EXHIBIT 99.2
ASSET SALE AND PURCHASE AGREEMENT
By and Among
SOUTHWESTERN ENERGY COMPANY,
ARKANSAS WESTERN GAS COMPANY
and
ATMOS ENERGY CORPORATION
Dated as of October 15, 1999
TABLE OF CONTENTS
Page
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I. DEFINITIONS 1
II. SALE AND PURCHASE 5
2.1. Sale and Purchase of Assets 5
2.2. Excluded Assets 6
2.3. Purchase Price; Adjustment 7
2.4. Assumption of Liabilities 9
2.5. Closing 10
2.6. Nonassignable Contracts 11
III. REPRESENTATIONS AND WARRANTIES OF SELLERS 11
3.1. Corporate Existence 11
3.2. Authorization and Validity of Agreement 12
3.3. No Contravention 12
3.4. Title to Assets; Adequacy; Condition 12
3.5. Material Contracts 12
3.6. Real Property 13
3.7. Permits 13
3.8. Litigation 13
3.9. Compliance with Laws 13
3.10.Governmental Consents 13
0.00.Xxx Matters 13
0.00.Xxxxxxxxx Statements 14
3.13.Employee Matters 14
3.14.Brokerage 15
3.15.Environmental Matters 15
0.00.Xx Undisclosed Liabilities; No Material Adverse Effect 16
3.17.Customers; Suppliers 16
3.18.Books and Records 16
0.00.Xxxxxxxxx 16
3.20.Accounts Receivable 16
3.21.Y2K Compliance 16
0.00.Xx Other Representations 16
IV. REPRESENTATIONS AND WARRANTIES OF BUYER. 17
4.1. Organization 17
4.2. Authorization and Validity of Agreement 17
4.3. No Contravention 17
4.4. Consents 17
4.5. Brokerage 17
4.6. Litigation 17
4.7. Financing 17
V. OBLIGATIONS OF SELLERS 17
5.1. Consents 18
5.2. Conduct of Business 18
5.3. Access Before Closing 18
5.4. Clearance Certificate 18
VI. OBLIGATIONS OF BUYER 18
6.1. Consents 18
VII. EMPLOYEE MATTERS 19
7.1. Employment of Employees 19
7.2. Severance Benefits 19
7.3. Transfer of Pension Assets and Liabilities. 19
7.4. Savings Plan 20
7.5. Indemnification for Plan Liabilities 20
7.6. Service Credit 21
7.7. Medical and Dental Plans 21
7.8. Vacation and Sick Day Benefits
Accrued Through Closing Date 22
7.9. Welfare Benefits 22
7.10.Long Term Disability 22
7.11.Flexible Spending Accounts 22
7.12.WARN Act Liability 22
0.00.Xxxxxx Care Continuation Coverage 22
7.14.Employment Taxes 22
VIII. ADDITIONAL RIGHTS AND OBLIGATIONS. 23
8.1. Access After Closing 23
8.2. Further Assurances 23
8.3. Confidentiality 23
8.4. Schedules 23
8.5. Tax Matters 23
8.6. Use of Name and Logos 24
8.7. Environmental Matters 24
8.8. Abstracts 24
8.9. Y2K 25
IX. CONDITIONS TO BUYER'S OBLIGATIONS 25
9.1. Representations, Warranties and Covenants of Sellers 25
9.2. No Prohibition 25
9.3. Further Action 25
9.4. No Material Adverse Effect 25
9.5. Abstracts 25
9.6. Omnibus Gas Transportation and Supply Agreement 26
9.7. Other Documents 26
X. CONDITIONS TO SELLERS' OBLIGATIONS 26
10.1.Representations, Warranties and Covenants of Buyer 26
00.0.Xx Prohibition 26
10.3.Further Action 26
10.4.Omnibus Gas Transportation and Supply Agreement 26
10.5.Other Documents 26
XI. TERMINATION PRIOR TO CLOSING 26
11.1.Termination 26
11.2.Effect of Termination 27
XII. INDEMNIFICATION AND SURVIVAL 27
12.1.Indemnification by Sellers 27
12.2.Indemnification by Buyer 27
12.3.Limitations on Liability 27
12.4.Indemnification Procedure 28
12.5.Exclusive Remedies 29
XIII. MISCELLANEOUS 29
13.1.Entire Agreement 29
13.2.Waiver of Bulk Transfer Requirements 29
13.3.Successors and Assigns 29
13.4.Counterparts 29
13.5.Headings 29
13.6.Modification and Waiver 29
00.0.Xx Third-Party Beneficiary Rights 30
13.8.Sales and Transfer Taxes 30
13.9.Expenses 30
13.10.Waiver of Conditions 30
13.11.Notices 30
13.12.Knowledge of Sellers 31
13.13.Governing Law 31
13.14.Waiver of Jury Trial 31
13.15.Announcements 31
13.16.Severability 32
SCHEDULES
2.1.1 - Owned Property
2.1.2 - Leased Property
2.1.4 - List of Machinery, Equipment, etc.
2.1.6 - Contracts
2.1.13 - Intellectual Property
2.2(c) - Names and Logos
2.2(k) - Other Excluded Assets
2.3.3 - Financial Principles
2.4 - Certain Excluded Liabilities
2.5.2(c) - Gas Transportation and Supply Matters
3.3 - Sellers' Third Party Consents
3.4 - Encumbrances on Transferred Assets
3.5 - Material Contracts
3.6 - Real Property
3.7 - Permits
3.8 - Litigation
3.9 - Compliance with Laws
3.10 - Seller Governmental Consents
3.12 - Financial Statements
3.13.1 - Employee Benefit Plans
3.13.2 - Pension Plans
3.13.4 - Labor Matters
3.15 - Environmental Matters
3.16 - Certain Liabilities
3.19 - Insurance Policies
3.20 - Accounts Receivable
4.4 - Buyer's Consents
7.1 - Transferred Employees
7.2 - Severance Benefits
7.3.2 - Accumulated Benefit Obligation and Calculation
Assumption
7.11 - Flexible Spending Accounts
9.3 - Required Non-Governmental Third Party Consents
ASSET SALE AND PURCHASE AGREEMENT
ASSET SALE AND PURCHASE AGREEMENT (the "Agreement") dated as
of October 15, 1999, by and among SOUTHWESTERN ENERGY COMPANY, a
corporation organized under the laws of the state of Arkansas
("Parent"), ARKANSAS WESTERN GAS COMPANY, a corporation organized
under the laws of the state of Arkansas ("AWG" and, together with
Parent, the "Sellers"), and ATMOS ENERGY CORPORATION, a
corporation organized under the laws of Texas and Virginia
("Buyer").
BACKGROUND
Sellers desire to sell and assign to Buyer, and Buyer
desires to purchase and assume from Sellers, the Transferred
Assets (as defined hereinafter) and the Assumed Liabilities (as
defined hereinafter), all on the terms and subject to the
conditions of this Agreement.
TERMS
NOW, THEREFORE, intending to be legally bound hereby, the
parties agree as follows:
I. DEFINITIONS.
For purposes of this Agreement, the following terms shall
have the following meanings:
"Affiliate" means, when used with respect to a specified
Person, another Person that, either directly or indirectly
through one or more intermediaries, controls or is controlled by
or is under common control with the Person specified.
"Abstracts" has the meaning specified in Section 8.8.
"Agreement" has the meaning specified in the first paragraph.
"Assumed Contracts" has the meaning specified in Section 2.1.6.
"Assumed Liabilities" has the meaning specified in Section 2.4.
"Assumption Agreement" has the meaning specified in Section 2.5.3.
"AWG" has the meaning specified in the first paragraph.
"Business" means the gas distribution and transmission
business and the unregulated operations conducted by AWG's
Associated Natural Gas Company Division in the State of Missouri
immediately prior to the date hereof; provided that the Business
shall not be deemed to include any operations of the Sellers
conducted in the State of Arkansas.
"Buyer" has the meaning specified in the first paragraph.
"Buyer Medical Plan" has the meaning specified in Section 7.7.1.
"Buyer's Pension Plan" has the meaning specified in Section 7.3.1.
"Buyer's Post-Retirement Trusts" has the meaning specified in Section
7.7.3.
"Buyer's Savings Plan" has the meaning specified in Section 7.4.
"Closing" and "Closing Date" have the meanings specified in Section 2.5.1.
"Closing Purchase Price" has the meaning specified in Section 2.3.1.
"Closing Statement" has the meaning specified in Section 2.3.3.
"Code" has the meaning specified in Section 7.3.1.
"Current Assets" means the current assets of the Sellers
reported as (i) accounts receivable, (ii) inventory, (iii) stores
expense undistributed, (iv) deferred gas purchases and (v) (to
the extent not exceeding $100,000) other current assets that are
included in the Transferred Assets, all as determined in
accordance with the Financial Principles applied consistently
with the Financial Statements.
"Current Liabilities" means the current liabilities of the
Sellers reported as (i) accounts payable, (ii) other taxes
payable, (iii) deferred gas purchases, (iv) customer deposits,
(v) accrued vacation payable and (vi) (to the extent not
exceeding $50,000) other current liabilities that are Assumed
Liabilities, all as determined in accordance with the Financial
Principles applied consistently with the Financial Statements.
"Current Period" has the meaning specified in Section 2.3.4.
"Eligible Transferred Employee" has the meaning specified in
Section 7.4.
"Encumbrances" has the meaning specified in Section 2.1.
"Environmental Laws" means any federal, state, local or
foreign statute, law, ordinance, regulation, rule, code, order,
common law, and any enforceable judicial or administrative
interpretation thereof, including any judicial or administrative
order, writ, consent decree or judgment, relating: to
(a) emissions, discharges, releases or threatened releases of
Hazardous Materials into the natural environment, including into
ambient air, soil, sediments, land surface or subsurface,
buildings or facilities, surface water, groundwater, publicly-
owned treatment works, septic systems or land; (b) the
generation, treatment, storage disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Materials;
(c) occupational health and safety; or (d) otherwise relating to
the pollution or protection of the environment, health, safety or
natural resources; provided that "Environmental Laws" shall not
mean or refer to any of the foregoing except to the extent in
existence and in full force and effect on and as of the Closing
Date and, accordingly, shall not include any of the foregoing as
it may be enacted, promulgated, amended, changed or altered (by
statute, judicial interpretation, official interpretation or
otherwise) at any time with effect after the Closing Date.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required
under or issued pursuant to any Environmental Law.
"ERISA" has the meaning specified in Section 3.13.2.
"Excluded Assets" has the meaning specified in Section 2.2.
"Excluded Liabilities" has the meaning specified in Section 2.4.
"Financial Principles" has the meaning specified in Section 2.3.3.
"Financial Statements" has the meaning specified in Section 3.12.
"FSA's" has the meaning specified in Section 7.11.
"Hazardous Material" means (a) any petroleum, petroleum
hydrocarbons, gas, gas liquids, or any other petroleum products,
by-products or breakdown products, radioactive materials,
asbestos-containing materials in any form or condition or
polychlorinated biphenyls in any form or condition or (b) any
solid, chemical, material or substance regulated as toxic or
hazardous or as a pollutant, contaminant or waste under any
Environmental Law.
"Knowledge of Sellers" has the meaning specified in Section 13.12.
"Leased Property" has the meaning specified in Section 2.1.2.
