
Transition
Plan.
|
39
|
Section
6.7
|
Purchase
of Leased Assets.
|
39
|
Section
6.8
|
Meter
Reading.
|
39
|
Section
6.9
|
Insurance.
|
40
|
Section
6.10
|
Risk
of Loss.
|
41
|
Section
6.11
|
Outstanding
Payments and Bank Accounts.
|
41
|
Section
6.12
|
Collective
Bargaining Agreements.
|
41
|
Section
6.13
|
Alternative
Proposals.
|
42
|
ARTICLE
VII
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||
CONDITIONS
PRECEDENT
|
||
Section
7.1
|
Seller’s
Conditions Precedent to Closing.
|
43
|
Section
7.2
|
Buyer’s
Conditions Precedent to Closing.
|
44
|
ARTICLE
VIII
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||
CLOSING
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||
Section
8.1
|
Closing.
|
45
|
ARTICLE
IX
|
||
TERMINATION
|
||
Section
9.1
|
Termination
Rights.
|
46
|
Section
9.2
|
Limitation
on Right to Terminate; Effect of Termination.
|
47
|
ARTICLE
X
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||
EMPLOYEE
MATTERS
|
||
Section
10.1
|
Employee
Agreement.
|
48
|
ARTICLE
XI
|
||
TAX
MATTERS
|
||
Section
11.1
|
Purchase
Price Allocation.
|
48
|
Section
11.2
|
Cooperation
with Respect to Like-Kind Exchange.
|
49
|
Section
11.3
|
Transaction
Taxes.
|
49
|
Section
11.4
|
Real
and Personal Property Taxes.
|
50
|
Section
11.5
|
Other
Taxes.
|
50
|
Section
11.6
|
Straddle
Period.
|
51
|
Section
11.7
|
Cooperation
on Tax Matters.
|
51
|
Section
11.8
|
Tax
Returns.
|
51
|
Section
11.9
|
Effect
of Indemnity Payments.
|
51
|
Section
11.10
|
Survival
of Obligations.
|
52
|
Section
11.11
|
Dispute
Resolution.
|
52
|
Section
11.12
|
Termination
of Tax Agreements.
|
52
|
ARTICLE
XII
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INDEMNIFICATION
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||
Section
12.1
|
Indemnification
by Seller.
|
52
|
Section
12.2
|
Indemnification
by Buyer.
|
53
|
Section
12.3
|
Limitations
on Seller’s Liability.
|
53
|
Section
12.4
|
Limitation
on Buyer’s Liability.
|
56
|
Section
12.5
|
Claims
Procedure.
|
56
|
Section
12.6
|
Exclusive
Remedy.
|
57
|
ARTICLE
XIII
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||
GENERAL
PROVISIONS
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||
Section
13.1
|
Expenses.
|
57
|
Section
13.2
|
Notices.
|
57
|
Section
13.3
|
Assignment.
|
59
|
Section
13.4
|
Successor
Bound.
|
59
|
Section
13.5
|
Governing
Law.
|
59
|
Section
13.6
|
Cooperation.
|
59
|
Section
13.7
|
Construction
of Agreement.
|
59
|
Section
13.8
|
Publicity.
|
60
|
Section
13.9
|
Waiver.
|
60
|
Section
13.10
|
Parties
in Interest.
|
60
|
Section
13.11
|
Section
and Paragraph Headings.
|
60
|
Section
13.12
|
Amendment.
|
60
|
Section
13.13
|
Entire
Agreement.
|
61
|
Section
13.14
|
Counterparts.
|
61
|
Section
13.15
|
Severability.
|
61
|
Section
13.16
|
Consent
to Jurisdiction.
|
61
|
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-
LIST
OF EXHIBITS
Exhibit
6.6
|
Transition
Services
|
Exhibit
8.1(d)
|
Litigation
Support Agreement
|
Exhibit
10.1
|
Employee
Agreement
|
LIST
OF SCHEDULES
Schedule
1.1(a)
|
Base
Statement
|
Schedule
1.1(b)
|
Certain
Excluded Assets
|
Schedule
1.1(c)
|
Permits
|
Schedule
2.2
|
Assumed
Proceedings
|
Schedule
4.3
|
Buyer’s
Governmental and Other Required Consents
|
Schedule
5.2
|
Seller’s
Authority
|
Schedule
5.3
|
Seller’s
Governmental and Other Required Consents
|
Schedule
5.5(a)
|
Encumbrances
|
Schedule
5.5(b)
|
Easements
|
Schedule
5.6
|
Financial
Statements
|
Schedule
5.7
|
Compliance
with Legal Requirements; Governmental Permits
|
Schedule
5.8
|
Legal
Proceedings; Outstanding Orders
|
Schedule
5.9
|
Taxes
|
Schedule
5.10
|
Intellectual
Property
|
Schedule
5.12
|
Material
Contracts
|
Schedule
5.13(a)
|
Employee
Plans
|
Schedule
5.13(j)
|
Post-Retirement
Welfare Benefits
|
Schedule
5.13(l)
|
Severance
or Other Compensation
|
Schedule
5.14(a)
|
Labor
Agreements
|
Schedule
5.14(b)
|
Labor
Matters
|
Schedule
5.14(c)
|
Labor
Complaints
|
Schedule
5.15
|
Environmental
Matters
|
Schedule
5.16
|
Absence
of Certain Changes or Events
|
Schedule
5.17
|
Regulatory
Matters
|
Schedule
5.18
|
Brokers
|
Schedule
5.20
|
Seller’s
Insurance
|
Schedule
5.21
|
Absence
of Undisclosed Liabilities
|
Schedule
5.22(a)
|
Sufficiency
of Assets
|
Schedule
5.22(b)
|
.Location
of Assets
|
Schedule
6.1
|
Conduct
of the Business Prior to the Closing Date
|
Schedule
6.2(c)
|
Seller
Guarantees and Surety Instruments
|
Schedule
6.7
|
Leased
Assets
|
Schedule
6.12(a)
|
Renewal
or Extension of Collective Bargaining Agreement
|
Schedule
6.12(b)
|
Early
Renewal or Extension of Collective Bargaining
Agreement
|
-
v
-
This
PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of the 15th day of
February, 2006, by and between SOUTHERN UNION COMPANY, a Delaware corporation
(“Seller”), and NATIONAL GRID USA, a Delaware corporation (“Buyer”). Capitalized
terms used herein shall have the meanings ascribed to them in Article I,
unless
otherwise provided.
W
I T N E S S E T H :
WHEREAS,
Seller or a Subsidiary owns all of the Assets and Seller owns, directly or
indirectly, all of the capital stock of each Subsidiary; and
WHEREAS,
Buyer desires to purchase, and Seller desires to sell, the Assets owned by
Seller and the capital stock of each Subsidiary, subject in all respects
to the
provisions of this Agreement.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 Certain
Defined Terms.
For
purposes of this Agreement, the following terms have the meanings specified
or
referred to in this Article I (such definitions to be equally applicable
to both
the singular and plural forms of the terms defined):
“Affiliates”
or “Affiliated Entities” —
shall
have the following meaning: entities shall be deemed “Affiliated” as to each
other to the extent (i) one of the entities directly or indirectly controls
the
other, or the direct or indirect control of one of the entities is exercised
by
the officers, directors, stockholders, or partners of the other entity (whether
or not such persons exercise such control in their capacities as officers,
directors, stockholders, or partners) or (ii) is deemed to be an Affiliate
under
existing statutes or regulations of the SEC.
“Assets”
— means all
of
the assets, properties, rights, claims, contracts and interests of every
type
and description, real, personal or mixed, tangible and intangible, owned
by
Seller, directly or indirectly through any Subsidiary or any Affiliate of
Seller, and relating primarily to the Business other than the Excluded
Assets.
Without
in any way limiting or expanding the foregoing, the Assets shall include
all
right, title and interest of Seller and its Affiliates in, to and under the
following:
(a) |
all
Real Property;
|
-
-
(b) |
all
tangible personal property, including machinery, mobile and immobile
equipment, furniture, furnishings, vehicles, tools, tooling, dies,
stores,
parts, supplies and other tangible personal property that is either
(x)
located on the Real Property or (y) primarily related to the
Business;
|
(c) |
the
Assumed Contracts, including all rights to receive goods and services
purchased pursuant to such Contracts and to assert claims and take
other
actions in respect of breaches or other violations
thereof;
|
(d) |
all
Permits (to the extent transferable) held by Seller or any of its
Affiliates that are used, required or necessary for the lawful ownership
or operation of the Business (including the Permits listed on Schedule
1.1(c));
|
(e) |
any
intellectual property owned by any
Subsidiary;
|
(f) |
all
books and records relating primarily to the
Business;
|
(g) |
all
rights under express or implied warranties relating primarily to
the
Business from suppliers to the Business;
|
(h) |
inventory
related primarily to the Business;
|
(i) |
prepaid
expenses, advance payments, deposits and prepaid items, including
prepaid
interest and deposits with lessors, suppliers or utilities, which
relate
primarily to the Business;
|
(j) |
accounts
receivable arising out of the conduct of the Business, including
any
payments received by Seller or any of its Affiliates with respect
thereto
after the Closing Date, and unpaid interest accrued on any accounts
receivable and any security or collateral relating
thereto;
|
(k) |
promotional
and advertising materials relating primarily to the Business, including
all catalogs, brochures, plans, customer lists, supplier lists, manuals,
handbooks, equipment and parts lists, and dealer and distributor
lists, to
the extent that any of the foregoing materials do not include the
name
“Southern Union”, “Southern”, “SU” or “SUG”; provided, however, that Buyer
shall be entitled to copies of any such excluded materials, and shall
be
entitled to use any such excluded materials provided that Buyer covers
or
removes such retained names from such
materials;
|
(l) |
all
rights, privileges, claims, demands, causes of action, claims in
bankruptcy, indemnification agreements with, and indemnification
rights
against, third parties, warranty claims (to the extent transferable),
offsets and other claims relating primarily to the
Business;
|
(m) |
any
and all goodwill associated primarily with the Business;
and
|
-
-
(n) |
the
confidentiality agreements entered into by or on behalf of Seller
or any
of its Affiliates in connection with the sale of the Business or
related
to any third party bid to purchase all or any part of the assets
of the
Business (collectively, the “Sales Process Confidentiality Agreements”).
|
“Assumed
Contract”—
means
any Contract to which Seller or any of its Affiliates is a party that relates
primarily to the Business, other than Contracts included in Excluded Assets
and
listed on Schedule
1.1(b).
“Assumed
Environmental Liabilities”—
means
all Environmental Liabilities of Seller or any Subsidiary relating to the
Business or the Assets, whether arising or relating to the period before
or
after the Closing, other than the Retained Environmental
Liabilities.
“Assumed
Indebtedness”—
means
all debt issued under the Indenture, dated as of January 1, 1922 between
Seller
(as successor to The Providence Gas Company), and U.S. Bank Trust Company,
National Association (as successor to Rhode Island Hospital Trust Company),
as
Trustee, and all indentures supplemental thereto.
“Base
Statement”—
means
the statement as to the Working Capital of the Business as of September 30,
2005
set forth in Schedule
1.1(a).
“Business”—
means
the business and operations conducted in Rhode Island by Seller and the
Subsidiaries, including:
(a) |
the
regulated and non-regulated gas distribution business conducted in
Rhode
Island by Seller through
New England Gas Company and the provision of related services and
products
and the engagement in related activities, including agreements as
to
appliances and other equipment installed or serviced in Rhode Island
by
Seller through New England Gas Company;
and
|
(b) |
all
activities conducted by any of the Subsidiaries, including the appliance
and equipment installation and servicing
businesses.
|
“Business
Day”—
means
any day that is not a Saturday, Sunday or other day on which banks in New
York
City are
authorized or required by law to close.
“CERCLA”
—
means
the Comprehensive Environmental Response Compensation and Liability Act (42
U.S.C. section 9601 et
seq.),
as
amended.
“Claim
Notice”—
means
a written notice of a claim given by a party seeking indemnification pursuant
to
the terms of this Agreement that specifies in reasonable detail the nature
of
the Losses and the estimated amount of such Losses (in each case to the extent
known).
“Confidentiality
Agreement” —
means
that certain confidentiality agreement dated as of January 31, 2006, between
Buyer and Seller.
-
-
“Consent”—
means
any approval, consent, ratification, waiver, clearance or other authorization
from any Person.
“Contract”—
means
any agreement, contract, document, note, bond, indenture, mortgage, deed
of
trust, lease, sublease, instrument, obligation, promise or undertaking (whether
written or oral) that is legally binding, including Easements.
“Current
Assets”—
means
the current Assets (other than Excluded Assets) of the Business as reflected
in
the categories set forth on the Base Statement as of the relevant date of
determination and prepared in accordance with Schedule
1.1(a).
“Current
Liabilities” —
means
the current Assumed Liabilities of the Business as reflected in the categories
set forth on the Base Statement as of the relevant date of determination
and
prepared in accordance with Schedule
1.1(a).
“Easements”
—
means
all easements, rights of way, Permits, prescriptive rights and other ways
of
necessity, whether or not of record, relating to real property.
“Encumbrance”—
means
any charge, adverse claim, lien, option, encumbrance, mortgage, pledge or
security interest.
“Environmental
Claim”—
means
any and all written administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, investigations, proceedings or notices
of noncompliance or violation by any third party (including any Governmental
Body) alleging potential liability (including potential liability for
enforcement, investigatory costs, damages, Losses, contribution,
indemnification, cost recovery, compensation, injunctive relief, cleanup
costs,
governmental resource costs, removal costs, remedial costs, natural resources
damages, property damages, personal injuries or penalties) arising out of,
based
on or resulting from (a) the presence, or Release or threatened Release into
the
environment, of any Hazardous Materials at any location operated, leased
or
managed by Seller or any Subsidiary; (b) any violation of any Environmental
Law; or (c) the storage, transportation, treatment, disposal, discharge,
recycling or Release of Hazardous Materials at any location other than any
location operated, leased or managed by Seller or any Subsidiary.
“Environmental
Law”
—
means
any Order or Legal Requirement relating to pollution or protection of human
health or the environment or natural resources, including those relating
to (a)
emissions, discharges, Releases or threatened Releases of Hazardous Material
into the environment (including ambient air, surface water, groundwater or
land), and (b) the treatment, storage or disposal of Hazardous
Material.
“Environmental
Liability”—
means
any liability, responsibility or obligation arising out of or relating
to:
(a) |
the
presence of any Hazardous Material in the fixtures, structures, soils,
groundwater, surface water or air on, under or about or emanating
from the
Assets and properties, in each case currently or formerly used, operated,
owned, leased, controlled,
|
(b) |
possessed,
occupied or maintained by a Person (including predecessors-in-interest
to
such Person) and any such Hazardous Material emanating to adjoining
or
other properties;
|
(c) |
the
storage, disposal, Release, threatened Release, discharge, spillage,
loss,
seepage or filtration of Hazardous Materials by a Person (including
predecessors-in-interest to such Person) or its employees, agents
or
contractors from, on, under or about the assets or properties currently
or
formerly used, operated, owned, leased, controlled, possessed, occupied
or
maintained by such Person (including predecessors-in-interest to
such
Person) or the presence therein or thereunder of any underground
or
above-ground tanks for the storage of fuel, oil, gasoline and/or
other
petroleum products or by-products or other Hazardous
Material;
|
(d) |
the
violation or noncompliance or alleged violation or noncompliance
by a
Person (including predecessors-in-interest to such Person) or its
employees, agents or contractors of any Environmental
Law;
|
(e) |
the
failure by a Person or its employees, agents, or contractors to have
obtained or maintained in effect any Environmental Permit as a result
of
its or their conduct, actions or operations or the use, operation,
ownership, lease, control, possession, occupancy, maintenance or
condition
of such Person’s assets or properties;
|
(f) |
the
storage, transportation, treatment, disposal, discharge, recycling
or
Release of Hazardous Materials, or the arrangement for same, by a
Person
or a predecessor-in-interest to such Person, at any Off-Site
Location;
|
(g) |
any
and all Proceedings arising out of any of the above-described matters,
including Proceedings by Governmental Bodies for enforcement,
investigation, monitoring, cleanup, containment, removal, treatment,
response, restoration, remedial or other actions or damages and
Proceedings by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief;
and
|
(h) |
any
and all remedial work and other corrective action (including investigation
or monitoring of site conditions, or any clean-up, containment, treatment,
response, restoration or removal) taken by, or the costs of which
are
imposed upon, a Person arising from any of the above-described
matters.
|
“ERISA”—
means
the Employee Retirement Income Security Act of 1974, as amended, or any
successor law, and regulations and rules issued pursuant to that act or any
successor law.
“Excluded
Assets”—
means
the following assets, each of which shall be excluded from the Assets, and
not
acquired by Buyer, at Closing:
(a) |
assets
of Seller located outside of the State of Rhode Island (none of which
relate primarily to the Business), other than the assets identified
on
Schedule
5.22(b);
|
(b) |
cash
and cash equivalents (including cash held by the Subsidiaries), other
than
xxxxx cash held locally for the benefit of the
Business;
|
-
-
(c) |
assets
to be retained by Seller as set forth in the Employee
Agreement;
|
(d) |
the
stock record and minute books of Seller;
|
(e) |
duplicate
copies of all books and records transferred to Buyer, and all records
(other than the Sales Process Confidentiality Agreements) prepared
in
connection with the sale of the Business (including bids received
from
third parties and analyses relating to the Business), in each case
subject
to the confidentiality provisions of Section
6.1(d);
|
(f) |
inventory
disposed of by Seller or any Subsidiary after the date of this Agreement
to the extent such dispositions are not prohibited by this Agreement
or
are approved by Buyer pursuant to Section
6.1;
|
(g) |
rights
to refunds of Taxes for periods on or prior to the Closing Date payable
with respect to the Business, assets, properties or operations of
Seller
or any member of any affiliated group of which any of them is a
member;
|
(h) |
accounts
owing, by and among Seller and its Affiliates, including the Subsidiaries
(other than accounts owing between or among the
Subsidiaries);
|
(i) |
all
deferred tax assets or collectibles;
|
(j) |
any
insurance policy, bond, letter of credit or other similar item, and
any
cash surrender value in regard thereto;
|
(k) |
the
Seller Marks, subject to the provisions of Section
6.4;
|
(l) |
Seller’s
ownership interest in Xxxxxxx Realty; and
|
(m) |
the
other assets listed in Schedule
1.1(b).
|
“Final
Order”
—
means
an action by a Governmental Body as to which (a) no request for stay of the
action is pending, no such stay is in effect and if any time period is permitted
by statute or regulation for filing any request for such stay, such time
period
has passed, (b) no petition for rehearing, reconsideration or application
for
review of the action is pending and the time for filing any such petition
or
application has passed, (c) such Governmental Body does not have the action
under reconsideration on its own motion and the time in which such
reconsideration is permitted has passed, and (d) no appeal to a court or
a
request for stay by a court of the Governmental Body’s action is pending or in
effect and the deadline for filing any such appeal or request has
passed.
“GAAP”—
means
generally accepted United States accounting principles, applied on a consistent
basis.
“Good
Utility Practices”—
means
any of the practices, methods and activities approved by a significant portion
of the gas distribution industry as good practices applicable to operations
-
-
of
similar design, size and capacity or any of the practices, methods or activities
which, in the exercise of reasonable judgment by an operator of a gas
distribution business in light of the facts known at the time the decision
was
made, would have been reasonably expected to accomplish the desired result
at a
reasonable cost consistent with good business practices, reliability, safety,
expedition and applicable law. Good Utility Practices are not intended to
be
limited to the optimal practices, methods or acts to the exclusion of all
others, but rather to be practices, methods or acts generally accepted in
the
gas distribution industry.
“Governmental
Body”—
means
any of the following that possesses competent jurisdiction:
(a) federal,
state, county, local, municipal or other governmental body;
(b) governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official or entity and any court or other tribunal);
or
(c) any
governmental body entitled to exercise any administrative, executive, judicial,
legislative, police, regulatory or taxing authority or power of any
nature.
“Hazardous
Material”—
means
any waste or other chemical, material or substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, toxic, or a pollutant or a contaminant, or words of similar
import,
under or pursuant to any Environmental Law, including any admixture or solution
thereof, and specifically including oil, natural gas, petroleum and all
derivatives thereof or synthetic substitutes therefor, asbestos or
asbestos-containing materials, any flammable substances or explosives, any
radioactive materials, any toxic wastes of substances, urea formaldehyde
foam
insulation, toluene or polychlorinated biphenyls.
“HSR
Act”
—
means
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, or
any
successor law, and regulations and rules issued by the U.S. Department of
Justice or the Federal Trade Commission pursuant to that act or any successor
law.
“IRC”
—
means
the Internal Revenue Code of 1986, as amended.
“IRS”
—
means
the Internal Revenue Service or any successor agency.
“Knowledge”
—
means
with respect to Seller, the actual knowledge, after due inquiry, of Xxxxx
X.
Xxxxxxx, Seller’s Senior Vice President and Chief Financial Officer, Xxxxxxx X.
German, Seller’s Senior Vice President, Utility Operations, Xxxxxx X. Xxxxxxxxx,
President and Chief Operating Officer of New England Gas Company, Xxxxxx
Xxxxxxxxx, Vice President, Finance, of New England Gas Company, Xxxxxxx
Xxxxxxxx, Vice President, Operations, of New England Gas Company, Xxxxxxx
Xxxxx,
Director, Marketing & Business Development, of New England Gas Company,
D’Xxxx Xxxxxxx, Vice President, Human Resources, of New England Gas Company,
Xxxxx Xxxxxxx, Manager of Environmental Compliance of New England Gas Company,
and Xxxxx Xxxxxxxxxx, Vice President, Customer Service & I.T., of New
England Gas Company.
-
-
“Legal
Requirement”
—
means
any federal, state, county, local, municipal, foreign, international,
multinational or other administrative Order, constitution, law, ordinance,
adopted code, principle of common law, regulation, rule, directive, approval,
notice, tariff, franchise agreement, statute or treaty.
“Losses”
—
means
all claims, losses, liabilities, causes of action, costs and expenses
(including, without limitation, involving theories of negligence or strict
liability and including court costs and reasonable attorneys’ fees and
disbursements in connection therewith).
“Material
Adverse Effect” —
means
an occurrence or condition that (alone or together with other similar
occurrences or conditions) has, or is reasonably likely to have, a material
adverse effect on (a) the business, operation, assets, financial condition
or
results of operations of the Business taken as a whole or (b) the ability
of
Seller to perform its obligations under this Agreement, including its obligation
to complete the transactions contemplated herein. For purposes of this
Agreement, an occurrence or condition shall not constitute a Material Adverse
Effect if it arises from (i) the announcement of this Agreement, (ii) general
business, economic or financial market conditions, or (iii) conditions generally
affecting the industries in which the Business operates, except with respect
to
clauses (ii) and (iii) to the extent that such occurrence or condition
disproportionately impacts the Business.
“Material
Contract”
—
means
an Assumed Contract that (a) involves a total commitment by or to any party
thereto of at least $250,000 on an annual basis and that cannot be terminated
by
Seller or any Subsidiary upon 90 days’ notice or less without penalty to Seller
or any Subsidiary, (b) prohibits or limits the right of the Business to compete
or prohibits or restricts the ability of the owner of the Business (or any
of
its Affiliates) to deal with any Person or in any geographical area, or (c)
that
is material to the Business, taken as a whole.
“New
England Gas Company”
—
means
New England Gas Company, a division of Seller.
“Off-Site
Location” —
means
any real property other than: (a) the real properties currently or formerly
used, operated, owned, leased, controlled, possessed or occupied by Seller
or
any Subsidiary (including their predecessors-in-interest) and (b) the real
properties adjacent to or in the vicinity of the real property described
in
clause (a) of this definition that have been impacted by Hazardous Materials
that have been Released, disposed, discharged or emitted at the real properties
described in clause (a) of this definition.
“Order”
—
means
any award, decision, injunction, judgment, order, writ, decree, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, other Governmental Body, or by any arbitrator, each
of
which possesses competent jurisdiction.
“Organizational
Documents”
—
means
the articles or certificate of incorporation and the bylaws of a corporation
or
the comparable organizational and governing documents of other
Persons.
“PCBs”
—
means
polychlorinated biphenyls.
-
-
“Permits”
—
means
all authorizations, licenses, identification numbers, permits, certificates
and
registrations under any Legal Requirement.
