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MEMORANDUM
To:
From:
Subject:
Date:
Mayor, City Council, City Manager
Mark T. Sokolow City Attorney
P. O. No. 5312; Council Meeting of March 4, 2003
February 25, 2003
Attached is P. O. No. 5312 pertaining to the rate increase of
Southern Union Gas. This was tabled at the last meeting. Exhibit
nD" has been added to the Ordinance denying the rate increase.
Nevertheless, it does indicate that the City Council will
reconsider it if ONEOK files a new rate increase with updated
accounting data. The effective date of the Ordinance was also
changed from March 1st to March 5tn 2003.
MTS/ts
Attachment
cc:
Susan Westbrook
ONEOK/TEXAS GAS SERVICE
1301 S. Mopac Expressway
Austin, TX 78746
and
P. O. No. 5312
02/25/03 ts
ORDINANCE NO.
AN ORDINANCE PERTAINING TO THE RATE INCREASE
OF SOUTHERN UNION GAS
WHEREAS, Southern Union Gas filed a rate increase on November
2002; and
WHEREAS, information was requested per Ordinance No. 02-60;
WHEREAS, Southern Union Gas has sold the gas transmission
lines to ONEOK, for approximately $420 million dollars, on or about
January 1, 2003, as denoted in Exhibits UA" and "B"; and
WHEREAS, a representative of Texas Gas Service, a division of
ONEOK has distributed a flyer, as denoted in Exhibit "C"; and
WHEREAS, some of the rates have been temporarily approved, per
Ordinance No. 02-62.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF PORT ARTHUR:
Section 1. That the facts and opinions in the preamble are
true and correct.
Section 2. That the City Council herein disapproves of the
rate increase, as denoted in Exhibit ~D".
Section 3.
5tn day of March,
Section 4.
shall be give
Secretary.
That this Ordinance shall be effective on the
2003.
That a true and correct copy of this Ordinance
to Southern Union Gas and to ONEOK by the City
Section $.
spread upon the Minutes of the City Council.
READ, ADOPTED ~ APPROVED on this day of ,
A.D., 2003, at a Regular Meeting of the City Council of the City
of Port Arthur, Texas, by the following vote: AYES:
Mayor City Council ,
That a copy of the caption of this Ordinance be
NOES:
ATTEST:
OSCAR ORTIZ, MAYOR
EVANGELINE GREEN, CITY SECRETARY
APPROVED AS TO FORM:
MARK T. SOKOLOW, CITY ATTORNEY
APPROVED FOR ADMINISTRATION:
STEVE FITZGIBBONS, CITY MANAGER
EXHIBIT "A'
Download: [PDF]
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 16, 2002
(Date of earliest event reported)
ONEOK, Inc.
(Exact name of registrant as specified in its charter)
Oklahoma
(State or other jurisdiction
of incorporation)
001-13643
(Commission
File Number)
73-1520922
(IRS Employer
Identification No )
100 West Fifth Street Tulsa OK
(Address of principal executive offices)
74103
[Zip code)
(918) 588-7000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Item 5.
Acquisition or Disposition of Assets
On October 16. 2002, ONEOK Inc. entered into a definitive
agreement with Southern Union Company to purchase all the
Texas gas distribution asse~s of Southern Union for a purchase
price of S420 million.
The gas distribution operations serve 535,000 customers in
ClSles located throughout the state of Texas. including the
ma3or c~tles of E1 Paso and Austin. as well as the cities of
Port Arthur Galveston Brownsville. and o~hers. The primary
growth areas are E1 Paso Austin and the Rio Grande River
Valley. Over 90 percent of the gas cusEomers are residential.
The acquls,~ion also includes a 125 mile natural gas
transmissIon system that is regulated by the Texas Railroad
Commission as well as Dther energy related assecs involved in
gas marketing, retail propane sales and natural gas
distribution investments in Mexico.
Operating income for these Texas assets for the twelve months
ending June 30, 2002, was approximately $41.2 million of which
approximately 95% was related to the Texas gas distribution
operations.
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Item 7.
(a)
(b)
(c)
Regulatory consents and approvals will be sought from numerous
municipalities. Notice is required to the Federal Energy
Regulatory Commission and the Texas Railroad Commission.
Antitrust clearance will also be sought from the Federal Trade
Commission under the Hart-Scott-Rodino Act. Closing is
expected to be on or before December 31, 2002. The boards of
directors of both companies have approved the transaction. UBS
Warburg acted as financial advisor to ONEOK on the
transaction.
Financial Statements, Pro Forma Financial Information and
Exhibits
Financial Statements of Businesses Acquired Not applicable.
ProForma Financial Information
Not applicable.
Exhibits
99.1
99.2
Press release issued by ONEOK, Inc. dated
October 16, 2002.
Purchase and Sale Agreement between Southern
Union Company and ONEOK, Inc. dated as of
October 16, 2002.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has dray caused this repod to be
signed on its behalf by the undersigned, hereunto du y authorized.
ONEOK, Inc,
Date: October 17, 2002
By:
/s/ Jim Kneale
Jim Kneale
Senior Vice President, Treasurer and Chief
Financial Officer (Principal Financial
Officer)
Exhibit 99.1
[ONEOK LOGO] Financial News
October 16, 2002 Contact: Weldon Watson 918-588-7158
ONEOK TO PURCHASE TEXAS PROPERTIES OF
SOUTHERN UN[ON
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Tulsa, Oklahoma - ONEOK, Inc. (NYSE:OKE), announced today the definitive agreement with Southern Union Company
(NYSE:SUG) to purchase all the Texas assets of Southern Union for $420 million.
David Kyle, chairman, president and chief executive officer of ONEOK, said, "This acquisition will make ONEOK the fourth
largest gas distributor in the United States with over 1.9 million customers in Oklahoma, Kansas and Texas. From our
beginning we have been a gas distributor and that business continues to be very important to our strategy+ We are excited
about the opportunities this acquisition brings to expand our base into the Texas market."
As the third largest gas distributor in Texas, the operations serve 535,000 customers in cities located throughout the state,
including the major cities of El Paso and Austin, as well as the cities of Port Adhur, Galveston, Brownsville, and others. The
primary growth areas are El Paso, Austin and the Rio Grande Valley and over 90 percent of the customers are residential.
The acquisition also includes 125 miles of natural gas transmission system that is regulated by the Texas Railroad
Commission as well as other energy related assets involved in gas marketing, retail propane, and natural gas distribution
investments in Mexico.
Operating income for the Texas properties for the twelve months ending June 30, 2002, was $41.2 million of which
approximately 95% was related to the Texas distribution operations.
Regulatory consent and approvals will be sought from numerous municipalities. Notice is required to the Federal Energy
Regulatory Commission and the Texas Railroad Commission. Antitrust clearance will also be sought from the Federal
Trade Commission under the Hart-Scott-Rodino Act. Closing is expected to be on or before December 31, 2002. The
boards of directors of both companies have approved the transaction and UBS Warburg acted as financial advisor to
ONEOK on the transaction.
ONEOK, Inc, is a diversified energy company involved primarily in oil and gas production, natural gas processing,
gathering, storage and transmission in the mid-continent areas of the United States. The company's energy marketing and
trading operations provide service to customers in 28 states. The company is also the largest natural gas distributor in
Kansas and Oklahoma, operating as Kansas Gas Service and Oklahoma Natural Gas Company, serving 1.4 million
customers.
Statements contained in this release that include company expectations or predictions are forward-looking statements
intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of
1934. It is important to note that actual results could differ materially from those projected in such forward-looking
statements. Any additional information regarding factors that could cause actual results to materially differ is found in the
company's Securities and Exchange Commission filings.
For information about ONEOK, Inc. visit the Web site: www.oneok.com.
EXHIBIT 99.2
PURCHASE AND SALE AGREEMENT
between
SOUTHERN UNION COMPANY
and
ONEOK, INC.
Dated as of October 16, 2002
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS ..........................................................
Section 1.1. Certain Defined Terms .............................................
Section 1.2. Other Defined Terms ...............................................
ARTICLE II. PURC~L~SE AND SALE ....................................................
Section 2.1. Purchase and Sale of Assets and Stock .............................
Section 2.2. Assumed Liabilities ...............................................
Section 2.3. Retained Liabilities ..............................................
Section 2.4. Condition on Assignment or Assumption of Contracts and Rights .....
Section 2.5. Settlement of Intercompany Accounts ...............................
ARTICLE III. PD~RCHASE PRICE .......................................................
Section 3.1. Purchase Price ....................................................
Section 3.2. Adjustment to Purchase Price ..................................
ARTICLE IV. REPRESENTATIONS AND WA~RA~NTIES OF BUYER ..............................
Section 4.1. Organization, Existence and Qualification .........................
Section 4.2. Authority Relative to this Agreement and Binding Effect ...........
Section 4.3. Governmental and Other Required Consents ..........................
Section 4.4. Availability of Funds .............................................
Section 4.5. Filings ...........................................................
Section 4.6. Brokers ...........................................................
Section 4.7. Independent Investigation .........................................
Section 4.8. Public Utility Holding Company Status; Regulation as a Public
utility ...........................................................
Investment Intent; Investment Experience; Restricted Securities...
Section 4.9.
ARTICLB V.
REPRESENTATIONS AND WARRANTIES OF SELLER .............................
Section 5.1.
Section 5.2.
Section 5.3.
Section 5.4.
Section 5.5.
Section 5.6.
Section 5.7.
Section 5.8.
Section 5.9.
Section 5.10.
Section 5.11.
Section 5.12.
Organization, Existence and Qualification .........................
Authority Relative to this Agreement and Binding Effect ...........
Governmental and Other Required Consents ..........................
Capitalization of the Subsidiaries; Title to Stock ................
Title to Assets; Encumbrances .....................................
Financial Statements ..............................................
Compliance with Legal Requirements; Governmental Permits
Legal Proceedings; Outstanding Orders .............................
Taxes .............................................................
Intellectual Property .............................................
Personal Property .................................................
Material Contracts ................................................
9
12
12
14
14
14
14
16
16
16
20
20
Section
Section
Section
Section
Section
Section
Section
Section
Section
5.13. Bmployee Benefit Matters ........................................
5.14. Environmental Matters ...........................................
5.15. Absence of Certain Changes or Events ............................
5.16. Regulatory Matters ..............................................
5.17. Public Utility Holding Company Status; Regulation as a Public
Utility .........................................................
5.18. Brokers .........................................................
5.19. Disclaimer ......................................................
5.20. Insurance .......................................................
5.21. Absence of Undisclosed Liabilities ..............................
ARTICLE VI. COVENA/~TS .............................................................
Section 6.1. Covenants of Seller .............................................
Section 6.2. Covenants of Buyer ..............................................
Section 6.3. Governmental Filings ............................................
Section 6.4. Seller Marks ....................................................
Section 6.5. Acknowledgment by Buyer .........................................
Section 6.6. Transition Plan .................................................
20
2O
22
22
22
22
23
23
23
24
24
26
27
28
28
29
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Section
Section
Section
Section
6.7. Purchase of Leased Assets ....................................... 29
6.8. Meter Reading ................................................... 30
6.9, Insurance ....................................................... 30
6.10. Risk of Loss .................................................... 30
ARTICLE VII, CONDITIONS PRECEDENT ................................................. 31
Section 7.1. Seller's Conditions Precedent to Closing ........................ 31
Section 7,2. Buyer's Conditions Precedent to Closing ......................... 32
ARTICLE VIII. CLOSING ............................................................. 33
Section 8.1. Closing ......................................................... 33
ARTICLE IX. TERMINATION ........................................................... 34
Section 9.1. Termination Rights .............................................. 34
Section 9.2. Limitation on Right to Terminate: Effect of Termination ......... 35
Section 9.3. Escrow Amount ................................................... 35
ARTICLE X. EMPLOYEE MATTERS ....................................................... 36
Section 10.1. Employee Agreement .............................................. 36
ARTICLE XI. TAX MATTERS ........................................................... 36
Section 11.1. Purchase Price Allocation ....................................... 36
Section 11.2. Cooperation with Respect to Like-Kind Exchange .................. 36
Section 11.3. Transaction Taxes ............................................... 37
Section 11.4. Real and Personal Property Taxes ................................ 37
Section 11.5. Taxes Based on Revenues ......................................... 38
ARTICLE XlI. INDEMNIFICATION ......................................................
38
Section
Section
Section
Section
Section
Section
Section
Section
12.1. Indemnification by Seller ....................................... 38
12.2. Indemnification by Buyer ........................................ 38
12.3. Limitations on Seller's Liability ............................... 39
12.4. Limitation on Buyer's Liability ................................. 41
12.5. Claims Procedure ................................................ 41
12.6. Exclusive Remedy ................................................ 42
12.7. Indemnification for Negligence .................................. 43
12.8. Waiver and Release .............................................. 43
ARTICLE XIII. GENERAL PROVISIONS .................................................. Section 13.1. Expenses ........................................................