"Leave" has the meaning specified in Section 7.1.
"Losses" has the meaning specified in Section 12.1.
"Material Adverse Effect" means any change in, or effect on,
the Business or the Transferred Assets that is or is reasonably
likely to be materially adverse to the Transferred Assets taken
as a whole or the assets, liabilities, operations, results of
operations or financial condition of the Business taken as a
whole, except for any such changes or effects resulting from (i)
changes in general economic, regulatory or political conditions
or changes that affect the industry in general and (ii) this
Agreement or the transactions contemplated hereby .
"Material Contracts" has the meaning specified in Section 3.5.
"Matters of Environmental Concern" has the meaning specified
in Section 8.7(a).
"Measurement Period" has the meaning specified in
Section 2.3.3.
"Names and Logos" has the meaning specified in
Section 2.2(c).
"Net Working Capital" has the meaning specified in Section 2.3.3.
"Non-Assigned Contracts" has the meaning specified in
Section 2.6.
"Omnibus Gas Transportation and Supply Agreement" has the
meaning specified in Section 2.5.2.
"Owned Property" has the meaning specified in Section 2.1.1.
"Parent" has the meaning specified in the first paragraph.
"Pension Plans" has the meaning specified in Section 3.13.2.
"Permits" has the meaning specified in Section 3.7.
"Permitted Encumbrances" has the meaning specified in Section 3.4.
"Person" means any individual, partnership, firm,
corporation, association, trust, limited liability company,
unincorporated organization, governmental authority or other
entity.
"Plans" has the meaning specified in Section 3.13.1.
"Post-Retirement Benefits" has the meaning specified in
Section 7.7.3.
"Pre-Closing Returns" has the meaning specified in Section 8.5.
"Purchase Price" has the meaning specified in Section 2.3.1.
"Returns" has the meaning specified in Section 3.11.
"Seller Medical Plans" has the meaning specified in
Section 7.7.1.
"Seller Pension Plan" has the meaning specified in Section 7.3.1.
"Seller Pension Plan Trust" has the meaning specified in
Section 7.3.1.
"Seller Savings Plan" has the meaning specified in Section 7.4.
"Sellers" has the meaning specified in the first paragraph.
"Seller's Post-Retirement Trusts" has the meaning specified
in Section 7.7.3.
"SFAS 106 Obligations" has the meaning specified in Section 3.13.5.
"System Property" has the meaning specified in Section 2.1.3.
"Taxes" means all federal, state, local and other taxes and
similar levies, fees, charges and assessments imposed by a
governmental authority, including without limitation, income,
gross receipts, sales, use, transfer, business and occupation,
franchise, profits, license, lease, service, service use, duties,
excise, severance, stamp, occupation, ad valorem, real and
personal property, withholding, payroll, and value added taxes.
"Threshold" has the meaning specified in Section 8.7.
"Transfer Taxes" has the meaning specified in Section 13.8.
"Transferred Assets" has the meaning specified in Section 2.1.
"Transferred Employee" and "Transferred Employees" have the
meanings specified in Section 7.1.
"Transferred Pension Plan Participants" has the meaning
specified in Section 7.3.1.
"Transition Services Agreement" has the meaning specified in
Section 2.5.2.
"WARN Act" has the meaning specified in Section 7.12.
"Welfare Plans" has the meaning specified in Section 3.13.3.
II. SALE AND PURCHASE.
2.1. Sale and Purchase of Assets. Subject to the terms and
conditions of this Agreement, at the Closing, each Seller shall
sell, transfer and assign to Buyer, free and clear of any lien,
pledge, option, security interest, claim, charge or other
encumbrance ("Encumbrances"), except Permitted Encumbrances, and
Buyer shall purchase and assume from each Seller, the Transferred
Assets. For purposes of this Agreement, "Transferred Assets"
shall mean the following assets:
2.1.1. The real property owned in fee by Sellers and
listed on Schedule 2.1.1 (the "Owned Property"), together
with all improvements, fixtures, rights, and other
appurtenances thereto of Sellers;
2.1.2. The leasehold interests of Sellers in all
possessory leases of real property listed on Schedule 2.1.2
(the "Leased Property");
2.1.3. All rights of way, easements, appurtenances and
similar realty interests of Sellers relating to the Owned
Property or the Leased Property or necessary for or relating
primarily to the Business (the "System Property");
2.1.4. Machinery, equipment, tools and fixed assets
owned by Sellers listed on Schedule 2.1.4, subject to such
additions, substitutions or deletions thereto as shall have
occurred in the ordinary course of the conduct of the
Business prior to the Closing Date that is consistent with
past practice;
2.1.5. All vehicles and other tangible assets of
Sellers which are used primarily in or related primarily to
the Business;
2.1.6. All rights of Sellers under the contracts
listed on Schedule 2.1.6, subject to such additions,
substitution or deletions thereto as shall have occurred in
the ordinary course of Sellers' conduct of the Business
prior to the Closing Date that is consistent with past
practice (the "Assumed Contracts");
2.1.7. To the extent assignable to Buyer, all of the
governmental permits, franchises, licenses, consents or
other authorizations issued or given to Sellers which relate
primarily to the Business or any of the Transferred Assets
and which are required in connection with the conduct, use,
operation or ownership thereof;
2.1.8. Copies of all customer, supplier and personnel
records and other records as are in either Seller's
possession or control which are used primarily in or related
primarily to the Business;
2.1.9. Accounts and notes receivable of Sellers which
arose from the operations of the Business (other than
accounts and notes receivable relating to inter-company
accounts between the Sellers, which accounts and notes
receivable shall not be included on the Closing Statement);
2.1.10. All inventories of gas, materials and spare
parts of Sellers used primarily in or relating primarily to
the Business;
2.1.11. All prepaid expenses of Sellers relating
primarily to the Business, except for prepaid expenses
attributable to any Excluded Asset or Excluded Liability;
2.1.12. To the extent the rights and benefits
thereunder are assignable to Buyer, all rights and benefits
under any manufacturer's, subcontractor's, supplier's,
repairman's or other third-party warranties, guarantees, and
service and replacement programs, and all rights of
indemnification, insurance proceeds, claims against insurers
and similar rights of Sellers relating to the Transferred
Assets or the Business, except to the extent any such rights
or benefits relate to Excluded Assets or losses or
conditions which Sellers have fully remedied prior to the
Closing;
2.1.13. All patents, patent rights, trademarks, trade
names and logos used in the Business listed on Schedule
2.1.13, other than the name "Associated Natural Gas" or
"ANG" or variants thereof and the associated logos; and
2.1.14. All of either Seller's other assets,
properties, franchises, interests, and rights and privileges
of every kind and description, real, personal or mixed,
tangible or intangible, necessary for, or primarily used by
the Sellers in, the operation of the Business.
2.2. Excluded Assets. Anything herein to the contrary
notwithstanding, the Transferred Assets shall not include the
following (the "Excluded Assets"):
(a) all cash on hand, cash equivalents,
investments, and bank accounts of Sellers as of the
Closing Date;
(b) all negotiable instruments (other than notes
receivable of the type included in the Transferred
Assets pursuant to Section 2.1.9) and chattel paper of
Sellers as of the Closing Date;
(c) all rights to the name "Associated Natural
Gas" (or any derivative thereof) or the logos
identified on Schedule 2.2(c) (the "Names and Logos"),
subject to the provisions of Section 8.6;
(d) refunds or claims for refunds due from
federal, state, local and foreign taxing authorities
with respect to taxes paid or to be paid by Sellers;
(e) all insurance policies of Sellers, except to
the extent provided in Section 2.1.12, and any related
unearned premiums;
(f) Sellers' rights under this Agreement;
(g) each Seller's corporate charter, minute and
stock record books and corporate seal;
(h) each Seller's ledgers, journals and tax
returns;
(i) any assets relating to any benefits provided
or plans maintained by Sellers for any employees,
subject to the provisions of Article VII;
(j) any assets of Sellers primarily used in
Sellers' gas distribution and transmission business
conducted in the State of Arkansas; and
(k) the assets identified on Schedule 2.2(k).
2.3. Purchase Price; Adjustment.
2.3.1. Determination and Payment. In addition to the
assumption of the Assumed Liabilities contemplated by
Section 2.4, the consideration to be paid by Buyer for the
Transferred Assets will be $32,000,000 (the "Closing
Purchase Price"), payable at Closing by wire transfer of
immediately available funds to an account designated by
Sellers. The Closing Purchase Price shall be subject to
adjustment after Closing pursuant to Section 2.3.3 (as so
adjusted, the "Purchase Price").
2.3.2. Allocation. Within ninety (90) days after the
Closing Date, the Purchase Price and the value of the
Assumed Liabilities will be allocated among the Transferred
Assets by Buyer and Sellers in a mutually acceptable manner
which is consistent with Section 1060 of the Code and the
regulations thereunder. The parties agree that they will
report the federal, state and local and other tax
consequences of the purchase and sale hereunder (including,
without limitation, in filings on Internal Revenue Service
Form 8594) in a manner consistent with such allocation and
that they will not take any position inconsistent therewith
in connection with any tax return, refund claim, litigation
or otherwise. The provisions of this Section 2.3.2 shall
apply to any subsequent adjustments to the Purchase Price,
including, without limitation, adjustment pursuant to
Sections 2.3.3 and 13.8 of this Agreement.
2.3.3. Post-Closing Adjustments. Within 90 days after
the Closing Date, Sellers shall deliver to Buyer a statement
(the "Closing Statement") of (i) the net amount of the
Current Assets minus the Current Liabilities ("Net Working
Capital") as at the Closing Date and (ii) capital
expenditures with respect to the Business and depreciation
with respect to the Business during the period from the date
hereof to and including the Closing Date ("Measurement
Period"), in each case in accordance with the accounting
principles and assumptions set forth in, and in the form
provided in, the document entitled Financial Principles
which is included as Schedule 2.3.3 hereto (the "Financial
Principles").
If Net Working Capital is more than $1,600,000, the
Closing Purchase Price shall be increased by the amount by
which Net Working Capital exceeds $1,600,000. If Net
Working Capital is less than $1,600,000, the Closing
Purchase Price shall be decreased by the amount by which Net
Working Capital is less than $1,600,000. If capital
expenditures with respect to the Business during the
Measurement Period exceed depreciation with respect to the
Business during the Measurement Period, the Closing Purchase
Price shall be increased by the amount by which such capital
expenditures exceed such depreciation, but this amount shall
not exceed $1,000,000. If depreciation with respect to the
Business during the Measurement Period exceeds capital
expenditures with respect to the Business during the
Measurement Period, the Closing Purchase Price shall be
decreased by the amount by which such depreciation exceeds
such capital expenditures. If the Purchase Price, as
adjusted as provided above, exceeds the Closing Purchase
Price, Buyer shall pay the amount of such excess to Sellers.
If the Purchase Price, as adjusted as provided above, is
less than the Closing Purchase Price, then Sellers shall pay
the amount of such deficit to Buyer. Any such payment shall
be made by wire transfer of immediately available funds
within 15 days after Buyer's written notification to Sellers
of Buyer's acceptance of the Closing Statement or within 15
days after Buyer is deemed to have accepted the Closing
Statement as provided in this Section 2.3.3. The amount of
any payment required by this Section 2.3.3 shall bear
interest from the Closing Date through the date of actual
payment at the rate of 30-day LIBOR plus 50 basis points.