“Permitted
Encumbrances”
—
means
any of the following:
(a) |
mechanics’,
carriers’, workers’ and other similar liens arising in the ordinary course
of business, which (i)(x) are not yet delinquent or (y) are being
contested in proceedings in good faith and, in the case of clause
(y), for
which adequate reserves have been taken and are reflected in the
Working
Capital of the Business as of the Closing Date set forth in the Closing
Statement, and (ii) in the aggregate are not substantial in amount
and do
not interfere with the present use of the Assets to which they
apply;
|
(b) |
liens
for (x) current Taxes and assessments not yet due and payable or
(y) Taxes
the validity of which is being contested in good faith, and, in the
case
of clause (y), for which adequate reserves have been taken and are
reflected in the Working Capital of the Business as of the Closing
Date
set forth in the Closing Statement;
|
(c) |
usual
and customary non-monetary real property Encumbrances, covenants,
imperfections in title, Easements, restrictions and other title matters
(whether or not the same are recorded) that do not materially interfere
with the operation of that portion of the Business currently conducted
on
such real property;
|
(d) |
Encumbrances
securing the payment or performance of any of the Assumed
Liabilities;
|
(e) |
all
applicable zoning ordinances and land use restrictions, provided
that such
restrictions do not materially interfere with the operation of that
portion of the Business currently conducted on such Real Property;
and
|
(f) |
with
respect to any Asset that consists of a leasehold or other possessory
interest in real property, all Encumbrances, covenants, imperfections
in
title, Easements, restrictions and other title matters (whether or
not the
same are recorded) to which the underlying fee estate in such real
property is subject that do not currently materially interfere with
the
operation of that portion of the Business currently conducted on
such real
property.
|
“Person”—
means
any individual, corporation (including any nonprofit corporation), general
or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization or Governmental Body.
“Proceeding”
—
means
any claim, action, arbitration, hearing, audit, litigation or suit commenced,
brought, conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
“Real
Property” —
means
all real property owned or leased by Seller or any of its Affiliates (including
any Subsidiary) and relating primarily to the operation of the Business,
together with all interests in real property (including Easements) used or
held
for use by Seller or any of its Affiliates (including any Subsidiary) and
relating primarily to the operation of the Business.
-
-
“Related
Documents”
—
means
any Contract provided for in this Agreement to be entered into by one or
more of
the parties hereto in connection with the transactions contemplated by this
Agreement, including the Employee Agreement, the transition agreement
contemplated by Section 6.6, special warranty deeds or quitclaim deeds (with
each interest in Real Property owned by Seller to be conveyed to Buyer with
a
special warranty deed to the extent Seller was provided with a special warranty
deed when it acquired such Real Property interest and each interest in Real
Property owned by Seller to be conveyed to Buyer with a quitclaim deed to
the
extent Seller was provided with a quitclaim deed when it acquired such Real
Property interest), quitclaim blanket easement assignments (one easement
assignment document per county or applicable jurisdiction; Seller shall not
be
obligated to provide a conveyance document for each individual easement unless
an individual document is required by a Governmental Body having jurisdiction
in
order to complete documentation of the transfer to Buyer or to record notice
of
the transfer to Buyer), conveyances, motor vehicle certificates of title
and
special assignment and assumption instruments.
“Release”
—
means
any presence, emission, dispersal, disposal, spilling, leaking, emitting,
discharging, depositing, pumping, pouring, escaping, leaching, dumping,
releasing or migration into the indoor or outdoor environment (including
the
abandonment or disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials), or in, into or from any facility, including
the movement of any Hazardous Materials through the air, soil, surface water,
groundwater or property.
“Representative”
—
means
with respect to a particular Person, any director, officer, employee, agent,
consultant, advisor, or other representative of such Person, including legal
counsel, accountants and financial advisors.
“Retained
Environmental Liabilities” —
means
the following Environmental Liabilities of Seller or its Affiliates, including
without limitation any Subsidiary: (a) all Environmental Liabilities arising
out
of or relating to operations or activities unrelated to the Business, whether
arising or related to the period before or after Closing, including, without
limitation, (i) the petroleum marketing business and (ii) litigation related
to
the Cory's Lane and Bay Street, Tiverton, Rhode Island sites; (b) all
Environmental Liabilities relating to the release of mercury, wherever such
release occurred or occurs and regardless of whether such release occurred
prior
to the Closing or occurs at any time after the Closing, which was stored
at one
time at Seller's Tidewater Street facility in Pawtucket, Rhode Island, as
described in Schedule
5.15
and
Seller's due diligence schedule SUG - 007.1 and related materials, including
without limitation the litigation filed in Providence County Superior Court,
docket no. PC 06-0356, captioned Xxxxx
Xxxxxxx, et al, vs. New England Gas Company et al.
matter;
(c) all Environmental Liabilities of which Seller has Knowledge arising out
of
or relating to the storage, transportation, treatment, disposal, discharge,
recycling or Release of Hazardous Materials or the arrangement for the same,
at
any Off-Site Location, by Seller or any Subsidiary (or any
predecessor-in-interest) with respect to the Business where such activities
occurred prior to the Closing Date; (d) all Environmental Liabilities of
which
Seller has Knowledge arising out of or related to any real property or assets
formerly owned by Seller or any Subsidiary with respect to the Business,
but no
longer owned (and not being transferred to Buyer) as of the Closing Date,
with
the exception that the exclusion set forth in clause (d) shall not apply
to any
formerly owned manufactured gas
-
-
plant-related
properties; and (e) any fines or penalties imposed by a Governmental Body
arising from violations or alleged violations of Environmental Law prior
to the
Closing Date.
“SEC”
—
means
the United States Securities and Exchange Commission or any successor
agency.
“Settlement
Interest”—
means,
with respect to any payment required to be made pursuant to Section 3.2(c)
(a
“Settlement Payment”), the sum of accrued interest on the amount of such
Settlement Payment, calculated at the Settlement Rate as from time to time
in
effect, for the period from the Closing Date to and including the date upon
which such Settlement Payment is made (calculated on the basis of the actual
number of days elapsed in a year of 365 or 366 days, as the case may
be).
“Settlement
Rate”—
means,
on any date, with respect to the Settlement Payment, the “target” federal funds
rate reported in the “Money Rates” section of the Eastern Edition of
The
Wall Street Journal published
for such date. In the event The
Wall Street Journal ceases
publication of such federal funds rate or fails on any particular date to
publish such federal funds rate, the Settlement Rate shall instead refer
to the
rate for the last transaction in overnight federal funds arranged prior to
such
date by XX Xxxxxx Chase.
“Stock”—
means
all of the capital stock of the Subsidiaries listed in (a) and (d) of the
definition of Subsidiary below.
“Subsidiary”—
means
any of the following:
(a) Newport
America Corporation, a Rhode Island corporation;
(b) Patience
Realty Corp., a Rhode Island corporation;
(c) Prudence
Corporation, a Rhode Island corporation; and
(d) Valley
Appliance and Merchandising Company, a Rhode Island corporation.
“Tax”
—
means
any tax (including any income tax, capital gains tax, value-added tax, sales
and
use tax, franchise tax, payroll tax, withholding tax or property tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, franchise
fee
or payment, payroll tax, utility tax, gross receipts tax or other fee or
payment, and any related charge or amount (including any fine, penalty, interest
or addition to tax), imposed, assessed or collected by or under the authority
of
any Governmental Body.
“Tax
Return”
—
means
any return (including any information return), report, statement, schedule,
notice, form, or other document or information filed with or submitted to,
or
required to be filed with or submitted to, any Governmental Body in connection
with the determination, assessment, collection, or payment of any Tax or
in
connection with the administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any Tax.
-
-
“Threatened”
—
shall
have the following meaning: a claim, dispute, or other matter will be deemed
to
have been “Threatened” if any demand or statement has been made or any notice
has been given, and Seller has Knowledge of the same.
“Working
Capital”—
means
the amount by which Current Assets exceeds Current Liabilities as of the
relevant date of determination, determined in accordance with Schedule 1.1(a).
“Working
Capital Target”—
means
$34,529,872.
Section
1.2 Other
Defined Terms.
In
addition to the terms defined in Section 1.1, certain other terms are defined
elsewhere in this Agreement as indicated below and, whenever such terms are
used
in this Agreement, they shall have their respective defined
meanings.
Term Section
Agreement Recitals
Allocation 11.1
Alternative
Proposal 6.13
Antitrust
Authorities 6.3
Assumed
Liabilities 2.2
Balance
Sheet 5.6
Buyer
Indemnitees 12.1
Closing 8.1
Closing
Date 8.1
Closing
Statement 3.2(a)
CPA
Firm 3.2(b)
Deductible 12.3(c)
Divestiture 6.2(a)
Employee Employee
Agreement
Employee
Agreement 10.1
Employee
Plans 5.13(a)
Environmental
Permits 5.14(a)(ii)
ERISA
Affiliate 5.13(a)
Estimated
Purchase Price 3.1
Final
Closing Statement 3.2(b)
Final
Purchase Price 3.1
Financial
Statements 5.6
Former
Employee Employee
Agreement
Indemnified
Party 12.5(a)
Indemnifying
Party 12.5(a)
Large
Volume Meters 6.8
Leased
Assets 6.7
Notice
Period 12.5(a)
Objection 3.2(b)
PBGC 5.13(c)
-
-
Pre-Closing
Tax Period 11.5
Proxy
Statement 6.1(f)(i)
PUHCA
2005 4.10
Purchase
Price 3.1
Representatives 6.1(d)
Restricted
Information 6.1(d)
Retained
Contract Liabilities 2.2(b)(i)
Retained
Liabilities 2.3
Review
Period 3.2(b)
Seller
Indemnitees 12.2
Seller
Marks 6.4
Seller’s
Pension Plans Employee
Agreement
Seller’s
401(k) Plan Employee
Agreement
Seller’s
Stockholder Approval 7.1(g)
Settlement
Payment 1.1
Seller's
Meeting 6.1(f)(iii)
Straddle
Period 11.6
Transition
Services Agreement 6.6
Transaction
Taxes 11.3
Upset
Date 9.1(e)
WARN
Act Employee
Agreement
ARTICLE
II
PURCHASE
AND SALE
Section
2.1 Purchase
and Sale of Assets and Stock.
Upon
the
terms and subject to the conditions contained herein, at the Closing, Seller
shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall
purchase and accept delivery from Seller, all of the Assets owned directly
or
indirectly by Seller or any of its Affiliates, free and clear of any
Encumbrances, other than Permitted Encumbrances, and all of the
Stock.
Section
2.2 Assumed
Liabilities.
In
further consideration for the sale of the Assets and the Stock, at the Closing,
and subject to the other terms and conditions of this Agreement, Buyer will
satisfy Buyer’s obligations under the Employee Agreement and will assume and
agree to pay, perform and discharge when due, or cause the appropriate
Subsidiary to pay, perform and discharge when due, all the liabilities and
obligations, of every kind or nature, of Seller or any of its Affiliates
arising
out of or relating to:
(a) the
ownership of the Assets and the conduct or operation of the Business prior
to
the Closing Date, other than the Retained Liabilities;
(b) the
ownership or use of the Assets by Buyer or any Subsidiary or the conduct
or
operation of the Business by Buyer or any Subsidiary, in each case after
the
-
-
Closing
Date, including all liabilities, responsibilities and obligations relating
to or
arising from the following:
(i) performance
of the Assumed Contracts included in the Assets and assigned to Buyer at
Closing
or retained by any Subsidiary, except that Buyer shall not assume any
liabilities or obligations for (x) any breach or default by Seller or any
Subsidiary under any such Contract occurring or arising prior to the Closing
Date or (y) the payment of money with respect to any obligation arising under
any such Contract prior to the Closing Date, except in the case of this clause
(y) to the extent such obligation is reflected in the Working Capital of
the
Business as of the Closing Date set forth in the Closing Statement (such
obligations and liabilities referred to in clauses (x) and (y), the “Retained
Contract Liabilities”);
(ii) customer
advances, customer deposits and construction advances, unperformed service
obligations, Easement relocation obligations, and engineering and construction
required to complete scheduled construction, construction work in progress,
and
other capital expenditure projects, in each case relating to the Business
and
outstanding on or arising after the Closing Date;
(iii) the
Assumed Environmental Liabilities;
(iv) Taxes
for
periods after the Closing Date to the extent Buyer or any Subsidiary is legally
obligated to pay such Taxes in accordance with Article XI;
(v) Proceedings
based on conduct, actions, inaction, facts, circumstances or conditions arising
or occurring on or after the Closing Date, Proceedings described in Schedule
2.2,
Proceedings arising from or related to any other Assumed Liability;
and
(vi) the
Assumed Indebtedness; and
(c) obligations
and liabilities of Buyer and its Affiliates under the Employee
Agreement.
The
liabilities, responsibilities and obligations to be assumed by Buyer or retained
by the Subsidiaries pursuant to this Section 2.2 are hereinafter collectively
referred to as the “Assumed Liabilities.” Subject to the other terms and
conditions of this Agreement, Buyer, for itself and each of its Affiliates
(including each Subsidiary upon Closing), hereby irrevocably and unconditionally
waives and releases Seller from all Assumed Liabilities and all liabilities
or
obligations relating to the Business or the Assets to the extent arising
from
events or occurrences on or after the Closing Date or to the extent otherwise
relating to the period after the Closing; provided,
however,
that
for the avoidance of doubt, Buyer and its Affiliates shall not be deemed
to have
waived, and nothing in this sentence shall be deemed or interpreted in any
way
to limit, any right of indemnification that any Buyer Indemnitee may have
in
respect of any such matter pursuant to Article XII. Notwithstanding anything
in
this Section 2.2 to the contrary, Assumed Liabilities shall not include any
liabilities, responsibilities or obligations expressly stated to be Retained
Liabilities pursuant to Section 2.3.
-
-
Section
2.3 Retained
Liabilities.
Buyer
shall not assume, and Seller shall retain and pay, perform and discharge
when
due, all of the liabilities and obligations, of every kind and nature, relating
to or arising from the following (collectively, the “Retained
Liabilities”):
(a) all
obligations of Seller or any Subsidiary with respect to any indebtedness
for
money borrowed by Seller or any Subsidiary (including items due to Seller’s
Affiliates), other than the Assumed Indebtedness, and payment obligations
arising on or after the Closing Date relating to the Business under any
equipment or vehicle lease or under any line extension Contracts or similar
construction arrangements, it being understood and agreed that such leases,
Contracts and similar arrangements do not create indebtedness for money
borrowed;
(b) Taxes
for
periods on or prior to the Closing Date to the extent Seller or any Subsidiary
is legally obligated to pay such Taxes in accordance with Article
XI;
(c) Excluded
Assets and all liabilities or obligations of Seller and its Affiliates related
to their businesses other than the Business, in each case whether arising
before, on or after the Closing Date;
(d) the
Retained Environmental Liabilities;
(e) Proceedings
involving Seller, any Subsidiary, any of the Assets or the Business based
on
conduct (including Seller’s or any Subsidiary's performance or failure to
perform under any Contract included among the Assets), action, inaction,
facts,
circumstances or conditions arising or occurring before the Closing Date
(whether or not such Proceeding existed before the Closing Date), but expressly
excluding any such liabilities or obligations for Proceedings relating to
Assumed Liabilities (including Proceedings described in Section 2.2(b)(v));
(f) the
Retained Contract Liabilities; and
(g) obligations
and liabilities of Seller and its Affiliates under the Employee
Agreement.
Seller,
for itself and each of its Affiliates, hereby irrevocably and unconditionally
waives and releases Buyer and each of its Affiliates from all Retained
Liabilities.
Section
2.4 Condition
on Assignment or Assumption of Contracts and Rights.
Anything
in this Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign or assume any Contract or any claim or
right
or any benefit arising thereunder or resulting therefrom if an attempted
assignment or assumption thereof, without the Consent of a third party thereto,
would constitute a breach thereof. Any transfer or assignment to Buyer by
Seller
or any of its Affiliates of any property or property rights or any
-
-
Contract
that requires the Consent of any third party shall be made subject to such
Consent being obtained. If such Consent is not obtained, or if an attempted
assignment thereof would be ineffective or would affect the rights of Seller
or
its Affiliate thereunder such that Buyer would not in fact receive all such
rights, Seller will cooperate with Buyer in any arrangement that does not
constitute a breach of such Contract, including an operating or other services
agreement if reasonably required by Buyer, reasonably designed to provide
for
Buyer the benefits under any such Contract or rights including enforcement
for
the benefit of Buyer of any and all rights of Seller or its Affiliates against
a
third party or Governmental Body thereto arising out of the breach or
cancellation by such third party or Governmental Body or otherwise. To the
extent that Buyer does receive all of the benefits of any such Contract or
rights pursuant to the preceding sentence, Buyer shall accept, and shall
indemnify Seller from and against, the burdens (including the out-of-pocket
costs and expenses incurred by Seller in performing such arrangement) and
perform the obligations under such Contract as subcontractor of Seller to
the
extent of the benefit received, and to the extent such burdens and obligations
would have constituted an Assumed Liability if such Contract had been
transferred to Buyer at the Closing. Seller shall and shall cause its Affiliates
to exercise or exploit their respective rights and options under all such
Contracts referred to in this Section 2.4 only as reasonably directed by
Buyer.
Furthermore, if the other party(ies) to such a Contract subsequently Consent
to
the assignment of such Contract to Buyer, Buyer shall thereupon agree to
assume
and perform all liabilities and the obligations arising thereunder after
the
date of such Consent, at which time such Contract shall be deemed an Asset,
without the payment of further consideration, and the obligations so assumed
thereunder shall be deemed Assumed Liabilities.
Section
2.5 Settlement
of Intercompany Accounts.
At
or
prior to the Closing, Seller shall cause all intercompany payables, receivables
and loans between New England Gas Company or any of the Subsidiaries relating
to
the Business, on the one hand, and Seller and its Affiliates (other than
New
England Gas Company and the Subsidiaries), on the other hand, to be settled
or
cancelled.
ARTICLE
III
PURCHASE
PRICE
Section
3.1 Purchase
Price.
Subject
to the terms and conditions of this Agreement, the aggregate purchase price
(the
“Purchase Price”) for the Assets owned directly by Seller and for the Stock
shall be an amount in cash equal to FIVE HUNDRED SEVENTY-FIVE MILLION DOLLARS
($575,000,000) less the aggregate outstanding principal amount of, and accrued
and unpaid interest on, the Assumed Indebtedness as of the Closing Date (the
“Estimated Purchase Price”), and as adjusted in accordance with Section 3.2
(as so adjusted, the “Final Purchase Price”), plus the assumption by Buyer at
Closing of the Assumed Liabilities (including the Assumed
Indebtedness).
Section
3.2 Adjustment
to Estimated Purchase Price.
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(a) Within
90
days following the Closing Date, Buyer shall prepare and deliver to Seller
a
statement (the “Closing Statement”), utilizing the same accounting methods,
policies, practices, procedures and adjustments as were used in the preparation
of the Base Statement as described on Schedule
1.1(a)
(and
otherwise in accordance with GAAP, with such exceptions to GAAP as indicated
on
Schedule 1.1(a))
and
shall set forth in reasonable detail the amount of Working Capital of the
Business as of 11:59 p.m. on the Closing Date (as well as the adjustments
contemplated in Section 6.8), and a calculation of the adjustment to the
Estimated Purchase Price that is payable based upon the difference between
the
Working Capital Target and the Working Capital in the Closing Statement.
Seller
agrees, at no cost to Buyer, to give Buyer and its authorized representatives
reasonable access to such employees, officers and other facilities and such
books and records of Seller and its Affiliates as are reasonably necessary
to
allow Buyer and its authorized representatives to prepare the Closing Statement.
The Closing Statement shall be prepared in accordance with Schedule
1.1(a).
The
Base Statement was prepared using the same accounting methods, policies,
practices, procedures and adjustments as were used in the preparation of
the
Financial Statements and otherwise in accordance with GAAP (and with such
exceptions to GAAP as indicated on Schedule
1.1(a)).
(b) Following
its receipt from Buyer of the Closing Statement, Seller shall have 15 Business
Days to review the Closing Statement and to inform Buyer in writing of any
disagreement (the “Objection”) that it may have with the Closing Statement,
which objection shall specify in reasonable detail Seller's disagreement
with
the Closing Statement. If Buyer does not receive the Objection within such
15-Business Day period, the amount of Working Capital set forth on the Closing
Statement delivered pursuant to Section 3.2(a) shall be deemed to have been
accepted by Seller and shall become binding upon Seller. If Seller does timely
deliver an Objection to Buyer, Buyer shall then have 15 Business Days from
the
date of receipt of such Objection (the “Review Period”) to review and respond to
the Objection. Seller and Buyer shall attempt in good faith to resolve any
disagreements with respect to the determination of the Working Capital of
the
Business as of the Closing Date or the amount of the adjustment to the Estimated
Purchase Price. If they are unable to resolve all of their disagreements
with
respect to the determination of Working Capital of the Business as of the
Closing Date or the amount of the adjustment to the Estimated Purchase Price
within 15 Business Days following the expiration of Buyer's Review Period,
they
may refer, at the option of either Buyer or Seller, their differences to
Ernst
& Young, or if Ernst & Young declines to accept such engagement, another
internationally recognized firm of independent public accountants selected
jointly by Buyer and Seller, which accountants shall determine, only with
respect to the disagreements so submitted, whether and to what extent, if
any,
the amount of Working Capital of the Business as of the Closing Date set
forth
in the Closing Statement requires adjustment. If Buyer and Seller are unable
to
so select the independent public accountants within 15 Business Days of Ernst
& Young declining to accept such engagement, either Buyer or Seller may
thereafter request that the American Arbitration Association make such selection
(as applicable, Ernst & Young, the firm selected by Buyer and Seller or the
firm selected by the American Arbitration Association is herein referred
to as
the “CPA Firm”). Buyer and Seller shall direct the CPA Firm to use its
reasonable best efforts to render its determination within 30 days after
the
issue is first submitted to the CPA Firm. The CPA Firm’s determination shall be
conclusive and binding upon Buyer and Seller. The fees and disbursements
of the
CPA Firm shall be shared equally by Buyer and
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Seller.
Buyer and Seller shall make readily available to the CPA Firm all relevant
books
and records relating to the Closing Statement and all other items reasonably
requested by the CPA Firm. The Closing Statement as agreed to by Buyer and
Seller or as determined by the CPA Firm shall be referred to as the “Final
Closing Statement.”
(c) In
the
event of a positive difference between Working Capital on the Final Closing
Statement from the Working Capital Target, Buyer shall pay to Seller in cash
the
amount of such difference, plus the Settlement Interest thereon. In the event
of
a negative difference between the Working Capital Target from the Working
Capital on the Final Closing Statement, Seller shall pay to Buyer in cash
the
amount of such difference, plus the Settlement Interest thereon. All amounts
payable under this Section 3.2(c) shall be paid within five Business Days
of the
determination of the Final Closing Statement by wire transfer of immediately
available funds to a bank account in the United States of America designated
in
writing by the recipient not less than one Business Day before such
payment.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF BUYER
Section
4.1 Organization,
Existence and Qualification.
Buyer
is
a corporation duly incorporated, validly existing, and in good standing under
the laws of its state of incorporation, with full corporate power and authority
to conduct its business as it is now being conducted, to own or use the
properties and assets that it purports to own or use, to perform its obligations
under all Contracts to which it is a party, and to execute and deliver this
Agreement and the Related Documents to which Buyer is a party. Buyer is duly
qualified to do business as a foreign corporation and is in good standing
under
the laws of each state in which the failure to be so qualified or in good
standing would materially adversely affect the business or properties of
Buyer,
taken as a whole, or Buyer’s ability to consummate the transactions contemplated
hereby.
Section
4.2 Authority
Relative to this Agreement and Binding Effect.
The
execution, delivery and performance by Buyer of this Agreement and the Related
Documents and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary corporate action. Neither the execution,
delivery and performance of this Agreement and the Related Documents by Buyer
nor the consummation by Buyer of the transactions contemplated thereby will
(a)
result in any conflict with or breach or violation of or default under the
Organizational Documents of Buyer, (b) result in a violation or breach of
any
term or provision of or a loss of any right or benefit under, constitute
a
default or accelerate the performance required under, result in the termination
of or a right of termination, cancellation or amendment, or result in the
creation of any Encumbrance upon any of the respective properties or assets
of
Buyer under any material Contract to which Buyer is a party or by which its
assets are bound, whether with or without notice or the passage of time or
both,
or (c) a violation of any Order of any Governmental Body. This Agreement
constitutes, and the Related Documents to be executed by Buyer when executed
and
delivered will constitute, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, except as such
enforceability may be limited by (i) bankruptcy or similar laws from time
to
time in effect
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affecting
the enforcement of creditors’ rights generally or (ii) the availability of
equitable remedies generally.