Section 13.2.
Section 13.3.
Section 13.4.
Section 13.5,
Section 13.6.
Section 13.7.
Section 13.8.
Section 13.9.
Section 13.10.
Section 13.11.
Section 13.12.
Section 13.13.
Section 13.14.
Section 13.15.
Section 13.16.
43
43
Notices ......................................................... 43
Assignment ...................................................... 44
Successor Bound ................................................. 45
Governing Law ................................................... 45
Dispute Resolution .............................................. 45
Cooperation ..................................................... 46
Construction of Agreement ....................................... 47
Publicity ....................................................... 47
Waiver .......................................................... 47
Parties in Interest ............................................. 48
Section and Paragraph Headings .................................. 48
Amendment ....................................................... 48
Entire Agreement ................................................ 48
Counterparts .................................................... 48
Severability .................................................... 48
iii
PURCHASE AND SALE AGREEMENT
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2/5/03
This PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of the 16th day of October, 2002, by and
between SOUTHERN UNION COMPANY, a Delaware corporation ("Seller"), and ONEOK, INC. an Oklahoma corpora[ion
("Buyer"). Capitalized terms used herein shall have the meanings ascribed to them in Article I, unless otherwise provided.
WlTNESSETH:
WHEREAS, Seller or a Subsidiary owns all of the Assets and Seller owns all of the capital stock of each Subsidiary; and
WHEREAS, Buyer desires to purchase, and Seller desires to sell, the Assets owned by Seller and the capital stock of each
Subsidiary, subject in all respects to the provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Certain Defined Terms.
For purposes of this Agreement, the following terms have the meanings specified or referred to in this Article I (such
definitions to be equally applicable to both the singular and plural forms of the terms defined):
'Affiliates" or "Affiliated Entities" - entities shall be deemed "Affiliated" as to each other to the extent ti) one of the entities
directly or indirectly controls the other, or the direct or indirect control of one of the entities is exercised by the officers,
directors, stockholders, or padners of the other entity (whether or not such persons exercise such control in their capacities
as officers, directors, stockholders, or partners) or (ii) is deemed to be an Affiliate under existing statutes or regulations of
the SEC.
'Assets" -- all of the assets, property and interests of every type and description, real, personal or mixed, tangible and
intangible, owned by Seller, directly or indirectly through any Subsidiary, and relating primarily to the Business, other than
the Excluded Assets.
"Assumed Environmental Liabilities" - means any of the following:
(a) Except for Retained Environmental Liabilities of Seller, all Environmental Liabilities of Seller and each Subsidiary
relating to the Business or the Assets that arise from or relate to the environmental matters or incidents that either are
disclosed in Schedule 5.14 as of the
date of execution of this Agreement or otherwise are known to Buyer on or before the date of execution of this Agreement
and that remain outstanding as of the Closing Date, it being understood by the parties that the unadjusted Purchase Price
reflects Buyer's estimate of any Losses that could adse on or after the Closing Date with respect to such Environmental
Liabilities; and
(b) Except for Retained Environmental Liabilities of Seller, any other Environmental Liability of Seller or any Subsidiary
relating to the Business or the Assets, whether arising or relating to the period before or after the Closing, including the
removal of asbestos or asbestos-containing materials in connection with any renovation or structural change to any Asset
conducted after Closing.
"Business" -- means collectively:
(a) the regulated and non-regulated gas distribution business conducted in Texas by Seller through Southern Union Gas
Company, a division of Seller, and the provision of related services and products and the engagement in related activities,
including agreements as to appliances and other equipment in Texas by Seller through its Southern Union Gas Company
division;
(b) the gas transportation business conducted by Seller through its Southern Union Gas Company division;
(c) the natural gas marketing business conducted by Mercado Gas Services inc.;
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(d) the propane distribution business conducted by Seller in and around Austin, Texas, through its propane division and
conducted by SuPro Energy Co. in and around El Paso and Alpine, Texas; and
(e) the intrastate pipeline business conducted by Southern Transmission Company and the interstate pipeline business
conducted by Norteno Pipeline Company.
"Claim Notice" -- means a written notice of a claim given by a party seeking indemnification pursuant to the terms of this
Agreement that specifies in reasonable detail the nature of the Losses and the estimated amount of such Losses.
"Confidentiality Agreement" -- means that certain confidentiality agreement dated August 20, 2002, between Buyer and
Seller.
"Consent" -- any approval, consent, ratification, waiver, clearance or other authorization from any Person.
"Contract" - any agreement, contract, document, instrument, obligation, promise or undertaking (whether written or oral)
that is legally binding, including Easements.
"Easements" -- means all easements, rights of way, permits, licenses, prescriptive rights and other ways of necessity,
whether or not of record, relating to real property.
"Encumbrance" -- any charge, adverse claim, lien, option, encumbrance, modgege, pledge or security interest.
"Environmental Claim" - any and all written administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, investigations, proceedings or notices of noncompliance or violation by any third party (including any
Governmental Body) alleging potential liability (including, without limitation, potential liability for enforcement, investigatory
costs, damages, Losses, contribution, indemnification, cost recovery, compensation, injunctive relief, cleanup costs,
governmental resource costs, removal costs, remedial costs, natural resources damages, property damages, personal
injuries or penalties) arising out of, based on or resulting from (a) the presence, or release or threatened release into the
environment, of any Hazardous Materials at any location operated, leased or managed by Seller or any Subsidiary; (b) any
violation of any Environmental Law; or (c) one or more Releases of the same or substantially the same Hazardous
Material, from or at the same location regardless of whether such releases resulted from the same event or from multiple
events over time.
"Environmental Law" - any and all applicable local, county, state, federal, and/or foreign law (including common law),
statute, code, ordinance, rule, regulation or other legal obtigafion relating to the protection of human health or safety or the
environment or natural resources, including, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. section 9601 et seq.), as amended ("CERCLA"), the Resource Conservation
and Recovery Act (42 U.S.C. section 6901 et seq.), as amended ("RCRA"), the Federal Water Pollution Control Act (33
U.S.C. section 1251 et seq.), as amended, the Clean Air Act (42 U.S.C. section 7401 et seq.), as amended, the Toxic
Substances Control Act (15 U.S.C. section 2601 et seq.), as amended, the Occupational Safety and Health Act (29 U.S.C.
section 651 et seq.), as amended, the Safe Drinking Water Act (42 U.S.C. section 300(0 et seq.), as amended, analogous
state, tribal or local laws, and any similar, implementing or successor law, and any amendment, rule, regulation, or directive
issued thereunder.
"Environmental Liability" - means any liability, responsibility or obligation arising out of or relating to:
(f) the presence of any Hazardous Material in the fixtures, structures, soils, groundwater, surface water or air on, under or
about or emanating from the assets and properties currently or formedy used, operated, owned, leased, controlled,
possessed, occupied or maintained by a Person (including predecessors-in-interest to such Person) and any such
Hazardous Material emanating to adjoining or other properties;
(g) the use, generation, production, manufacture, treatment, storage, disposal, Release, threatened Release, discharge,
spillage, loss, seepage or filtration of Hazardous Materials by a Person (including predecessors-in-interest to such Person)
or its employees, agents or contractors from, on, under or about the assets or properties currently or formerly used,
operated, owned, leased, controlled, possessed, occupied or maintained by such Person (including predecessors-in-
interest to such Person) or the presence therein or thereunder of any underground or above-ground tanks for the storage
of fuel, oil, gasoline and/or other petroleum products or by-products or other Hazardous Material;
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(h) the violation or noncompliance or alleged violation or noncompliance by a Person (including predecessors-in-interest to
such Person) or its employees, agents or contractors of any Environmental Law arising from or related to its or their
conduct, actions or operations or the former or current use, operation, ownership, {ease, possession, control, occupancy,
maintenance or condition of any of the former or current Assets or properties of such Person (including predecessors-in-
interest to such Person);
(i) the failure by a Person or its employees, agents, or contractors to have obtained or maintained in effect any certificate,
permit or authorization required by any Environmental Law as a result of its or their conduct, actions or operations or the
use, operation, ownership, lease, control, possession, occupancy, maintenance or condition of such Person's assets or
properties;
(j) any and all Proceedings adsing out of any of the above-described matters, including Proceedings by Governmental
Bodies for enforcement, cleanup, removal, treatment, response, remedial or other actions or damages and Proceedings by
any third Person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief; and
(k) any and all remedial work and other corrective action (including investigation or monitoring of site conditions, or any
clean-up, containment, restoration or removal) taken by, or the costs of which are imposed upon, a Person arising from any
of the above~escribed matters.
"ERISA" - the Employee Retirement Income Secudty Act of 1974, as amended, or any successor law, and regulations and
rules issued pursuant to that act or any successor law.
"Excluded Assets" - means the following assets, each of which shall be excluded from the Assets, and not acquired by the
Buyer, at Closing:
(I) assets that Seller uses in both the Business and in Seller's other businesses, the material items of which are described
in Schedule 1.1(a), and Contracts regarding the procurement of services or goods by Seller primarily used by Seller in its
other businesses;
(m) cash and cash equivalents (including checks) in transit, in hand or in bank accounts, other than petty cash held locally
for the benefit of the Business;
(n) except as otherwise set forth in the Employee Agreement, assets attributable to or related to an Employee Plan of
Seller;
(o) the stock record and minute books of Seller, duplicate copies of
all books and records transferred to Buyer, and all records prepared in connection with the sale of the Business (including
bids received from third parties and analysis relating to the Business);
(p) assets disposed of by Seller or any Subsidiary after the date of this Agreement to the extent such dispositions are not
prohibited by this Agreement or are approved by Buyer pursuant to Section 6,1 hereof;
4
(q) dghts to refunds of Taxes for periods prior to the Closing Date payable with respect to the Business, assets, propertie~'
or operations of Seller or any member of any affiliated group of which either of them is a member;
(r) accounts owing, by and among Seller and its Affiliates, including the Subsidiaries;
(s) all deferred tax assets or collectibles;
(t) any insurance policy, bond, letter of credit or other similar item, and any cash surrender value in regard thereto;
(u) the Seller Marks; and
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(v) the other assets listed in Schedule 1.1(a).
"GAAP" - generally accepted United States accounting principles, applied on a consistent basis.
'Governmental Body" - any of the following that possesses competent jurisdiction:
(w) federal, state, county, local, municipal or other governmental body;
(x) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department,
official or entity and any coud or other tribunal); or
(y) any governmental body enfitied to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
"Hazardous Material" - (1) any petroleum or petroleum products, radioactive materials, friable asbestos, urea
formaldehyde foam insulation, mercury and transformers or other equipment that contained dielectric fluid containing
polychlorinated biphenyls ("PCBs"); (2) any chemicals, materials or substances which are now defined as or included in the
definition of hazardous substances, hazardous wastes, hazardous materials, extremely hazardous wastes, restricted
hazardous wastes, toxic substances, toxic pollutants, or words of similar import under any Environmental Law; and (3) any
other chemical material, substances or waste, exposure to which is now prohibited, limited or regulated under
Environmental Law in a jurisdiction in which the Seller or any Subsidiaries operate related to the Assets.
"Hazardous Substance" - a substance, chemical, pollutant, waste, or other materia that consbtutes any "hazardous
substance" under CERCLA or any "hazardous waste" or "regutated substance" under RCRA, or any other material, waste,
or substance that may serve as the basis of obligations to sample, test, investigate, cleanup, remove, monitor, or otherwise
respond under Environmental Laws.
"HSR Act" -- the Had-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any successor law, and
regulations and rules issued by the U.S. Department of Justice or the Federal Trade Commission pursuant to that act or
any successor law.
5
"IRC" - the Internal Revenue Code of 1986, as amended.
"IRS" - the Intemal Revenue Service or any successor agency.
"Know[edge" - means, with respect to Seller, the actual knowledge of any of Thomas F. Karam, Seller's President and
Chief Operating Officer, David Stevens, SUG's Executive Vice President-Utility Operations, David Kvapil, Selleds
Executive Vice President and Chief Financial Officer, John Davis, SUG's Vice President-Controfler, Michael T. Langston,
SUG's Vice President-Gas Supply, and Robert J. Wesch, SUG's Director Subsidiary Operations and Technical Services; or
their respective successor.
'Legal Requirement" - any federal, state, county, local, municipal, foreign, international, multinational, or other
administrative Order, constitution, law, ordinance, adopted code, principle of common law, regulation, rule, directive,
approval, notice, tadff, franchise agreement, statute or treaty.
'Losses" - shall mean alt claims, losses, liabilities, causes of action, costs and expenses (including, without limitation,
involving theories of negligence or stdct liability and including court costs and reasonable attorneys' fees and
disbursements in connection therewith).