After delivery of the Closing Statement, Sellers shall
permit Buyer and Buyer's independent accountants access,
upon reasonable notice and during reasonable business hours,
to review their work papers and all books and records of
Sellers relevant to the items covered by the Closing
Statement, and Sellers shall permit such accountants to
perform such tests as they may reasonably require to confirm
the accuracy of such items.
In the event Buyer disputes any matter or matters on
the Closing Statement, Buyer may within forty-five (45) days
after the delivery of the Closing Statement notify Sellers
of such dispute in a writing setting forth in reasonable
detail the nature of such dispute and the facts upon which
it is based, together with the application or treatment
proposed by Buyer and the reasons supporting the use of such
application or treatment rather than that used by Sellers.
If both the Closing Statement as delivered by Sellers to
Buyer and the Closing Statement as proposed by Buyer would
require a payment by the same party pursuant to the second
paragraph of this Section 2.3.3, then such party shall make
a payment of the lesser amount reflected on the respective
Closing Statements within 15 days of delivery of Buyer's
proposed Closing Statement to Sellers, together with
interest thereon as provided by such paragraph. If no such
notice is given by Buyer within the time specified, the
Closing Statement shall be deemed accepted by Buyer.
If the parties have not resolved all matters in dispute
relating to the Closing Statement within forty-five (45)
days after Sellers' receipt of such notice from Buyer, then
any party may notify the others in writing that it elects to
submit all remaining issues to resolution by a neutral
accounting firm of national reputation. Within ten (10)
days after receipt of such notice of election by a party,
the parties shall agree upon the selection of a neutral
accounting firm or, if they are unable to agree, Sellers and
Buyer shall each submit the names of two neutral firms and a
firm shall be selected at random from among them. A firm
shall be considered neutral if it has not within the past
three years performed and does not currently perform or
contemplate performing any accounting, consulting or other
services for any of the parties and their respective
Affiliates having an aggregate value in excess of $250,000.
As soon as reasonably practicable, the firm selected
shall resolve all matters remaining in dispute solely on the
basis of the Financial Principles and the provisions of this
Section 2.3.3. Such firm shall not be required to follow
any particular rules of procedure, it being the intention of
the parties to create a feasible, practical and expeditious
method for resolving any disagreement hereunder. The
decision of such firm hereunder shall be final and binding
and shall not be subject to review or challenge of any kind.
The appropriate party shall pay to the other any disputed
amount that is determined to be due within 15 days after
such determination, together with interest thereon as
provided in the second paragraph of this Section 2.3.3. The
fees and expenses of such firm shall be borne equally by
Buyer, on the one hand, and Sellers, on the other.
If the parties resolve all matters in dispute relating
to the Closing Statement, then the Closing Statement shall
be adjusted as required by the agreement resolving the
matters in dispute and the Closing Statement as modified
shall be deemed accepted by Buyer.
2.3.4. Proration of Certain Expenses. To the extent
not reflected on the Closing Statement, real property,
personal property and other ad valorem Taxes, rents, utility
charges and similar expenses of Sellers related to the
Transferred Assets shall be allocated between Buyer, on the
one hand, and Sellers, on the other, on the basis of a daily
proration and the net amount owing from Buyer to Sellers or
from Sellers to Buyer on account of such proration shall be
paid at such time as the post-closing adjustment is paid
pursuant to Section 2.3.3. If an assessment for the period
that includes the Closing Date (the "Current Period") has
not been made by the time that payment is due under the
preceding sentence, a tentative payment shall be made at
that time based on the assessment for the immediately
preceding tax period, and Buyer or Sellers, as the case may
be, shall make an appropriate adjusting payment within 10
days following receipt of the assessment for the Current
Period.
2.4. Assumption of Liabilities. In addition to the payment
of the Purchase Price in accordance with Section 2.3.1, Buyer
shall assume and pay, perform and discharge in accordance with
the terms thereof the following liabilities and obligations (the
"Assumed Liabilities"):
2.4.1. The obligations of Sellers not required to be
performed prior to or as of the Closing Date under the
Assumed Contracts;
2.4.2. The Current Liabilities included in the
determination of Net Working Capital;
2.4.3. The obligations of Sellers not required to be
performed prior to or as of the Closing Date under the
governmental permits, franchises, consents or other
authorizations included in the Transferred Assets pursuant
to Section 2.1.7;
2.4.4. The obligations of Sellers not required to be
performed prior to or as of the Closing Date under the
agreements and arrangements giving rise to the rights and
benefits included in the Transferred Assets pursuant to
Section 2.1.12; and
2.4.5. The obligations of Sellers to customers
providing advances for construction to refund portions of
such advances to the extent additional amounts are received
by Buyer after the Closing Date from other customers with
respect to reimbursement of such advances.
Notwithstanding the foregoing, the Assumed Liabilities shall
not include any of the following (collectively, the "Excluded
Liabilities"): (a) any liabilities that AWG's Associated Natural
Gas Company Division owes to either of the Sellers or any of its
other Affiliates (other than those arising under an Assumed
Contract for the payment of natural gas or transportation
services to the extent not disallowed by any regulatory agency);
(b) any liabilities or obligations that relate primarily to the
Excluded Assets; (c) any liabilities or obligations of Sellers
with respect to any legal, administrative or other action,
proceeding or governmental investigation pending or threatened on
or prior to the Closing Date; (d) any Taxes attributable to Tax
periods that close on or before the Closing Date, or to the
extent a Tax period closes after the Closing Date but includes
the period on or before the Closing Date, any Taxes attributable
to the portion of such Tax period that is on or before the
Closing Date; (e) any liability relating to employee benefits or
employment except as provided in Article VII; (f) any liability
or obligation identified on Schedule 2.4; and (g) any other
contingent liability or obligation, whether known or unknown, of
either Seller to the extent arising out of or relating to the
operation or conduct of the Business on or prior to the Closing
Date or the ownership of the Transferred Assets on or prior to
the Closing Date which is not a liability or obligation
specifically referred to in Section 2.4.1, 2.4.2, 2.4.3, 2.4.4 or
2.4.5. For the avoidance of doubt, the provisions of this
paragraph are not intended to qualify the obligations of Buyer to
the extent provided in Section 2.3.4, Article VII, Section 8.7 or
Section 13.8. The Sellers shall retain and pay, perform or
discharge when due, all of the Excluded Liabilities.
2.5. Closing.
2.5.1. Time and Place. The closing of the
transactions contemplated hereby (the "Closing") shall take
place at the offices of Parent, 0000 Xxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxx 00000, at 11:00 a.m., Central Time
(or at such other place and time as Buyer and Sellers shall
agree), on the last day of the month in which all of the
conditions specified in Articles IX and X hereof have been
satisfied or waived (the "Closing Date").
2.5.2. Sellers' Deliveries at Closing. At the
Closing, Sellers shall deliver to Buyer:
(a) Such bills of sale and instruments of
conveyance, transfer and assignment, dated the Closing
Date, as Buyer shall reasonably request to vest in
Buyer the Transferred Assets;
(b) An agreement (the "Transition Services
Agreement") requiring Sellers to furnish to Buyer post-
Closing information technology, human resources,
billing, call center and other transition services to
be mutually agreed upon by Sellers and Buyer for a
period not to exceed ninety (90) days following the
Closing Date for consideration and upon such other
terms to be mutually agreed upon by Sellers and Buyer;
(c) An agreement (the "Omnibus Gas Transportation
and Supply Agreement") relating to certain arrangements
regarding gas transportation contracts and related
matters, including those matters identified on Schedule
2.5.2(c), on terms to be mutually agreed upon by
Sellers and Buyer; and
(d) The closing certificates and documents
required by this Agreement and such other documents and
instruments as may be reasonably requested by Buyer.
2.5.3. Buyer's Deliveries at Closing. At the Closing,
Buyer shall deliver to Sellers:
(a) By wire transfer, the Closing Purchase Price
in the manner specified in Section 2.3.1 hereof;
(b) An instrument of assumption of liabilities,
dated the Closing Date, in a form reasonably acceptable
to Sellers (the "Assumption Agreement");
(c) An executed counterpart of each of the
Transition Services Agreement and the Omnibus Gas
Transportation and Supply Agreement; and
(d) The closing certificates and documents
required by this Agreement and such other documents and
instruments as may be reasonably requested by Sellers.
2.6. Nonassignable Contracts. In the case of any contract
or other agreement (other than agreements described in Section
2.1.7) that would be included in the Transferred Assets but which
by its terms or by virtue of its subject matter is not assignable
to Buyer as of the Closing Date (collectively, the "Non-Assigned
Contracts"), such Non-Assigned Contracts shall not be transferred
or assigned to Buyer, and Sellers agree to use commercially
reasonable efforts to obtain, as soon as is reasonably
practicable following the Closing Date, any consents necessary to
convey to Buyer the benefit thereof, it being understood that
such efforts shall not include any requirement to offer or grant
any material financial accommodations to any third party or to
remain secondarily liable with respect to any such Non-Assigned
Contract. Sellers agree to use commercially reasonable efforts
to provide Buyer with the same economic and other benefits of
each Non-Assigned Contract as if such contracts had been assigned
on the Closing Date. Nothing in this Agreement shall be
construed as an attempt or an agreement to assign or cause the
assignment of any Non-Assigned Contract which is not assignable
without the consent of the other party or parties thereto, unless
such consent shall have been given, or as to which all the
remedies for the enforcement thereof enjoyed by Sellers would
not, as a matter of law, pass to Buyer as an incident of the
assignments provided by this Agreement. The provision of
benefits under this Section 2.6 shall not constitute satisfaction
of the conditions in Articles IX and X.
III. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers, jointly and severally, hereby represent and warrant
to Buyer as follows:
3.1. Corporate Existence. Each Seller (a) is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Arkansas, (b) has the requisite power
and authority to enter into and perform its obligations under
this Agreement, and (c) is duly qualified to do business as a
foreign corporation, and is in good standing in each jurisdiction
where the Business makes such qualification necessary, except
where the failure to be so qualified or in good standing would
not reasonably be expected to have a Material Adverse Effect.
3.2. Authorization and Validity of Agreement. The
execution, delivery and performance by each Seller of this
Agreement have been duly authorized by all necessary corporate
action. This Agreement has been duly and validly executed and
delivered by each Seller and constitutes a valid and binding
obligation enforceable against each Seller in accordance with its
terms, except to the extent that such enforceability (i) may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally, or
(ii) is subject to general principles of equity.
3.3. No Contravention. The execution, delivery and
performance by each Seller of this Agreement and the consummation
by each Seller of the transactions contemplated on its part
hereby will not, subject to obtaining the consents, approvals,
authorizations, exemptions or waivers identified on Schedule 3.3,
3.7 or 3.10, (i) violate any provision of law, rule or regulation
to which either Seller is subject, (ii) violate any order,
judgment or decree applicable to either Seller or (iii) conflict
with, or result in a breach or default under, any term or
condition of any of the charter or bylaws of either Seller or any
material term or condition of any contract, agreement or
instrument (including the Assumed Contracts) to which it is a
party or by which it or any of the Transferred Assets may be
bound.