Section
4.3 Governmental
and Other Required Consents.
Except
for those Consents described in Schedule
4.3,
no
Consent of any Governmental Body or third party is required to be obtained
by
Buyer in connection with the execution and delivery by Buyer of this Agreement
or the Related Documents or the consummation by Buyer of the transactions
contemplated by this Agreement or the Related Documents. Buyer has no knowledge
of any facts or circumstances relating to Buyer or its Affiliates that
reasonably would be likely to preclude or prolong either (i) the receipt
of such
required consents or (ii) consummation of the transactions contemplated by
this Agreement in accordance with its terms.
Section
4.4 Availability
of Funds.
Buyer
will have available on the Closing Date sufficient funds to enable it to
consummate the transactions contemplated by this Agreement.
Section
4.5 Filings.
No
statement furnished by Buyer for inclusion in any filing with any Governmental
Body in connection with obtaining such Governmental Body’s Consent for the
consummation of the transactions contemplated by this Agreement will contain,
as
of the date such information is so provided, any untrue statement of a material
fact or will omit to state, as of the date such information is so provided,
any
material fact that is necessary to make the statements contained therein,
in
light of the circumstances under which they were made, not
misleading.
Section
4.6 Brokers.
Except
for Rothschild, Inc., no broker or finder has acted for or on behalf of Buyer
or
any Affiliate of Buyer in connection with this Agreement or the transactions
contemplated by this Agreement. No broker or finder is entitled to any brokerage
or finder’s fee, or to any commission, or to any other compensation based in any
way on agreements, arrangements or understandings made by or on behalf of
Buyer
or any Affiliate of Buyer for which Seller or any Affiliate of Seller has
or
will have any liability or obligation (contingent or otherwise).
Section
4.7 Litigation.
There
are
no pending or, to the knowledge of Buyer, threatened Proceedings by any Person
against Buyer that would reasonably be expected to have a material adverse
effect on the ability of Buyer to perform or comply with its obligations
under
this Agreement and the Related Documents to which Buyer will be a party or
the
consummation of the transfer of the Assets and Stock to Buyer and the assumption
of the Assumed Liabilities by Buyer.
Section
4.8 Independent
Investigation.
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Buyer
is
knowledgeable about the businesses engaged in by Seller through New England
Gas
Company and the Subsidiaries and of the usual and customary practices of
companies engaged in businesses similar to the Business and has had access
to
the Assets, the officers and employees of Seller, and the books, records
and
files of Seller relating to the Business and the Assets. In making the decision
to enter into this Agreement and to consummate the transactions contemplated
hereby, Buyer has relied solely on the basis of its own independent due
diligence investigation of the Business and upon the representations and
warranties made in Article V.
Section
4.9 Investment
Intent; Investment Experience; Restricted Securities.
Buyer
is
acquiring the Stock for its own account for investment and not with a view
to,
or for sale or other disposition in connection with, any distribution of
all or
any part thereof in violation of federal or state securities law. In acquiring
the Stock, Buyer is not offering or selling, and will not offer or sell,
for
Seller in connection with any distribution of the Stock, and Buyer does not
have
a participation and will not participate in any such undertaking or in any
underwriting of such an undertaking except in compliance with applicable
federal
and state securities laws. Buyer acknowledges that it is able to fend for
itself, can bear the economic risk of its investment in the Stock, and has
such
knowledge and experience in financial and business matters that it is capable
of
evaluating the merits and risks of an investment in the Stock. Buyer is an
“accredited investor” as such term is defined in Regulation D under the
Securities Act. Buyer understands that the Stock has not been registered
pursuant to the Securities Act or any applicable state securities laws, that
the
Stock will be characterized as “restricted securities” under federal securities
laws and that under such laws and applicable regulations the Stock cannot
be
sold or otherwise disposed of without registration under the Securities Act
or
an exemption therefrom.
Section
4.10 PUHCA.
Buyer
is
a “holding company” under the Public Utility Holding Company Act of 2005 (“PUHCA
2005”). The execution and delivery of this Agreement by Buyer do not and will
not violate any provision of PUHCA 2005 or any rules or regulations thereunder
pertaining to Buyer.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF SELLER
Section
5.1 Organization,
Existence and Qualification.
Seller
and each Subsidiary is a corporation duly incorporated, validly existing
and in
good standing under the laws of its respective jurisdiction of incorporation,
with full corporate power and authority to conduct the portion of the Business
conducted by it as it is now being conducted, to own or use its portion of
the
Assets and to perform its obligations under all Contracts to which it is
a
party. Seller has full corporate power and authority to execute and deliver
this
Agreement and the Related Documents to which Seller is a party. Seller and
each
Subsidiary is duly qualified to do business as a foreign corporation and
is in
good standing under the laws of the State of Rhode Island and each other
state
in which the failure to be so qualified
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-
or
in
good standing, individually or in the aggregate, would be reasonably likely
to
have a Material Adverse Effect.
Section
5.2 Authority
Relative to this Agreement and Binding Effect.
The
execution, delivery and performance by Seller of this Agreement, the Related
Documents and the consummation of the transactions contemplated thereby have
been duly authorized by all requisite corporate action. Except as set forth
in
Schedule
5.2,
neither
the execution, delivery and performance of this Agreement and the Related
Documents by Seller, nor the consummation of the transactions contemplated
thereby, will (a) result in any conflict with or breach or violation of or
default under the Organizational Documents of Seller or any Subsidiary, (b)
result in a violation or breach of any term or provision of or a loss of
any
right or benefit under, constitute a default or accelerate the performance
required under, result in the termination of or a right of termination,
cancellation or amendment, or result in the creation of any Encumbrance upon
any
of the respective properties or assets of Seller or any of its Affiliates
(including the Subsidiaries) under any Contract to which Seller or any of
its
Affiliates (including the Subsidiaries) is a party or by which any of their
respective assets are bound, whether with or without notice or the passage
of
time or both, or (c) a violation of any Order of any Governmental Body, except
for such exceptions to the foregoing clause (b) that, individually or in
the
aggregate, would not be reasonably likely to have a Material Adverse Effect
or
that will be cured, waived or otherwise remedied on or prior to the Closing
Date. This Agreement constitutes, and the Related Documents to be executed
by
Seller when executed and delivered will constitute, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms, except as enforceability may be limited by (i) bankruptcy
or
similar laws from time to time in effect affecting the enforcement of creditors’
rights generally or (ii) the availability of equitable remedies
generally.
Section
5.3 Governmental
and Other Required Consents.
Except
as
set forth in Schedule
5.3,
no
Consent of any Governmental Body or third party is required to be obtained
by
Seller or any Subsidiary in connection with the execution and delivery by
Seller
of this Agreement or the Related Documents or the consummation of the
transactions contemplated by this Agreement or the Related Documents, other
than
any Consent the failure of which to be obtained would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. Seller
has
no knowledge of any facts or circumstances relating to Seller, any Subsidiary
or
their Affiliates that reasonably would be likely to preclude or prolong either
(i) the receipt of such required consents or (ii) consummation of the
transactions contemplated by this Agreement in accordance with its
terms.
Section
5.4 Capitalization
of the Subsidiaries; Title to Stock.
(a) Seller
owns all of the issued and outstanding shares of the capital stock of Newport
America Corporation and Valley Appliance and Merchandising Company; Newport
America Corporation owns all of the issued and outstanding shares of the
capital
stock of each of Patience Realty Corp. and Prudence Corporation, in each
case
free and clear of any Encumbrances, other than transfer restrictions imposed
on
equity securities by federal securities laws, and all of such shares are
duly
authorized and validly issued and are fully paid, non-
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assessable and
free
of preemptive rights. None of the Subsidiaries has, or is bound by, any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any security of
any
such Subsidiary, including any securities representing the right to purchase
or
otherwise receive any shares of capital stock or any other equity security
of
any such Subsidiary. None of the Subsidiaries may be required to acquire
by any
means, directly or indirectly, any capital stock, voting rights, equity
interests or investments in another Person.
(b) Except
as
set forth in Section 5.4(a), none of the Subsidiaries has any direct or indirect
interest in any other Person.
Section
5.5 Title
to Assets; Encumbrances.
(a) Seller
or
the appropriate Subsidiary has good and indefeasible title to the Assets
reflected in the Financial Statements except those that in the aggregate
are not
material to the Business and those disposed of since the date of the Financial
Statements in the ordinary course of business or otherwise disposed of in
accordance with this Agreement. None of the Assets are subject to any
Encumbrance except (i) Encumbrances described in Schedule 5.5(a)
and
(ii) Permitted
Encumbrances.
(b) Except
as
set forth in Schedule
5.5(b),
Seller
or the appropriate Subsidiary owns or possesses all Easements necessary to
conduct the Business as now being conducted without any known conflict with
the
rights of others, in each case except to the extent that the failure to own
or
possess such Easements would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
(c) Except
in
cases that individually or in the aggregate are not reasonably likely to
have a
Material Adverse Effect, (x) Seller or the appropriate Subsidiary enjoys
peaceful and undisturbed possession under all material leases of Real Property,
and (y) all such leases are valid and subsisting and in full force and
effect.
Section
5.6 Financial
Statements.
(a) Schedule
5.6
sets
forth the unaudited combined statement of assets and liabilities of the Business
as of September 30, 2005 (the “Balance Sheet”) and the unaudited combined
statement of profit of the Business for the nine-month period ended September
30, 2005 (collectively, the “Financial Statements”). Except
as
set forth in Schedule
5.6,
the
Financial Statements have been prepared on a pre-tax basis
consistent with Seller’s consolidated audited financial statements as of, and
for its fiscal year ended, December 31, 2004, which Seller financial statements
were prepared, in all material respects, in accordance with GAAP. Except
as set
forth in Schedule
5.6,
the
Balance Sheet presents fairly in all material respects the combined financial
condition of the Business as of its date and the statements of profit included
in the Financial Statements present fairly in all material respects the combined
results of operations of the Business for the period covered thereby. The
books
and records of Seller and the Subsidiaries from which the Financial Statements
were derived were complete and accurate in all material respects at the time
of
such preparation.
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(b) Seller
and its Affiliates (including the Subsidiaries) maintain a system of internal
accounting controls with respect to the Business sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(c) Seller
has established, maintains and evaluates controls and procedures with respect
to
the Business that are designed to ensure that material information relating
to
the Business is made known to Seller’s Chief Executive Officer and its Chief
Financial Officer by others in the Business, and such controls and procedures
are effective to perform the functions for which they were
established.
Section
5.7 Compliance
with Legal Requirements; Governmental Permits.
Except
as
relates to tax matters (which are provided for in Section 5.9), employee
benefit
matters (which are provided for in Section 5.13) or environmental matters
(which
are provided for in Section 5.15) and except as set forth in Schedule
5.7,
(a)
neither Seller nor any of its Affiliates (including any Subsidiary) is or
has
been in violation of any Legal Requirement or Order that is applicable to
it
that is material to the conduct or operation of the Business, or to the
ownership or use of any of the Assets, in either case taken as a whole; and
(b)
Seller or the appropriate Subsidiary possesses all Permits from Governmental
Bodies required by any applicable Legal Requirement or Order material to
the
operation of the Business substantially in the manner in which it is currently
being conducted by Seller and its Affiliates (including the Subsidiaries),
taken
as a whole.
Section
5.8 Legal
Proceedings; Outstanding Orders.
Except
as
set forth in Schedule
5.8,
there
is no pending or Threatened Proceeding (a) that has been commenced against
Seller or any of its Affiliates (including any Subsidiary) that would be
reasonably likely to have an adverse financial effect on the Business of
more
than $400,000, or otherwise would be reasonably likely, individually or in
the
aggregate, to have a Material Adverse Effect or (b) that challenges, or
that may have the effect of preventing, delaying, making illegal or otherwise
interfering with, the transactions contemplated hereby. Except as disclosed
in
Schedule
5.8,
there
are no outstanding Orders against Seller or its Affiliates (including any
Subsidiary) that relate to or arise out of the conduct of the Business or
the
ownership, condition or operation of the Business or the Assets (other than
any
Order relating to rates, tariffs and similar matters arising in the ordinary
course of business) which individually or in the aggregate would (x) have
an
adverse financial effect on the Business of more than $400,000 or (y) otherwise
be reasonably likely individually or in the aggregate to have a Material
Adverse
Effect.
Section
5.9 Taxes.
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Seller
or
the appropriate Subsidiary has filed all United States federal, state, local
and
foreign Tax Returns required to be filed by Seller or such Subsidiary with
respect to the Assets, Subsidiaries, or assets of any Subsidiary or requests
for
extensions to file such Tax Returns have been timely filed, and Seller or
such
Subsidiary has timely paid and discharged or made adequate provision for
all
Taxes (other than Retained Liabilities) except where the failure to so file,
pay, discharge or make adequate provision for are not, individually or in
the
aggregate, reasonably likely to have a material impact on the Business. All
such
Tax Returns are true, correct and complete in all material respects. There
are
no pending audits, other examinations, or Threatened Proceedings relating
to any
Tax matters of the Subsidiaries or relating to the Business except as set
forth
in Schedule 5.9.
There
are no Tax liens on the Assets or the assets of any Subsidiary. As of the
date
of this Agreement, neither Seller (with respect to the Business) nor any
Subsidiary has granted any waiver of any statute of limitations, or any
extension of a period for the assessment of, any Tax except as set forth
in
Schedule
5.9.
As of
the Closing Date, none of the Subsidiaries nor the Seller (but only to the
extent secured by the Business or the Assets) will be a party to, be bound
by or
have any obligation under any Tax sharing agreement, Tax indemnity or similar
agreement, understanding or arrangement pursuant to which any of the
Subsidiaries or Seller has assumed an obligation to satisfy any Tax obligations
of another person or entity. Up to and including the Closing Date, none of
the
Subsidiaries has carried on its business and other activities in such a way
that
would result in the recognition by any Subsidiary of liabilities for Taxes
after
the Closing Date as result of such activities (for example, none of the
Subsidiaries has engaged in a IRC Section 355 transaction nor has engaged
in any
activity or accounting practice that is a “reportable transaction” as defined in
Treas. Reg. Section 1.6011-4). Except for liability for Taxes arising as
part of
an affiliated, consolidated or combined group with Southern Union Company
and
its Affiliates under Treasury Regulation Section 1.1502-6 or any similar
provision under state, local or foreign law, none of the Subsidiaries has
any
liability for the Taxes of any person as a transferee, or successor or otherwise
(including any liability under Treasury Regulation Section 1.1502-6 or any
similar provision of state, local or foreign law). The Subsidiaries have
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, member or other third party. None of the Assets or assets of the
Subsidiaries are (a) required, pursuant to section 168(g) of the IRC, to
be
depreciated under the “alternative depreciation system” within the meaning of
section 168(g)(2) of the IRC, (b) subject to the provisions of section 168(f)
of
the IRC, or (c) subject to a tax benefit transfer lease subject to the
provisions of former section 168(f)(8) of the IRC. The only representations
and
warranties given in respect of tax matters are those contained in this Section
5.9 and none of the other representations and warranties set forth in this
Agreement shall be deemed to constitute, directly or indirectly, a
representation or warranty in respect of tax matters.
Section
5.10 Intellectual
Property.
Except
as
set forth on Schedule
5.10,
Seller
and each Subsidiary possesses or has adequate rights to use all trademarks,
trade names, patents, service marks, brand marks, brand names, computer
programs, databases, industrial designs and copyrights necessary for the
operation of the Business in the manner in which it is currently being conducted
by Seller or such Subsidiary, except for the failure to possess or have adequate
rights to use such properties
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that,
individually or in the aggregate, would not be reasonably likely to have
a
Material Adverse Effect. Except as set forth on Schedule
5.10,
Seller
has no Knowledge of (a) any infringement or claimed infringement by Seller
or
any Subsidiary of any patent, trademark, service xxxx or copyright of others
or
(b) any infringement of any patent, trademark, service xxxx or copyright
owned
by or under license to Seller or any Subsidiary except for any such
infringements of the type described in clause (a) or (b) that are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect.
Section
5.11 Personal
Property.
Except
for such exceptions as are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect, the machinery, equipment and vehicles
included among the Assets are in normal operating condition and in a state
of
reasonable maintenance and repair and are suitable in all material respects
for
the purposes for which they are now being used in the conduct of the
Business.
Section
5.12 Material
Contracts.
Schedule
5.12
contains
a complete list of all Material Contracts. Seller has made available to Buyer
a
true and correct copy of each Material Contract, including all amendments
and
modifications thereof. Except as described in Schedule 5.12,
all of
the Material Contracts are in full force and effect (subject to the expiration
of the stated term of any such Material Contract in accordance with its terms)
and there are no defaults under any such Contracts by Seller or any of its
Affiliates (including the Subsidiaries) or, to Seller's Knowledge, the counter
parties to such Contracts, except for any failure to be in full force and
effect
and for any default that, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect.
Section
5.13 Employee
Benefit Matters.
(a)
Schedule 5.13(a)
contains
a true and complete list of each deferred compensation and each incentive
compensation, stock purchase, stock option and other equity compensation
plan,
program, agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance and other “welfare” plan, fund or
program (within the meaning of section 3(1) of ERISA); each profit-sharing,
stock bonus or other “pension” plan, fund or program (within the meaning of
section 3(2) of ERISA); each employment, termination or severance agreement;
and
each other employee benefit plan, fund, program, agreement or arrangement,
in
each case, that is sponsored, maintained or contributed to or required to
be
contributed to by the Seller or by any trade or business, whether or not
incorporated (an “ERISA Affiliate”), that together with the Seller would be
deemed a “single employer” within the meaning of section 4001(b) of ERISA, or to
which the Seller or an ERISA Affiliate is party for the benefit of any Employee
or Former Employee of the Seller (the “Employee Plans”). Seller’s Pension
Plans and Seller’s 401(k) Plan are the only Employee Plans that are intended to
be qualified under Section 401(a) of the IRC. Each employee benefit plan
(within the meaning of Section 3(3) of ERISA) that is sponsored, maintained
or
contributed to or required to be contributed to by Seller or an ERISA Affiliate
of Seller and that is subject to
-
-
Section
302 or Title IV of ERISA or section 412 of the IRC is hereinafter referred
to as
a “Title IV Plan.”
(b) With
respect to each Employee Plan, Seller has heretofore delivered to Buyer true
and
complete copies of the Employee Plan and any amendments thereto (or if the
Employee Plan is not a written Employee Plan, a description thereof), any
related trust or other funding vehicle, any reports or summaries required
under
ERISA or the IRC and the most recent determination letter received from the
Internal Revenue Service with respect to each Employee Plan intended to qualify
under section 401 of the IRC.
(c) No
liability under Title IV or section 302 of ERISA has been incurred by the
Seller
or any ERISA Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to the Seller or any ERISA Affiliate
of
incurring any such liability, other than liability for premiums due the Pension
Benefit Guaranty Corporation (“PBGC”) (which premiums have been paid when
due). Insofar as the representation made in this Section 5.13(c) applies
to sections 4064, 4069 or 4204 of Title IV of ERISA, it is made with respect
to
any employee benefit plan, program, agreement or arrangement subject to Title
IV
of ERISA to which the Seller or any ERISA Affiliate made, or was required
to
make, contributions during the five (5)-year period ending on the last day
of
the most recent plan year ended prior to the Closing Date.
(d) The
PBGC
has not instituted proceedings to terminate any Title IV Plan and no condition
exists that presents a material risk that such proceedings will be
instituted.
(e) No
Title
IV Plan or any trust established thereunder has incurred any “accumulated
funding deficiency” (as defined in section 302 of ERISA and section 412 of the
IRC), whether or not waived, as of the last day of the most recent fiscal
year
of each Title IV Plan ended prior to the Closing Date. All contributions
required to be made with respect to any Employee Plan on or prior to the
Closing
Date have been timely made.
(f) No
Title
IV Plan is a “multiemployer pension plan,” as defined in section 3(37) of ERISA,
nor is any Title IV Plan a plan described in section 4063(a) of ERISA.
Neither the Seller nor any ERISA Affiliate has made or suffered a “complete
withdrawal” or a “partial withdrawal,” as such terms are respectively defined in
sections 4203 and 4205 of ERISA (or any liability resulting therefrom has
been
satisfied in full).
(g) Neither
the Seller or any Subsidiary, any Employee Plan, any trust created thereunder,
nor any trustee or administrator thereof has engaged in a transaction in
connection with which the Seller or any Subsidiary, any Employee Plan, any
such
trust, or any trustee or administrator thereof, or any party dealing with
any
Employee Plan or any such trust could be subject to either a civil penalty
assessed pursuant to section 409 or 502(i) of ERISA or a tax imposed pursuant
to
section 4975 or 4976 of the IRC.
(h) Each
Employee Plan has been operated and administered in all material respects
in
accordance with its terms and applicable law, including but not limited to
ERISA
and the IRC.
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(i) Each
Employee Plan intended to be “qualified” within the meaning of section 401(a) of
the IRC is so qualified and the trusts maintained thereunder are exempt from
taxation under section 501(a) of the IRC. Each Employee Plan intended to
satisfy
the requirements of Section 501(c)(9) has satisfied such
requirements.
(j) Except
as
disclosed in Schedule
5.13(j),
no
Employee Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for Employees or Former Employees of the
Seller or any Subsidiary for periods extending beyond their retirement or
other
termination of service, other than (i) coverage mandated by applicable law,
(ii)
death benefits under any “pension plan,” or (iii) benefits the full cost of
which is borne by the Employee or Former Employee (or his
beneficiary).
(k) No
amounts payable under the Employee Plans will fail to be deductible for federal
income tax purposes by virtue of section 280G of the IRC.
(l) Except
as
disclosed in Schedule
5.13(l),
the
consummation of the transactions contemplated by this Agreement will not,
either
alone or in combination with another event, (i) entitle any Employee, Former
Employee or officer of the Seller or any Subsidiary to severance pay or any
other payment, except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such Employee, Former Employee or officer.
(m) There
are
no pending, threatened or anticipated claims by or on behalf of any Employee
Plan, by any employee or beneficiary covered under any such Employee Plan,
or
otherwise involving any such Employee Plan (other than routine claims for
benefits).
(n) The
Subsidiaries do not employ any Employees or any other individuals and do
not
currently maintain any Employee Plan.
(o) The
only
representations and warranties given in respect of employee benefit matters
are
those contained in this Section 5.13 and Section 5.14 and none of the other
representations and warranties set forth in this Agreement shall be deemed
to
constitute, directly or indirectly, a representation or warranty in respect
of
employee benefit matters.
Section
5.14 Employee
and Labor Matters.
(a) Schedule
5.14(a)
lists
each collective bargaining, union or other employee association agreement
to
which Seller or any of the Subsidiaries is a party or bound with respect
to the
Business.
(b) Except
as
set forth on Schedule
5.14(b)
with
respect to the Business:
(i) To
Seller's Knowledge, (A) no labor union or labor organization has made a pending
demand for recognition or certification, and (B) there are no
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representation
or certification proceedings or petitions seeking a representation proceeding
presently pending or Threatened to be brought or filed with the National
Labor
Relations Board or any other Governmental Body.
(ii) From
January 1, 2003 to the date of this Agreement, there has been no actual or,
to
Seller's Knowledge, Threatened, strikes, lockouts, slowdowns or work stoppages
against or affecting the Business.
(c) Except
as
set forth on Schedule
5.14(c),
to
Seller's Knowledge, there are no (i) unfair labor practice charges or complaints
presently pending or Threatened before the National Labor Relations Board
or any
other Governmental Body against Seller or the Subsidiaries; (ii) complaints,
grievances or arbitrations arising out of any collective bargaining agreement,
or any charge or complaint with respect to or relating to Seller or any
Subsidiary presently pending before the Equal Employment Opportunity Commission
or any other Governmental Body responsible for the prevention of unlawful
employment practices; or (iii) presently pending or Threatened Proceedings
against Seller or any Subsidiary by or on behalf of any present or former
employee, any applicant for employment or classes of the foregoing alleging
breach of any express or implied Contract, any applicable Legal Requirements
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment relationship;
other than, with respect to (i), (ii) or (iii), charges, complaints or
Proceedings which, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect.
(d) Neither
Seller nor any Subsidiary is delinquent in any material payments to any present
or former employees or consultants for any services or amounts required to
be
reimbursed or otherwise paid.
(e) To
the
Knowledge of Seller, no employee is in any respect in violation of any
employment agreement, nondisclosure agreement, common law nondisclosure
obligation, fiduciary duty, noncompetition agreement, restrictive covenant
or
other obligation to a former employer relating to the right of such employee
to
be employed by Seller or any Subsidiary or the employee's knowledge or use
of
trade secrets or proprietary information.