"Material Adverse Effect" -- an occurrence or condition that has a material adverse effect on the operation, financial
condition or results of operations of the Business taken as a whole. For purposes of this Agreement, an occurrence or
condition shaft not constitute a Material Adverse Effect if it arises from general business, economic or financial market
conditions, from conditions generally affecting the industries in which the Business operates, or from the transactions
contemplated by this Agreement.
"Material Contract" -- a Contract relating primarily to the Business that involves a total commitment by or to any party
thereto of at least $250,000 on an annual basis and that cannot be terminated by Seller or any Subsidiary with notice of
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ninety (90) days or less without penalty to Seller or any Subsidiary.
'Order" -- any award, decision, injunction, judgment1 order, writ, decree, ruling, subpoena, or verdict entered, issued, made,
or rendered by any court, administrative agency, other Governmental Body, or by any arbitrator, each of which possesses
competent jurisdiction.
"Organizational Documents" - the articles or cedificate of incorporation and the bylaws of a corporation or the comparable
organizational and governing documents of other Persons.
"Permitted Encumbrances" - means any of the following:
(z) mechanics', carriers', workers' and other simiIar liens arising in the ordinary course of business and which in the
aggregate are not substantial in amount and do not interfere with the present use of the Assets to which they apply;
(aa) liens for current Taxes and assessments not yet due and payable or for Taxes the validity of which are being
contested in good faith;
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(bb) usual and customary nonmonetary real property Encumbrances, covenants, imperfections in title, Easements,
restrictions and other title matters (whether or not the same are recorded) that do not and will not materially interfere with
the operation of that podion of the Business currently conducted on such real properly;
(cc) Encumbrances securing the payment or performance of any of the Assumed Liabilities;
(dd) all applicable zoning ordinances and land use restrictions;
(ee) with respect to any Asset which consists of a leasehold or other possessory interests in real property, ali
Encumbrances, covenants, imperfections in title, Easements, restrictions and other title matters (whether or not the same
are recorded) to which the underlying fee estate in such real property is subject that do not currently interfere materially
with the operation of that portion of the Business currently conducted on such property; and
(fO any other Encumbrances, Contracts, obligations, defects or irregularities of any kind whatsoever, affecting the Assets or
the Stock that, individually or in the aggregate, are not such as are reasonably likely to have an adverse financial impact of
more than $500,000 on the Business that are not released or waived on or before the Closing Date.
"Person" - any individual, corporation (including any nonprofit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization or Governmental Body.
"Proceeding" - any claim, action, arbitration, hearing, audit, litigation or suit commenced, brought, conducted, or heard by
or before, or otherwise involving, any Governmental Body or arbitrator.
"PUHCA" - the Public Utility Holding Company Act of 1935, as amended, or any successor law, and regulations and rules
issued by the SEC pumuant to that act or any successor law.
"Real Property" -- all real property owned or leased by Seller or any Subsidiary in the operation of the Business, together
with all interests in real property (including Easements) used or held for use by Salter or any Subsidiary in the operation of
the Business.
"Related Documents" -- any Contract provided for in this Agreement to be entered into by one or more of the parties hereto
in connection with the transactions contemplated by this Agreement, including the Employee Agreement.
"Release" - any presence, emission, dispersal, disposal, spilling, leaking, emitting, discharging, depositing, pumping,
pouring, escaping, leaching, dumping, releasing or migration into the indoor or outdoor environment (including the
abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), or in,
into or from any facility,
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including the movement of any Hazardous Materials through the air, soil, surface water, groundwater or property.
"Representative" -- with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants and financial advisors.
"Retained Environmeatal Liabilities" -- Environmental Liabilities for the former manufactured gas plant sites indicated in
subsection (11) of Schedule
5.14 thereon with an asterisk.
"SEC" - the United States Securities and Exchange Commission or any successor agency.
"Stock" -- means collectively all of the capital stock of each Subsidiary and all interests and stock.
"Subsidiaw" - means any of the following:
(gg) SuPro Energy Co., a Delaware corporation;
(hh) Mercado Gas Se~ices Inc., a Delaware corporation;
(ii) Southern Transmission Company, a Delaware corporation;
(jj) Nortano Pipeline Company, a Delaware corporation;
(kk) Southern Union Energy International, Inc., a Delaware corporation; and
(il) Southern Union International Investments, inc., a Delaware corporation.
'Wax" -- any tax (including any income tax, capital gains tax, value-added tax, sales and use tax, franchise tax, payroll tax,
withholding tax or property tax), levy, assessment, tariff, duty (including any customs duty), deficiency, franchise fee or
payment, payroll tax, utility tax, gross receipts tax or other fee or payment, and any related charge or amount (including any
fine, penalty, interest or addition to tax), imposed, assessed or collected by or under the authority of any Governmental
Body.
'Tax Return" - any return (including any information return), report, statement, schedule, notice, form, or ether document
or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection
with the determination, assessment, collection, or payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.
'Whreataned" - a claim, dispute, or other matter will be deemed to have been "Threatened" if any demand or statement
has been made in writing or any notice has been given in writing, and Seller has Knowledge of the Same.
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Section 1.2. Other Defined Terms.
In addition to the terms defined in Section 1.1, certain other terms are defined elsewhere in this Agreement as indicated
below and, whenever such terms are used in this Agreement, they shall have their respective defined meanings.
Term Section
Antitrust Authorities 6.3
Assumed Liabilities 2.2
Balance Sheet 5.6(a)
Base Statement 3.2(a)
Buyer Indemnitees 12.1
Buyer's Pension Plan Employee Agreement
Casualty Event 6.10
CERCLA 5.14(c)
Closing 8.1
Closing Date 8.1
Closing Statement 3.2(a)
CPA Firm 3~2(b)
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EES
Employee
Employee Agreement
Employee Plans
Escrow Amount
Estimated Purchase Price
Final Closing Statemen£
Financial Statements
Large Volume Meters
Non-Transferred Employees
Non-Transferred Terminated Employees
Objection
PCBs
Purchase Price
RCRA
Retained Liabilities
Review Period
Seller Indea%nitees
Seller Marks
Seller's Pension Plan
Seller's 401(k) Plan
SUEI
Transaction Taxes
Employee Agreement
5 13
9.3
3.2(a)
3.2tb)
5.6 a
6.8
Employee Agreement
Employee Agreement
3.2 lb)
2.3
3.2 b)
13.2
6.4
Employee Agreemenn
Employee Agreement
5.4(b)
5.4(b
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ARTICLE II.
PURCHASE AND SALE
Section 2,1. Purchase and Sale of Assets and Stock.
Upon the terms and subject to the conditions contained herein, at the Closing, Seller shall sell, transfer, assign, convey and
deliver to Buyer, and Buyer shall purchase and accept delivery from Seller, all of the Assets owned directly by Seller and all
of the Stock.
Section 2.2. Assumed Liabilities.
In further consideration for the sale of the Assets and the Stock, at the Closing, and subject to the other terms and
conditions of this Agreement, Buyer will satisfy Buyer's obligations under the Employee Agreement and will assume and
agree to pay, perform and discharge when due, or cause the appropriate Subsidiary to pay, perform and discharge when
due, all liabilities and obligations, of every kind or nature, arising out of or relating to:
(a) the ownership of the Assets and the conduct or operation of the Business prior to the Closing Date, other than the
Retained Liabilities (including the Excluded Assets); and
(b) the ownership or use of the Assets by Buyer or any Subsidiary or the conduct or operation of the Business by Buyer or
any Subsidiary, in each case on and after the Closing Date, including all liabilities, responsibilities and obligations relating
to or arising from the following:
ti) performance of the Contracts included among the Assets and assigned to Buyer at Closing or retained by any
Subsidiary, except that Buyer shall not assume any liabilities or obligations for any breach or default by Seller or any
Subsidiary under any such Contract occurring or arising prior to the Closing Date;
(ii) customer advances, customer deposits and construction advances, unperformed service obligations, Easement
relocation obligations, and engineering and construction required to complete scheduled construction, construction work in
progress, and other capital expenditure projects, in each case relating to the Business and outstanding on or arising after
the Closing Date;
(iii) Assumed Environmental Liabilities;
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(iv) Taxes for periods on and after the Closing Date to the extent Buyer is legally obligated to pay such Taxes in
accordance with Article Xl; and
(v) Proceedings based on conduct, actions, inaction, facts, circumstances or conditions arising or occurring on or after the
Closing Date, Proceedings described in Schedule 2.2, and Proceedings arising from or related to any other Assumed
Liability.
The liabilities, responsibilities and obligations to be assumed by Buyer or retained by any Subsidiary pursuant to this
Section 2.2 are hereinafter collectively referred to as the 'Assumed Liabilities." Subject to the other terms and conditions of
this Agreement, Buyer, for itself and each of its
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Affiliates (including each Subsidiary upon Closing), hereby irrevocably and unconditionally waives and releases Seller from
all Assumed Liabilities and all liabilities or obligations relating to the Business or the Assets to the extent arising from
events or occurrences on or after the Closing Date or to the extent otherwise relating to the pedod after the Closing.
Notwithstanding anything in this Section 2.2 to the contrary, Assumed Liabilities shall not include any liabilities,
responsibilities or obligations expressly stated to be Retained Liabilities pursuant to Section 2.3 (including liabilities,
responsibilities or obligations related to Excluded Assets}.
Section 2.3. Retained Liabilities.
Buyer shall not assume and Seller shall retain and pay, perform and discharge when due, all of the liabilities and
obligations relating to or arising from the following (collectively referred to herein as the "Retained Liabilities"):
(a) all obligations of Seller or any Subsidiary with respect to any indebtedness for money borrowed by Seller or any
Subsidiary (including items due to Seller's Affiliates) other than payment obligations adsing on or after the Closing Date
relating to the Business under any equipment or vehicle lease or under any lille extension Contracts or similar construction
arrangements, it being understood and agreed that such leases, Contracts and similar arrangements do not create
indebtedness for money borrowed;
(b) Taxes for periods prior to the Closing Date to the extent Seller is legally obligated to pay such Taxes in accordance with
Article XI.
(c) Excluded Assets and all liabilities Or obligations of Seller and its Affiliates related to their businesses other than the
Business;
(d) Non-Transferred Employees and Non-Transferred Terminated Employees (except to the extent otherwise provided in
the Employee Agreement); and
(e) Retained Environmental Liabilities,
Seller, for itself and each of its Affiliates, hereby irrevocably and unconditionally waives and releases Buyer and each of its
Affiliates from ali Retained Liabilities or liabilities associated with the Excluded Assets.
Section 2.4. Condition on Assignment or Assumption of Contracts and Rights.
Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign or
assume any Contract or any claim or right or any benefit arising thereunder or resulting therefrom if an attempted
assignment or assumption thereof, without the Consent of a third party thereto, would constitute a breach thereof. Any
transfer or assignment to Buyer by Seller of any property or property rights or any Contract which requires the Consent of
any third party shall be made subject to such Consent being obtained. If such Consent is not obtained, or if an attempted
assignment thereof would be ineffective or would affect the rights of Seller thereunder so that Buyer would not in fact
receive all such rights, Seller will cooperate with Buyer in any arrangement, including an operating or other services
agreement if reasonably required by Buyer,
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reasonably designed to provide for Buyer, at Seller's cost, the benefits under any such Contract or rights including, without
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limitation, enforcement for the benefit of Buyer of any and all rights of Seller against a third party or Governmental Body
thereto arising out of the breach or cancellation by such third party or Governmental Body or otherwise. To the extent that
Buyer does receive all of the benefits of any such Contract or rights pursuant to the preceding sentence, such Contract
shall be a Contract deemed to have been assigned or transferred to Buyer pursuant to Section 2.2(b)(i). Seller shall not be
obligated (although Buyer is permitted at its expense) to provide any arrangement or effect any assignment pursuant to this
Section 2.4 which resuIts in an out-of-pocket cost or expenditure by Seller, or exposure to or continuation of liability to
Seller, resulting from such arrangements and assignments, that would be reasonably estimated to be in excess of
$250,000, in the aggregate, except as otherwise expressly provided for by this Agreement, and
(ii) where SeIler has continuing liabiIity or exposure due to any third party's failure to release Seller as a result of such third
pady's unwillingness to accept Buyer as assignee; provided, however, that it Buyer, at Buyer's option, indemnifies Seller
from such continuing liability or exposure on terms and conditions reasonably satisfactory to Seller, then Seller shall
provide an arrangement or assignment of the Contract to Buyer.
Section 2.5. Settlement of Intercompany Accounts.
At or prior to the Closing, Seller shall cause all intercompany payables, receivables and loans between Seller's Southern
Union Gas Division and any of the Subsidiaries, on the one hand, and Seller and its Affiliates (other than the Southern
Union Gas Division and any of the Subsidiaries), on the other hand, to be settled or cancelled.