3.4. Title to Assets; Adequacy; Condition. Each Seller has
good title to the Transferred Assets to be sold by it hereunder,
subject to no Encumbrance, except Permitted Encumbrances. For
purposes of this Agreement, "Permitted Encumbrances" shall mean
(i) liens for Taxes and assessments not yet due or being
contested in good faith by appropriate proceedings, (ii) such
minor imperfections of title and encumbrances that do not secure
monetary obligations which individually or in the aggregate are
not substantial and do not materially detract from the value or
impair the use of the Transferred Assets and (iii) such
encumbrances as set forth in Schedule 3.4. The Transferred
Assets include all assets and properties that are necessary for
the supply and servicing of the customers of the Business in
accordance in all material respects with the historical supply
and service standards of the Sellers, except for the functions
subject to the Transition Services Agreement and the Omnibus Gas
Transportation and Supply Agreement. The tangible assets
included in the Transferred Assets are in good operating
condition, reasonable wear and tear excepted, and are adequate
for the uses to which they are being put in the conduct of the
Business.
3.5. Material Contracts. Schedule 3.5 contains a list of
each Assumed Contract in existence as of September 30, 1999, (i)
which is a gas supply, transportation or storage agreement
relating to the Business involving a minimal annual payment of
more than $50,000, (ii) which involves a minimum annual payment
to or by a Seller relating to the Business of more than $50,000,
(iii) the loss of which would have a Material Adverse Effect,
(iv) pursuant to which either Seller is subject to take-or-pay
obligations with respect to gas purchases or gas marketing in
connection with the Business which impose minimum obligations of
more than $50,000 over the remaining term thereof or (v) which is
otherwise material to the Business or the Transferred Assets
(collectively, the "Material Contracts"). Except as set forth in
Schedule 3.5, each of the Material Contracts is in full force and
effect and is valid and enforceable in accordance with its terms,
subject as to enforceability to the effects of any bankruptcy or
similar laws. Except as set forth in Schedule 3.5, each Seller
is in material compliance with all applicable terms of each
Material Contract, and to the Knowledge of each Seller, each
other party thereto is in material compliance with all applicable
terms of each Material Contract. Neither Seller has given to or
received from any other party to any Material Contract any notice
or other written communication regarding any actual or alleged
material breach of or default under any Material Contract that
has not been withdrawn, settled, or otherwise resolved.
3.6. Real Property. To the Knowledge of each Seller, no
condemnation, expropriation, eminent domain or similar proceeding
is pending or contemplated with respect to the Owned Property,
the Leased Property or the System Property. Except as set forth
in Schedule 3.6, each Seller is in compliance, in all material
respects, with all covenants, restrictions, rights of way,
easements and similar realty interests benefiting or encumbering
the Real Property, the Leased Property and the System Property.
The Real Property, the Leased Property and the System Property,
and all improvements thereon, do not violate in any material
respect any applicable zoning, construction code or other
governmental restriction.
3.7. Permits. Except with regard to Environmental Permits,
as to which the Sellers' sole representations and warranties are
set forth in Section 3.15, each Seller holds all material
permits, franchises and other authorizations necessary to conduct
the Business as currently conducted by such Seller. The Sellers
are in compliance, in all material respects, with all of such
permits, franchises and other authorizations. A list of all
material permits, franchises and other authorizations, other than
Environmental Permits, relating to the Business is set forth in
Schedule 3.7 (the "Permits").
3.8. Litigation. Except as set forth in Schedule 3.8, there
is no legal, administrative or other action, proceeding or, to
the Knowledge of each Seller, governmental investigation either
pending or, to the Knowledge of each Seller, threatened
(i) against either Seller with respect to the Business or the
Transferred Assets, or (ii) which seeks to enjoin or obtain
damages in respect of the consummation of the transactions
contemplated hereby, which, in either case, if decided adversely,
would reasonably be expected to have a Material Adverse Effect.
3.9. Compliance with Laws. Except as set forth in Schedule
3.9, each Seller is in compliance, in all material respects, with
all laws, rules, regulations, ordinances, judgments, injunctions,
orders and decrees applicable to the Transferred Assets or the
Business, excluding, however, Environmental Laws, as to which the
Sellers' sole representations and warranties are set forth in
Section 3.15.
3.10. Governmental Consents. Except as set forth in
Schedule 3.10, no consent, approval or authorization of, or
exemption by, or declaration, registration or filing with, any
governmental or regulatory authority is required in connection
with the execution, delivery and performance by Sellers of this
Agreement or the taking of any other action contemplated hereby,
excluding, however, consents, approvals, authorizations,
exceptions and filings, if any, where the failure to obtain or
make the same would not impair in any material respect the
consummation of the transactions contemplated by this Agreement
and would not materially affect the use or operation of the
Transferred Assets after the Closing Date.
3.11. Tax Matters.
(a) Tax Returns. All federal, state, local and other Tax
returns, declarations, statements, reports or other documents
required to be filed with respect to Taxes ("Returns") by Sellers
on or before the Closing Date have been filed or will be filed on
a timely basis with the appropriate governmental agencies in all
jurisdictions in which such Returns are required to be filed.
All such Returns are true, complete and correct in all material
respects and all Taxes shown on such Returns as being due, or
otherwise due, in respect of material Taxes either (i) have been
or will be fully paid or adequately provided for or (ii) are
being contested in good faith by appropriate proceedings.
(b) Transferred Asset Status. None of the Transferred
Assets (i) secures any debt the interest on which is tax-exempt
under Section 103 of the Code, (ii) is "tax-exempt use property"
within the meaning of Section 168(h) of the code, (iii) is "tax-
exempt bond financing property" within the meaning of Section
168(g)(5) of the Code, (iv) is "limited use property" within the
meaning of Revenue Procedure 76-30, or (v) is required to be
treated as being owned by any other Person pursuant to the
provisions of former section 168(f)(8) of the Code.
3.12. Financial Statements. Attached hereto as Schedule
3.12 are a balance sheet and a statement of income for the
Business as of and for the nine months ended September 30, 1999
and a balance sheet and a statement of income for the Business
for the year ended December 31, 1998 (the "Financial
Statements"). The Financial Statements have been prepared in
accordance with the Financial Principles and with the books and
records of Sellers. To the extent relevant to the Financial
Statements, in all material respects the books and records of
Sellers are true, accurate and complete; have been maintained in
accordance with good accounting practices; and, except as set
forth in the Financial Principles, have been maintained on a
consistent basis. The Financial Statements make adequate
provision, in accordance with the Financial Principles, for any
material contracts (or material group of similar contracts)
reasonably expected to be performed at a loss. The Financial
Statements fairly present, in all material respects, the
financial position and the results of operations of the Business
as of and for such dates and periods in accordance with the
Financial Principles consistently applied. Since September 30,
1999, the Sellers have not made any capital expenditures outside
the ordinary course of business or inconsistent with past
practice with respect to the Business, entered into any material
contracts (or material group of similar contracts) reasonably
expected to be performed at a loss, or experienced any material
damage, destruction or loss (whether or not covered by insurance)
to the assets or properties used in the conduct of the Business.
3.13. Employee Matters.
3.13.1. Schedule 3.13.l contains a list, which is true
and complete in all material respects, of (a) each
employment agreement with any Transferred Employee, written
or oral, and (b) each bonus, deferred compensation,
incentive compensation, stock purchase, stock option,
severance pay, change in control, disability, medical,
dental, life or other insurance, supplemental unemployment
benefits, profit sharing, pension or retirement plan,
program, agreement or arrangement (collectively, the
"Plans") sponsored, maintained or contributed to or required
to be contributed to by either Seller or with respect to
which Seller has any liability for the benefit of any
Transferred Employee (as hereinafter defined) or any former
employee of the Business.
3.13.2. Each Seller maintains, sponsors or contributes
to only those employee pension benefit plans (as defined in
Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), whether or not excluded from
coverage under specific Titles or Subtitles of ERISA)
established or maintained for the benefit of employees or
former employees of the Business that are described in
Schedule 3.13.2 (the "Pension Plans"), none of which is a
multi-employer plan (within the meaning of Section 3(37) of
ERISA). Except as set forth on Schedule 3.13.2, each
Pension Plan that is intended to be tax qualified under
Sections 401(a) and 501(a) of the Code is so qualified, has
received one or more favorable IRS determination letters as
to its qualification, covering such plan from its inception,
and nothing has occurred that could jeopardize such tax
qualified status.
3.13.3. Each Seller maintains, sponsors or contributes
to only those employee welfare benefit plans (as defined in
Section 3(1) of ERISA, whether or not excluded from coverage
under specific Titles or Subtitles of ERISA) for the benefit
of employees or former employees of the Business that are
described in Schedule 3.13.1 (the "Welfare Plans"), none of
which is a multi-employer plan (within the meaning of
Section 3(37) of ERISA).
3.13.4. Except as set forth on Schedule 3.13.4,
neither Seller is a party to any collective bargaining or
labor agreement relating to the Business, and there is not,
as of the date of this Agreement, any strike, work stoppage
or material labor controversy or dispute pending or, to the
best of the Knowledge of each Seller, threatened relating to
the Business.
3.13.5 The post-retirement health and life obligations of
Sellers for Transferred Employees and former employees of the
Business ("SFAS 106 Obligations") for the year ended December 31,
1998 did not exceed by more than $20,000 the amount included in
rate recovery for the Business with respect to SFAS 106
Obligations pursuant to Sellers' most recent Missouri rate case
(effective January 10, 1998). That portion of all rates
reflecting the SFAS 106 Obligations paid to Sellers relating to
the Business has been deposited in the trusts created to fund the
SFAS 106 Obligations.
3.13.6 Prior to January 10, 1998, there were no post-
retirement health or life obligations of Sellers for employees or
former employees of the Business included in rate recovery, other
than "pay-as-you-go" obligations.
3.14. Brokerage. No broker or finder has acted directly
or indirectly for either Seller in connection with this Agreement
or the transactions contemplated hereby, and no broker or finder
is entitled to any brokerage or finder's fee or other commission
in respect thereof based in any way on agreements, arrangements
or understandings made by or on behalf of either Seller.
3.15. Environmental Matters. Except as disclosed in
Schedule 3.15, each Seller holds all Environmental Permits that
are required for the operation of the Business. Except as
disclosed in Schedule 3.15, each Seller's conduct of the
Business, and the condition of all properties and improvements
included in the Transferred Assets (and, to the Knowledge of each
Seller, any off-site storage or disposal of any Hazardous
Materials from such operations), is in compliance, in all
material respects, with all Environmental Laws. Except as
disclosed on Schedule 3.15, neither Seller is currently in
receipt of any written claim, demand, notice or complaint
alleging material violation of, or material liability under, any
Environmental Law relating to the operation of the Business or
the Transferred Assets. Except as described on Schedule 3.15, to
the Knowledge of each Seller, neither of Sellers has incurred any
material liability or obligation in connection with any release
or threatened release of any Hazardous Material in the
environment or any material reclamation or remediation
requirements under any Environmental Law, in each case relating
to the operation of the Business or the Transferred Assets. No
Seller has been named as a potential responsible party under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, or any corresponding state laws. Except
as described on Schedule 3.15, to the Knowledge of each Seller,
no Hazardous Materials were incorporated in the Real Property,
the Leased Property or the System Property prior to the
acquisition thereof by such Seller. There are no sites,
locations or operations at which any Seller is currently
undertaking, or has completed, any remedial or response action
relating to the disposal or release of a Hazardous Material, as
required by Environmental Laws, with respect to the Business.