Section
5.15 Environmental
Matters.
(a) Except
as
set forth in Schedule
5.15:
(i) Compliance.
Seller
and each Subsidiary are in compliance with all Environmental Laws applicable
to
the Assets or the Business except where the failure to be in compliance with
such Environmental Laws would not, individually or in the aggregate, be
reasonably likely to have an adverse financial effect on the Business of
more
than $400,000. Seller and each Subsidiary have been in compliance since January
1, 2001 with all Environmental Laws applicable to the Assets or the Business
except where the failure to be in compliance with such Environmental Laws
would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Neither Seller nor any of the Subsidiaries has received any
written communication that alleges that either Seller or any Subsidiary is
not
in compliance with applicable Environmental Laws related to the Assets or
the
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Business
except for any such written communications relating to matters that would
not,
individually or in the aggregate, have an adverse financial effect on the
Business of more than $400,000. To the Knowledge of Seller with respect to
the
Assets or the Business, neither Seller nor any Subsidiary has used any waste
disposal site, or otherwise disposed of, or transported, or arranged for
the
transportation of, any Hazardous Materials to any location in violation in
any
material respect of any Environmental Law or that is likely to result in
an
Environmental Liability of more than $400,000.
(ii) Environmental
Permits.
Seller
and each Subsidiary have obtained or applied in a timely manner, for all
environmental, health and safety Permits (collectively, the “Environmental
Permits”) necessary for the construction of their facilities or the conduct of
their present operations related to the Assets or the Business, and all such
Environmental Permits are in good standing or, where applicable, a renewal
application has been timely filed and is pending agency approval, and Seller
and
each Subsidiary is in compliance with all terms and conditions of its respective
Environmental Permits related to the Assets or the Business, in each case
except
where the failure to obtain or apply or be in compliance with such Environmental
Permits or the requirement to make any expenditure in connection with such
Environmental Permits would not, individually or in the aggregate, have an
adverse financial effect on the Business of more than $400,000.
(iii) Environmental
Claims.
There
is no Environmental Claim related to the Assets or the Business pending (x)
against Seller or any of its Affiliates (including any Subsidiary), (y) to
the
Knowledge of Seller, against any person or entity whose liability for any
Environmental Claim Seller or any of its Affiliates (including any Subsidiary)
has retained or assumed either contractually or by operation of law, or (z)
against any real or personal property or operations that Seller or any of
its
Affiliates (including any Subsidiary) owns, leases or manages, in whole or
in
part, or, to the Knowledge of Seller, against any real or personal property
or
operations that Seller or any of its Affiliates (including any Subsidiary)
formerly owned, leased or managed, in whole or in part, which, in the cases
of
(x), (y) or (z) would reasonably be expected to have, in the aggregate, an
adverse financial effect on the Business of more than $400,000.
(iv) Releases.
Seller
has no Knowledge of any Releases of any Hazardous Material related to the
Assets
or the Business and its current or former assets, properties and operations
that
would reasonably be expected to form the basis of any Environmental Claim
against Seller, or any of its Affiliates (including any Subsidiary), or against
any person or entity whose liability for any Environmental Claim Seller or
any
of its Affiliates (including any Subsidiary) has retained or assumed either
contractually or by operation of law, or any requirement under any Environmental
Law to investigate or remediate such Release except for Releases of Hazardous
Materials, the liability for which would not reasonably be expected to have,
in
the aggregate, an adverse financial effect on the Business of more than
$400,000, or would not constitute an Assumed Liability.
(v) Predecessors.
Seller
has no Knowledge, with respect to any predecessor of Seller or any of its
Affiliates (including any Subsidiary), of any Environmental Claim or
Environmental Liability related to the Assets or the Business pending or
threatened, or of any Release of Hazardous Materials that would reasonably
be
expected to form the basis of
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any
Environmental Claim or Environmental Liability, that would reasonably be
expected to have individually
or in the aggregate, an adverse financial effect on the Business of more
than
$400,000.
(vi) Disclosure.
Seller
has no Knowledge of any material facts related to the Assets or the Business
that Seller reasonably believes would form the basis of an Environmental
Claim
or Environmental Liability that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(b) With
the
exception of Section 5.16 and 5.21, the
only
representations and warranties given in respect of environmental matters
and
compliance with and liability under Environmental Laws
are
those contained in this Section 5.15 and none of the other representations
and
warranties shall be deemed to constitute, directly or indirectly, a
representation or warranty in respect of environmental matters and compliance
with and liability under Environmental Laws.
Section
5.16 Absence
of Certain Changes or Events.
Except
(a) as set forth in Schedule
5.16,
(b) for
any intercompany receivables or payables that will be paid, cancelled or
offset
prior to Closing as contemplated in Section 2.5 and (c) any actions taken
by
Seller or any Subsidiary that would be permitted by Section 6.1(a), since
September 30, 2005, the Business has been conducted in the ordinary course
(it
being acknowledged that Seller has conducted a sales process with respect
to the
Business and that, in connection therewith, several parties were permitted
access to confidential information of the Business pursuant to Sales Process
Confidentiality Agreements). Since September 30, 2005, there has not been
any
event or condition, or series of events or conditions, occurring outside
the
normal course of business affecting the Assets that individually or in the
aggregate either (i) has resulted in, or (ii) to Seller’s Knowledge, would be
reasonably likely to result in, a Material Adverse Effect.
Section
5.17 Regulatory
Matters.
(a) Schedule
5.17
sets
forth all of the currently pending rate filings relating to the Business
heretofore made by Seller before any Governmental Body and each other currently
pending rate Proceeding of any Governmental Body relating to the Business
(other
than Proceedings that also affect other Persons engaged in a business similar
to
the Business such as generic or industry-wide Proceedings).
(b) All
currently effective material filings relating to the Business heretofore
made by
Seller or any Subsidiary with any Governmental Body were made in material
compliance with Legal Requirements then applicable thereto and the information
contained therein was true and correct in all material respects as of the
respective dates of such filings.
(c) Seller
has certificates of public convenience from the Rhode Island Division of
Public
Utilities and Carriers or is otherwise legally entitled to provide service
in
all areas (a) where it currently provides service to its customers as part
of the Business or (b) as identified on its tariff.
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Section
5.18 Brokers.
Except
as
set forth on Schedule
5.18,
no
broker or finder has acted for or on behalf of Seller or any Affiliate of
Seller
in connection with this Agreement or the transactions contemplated by this
Agreement. No broker or finder is entitled to any brokerage or finder’s fee, or
to any commission, or to any other compensation based in any way on agreements,
arrangements or understandings made by or on behalf of Seller or any Affiliate
of Seller for which Buyer has or will have any liability or obligation
(contingent or otherwise).
Section
5.19 Disclaimer.
Except
as
otherwise expressly set forth in this Article V, Seller expressly disclaims
any
representations or warranties of any kind or nature, express or implied,
as to
the condition, value or quality of the assets or properties currently or
formerly used, operated, owned, leased, controlled, possessed, occupied or
maintained by Seller or any Subsidiary, and Seller SPECIFICALLY DISCLAIMS
ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS
FOR
ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH ASSETS OR PROPERTIES, OR ANY
PART
THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS
THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT SUCH ASSETS AND
PROPERTIES ARE BEING ACQUIRED, “AS IS, WHERE IS” ON THE CLOSING DATE, AND IN
THEIR PRESENT CONDITION, WITH ALL FAULTS AND THAT BUYER SHALL RELY ON ITS
OWN
EXAMINATION AND INVESTIGATION THEREOF.
Section
5.20 Insurance.
(a) Schedule
5.20
sets
forth a true and complete list of all current policies of property and casualty
insurance, insuring the properties, assets, employees and/or operations of
the
Business (collectively, the “Policies”). All premiums payable under such
Policies have been paid in a timely manner and Seller and each Subsidiary
have
complied in all material respects with the terms and conditions of all such
Policies.
(b) All
material Policies are in full force and effect. Neither Seller nor any of
its
Affiliates (including any Subsidiary) is in material default under any
provisions of the Policies, and there is no claim by Seller or any of its
Affiliates (including any Subsidiary) or any other Person pending under any
of
the Policies as to which coverage has been questioned, denied or disputed
by the
underwriters or issuers of such Policies.
Section
5.21 Absence
of Undisclosed Liabilities.
Except
as
disclosed on Schedule
5.21,
neither
Seller nor any of its Affiliates (including any Subsidiary) has any indebtedness
or liability, absolute or contingent, related to the Assets or the Business
of a
nature required by GAAP to be reflected in a consolidated corporate balance
sheet relating solely to the Business, except liabilities, obligations or
contingencies that (a) are accrued or reserved against in the Financial
Statements or reflected in the notes thereto, (b) were
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incurred
or accrued in the ordinary course of business (including liens of current
taxes
and assessments not in default) since September 30, 2005, or (c) would not
reasonably be expected, individually or in the aggregate, to have an adverse
financial effect on the Business of more than $1,000,000.
Section
5.22 Sufficiency
of Assets.
(a) Except
as
set forth on Schedule
5.22(a),
the
Assets include all assets, properties and rights necessary for the operation
of
the Business consistent with past practice and as currently
operated.
(b) Except
as
set forth on Schedule
5.22(b),
none of
the assets of Seller or any of its Affiliates which are located outside of
the
State of Rhode Island relate primarily to the Business.
Section
5.23 PUHCA.
Seller
is
not a “holding company” as defined in PUHCA 2005. The execution and delivery of
this Agreement by Seller does not and will not violate any provision of PUHCA
2005 or any rules or regulations thereunder pertaining to Seller.
Section
5.24 Filings.
No
statement furnished by Seller or its Affiliates, including the Subsidiaries,
for
inclusion in any filing with any Governmental Body in connection with obtaining
such Governmental Body’s Consent for the consummation of the transactions
contemplated by this Agreement will contain, as of the date such information
is
so provided, any untrue statement of a material fact or will omit to state,
as
of the date such information is so provided, any material fact that is necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading.
ARTICLE
VI
COVENANTS
Section
6.1 Covenants
of Seller.
Seller
agrees to observe and perform the following covenants and
agreements:
(a) Conduct
of the Business Prior to the Closing Date.
With
respect to the Business, except (x) as contemplated in this Agreement or
in
Schedule
6.1,
(y) as required by any Legal Requirement or Order or (z) as otherwise
expressly consented to in writing by Buyer, which consent will not be
unreasonably withheld or delayed, prior to the Closing, Seller will, and
will
cause its Affiliates (including each Subsidiary) to:
(i) not
make
or permit any change in the general nature of the Business;
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(ii) maintain
the Business in the ordinary course of business consistent with Good Utility
Practices, and maintain the Assets in their present condition, reasonable
wear
and tear excepted, subject to retirements in the ordinary course of
business;
(iii) not
enter
into, assign, amend, renew or extend, any material transaction or Material
Contract other than in the ordinary course of business, provided that such
ordinary course exception shall not be applicable to any collective bargaining
agreement (as to which Section 6.12 shall apply);
(iv) not
(A)
sell, lease (as lessor) or dispose of or otherwise transfer or make any Contract
for the sale, lease (as lessor), disposition or transfer of, or subject to
any
Encumbrance (other than a Permitted Encumbrance), any Assets, other than
(m) the
sale of inventory in the ordinary course of business or (n) the sale or lease
(as lessor) of Assets in excess of $100,000 in the aggregate , or (B) purchase
or lease (as lessee), or make any Contract for the purchase or lease (as
lessee)
of, any Assets, other than (x) the purchase of inventory in the ordinary
course
of business, (y) pursuant to any capital expenditure reflected in the capital
expenditure budget previously delivered to Buyer, or (z) the purchase or
lease
(as lessee) of Assets in excess of $100,000 in the aggregate;
(v) not
(A)
hire any new employee or (B) transfer any existing employee of Seller or
any
Affiliate to any position with the Business or any of the Subsidiaries, in
each
case unless such employee is a bona fide replacement for either a
presently-filled position or a vacancy in an authorized position with the
Business;
(vi) not
make
any unbudgeted capital expenditure or capital expenditure commitment in excess
of $500,000 in
the
aggregate except in the event of service interruption, emergency or casualty
loss;
(vii) comply
in
all material respects with all applicable material Legal Requirements and
Orders, including those relating to the filing of reports and the payment
of
Taxes due to be paid prior to the Closing, other than those contested in
good
faith for which reserves have been established in accordance with
GAAP;
(viii) except
in
the ordinary course of business or in accordance with the terms of any existing
Contract which has been disclosed on Schedule
5.13(l),
Employee Plan or collective bargaining agreement, not grant any material
increase or change in total compensation or benefits (taken as a whole) to
any
of the Transferred Employees or enter into any employment, severance or similar
Contract with any Person or amend any such existing Contracts to increase
any
amounts payable thereunder or benefits provided thereunder;
(ix) not
terminate any Material Contract except in the case of a breach of such Contract
by the other party thereto;
(x) not
create, incur, assume, guarantee or otherwise become liable with respect
to any
indebtedness for money borrowed other than intercompany debt (it being
understood and agreed that customer advances, customer deposits and construction
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advances
do not create indebtedness for money borrowed), except pursuant to advances
made
by Seller to the Business or to any Subsidiary;
(xi) not
amend
the Organizational Documents of any Subsidiary;
(xii) not
make
any change in the stock ownership of any Subsidiary and not grant, issue,
sell,
dispose of, pledge or otherwise encumber any interest in any Subsidiary;
(xiii) solely
in
the case of the Subsidiaries, not declare, set aside or pay any non-cash
dividend or other non-cash distribution with respect to its capital stock;
(xiv) to
the
extent exclusively relating to the Business or the Subsidiaries, not (A)
change
any material financial or Tax accounting methods, policies or practices except
as required by a change in GAAP, (B) make, revoke or amend any material Tax
election, (C) file any material amended Tax Return or claim for refund which
may
result in an adjustment of any item of income, gain, deduction or loss with
respect to the Business, (D) consent to extend the period of limitations
for the
payment or assessment of any material Tax, (E) enter into any closing agreement
affecting any material Tax liability or refund, or (F) settle or compromise
any
material Tax liability or refund; and
(xv) not
make
any commitment to take any of the actions prohibited by this Section
6.1(a).
(b) Access
to the Business, Assets and Records; Updating Information.
(i) From
and
after the date hereof and until the Closing Date, Seller shall permit Buyer
and
its Representatives to have, on reasonable notice and at reasonable times,
reasonable access to all properties, employees, offices and books, papers
and
records to the extent that they reasonably relate to the ownership, operation,
obligations and liabilities of the Business, the Subsidiaries and the Assets;
provided,
however,
that
such access shall not unreasonably interfere with the operation of the Business;
and provided,
further,
that
Buyer hereby agrees to defend, indemnify and hold harmless Seller from and
against all Losses arising out of or relating to Buyer’s access provided
pursuant to this Section 6.1(b)(i). Without limiting the application of the
Confidentiality Agreement, all documents or information furnished by Seller
or
obtained by Buyer hereunder shall be subject to the Confidentiality Agreement.
Notwithstanding the foregoing or any provision of the Confidentiality Agreement,
Seller acknowledges and agrees that, from and after the Closing, all information
relating to the Business shall be deemed to be confidential information of
Buyer
and shall not be subject to the terms of the Confidentiality
Agreement.
(ii) Seller
will notify Buyer as promptly as practicable of any (x) significant change
in
the ordinary course of business for the Business, (y) material Proceedings
(Threatened or pending) involving or affecting the Business or the transactions
contemplated by this Agreement, and (z) unbudgeted capital expenditure or
commitment in excess of $100,000, individually, and shall use reasonable
efforts
to keep Buyer fully informed of such events.
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(c) Consents.
Subject
to Section 2.4, Seller will use its commercially reasonable efforts and act
diligently to obtain all necessary Consents required to consummate the
transactions contemplated hereby in a timely manner, including any Consent
required under any Legal Requirement or Contract applicable to the Business
and
all Consents listed in Schedule 5.3.
Seller
will use its commercially reasonable efforts and act diligently to obtain
all
necessary Consents of its stockholders, if any, that may be required to
consummate the transactions contemplated hereby in a timely manner.
(d) Confidentiality.
From
and
after the Closing Date, Seller shall, and shall cause its Affiliates and
their
respective officers, directors, employees, agents and representatives
(collectively, “Representatives”)
to,
keep confidential and not disclose all information relating to the Business
(whether in the possession of Seller, its Affiliate or such Representative
at
the time of the Closing or subsequently obtained by Seller, any Affiliate
of
Seller or any such Representative from Buyer pursuant to this Agreement or
any
Related Document) (“Restricted
Information”),
and
shall not directly or indirectly use such Restricted Information for any
purpose, except as and to the extent permitted by the terms of this Agreement
or
any Related Document. The obligation to keep such Restricted Information
confidential shall continue indefinitely from the Closing Date and shall
not
apply to any information which (i) is in the public domain, (ii) is published
or
otherwise becomes part of the public domain through no fault of Seller, any
of
its Affiliates or any of their Representatives or (iii) becomes available
to
Seller, any of its Affiliates or any of their Representatives on a
non-confidential basis from a source that did not acquire such information
(directly or indirectly) from Seller or Buyer on a confidential basis.
Notwithstanding the foregoing, Seller may make disclosures required by law;
provided,
that
Seller, to the extent practicable, shall provide Buyer with prompt notice
thereof so that Buyer may seek a protective order or other appropriate remedy
or
waive compliance with the provisions of this Section 6.1(d). In the event
that
such protective order or other remedy is not obtained or Buyer waives compliance
with the provisions of this Section 6.1(d), Seller shall or shall cause the
Person required to disclose such Restricted Information to furnish only that
portion of the information that such Person is advised by an opinion of Seller’s
counsel is legally required, and, to the extent practicable, Seller shall
exercise its reasonable best efforts to obtain reliable assurance that
confidential treatment is accorded the Restricted Information so
furnished.
(e) Non-Solicitation
of Employees.
Except
as otherwise set forth in the Employee Agreement, for a period of two years
after the Closing Date, Seller shall not, and shall cause its Affiliates
not to,
without the prior written approval of Buyer, directly or indirectly, solicit,
encourage, entice or induce any Transferred Employee (as defined in the Employee
Agreement) to terminate his or her employment with Buyer or any of its
Affiliates (including, after the Closing, the Subsidiaries), provided,
however,
that
such prohibition shall not apply to any person who responds to a general
solicitation.
(f) Board
Meeting; Duty to Recommend.
(i) Proxy
Statement.
If the
Seller's Stockholder Approval is required by the Rhode Island Division of
Public
Utilities and Carriers, as soon as reasonably
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practicable
following the date of this Agreement, Seller shall prepare and file with
the SEC
a proxy statement in preliminary form (together with any amendments or
supplements thereto, the “Proxy Statement”) in connection with obtaining the
Seller's Stockholder Approval. Each of Seller and Buyer shall use their
respective commercially reasonable efforts to furnish the information required
to be included by the SEC in the Proxy Statement. After consultation with
Buyer,
Seller shall respond promptly to any comments made by the SEC with respect
to
the Proxy Statement and cause a definitive Proxy Statement to be mailed to
its
stockholders as promptly as practicable following the date of this Agreement,
and the parties shall respond promptly to any comments with respect to any
other
statement or schedule filed by them. No filing of, or amendment or supplement
to, the Proxy Statement or any other statement or schedule will be made by
Seller without providing Buyer a reasonable opportunity to review and comment
on
the portions thereof pertaining to the transactions contemplated by this
Agreement. If at any time after the date the Proxy Statement is mailed to
Seller's stockholders and prior to the Seller Meeting any information relating
to Seller, Buyer or any of their respective affiliates, officers or directors,
should be discovered by Seller or Buyer which is required to be set forth
in an
amendment or supplement to the Proxy Statement, so that the Proxy Statement
will
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, rule or
regulation, disseminated to the stockholders of Seller.
(ii) Buyer
Information.
Buyer
agrees that it will provide Seller with all information concerning Buyer
necessary or reasonably appropriate to be included in the Proxy
Statement.
(iii) Seller's
Stockholder Meeting.
If the
Seller's Stockholder Approval is required by the Rhode Island Division of
Public
Utilities and Carriers, Seller, acting through the board of directors of
Seller,
shall, in accordance with its certificate of incorporation and bylaws and
with
applicable law, promptly and duly call, give notice of, convene and hold,
as
soon as practicable following the date upon which the Proxy Statement is
cleared
by the SEC, and in no event later than 75 days after such date, a special
meeting of its stockholders for the sole purpose of considering and taking
action upon this Agreement and the transactions contemplated hereby (the
“Seller's Meeting”); provided,
however,
that in
lieu of calling a special meeting, Seller shall be entitled to submit this
Agreement and the transactions contemplated hereby to a vote of its stockholders
at Seller's 2006 annual meeting of its stockholders (provided such annual
meeting is held no later than May 15, 2006), in which case references herein
to
the “Seller's Meeting” shall be deemed references to Seller's 2006 annual
meeting of its stockholders.
(iv) Recommendation.
Seller,
acting through the board of directors of Seller, shall (a) recommend adoption
of
this Agreement and the transactions contemplated hereby and include such
recommendation in the Proxy Statement, and (b) use its commercially reasonable
efforts to solicit and obtain such adoption. Neither the board of directors
of
Seller nor any committee thereof shall directly or indirectly (x) withdraw
(or
amend or modify in a manner adverse to Buyer), or publicly propose to withdraw
(or amend or modify
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in
a
manner adverse to Buyer), the approval, recommendation or declaration of
advisability by the board of directors of Seller of this Agreement or the
transactions contemplated hereby or (y) recommend, adopt or approve, or propose
publicly to recommend, adopt or approve, any Alternative Proposal.
Section
6.2 Covenants
of Buyer.
Buyer
agrees to observe and perform the following covenants and
agreements:
(a) Consents.
Buyer
will use its commercially reasonable efforts and act diligently to assist
Seller
in obtaining all necessary Consents required to consummate the transactions
contemplated hereby in a timely manner, including any Consent required under
any
Legal Requirement or Contract applicable to the Business, and all Consents
listed in Schedule 5.3,
and
will use its commercially reasonable efforts and act diligently to obtain
all
Consents described in Section 4.3 in a timely manner.
(b) Access
to Information.
After
Closing, Buyer will, and will cause its Representatives to, afford to Seller,
including its Representatives, reasonable access to all books, records, files
and documents related to the Business in order to permit Seller to prepare
and
file its Tax Returns and to prepare for and participate in any investigation
with respect thereto, to prepare for and participate in any other investigation
and defend any Proceedings relating to or involving Seller, any Subsidiary
or
the Business for which Seller may be responsible, to discharge its obligations
under this Agreement and the other Related Documents to which it is a party
and
for other reasonable purposes and will afford Seller reasonable assistance
in
connection therewith. Buyer will cause such records to be maintained for
not
less than seven years from the Closing Date and will not dispose of such
records
without first offering in writing to deliver them to Seller; provided,
however,
that in
the event that Buyer transfers all or a portion of the Business to any third
party during such period, Buyer may transfer to such third party all or a
portion of the books, records, files and documents related thereof, provided
such third party transferee expressly assumes in writing the obligations
of
Buyer under this Section 6.2(b). In addition, on and after the Closing Date,
at
Seller’s request, Buyer shall make available to Seller and its Affiliates,
employees, representatives and agents, those employees of Buyer requested
by
Seller in connection with any Proceeding, including to provide testimony,
to be
deposed, to act as witnesses and to assist counsel; provided,
however,
that
(i) such access to such employees shall not unreasonably interfere with the
normal conduct of the operations of Buyer and (ii) Seller shall reimburse
Buyer for the out-of-pocket costs reasonably incurred by Buyer in making
such
employees available to Seller. Without limiting the application of Section
6.1(d), all documents or information furnished by Buyer or obtained by Seller
or
its Representatives hereunder shall be subject to Section 6.1(d).
(c) Seller
Guarantees and Surety Instruments.
Buyer
shall use its commercially reasonable efforts to assist Seller in obtaining
full
and complete releases on the guarantees, letters of credit, bonds and other
surety instruments provided by Seller in connection with the Business or
for the
benefit of any Subsidiary, all of which have been listed by Seller on
Schedule 6.2(c).