ARTICLE IlL
PURCHASE PRICE
Section 3.1. Purchase Pdce.
Subject to the terms and conditions of this Agreement, the aggregate purchase price for the Assets owned directly by
Seller and for the Stock (the "Purchase Price") shall be an amount equal to Four Hundred Twenty Million Dollars
($420,000,000) in cash, as adjusted in accordance with Section 3.2, and the assumption by Buyer at Closing of the
Assumed Liabilities.
Section 3.2. Adjustment to Purchase Price.
(a) Schedule 3.2 sets forth the Working Capital of the Business as of June 30, 2002 (the "Base Statement"). "Working
Capital" shall mean Current Assets [ess Current Liabilities. "Current Assets" shall mean current assets of the Business as
reflected in the Base Statement as of the relevant date of determination, but excluding Excluded Assets, intercompany
receivables (that is, receivables of the Business from divisions, subsidiaries or Affiliates of Seller not a part of the Business)
and prepaid insurance. "Current Liabilities" shall mean the current liabilities of the Business as reflected in the Base
Statement as of the relevant date of determination, but excluding Retained Liabilities (including liabilities associated with
Excluded Assets), intercompany payables (that is, payables of the Business to divisions, subsidiaries or Affiliates of Seller
not a part of the Business, and accrued liability for Taxes for which Seller is liable. Within 90 days following the
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Closing Date, Seller shall prepare and deliver to Buyer a statement (the "Closing Statement"), which shall set forth in
reasonable detail the amount of Working Capital of the Business as of the Closing Date prepared on a basis consistent
with the Base Statement, and a calculation of the adjustment to the Purchase Price that is payable based upon the
difference between the Working Capital in the Base Statement and the Working Capital in the Closing Statement. Buyer
agrees, at no cost to Seller, to give Seller and its authorized representatives reasonable access to such employees,
officers and other facilities and such books and records of the Buyer and the Subsidiaries as are reasonably necessary to
allow Seller and its authorized representatives to prepare the Closing Statement. The Base Statement shall be prepared
using the same accounting methods, policies, practices, procedures and adjustments as were used in the preparation of
the Financial Statements. The Closing Statement shall be prepared using the same accounting methods, policies,
practices, procedures and adjustments as were used in tire preparation of the Financial Statements.
(b) Following its receipt from Seller of the Closing Statement, Buyer shall have 15 Business Days to review the Closing
Statement and to inform Seller in writing of any disagreement (the "Objection") which it may have with the Closing
Statement, which objection shall specify in reasonable detail Buyer's disagreement with the Closing Statement. If Seller
does not receive the Objection within such 15-Business Day period, the amount of Working Capital set forth on the Closing
Statement delivered pursuant to Section 3.2(a) shall be deemed to have been accepted by Buyer and shall become
binding upon Buyer. if Buyer does timely deliver an Objection to Seller, Seller shall then have 15 Business Days from the
date of receipt of such Objection (the 'Review Pedod") to review and respond to the Objection. Buyer and Seller shall
attempt in good faith to resolve any disagreements with respect to the determination of Working Capital of the Business as
of the Closing Date or the amount of the adjustment to the Purchase Price. If they are unable to resolve all of their
disagreements with respect to the determination of Working Capital of the Business as of the Closing Date or the amount
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OIND, IDK lined/Ni~,W/(.l~Orm: ~-1% KecelveO: loll ilZOOz lo:zl;3q) ~ as~, ,., u~ oJ
of the adjustment to the Purchase Price within 15 Business Days following the expiration of Seller's Review Period, they
may refer, at the option of either Buyer or Seller, their differences to Deloitte & Touche LLP, or if Deloitte & Touche LLP
declines to accept such engagement, an internationally recognized firm of independent public accountants selected jointly
by Buyer and Seller, who shall determine only with respect to the differences so submitted, whether and to what extent, if
any, the amount of Working Capital of the Business as of the Closing Date set forth in the Closing Statement requires
adjustment, if Buyer and Seller are unable to so select the independent public accountants within 15 Business Days of
Deloitte & Touche LLP declining to accept such engagement, either Buyer or Seller may thereafter request that the
American Arbitration Association make such selection (as applicable, Deloitte & Touche LLP, the firm selected by Buyer
and Seller or the firm selected by the American Arbitration Association is referred to as the "CPA Firm"). Buyer and Seller
shall direct the CPA Firm to use its reasonable best effods to render its determination within 30 days after the issue is first
submitted to the CPA Firm. The CPA Firm's determination shall be conclusive and binding upon Buyer and Seller. The fees
and disbursements of the CPA Firm shall be shared equally by Buyer and Seller. Buyer and Seller shall make readily
available to the CPA Firm all relevant books and records relating to the Closing Statement and all other items reasonably
requested by the CPA Firm. The Closing Statement as agreed to by Buyer and Seller or as determined by the CPA Firm
shall be referred to as the "Final Closing Statement."
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(c) In the event ora positive difference between Working Capital on the Final Closing Statement from the Working Capital
on the Base Statement, then Buyer shall pay to Seller in cash the amount of such difference. In the event of a negative
difference between the Working Capital on the Base Statement from the Working Capital on the Final Closing Statement,
then Seller shall pay to Buyer in cash the amount of such difference. All amounts payable under this Section
3.2(c) shall be paid within five (5) Business Days of the determination of the Final Closing Statement by wire transfer of
immediately available funds to a bank account in the United States of America designated in writing by the recipient not
less than one Business Day before such payment.
(d) The Seller and Buyer hereby agree that, on or before the Closing Date, all intercompany accounts of the Business due
from or to Seller or any divisions, subsidiaries or Affiliates of Seller not a part of the Business shall be paid in ful! or offset,
dMdended or distributed to the Seller or its Affiliates, or otherwise cancelled without payment.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.1. Organization, Existence and Qualification.
Buyer is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Oklahoma,
with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, to perform its obligations under all Contracts to which it is a pady, and to execute
and deliver this Agreement and the Related Documents to which Buyer is a party. Buyer is duly qualified to do business as
a foreign corporation and is in good standing under the laws of each state in which the failure to be so qualified or in good
standing would materially adversely affect the business or properties of Buyer or Seller's ability to consummate the
transactions contemplated hereby.
Section 4.2, Authority Relative to this Agreement and Binding Effect.
The execution, delivery and performance of this Agreement and the Related Documents by Buyer have been duly
authorized by Buyer's Board of Directors, which constitutes ali necessary corporate action required on the part of Buyer
and Buyer's shareholders for such authorizations. The execution, delivery and performance of this Agreement and the
Related Documents by Buyer will not result in (a) any conflict with or breach or violation of or default under the
Organizational Documents of Buyer, (b) a violation or breach of any term or provision of, or constitute a default or
accelerate the performance required under, any indenture, mortgage, deed of trust, security agreement, loan agreement,
or Contract to which Buyer is a party or by which its assets are bound, or (c) a violation of any Order of any Governmental
Body, This Agreement constitutes, and the Related Documents to be executed by Buyer when executed and delivered will
constitute, valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms,
except as such enfomeability may be limited by ti) bankruptcy or similar laws from time to time in effect affecting the
enforcement of creditors' rights generally or (ii) the availability of equitable remedies generally.
Section 4.3. Governmental and Other Required Consents.
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Except for those Consents described in Schedule 4.3 and except as set forth in Schedule 5.3 to the extent (but only to the
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extent) applicable to Buyer, no Consent of any Govemmenta[ Body or third Person is required to be obtained by Buyer in
connection with the execution and delivery by Buyer of this Agreement or the Related Documents or the consummation by
Buyer of the transactions contemplated by this Agreement or the Related Documents. Buyer has no knowledge of any facts
or circumstances relating to Buyer or its Affiliates that reasonably would be likely to preclude or prolong the receipt by
Buyer or Seller of any of its or their required Consents.
Section 4.4. Availability of Funds.
Buyer has available, and will have available through the payment of the Purchase Pr[ce at Closing, sufficient funds to
enable it to consummate the transactions contemplated by this Agreement.
Section 4.5. Filings.
No statement furnished by Buyer for inclusion in any filing with any Governmental Body in connection with obtaining such
Governmental Body's Consent for the consummation of the transactions contemplated by this Agreement will contain, as of
the date such information is so provided, any untrue statement of a material fact or will omit to state, as of the date such
information is so provided, any material fact which is necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
Section 4.6. Brokers.
Except for UBS Warburg LLC, no broker or finder has acted for or on behalf of Buyer or any Affiliate of Buyer in connection
with this Agreement or the transactions contemplated by this Agreement. No broker or finder is entitled to any brokerage or
finder's fee, or to any commission, or to any other compensation based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer or any Affiliate of Buyer for which Seller or any Affiliate of Seller has or will
have any liability or obligation (contingent or otherwise).
Section 4.7. Independent Investigation.
Buyer is knowledgeable about the businesses engaged in by Seller through its Southern Union Gas Company division and
the Subsidiaries and of the usual and customary practices of companies engaged in businesses similar to such businesses
and has had access to the Assets, the officers and employees of Seller, and the books, records and files of Seller relating
to the Business and the Assets. In making the decision to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer has relied solely on the basis of its own independent due diligence investigation of the
Business and upon the representations and warranties made in Adicle V.
15
Section 4.8. Public Utility Holding Company Status; Regulation as a Public Utility.
Buyer is a "public utility company" (as such term is defined in PUHCA). Buyer is not a "holding company" or a "subsidiary"
or an "affiliate" of a "public utility company" or of a "holding company", within the meaning of such terms in PUHCA.
Section 4.9. Investment Intent; Investment Experience; Restricted Securities.
Buyer is acquiring the Stock for its own account for investment and not with a view to, or for sale or other disposition in
connection with, any distribution of alt or any part thereof in violation of federal or state securities law. In acquiring the
Stock, Buyer is not offering or selling, and will not offer or sell, for Seller in connection with any distribution of the Stock,
and Buyer does not have a participation and will not padicipate in any such undertaking or in any underwriting of such an
undertaking except in compliance with applicable federal and state securities laws. Buyer acknowledges that it is able to
fend for itself, can bear the economic risk of its investment in the Stock, and has such knowledge and experience in
financial and business mattem that it is capable of evaluating the merits and risks of an investment in the Stock. Buyer is
an "accredited investor" as such term is defined in Regulation D under the Securities Act. Buyer understands that the Stock
has not been registered pursuant to the Securities Act or any applicable state securities laws, that the Stock will be
characterized as "restricted securities" under federal securities laws and that under such laws and applicable regulations
the Stock cannot be sold or otherwise disposed of without registration under the Securities Act or an exemption therefrom.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 5.1. Organization, Existence and Qualification.
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Seller and each Subsidiary is a corporation duly incorporated, validly existing, and in good standing under the laws of the
State of Delaware, with full corporate power and authority to conduct the portion of the Business conducted by it as it is
now being conducted, to own or use [ts portion of the Assets and to perform its obligations under all Contracts to which it is
a party. Energia Estmlta de[ Sur, S.A. de C.V. ("EES") is a limited liability variable stock corporation (sociedad anonima de
capital variable) duly incorporated and in existence under the laws of the United Mexican States and has all necessary
authority to conduct the podion of the Business conducted by it as it is now being conducted, to own or use its podion of
the Assets and to per[orm its obligations under all Contracts to which it is a party. Seller has fuji corporate power and
authority to execute and deliver this Agreement and the Related Documents to which Seller is a pady. Seller and each
Subsidiary is duly qualified to do business as a foreign corporation and is in good standing under the laws of the State of
Texas and each other state or country in which the failure to be so qualified or in good standing would have a Material
Adverse Effect.
Section 5.2. Authority Relative to this Agreement and Sinding Effect.
The execution, delivery and performance of this Agreement and the Related Documents by Seller have been duly
authorized by Seller's Board of Directors, which constitutes all necessary
16
corporate action required on the part of Seller and Seller's shareholders for such authorizations. Except as set forth in
Schedule 5.2, the execution, delivery and performance of this Agreement and the Related Documents by Seller will not
result in (a) any conflict with or breach or violation of or default under the Organizational Documents of Seller or any
Subsidiary, (b) a violation or breach of any term or provision of, or constitute a default or accelerate the performance
required under, any indenture, mortgage, deed of trust, secudty agreement, loan agreement, or Material Contract to which
Seller or any Subsidiary is a par~y or by which any of the Assets are bound, or (c) a violation of any Order of any
Governmental Body, except for such exceptions to the foregoing clauses (b) and (c) that, individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect or that will be cured, waived or otherwise remedied on or
prior to the Closing Date. This Agreement constitutes, and the Related Documents to be executed by Seller when executed
and delivered will constitute, valid and binding obligations of Seller, enforceable against Seller in accordance with their
respective terms, except as enforceability may be limited by ti) bankruptcy or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally or (ii) the availability of equitable remedies generally.