Buyer acknowledges that (i) the representations and warranties
contained in this Section 3.15 are the only representations and
warranties being made with respect to compliance with or
liability under Environmental Laws or with respect to any
environmental, health or safety matter, including natural
resources, related in any way to this Agreement or its subject
matter and (ii) no other representation contained in this
Agreement shall apply to any such matters and no other
representation or warranty, express or implied, is being made
with respect thereto.
3.16. No Undisclosed Liabilities; No Material Adverse
Effect. There are no material liabilities or obligations of the
Business or of either Seller arising out of or relating to the
Business or the Transferred Assets, except (i) Excluded
Liabilities, (ii) liabilities and obligations reflected in the
Financial Statements, (iii) liabilities and obligations arising
since September 30, 1999 in the ordinary course of business that
are not inconsistent with the types and amounts of such
liabilities and obligations historically incurred in the
Business, and (iv) liabilities and obligations identified on
Schedule 3.16 or another Schedule hereto. Since September 30,
1999, there has not occurred any event resulting in a Material
Adverse Effect.
3.17. Customers; Suppliers. Neither of Sellers has been
involved in any material controversy with any group of similarly
situated customers of the Business or with any material suppliers
of the Business during the last two years.
3.18. Books and Records. All books and records of each
Seller with respect to the Business or the Transferred Assets
have been prepared, assembled and maintained in accordance in all
material respects with the usual and customary policies and
procedures and accurately reflect, in reasonable detail, the
assets and transactions of each Seller relating to the Business
or the Transferred Assets.
3.19. Insurance. Schedule 3.19 identifies each material
insurance policy of Sellers relating to the Transferred Assets.
3.20. Accounts Receivable. Except as set forth on
Schedule 3.20, the accounts and notes receivable included in the
Transferred Assets: (a) arose from bona fide sales or
contracting transactions by Sellers in the ordinary course of
business consistent with past practices; and (b) represent bona
fide indebtedness of the respective debtors.
3.21. Y2K Compliance. Sellers have put into effect
reasonable and customary practices and programs designed to
enable all material software, hardware and equipment that are
owned or utilized by Sellers in the operation of the Business to
be capable, by December 31, 1999, of accounting for all
calculations using a century and date sensitive algorithm for the
year 2000 without any material interruption caused by the
occurrence of the year 2000.
3.22. No Other Representations. Except as set forth in
this Article III or made pursuant to Section 9.1, Sellers make no
representation or warranty whatsoever to Buyer.
IV. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Sellers as follows:
4.1. Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Texas and the Commonwealth of Virginia and has all requisite
corporate power and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated
hereby.
4.2. Authorization and Validity of Agreement. The
execution, delivery and performance by Buyer of this Agreement
have been duly authorized by all necessary corporate action.
This Agreement has been duly and validly executed and delivered
by Buyer and constitutes a valid and binding obligation
enforceable against Buyer in accordance with its terms, except to
the extent that such enforceability (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally, or (ii) is
subject to general principles of equity.
4.3. No Contravention. The execution, delivery and
performance by Buyer of this Agreement and the consummation of
the transactions contemplated on its part hereby will not,
subject to obtaining any required consents, approvals,
authorizations, exemptions or waivers, (i) violate any provision
of law, rule or regulation to which it is subject, (ii) violate
any order, judgment or decree applicable to it, or (iii) conflict
with, or result in a breach or default under, any term or
condition of Buyer's articles of incorporation or bylaws, or any
contract, agreement or other instrument to which it is a party or
by which it may be bound.
4.4. Consents. Except as set forth on Schedule 4.4, no
consent, approval or authorization of, or exemption by, or
declaration, registration or filing with, any governmental or
regulatory authority is required in connection with the
execution, delivery and performance by Buyer of this Agreement,
or the taking of any other action contemplated hereby.
4.5. Brokerage. No broker or finder has acted directly or
indirectly for Buyer in connection with this Agreement or the
transactions contemplated hereby, and no broker or finder is
entitled to any brokerage or finder's fee or other commission in
respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer.
4.6. Litigation. There is no legal, administrative or other
action, proceeding or, to Buyer's knowledge, governmental
investigation pending or, to Buyer's knowledge, threatened
(i) against Buyer with respect to which there is a reasonable
likelihood of a determination which would have a material adverse
effect on the ability of Buyer to perform its obligations under
this Agreement or (ii) which seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated
hereby.
4.7. Financing. Buyer has all funds necessary to consummate
the transactions contemplated by this Agreement.
V. OBLIGATIONS OF SELLERS.
Sellers hereby covenant and agree with Buyer as follows:
5.1. Consents. Each Seller will use commercially reasonable
efforts, and will cooperate with Buyer, to secure all necessary
consents, approvals, authorizations, exemptions and waivers from
third parties, including governmental authorities, as shall be
required in order to enable Sellers to effect the transactions
contemplated on their part hereby. It is understood that such
efforts do not require Sellers to offer or grant financial
accommodations to any third party or to remain secondarily liable
with respect to any Assumed Liability.
5.2. Conduct of Business. Except as may be otherwise
contemplated by this Agreement or required by any of the
documents listed in any Schedule hereto or except as Buyer may
otherwise consent in writing, between the date hereof and the
Closing Date Sellers will: (i) in all material respects, conduct
the Business only in the ordinary course consistent with past
practice; (ii) use commercially reasonable efforts to preserve
intact the Business and the goodwill of its customers, suppliers,
employees and any other Persons having business relations with
them with respect to the Business; (iii) maintain the properties,
machinery and equipment included in the Transferred Assets in
sufficient operating condition and repair to enable Buyer to
conduct the Business as currently conducted by Sellers; and
(iv) use commercially reasonable efforts to conduct the Business
in such a manner so that the representations and warranties of
the Sellers contained herein shall continue to be true and
correct at all times prior to the Closing Date as if made on and
as of such times. Without limiting the generality of the
foregoing, except as Buyer may otherwise consent in writing,
Sellers shall not (i) enter into any contract which would be a
Material Contract, or amend or modify any existing Material
Contract, not in the ordinary course of business consistent with
past practice or (ii) except for budgeted compensation increases,
adopt, amend or terminate any Plan, increase any salary, bonus or
other compensation or benefit, or promise or commit to do any of
the foregoing, except in a manner which individually or in the
aggregate will not result in a material increase in benefits or
compensation expense.
5.3. Access Before Closing. From the date of this Agreement
until the Closing Date, Sellers will permit Buyer and its
representatives reasonable access on reasonable notice during
normal business hours to the properties, personal property,
personnel, books and records, contracts, and commitments of the
Business, including the right to make copies of such books and
records, contracts, and commitments. In the event that any
record or other information requested by Buyer is subject to a
confidentiality agreement with a third party, attorney-client
privilege, or other legal restriction or privilege, Sellers and
Buyer will endeavor to find means of disclosing as much
information as practicable that is needed by Buyer to prepare for
the transfer of the Business, but Sellers will not be obligated
to breach such restriction or privilege. Buyer shall return all
copies of such books and records, contracts, and commitments
promptly upon the request of Sellers if for any reason the
Closing does not occur.
5.4. Clearance Certificate. On or prior to the Closing
Date, Sellers shall use commercially reasonable efforts to
provide Buyer, at Buyer's request, with all clearance
certificates or similar documents that may be required by any
state, local or other taxing authority in order to relieve Buyer
of any obligation to withhold or escrow any portion of the
Purchase Price.
VI. OBLIGATIONS OF BUYER.
Buyer hereby covenants and agrees with Sellers as follows:
6.1. Consents. Buyer will use commercially reasonable
efforts, and will cooperate with Sellers, to secure all necessary
consents, approvals, authorizations, exemptions and waivers from
third parties, including governmental authorities, as shall be
required in order to enable Buyer to effect the transactions
contemplated hereby. It is understood that such efforts do not
require Buyer to offer or grant financial accommodations to any
third party or to become liable with respect to any Excluded
Liability.
VII. EMPLOYEE MATTERS.
7.1. Employment of Employees. As of the Closing Date, Buyer
shall offer to employ each employee listed in Schedule 7.1 (which
Schedule shall be updated as of the Closing Date with appropriate
deletions and additions thereto to reflect the then current
employees of the Business, but not including any employee then on
long-term disability, short-term disability or not actively at
work other than those employees on vacation, bereavement leave,
short-term sick leave or other short-time due to non-medical
reasons which are not scheduled to last more than ten (10)
business days ("Leave"), unless and until such employee returns
to full-time work from such long-term disability, short-term
disability or Leave after the Closing Date) at a base salary or
hourly rate not less than the base salary or hourly rate then
applicable to such employee and to provide such benefits,
holidays, vacation days, and similar benefits as are, in the
aggregate, substantially comparable to those then in effect for
such employees, except that Buyer shall not be required to
provide a 401(k) savings plan. Each such employee as of the
Closing Date (or for an employee on long-term or short-term
disability or Leave as of the Closing Date, who returns from such
disability or Leave after the Closing Date), who becomes employed
by Buyer is herein referred to individually as a "Transferred
Employee" and collectively as the "Transferred Employees".
7.2. Severance Benefits. For a period of one year after the
Closing Date, Buyer shall provide to each Transferred Employee
who is involuntarily terminated not for cause by Buyer the
severance benefits set forth on Schedule 7.2 hereto.
7.3. Transfer of Pension Assets and Liabilities.
7.3.1. Transfer. Subject to the review of Sellers'
plan documents, as soon as practicable following the Closing
Date, but not earlier than thirty (30) days following the
filing of appropriate Forms 5310A, if applicable, with the
Internal Revenue Service, Parent shall cause to be
transferred (i) from the Southwestern Energy Company Pension
Plan (the "Seller Pension Plan") to the pension plan
sponsored by or to be established by Buyer ("Buyer's Pension
Plan"), and Buyer's Pension Plan shall assume, the accrued
benefits liability as of the Closing Date for each of the
Transferred Employees who participated in the Seller Pension
Plan prior to the Closing Date (the "Transferred Pension
Plan Participants"), and (ii) from the Southwestern Energy
Company Pension Trust (the "Seller Pension Plan Trust") to
Buyer's Pension Plan trust, an amount in cash equal to the
projected benefit obligation to the Transferred Pension Plan
Participants on the Closing Date under the Seller Pension
Plan, increased by interest at the plan's actuarial rate
from Closing to the actual date of transfer and decreased by
the amount of any benefit payments to Transferred Pension
Plan Participants after the Closing Date but before the date
of transfer. Parent shall not be obligated to cause any
amount to be transferred to any plan or trust designated by
Buyer until Buyer provides evidence (such as a favorable
determination letter from the Internal Revenue Service, an
opinion of counsel or other reasonably satisfactory
evidence) reasonably acceptable to Parent that (i) such plan
and trust satisfy the requirements for qualification under
Section 40l(a) of the Internal Revenue Code (the "Code") and
(ii) such plan provides that each Transferred Pension Plan
Participant is entitled to a nonforfeitable accrued benefit
under such plan that is not less than the nonforfeitable
accrued benefit to which such Transferred Pension Plan
Participant was entitled under the Seller Pension Plan on
the Closing Date.