For
purposes of this Section 6.2(c), commercially reasonable efforts shall include:
(i) Buyer’s assumption of the Contracts on the terms set forth in this
Agreement; and (ii) an obligation on the part of Buyer to provide a
guaranty, letter of credit, bond or other surety
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instrument
at Closing to the extent required by any Contract assumed by Buyer or retained
by any Subsidiary at Closing and, in general, no later than 90 days after
the
Closing Date but effective as of the Closing Date, an equivalent surety
instrument to be substituted for any surety instrument provided by Seller
to any
beneficiary in connection with the Business or for the benefit of any
Subsidiary. Buyer shall indemnify, defend and hold harmless Seller and its
Affiliates for any and all Losses (in each case without deduction or set
off)
incurred on account of Seller’s guarantees, letters of credit, bonds and other
surety instruments on or after the Closing Date insofar as such Losses relate
to
any failure of Buyer or any Subsidiary to perform or discharge any Assumed
Liability following the Closing.
Section
6.3 Governmental
Filings.
(a) HSR
Act Filing.
Buyer
and Seller shall use reasonable efforts to make an appropriate filing of
a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby within ten Business Days following the
execution of this Agreement. Buyer and Seller shall supply as promptly as
practicable any additional information or documentary material that may be
requested pursuant to the HSR Act and shall take all other actions necessary
to
cause the expiration or termination of the applicable waiting periods under
the
HSR Act as soon as practicable. Buyer and Seller shall comply substantially
with
any additional requests for information, including requests for production
of
documents and production of witnesses for interviews or depositions, made
by the
Antitrust Division of the United States Department of Justice, the United
States
Federal Trade Commission or the antitrust or competition law authorities
of any
other jurisdiction (the “Antitrust Authorities”) and take all other reasonable
actions to obtain clearance from the Antitrust Authorities, or if such clearance
cannot be obtained, to reach an agreement, settlement, consent providing
for
divestiture, a “hold separate” agreement, contractual undertakings with third
parties or any other relief with the concerned Antitrust Authority in order
to
permit the consummation of the transactions contemplated by this Agreement.
Buyer shall exercise its commercially reasonable efforts, and Seller shall
cooperate fully with Buyer, to prevent the entry in any Proceeding brought
by an
Antitrust Authority or any Governmental Body of an Order that would prohibit,
make unlawful or delay the consummation of the transactions contemplated
by this
Agreement. Seller shall not oppose any efforts of Buyer, including Buyer’s
proffer of consent to any Order, to complete lawfully the transactions
contemplated by this Agreement, and shall cooperate in good faith with Buyer
and
the Antitrust Authorities to the same effect. Notwithstanding the
foregoing, neither party shall be required to agree to any sale,
transfer, license, separate holding, divestiture or other disposition of,
or to
any prohibition of or any limitation on, the acquisition, ownership, operation,
effective control or exercise of full rights of ownership (each, a
“Divestiture”) relating (x) to the Business to the extent such Divestiture would
have a Material Adverse Effect thereon, (y) to The Narragansett Electric
Company
to the extent that such Divestiture constitutes other than an immaterial
restriction on the operations thereof, or (z) to any material business unit
of
such party or any subsidiary or Affiliate of such party to the extent that
such
Divestiture would have a material adverse effect thereon.
(b) Other
Regulatory Filings.
Buyer
and Seller will, as soon as reasonably practicable following the execution
of
this Agreement, but no later than twenty Business Days thereafter with respect
to the joint application to the Rhode Island Division of Public Utilities
and
Carriers, prepare and file with each Governmental Body requests for such
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Consents
as may be necessary for the consummation of the transactions contemplated
hereby
in accordance with the terms of this Agreement. Buyer and Seller will diligently
pursue such Consents and will cooperate with each other in seeking such
Consents. To such end, the parties agree to make available the personnel
and
other resources of their respective organizations in order to obtain all
such
Consents. Each party will promptly inform the other party of any communication
received by such party from, or given by such party to, any Governmental
Body
from which any such Consent is required and of any material communication
received or given in connection with any Proceeding by a private party, in
each
case regarding any of the transactions contemplated hereby, and will permit
the
other party to review any communication given by it to, and consult with
each
other in advance of any meeting or conference with, any such Governmental
Body
or, in connection with any Proceeding by a private party, with such other
Person, and to the extent permitted by such Governmental Body or other Person,
give the other party the opportunity to attend and to participate in such
meetings and conferences. Neither party shall take any action in connection
with
obtaining any Consent from any Governmental Body that is intended to create,
allocate, or shift to the other party any liability arising from the obtaining
of such Consent. Notwithstanding the foregoing, neither party shall be required
to agree to any divestiture of or material restriction on, a material business,
a material asset or a material group of related assets that, in any such
case,
is owned or operated by it or any of its Affiliates.
(c) Seller,
with the full cooperation of Buyer, shall take all commercially reasonable
actions necessary to effect the transfer or reissuance of any Permit required
for the operation of the Assets and the Business, including, without limitation,
all Environmental Permits, prior to the Closing Date, to the extent required
by
applicable Legal Requirements.
Section
6.4 Seller
Marks. No
later
than 180 days after the Closing Date, Buyer shall cease using any names,
marks,
trade names, trademarks and corporate symbols and logos incorporating “Southern
Union”, “Southern,” “SU,” “SUG,” “New England Gas Company” and “Negasco”
(collectively and together with all other names, marks, trade names, trademarks
and corporate symbols and logos owned by Seller or any of its Affiliates
(other
than the Subsidiaries), the “Seller Marks”); shall use commercially reasonable
efforts to remove from the Assets any and all Seller Marks and shall amend
the
relevant Organizational Documents of each Subsidiary to change the name of
each
Subsidiary to a name that does not include any Seller Xxxx or any name or
term
confusingly similar to any Seller Xxxx. Thereafter, except as required by
Legal
Requirement or Order or with the written consent of Seller, Buyer shall not
use
any Seller Xxxx or any name or term confusingly similar to any Seller Xxxx
in
connection with the sale of any products or services, in the corporate or
doing
business name of any of its Affiliates or otherwise in the conduct of its
or any
of its Affiliates’ businesses or operations. In the event that Buyer breaches
this Section 6.4, Seller shall be entitled to specific performance of this
Section 6.4 and to injunctive relief against further violations, as well
as any
other remedies at law or in equity available to Seller.
Section
6.5 Acknowledgment
by Buyer.
In
order
to induce Seller to enter into and perform this Agreement and the Related
Documents, Buyer acknowledges and agrees with Seller as follows:
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THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE V OF THIS AGREEMENT
CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF SELLER
TO
BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND BY THE
RELATED
DOCUMENTS, AND THERE ARE NO REPRESENTATIONS, WARRANTIES, COVENANTS,
UNDERSTANDINGS OR AGREEMENTS, ORAL OR WRITTEN, IN RELATION THERETO BETWEEN
THE
PARTIES OTHER THAN THOSE INCORPORATED HEREIN AND THEREIN. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE V OF THIS
AGREEMENT, BUYER DISCLAIMS RELIANCE ON ANY REPRESENTATIONS OR WARRANTIES,
EITHER
EXPRESS OR IMPLIED, BY OR ON BEHALF OF SELLER OR ITS AFFILIATES OR
REPRESENTATIVES. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER
ACKNOWLEDGES AND AGREES THAT, EXCEPT AS PROVIDED IN SECTIONS 5.11, 5.15,
5.16
AND 5.21 THERE ARE NO REPRESENTATIONS OR WARRANTIES OF SELLER WITH RESPECT
TO
THE CONDITION OF THE ASSETS, COMPLIANCE WITH ENVIRONMENTAL LAWS AND
ENVIRONMENTAL PERMITS OR THE PRESENCE OR RELEASES OF HAZARDOUS MATERIAL IN
THE
FIXTURES, SOILS, GROUNDWATER, SURFACE WATER OR AIR ON, UNDER OR ABOUT OR
EMANATING FROM ANY OF THE PROPERTIES OR ASSETS OF SELLER OR ANY
SUBSIDIARY.
Section
6.6 Transition
Plan.
Within
15
days after the execution date of this Agreement, Buyer shall deliver to Seller
a
list of its proposed representatives to a joint transition team, which shall
include individuals with expertise from various functional specialties
associated or involved in providing billing, payroll and other support services
provided to the Business by any automated or manual process using facilities
or
employees that are not included among the Assets or Transferred Employees.
Seller will add its representatives to such team within 15 days after receipt
of
Buyer’s list. Such team will be responsible for preparing as soon as reasonably
practicable after the execution date of this Agreement, and timely implementing,
a transition plan that will identify and describe substantially all of the
various transition activities that the parties will cause to occur before
and
after the Closing and any other transfer of control matters that any party
reasonably believes should be addressed in such transition plan, including
the
matters set forth on Exhibit
6.6.
Buyer
and Seller shall use their commercially reasonable efforts to cause their
Representatives on such transition team to cooperate in good faith and take
all
reasonable steps necessary to develop a mutually acceptable transition plan
by
no later than 60 days after the date of this Agreement. The terms and conditions
governing such transition activities will be more fully set forth in a
transition services agreement (the “Transition Services Agreement”) reasonably
satisfactory to the parties, including the matters set forth on Exhibit
6.6,
to be
executed and delivered by Buyer and Seller at the Closing.
Section
6.7 Purchase
of Leased Assets.
Buyer
and
Seller shall use commercially reasonable efforts to arrange for Buyer, on
the
Closing Date, to enter into new lease agreements covering the motor vehicles
and
other equipment listed on Schedule
6.7
and
leased by the lessors to Seller and/or any Subsidiary as identified on
Schedule
6.7
(the
“Leased Assets”), or if unable to do so, then for Buyer to
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purchase
any Leased Assets directly from any such lessor on, or promptly after, the
Closing Date upon Buyer’s payment directly to any lessor of the purchase price
for any of the Leased Assets under the applicable lease. Each party shall
be
responsible for one-half of any related transfer, registration, sales tax
or
similar fees associated with the transfer of such leases from Seller to
Buyer.
Section
6.8 Meter
Reading.
On
and
prior to the Closing Date, Seller shall read the customer meters in their
normal
cycle and in due course render the related bills to its customers served
by the
Business. Seller shall also read each daily read transportation customer
meter
(collectively, “Large Volume Meters”) on the day immediately preceding the
Closing Date. Seller shall provide Buyer with the last meter reading from
each
of the Large Volume Meters made on the day immediately preceding the Closing
Date as soon as practicable after the Closing Date. After the Closing Date,
Buyer shall read the customer meters for their first time, in the normal
cycle,
and in due course render bills for service during the period between Seller’s
last reading in the normal cycle and Buyer’s first reading in the normal cycle
to the customers. Buyer shall determine the volume of gas sold by Seller
prior
to the Closing Date through Large Volume Meters by Seller’s meter readings on
the day immediately preceding Closing Date. Buyer shall determine by allocation
the volumes of gas sold by Seller through all meters other than Large Volume
Meters, prior to the Closing Date, and the gas sold by Seller, on and after
the
Closing Date and prior to its first meter reading through meters without
charts.
Such allocation shall be consistent with Seller’s past practices for unbilled
revenues. Once such determinations have been made by Buyer, the estimated
amounts of accounts receivable and earned but unbilled revenue and any other
related payables or liabilities shall be adjusted based upon such determinations
for purposes of the Working Capital adjustment.
Section
6.9 Insurance.
(a) At
Buyer’s request, Seller agrees to use commercially reasonable efforts to assert
and diligently pursue all rights to insurance coverage under the Policies
(other
than with respect to Xxxxxxx’x Compensation and punitive damage policies) and
any
past
insurance policies of Seller relating to the Business or the Assets (such
Policies
and past insurance
policies shall collectively be referred to herein as the “Insurance Policies”)
with respect to insured claims asserted
prior to the Closing for
matters included in the Assumed Liabilities pursuant to Section 2.2(b)(v).
Seller
retains
the exclusive right, in its sole discretion, to make and settle insurance
claims
under past insurance policies for all
matters,
whether
relating to Assumed Liabilities or Retained Liabilities. As part of any such
settlement(s), Seller may relinquish all rights in and to such past insurance
policies with respect to such matters, including Assumed Liabilities. Seller
shall remit to Buyer insurance proceeds (net of Seller’s costs and expenses)
obtained by Seller after Closing with respect to such insured claims allocable
to the Assumed Liabilities, as determined by the insurers with whom such
claims
are settled (or in the absence of such allocation by the insurers, by Seller
in
proportion to the weight attributable to the claims related to the Assumed
Liabilities to the totality of Seller’s claims to such insurers), but in no
event shall Buyer be entitled to receive more than $4,000,000 (net of Seller’s
costs and expenses) in the aggregate in respect of the Business under such
past
insurance policies. Subject to the preceding sentence, Seller agrees to use
commercially reasonable efforts to negotiate with
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each
of
its insurance companies in order to provide Buyer the benefit of the coverage
under the Policies for all claims asserted on or after the Closing Date (to
the
extent available) and to cooperate with Buyer with any efforts to obtain
“tail”
coverage, all at Buyer’s sole cost, with respect to any “claims made policies.”
Seller shall provide access to Buyer to all of the non-privileged information
relating to these matters and shall consult with Buyer on the progress thereof
from time to time.
(b) After
the
Closing, Buyer shall be responsible for, and neither Seller nor any of its
Affiliates shall have any responsibility for, the payment of any deductible
amounts or underlying limits attributable to the Insurance Policies for claims
relating to Assumed Liabilities. Buyer acknowledges that certain of the
Insurance Policies may require Seller or any of its Affiliates to provide
an
indemnity to the insurance carrier for deductible amounts and to provide
collateral to secure such indemnity obligations. Buyer shall enter into an
indemnification agreement in form mutually acceptable to Buyer and Seller
wherein Buyer agrees to indemnify and hold harmless Seller or any of its
Affiliates (as applicable) for any and all of the costs of maintaining such
collateral and for any charges made against such collateral or indemnification
payments in connection with claims arising or alleged to arise from the
operations of the Business required to be paid by Seller of any of its
Affiliates (as applicable) under or with respect to such Insurance Policies
from
and after the Closing Date.
(c) Seller
makes no representation or warranty with respect to the applicability, validity
or adequacy of any Insurance Policies, and Seller shall not be responsible
to
Buyer or any of its Affiliates for the failure of any insurer to pay under
such
Insurance Policy.
(d) Nothing
in this Agreement is intended to provide or shall be construed as providing
a
benefit or release to any insurer or claims service organization of any
obligation under any Insurance Policy. Nothing herein shall be construed
as
creating or permitting any insurer or claims service organization the right
of
subrogation against Seller or Buyer or any of their Affiliates in respect
of
payments made by one to the other under any Insurance Policy.
Section
6.10 Risk
of Loss.
The
risk
of any loss, damage, impairment, confiscation or condemnation of any of the
Assets from any cause whatsoever shall be borne by Seller at all times prior
to
the Closing, and by Buyer at all times thereafter. If any such loss, damage,
impairment, confiscation or condemnation occurs, Seller shall apply the proceeds
of any insurance policy, judgment or award with respect thereto to impair,
replace or restore the Assets as soon as possible to their prior condition;
provided,
however,
anything contained in this Agreement to the contrary notwithstanding, Seller
shall not be obligated to expend sums in excess of the proceeds of any insurance
policy, judgment or award with respect to any loss, damage, impairment,
confiscation or condemnation of any of the Assets in order to repair, replace
or
restore such Assets to their prior condition. The provisions of this Section
6.10 shall apply in the event (“Casualty Event”) of any damage or destruction to
the Assets which would result in the nonsatisfaction of a condition precedent
to
Buyer's obligation to consummate this Agreement. If a Casualty Event shall
occur, Buyer at its option, may proceed to close this Agreement on the Closing
Date, in which event Seller shall pay or assign to Buyer the proceeds from
any
insurance policies
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covering
Assets subject to the Casualty Event to the extent such proceeds are received
by
or payable to Seller and have not been used in or committed to the restoration
or replacement of Assets subject to the Casualty Event as of the Closing
Date.
Section
6.11 Outstanding
Payments and Bank Accounts.
(a) Notwithstanding
anything contained herein to the contrary, (i) all of the bank accounts and
lock
boxes of Seller used in or in connection with the Business shall be considered
“Assets” for the purposes of this Agreement and shall be transferred to Buyer at
the Closing, (ii) any checks that are in the possession of Seller at the
Closing
that relate to accounts receivable (or any other asset) included in the Assets
shall be transferred to Buyer at the Closing and (iii) any checks that are
in
the possession of Seller at the Closing that relate to accounts receivable
(or
any other asset) not included in the Assets shall be retained by
Seller.
(b) From
and
after the Closing, (i) if Seller or any of its Affiliates receives or collects
any funds relating to any accounts receivable (or any other asset) included
in
the Assets, Seller or its Affiliates shall remit any such amounts to Buyer
as
promptly as practicable but no later than ten (10) days after Seller or any
of
its Affiliates receives such sum, and (ii) Seller and its Affiliates shall
promptly forward all mail, remittances, receipts or other mailings received
by
any of them relating to the Business to Buyer.
Section
6.12 Collective
Bargaining Agreements.
Seller
has advised Buyer that Seller (a) intends to negotiate a renewal or extension
of
that certain collective bargaining agreement listed on Schedule
6.12(a)
and (b)
intends to negotiate an early renewal or extension of that certain collective
bargaining agreement listed on Schedule
6.12(b).
Seller
agrees to negotiate such renewals or extensions diligently to achieve
commercially reasonable terms and conditions consistent with past practice.
Seller shall give Buyer access to all information relating to the renewals
or
extensions of any such collective bargaining agreement and shall permit Buyer
to
consult with Seller and its counsel on the progress thereof from time to
time.
Notwithstanding the foregoing, Seller shall have discretion to conduct such
negotiations in the manner consistent with the foregoing standards, but Seller
shall not enter into any such renewal or extension without the prior written
consent of Buyer , such consent not to be unreasonably withheld.
Section
6.13 Alternative
Proposals.
(a) Seller
agrees that it shall not, and Seller shall cause its Affiliates and its and
its
Affiliates' respective Representatives not to, (i) directly or indirectly
initiate, solicit, knowingly encourage or facilitate (including by way of
furnishing information) any inquiries or the making or submission of any
proposal that constitutes, or could reasonably be expected to lead to, an
Alternative Proposal, (ii) participate or engage in discussions or negotiations
with, or disclose any non-public information or data relating to Seller or
any
of its Affiliates or afford access to the properties, books or records of
Seller
or any of its Affiliates to any Person that has made an Alternative Proposal
or
to any Person in contemplation of an Alternative Proposal, or (iii) accept
an
Alternative Proposal or enter into any agreement, including any letter of
intent, memorandum of understanding, agreement in principle, merger agreement,
acquisition
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agreement,
option agreement, joint venture agreement, partnership agreement or other
similar agreement, arrangement or understanding, (A) constituting or related
to,
or that is intended to or could reasonably be expected to lead to, any
Alternative Proposal or (B) requiring, intended to cause, or which could
reasonably be expected to cause Seller to abandon, terminate or fail to
consummate the sale and transfer of the Assets and Stock to Buyer or any
other
transaction contemplated by this Agreement.
(b) Seller
shall advise Buyer in writing promptly (but in no event more than the later
of
24 hours after Seller's or any Affiliate's receipt thereof) of (i) any request
for information by any Person in contemplation of an Alternative Proposal,
(ii)
any Alternative Proposal received from any Person, (iii) the terms and
conditions of any such request or proposal, and (iv) the identity of the
Person
or group making any such request, Alternative Proposal or inquiry, and Seller
shall promptly provide to Buyer copies of any written materials received
in
connection with any of the foregoing.
(c) For
purposes of this Agreement, “Alternative Proposal” shall mean any bona fide
proposal, whether or not in writing, for the (i) direct or indirect acquisition
or purchase of any assets that constitute 10% or more of the net revenues,
net
income or the assets (based on the fair market value thereof) of the Business,
or (ii) direct or indirect acquisition or purchase of any of the Stock;
provided,
however,
that
“Alternative Proposal” shall not be deemed to include any proposal to engage in
any merger, consolidation, restructuring, or other business combination
transaction, sale of shares of capital stock (other than any tracking or
similar
shares related in whole or in part to the Business or any part thereof),
tender
offer, exchange offer, recapitalization, stock repurchase program or other
similar transaction involving Seller, so long as such transaction would not
result in Seller ceasing to own and conduct all or any part of the Business
or
ceasing to own all or any part of the Assets or Stock.
(d) Immediately
after the execution and delivery of this Agreement, Seller shall, and shall
instruct its Affiliates and its and their respective Representatives to,
terminate any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any possible Alternative Proposal.
ARTICLE
VII
CONDITIONS
PRECEDENT
Section
7.1 Seller’s
Conditions Precedent to Closing.
The
obligation of Seller to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment at or prior to the Closing of the
following conditions, any one or more of which may be waived in writing by
Seller:
(a) Representations
and Warranties True as of the Closing Date.
Buyer’s
representations and warranties in this Agreement shall have been true and
correct in all material respects as of the date of this Agreement and shall
be
true and correct in all material respects as of the Closing Date as if made
on
the Closing Date, subject to changes expressly contemplated and permitted
by
this Agreement, except that representations and warranties made
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as
of, or
in respect of, only a specified date or period shall be true and correct
in all
material respects as of, or in respect of, such date or period.
(b) Compliance
with Agreements.
The
covenants, agreements and conditions required by this Agreement and the Employee
Agreement to be performed and complied with by Buyer shall have been performed
and complied with in all material respects prior to or at the Closing
Date.
(c) Certificate.
Buyer
shall execute and deliver to Seller a certificate of an authorized officer
of
Buyer, dated the Closing Date, stating that the conditions specified in Sections
7.1(a) and 7.1(b) of this Agreement have been satisfied.
(d) Governmental
Approvals.
Buyer
and Seller shall have each obtained all Consents of Governmental Bodies by
Final
Order that are required in order to consummate the transactions contemplated
hereby and to transfer the Assets and the Stock to Buyer without Seller
incurring material liability under any Legal Requirement or Order.
(e) HSR
Act.
The
applicable waiting period under the HSR Act with respect to the transactions
contemplated hereby shall have expired or have been terminated.
(f) No
Injunctions.
On the
Closing Date, there shall be no Orders that operate to restrain, enjoin or
otherwise prevent the consummation of the transactions contemplated by this
Agreement.
(g) Seller’s
Stockholder Approval.
This
Agreement and the transactions contemplated hereby shall have been approved
by
the affirmative vote of the holders of at least two-thirds (2/3s) of the
issued
and outstanding shares of Seller's common stock (the “Seller’s Stockholder
Approval”), if required by the Rhode Island Division of Public Utilities and
Carriers.
(h) Third
Party Consents.
Seller
shall have obtained all Consents of Persons (other than Governmental Bodies)
listed on Schedule
5.3
that are
required in order to consummate the transactions contemplated hereby without
incurring material liability to obtain such Consents and such Consents shall
remain in full force and effect, other than those the failure of which to
obtain
or keep in full force and effect would not, individually or in the aggregate,
have a Material Adverse Effect.
(i) Documents.
Buyer
shall have delivered or shall stand ready to deliver all the certificates,
instruments, Contracts and other documents specified to be delivered by it
hereunder on or before the Closing Date, including pursuant to Section 8.1,
and
shall have taken such actions as Seller may have requested pursuant to Section
11.2.
(j) Proceedings
Seeking an Injunction.
No
action or proceeding initiated by any Governmental Body seeking an Order
prohibiting the consummation of the transactions contemplated by this Agreement
shall be pending.
Section
7.2 Buyer’s
Conditions Precedent to Closing.
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The
obligation of Buyer to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment at or prior to the Closing of the
following conditions, any one or more of which may be waived in writing by
Buyer:
(a) Representations
and Warranties.
(i) the
representations and warranties of Seller set forth in the first and second
sentences of Section 5.4(a) and the first sentence of Section 5.5(a) of this
Agreement shall be true and correct, in each case, both at and as of the
date of
this Agreement and at and as of the Closing Date, as if made at and as of
such
time; and (ii) the representations and warranties of Seller set forth in
this
Agreement (other than the representations and warranties of Seller set forth
in
the first and second sentences of Section 5.4(a) and the first sentence of
Section 5.5(a)) shall be true and correct (without giving effect to any
limitation as to “materiality” or “Material Adverse Effect” set forth therein)
both at and as of the date of this Agreement and at and as of the Closing
Date,
as if made at and as of such time (except to the extent expressly made as
of an
earlier date, in which case as of such date), except where the failure of
such
representations and warranties to be so true and correct (without giving
effect
to any limitation as to “materiality” or “Material Adverse Effect” set forth
therein) individually or in the aggregate has not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect.
(b) Compliance
with Agreements.
The
covenants, agreements and conditions required by this Agreement or the Employee
Agreement to be performed and complied with by Seller shall have been performed
and complied with in all material respects prior to or at the Closing
Date.
(c) Certificate.