Section 5.3. Governmental and Other Required Consents.
Except as set forth in Schedule 5.3, no Consent of any Governmental Body or third Pemon is required to be obtained by
Seller or any Subsidiary or, to Seller's knowledge, Buyer, in connection with the execution and delivery by Seller and Buyer
of this Agreement or the Related Documents or the consummation by Seller and Buyer of the transactions contemplated by
this Agreement or the Related Documents, other than any Consent the failure of which to obtain would not be reasonably
likely to have a Matedal Adverse Effect. Seller has no knowledge of any facts or circumstances relating to Seller, any
Subsidiary or their Affiliates that reasonably would be likely to preclude or prolong either
(i) the receipt of such required consents or (ii) consummation of the transactions contemplated by this Agreement in
accordance with its terms.
Section 5.4. Capitalization of the Subsidiaries; Title to Stock.
(e) Seller owns all of the issued and outstanding shares of the capital stock of each Subsidiary, free and clear of any
Encumbrances except Permitted Encumbrances, and ali of such shares are duly authorized and validly issued and are fully
paid, non-assessable and free of preemptive rights. None of the Subsidiaries has, or is bound by, any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of
any secodty of such Subsidiary, including any securities representing the right to purchase or otherwise receive any shares
of capital stock or any other equity security of such Subsidiary. None of the Subsidiaries may be required to acquire by any
means, directly or indirectly, any capital stock, voting rights, equity interests or investments in another Person, which would
constitute a material acquisition or investment for the Business.
(f) Except as set forth in the next sentence, no Subsidiary has any direct or indirect interest in any other Person. Southern
Union Energy International, Inc. ("SUEI") owns 99%, and Southern Union International Investments, Inc. ("SUII") owns 1%,
of the issued and outstanding capital stock of EES, and EES owns the percentage interest of the capital stock of each
limited liability variable stock corporation (sociedad enonima de capital variable) organized under the laws
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of the United Mexican States that is described in Schedule 5.4(b) (each, an "EES-Related Entity"). Each of SUEI and SUll
owns its respective shares of capital stock of EES free and clear of any Encumbrances. EES owns its shares of capital
stock in each EES-Re[ated Entity free and clear of any Encumbrances except for (i) Encumbrances imposed under the
Organizational Documents of such EES-Related Entity or otherwise disclosed in Schedule 5.4(b), or under foreign, federal
or state securities laws, and (ii) Permitted Encumbrances. All such shares of EES and, to the Knowledge of Seller, all
shares owned by EES in each EES-Related Entity are duty authorized and validly issued and are fully paid, non-
assessable and free of preemptive rights.
Section 5.5. Title to Assets; Encumbrances.
Seller or the appropriate Subsidiary has good and indefeasible titIe to the Assets reflected in the Financial Statements
except those that in the aggregate are not material to the Business and those disposed of since the date of the Financial
Statements in the ordinary course of business or otherwise disposed of in accordance with this Agreement. None of the
Assets are subject to any Encumbrance except (i) Encumbrances described in Schedule 5.5 and (ii) Permitted
Encumbrances. Except as set forth in Schedule 5.5, Seller or the appropriate Subsidiary owns or possesses ail Easements
necessary to conduct the Business as now being conducted without any known conflict with the rights of others, in each
case except to the extent that the failure to own or possess such Easements would not have a Material Adverse Effect.
Except in cases which individually or in the aggregate are not reasonably likely to result in a Material Adverse Effect, (i)
Seller or the appropriate Subsidiary enjoys peaceful and undisturbed possession under all material leases of Real
Property, and (ii) to the Knowledge of Seller, all such leases are valid and subsisting and in full force and effect.
Section 5.6. Financial Statements.
Schedule 5.6 sets forth the unaudited consolidated statement of assets and liabilities of the Business as of June 30, 2002
(the "Balance Sheet") and the unaudited consolidated statement of profit of the Business for the twelve-month period
ended June 30, 2002 (collectively, the "Financial Statements"). Except as set forth in Schedule 5.6, the Financial
Statements have been prepared on a pre-tax basis consistent with Seller's consolidated audited financial statements
prepared in accordance, in all material respects, with GAAP, as of, and for its fiscal year ended, June 30, 2002. Except as
set forth in Schedule 5.6, the Balance Sheet presents fairly in all material respects the consolidated financial condition of
the Business as of its date and the statement of profit included in the Financial Statements presents fairly in all material
respects the consolidated results of operations of the Business for the period covered thereby. The books and records of
Seller and the Subsidiaries from which the Financial Statements were derived were complete and accurate in alt material
respects at the time of such preparation.
Section 5.7. Compliance with Legal Requirements; Governmental Permits.
Except as relates to tax matters (which are provided for in Section 5.9), employee benefit matters (which are provided for in
Section 5.13) or environmental matters (which are provided for in Section 5.14) and except as set fodh in Schedule 5.7, to
the Knowledge of Seller: (i) neither Seller nor any Subsidiary is in violation of any Legal Requirement or Order that is
applicable to it that is material to the conduct or operation of the Business, or to the ownership or use of any of the Assets,
18
in either case taken as a whole; and (ii) Seller or the appropriate Subsidiary possesses all permits, licenses, and
authorizations from Governmental Bodies required by any applicable Legal Requirement or Order material to the operation
of the Business substantially in the manner in which it is currently being conducted by Selter and the Subsidiaries, taken as
a whole.
Section 5.8. Legal Proceedings; Outstanding Orders.
Except as set forth in Schedule 5.8, as of the date of this Agreement, there is no pending or Threatened Proceeding (a)
that has been commenced against Seller or any Subsidiary that is reasonably likely to have an adverse financial effect on
the Business of more than $250,000 or (b) that challenges, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, the transactions contemplated hereby. Except as disclosed in Schedule 5.8, as of the
date of this Agreement, there are no outstanding Orders against Seller or any Subsidiary which relate to or arise out of the
conduct of the Business or the ownership, condition or operation of the Business or the Assets (other than any Order
relating to rates, tariffs and similar matters arising in the ordinary course of business) which individually or in the aggregate
would have an adverse financial effect on the Business of more than $250,000.
Section 5.9. Taxes.
Seller or the appropriate Subsidiary has filed all United States federal, state and local income Tax Returns required to be
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filed by Seller or such Subsidiary or requests for extensions to file such Tax Returns have been timely filed, and Seller or
such Subsidiary has paid and discharged or made adequate provision for all Taxes except where failure to so file, pay,
discharge or make adequate provision for would not be material to the Business, other than Retained Liabilities. There are
no pending audits or other examinations relating to any Tax matters relating to the Business except as set fodh in
Schedule 5.9. To the Knowledge of Seller, there are no Tax liens on the Assets. As of the date of this Agreement, neither
Seller nor any Subsidiary has granted any waiver of any statute of limitations with respect to, or any extension of a period
for the assessment of, any Tax relating to the Business except as set forth in Schedule
5.9. As of the Closing Date, none of the Subsidiaries will be a party to, will be bound by or will have any obligation under
any tax sharing agreement or similar agreement or arrangement that includes Seller or any Affiliate of Seller.
Section 5.10. Intellectual Property.
Seller and each Subsidiary possesses or has adequate rights to use all trademarks, trade names, patents, service marks,
brand marks, brand names, computer programs, databases, industrial designs and copyrights necessary for the operation
of the Business in the manner in which it is currently being conducted by Seller or such Subsidiary, except for the failure to
possess or have adequate rights to use such properties that would not have a Material Adverse Effect. Seller has no
Knowledge of (i) any infringement or claimed infringement by Seller or any Subsidiary of any patent, trademark, service
mark or copyright of others or (ii) any infringement of any patent, trademark, service mark or copyright owned by or under
license to Seller or any Subsidiary except for any such infringements of the type described in clause (i) or (ii) that are not,
individually or in the aggregate, reasonabIy likely to have a Material Adverse Effect.
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Section 5.11. Personal Property.
Except for such exceptions as are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect,
the machinery and equipment included among the Assets are in normal operating condition and in a state of reasonable
maintenance and repair, and are suitable in all material respects for the purposes for which they are now being used in the
conduct of the Business.
Section 5.12. Material Contracts.
Except as described in Schedule 5.12, all of the Material Contracts are in full force and effect as of the date hereof and, to
Seller's Knowledge, there are no defaults under any such Contracts except for any failure to be in full force and effect and
for any default that, individually or in the aggregate, will not have a Material Adverse Effect.
Section 5.13. Employee Benefit Matters.
(g) Schedule 5.13 lists (i) each "Employee Benefit Plan," as such term is defined in Section 3(3) of ERISA, which is
covered by any provision of ERISA and which is maintained by Seller for the benefit of the Employees and each other
material fringe benefit plan, policy or arrangement currently maintained by Seller for the benefit of Employees which
provides for pension, deferred compensation, bonuses, severance, employee insurance coverage or similar employee
benefits (collectively, "Employee Plans"); and (ii) each collective bargaining, union or other employee association
agreement, employment, managerial advisory, and consulting agreement, employee confidentiality agreement, and all
other material agreements, policies, or arrangements maintained by Seller for the Employees. Seller has made available to
Buyer copies, which were accurate and complete as of the date so made available, of all such documents and (if
applicable) summary plan descriptions with respect to such plans, agreements and arrangements, or summary description
(s) of any such plans, agreements or arrangements not otherwise in wdfing.
(h) Seller's Pension Plan and Seller's 401(k) Plan are the only Employee Plans which are intended to be qualified under
Section 401(a) of the IRC.
(i) Each Employee Benefit Plan maintained by Seller for the benefit of the Employees has been established and
administered in all material respects in accordance with the material terms of ERISA and the applicable provisions of the
IRC.
Section 5.14. Environmental Matters.
(a) Except as set forth in Schedule 5.14: .
(i) Compliance. Seller and each Subsidiary are in compliance with all Environmental Laws applicable to the Assets and
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Business, Seller and each Subsidiary have not received any written communication that alleges that Seller or any of the
Subsidiaries are not in compliance with applicable Environmental Law~ related to the Assets and Business. To the
Knowledge of Seller, Seller and each Subsidiary have not used any waste disposal site, or otherwise
2O
~lis~)~d-'of, o~'t~a~t~', or ~rr~ngEd for the tr'mss~dation o~ ~y~az~;~e~s Ma~ri~ t~-~n~¥o~c~ion in ~T~-atio~-- '
any Environmental Law that relates to the Assets and Business.
(ii) Environmental Permits. Seller and each Subsidiary have obtained or applied for all environmental, health and safety
permits and authorizations (collectively, the "Environmental Permits") necessary for the construction of their facilities or the
conduct of their present operations related to the Assets and Business, and ali such permits are in good standing or, where
applicable, a renewal application has been timely filed and is pending agency approval, and Seller and each Subsidiary are
in compliance with alt terms and conditions of the Environmental Permits related to the Assets and Business, in each case
except where the failure to obtain or be in compliance with such Environmental Permits or the requirement to make any
expenditure in connection with such Environmental Permits would not, individually or in the aggregate, have an adverse
financial effect on the Business of more than $250,000.
(iii) Environmental Claims. To the Knowledge of Seller, there is no Environmental Claim related to the Assets and Business
pending (i) against Seller or any Subsidiary, (ii) against any person or entity whose liability for any Environmental Claim
Seller or any Subsidiary has retained or assumed either contractually or by operation of law, or (iii) against any real or
personal property or operations that Seller or any Subsidiary owns, leases or manages, in whole or in part, which, in the
cases of (i), (ii) or (iii) would reasonably be expected to have, in the aggregate, an adverse financial effect on the Business
of more than $250,000.
(iv) Releases. Seller has no Knowledge of any Releases of any Hazardous Material related to the Assets and Business and
its assets, properties and operations that would reasonably be expected to form the basis of any Environmental Claim
against Seller or any Subsidiary, or against any person or entity whose liability for any Environmental Claim Seller or any
Subsidiary has retained or assumed either contractually or by operation of law, except for Releases of Hazardous
Materials, the liability for which would not reasonably be expected to have, in the aggregate, an adverse financial effect on
the Business of more than $250,000, or would not constitute an Assumed Liability.
(v) Predecessors. Seller has no Knowledge, with respect to any predecessor of Seller or any Subsidiaries, of any
Environmental Claim or Environmental Liability related to the Assets pending or threatened, or of any Release of
Hazardous Materials that would reasonably be expected to form the basis of any Environmental Claim or Environmental
Liability related to the Assets, that would reasonably be expected to have a Material Adverse Effect
(vi) Disclosure. Seller has no Knowledge of any material facts related to the Assets that Seller reasonably believes would
form the basis of an Environmental Claim or Environmental Liability arising from (i) the cost of pollution control equipment
currently required or known to be required in the future or (ii) current remediation costs or remediation costs known to be
required in the future, in either case that would reasonably be expected to have a Material Adverse Effect.
lb) The only representations and warranties given in respect of environmental, matters and compliance with and liability
under Environmental Laws are those contained in Section
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5.14 and none of the other representations and warranties shall be deemed to constitute, directly or indirectly, a
representation and warranty in respect of environmental matters or compliance with and liability under Environmental Laws.