7.3.2. Benefit Calculations. The projected benefit
obligation to Transferred Pension Plan Participants shall be
determined using the projected benefit obligation
methodology of Statement of Financial Accounting Standards
No. 87, on the basis of (i) each participant's age, service
for benefit accrual purposes and average compensation and
the terms of the Seller Pension Plan in effect on the
Closing Date, and (ii) the actuarial assumptions and method
used for determining the projected benefit obligation as set
forth in Schedule 7.3.2. In no event shall each amount
transferred pursuant to this Section 7.3 be less than the
amount required to be transferred to meet the requirements
of Sections 401(a)(12) and 414(1) of the Code. The
calculation of projected benefit obligation required for
purposes of this Section 7.3.2 shall be made in accordance
with the assumptions set forth on Schedule 7.3.2.
7.3.3. Plan Termination. Subject to the requirements
of applicable law, in the event of the termination of
Buyer's Pension Plan within five (5) years after the Closing
Date, all of the assets transferred to such plan pursuant to
this Section 7.3, adjusted for earnings, gains or losses
after the date of such transfer, shall be used to provide
benefits to Transferred Pension Plan Participants and their
beneficiaries who are entitled to benefits under such plan
at the time of its termination.
7.4. Savings Plan. Subject to the review of Sellers' plan
documents, as soon as practicable following the Closing Date, to
the extent that Buyer sponsors a 401(k) savings plan (which it
shall not be required to do), Parent shall cause to be
transferred (i) from the Southwestern Energy Company 401(k)
savings plan (the "Seller Savings Plan") to the 401(k) savings
plan sponsored by Buyer ("Buyer's Savings Plan"), and the Buyer's
Savings Plan shall assume, the account balance liability as of
the date of transfer for each Transferred Employee who
participated in the Seller Savings Plan prior to the Closing
Date, who is employed by Buyer on the date of transfer (the
"Eligible Transferred Employee"), and (ii) from the trust
relating to the Seller Savings Plan, an amount in cash or other
property, including participant loans, acceptable to the trustee
of the Buyer's Savings Plan equal to the sum of the account
values (as of the date of transfer) of each Eligible Transferred
Employee. Parent shall not be obligated to cause any amount to
be transferred to the Buyer's Savings Plan or the trust
thereunder until Buyer provides evidence (such as a favorable
determination letter from the Internal Revenue Service, an
opinion of counsel or other reasonably satisfactory evidence)
reasonably acceptable to Parent that such plan and trust satisfy
the requirements for qualification under Section 40l(a) of the
Code. Each Eligible Transferred Employee shall be entitled on
the date of transfer to a nonforfeitable account balance under
the Buyer's Savings Plan that is not less than such Eligible
Transferred Employee's nonforfeitable account balance under the
Seller Savings Plan immediately prior to such transfer. Buyer
agrees to permit any Eligible Transferred Employee who has an
unpaid loan balance under the Seller Savings Plan to continue to
repay such loan under the Buyer's Savings Plan under the same
terms as such loan was required to be repaid under the Seller
Savings Plan. However, nothing herein shall require Buyer to
sponsor or establish a Savings Plan, in which case this Section
7.4 shall not apply. Buyer shall permit the Transferred
Employees to participate in Buyer's Employee Stock Ownership
Plan.
7.5. Indemnification for Plan Liabilities. From the dates
of the transfers of assets referred to in Sections 7.3 and 7.4,
Buyer shall indemnify and hold Sellers and Seller Savings Plan
and Seller Pension Plan harmless for any loss that Sellers or
said plans may incur in respect of any obligation or liability
transferred under Sections 7.3 and 7.4 to the applicable plan of
Buyer designated under such Sections.
7.6. Service Credit. For purposes of vesting, benefit
accrual, benefit calculation, participation, eligibility
(including for optional forms of benefits or early retirement or
disability retirement under Buyer's Pension Plan), and matching
contribution benefits, if any, Buyer shall, with respect to each
benefit required to be provided under the terms of this Article
7, credit each Transferred Employee with all service credited to
the Transferred Employee under each Seller's corresponding plan,
policy, program, or arrangement applicable to such Transferred
Employee as of the Closing Date.
7.7. Medical and Dental Plans.
7.7.1. Effective as of the Closing Date, Buyer shall
make enrollment available to all Transferred Employees and
their eligible dependents without any waiting period in a
Buyer plan or plans providing medical and dental benefits
(the "Buyer Medical Plan"), to the extent such individuals
were covered under Seller's Medical Plan, as contemplated by
Section 7.1. Such Buyer Medical Plan shall waive any
restrictions and limitations for pre-existing conditions for
all Transferred Employees, to the extent such restrictions
did not apply under Seller's Medical Plan, and shall give
credit to each Transferred Employee for any deductibles and
out-of-pocket expenses paid during the current plan year by
such Transferred Employee under Sellers' applicable medical
and dental Plans (hereinafter collectively referred to as
the "Seller Medical Plans").
7.7.2. Buyer shall be responsible for medical and
dental expenses covered under the terms of the Buyer Medical
Plan incurred on the later of (i) the Closing Date or (ii)
the date such person becomes a Transferred Employee, by a
Transferred Employee and/or his covered dependents who are
enrolled in the Buyer Medical Plan. Sellers shall be
responsible only for medical and dental expenses covered
under the terms of the Seller Medical Plans incurred prior
to the Closing Date (or if later, for the period from the
Closing Date until the date such person becomes a
Transferred Employee) by a Transferred Employee and/or his
covered dependents. If a Transferred Employee or a covered
dependent of a Transferred Employee enrolled in the Seller
Medical Plans is hospitalized on the Closing Date, the
Seller Medical Plans shall continue to provide coverage for
such person until he or she is discharged from the hospital,
to the extent coverage is provided under the terms of the
Seller Medical Plans.
7.7.3. As soon as possible following the Closing Date,
but in no event later than 30 days following the later of
the Closing Date or the establishment of Buyer's Post-
Retirement Trusts (as defined below), Parent shall cause to
be transferred to Buyer, either through the transfer from
the trusts or other vehicles (the "Seller's Post-Retirement
Trusts") funding the post-retirement medical and other
welfare benefits (the "Post Retirement Benefits") for all
Transferred Employees listed on Schedule 7.1 and not greater
than thirty-five (35) former employees of the Business (to
be listed on a Schedule to be provided by Sellers to Buyer
within five days of the date hereof, and updated as of the
Closing Date) to the trust or trusts established or
maintained by Buyer (the "Buyer's Post-Retirement Trusts")
for the funding of post-retirement medical and other welfare
benefits or through a direct payment to Buyer, an amount
equal to the difference between (a) the amount of the Post-
Retirement Benefits which has been recovered by Seller in
rates on or after January 10, 1998, and (b) the amount of
the Post-Retirement Benefits paid by Seller in the form of
benefit payments between January 10, 1998 and the Closing
Date. In the event the representations and warranties of
Sellers in Section 3.13.6 do not continue to be true and
correct, Sellers shall pay to Buyer the amount by which the
rate recovery with respect to the Business for periods prior
to January 10, 1998 exceeded the "pay-as-you-go" obligations
of the Business for periods prior to January 10, 1998.
7.8. Vacation and Sick Day Benefits Accrued Through Closing
Date. Buyer shall credit each Transferred Employee with any
vacation and sick days accrued as of the Closing Date in
accordance with the terms of Sellers' vacation and sick day
policies in effect as of such date.
7.9. Welfare Benefits. Sellers shall be liable for claims
incurred under the Welfare Plans prior to the Closing Date.
7.10. Long Term Disability. Buyer shall not assume
sponsorship of, or any liabilities under, the Southwestern Energy
Company Long Term Disability Plan. Any and all such liabilities
shall remain solely with Sellers.
7.11. Flexible Spending Accounts. As soon as possible
following the Closing Date, Sellers shall transfer to Buyer, and
Buyer agrees to accept, those amounts which represent the
Transferred Employees' debit and credit balances under the
Southwestern Energy Company Salary Conservation Plan (the
"FSA's"), a schedule of which is attached hereto as Schedule
7.11. Buyer agrees to administer the FSA's (consistent with the
terms of the flex plan applicable to Buyer's employees) such that
Transferred Employees will be able to defer additional
compensation (in accordance with the terms of the applicable
Buyer plan) and to submit claims against the FSA within the time
period permitted by applicable law.
7.12. WARN Act Liability. Sellers shall pay and be
solely liable for all liability under the Worker Adjustment and
Retraining Notification Act ("WARN Act"), in each case, arising
from any act or omission of Sellers on or before the Closing
Date. Buyer shall pay and be solely liable for all liability
under the WARN Act, in each case, arising from any act or
omission of Buyer or its Affiliates after the Closing Date.
7.13. Health Care Continuation Coverage. Sellers shall
be responsible for compliance with all requirements under Section
4980B of the Code and Section 601 et seq. of ERISA with respect
to any (a) Transferred Employee or (b) family member of such
Transferred Employee, in each case who becomes a qualified
beneficiary within the meaning of Section 4980B(g)(1) of the Code
as a result of any "qualifying event" within the meaning of
Section 4980B(f)(3) of the Code which occurs on or prior to the
Closing Date. Buyer shall be responsible for compliance with all
requirements under Section 4980B of the Code and Section 601 et
seq. of ERISA with respect to any (a) Transferred Employee or
(b) family member of such Transferred Employee, in each case who
becomes a qualified beneficiary within the meaning of Section
4980B(g)(1) of the Code as a result of any "qualifying event"
within the meaning of Section 4980B(f)(3) of the Code which
occurs after the Closing Date.
7.14. Employment Taxes. Sellers hereby acknowledge
that, for FICA and FUTA tax purposes, Buyer qualifies as a
successor employer with respect to the Transferred Employees. In
connection with the foregoing, the parties agree to follow the
"Alternative Procedures" set forth in Section 5 of Revenue
Procedure 96-60, 1996-2-C.B.399. In connection with the
application of the "Alternative Procedures," (i) Sellers and
Buyer each shall report on a predecessor-successor basis as set
forth in such Revenue Procedure, (ii) provided that Sellers
provide to Buyer all necessary payroll records for the calendar
year that includes the Closing Date, Sellers shall be relieved
from furnishing Forms W-2 to employees of Sellers that become
employees of Buyer, and (iii) provided that Sellers provide to
Buyer all necessary payroll records for the calendar year that
includes the Closing Date, Buyer shall assume the obligations of
Sellers to furnish such Forms W-2 to such employees for the full
calendar year in which the Closing occurs.
VIII. ADDITIONAL RIGHTS AND OBLIGATIONS.
8.1. Access After Closing. Buyer will permit Sellers and
their representatives reasonable access on reasonable notice
during normal business hours, for a period of three years
following the Closing Date and for such longer period as may be
required in connection with any pending or threatened tax audit
or judicial or administrative proceeding, (i) to the books and
records of Sellers included in the Transferred Assets, including
the right to make copies thereof, and to personnel (for
reasonable inquiry and testimony), and (ii) to any computerized
data included in the Transferred Assets. All information so
obtained shall be kept confidential by the Sellers, unless such
information otherwise becomes publicly available or disclosure of
such information is required by applicable law.
8.2. Further Assurances. At any time and from time to time
after the Closing Date, Sellers shall, at the request of Buyer,
and Buyer shall, at the request of Sellers, execute and deliver
any further instruments or documents and take all such further
action as the other party may reasonably request in order to
consummate and make effective the sale of the Transferred Assets
and the assumption of the Assumed Liabilities pursuant to this
Agreement or to fulfill any other of such party's obligations
hereunder.