Seller
shall execute and deliver to Buyer a certificate of an authorized officer
of
Seller, dated the Closing Date, stating that the conditions specified in
Sections 7.2(a) and 7.2(b) of this Agreement have been satisfied.
(d) Governmental
Approvals.
Buyer
and Seller shall have each obtained all Consents of Governmental Bodies by
Final
Order that are required in order to consummate the transactions contemplated
hereby. Such Consents of Governmental Bodies shall contain no condition that
could reasonably be expected to have a material adverse effect on the Assets
or
the Business or Buyer or any of its Affiliates.
(e) HSR
Act.
The
applicable waiting period under the HSR Act with respect to the transactions
contemplated hereby shall have expired or have been terminated.
(f) No
Injunctions.
On the
Closing Date, there shall be no Orders that operate to restrain, enjoin or
otherwise prevent the consummation of the transactions contemplated by this
Agreement.
(g) Documents.
Seller
shall have delivered or shall stand ready to deliver all of the certificates,
instruments, Contracts and other documents specified to be delivered by it
hereunder, including pursuant to Section 8.1.
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(h) No
Material Adverse Effect.
No
occurrence or condition (alone or together with other occurrences or conditions)
giving rise to a Material Adverse Effect shall have occurred since the date
of
this Agreement; for the avoidance of doubt, the failure of Buyer or its designee
to have a tariff (including reasonable evidence of the existence of such
tariff)
sufficient to generate revenues to operate the Business after Closing will
be
deemed to be a Material Adverse Effect.
(i) Third
Party Consents.
Seller
shall have obtained all Consents of Persons (other than Governmental Bodies)
that are required under any loan or credit agreement, note, mortgage, indenture,
lease, license, charter or other agreement or instrument in order to consummate
the transactions contemplated hereby and such Consents shall remain in full
force and effect, other than those the failure of which to obtain or keep
in
full force and effect would not, individually or in the aggregate, have a
Material Adverse Effect.
(j) Proceedings
Seeking an Injunction.
No
action or proceeding initiated by any Governmental Body seeking an Order
prohibiting the consummation of the transactions contemplated by this Agreement
shall be pending.
ARTICLE
VIII
CLOSING
Section
8.1 Closing.
The
closing of the purchase and sale of the Assets (the “Closing”) will take place
at the offices of Xxxxxxxxxx and Xxxxx, L.L.P., 0000 Xxxxxxxxxxxx Xxxxxx,
X.X.,
Xxxxx 000, Xxxxxxxxxx, X.X. 00000, on the fifth business day after the date
on
which the conditions specified in Sections 7.1 and 7.2 (excluding conditions
that, by their terms, cannot be satisfied until the Closing) are satisfied
or
waived, unless another time, date and place is agreed to in writing by the
parties; provided,
however,
that
neither Seller nor Buyer shall be required to close the transactions
contemplated by this Agreement until all conditions to the obligations of
Seller
or Buyer, as the case may be, shall have been satisfied or waived in accordance
with the provisions of Article VII. Buyer shall have the right to designate
any
of its Subsidiaries to execute any documents or perform any actions on its
behalf pursuant to this Section 8.1; provided
that
such designation shall not relieve Buyer of any of its obligations hereunder.
The date of the Closing is referred to in this Agreement as the “Closing Date.”
The transactions to be consummated on the Closing Date shall be deemed to
have
been consummated as of 12:01 a.m., local time, on the Closing Date. At the
Closing, the following events shall occur, each event being deemed to have
occurred simultaneously with the other events.
(a) Xxxx
of Sale; Collective Bargaining Agreement Assignment and
Assumption.
Seller
and Buyer shall execute and deliver a xxxx of sale and assignment and assumption
agreement in a form reasonably acceptable to the parties. Seller and Buyer
shall
execute and deliver assignment and assumption agreements relating to all
collective bargaining agreements listed on Schedule
5.14(a)
(or any
successor agreement entered into in accordance with Section 6.12 of this
Agreement) in a form reasonably acceptable to the parties.
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(b) Stock
Certificates; Resignations; FIRPTA.
Seller
shall deliver to Buyer: (i) the certificates representing the Stock, duly
and
validly endorsed to or registered in the name of Buyer or its nominees or
accompanied by separate stock powers duly and validly executed by Seller,
(ii)
letters of resignation, effective as of the Closing Date, from each director
and
each officer of each Subsidiary and (iii) a certification of its non-foreign
status as set forth in Section 1445 of the IRC and the Treasury regulations
promulgated thereunder.
(c) Transition
Services Agreement.
Seller
and Buyer shall execute and deliver the Transition Services Agreement in
a form
reasonably acceptable to the parties.
(d) Litigation
Support Agreement.
Seller
and Buyer shall execute and deliver the Litigation Support Agreement,
substantially in the form attached hereto as Exhibit
8.1(d).
(e) Payment
of Estimated Purchase Price.
Buyer
will pay to Seller an amount equal to the Estimated Purchase Price by wire
transfer, in lawful money of the United States of America in immediately
available funds, to such account as Seller shall have designated by notice
to
Buyer. Notwithstanding any other provision of this Agreement, if Seller does
not
deliver the certificates described in clause (iii) of Section 8.1(b) at or
prior
to the Closing, Buyer shall be permitted to withhold from the Estimated Purchase
Price the amount required to be withheld pursuant to Section 1445 of the
IRC as
calculated by Buyer in good faith.
(f) Other
Related Documents.
To the
extent consistent with the other provisions of this Agreement, Seller (or
the
appropriate Affiliate of Seller) and Buyer shall execute and deliver such
other
Related Documents and shall obtain and deliver such other certificates
reasonably requested by a party that are necessary in order to satisfy any
applicable Legal Requirements relating to the transfer of the Assets or the
Stock to Buyer or the assumption of the Assumed Liabilities by Buyer;
provided,
however,
that
nothing in this clause (f) shall obligate Seller or any Affiliate of Seller
to
execute or deliver any document that affects, in a manner adverse to Seller,
Seller’s liability to Buyer as expressed herein.
ARTICLE
IX
TERMINATION
Section
9.1 Termination
Rights.
This
Agreement may be terminated in its entirety at any time prior to the
Closing:
(a) By
the
mutual written agreement of Seller and Buyer;
(b) By
Buyer,
on the one hand, or Seller, on the other hand, in writing if there shall
be in
effect a nonappealable Order prohibiting, enjoining or restricting the
transactions contemplated by this Agreement;
(c) By
either
party in writing if there shall have been a material breach of or any inaccuracy
in any of the representations or warranties set forth in this Agreement on
the
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part
of
the other party, which breach is not cured within 30 days following receipt
by
the breaching party of written notice of such breach from the terminating
party,
or which breach, by its nature, cannot be cured prior to the Closing;
provided,
however,
that
neither party shall have the right to terminate this Agreement pursuant to
this
Section 9.1(c) unless the breach of representation or warranty, together
with
all other such breaches, would entitle the party receiving such representation
not to consummate the transactions contemplated by this Agreement under Section
7.2(a) (in the case of a breach of representation or warranty by Seller)
or
Section 7.1(a) (in the case of a breach of representation or warranty by
Buyer)
and provided,
further,
that
the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein;
(d) By
either
party in writing if there shall have been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of the other
party, which breach shall not have been cured within 30 days following receipt
by the breaching party of written notice of such breach from the terminating
party, or which breach, by its nature, cannot be cured prior to the Closing
(provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein);
(e) By
either
party in writing if the Closing has not occurred by August 25, 2006 (the
“Upset
Date”); provided,
however,
that the
right to terminate this Agreement under this Section 9.1(e) will not be
available to any party that is in material breach of its representations,
warranties, covenants or agreements contained herein; and provided further
that
in the event either party's conditions precedent to Closing set forth in
Sections 7.1(d) or 7.1(e) or Sections 7.2(d) or 7.2(e) have not been satisfied
prior to the Upset Date but are reasonably capable of being satisfied
thereafter, then either party may, following written notice to the other,
extend
the Upset Date in thirty day increments (up to an aggregate of 120
days);
(f) By
Seller, if at Closing Buyer fails to make the payments required to be made
by
Buyer at Closing; or
(g) By
Buyer,
on the one hand, or Seller, on the other hand, in writing if Seller’s
Stockholder Approval is not obtained upon the taking of such vote at the
Southern Union Company stockholders’ meeting held for the purposes of obtaining
such Seller’s Stockholder Approval or any adjournment or postponement thereof;
provided
that the
right to terminate this Agreement pursuant to this Section 9.1(g) shall not
be
available to Seller if it has not complied with its obligations under Section
6.1(f).
Section
9.2 Limitation
on Right to Terminate; Effect of Termination.
(a) A
party
shall not be allowed to exercise any right of termination pursuant to Section
9.1 if the event giving rise to the termination right shall be due to the
willful failure of such party seeking to terminate this Agreement to perform
or
observe in any material respect any of the covenants or agreements hereunder
to
be performed or observed by such party.
(b) If
this
Agreement is terminated as permitted under Section 9.1, such termination
shall
be without liability of or to any party to this Agreement, or any shareholder
or
Representative of such party; provided,
however,
that if
such termination shall
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result
from the willful failure of any party to fulfill a condition to the performance
of any other party or to perform a covenant of this Agreement or from a material
and willful breach by any party to this Agreement (it being understood that
the
failure to cure a breach shall not, by itself, be a willful breach of this
Agreement), then such party shall (subject to the last sentence of this Section
9.2(b)) be fully liable for any and all damages sustained or incurred by
the
other party. If prior to Closing either party to this Agreement resorts to
legal
proceedings to enforce this Agreement, the prevailing party in such proceedings
shall be entitled to recover all costs incurred by such party including
reasonable attorney’s fees, in addition to any other relief to which such party
may be entitled; provided,
however,
and
notwithstanding anything to the contrary in this Section 9.2(b), in no event
shall either party be entitled to receive any punitive, exemplary, special,
remote, speculative, indirect or consequential damages (including any damages
on
account of lost profits or opportunities) in connection with any termination
of
this Agreement.
ARTICLE
X
EMPLOYEE
MATTERS
Section
10.1 Employee
Agreement.
The
parties have addressed the transfer of employees and employee benefit matters
in
a separate agreement, entitled Employee Agreement, executed and delivered
of
even date herewith, the terms and provisions of which agreement are incorporated
into this Agreement as if fully set forth herein and a copy of which is attached
hereto as Exhibit
10.1
(the
“Employee Agreement”).
ARTICLE
XI
TAX
MATTERS
Section
11.1 Purchase
Price Allocation.
Within
180 days after the Closing Date, Buyer and Seller shall use their good faith
efforts to agree upon the allocation (the “Allocation”) of the Purchase Price to
the individual assets or classes of assets within the meaning of Section
1060 of
the IRC and the Treasury Regulations thereunder. If Buyer and Seller agree
to
such Allocation, Buyer and Seller covenant and agree that (a) the values
assigned to the assets by the parties’ mutual agreement shall be conclusive and
final for all purposes, (b) neither Buyer nor Seller will take any position
before any Governmental Body or in any Proceeding that is in any way
inconsistent with such Allocation and (c) Buyer and Seller shall file all
federal, state, local and foreign Tax Returns and IRS Forms 8594 and 8883
(and
any similar forms required for state or local Tax purposes) in accordance
with
the Allocation. Notwithstanding the foregoing, if Buyer and Seller cannot
agree
to an Allocation, Buyer and Seller covenant and agree to file, and to cause
their respective Affiliates to file, all Tax Returns and schedules thereto
(including, for example, amended returns, claims for refund, and those returns
and forms required under Section 1060 of the IRC and any Treasury regulations
promulgated thereunder) consistent with each of such party’s good faith
Allocations, unless otherwise required because of a change in any Legal
Requirement. Each of Buyer and Seller agrees to provide the other promptly
with
any other information reasonably required to complete Form 8594 and Form
8883
(and any similar forms required for state or local Tax
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purposes).
Each of Buyer and Seller shall notify the other in the event of an examination,
audit or other proceeding regarding the Allocation determined under this
Section
11.1.
Section
11.2 Cooperation
with Respect to Like-Kind Exchange.
Buyer
agrees that Seller may, at Seller’s election prior to the Closing Date, direct
that all or a portion of the Purchase Price be delivered to a “qualified
intermediary” (as defined in Treasury Regulation Section 1.1031(k) - 1(g)(4)) in
order to enable Seller’s relinquishment of the Assets to qualify as part of a
like-kind exchange of property covered by Section 1031 of the IRC. If Seller
so
elects, Buyer shall cooperate with Seller in connection with Seller’s efforts to
effect such like-kind exchange, which cooperation shall include, without
limitation, taking such actions as Seller requests in order to enable Seller
to
qualify such transfer as part of a like-kind exchange of property covered
by
Section 1031 of the IRC (including any actions required to facilitate the
use of
a “qualified intermediary”); provided,
however,
that
Buyer shall have no obligation to take (or agree to take) any action that,
in
its reasonable discretion, may create any adverse consequences to Buyer,
including but not limited to adverse Tax, financial or regulatory consequences
for the transactions contemplated by this Agreement. Notwithstanding anything
herein, the structuring of the transactions in a manner that qualifies the
transactions as part of a like-kind exchange shall not be a condition to
Closing. Buyer agrees that Seller may assign all or part of its rights and
delegate all or part of its obligations under this Agreement to a person
or
entity acting as a qualified intermediary to qualify the transfer of the
Assets
as part of a like-kind exchange of property covered by Section 1031 of the
IRC.
Any and all representations, obligations, agreements, warranties and covenants
made by Seller to Buyer in connection with this Agreement shall remain in
full
force and effect and continue to inure to the benefit of Buyer, notwithstanding
any assignment of this Agreement to a third party in connection with such
Section 1031 exchange. Nothing in this Section 11.2 shall in any manner relieve
Seller from any of its obligations under this Agreement, and Seller shall
remain
primarily liable to Buyer pursuant to the terms of this Agreement. Buyer
and
Seller agree in good faith to use reasonable efforts to coordinate the
transactions contemplated by this Agreement with any other transactions engaged
in by either Buyer or Seller; provided that such efforts do not result in
an
unreasonable delay in the consummation of the transactions contemplated by
this
Agreement. Seller shall indemnify and hold Buyer harmless from any out-of-pocket
cost or expense (including but not limited to legal fees, opinions of counsel
or
other costs incurred in implementing any transaction under this Section 11.2),
or any obligation or liability incurred by Buyer in connection with any action
taken by Buyer under Section 11.2 or such Section 1031 exchange. Notwithstanding
anything to the contrary in this Section 11.2, in no event shall Seller transfer
title to any of the Assets to any Person other than directly to Buyer or
its
designee.
Section
11.3 Transaction
Taxes.
All
transfer, documentary, recording, notarial, sales, use, registration, stamp
and
other similar taxes, fees and expenses (including, but not limited to, all
applicable stock transfer, real estate transfer or gains Taxes and including
any
penalties, interest and additions to such tax) (“Transaction Taxes”) incurred in
connection with this Agreement and the transactions contemplated hereby shall
be
borne one-half by Buyer and one-half by Seller, regardless of whether the
Tax
authority seeks to collect such Taxes from Seller or Buyer. Buyer and Seller
shall cooperate in timely making and filing all Tax Returns as may be required
to comply with
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the
provisions of laws relating to such Transaction Taxes. Seller shall prepare
all
tax filings related to any Transaction Taxes. Fifteen days prior to making
such
filings, Seller shall provide to Buyer Seller’s work papers for Buyer’s review
and approval. Buyer shall also be responsible for (a) administering the
payment of such Transaction Taxes, (b) defending or pursuing any proceedings
related thereto and (c) paying any expenses related thereto. Seller shall
give
prompt written notice to Buyer of any proposed adjustment or assessment of
any
Transaction Taxes with respect to the transaction, or of any examination
of said
transaction in a sales, use, transfer or similar Tax audit. In any proceedings,
whether formal or informal, Seller shall permit Buyer to participate and
control
the defense of such proceeding and shall take all actions and execute all
documents required to allow such participation. Seller shall not negotiate
a
settlement or compromise of any Transaction Taxes without the prior written
consent of Buyer, which consent shall not be unreasonably withheld or
delayed.
Section
11.4 Real
and Personal Property Taxes.
All
real
(including public utility realty tax) and personal property Taxes and
assessments arising with respect to the Assets and the assets of Subsidiary
and
any similar utility Taxes of any other jurisdiction shall be prorated between
Buyer and Seller based on the relative periods of time the Assets were owned
by
each respective party or their respective Affiliates during the fiscal period
for which such Taxes are imposed by the applicable taxing jurisdiction (as
such
fiscal period is or may be reflected on the xxxx rendered by such taxing
jurisdiction, but in the case of Taxes imposed based on the specific day
of
ownership of assets, a fiscal period shall be deemed to be the 365 day period
ending with such date). Upon receipt by Buyer of the tax xxxx, invoice or
other
statement regarding such real and personal property Taxes, Buyer shall calculate
the pro
rata
share of
such tax xxxx, invoice or other statement attributable to Buyer and Seller.
Buyer then shall forward, as soon as practicable, to Seller a copy of such
tax
xxxx, invoice or statement along with the supporting documentation relating
to
the calculation of the pro
rata
share to
Seller. Seller then shall forward to Buyer payment in immediately available
funds of its pro
rata
share of
such Taxes as soon as practicable in advance of the due date of the tax xxxx,
invoice or statement and in time to avoid the incurrence of penalties or
interest. Upon its receipt of such payment, Buyer will pay the full amount
of
the tax xxxx, invoice or statement to the applicable taxing authority. In
the
event Seller first receives a tax xxxx, invoice or statement relating to
the
Assets from a taxing authority, Seller shall immediately forward such tax
xxxx,
invoice or statement to Buyer.
Section
11.5 Other
Taxes.
Except
as
otherwise provided in Sections 11.3 and 11.4, Seller shall indemnify Buyer
from
and against and in respect of any and all losses incurred by Buyer, which
may be
imposed on, sustained, incurred or suffered by or assessed against Buyer,
directly or indirectly, to the extent relating to or arising from (a) all
Taxes
(or the non-payment thereof) of Seller and its Subsidiaries or with respect
to
the Assets for all taxable periods ending on or before the Closing Date and,
with respect to any Straddle Period, the portion of such Straddle Period
deemed
to end on and include the Closing Date (“Pre-Closing Tax Period”), (b) all Taxes
of any member of an affiliated, consolidated, combined or unitary group of
which
Seller or any its Subsidiaries (or any predecessor of any of the foregoing)
is
or was a member on or prior to the Closing Date, including pursuant to Treasury
Regulation §1.1502-6 or any analogous or similar state, local, or
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foreign
law or regulation, (c) any and all Taxes of any Person (other than Seller
and
its Subsidiaries) imposed on Seller or its Subsidiaries as a transferee or
successor, by contract or pursuant to any law, rule, or regulation, which
Taxes
relate to an event or transaction occurring on or before the Closing, (d)
any
Taxes of Seller that do not relate to the Business or the Assets purchased
pursuant to this Agreement, and (e) any breach or inaccuracy in the
representations and warranties set forth in Section 5.9.
Section
11.6 Straddle
Period.
In
the
case of any taxable period that includes (but does not end on) the Closing
Date
(a “Straddle Period”), the amount of any Taxes based on or measured by income or
receipts of Seller and its Subsidiaries for the Pre-Closing Tax Period shall
be
determined based on an interim closing of the books as of the close of business
on the Closing Date (and for such purpose, the taxable period of any partnership
or other pass-through entity in which Seller or its Subsidiaries holds a
beneficial interest shall be deemed to terminate at such time) and the amount
of
other Taxes of Seller and its Subsidiaries for a Straddle Period that relates
to
the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for
the
entire taxable period multiplied by a fraction the numerator of which is
the
number of days in the taxable period ending on and including the Closing
Date
and the denominator of which is the number of days in such Straddle
Period.
Section
11.7 Cooperation
on Tax Matters.
Buyer,
the Seller and its Subsidiaries shall cooperate fully, as and to the extent
reasonably requested by the other Party, in connection with the filing of
Tax
Returns pursuant to this Article XI and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other Party's request) the provision of records and information
that are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder.
Section
11.8 Tax
Returns.
Except
as
otherwise provided in Sections 11.3 and 11.4,
(a) Seller
shall prepare and file or cause to be prepared and filed when due (including
extensions) all Tax Returns that are required to be filed by the Seller or
the
Subsidiaries with respect to the Assets or Subsidiaries for taxable years
or
periods ending on or before the Closing Date, and Seller shall remit or cause
to
be remitted any Taxes due in respect of such Tax Returns. All such Tax Returns
shall be prepared in a manner consistent with past practice.
(b) Buyer
shall prepare and file or cause to be prepared and filed when due all Tax
Returns that are required to be filed by the Subsidiaries or with respect
to the
Assets for taxable years or periods ending after the Closing Date, and Buyer
shall remit or cause to be remitted any Taxes due in respect of such Tax
Returns.
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(c) Upon
the
written request of Buyer setting forth in detail the computation of the amount
owed, Seller shall pay to Buyer, no later than five (5) days prior to the
due
date for the applicable Tax Return, the Taxes for which Seller is liable
pursuant to Section 11.5 but which are payable with any Tax Return to be
filed
by Buyer with respect to any Straddle Period.
Section
11.9 Effect
of Indemnity Payments.
Buyer
and
Seller hereby agree that any and all indemnity payments made pursuant to
this
Agreement shall, to the maximum extent permitted by applicable law, be treated
for all Tax purposes as an adjustment to the Purchase Price.
Section
11.10 Survival
of Obligations.
Notwithstanding
any other provision of this Agreement, the obligations of Buyer and Seller
set
forth in this Article XI shall not be subject to any restrictions or limitations
other than those expressly set forth in this Article XI and shall survive
the
Closing.
Section
11.11 Dispute
Resolution.
In
the
event that Seller and Buyer disagree as to the amount or calculation of any
payment to be made under this Agreement relating to Taxes, or the interpretation
or application of any provision under this Agreement relating to Taxes, the
Parties shall attempt in good faith to resolve such dispute. If such dispute
is
not resolved within sixty (60) days following the commencement of the dispute,
Seller and Buyer shall jointly retain a nationally recognized law or accounting
firm, which firm is independent of both parties (the “Independent Firm”), to
resolve the dispute. The Independent Firm shall act as an arbitrator to resolve
all points of disagreement and its decision shall be final and binding upon
all
parties involved. Following the decision of the Independent Firm, Seller
and
Buyer shall each take or cause to be taken any action necessary to implement
the
decision of the Independent Firm. The fees and expenses relating to the
Independent Firm shall be borne equally by Seller and Buyer.
Section
11.12 Termination
of Tax Agreements.
All
Tax
allocation, Tax sharing, Tax indemnity or similar agreements between Seller
or
any of its Affiliates (other than the Subsidiaries), on the one hand, and
the
Subsidiaries, on the other hand, shall be terminated with respect to the
Subsidiaries prior to the Closing Date, and, after the Closing Date, neither
Seller or any of its Affiliates (other than the Subsidiaries), on the one
hand,
nor the Subsidiaries, on the other hand, shall be bound thereby or have any
further liability or obligation thereunder to the other party with respect
to
periods prior to the Closing Date.
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ARTICLE
XII
INDEMNIFICATION
Section
12.1 Indemnification
by Seller.
From
and
after Closing and subject to the other provisions of this Article XII, Seller
shall indemnify and hold harmless Buyer, its Representatives, Affiliates
(which
after the Closing shall include the Subsidiaries), successors and permitted
assigns (collectively, the “Buyer Indemnitees”) from and against any and all
Losses actually incurred by a Buyer Indemnitee, and resulting from:
(a) (i)
any
representations and warranties made by Seller in this Agreement or in any
certificate furnished by or on behalf of Seller to Buyer pursuant to this
Agreement not being true and correct when made, or (ii) any representations
and
warranties made by Seller in this Agreement not being true and correct as
of the
Closing Date, each of which representations and warranties will be deemed
for
purposes of this Section 12.1(a)(ii) to have been made by Seller as of the
Closing Date, except that those representations and warranties that are made
as
of a specific date will be deemed for purposes of this Section 12.1(a)(ii)
to
have been made by Seller as of such date;
(b) any
breach or default by Seller in the performance of its covenants, agreements,
or
obligations under this Agreement, the Employee Agreement or the Transition
Services Agreement;
(c) the
Retained Liabilities; and
(d) the
Excluded Assets.
Section
12.2 Indemnification
by Buyer.