Section 5.15. Absence of Certain Changes or Events.
Except ti) as set forth in Schedule 5.15, (ii) for any intercompany receivables or payables that will be paid, cancelled or
offset prior to Closing as contemplated in Section 3.2(d) hereof and (iii) any actions taken by Seller or any Subsidiary that
would be permitted by Section 6.1(a), since June 30, 2002, the Business has been conducted in the ordinary course,
except in connection with entering into this Agreement or any marketing by them of the Business. Since June 30, 2002,
there has not been any event or condition, or series of events or conditions, occurring outside the normal course of
business affecting the Assets that either tx) has resulted in, or (y) to Seller's Knowledge, will result in, a Material Adverse
Effect.
Section 5.16. Regulatory Matters.
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(j) Schedule 5.16 reflects all of the currently pending rate filings relating to the Business heretofore made by Seller before
any Governmental Body and each other currently pending rate Proceeding of any Governmental Body (other than
Proceedings that also affect other Persons engaged in a business similar to the Business such as generic or industry-wide
Proceedings) that is reasonably likely to have a Material Adverse Effect.
(k) All currently effective material filings relating to the Business heretofore made by Seller or any Subsidiary with any
Governmental Body were made in material compliance with Legal Requirements then applicable thereto and the
information contained therein was true and correct in all material respects as of the respective dates of such filings.
Section 5.17. Public Utility Holding Company Status; Regulation as a Public Utility.
Seller is a "gas utility company" and a "public utility company" (as such terms are defined in PUHCA). Seller indirectly owns
a minority interest in a "foreign utility company" (as such term is defined in PUHCA) that is exempt from, and is deemed not
to be a public utility company for purposes of, PUHCA pursuant to Section 33 thereof and with respect to which SeIler has
filed with the SEC a Form U-57 notification of foreign utility company status. Except as stated in this Section 5.17, neither
Seller nor any of the Subsidiaries is a "holding company," a "subsidiary company," a "public utility company," or an
"Affiliate" of a "public utility company" or a "holding company" within the meaning of such terms in PUHCA.
Section 5.18. Brokers.
Except for J.P. Morgan Securities Inc., no broker or finder has acted for or on behalf of Seller or any Affiliate of Seller in
connection with this Agreement or the transactions contemplated by this Agreement. No broker or finder is entitled to any
brokerage or finder's fee, or to any commission, or to any other compensation based in any way on agreements,
arrangements or understandings made by or on behalf of Seller or any Affiliate of Seller for which Buyer has or will have
any liability or obligation (contingent or otherwise).
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Section 5.19. Disclaimer.
Except as otherwise expressly set forth in this Adicle V, Seller expressly disclaims any representations or warranties of any
kind or nature, express or implied, as to the condition, value or quality of the assets or properties currently or formerly
used, operated, owned, leased, controlled, possessed, occupied or maintained by Seller or any Subsidiary, and Seller
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH ASSETS OR PROPERTIES, OR ANY
PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN,
WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT SUCH ASSETS AND PROPERTIES ARE BEING
ACQUIRED, "AS IS, WHERE IS" ON THE CLOSING DATE, AND IN THEIR PRESENT CONDITION, WITH ALL FAULTS
AND THAT BUYER SHALL RELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF.
Section 5.20. Insurance.
(I) Schedule 5.20 sets forth a true and complete list of all current policies of property and casualty insurance, insuring the
properties, assets, employees and/or operations of the Business (collectively, the "Policies"). All premiums payable under
such Policies have been paid in a timely manner and Seller and each Subsidiary have complied in all material respects
with the terms and conditions of all such Policies.
(m) All material Policies are in full force and effect. Neither Seller nor any Subsidiary is in material default under any
provisions of the Policies, and there is no claim by Seller or any Subsidiary or any other Person pending under any of the
Policies as to which coverage has been questioned, denied or disputed by the underwriters or issuers of such Policies.
Section 5.21. Absence of Undisclosed Liabilities.
Except as disclosed on Schedule 5.21, neither Seller nor any Subsidiary has any indebtedness or liability, absolute or
contingent, related to the Assets, including any obligations, liabilities or commitments of SUEI, SUll or EES to any other
Person, including the EES-Related Entities, of a nature required by GAAP to be reflected in a consolidated corporate
balance sheet relating to the Business, except liabilities, obligations or contingencies that (i) are accrued or reserved
against in the Financial Statements or reflected in the notes thereto, (ii) were incurred or accrued in the ordinary course of
business (including liens of current taxes and assessments not in default) since June 30, 2002, or (iii) to Se[ler"s
Knowledge, would not reasonably be expected, individually or in the aggregate, to have an adverse financial effect on the
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Business of more than $750,000.
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ARTICLE VI.
COVENANTS
Section 6.1. Covenants of Seller.
Seller agrees to observe and perform the following covenants and agreements;
(a) Conduct of the Business Prior to the Closing Date. With respect to the Business, except (i) as contemplated in this
Agreement or in Schedule 6.1,
(ii) as required by any Legal Requirement or Order or (iii) as otherwise expressly consented to in writing by Buyer which
consent will not be unreasonably withheld or delayed, pdor to the Closing, Seller will, with respect to the Business, and will
cause each Subsidiary to:
(i) not make or permit any material change in the general nature of the Business;
(ii) maintain the Business in the ordinary course of business in accordance with prudent business judgment and consistent
with past practice and policy, and maintain the Assets in their present condition, reasonable wear and tear excepted,
subject to retirements in the ordinary course of business;
(iii) not enter into, or renew or extend, any material transaction or Material Contract other than in the ordinary course of
business;
(iv) not purchase, sell, lease, dispose of or otherwise transfer or make any Contract for the purchase, sale, lease,
disposition or transfer of, or subject to Encumbrance, any material Assets other than in the ordinary course of business;
(v) not hire any new employee unless such employee is a bona fide replacement for either a presently-filled position or a
vacancy in an authorized position with the Business;
(vi) not make any unbudgeted capital expenditure or capital expenditure commitment in excess of $500,000 in the
aggregate except in the event of service interruption, emergency or casualty loss;
(vii) comply in all material respects with all applicable material Legal Requirements and Orders, including without limitation
those relating to the filing of reports and the payment of Taxes due to be paid prior to the Closing, ether than those
contested in good faith;
(viii) except in the ordinary course of business or in accordance with the terms of any existing Contract, Employee Plan or
collective bargaining agreement, not grant any material increase or change in total compensation or benefits (taken as a
whole) to any of the Transferred Employees or enter into any employment, severance or similar Contract with any Person
or amend any such existing Contracts to increase any amounts payable thereunder or benefits provided thereunder;
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(ix) not terminate any Material Contract except in the case of a breach of such Contract by the other party thereto;
(x} not create, incur, assume, guarantee or otherwise become liable with respect to any indebtedness for money borrowed
other than in the ordinary course of business (it being understood and agreed that customer advances, customer deposits
and construction advances do not create indebtedness for money borrowed), except pursuant to advances made by Seller
to the Business or to the Subsidiaries;
(xi) not amend the Organizational Documents of any Subsidiary;
(xii) not make any change in the stock ownership of any Subsidiary and not grant, issue, sell, dispose of, pledge or
otherwise encumber any interest in any Subsidiary; and
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(xiii) not make any commitment to take any of the actions prohibited by this Section 6.1(a).
(b) Access to the Business, Assets and Records; Updating Information.
(i) From and after the date hereof and until the Closing Date, Seller shall permit Buyer and its Representatives to have, on
reasonable notice and at reasonable times, reasonable access to all propedies, employees, offices and books, papers and
records to the extent that they reasonably relate to the ownership, operation, obligations and liabilities of the Business, the
Subsidiaries and the Assets; provided, however, that such access shall not unreasonably interfere with the operation of the
Business; and provided, fudher, that Buyer hereby agrees to defend, indemnify and hold harmless Seller from and against
all Losses arising out of or relating to Buyer's access provided pursuant to this Section 6.1(b)(1 ). Without limiting the
application of the Confidentiality Agreement, all documents or information furnished by Seller or obtained by Buyer
hereunder shalI be subject to the Confidentiality Agreement.
(ii) Seller will notify Buyer as promptly as practicable of any significant change in the ordinary course of business for the
Business and of any material Proceedings (Threatened or pending) involving or affecting the Business or the transactions
contemplated by this Agreement, of any unbudgeted capital expenditure or commitment in excess of $100,000, individually,
or $500,000 in the aggregate, and shall use reasonable effods to keep Buyer fully informed of such events.
(c) Consents. Seller will use its commercially reasonable efforts and act diligently to obtain all necessary Consents from
any Person required to consummate the transactions contemplated hereby in a timely manner, including the Consent of
any Person required under any Legal Requirement or Contract applicable to the Business and afl Consents listed in
Schedule 5.3.
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Section 6.2. Covenants of Buyer.
Buyer agrees to observe and perform the following covenants and agreements:
(n) Consents. Buyer will use its commemiaHy reasonable effods and act diligently to assist Seller in obtaining all necessary
Consents from any Person required to consummate the transactions contemplated hereby in a timely manner, including the
Consent of any Person required under any Legal Requirement or Contract applicable to the Business, and will use its
commercially reasonable efforts and act diligently to obtain ali Consents described in Section 4.3 and ail Consents listed in
Schedule 5.3 in a timely manner.
(o) Access to Information. After Closing, Buyer will, and will cause its Representatives to, afford to Seller, including its
Representatives, reasonable access to all books, records, files and documents related to the Business in order to permit
Seller to prepare and file its Tax Returns and to prepare for and participate in any investigation with respect thereto, to
prepare for and participate in any other investigation and defend any Proceedings relating to or involving Seller, any
Subsidiary or the Business for which Seller may be responsible, to discharge its obligations under this Agreement and the
other Related Documents to which it is a pady and for other reasonable purposes and wilt afford Seller reasonable
assistance in connection therewith. Buyer will cause such records to be maintained for not less than seven years from the
Closing Date and will not dispose of such records without first offering in writing to deliver them to Seller; provided,
however, that in the event that Buyer transfers all or a portion of the Business to any third party dudng such period, Buyer
may transfer to such third party all or a portion of the books, records, files and documents related thereof, provided such
third party transferee expressly assumes in wdting the obligations of Buyer under this Section 6.2(b). In addition, on and
after the Closing Date, at SeltaCs request, Buyer shall make available to Seller and its Affiliates, employees,
representatives and agents, those employees of Buyer requested by Seller in connection with any Proceeding, including to
provide testimony, to be deposed, to act as witnesses and to assist counsel; provided, however, that (x) such access to
such employees shall not unreasonably interfere with the normal conduct of the operations of Buyer and (y) Seller shall
reimburse Buyer for the out-of-pocket costs reasonably incurred by Buyer in making such employees available to Seller.
(p) Seller Guarantees and Surety instruments. Buyer shall use its commercially reasonable efforts to assist Seller in
obtaining full and complete releases on the guarantees, letters of credit, bonds and other surety instruments provided by
Seller in connection with the Business or for the benefit of any Subsidiary. For purposes of this Section 6.2(c),
commercially reasonable efforts shall include: (i) Buyeds assumption of the Contracts on the terms set forth in this
Agreement; and (ii) an obligation on the part of Buyer to provide a guaranty, letter of credit, bond or other surety instrument
at Closing to the extent required by any Contract assumed by Buyer or retained by any Subsidiary at Closing and, in
general, no later than ninety (90) days after the Closing Date but effective as of the Closing Date, an equivalent surety
instrument to be substituted for any surety instrument provided by Seller to any beneficiary in connection with the Business
or for the benefit of any Subsidiary. Buyer shall indemnify, defend and hold harmless Seller and its Affiliates for any and all
Losses (in each case without deduction or set off) incurred on account of Seller"s guarantees, letters of credit, bonds and
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other surety instruments on or after the CE)sing Date insofar as such Losses relate to events occurring on or after Closing.
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(q) Notice of Breach. Buyer shall promptly, but in any event prior to the Closing Date, give to Seller written notice with
particularity upon having knowtedge prior to the Closing Date of any matter that Buyer reasonably believes would constitute
a breach of any representation, warranty, agreement or covenant contained in this Agreement, including, without limitation,
Seller's representations in Adicle V. For purposes of Section 6,2(d) and Section 12.3(e), the "knowledge of Buyer" or any
similar phrases shall mean the knowledge of those employees of Buyer responsible for negotiation of this Agreement and
due diligence with respect to the transactions contemplated by this Agreement.