8.3. Confidentiality. The terms of the Confidentiality
Agreement dated June 15, 1999 between Parent and Buyer are hereby
incorporated herein by reference and shall continue in full force
and effect until the Closing, at which time such Confidentiality
Agreement and the obligations of Buyer under this Section 8.3
shall terminate. If this Agreement is, for any reason,
terminated prior to the Closing, the Confidentiality Agreement
shall continue in full force and effect.
8.4. Schedules. Certain information set forth in the
Schedules is included solely for informational purposes and may
not be required to be disclosed pursuant to this Agreement. The
disclosure of any information shall not be deemed to constitute
an acknowledgment that such information is required to be
disclosed in condition with the representations and warranties
made by Sellers in this Agreement.
8.5. Tax Matters. Sellers shall prepare or cause to be
prepared and timely file or cause to be timely filed all required
Tax Returns relating to Transfer Taxes imposed on Sellers for
(i) all taxable periods ending on or before the Closing Date for
which Returns shall not have been filed as of the Closing Date,
and (ii) all taxable periods ending following the Closing Date
that include the Closing Date (all such Returns referred to in
clause (i) and (ii) being "Pre-Closing Returns"). All such Pre-
Closing Returns shall be prepared on a basis consistent with
prior practice unless a different treatment is required by a
change in applicable law.
8.6. Use of Name and Logos.
8.6.1. Buyer agrees to cease using the Names and Logos
on its literature, inventory, products, labels, packaging or
materials as soon as available supplies thereof are
exhausted and in any event within six months after the
Closing Date with respect to inventory and products, and
within 90 days after the Closing Date with respect to
literature.
8.6.2. For thirty days after Closing, Buyer may use,
as is, any of Sellers' receipts, bags, boxes, stationery,
purchase order forms, bills or other similar paper goods on
hand or order at Closing. After such time, Buyer shall not
use any such supplies which state or otherwise indicate
thereon that the business operated by Buyer is a subsidiary,
division or unit of either Seller without first crossing out
or marking over such statement or indication or otherwise
clearly indicating on such supplies that the business
operated by Buyer is no longer a subsidiary, division or
unit of either Seller.
8.7. Environmental Matters.
(a) Sellers jointly and severally agree to indemnify and
hold Buyer harmless against any and all Losses incurred by Buyer
resulting from Matters of Environmental Concern (as hereinafter
defined); provided that: (i) any claim by Buyer for
indemnification pursuant to this clause 8.7(a) must be made by
written notice given within three (3) years after the Closing
Date; (ii) Sellers will have no obligation to indemnify Buyer for
such Losses except to the extent that such Losses, taken
together, exceed $200,000 in the aggregate (the "Threshold"), and
then only to the extent of the excess that has not and will not
be recoverable through rates; and (iii) any clean-up,
remediation, reclamation or other costs with respect to the
Transferred Assets for which a claim is made by Buyer under this
Section 8.7(a) shall be borne, after giving effect to the
Threshold, 50% by Sellers and 50% by Buyer. "Matters of
Environmental Concern" means (i) any failure by Sellers to have
complied prior to the Closing Date with applicable Environmental
Laws or (ii) any handling, use, storage, generation, release,
discharge, disposal, dumping or migration of any Hazardous
Materials (whether legal, illegal, accidental or intentional) on,
to, from or beneath the Real Property, the Leased Real Property,
the System Property or any other Transferred Asset to the extent
occurring prior to the Closing Date.
(b) If Buyer or either Seller has or may have the right to
recover Losses indemnified by Sellers or borne by Buyer pursuant
to clause (a) of this Section 8.7 from a party in addition to
Sellers, Buyer and each Seller, as the case may be, shall assign
such right to the other (in proportion to the relative amounts
indemnified against or borne) and shall reasonably cooperate in
pursuing any rights against such third party.
8.8. Abstracts. Within 60 days after the date hereof,
Sellers shall cause to be prepared by a title abstractor
reasonably acceptable to Buyer and delivered to Buyer abstracts
of title for the Real Property and the Leased Property (other
than office and warehouse space) and the System Property (the
"Abstracts") showing, in customary detail, the state of title to
such Transferred Assets, including the legal description and any
other identification of such Transferred Assets, the instruments
creating or evidencing such Transferred Assets and the
encumbrances affecting such Transferred Assets.
8.9. Y2K. To the extent, if any, that the information
technology included in the Transferred Assets (including
components of the Transferred Assets that interface with or whose
operation is dependent upon the operation of information
technology systems) will not operate without error relating to
date data that references different centuries or more than one
century, Sellers shall use commercially reasonable efforts, at
Sellers' expense, to modify or replace such information
technology so it will so operate without error. Any modification
or replacement will be made as promptly as practicable after
Buyer's request; provided that Buyer's request is made not later
than six months after the Closing Date.
IX. CONDITIONS TO BUYER'S OBLIGATIONS.
The obligations of Buyer under this Agreement to purchase
the Transferred Assets and to consummate the other transactions
contemplated hereby shall be subject to the satisfaction (or
waiver by Buyer) on or prior to the Closing Date of all of the
following conditions:
9.1. Representations, Warranties and Covenants of Sellers.
Sellers shall have complied in all material respects with their
agreements and covenants contained herein to be performed on or
prior to the Closing Date, and all the representations and
warranties of Sellers contained herein shall be (a) true and
correct on and as of the date hereof and (b) true and correct in
all material respects on and as of the Closing Date with the same
effect as though made on and as of the Closing Date, (i) except
to the extent that such representations and warranties were made
as of a specified date, and as to such representations and
warranties the same shall continue on the Closing Date to have
been true and correct in all material respects as of the
specified date and (ii) in the case of clause (b) above, except
for changes after the date hereof resulting from the conduct of
the Business in the ordinary course of business that do not
result from a violation of Section 5.2, if such changes could not
adversely affect the Buyer, the Transferred Assets or the use or
operations thereof in any material respect. Buyer shall have
received a certificate of Sellers, dated as of the Closing Date
and signed by an officer of each Seller, certifying as to the
fulfillment of the condition set forth in this Section 9.1.
9.2. No Prohibition. No statute, rule or regulation or
order of any court or administrative agency shall be in effect
which prohibits Buyer from consummating the transactions
contemplated hereby.
9.3. Further Action. All consents and approvals of
governmental authorities referred to in Schedule 3.10 or 4.4
hereto, the granting of which are necessary to consummate the
transactions contemplated hereby, shall have been obtained and
shall not (a) result in rate adjustments with respect to the
Business which would be materially less favorable in the
aggregate to Buyer than the rates currently in effect on the date
hereof, (b) prevent or adversely affect the operation of the
Transferred Assets (or the results of operations therefrom) after
the Closing Date in a manner consistent with the Business or
(c) contain any other terms materially adverse to the Buyer. The
consents and approvals of third parties (other than governmental
authorities) identified on Schedule 9.3 shall have been obtained
and shall be reasonably satisfactory to Buyer.
9.4. No Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any event resulting in a
Material Adverse Effect.
9.5. Abstracts. Buyer shall have received the Abstracts,
and the Abstracts reflect a state of title that is reasonably
satisfactory to Buyer.
9.6. Omnibus Gas Transportation and Supply Agreement. The
parties shall have reached agreement on, and executed, the
Omnibus Gas Transportation and Supply Agreement.
9.7. Other Documents. The Sellers shall have delivered to
Buyer such certificates, documents and instruments, including
certified resolutions, authorizations and confirmations of
incumbency, as Buyer may reasonably request to effect or confirm
the transactions contemplated hereby.
X. CONDITIONS TO SELLERS' OBLIGATIONS.
The obligations of Sellers under this Agreement to sell the
Transferred Assets and to consummate the other transactions
contemplated hereby shall be subject to the satisfaction (or
waiver by Sellers) on or prior to the Closing Date of all of the
following conditions:
10.1. Representations, Warranties and Covenants of
Buyer. Buyer shall have complied in all material respects with
all of its agreements and covenants contained herein to be
performed on or prior to the Closing Date, and all of the
representations and warranties of Buyer contained herein shall be
(a) true and correct on and as of the date hereof and (b) true
and correct in all material respects on and as of the Closing
Date with the same effect as though made on and as of the Closing
Date, except to the extent that such representations and
warranties were made as of a specified date, and as to such
representations and warranties the same shall continue on the
Closing Date to have been true and correct in all material
respects as of the specified date. Sellers shall have received a
certificate of Buyer, dated as of the Closing Date and signed by
an officer of Buyer, certifying as to the fulfillment of the
condition set forth is this Section 10.1.
10.2. No Prohibition. No statute, rule, regulation or
order of any court or administrative agency shall be in effect
which prohibits Sellers from consummating the transactions
contemplated hereby.
10.3. Further Action. All consents and approvals of
governmental authorities, referred to in Schedule 3.10 or
Schedule 4.4 hereto, the granting of which are necessary to
consummate the transactions contemplated hereby, shall have been
obtained.
10.4. Omnibus Gas Transportation and Supply Agreement.
The parties shall have reached agreement on, and executed, the
Omnibus Gas Transportation and Supply Agreement.
10.5. Other Documents. Buyer shall have delivered to
Sellers such certificates, documents and instruments, including
certified resolutions, authorizations and confirmations of
incumbency, as Sellers may reasonably request to effect or
confirm the transactions contemplated hereby.
XI. TERMINATION PRIOR TO CLOSING.
11.1. Termination. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time
prior to the Closing:
(i) By the mutual written consent of Buyer and
Sellers; or
(ii) By either Buyer or Sellers, if the Closing
shall have not occurred on or before December 31,
2000; provided, however, that the right to
terminate this Agreement under this subclause (ii)
shall not be available to any party whose failure
to fulfill any obligation under this Agreement
shall have been the cause of, or resulted in, the
failure of the Closing to occur on or before such
date.
11.2. Effect of Termination. In the event of
termination of this Agreement as provided in Section 11.1, this
Agreement shall forthwith become void; provided, however, that
such termination shall not relieve any party of its obligations
under Section 8.3, Section 13.9 and Section 13.15 nor relieve any
party from liability for any breach hereof. Upon any termination
of this Agreement, each party hereto will return all documents,
work papers and other material of the other party relating to the
transactions contemplated hereby and all copies of such
materials, whether so obtained before or after the execution
hereof, to the party furnishing the same.
XII. INDEMNIFICATION AND SURVIVAL.
12.1. Indemnification by Sellers. Subject to Sections
12.3 and 12.4, Sellers will jointly and severally indemnify and
hold Buyer harmless against any and all Losses to which Buyer
becomes subject or which Buyer suffers or incurs, insofar as such
Losses arise out of or result from (a) the Excluded Liabilities,
(b) the inaccuracy of any representation or warranty of Sellers
contained herein, (c) the breach of any covenant of Sellers
contained herein, (d) subject to Sections 2.3.4 and 13.8, any Tax
imposed upon either Seller or the Transferred Assets for any
event or period through the Closing Date and (e) any failure to
comply with any bulk transfer or similar law in connection with
the transactions contemplated hereby or, subject to the
provisions of Section 8.7, the imposition on Buyer of any
liability or obligation of Sellers that are not Assumed
Liabilities pursuant to any successor liability law. As used
herein, "Losses" means losses, liabilities, claims, damages,
costs and expenses (including reasonable attorneys' fees and
costs of investigation), whether or not involving a third party
claim; provided that Losses shall not include (i) any multiple,
punitive or exemplary damages, except to the extent resulting
from third party claims, (ii) consequential or special damages,
except to the extent proximately resulting from any inability to
operate the Transferred Assets in a manner consistent with the
Business, or (iii) any matter to the extent taken into account on
the Closing Statement.