From
and
after Closing and subject to the other provisions of this Article XII, Buyer
shall indemnify and hold harmless Seller, its Representatives, Affiliates,
successors and permitted assigns (collectively, the “Seller Indemnitees”) from
and against any and all Losses actually incurred by a Seller Indemnitee,
and
resulting from:
(a) (i)
any
representations and warranties made by Buyer in this Agreement or in any
certificate furnished by or on behalf of Buyer to Seller pursuant to this
Agreement not being true and correct when made, or (ii) any representations
and
warranties made by Buyer in this Agreement not being true and correct as
of the
Closing Date, each of which representations and warranties will be deemed
for
purposes of this Section 12.2(a)(ii) to have been made by Buyer as of the
Closing Date, except that those representations and warranties that are made
as
of a specific date will be deemed for purposes of this Section 12.2(a)(ii)
to
have been made by Buyer as of such date;
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(b) any
breach or default by Buyer in the performance of its covenants, agreements,
or
obligations under this Agreement, the Employee Agreement or the Transition
Services Agreement; and
(c) the
Assumed Liabilities.
Section
12.3 Limitations
on Seller’s Liability.
Notwithstanding
anything to the contrary in this Agreement, the liability of Seller under
this
Agreement and any documents delivered in connection herewith or contemplated
hereby shall be limited as follows:
(a) EXCEPT
TO
THE EXTENT ARISING OUT OF FRAUD, IN NO EVENT SHALL SELLER BE LIABLE TO THE
BUYER
INDEMNITEES FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL,
REMOTE OR SPECULATIVE DAMAGES; provided,
however,
that if
Buyer is held liable to a third party for any of such damages and Seller
is
obligated to indemnify Buyer for the matter that gave rise to such damages,
then
Seller shall be liable for, and obligated to reimburse Buyer for, such
damages.
(b) Notwithstanding
anything in this Agreement to the contrary, for purposes of Section 12.1
and
this Section 12.3, (x) a breach of a representation or warranty shall be
deemed
to exist either if such representation or warranty is actually inaccurate
or
breached or would have been inaccurate or breached if such representation
or
warranty had not contained any limitation or qualification as to materiality,
Material Adverse Effect (which instead will be read as adverse effect or
change)
or similar language, or any dollar limitation or threshold and (y) the amount
of
Losses in respect of any breach of a representation or warranty, including
any
deemed breach resulting from the application of clause (x), shall be determined
without regard to any limitation or qualification as to materiality, Material
Adverse Effect (which instead will be read as adverse effect or change) or
similar language or any dollar limitation or threshold set forth in such
representation or warranty.
(c) Except
as
provided below, the representations and warranties of Seller set forth in
this
Agreement shall survive the Closing until the date that is eighteen months
after
the Closing Date; provided
however,
that
(i) the representations and warranties set forth in Section 5.2 (Authority
Relative to this Agreement and Binding Effect), in the first two sentences
of
Section 5.4(a) (Capitalization of the Subsidiaries; Title to Stock), in Section
5.5(a) (Title to Assets; Encumbrances), and in Section 5.18 (Brokers) shall
survive indefinitely, (ii) the representations and warranties set forth in
Section 5.9 (Taxes) shall survive for a period equal to the applicable statute
of limitations for the taxable year for each Tax (giving effect to any
extensions or waivers thereof), and (iii) the representations and warranties
set
forth in Section 5.15 (Environmental Matters) shall survive until the second
anniversary of the Closing Date. The other terms of this Agreement and the
agreements delivered in connection herewith shall survive the Closing. All
representations and warranties, covenants and agreements of Seller under
this
Agreement and the indemnities granted by Seller in Section 12.1 shall
terminate at
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5:00
p.m., East Coast time, on the applicable survival termination date set forth
above; provided,
however,
that
such indemnities shall survive with respect only to any specific matter that
is
the subject of a proper Claim Notice delivered in good faith in compliance
with
the requirements of this Section 12.3 until the earlier to occur of (i) the
date on which a final nonappealable resolution of the matter described in
such
Claim Notice has been reached, including the determination of all related
Losses, if any, regardless of when such Losses are finally determined or
(ii) the date on which the matter described in such Claim Notice has
otherwise reached final resolution, including the determination of all related
Losses, if any, regardless of when such Losses are finally determined. In
no
event shall any amounts be recovered from Seller under Section 12.1 or otherwise
for any matter for which a Claim Notice is not delivered to Seller prior
to the
close of business on the applicable expiration date set forth
above.
(d) Notwithstanding
anything to the contrary in this Agreement, in no event shall Seller indemnify
the Buyer Indemnitees, or be otherwise liable in any way whatsoever to the
Buyer
Indemnitees, for any Losses (determined after giving effect to the other
provisions of this Section 12.3) otherwise subject to indemnification by
Seller
pursuant to Section 12.1(a) (other than in respect of any claim for any
inaccuracy or breach (or deemed inaccuracy or breach) of the representations
and
warranties contained in the first two sentences of Section 5.4(a) or in Sections
5.5(a) or (c), which claims shall not be subject to the limitations set forth
in
this Section 12.3(d)) until the Buyer Indemnitees have incurred Losses otherwise
indemnifiable pursuant to Section 12.1(a) that in the aggregate exceed Five
Million Dollars ($5,000,000) (the
“Deductible”), after which Seller shall then be liable for all Losses incurred
by the Buyer Indemnitees that are indemnifiable pursuant to Section 12.1(a)
in
excess of such amount up to the maximum amount set forth in Section 12.3(e).
Losses subject to indemnification by Seller pursuant to Section 12.1(a) (other
than in respect of any claim for any inaccuracy or breach (or deemed inaccuracy
or breach) of the representations and warranties contained in the first two
sentences of Section 5.4(a) or in Section 5.5(a)) relating to any single
breach
or series of related breaches by Seller shall not constitute Losses, and
therefore shall not be applied toward the Deductible or be indemnifiable
hereunder, unless such Losses relating to any single breach or series of
related
breaches exceed $20,000.
(e) Notwithstanding
anything to the contrary in this Agreement, (i) in no event shall Seller
indemnify the Buyer Indemnitees, or be otherwise liable in any way whatsoever
to
the Buyer Indemnitees, for any Losses (determined after giving effect to
the
other provisions of this Section 12.3) otherwise subject to indemnification
by
Seller pursuant to Section 12.1(a) (other than in respect of any claim for
any
inaccuracy or breach (or deemed inaccuracy or breach) of the representations
and
warranties contained in the first two sentences of Section 5.4(a) or in Sections
5.5(a) or (c)) that in the aggregate exceed One Hundred Million Dollars
($100,000,000), and (ii) in no event shall Seller indemnify the Buyer
Indemnitees, or be otherwise liable in any way whatsoever to the Buyer
Indemnitees, for any Losses (determined after giving effect to the other
provisions of this Section 12.3) otherwise subject to indemnification by
Seller
pursuant to Section 12.1(a) (solely in respect of any claim for any inaccuracy
or breach (or deemed inaccuracy or breach) of the representations and warranties
contained in the first two sentences of Section 5.4(a) or in Sections 5.5(a)
or
(c)) that in the aggregate exceed the Purchase Price; provided,
however,
that in
the event Seller makes any indemnification payment to any Buyer Indemnitee
for
any Loss pursuant to Section 12.1(a), regardless of whether such claim is
for
any inaccuracy or breach (or deemed inaccuracy or
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-
breach)
of the representations and warranties contained in the first two sentences
of
Section 5.4(a) or in Sections 5.5(a) or (c), then the amount of such payment
shall be credited against each of the limitations set forth in clause (i)
and
clause (ii) of this Section 12.3(e).
(f) Seller
shall have no liability for any portion of any claim or Loss for which (i)
Buyer
receives or is entitled to receive (and which are collectible) any insurance
proceeds or any indemnity, contribution or other similar payment from any
other
insurer or other third party (whether in a lump sum or stream of payments)
or
(ii) Buyer recovers or is entitled to recover through rates, provided that
Buyer
shall have made a good faith effort to recover any such claim or loss through
rates and that such recovery is not indeterminable due to the terms of any
rate
settlement agreed to by Buyer. No cost or expense relating to any such claim
or
Loss that is actually recovered on the basis of the foregoing shall be included
in determining the extent of Losses suffered by the Buyer Indemnitees for
purposes of Section 12.3(c) or Section 12.3(d). Buyer agrees to use its
commercially reasonable efforts to give timely and effective written notice
to
the appropriate insurance carrier(s) of any occurrence or circumstances that,
in
the judgment of Buyer consistent with its customary risk management practices,
appear likely to give rise to a claim against Buyer that is likely to involve
one or more insurance policies of Buyer. Any such notice shall be given in
good
faith by Buyer without regard to the possibility of indemnification payments
by
Seller under Section 12.1, and shall be processed by Buyer in good faith
and in
a manner consistent with its risk management practices involving claims for
which no third party contractual indemnification is available. Buyer agrees
that
(x) if it is entitled to receive payment from Seller for a Loss, and
(y) if Buyer has obtained insurance that may cover the claim or matter
giving rise to such Loss, then (z) such insurance shall be primary coverage
and Buyer will make a claim under such insurance (if such claim can be made
in
good faith) before enforcing its right to receive payment from Seller. If
at any
time subsequent to the receipt by a Buyer Indemnitee of an indemnity payment
from Seller hereunder, such Buyer Indemnitee (or any Affiliate thereof) receives
any recovery, settlement or other similar payment with respect to the Loss
for
which it receives such indemnity payment, such Buyer Indemnitee shall promptly
pay to Seller an amount equal to the amount of such recovery, less any expense
incurred by such Buyer Indemnitee (or its Affiliates) in connection with
such
recovery, but in no event shall any such payment exceed the amount of such
indemnity payment.
(g) Notwithstanding
any language contained in any Related Document (including deeds and other
conveyance documents relating to the Real Property), the representations
and
warranties of Seller set forth in this Agreement will not be merged into
any
such Related Document and the indemnification obligations of Seller, and
the
limitations on such obligations, set forth in this Agreement shall control.
No
provision set forth in any such Related Document shall be deemed to enlarge,
alter or amend the terms or provisions of this Agreement.
Section
12.4 Limitation
on Buyer’s Liability.
EXCEPT
TO
THE EXTENT ARISING OUT OF FRAUD, IN NO EVENT SHALL BUYER BE LIABLE TO THE
SELLER
INDEMNITEES FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL,
REMOTE OR SPECULATIVE DAMAGES; provided,
however,
that if
Seller is held liable to a third party for any of such damages and Buyer
is
obligated to indemnify Seller for the matter that gave rise to such damages,
then Buyer shall be liable for, and obligated to reimburse Seller for, such
damages.
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Section
12.5 Claims
Procedure.
(a) All
claims for indemnification under Section 12.1 or 12.2, or any other provision
of
this Agreement except as otherwise expressly provided in this Agreement,
shall
be asserted and resolved pursuant to this Article XII. Any Person claiming
indemnification hereunder is referred to as the “Indemnified Party” and any
Person against whom such claims are asserted hereunder is hereinafter referred
to as the “Indemnifying Party.” In the event that any Losses are asserted
against or sought to be collected from or threatened to be sought from an
Indemnified Party by a third party, including a Governmental Body, said
Indemnified Party shall with reasonable promptness provide to the Indemnifying
Party a Claim Notice. The Indemnifying Party shall not be obligated to indemnify
the Indemnified Party with respect to any such Losses if the Indemnified
Party
fails to notify the Indemnifying Party thereof in accordance with the provisions
of this Agreement in reasonably sufficient time so that the Indemnifying
Party’s
ability to defend against the Losses is not prejudiced. The Indemnifying
Party
shall have 30 days from the personal delivery or receipt of the Claim Notice
(the “Notice Period”) to notify the Indemnified Party (i) whether or not it
disputes the liability of the Indemnifying Party to the Indemnified Party
hereunder with respect to such Losses and/or (ii) whether or not it
desires, at the sole cost and expense of the Indemnifying Party, to defend
the
Indemnified Party against such Losses; provided,
however,
that any
Indemnified Party is hereby authorized prior to and during the Notice Period
to
file any motion, answer or other pleading that it shall reasonably deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party (and of which it shall have given notice and opportunity to comment
to the
Indemnifying Party) and not prejudicial to the Indemnifying Party. In the
event
that the Indemnifying Party notifies the Indemnified Party within the Notice
Period that it desires to defend the Indemnified Party against such Losses,
the
Indemnifying Party shall have the right to defend all appropriate proceedings,
and with counsel of its own choosing, which proceedings shall be promptly
settled or prosecuted by them to a final conclusion. If the Indemnified Party
desires to participate in, but not control, any such defense or settlement
it
may do so at its sole cost and expense. If requested by the Indemnifying
Party,
the Indemnified Party agrees to cooperate with the Indemnifying Party and
its
counsel in contesting any Losses that the Indemnifying Party elects to contest
or, if appropriate and related to the claim in question, in making any
counterclaim against the Person asserting the third party Losses, or any
cross-complaint against any Person. No claim may be settled or otherwise
compromised without the prior written consent of the Indemnifying
Party.
(b) The
Indemnified Party shall provide reasonable assistance to the Indemnifying
Party
and provide access to its books, records and personnel as the Indemnifying
Party
reasonably requests in connection with the investigation or defense of the
Losses. The Indemnifying Party shall promptly upon receipt of reasonable
supporting documentation reimburse the Indemnified Party for out-of-pocket
costs
and expenses incurred by the latter in providing the requested
assistance.
(c) With
regard to third party claims for which Buyer or Seller is entitled to
indemnification under Section 12.1 or 12.2, such indemnification shall be
paid
by the Indemnifying Party upon (i) the entry of an Order against the Indemnified
Party and the expiration of any applicable appeal period or (ii) a settlement
with the consent of the
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Indemnifying
Party, provided that no such consent need be obtained if the Indemnifying
Party
fails to respond to the Claim Notice as provided in Section 12.5(a).
Notwithstanding the foregoing but subject to Section 12.5(a), and provided
that
there is no dispute as to the applicability of indemnification, expenses
of
counsel to the Indemnified Party shall be reimbursed on a current basis by
the
Indemnifying Party as if such expenses are a liability of the Indemnifying
Party.
Section
12.6 Exclusive
Remedy.
Except
(i) for claims arising out of fraud or criminal misrepresentation, and (ii)
as
otherwise provided in Sections 3.2(b), 6.4, 9.2 or 11.11, the rights, remedies
and obligations of the Buyer Indemnitees and the Seller Indemnitees set forth
in
this Article XII will be the exclusive rights, remedies and obligations of
such
Persons after the Closing with respect to all post-Closing claims relating
to
this Agreement, the events giving rise to this Agreement and the transactions
provided for herein or contemplated hereby or thereby. Except as provided
above,
no Proceeding for termination or rescission, or claiming repudiation, of
this
Agreement may be brought or maintained by either party against the other
following the Closing Date no matter how severe, grave or fundamental any
breach, default or nonperformance may be by one party. Accordingly, except
as
otherwise provided in this Section 12.6, the parties hereby expressly waive
and
forego any and all rights they may possess to bring any such
Proceeding.
ARTICLE
XIII
GENERAL
PROVISIONS
Section
13.1 Expenses.
Except
as
otherwise specifically provided herein, each party will pay all costs and
expenses of its performance of and compliance with this Agreement, provided,
however,
that
notwithstanding anything to the contrary contained herein, Buyer will pay
the
filing fees associated with the HSR Act.
Section
13.2 Notices.
All
notices, requests and other communications hereunder shall be in writing
and
shall be deemed to have been given upon receipt if either (a) personally
delivered with written acknowledgment of such receipt, (b) sent by prepaid
first
class mail, and registered or certified and a return receipt requested, as
of
the date such receipt indicates by signature, (c) sent by overnight delivery
via
a nationally recognized carrier with written acknowledgment of such receipt
or
(d) by facsimile with, and as of the date of, completed transmission being
acknowledged:
If
to Seller, to:
Southern
Union Company
0000
Xxxxxxxxxx Xxxx
Xxxxxxx,
XX 00000
Attention: Xxxxx
X.
Xxxxxxx
SVP
and
CFO
Telecopier:
(000) 000-0000
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-
with
a copy (which shall not constitute notice), to:
Southern
Union Company
0000
Xxxxxxxxxx Xxxx
Xxxxxxx,
XX 00000
Attention: Xxxxxx
X.
Xxxxxxxx,
SVP
and
Associate General Counsel
Telecopier:
(000) 000-0000
and
a copy (which shall not constitute notice) to:
Xxxxxxxxxx
and Xxxxx, L.L.P.
0000
Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx,
X.X. 00000
Attention:
Xxxx X. Xxxxxx, Esquire
Telecopier:
(000) 000-0000
If
to Buyer, to:
National
Grid USA
00
Xxxxxxxx Xx.
Xxxxxxxxxxx,
XX 00000
Attention: Xxxx
Xxxxxxxx
Treasurer
and Chief Financial Officer
Facsimile:
000 000-0000
with
copies (which shall not constitute notice) to:
Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
0000
Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
Xxxxx Xx Xxxxxxx XX
and
Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
0
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000-0000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
Xxxxxxx X. Xxxxx
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or
at
such other address or number as shall be given in writing by a party to the
other party.
Section
13.3 Assignment.
This
Agreement may not be assigned, by operation of law or otherwise, by any party
hereto without the prior written consent of the other party hereto, such
consent
not to be unreasonably withheld; provided,
however,
in the
event of any such assignment by a party by operation of law without the consent
of the other party as required above, such other party may consent to such
assignment after it has occurred and, in such event, this Agreement and all
the
provisions hereof shall be binding upon the Person receiving such assignment
by
operation of law. Notwithstanding the foregoing, Seller may assign all or
part
of its rights or delegate all or part of its duties under this Agreement,
without the prior written consent of Buyer, to a qualified intermediary chosen
by Seller to structure all or part of the transactions contemplated hereby
as a
like-kind exchange of property covered by Section 1031 of the IRC; provided
that
no such assignment or delegation shall relieve Seller of its obligations
hereunder, and Seller shall remain primarily liable to Buyer pursuant to
the
terms of this Agreement.
Section
13.4 Successor
Bound.
Subject
to the provisions of Section 13.3, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and
permitted assigns.
Section
13.5 Governing
Law.
The
validity, performance, and enforcement of this Agreement and all Related
Documents, unless expressly provided to the contrary, shall be governed by
the
laws of the State of New York without giving effect to the principles of
conflicts of law of such state.
Section
13.6 Cooperation.
Each
of
the parties hereto agrees to use its commercially reasonable efforts to take
or
cause to be taken all action, and to do or cause to be done all things
necessary, proper or advisable under applicable laws, regulations or otherwise,
to consummate and to make effective the transactions contemplated by this
Agreement, including the timely performance of all actions and things
contemplated by this Agreement to be taken or done by each of the parties
hereto.
Section
13.7 Construction
of Agreement.
The
terms
and provisions of this Agreement represent the results of negotiations between
Buyer and Seller, each of which has been represented by counsel of its own
choosing, and neither of which has acted under duress or compulsion, whether
legal, economic or otherwise. Accordingly, the terms and provisions of this
Agreement shall be interpreted and construed in accordance with their usual
and
customary meanings, and Buyer and Seller hereby waive the application in
connection with the interpretation and construction of this Agreement of
any
rule of law to the effect that ambiguous or conflicting terms or provisions
contained in this Agreement shall be interpreted or construed against the
party
whose attorney prepared the
-
-
executed
draft or any earlier draft of this Agreement. It is understood and agreed
that
neither the specification of any dollar amount in the representations and
warranties contained in this Agreement nor the inclusion of any specific
item in
the Schedules or Exhibits is intended to imply that such amounts or higher
or
lower amounts, or the items so included or other items, are or are not material,
and none of the parties shall use the fact of the setting of such amounts
or the
fact of any inclusion of any such item in the Schedules or Exhibits in any
dispute or controversy between the parties as to whether any obligation,
item or
matter is or is not material for purposes hereof. The word “including” in this
Agreement shall mean including without limitation. Words in the singular
shall
be held to include the plural and vice versa and words of one gender shall
be
held to include the other genders as the context requires. The terms “hereof,”
“herein,” and “herewith” and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all
of the
Schedules and Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph, Exhibit and Schedule references
are
to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement
unless otherwise specified.
Section
13.8 Publicity.
Neither
party hereto shall issue, make or cause the publication of any press release
or
other announcement with respect to this Agreement or the transactions
contemplated hereby, or otherwise make any disclosures relating thereto,
without
the consent of the other party, such consent not to be unreasonably withheld
or
delayed; provided,
however,
that
such consent shall not be required where such release or announcement is
required by applicable law or the rules or regulations of a securities exchange,
in which event the party so required to issue such release or announcement
shall
endeavor, wherever possible, to furnish an advance copy of the proposed release
to the other party.
Section
13.9 Waiver.
Except
as
otherwise expressly provided in this Agreement, neither the failure nor any
delay on the part of any party to exercise any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise or waiver of any such right, power or privilege preclude any other
or
further exercise thereof, or the exercise of any other right, power or privilege
available to each party at law or in equity.
Section
13.10 Parties
in Interest.
This
Agreement (including the documents and instruments referred to herein) is
not
intended to confer upon any Person, other than the parties hereto and their
successors and permitted assigns, any rights or remedies hereunder provided,
however,
that
the indemnification provisions in Article XII shall inure to the benefit
of the
Buyer Indemnitees and the Seller Indemnitees as provided therein.
Section
13.11 Section
and Paragraph Headings.
The
section and paragraph headings in this Agreement are for reference purposes
only
and shall not affect in any way the meaning or interpretation of this
Agreement.
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Section
13.12 Amendment.
This
Agreement may be amended only by an instrument in writing executed by the
parties hereto.
Section
13.13 Entire
Agreement.
This
Agreement, the Exhibits and Schedules hereto and the documents specifically
referred to herein and the Confidentiality Agreement constitute the entire
agreement, understanding, representations and warranties of the parties hereto,
and supersede all prior agreements, both written and oral, between Buyer
and
Seller. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth
in full
herein. Disclosure of any fact or item in any Schedule referenced by a
particular paragraph or Section in this Agreement shall, should the existence
of
the fact or item or its contents be relevant to any other paragraph or Section,
be deemed to be disclosed with respect to that other paragraph or Section
whether or not any explicit cross-reference appears therein but only to the
extent that such relevance is clearly and readily apparent from the face
of such
disclosure; provided,
however,
that
notwithstanding the foregoing, no disclosures shall be deemed to be disclosed
on
Schedule
5.21
except
for such disclosures explicitly set forth thereon or explicitly incorporated
by
reference into Schedule
5.21.
Section
13.14 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the
same
instrument.
Section
13.15 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 materially 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 transactions contemplated
hereby are fulfilled to the greatest extent possible.
Section
13.16 Consent
to Jurisdiction.
The
parties hereby irrevocably submit to the exclusive jurisdiction of the courts
of
the State of New York located in the Borough of Manhattan and the federal
courts of the United States of America located in the Southern District of
the
State of New York over any dispute arising out of or relating to this Agreement
or any of the transactions contemplated hereby, and each party irrevocably
agrees that all claims in respect of such dispute or proceeding shall be
heard
and determined in such courts. The parties hereby irrevocably waive, to the
fullest extent
-
-
permitted
by applicable law, any objection which they may now or hereafter have to
the
venue of any dispute arising out of or relating to this Agreement or any
of the
transactions contemplated hereby brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each party agrees
that a
judgment in any such dispute may be enforced in other jurisdictions by suit
on
the judgment or in any other manner provided by applicable law.
[signature
page to follow]
IN
WITNESS WHEREOF,
the
parties have caused this Agreement to be executed and delivered by their
duly
authorized officers as of the date first written above.
SOUTHERN
UNION COMPANY
By:
/s/
Xxxxx X. Xxxxxxx
Xxxxx
X.
Xxxxxxx
Senior
Vice President and Chief Financial Officer
NATIONAL
GRID USA
By:
/s/
Xxxxxxx X. Xxxxxxx
Xxxxxxx
X. Xxxxxxx
President
and Chief Executive Officer
[Signature
page to Purchase and Sale Agreement between
Southern
Union Company and National Grid USA]
EXECUTION
COPY
EMPLOYEE
AGREEMENT
This
EMPLOYEE AGREEMENT (this “Agreement”), is made as of the 15th
day
of
February, 2006, by and between SOUTHERN UNION COMPANY, a Delaware corporation
(“Seller”), and National Grid USA, a Delaware corporation
(“Buyer”).