Section 6.3. Governmental Filings.
(r) HSR Act Filing. Buyer and Seller shall make an appropriate filing of a Notification and Report Form pumuant to the HSR
Act with respect to the transactions contemplated hereby as promptly as practicable following the execution of this
Agreement, shall supply as promptly as practicable any additional information or documentary material that may be
requested pursuant to the HSR Act and shall take all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable, Buyer and Seller shalt comply substantially with any
additional requests for information, including requests for production of documents and production of witnesses for
interviews or depositions, made by the Antitrust Division of the United States Department of Justice, the United States
Federal Trade Commission or the antitrust or competition law authorities of any other jurisdiction (the "Antitrust
Authorities") and take all other reasonable actions to obtain clearance from the Antitrust Authorities, or if such clearance
cannot be obtained, to reach an agreement, settlement, consent providing for divestiture, a "hold separate" agreement,
contractual undertakings with third Persons or any other relief with the concerned Antitrust Authority in order to permit the
consummation of the transactions contemplated by this Agreement. Buyer shall exercise its commercially reasonable
efforts, and Seller shall cooperate fully with Buyer, to prevent the entry in any Proceeding brought by an Antitrust Authodty
or any Governmental Body of an Order which would prohibit, make unlawful or delay the consummation of the transactions
contemplated by this Agreement. Seller shall not oppose any efforts of Buyer, including Buyer's proffer of consent to any
Order, to complete lawfully the transactions contemplated by this Agreement. and shall cooperate in good faith with Buyer
and the Antitrust Authorities to the same effect. Notwithstanding the foregoing, neither pady shall be required to agree to
any divestiture of or material restriction on, a material business, a material asset or a material group of related assets that,
in any such case, is owned or operated by it or any of its Affiliates.
(s} Other Regulatory Filings. Buyer and Seller will, as soon as reasonably practicable following the execution of this
Agreement, prepare and file with each Governmental Body requests for such Consents as may be necessary for the
consummation of the transactions contemplated herein in accordance with the terms of this Agreement. Buyer and Seller
will diligently pursue such Consents and will cooperate with each other in seeking such Consents. To this end, the parties
agree to make available the personnel and other resources of their respective organizations in order to accomplish actions
reasonably required by them to obtain all such Consents. Each party will promptty inform the other party of any
communication received by such party from, or given by such party to, any Governmental Body from which any such
Consent is required and of any material communication received or given in connection with any Proceeding by a private
party, in each case
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regarding any of the transactions contemplated hereby, and will permit the other party to review any communication give.
by it to, and consult with each other in advance of any meeting or conference with, any such Governmental Body or, in
connection with any Proceeding by a private pady, with any other Person, and to the extent permitted by such
Governmental Body or other Person, give the other party the opportunity to attend and to participate in such meetings and
conferences. Neither party shall take any action in connection with obtaining any Consent from any Governmental Body
that is intended to create, allocate, or shift to the other party any liability arising from the obtaining of such Consent.
Section 6.4. Seller Marks.
Buyer acknowledges and agrees with Seller that Seller has the absolute and exclusive proprietary right to all names,
marks, trade names, trademarks and corporate symbols and Iogos incorporating "Southern Union", "Southern" and
"SU" (collectively and together with all other names, marks, trade names, trademarks and corporate symbols and Iogos
owned by Seller or any of its Affiliates, the "Seller Marks"), all rights to which and the goodwill represented thereby and
pertaining thereto are being retained by Seller. Within one hundred eighty (180) days after the Closing Date, Buyer shall
cease using any Seller Mark, shall use commercially reasonable efforts to remove from the Assets any and alt Seller Marks
and shall amend the relevant Organizational Documents of Southern Transmission Company, SuPro Energy Co., SUEI
and SUII to change the name of such Subsidiaries to a name that does not include any Seller Mark or any name or term
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confusingly similar to any Seller Mark. Thereafter, Buyer shall not use any Seller Mark or any name or term confusingly
similar to any Seller Mark in connection with the sale of any products or services, in the corporate or doing business name
of any of ~ts Affihates or otherwise on the conduct of its or any of its Affiliate's businesses or operabons. In the event that
Buyer breaches this Section 6.4, Seller shall be entitled to specific pedormanco of this
Section 6.4 and to injunctive relief against fudher vioIations, as well as any other remedies at law or in equity available to
Seller.
Section 6.5. Acknowledgment by Buyer.
In order to induce Seller to enter into and perform this Agreement and the Related Documents, Buyer acknowledges and
agrees with Seller as follows:
THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE V OF THIS AGREEMENT CONSTITUTE THE
SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF SELLER TO BUYER IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED HEREBY AND BY THE RELATED DOCUMENTS, AND THERE ARE NO
REPRESENTATIONS, WARRANTIES, COVENANTS, UNDERSTANDINGS OR AGREEMENTS, ORAL OR WRITTEN,
IN RELATION THERETO BETWEEN THE PARTIES OTHER THAN THOSE INCORPORATED HEREIN AND THEREIN.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE V OF THIS
AGREEMENT, BUYER DISCLAIMS RELIANCE ON ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS
OR IMPLIED, BY OR ON BEHALF OF SELLER OR ITS AFFILIATES OR REPRESENTATIVES. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, BUYER
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ACKNOWLEDGES AND AGREES THAT, EXCEPT AS PROVIDED IN SECTIONS 5.7, 5.11 AND
5.14, THERE ARE NO REPRESENTATIONS OR WARRANTIES OF SELLER WITH RESPECT TO THE CONDITION OF
THE ASSETS, COMPLIANCE WITH ENVIRONMENTAL LAWS AND ENVIRONMENTAL PERMITS OR THE PRESENCE
OR RELEASES OF HAZARDOUS MATERIAL IN THE FIXTURES, SOILS, GROUNDWATER, SURFACE WATER OR
AiR ON, UNDER OR ABOUT OR EMANATING FROM ANY OF THE PROPERTIES OR ASSETS OF SELLER OR ANY
SUBSIDIARY.
Section 6.6. Transition Plan.
Within fifteen (15) days after the execution date of this Agreement, Buyer shall deliver to Seller a list of its proposed
representatives to a joint transition team, which shall include individuals with expertise from various functional specialties
associated or involved in providing billing, payroll and other support services provided to the Business by any automated or
manual process using facilities or employees that are not included among the Assets or Transferred Employees. Seller will
add its representatives, subject to Buyer's approval, which approval shall not unreasonably be withheld, to such team
within fifteen (15) days after receipt of Buyer's list. Such team will be responsible for preparing as soon as reasonably
practicable after the execution date of this Agreement, and timely implementing, a transition plan which will identify and
describe substantially all of the various transition activities that the parties will cause to occur before and after the Closing
and any other transfer of control matters that any party reasonably believes should be addressed in such transition plan,
including the matters set forth on Exhibit 6.6. Buyer and Seller shaft use their commercially reasonable efforts to cause
their Representatives on such transition team to cooperate in good faith and take all reasonable steps necessary to
develop a mutually acceptable transition plan by no later than sixty (60) days after the date of this Agreement. The terms
and conditions governing such transition activities will be more fully set forth in a Transition Agreement reasonably
satisfactory to the parties, including the matters set forth on Exhibit 6.6, that will be executed and delivered by the Buyer
and Seller at the Closing.
Section 6.7. Purchase of Leased Assets.
Buyer and Seller shall use commercially reasonable efforts to arrange for Buyer, on the Closing Date, to enter into new
lease agreements covering the motor vehicles and other equipment listed on Schedule 6.7 and leased by the lessors to
Seller as identified on Schedule 6.7 (the "Leased Assets"), or if unable to do so, then for Buyer to purchase any Leased
Assets directly from any such Lessor on, or promptly after, the Closing Date upon Buyer's payment directly to any Lessor of
the purchase price for any of the Leased Assets under the applicable Lease. In either case, Buyer shall be responsible for,
and shall pay any related title transfer, registration, sales tax and similar fees, including expenses of counsel, if any,
associated with any such lease arrangement or any transfer of title arising therefrom, or in lieu thereof, including any motor
vehicle title transfer and registration issues.
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Section 6.8. Meter Reading.
On and prior to the Closing Date, Seller shall read the customer meters in their normal cycle and in due course render the
related bills to its customers served by the Business. Seller shall alco read each transpodation customer meter
(collectively, "Large Volume Meters") on file day immediately preceding the Closing Date. Seller shall provide Buyer with
the last meter reading from each of the Large Volume Meters made on the day immediately preceding the Closing Date as
soon as practical after the Closing Date. After the Closing Date, Buyer shall read the customer meters for their first time, in
the normal cycle, and in due course render bills for sen/ice during the period between the Seller's last reading in the normal
cycle and the Buyer's first reading in the normal cycle to the customers. Buyer shall determine the volume of gas sold by
the Seller prior to the Closing Date through Large Volume Meters by the Seller's meter readings on the day immediately
preceding Closing Date~ Buyer shall determine by allocation the volumes of gas sold by the Seller through all meters other
than Large Volume Meters, prior to the Closing Date, and the gas sold by the Seller, on and after the Closing Date and
prior to its first meter reading through meters without chads. Such allocation shall be consistent with the Seller's past
practices for unbiIied revenues. Once such determinations have been made by Buyer, the estimated amounts of accounts
receivable and earned but unbilled revenue shall be adjusted based upon such determinations for purposes of the Working
Capital adjustment.
Section 6.9. Insurance.
Seller agrees to use commercially reasonable efforts to negotiate with each of the insurance companies identified on
Schedule 5.20 thereon with an asterisk in order to provide Buyer the benefit of coverage under the Policies for ail
"occurrences," as that term is defined by the Policies, arising from the conduct of the Business on or prior to Closing.
Section 6.10, Risk of Loss.
The risk of any loss, damage, impairment, confiscation or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing, and by Buyer at all times thereafter. If any such loss, damage or
impairment, confiscation or condemnation occurs, Seller shall apply the proceeds of any insurance policy, judgment or
award with respect thereto to impair, replace or restore the Assets as soon as possible to their prior condition; provided,
however, anything contained in this Agreement to the contrary notwithstanding, Seller shall no[ be obligated to expend
sums in excess of the proceeds of any insurance po[icy, judgment or award with respect to any loss, damage, impairment,
confiscation or condemnation of any of the Assets in order to repair, repJace or restore such Assets to their prior condition.
The provisions of this Section 16.10 shall apply in the event ("Casualty Event") of any damage or destruction to the Assets
which would result in the non-occurrence of a condition precedent to Buyer's obligation to consummate this Agreement. If a
Casualty Event shall occur, Buyer at its option, may proceed to close this Agreement on the Closing Date, in which event
Seller shall pay or assign to Buyer the proceeds from any insurance policies covering Assets subject to the Casualty Event
to the extent such proceeds are received by or payable to Seller and have not been used in or committed to the restoration
or replacement of Assets subject to the Casualty Event as of the Closing Date.
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ARTICLE VII.
CONDITIONS PRECEDENT
Section 7.1. Selleds Conditions Precedent to Closing.
The obligation of Seller to consummate the transactions contemplated by this Agreement shall be subject to fulfillment at or
prior to the Closing of the following conditions:
(t) Representations and Warranties True as of the Closing Date. Buyer's representations and warranties in this Agreement
shall have been t~ue and correct in all material respects as of the date of this Agreement and shall be true and correct in ali
material respects as of the Closing Date as if made on the Closing Date, subject to changes expressly contemptated and
permitted by this Agreement, except that representations and warranties made as of, or in respect of, only a specified date
or period shall be true and correct in all material respects as of, or in respect of, such date or period.
(u) Compliance with Agreements. The covenants, agreements and conditions required by this Agreement or the Employee
Agreement to be performed and complied with by Buyer shall have been performed and complied with in all material
respects prior to or at the Closing Date.
(v) Certificate. Buyer shall execute and deliver to Seller a certificate of an authorized officer of Buyer, dated the Closing
Date, stating that the conditions specified in Sections 7.1(a) and 7.1(b) of this Agreement have been satisfied.
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(w) Governmental Approvals and Other Consents. Seller shall have obtained all Consents of Governmental Bodies (or the
Consent of the appropriate Governmental Body shall be able to be deemed to have been received in accordance with the
applicable Legal Requirement) and other Persons which are required in order to consummate the transactions
contemplated hereby and to transfer the Assets and the Stock to Buyer without Seller incurring material liability under any
Legal Requirement, Order or Contract.
(x) HSR Act. The applicable waiting period under the HSR Act with respect to the transactions contemplated hereby shall
have expired or have been terminated.
(y) Injunctions. On the Closing Date, there shall be no Orders which operate to restrain, enjoin or otherwise prevent the
consummation of the transactions contemplated by this Agreement.