12.2. Indemnification by Buyer. Subject to Sections
12.3 and 12.4, Buyer will indemnify and hold Sellers harmless
against any and all Losses to which either Seller becomes subject
or which either Seller suffers or incurs, insofar as such Losses
arise out of or result from (a) the Assumed Liabilities, (b) the
inaccuracy of any representation or warranty of Buyer contained
herein, (c) the breach of any covenant of Buyer contained herein
or (d) expect for matters as to which Buyer is entitled to
indemnification pursuant to Section 12.1, the operation or use of
the Transferred Assets subsequent to the Closing Date.
12.3. Limitations on Liability.
12.3.1. Time Limitations and Survival. The
representations, warranties, covenants and agreements of the
parties shall survive the Closing and any investigation by
the parties. Any claim by any party with respect to any
representation or warranty, or any covenant to be performed
on or prior to the Closing Date, by another party for
indemnification must be made by written notice given within
twelve (12) months after the Closing Date; provided that (i)
claims with respect to the representations and warranties
contained in Section 3.15 may be made by written notice
within three (3) years after the Closing Date and (ii)
claims with respect to the representations and warranties
contained in Section 3.13.6 may be made by written notice
until the earlier of four (4) years after the Closing Date
or the conclusion of Buyer's next rate case with respect to
the Business.
12.3.2. Limitation on Amount. Sellers will have no
obligation to indemnify Buyer for any Losses pursuant to
clause (b) (other than in respect of Section 3.13.6) or
clause (c) (to the extent relating to covenants to be
performed on or prior to the Closing Date) of Section 12.1,
except to the extent that such Losses, taken together,
exceed $100,000 (provided that if a Loss relates to breach
of a representation or warranty contained in Section 3.15
relating to Matters of Environmental Concern, such Loss
shall be subject to the $200,000 deductible provided in
Section 8.7(a) and not towards this $100,000 deductible),
and then only to the extent of such excess. In no event
shall Sellers be liable for aggregate Losses under Sections
12.1(b) (other than in respect of Section 3.15 or Section
3.13.6) and 12.1(c) (but only in respect of the covenants in
Section 5.2) of more than $3.2 million.
12.3.3. Other Limitations. If any indemnified party
may have the right to recover Losses from a third party
(other than an insurer) in addition to the indemnifying
party, the indemnified party shall assign to the
indemnifying party any such right remaining against such
third party after the indemnified party shall have recovered
all of its Losses, and shall reasonably cooperate (at the
expense of the indemnifying party) in pursuing any rights
against such third party.
12.4. Indemnification Procedure. Promptly after receipt
by any indemnified party of notice of the commencement of any
action, proceeding, or claim in respect of which the indemnified
party intends to seek indemnification pursuant to Section 12.1 or
12.2, the indemnified party shall notify the indemnifying party
in writing; provided that the omission to so notify shall not
relieve the indemnifying party of its indemnification obligations
except to the extent the indemnifying party is materially
prejudiced thereby. The indemnifying party shall be entitled to
assume control of the defense of such action or claim with
counsel reasonably satisfactory to the indemnified party;
provided, however, that:
(i) the indemnified party shall be entitled to
participate in the defense of such claim and to
employ counsel at its own expense to assist in the
handling of such claim;
(ii) no indemnifying party shall consent to the
entry of any judgment or enter into any settlement
that does not include as an unconditional term
thereof the giving by each claimant or plaintiff
to the indemnified party of a release from all
liability in respect of such claim or if, pursuant
to or as a result of such consent or settlement,
injunctive or other equitable relief would be
imposed against the indemnified party or such
judgment or settlement could materially interfere
with the business, operations or assets of the
indemnified party; and
(iii) after written notice by the indemnifying
party to the indemnified party of its election to
assume control of the defense of any such action
in accordance with the foregoing provisions, the
indemnifying party shall not be liable to such
indemnified party hereunder for any legal fees,
costs and expenses subsequently incurred by such
indemnified party in connection with the defense
thereof.
If the indemnifying party does not assume control of the
defense of such claim in accordance with the foregoing
provisions, the indemnified party shall have the right to defend
such claim in such manner as it may deem appropriate at the
reasonable cost and expense of the indemnifying party, and the
indemnifying party will promptly reimburse the indemnified party
therefore in accordance with this Section 12.4; provided that the
indemnified party shall not be entitled to consent to the entry
of any judgment or enter into any settlement of such claim
without the prior written consent of the indemnifying party (not
to be unreasonably withheld).
12.5. Exclusive Remedies. If the Closing occurs, then
the remedies provided in this Article XII shall constitute the
sole and exclusive remedies with respect to all claims for breach
of any representation or warranty, or covenant to be performed on
or prior to the Closing Date, contained in this Agreement, except
for fraud or other willful dishonesty. Notwithstanding the
foregoing, the provisions of this Article XII shall not affect
the rights of any party hereto against any third party (including
a third party whose claim against a party hereto is the basis of
a claim for indemnification) and shall not inure to the benefit
of any third party.
XIII. MISCELLANEOUS.
13.1. Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto) and the Confidentiality Agreement
referred to in Section 8.3 constitute the entire understanding of
the parties with respect to the subject matter hereof and, except
as provided in Section 8.3, supersedes all other prior or
contemporaneous oral or written statements by any party with
respect thereto.
13.2. Waiver of Bulk Transfer Requirements. Subject to
Section 12.1, Buyer agrees to waive Sellers' compliance with
Article 6 of the Uniform Commercial Code (Bulk Transfers), as in
effect in any jurisdiction, or any other applicable bulk sales
law.
13.3. Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective successors of the parties hereto; provided,
however, that this Agreement may not be assigned by Buyer without
the prior written consent of Sellers, which consent shall not be
unreasonably withheld in the case of an assignment to an entity
that is controlled by Buyer.
13.4. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be
deemed to be an original and all of which shall constitute the
same instrument.
13.5. Headings. The headings of the sections and
paragraphs of this Agreement are inserted for convenience only
and shall not be deemed to constitute a part of this Agreement or
to affect the construction hereof.
13.6. Modification and Waiver. No amendment,
modification or alteration of the terms or provisions of this
Agreement shall be binding unless the same shall be in writing
and duly executed by the parties hereto, except that any of the
terms or provisions of this Agreement may be waived in writing at
any time by the party which is entitled to the benefits of such
waived terms or provisions. No waiver of any of the provisions
of this Agreement shall be deemed to or shall constitute a waiver
of any other provision hereof (whether or not similar). No delay
on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.
13.7. No Third-Party Beneficiary Rights. This Agreement
is not intended to and shall not be construed to give any person
or entity other than the parties signatory hereto any interest or
rights (including, without limitation, any third party
beneficiary rights) with respect to or in connection with any
agreement or provision contained herein or contemplated hereby.
13.8. Sales and Transfer Taxes. Sellers, on the one
hand, and Buyer, on the other, shall each be responsible for and
pay one-half (1/2) of all applicable sales, transfer,
documentary, or use taxes and recording and filing fees
("Transfer Taxes") that may become due or payable as a result of
the sale, conveyance, assignment, transfer or delivery of any of
the Transferred Assets or the transactions contemplated hereby
whether levied on Buyer, Sellers or any Affiliate of Sellers. At
the Closing, Sellers shall execute and deliver to Buyer any
certificates or other documents as Buyer may reasonably request
to claim available exemptions from the payment of Transfer Taxes
under applicable law.
13.9. Expenses. Except as expressly provided otherwise
herein, each of Sellers and Buyer shall pay all costs and
expenses incurred by it or on its behalf in connection with this
Agreement and the transactions contemplated hereby, including,
without limiting the generality of the foregoing, fees and
expenses of its own financial consultants, accountants and
counsel.
13.10. Waiver of Conditions. The conditions to each
party's obligations hereunder are for the sole benefit of such
party and may be waived by such party in whole or in part to the
extent permitted by applicable law.
13.11. Notices. Any notice, request, instruction or
other document to be given hereunder by either party hereto to
the other party shall be in writing and shall be sent by telefax
(with confirmation received of the recipient's number) to the
number stated below or shall be delivered personally or sent by
registered or certified mail (postage prepaid and return receipt
requested) to the address stated below.
If to either Seller, to:
Southwestern Energy Company
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Senior Vice President and
Chief Financial Officer
Telephone: (000) 000-0000
Telefax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Telefax: (000) 000-0000
If to Buyer, to:
Atmos Energy Corporation
1800 Three Lincoln Center
0000 XXX Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telefax: (000) 000-0000
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxx, III, Esq.
Telephone: (000) 000-0000
Telefax: (000) 000-0000
or at such other telefax number or address for a party as shall
be specified by like notice. Any notice which is delivered
personally in the manner provided herein shall be deemed to have
been duly given to the party to whom it is directed upon actual
receipt by such party. Any notice which is sent by telefax or
addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to
which it is addressed on the date indicated on the telefax
confirmation or the postal receipt.
13.12. Knowledge of Sellers. For purposes of this
Agreement, "knowledge of Sellers" or any similar term shall mean
the actual knowledge of an executive officer of Parent or of
Xxxxxxx X. Xxxxxxx, Senior Vice President of AWG, after
reasonable inquiry.
13.13. Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of
Arkansas applicable to agreements made and to be performed wholly
within such jurisdiction without regard to the conflicts of laws
provisions thereof. Each of the parties agrees to (i) the
irrevocable designation of the Secretary of State of the State of
Arkansas as its agent upon whom process against it may be served
and (ii) personal jurisdiction in any action brought in any
court, Federal or State, within the State of Arkansas having
subject matter jurisdiction over matters arising under this
Agreement. Any suit, action or proceeding arising out of or
relating to this Agreement shall only be instituted in a Federal
or State court located in the State of Arkansas. Each party
waives any objection which it may have now or hereafter to the
laying of the venue of such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any
such suit, action or proceeding.
13.14. Waiver of Jury Trial. Each of Sellers and Buyer
hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to this Agreement
or the actions of Sellers or Buyer in the negotiations,
administration, performance and enforcement thereof.
13.15. Announcements. No party hereto shall make any
public statements, including, without limitation, any press
release, with respect to this Agreement and the transactions
contemplated hereby without the prior written consent of the
other parties, other than as may be required by law, which
consent shall not be unreasonably withheld.
13.16. Severability. If any term or other provision of
this Agreement is held to be invalid, illegal or incapable of
being enforced by any court having jurisdiction, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf as of the date first
above written.
SELLERS:
SOUTHWESTERN ENERGY COMPANY
By: /s/ Xxxx X. Xxxxxx
-----------------------
Xxxx X. Xxxxxx
Senior Vice President
ARKANSAS WESTERN GAS COMPANY
By: /s/ Xxxx X. Xxxxxx
-----------------------
Xxxx X. Xxxxxx
Senior Vice President
BUYER:
ATMOS ENERGY CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Xxxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