W
I T N E S S E T H:
WHEREAS,
Seller is engaged in the Business;
WHEREAS,
Seller and Buyer have entered into the Purchase and Sale Agreement, dated
as of
February 15, 2006 (the “Sale Agreement”), in which this Agreement is
incorporated by reference;
WHEREAS,
Buyer intends to offer, or cause an Affiliate of Buyer to offer, employment
to
all persons who are employed in the Business; and
WHEREAS,
Seller and Buyer have determined that it is desirable to provide detail
with
respect to the manner in which assets and liabilities will be allocated
by and
among Seller and Buyer in connection with the transactions contemplated
by the
Sale Agreement with respect to Employees and Former Employees;
NOW,
THEREFORE, in consideration of the respective covenants, representations
and
warranties
herein contained, the parties agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 General.
Capitalized
terms used in this Agreement (including Schedules to this Agreement) not
defined
herein shall have the meanings ascribed to them in the Sale Agreement.
For
purposes of this Agreement (including Schedules to this Agreement), the
following terms shall have the meanings set forth below.
“Base
Compensation” shall
mean an Employee’s base hourly wages or base salary, as applicable.
“COBRA”
shall
mean the continuation coverage requirements for group health plans under
Title X
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
and
as codified in IRC Section 4980B and ERISA Sections 601-608.
“Collective
Bargaining Agreements” shall
mean (1) the Collective Bargaining Agreement between New England Gas Company
and
United Steelworkers of America, AFL-CIO-CLC, on behalf of United Steelworkers
of
America, Local 12431-01, (2) the Collective Bargaining Agreement between
Southern Union Company d/b/a New England Gas Company
--
-
and
United Steelworkers of America, AFL-CIO-CLC, on behalf of United Steelworkers
of
America Local 12431-02, and (3) the Collective Bargaining Agreement between
New
England Gas Company and Utility Workers Union of America, AFL-CIO, and
Local
Union No. 472.
“Continuation
Period” shall
mean the one-year period following the Closing Date.
“Employee”
shall
mean a person who is a full-time or part-time employee of Seller, whether
or not
covered by a Collective Bargaining Agreement, whose responsibilities pertain
primarily to the Business on the Closing Date, including an employee who
is not
actively at work on the Closing Date because the employee is on workers’
compensation, on an approved leave of absence (including an approved leave
of
absence with a legal or contractual right to reinstatement, military leave,
maternity leave, or leave under the Family and Medical Leave Act of 1993)
or
absent due to vacation, disability, illness or other similar circumstance,
except that a person who is absent due to, and who is on, long-term disability
shall not be deemed to be an “Employee” hereunder where such person is unable to
perform the essential functions of his or her job, with or without reasonable
accommodation (or otherwise consistent with applicable Legal Requirements).
A
preliminary list of Employees, as of January 31, 2006, is set forth in
Schedule
1.1.
“For
Cause” shall
mean (1) the commission by the Transferred Employee of a criminal or other
act
that causes or is reasonably likely to cause economic damage to Buyer or
injury
to the business reputation of Buyer, (2) the commission by the Transferred
Employee of an act of fraud, theft or financial dishonesty in the performance
of
the Transferred Employee’s duties, (3) the continuing failure or continuing
refusal of the Transferred Employee to satisfactorily perform the duties
of the
Transferred Employee to Buyer, (4) the disregard or violation by the Transferred
Employee of the legal rights of any employees of the Buyer or of the Buyer’s
written policies regarding harassment or discrimination, or (5) any other
conduct materially detrimental to the Buyer’s business.
“Former
Employee” shall
mean a person who was formerly employed by Seller, a former owner of the
Business, or an Affiliate of either, whose responsibilities pertained primarily
to the Business and who is not an Employee on the Closing Date.
“Liabilities”
shall
mean any direct or indirect liability (whether absolute, accrued or unaccrued,
fixed or unfixed, xxxxxx or inchoate, secured or unsecured, liquidated
or
unliquidated, matured or unmatured, known or unknown, contingent or otherwise),
indebtedness, obligation, expense, claim, charge, cause of action, deficiency,
guarantee or endorsement of or by a party, including those arising under
any
applicable law or action, under any award of any court, administrative
agency,
tribunal or arbitrator, and under any contract or undertaking.
“New
England FAS 106 Reports” shall
mean “The Southern Union Company Postretirement Medical and Death Benefits for
ProvEnergy Employees Application of Statement of Financial Accounting Standards
Nos. 106 and 132 to the Fiscal Year Ending December 31, 2005” and “The Southern
Union Company Postretirement Medical, Dental and Death Benefits for Valley
Resources Employees Application of Statement of Financial Accounting Standards
--
-
Nos.
106
and 132(R) to the Fiscal Year Ending December 31, 2005,” draft copies of which
Seller has provided to Buyer.
“Transferred
Employee”
shall
mean an Employee who accepts Buyer’s offer of employment pursuant to Section 2.3
and commences employment with Buyer or its Affiliate.
Section 1.2 Terms
Defined Elsewhere.
For
purposes of this Agreement (including Schedules to this Agreement), the
following terms have the meanings set forth in the sections
indicated.
Term Section
Absent
Employee……………………………………2.3(a)
Absent
Employee’s Start Date… …………………2.3(a)
Agreement
Preamble
Buyer
Preamble
Buyer’s
401(k) Plan 3.2
New
England VEBAs……………… …………….. 4.6
Sale
Agreement ………………………......…. Preamble
Seller Preamble
Seller’s
401(k) Plan 3.2
Seller’s
Flex Plan…………………………..……….. 4.5
Seller’s
Pension Plans 3.1
Severance
Benefits ………………………………… 2.4(b)
WARN
Act…………………………………………. 7.3(a)
ARTICLE
II
EMPLOYEES
Section
2.1 Employee
List.
Not
later than five (5) business days following the execution of the Sale Agreement,
Seller shall provide to Buyer an updated list, as of the date of the Sale
Agreement, of Employees originally provided to Buyer in Schedule 1.1, which
shall consist not only of the names, but also (to the extent permitted
by
applicable Legal Requirements) job titles, job locations, Base Compensation,
employment status (e.g., active, inactive, on leave), date of hire, and
union or
non-union status, of all Employees. Seller shall provide Buyer with a revised
Schedule 1.1, updated as of the Closing Date, within ten (10) days following
the
Closing Date. Seller agrees that, during the period following the execution
of
the Sale Agreement and prior to the Closing Date, Seller shall not transfer
an
employee of Seller or any Affiliate of Seller, whose responsibilities prior
to
the transfer do not pertain primarily to the Business, to a position where
the
employee has responsibilities that pertain primarily to the
Business.
Section
2.2 Collective
Bargaining Agreements. Effective
as of the Closing Date, Buyer shall assume and agree to perform all obligations
of Seller and/or New England Gas
--
-
Company under
the
Collective Bargaining Agreements, and the Collective Bargaining Agreements
shall
thereafter be binding on Buyer.
Section
2.3 Offers
of Employment to Employees
(a)
At
least thirty (30) days prior to the anticipated Closing Date, Buyer shall
offer
employment to all Employees (including Employees who are not actively at
work on
the Closing Date because the Employee is on workers’ compensation, on an
approved leave of absence (including an approved leave of absence with
a legal
or contractual right to reinstatement, military leave, maternity leave,
or leave
under the Family and Medical Leave Act of 1993) or absent due to vacation,
disability, illness or other similar circumstance (each, an “Absent Employee”)),
effective as of 12:01 a.m. on the Closing Date (except as provided in the
following sentence), with at least the same level of Base Compensation
as was in
effect for each such Employee immediately prior to the Closing Date. The
offer
to an Absent Employee shall be made for employment effective as of the
expiration of the approved leave of absence or the Absent Employee’s other
return from workers’ compensation, vacation, disability, illness or other
similar circumstance, provided that such offer of employment shall remain
open
no later than (1) one hundred eighty (180) days following the Closing Date,
or
(2) such longer period as may be consistent with applicable Legal Requirements
(as to each Absent Employee, the “Absent Employee’s Start Date”). An Absent
Employee who does not return to work after the expiration of an approved
leave
of absence or otherwise under the preceding sentence shall not be considered
a
Transferred Employee hereunder. Notwithstanding the foregoing, Seller and
Buyer
agree that the Employees listed in Schedule 2.3(a) may have the opportunity
to
continue employment with Seller; provided that Buyer shall have reasonable
access to the Employees listed in Schedule 2.3(a) prior to and after the
Closing
Date.
(b)
Buyer
shall notify Seller of the Employees’ responses to Buyer’s offers of employment
under this Section 2.3 as soon as administratively feasible after receiving
each
Employee’s response. Buyer and Seller shall cooperate fully to facilitate the
preparation of Buyer’s offers of employment and such offers shall include the
language set forth in Schedule 2.3(b) or similar language reasonably acceptable
to Buyer and Seller.
Section
2.4 Employment
of Transferred Employees
(a)
Buyer
shall employ, as of 12:01 a.m. on the Closing Date, all of the Employees
who
accept Buyer’s offer of employment, except that each Absent Employee shall be
deemed employed by Buyer as of 12:01 a.m. on the Absent Employee’s Start
Date.
(b)
In
the event that (1) on the Closing Date or during the Continuation Period,
the
employment of a Transferred Employee (other than a Transferred Employee
covered
by a collective bargaining agreement) is terminated by the Buyer or an
Affiliate
of Buyer, other than For Cause, or (2) during the Continuation Period,
Buyer
fails to provide a Transferred Employee (other than a Transferred Employee
covered by a collective bargaining agreement) with at least the same level
of
Base Compensation as was in effect immediately prior to the Closing Date,
then
Buyer shall be responsible for and shall pay to such Transferred Employee,
in a
lump sum payment, not later than sixty (60) days following the date of
the
Transferred Employee’s
--
-
termination
of employment, the following severance benefit (the “Severance Benefits”): two
weeks of the Employee’s Base Compensation at termination of employment for each
full or partial year of service, measured from the Transferred Employee’s date
of hire reflected in Schedule 1.1, not to exceed fifty-two (52) weeks of
such
Base Compensation; provided, however, that in no event shall such Severance
Benefit be less than six (6) weeks of such Base Compensation. The costs
incurred, directly or indirectly, in connection with the termination of
employment of any Transferred Employee on or after the Closing Date shall
be
borne exclusively by Buyer. Buyer’s obligation to provide the Severance Benefits
shall be subject to the Transferred Employee executing a release of all
claims
against the Buyer and its Affiliates, and the Seller and its Affiliates,
in a
form reasonably satisfactory to Buyer.
Section
2.5 Prior
Service Credit.
On and
after the Closing Date, for each Transferred Employee not covered by a
Collective Bargaining Agreement and, to the extent consistent with Section
2.2,
each Transferred Employee covered by a Collective Bargaining Agreement,
Buyer
and its Affiliates shall recognize service for Seller, a former owner of
the
Business, or an Affiliate of either, prior to the Closing Date, for all
employee
benefit and employment-related purposes, other than for purposes of defined
benefit plans and post-retirement health, dental and life insurance benefits
(except as required by Section 3.1 or Section 4.6).
Section
2.6 Vacation.
Buyer
shall permit each Transferred Employee to carry forward (to the same extent
allowed to be carried forward by Seller) and to receive paid time off for
all
vacation days (including sick days and personal days) accrued prior to
the
Closing Date. As soon as administratively feasible following execution
of the
Sale Agreement, Seller shall provide to Buyer a list reflecting the paid
time
off balances standing to the credit of each Transferred Employee as of
the date
of the Sale Agreement. Seller shall provide Buyer with a revised list,
updated
as of the Closing Date, within ten (10) days following the Closing Date.
ARTICLE
III
PENSION,
401(k) AND NONQUALIFIED PLANS
Section
3.1 Pension
Plans. Seller
has no defined benefit plans that cover the Employees and that are intended
to
be qualified plans other than the Southern Union Company ProvEnergy Pension
Plan
for Non-Bargaining Unit Employees, the Southern Union Company ProvEnergy
Pension
Plan for Bargaining Unit Employees, the Southern Union Company Valley Resources
Employees’ Retirement Plan and the Southern Union Company Valley Resources
Employees’ Pension Plan (collectively, “Seller’s Pension Plans”). Effective as
of the Closing Date, Buyer shall assume sponsorship of, and all assets
(held in
trust), liabilities and obligations under, Seller’s Pension Plans, including
liability for any contributions due on or after the Closing Date. Seller
and
Buyer shall take all action necessary and appropriate to establish Buyer,
effective as of the Closing Date, as successor to Seller as to all rights,
assets (held in trust), duties, liabilities and obligations under or with
respect to Seller’s Pension Plans. Buyer shall be responsible for the
preparation and filing of any annual reports relating to plan years that
include
the Closing Date; provided, however, that Seller shall furnish Buyer with
such
information concerning Seller’s Pension Plans as is necessary to prepare such
forms.
--
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Section
3.2 401(k)
Plans.
Seller
has no defined contribution plan that covers the Employees and that is
intended
to be a qualified plan other than the Southern Union Savings Plan, which
includes a qualified cash or deferred arrangement under IRC Section 401(k)
(“Seller’s 401(k) Plan”). As of the Closing Date, Seller shall vest the
Transferred Employees in their account balances under Seller’s 401(k) Plan. If
the Transferred Employees will be eligible to participate in a defined
contribution plan maintained by Buyer ("Buyer’s 401(k) Plan"), immediately
following the Closing Date, Buyer shall take all actions necessary to ensure
that Buyer’s 401(k) Plan accepts from any Transferred Employee a rollover or
direct rollover of all of his or her account balance under Seller’s 401(k) Plan,
including his or her loan balances and related loan documentation; provided
that
a Transferred Employee shall only be permitted to roll over his or her
loan
balances and related loan documentation if the Transferred Employee makes
a
rollover or direct rollover of all of his or her account balance under
Seller’s
401(k) Plan. If the Transferred Employees will be eligible to participate
in
Buyer’s 401(k) Plan, the trustee or recordkeeper of Seller’s 401(k) Plan shall
transfer to the trustee or recordkeeper of Buyer’s 401(k) Plan any loan
documentation for loans to be rolled over or transferred to Buyer’s 401(k)
Plan.
The
Transferred Employees shall not be required to roll over, or otherwise
transfer,
their account balances under Seller’s 401(k) Plan to Buyer’s 401(k) Plan.
Section
3.3 Nonqualified
Deferred Compensation Plans and Individual Deferred Compensation and Other
Arrangements. Except
as
provided in Section 4.6, Buyer shall assume no liability or responsibility,
and
the Seller shall retain all liabilities and responsibilities, with respect
to
(a) the Southern Union Company Supplemental Deferred Compensation Plan,
which is
a nonqualified deferred compensation plan maintained by Seller, (b) the
five (5)
nonqualified deferred compensation plans listed in Item 1 of Schedule 3.3,
and
(c) the three (3) individual deferred compensation and other arrangements
listed
in Item 2 of Schedule 3.3. Under the Sale Agreement, “Excluded
Assets”
include
the assets held in the three rabbi trusts listed in Item 3 of Schedule
3.3 and
other life insurance policies purchased to support obligations under the
nonqualified deferred compensation plans and individual deferred compensation
and other arrangements described in this Section 3.3.
ARTICLE
IV
OTHER
BENEFITS
Section
4.1 Welfare
Benefit Plans. Coverage
of all Transferred Employees under each Employee Plan that is an “employee
welfare benefit plan” within the meaning of Section 3(1) of ERISA to which
Seller or any Affiliate of Seller is a party or by which any of them is
bound,
shall cease as of the Closing Date (or in the case of an Absent Employee,
on the
Absent Employee’s Start Date, unless sooner terminated in accordance with
Seller’s policies or the terms of an Employee Plan). To the extent that Buyer
or
an Affiliate of Buyer offers health insurance benefits to any employees,
Buyer
agrees to offer health insurance benefits to all Transferred
Employees.
Section
4.2 COBRA.
Seller
shall provide continuation coverage required under COBRA to all eligible
Employees and Former Employees and their qualified beneficiaries attributable
to
a “qualifying event” (as defined in COBRA) that occurs on or prior to the
Closing
--
-
Date.
After the Closing Date, Buyer shall provide continuation coverage required
under
COBRA to all eligible Transferred Employees and their qualified beneficiaries
attributable to a “qualifying event” (as defined in COBRA) that occurs after the
Closing Date.
Section
4.3 Individuals
on Long-Term Disability. Any
individual who, as of the Closing Date, is eligible for long-term disability
benefits shall be covered under Seller’s long-term disability plan. In addition,
any Employee who, as of the Closing Date, is absent due to short-term
disability, who does not become a Transferred Employee, and who becomes
eligible
for long-term disability benefits under Seller’s long-term disability plan after
the Closing Date shall be covered under Seller’s long-term disability plan.
Section
4.4 Workers’
Compensation. The
parties agree that workers’ compensation benefits for the Transferred Employees
will be handled as provided in this Section 4.4. With respect to occurrences
on
or after the Closing Date, workers’ compensation benefits shall be subject to
Buyer’s workers’ compensation policies, programs and plans, and Buyer shall bear
sole financial responsibility with respect to such benefits. With respect
to
occurrences prior to the Closing Date, workers’ compensation benefits shall be
subject to Seller’s workers’ compensation policies, programs and plans, and
Seller shall have financial responsibility for all expenses. The expenses
referred to in the preceding sentence include all expenses not recoverable
under
Seller’s insurance (specifically including settlement amounts, third party
administrator expenses, and expenses as set forth or defined in applicable
Travelers Insurance agreements such as deductible plan charges, retrospective
premium adjustments, non-loss responsive premiums and adjustments, miscellaneous
charges, tax assessments and surcharges, collection
costs and damages, and collateral costs).
Section
4.5 Flexible
Spending Accounts.
As soon
as administratively feasible after the Closing Date, Seller shall transfer
to
Buyer’s flexible benefits plan, in cash, any health care and dependent care
balances standing to the credit of Transferred Employees under
the
Southern Union Company Flexible Benefit Plan (“Seller’s Flex Plan”) as of the
day immediately preceding the Closing Date, and Buyer shall reimburse
Transferred Employees for
all
eligible health and dependent care expenses submitted on or after the Closing
Date. As soon as administratively feasible after the Closing Date, Seller
shall
provide to Buyer a list of those Transferred Employees who
have
participated in the health or dependent care reimbursement accounts under
Seller’s Flex Plan, together with their elections made prior to the Closing Date
with respect to such accounts, and balances standing to their credit as
of the
day immediately prior to the Closing Date.
Section
4.6 Post-Retirement
Benefit Plans. Effective
as of the Closing Date, Buyer shall assume and be responsible for all
liabilities and obligations of Seller and/or New England Gas Company to
provide
post-retirement health, dental and life insurance benefits described in
and/or
valued under the New England FAS 106 Reports, whether such benefits are
currently being paid or are to be paid in the future to any Employee or
Former
Employee, including (a) post-retirement life insurance benefits under the
agreement listed in Item 2.a of Schedule 3.3, and (b) other post-retirement
health, dental and life insurance benefits for eligible individuals and
their
beneficiaries covered under the plans and arrangements described in Section
3.3.
Seller and Buyer shall take all action necessary and appropriate to establish
Buyer, effective as of the
--
-
Closing
Date, as successor to Seller as to all rights, assets (held in trust),
duties,
liabilities and obligations under or with respect to the “New England VEBAs,” as
defined in the following sentence. The “New England VEBAs” are (1) the Southern
Union Company ProvEnergy Non-Bargaining VEBA, (2) the Southern Union Company
ProvEnergy Bargaining VEBA, and (3) the Valley Gas Company Employee Benefit
Trust (under which separate accounts are maintained for union and non-union
benefits). Seller and Buyer shall take all action necessary and appropriate
to
have the New England VEBAs make reimbursements for claims incurred prior
to the
Closing Date. Seller shall retain all liabilities and responsibilities
for the
post-retirement health, dental and life insurance benefits that are not
described in and/or valued under the New England FAS 106 Reports, specifically
(a) the post-retirement dental insurance benefit under the agreement listed
in
Item 2.a of Schedule 3.3, and (b) the post-retirement health, dental and
vision
insurance benefits for the individual and his spouse under the agreement
listed
in Item 2.c of Schedule 3.3.
ARTICLE
V
LIABILITIES
Except
as
otherwise provided in this Agreement, Buyer, for itself and its Affiliates,
assumes and agrees to pay, perform, fulfill and discharge when due all
Liabilities, including litigation costs, with respect to a Transferred
Employee
or a dependent or beneficiary of a Transferred Employee relating to, arising
out
of or resulting from employment in connection with the Business prior to,
on or
after the Closing Date. Except as otherwise provided in this Agreement,
Seller
retains and shall pay, perform, fulfill and discharge all Liabilities with
respect to Former Employees and Employees who are not Transferred Employees.
ARTICLE
VI
RECORDS
AND INFORMATION
Section
6.1 Records.
On or
soon after the Closing Date, Seller shall deliver to Buyer, to the extent
permitted by applicable Legal Requirements, all personnel files and records
in
its possession relating to the Transferred Employees, including active
contracts, litigation files, annual reviews, grievances and any other
information that is part of the personnel file of a Transferred Employee.
Prior
to the Closing Date, subject to applicable Legal Requirements, Seller shall
provide Buyer with reasonable access to information and records in its
possession relating to the Transferred Employees. Subject to applicable
Legal
Requirements, from and after the Closing Date, all such files and records
shall
be the property of Buyer, provided, that Seller may copy such files and
records
prior to transferring them to Buyer.
Section
6.2 Access
to Information.
From and
after the Closing Date, Buyer shall afford to Seller reasonable and timely
access and duplicating rights, during normal business hours and upon reasonable
advance notice, to the personnel files and records in the possession or
control
of Buyer, insofar as such access is reasonably required for a reasonable
business purpose, subject to applicable Legal Requirements. Without limiting
the
foregoing, information may be requested under this Section 6.2 for audit,
accounting, claims, litigation and tax purposes, as well as for purposes
of
fulfilling disclosure and reporting obligations.
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Section
6.3 Confidentiality.
Buyer
and its Affiliates shall preserve the confidentiality, in accordance with
all
applicable Legal Requirements, of all information contained in the personnel
files and records obtained from Seller pursuant to this Agreement.
ARTICLE
VII
GENERAL
PROVISIONS
Section
7.1 Cooperative
Actions. Seller
and Buyer shall cooperate with each other in carrying out, implementing
and
defending the terms of this Agreement, including cooperating with each
other
with respect to any claims or litigation challenging any of the terms of
this
Agreement. Seller and Buyer agree to good faith mutual cooperation in any
investigation, inquiry or litigation which jointly involves them or in
which a
party makes a reasonable request for cooperation. Each party will make
its
employees available on a reasonable basis to give testimony and assistance
in
connection with any lawsuit, dispute, investigation or proceeding involving
the
other party; provided, however, that such other party shall pay for all
out-of-pocket costs incurred in connection with providing such testimony
and
assistance. Except as otherwise provided in this Agreement, each party
will pay
all costs and expenses of its performance of and compliance with this
Agreement.
Section
7.2 Parties
in Interest. No
provision of this Agreement shall confer upon any person, other than the
parties
hereto, their Affiliates, successors and permitted assigns, any rights
or
remedies hereunder, including any rights or remedies with respect to the
employment, compensation, benefits or other terms and conditions of employment
of any person.
Section 7.3
WARN Act.
(a)
On or
before the Closing Date, Seller shall provide a list of the name and site
of
employment of any and all employees of Seller who have experienced, or
who will
experience, an employment loss or layoff (as defined by the Worker Adjustment
and Retraining Notification Act of 1988 or any similar applicable state
or local
law requiring notice to employees in the event of a closing or layoff (the
“WARN
Act”)) within ninety (90) days prior to the Closing Date. Seller shall update
this list up to and including the Closing Date.
(b)
For a
period of ninety (90) days after the Closing Date, Buyer shall not engage
in any
conduct which would result in an employment loss or layoff for a sufficient
number of employees of Buyer which, if aggregated with any such conduct
on the
part of Seller prior to the Closing Date, would trigger the WARN
Act.
Section
7.4 Satisfaction
of Liabilities by Affiliate.
Obligations of Buyer hereunder may be satisfied by an Affiliate of
Buyer.
[Remainder
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IN
WITNESS WHEREOF,
the
parties have caused this Agreement to be executed and delivered by their
duly
authorized officers as of the date first written above.
SOUTHERN
UNION COMPANY
By:
/s/
Xxxxx X. Edwards_______________
Name:
Xxxxx X. Xxxxxxx
Title:
Senior Vice President & Chief
Financial
Officer
NATIONAL
GRID USA
By:
/s/
Xxxx X. Cochrane_______________
Name:
Xxxx X. Xxxxxxxx
Title:
Executive Vice President, Treasurer
and
Chief
Financial Officer
[Signature
page to Employee Agreement between
Southern
Union Company and National Grid USA]