(z) Documents. Buyer shall have delivered or shall stand ready to deliver all the cedificates, instruments, Contracts and
other documents specified to be delivered by it hereunder on or before the Closing Date, including pursuant to Section 8.1,
and shall have taken such actions as Seller may have requested pursuant to Section 11.2 hereof.
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Section 7.2. Buyer's Conditions Precedent to Closing.
The obligation of Buyer to consummate the transactions contemplated by this Agreement shall be subject to fUlfillment at or
prior to the Closing of the following conditions:
(aa) Representations and Warranties True as of the Closing Date. Seller's representations and warranties in this
Agreement shall have been true and correct in all material respects as of the date of this Agreement and shall be true and
correct in all material respects as of the Closing Date as if made on the Closing Date, subject to changes expressly
contemplated and permitted by this Agreement, except (i) that representations and warranties made as of, or in respect of,
only a specified date or period shall be true and correct ir] all material respects as of, or in respect of, such date or period,
and (ii) to the extent that any failure of such representations and warranties to be true and correct as aforesaid when taken
in the aggregate would not have a Material Adverse Effect.
(bb) Compliance with Agreements. The covenants, agreements and conditions required by this Agreement or the
Employee Agreement to be performed and complied with by Seller shall have been performed and complied with in all
material respects prior to or at the Closing Date, except where the failure to so perform or comply when taken in the
aggregate would not have a Material Adverse Effect.
(cc) Certificate. Seller shall execute and deliver to Buyer a certificate of an authorized officer of Seller, dated the Closing
Date, stating that the conditions specified in Sections 7.2(a) and 7.2(b) of this Agreement have been satisfied.
(dd) Governmental Approvals and Other Consents. Seller shall have obtained all Consents of Governmental Bodies (or the
Consent of the apprepdate Governmental Body shall be able to be deemed to have been received in accordance with the
applicable Legal Requirement) and other Persons which are required in order to consummate the transactions
contemplated hereby other than those the failure of which to obtain would not have a Material Adverse Effect. For purposes
of this Section 7.2(d), no failure to obtain Consents from any local franchising authorities with respect to the applicable
franchises shall be deemed to have a Material Adverse Effect, provided, however, that the failure to obtain a Consent from
either the City of Austin, Texas or the City of El Paso, Texas with respect to the applicable franchise shall be deemed to
have a Material Adverse Effect.
(ee) HSR Act. The applicable waiting period under the HSR Act with respect to the transactions contemplated hereby shall
have expired or have been terminated.
(fO Injunctions. On the Closing Date, there shall be no Orders which operate to restrain, enjoin or otherwise prevent the
consummation of the transactions contemplated by this Agreement.
(gg) Documents. Seller shall have delivered or shall stand ready to deliver all of the certificates, instruments, Contracts and
other documents specified to be delivered by it hereunder, including pursuant to Section 8.1.
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ARTICLE VIII.
CLOSING
Section 8.1. Closing.
The closing of the purchase and sale of the Assets (Ihe "Closing") will take place at the offices of Fleischman and Walsh,
L.LP., 1400 Sixteenth Street, N.W., Suite 600, Washington, D.C. 20036, on the fifth business day after the date on which
the conditions specified in Sections 7.1(d) and 7.2(d) are satisfied or waived, unless another time, date and place is agreed
to in writing by the parties. The date of the Closing is referred to in this Agreerneet as the "Closing Date." The transactions
lo be consummated on the Closing Date shall be deemed to have been consummated as of 12:01 a.m. on the Closing
Date. At the Closing the following events shall occur, each event being deemed to have occurred simultaneously with the
other events.
(hh) Bill of Sale. Seller and Buyer shall execute and deliver a bill of sale and assignment and assumption agreement in a
form reasonably acceptable to the parties.
(ii) Stock Certificates; Resignations. Seller shall deliver to Buyer,
ti) the cedificates representing the Stock, duly and validly endorsed to or registered in the name of Buyer or its nominees
or accompanied by separate stock powers duly and validly executed by Seller; (ii) certificates representing the shares of
EES owned by SUE~ and SUfi and the shares of each EES-Re~ated Entity owned by EES; and (iii) letters of resignation,
effective as of the Closing Date, from each director and each officer of each Subsidiary and of EES.
(jj) Payment of Purchase Price. Buyer will pay to Seller an amount equal to the Estimated Purchase Price by wire
transferring such amount, in lawful money of the United States of America in immediately available funds, to such account
as Seller shall have designated by notice to Buyer.
(kk) Other Related Documents. To the extent consistent with the other provisions of this Agreement, Seller (or the
appropriate Affiliate of Seller) and Buyer shall execute and deliver such other Related Documents (including special
warranty deeds, blanket easement assignments, conveyances, motor vehicle certificates of title and special assignment
and assumption instruments) and shall obtain and deliver such other certificates reasonably requested by a party that are
necessa~ in order to satisfy any applicable Legal Requirements relating to the transfer of the Assets or the Stock lo Buyer
or Ihe assumption of the Assumed Liabilifies by Buyer; provided, however, that nolhing in this clause (d) shall obligate
Seller or any Affiliate of Seller to execute or deliver any document that affects, in a manner adverse to Seller, Seller's
liability to Buyer as expressed herein.
(11) Buyer and Seller shall give prompt written instruction to the Escrow Agent that the Escrow Amount shall be refunded to
Buyer. The Escrow Agreement shall then be terminated, subject to its terms and conditions.
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ARTICLE IX.
TERMINATION
Section 9.1. Termination Rights.
This Agreement may be terminated in its entirety at any time prior to the Closing:
(mm) By the mutual written agreement of Seller and Buyer;
(nn) By Buyer, on the one hand, or Seller, on the other hand, in writing if there shall be in effect a nonappealable Order
prohibiting, enjoining or restricting the transactions contemplated by this Agreement;
(oo) By Buyer, upon the breach in any material respect of any of the representations and warranties of Seller contained
herein or in Ihe failure by Seller lo perform and comply in any material respect with any of the agreements and obligations
required by this Agreement to be performed or complied with by Seller, provided that all such breaches or failures are
reasonably likely to result in a Material Adverse Effect and are not cured or otherwise addressed by Seller in a manner
reasonab y acceptab e to Buyer w~thm fifteen {15) days of Seller s receipt of a wntte notice from Buyer that such breaches
or failures have occurred (or significant efforts have not been commenced to cure such misrepresentations or breaches if
they are susceptible to cure but not capable of being cured within such fifteen (15) days);
(pp) By Seller, upon the breach in any material respect of any of the representations and warranties of Buyer contained
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herein or the failure by Buyer to perform and comply in any matedal respect with any of the agreements and obligations
required by this Agreement to be performed or complied with by Buyer, provided that such breach or failure is not cured or
otherwise addressed by Buyer in a manner reasonably acceptable to Seller within fifteen (15) days of Buyer's receipt of a
written notice from Seller that such a breach or failure has occurred (or significant efforts have not been commenced to
cure such misrepresentation or breach if it is susceptible to cure but not capable of being cured within such fifteen (15)
days);
(qq) By either party in writing if the Closing has not occurred within ninety (90) days after the execution date specified in the
first paragraph of this Agreement (the "Upset Date"); provided, however, that the right to terminate this Agreement under
this Section 9.1(e) will not be available to any party that is in material breach of its representations, warranties, covenants
or agreements contained herein; and provided further that in the event either party's conditions precedent to Closing set
forth in Article VII have not been satisfied prior to the Upset Date but reasonably are capable of being satisfied thereafter,
then either pady may request from the other up to an aggregate of three (3) thirty (30) day extensions of the Upset Date,
the other party's approval of such extension(s) not unreasonably to be withheld (for the avoidance of doubt, the Upset Date
shall not be extended by more than 90 days); or
(rr) By Seller, if at Closing Buyer fails to make the payments required to be made by Buyer at Closing.
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Section 9.2. Limitation on Right to Terminate: Effect of Termination.
(a) A party shall not be allowed to exercise any right of termination pursuant to Section 9.1 if the event g~wng rise to the
termination right shall be due to the willful failure of such party seeking to terminate this Agreement to perform or observe
in any material respect any of the covenants or agreements hereof to be performed or observed by such party.
(b) If this Agreement is terminated as permitted under Section 9.1, such termination shall be without liability of or to any
party to this Agreement, or any shareholder or Representative of such party; provided, however, that if such termination
shall result from the willful failure of any party to fulfill a condition to the performance of any other party or to perform a
covenant of this Agreement or from a material and willful breach by any party to this Agreement (it being understood that
the failure to cure a breach shall not, by itself, be a willful breach of this Agreement), then such party shall (subject to the
limitation set forth in the last sentence of this Section
9.2(b)) be fully liable for any and all damages sustained or incurred by the other party. If prior to Closing either party to this
Agreement resorts to legal proceedings to enforce this Agreement, the prevailing party in such proceedings shalI be
entitled to recover ail costs incurred by such party including reasonable attorney's fees, in addition to any other relief to
which such party may be entitled; provided, however, and notwithstanding anything to the contrary in this Agreement, in no
event shall either party be entitled to receive any punitive, exemplary, special, remote, speculative, indirect or
consequential damages (including any damages on account of lost profits or opportunities).
(c) If Seller terminates this Agreement pursuant to Section 9.1(d) or
Section 9.1(f), then Seller shall be entitled to payment of the Escrow Amount as liquidated damages free of any claims by
Buyer or any other Person with respect thereto (the parties hereby acknowledging that the extent of damages to Seller
occasioned by such breach or default by Buyer would be impossible or extremely difficult to ascertain and that the amount
of the Escrow Amount is a fair and reasonable estimate of such damages under the circumstances). If this Agreement is
terminated for any reason other than as set forth in the preceding sentence, then the Escrow Amount shall be paid to
Buyer, free of any claims by Seller or any other Person with respect thereto.
(d) If Buyer terminates this Agreement pumuant to Section 9.1(c), then Buyer shall be entitled to recover from Seller
$30,000,000 as liquidated damages (the padies hereby acknowledging that the extent of damages to Buyer occasioned by
such breach or default by Seller would be impossible or extremely difficult to ascertain and that the amount of such
liquidated damages is a fair and reasonable estimate of such damages under the circumstances).
Section 9.3. Escrow Amount.
Concurrently with the execution of this Agreement, Buyer has made a deposit of $30,000,000 (the "Escrow Amount") with
J.P. Morgan Chase National Bank, New York, NY (the "Escrow Agent"), to be held by the Escrow Agent pursuant to the
terms of an Escrow Agreement, dated as of the date of this Agreement, among Buyer, Seller and the Escrow Agent as
security for the payment of the liquidated damages due from Buyer to Seller pursuant to Section 9.1(d) or 9.1(0, in which
event
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Seller shall be entitled to give notice to the Escrow Agent and Buyer, causing the prompt release and payment of the
Escrow Amount to Seller by the Escrow Agent pursuant to the Escrow Agreement.
ARTICLE X.
EMPLOYEE MATI'ERS
Section 10.1. Employee Agreement.
The parties have addressed the transfer of employees and employee benefit matters in a separate agreement, entitled
Employee Agreement, the terms and provisions of which are incorporated into this Agreement as if fully set forth herein
and a copy of which is attached hereto as Exhibit 10.1 (the "Employee Agreement").
ARTICLE Xl.
TAX MATTERS
Section 11.1. Purchase Price Allocation.
Within 180 days after the Closing Date, Buyer and Seller shall use their good faith efforts to agree upon the allocafion (the
"Allocation") of the Purchase Price, the Assumed Liabilities and other relevant items (including, for example, adjustments to
the Purchase Price) to the individual assets or classes of assets within the meaning of Section 1060 of the IRC. If Buyer
and Seller agree to such Allocation, Buyer and Seller covenant and agree that ti) the values assigned to the assets by the
parties' mutual agreement shall be conclusive and final for all purposes, and (ii) neither Buyer nor Seller will take any
position before any Governmental Body or in any Proceeding that is in any way inconsistent with such Allocation.
Notwithstanding the foregoing, if Buyer and Seller cannot agree to an Allocation, Buyer and Seller covenant and agree to
file, and to cause their respective Affiliates to file, a~l Tax Returns and schedules thereto (including, for example, amended
returns, claims for refund, and those returns and forms required under Section 1060 of the IRC and any Treasury
regulations promulgated thereunder) consistent with each of such party's good faith Allocations, unless othe~visa required
because of a change in any Legal Requirement.
Section 11.2. Cooperation with Respect to Like-Kind Exchange.
Buyer agrees that Seller may, at Seller's election prior to the Closing Date, direct that all or a portion of the Purchase Pdce
be delivered to a "qualified intermediary" (as defined in Treasury Regulation Section 1.1031(k) -
(g)(4)) as to enable Seller's relinquishment of the Assets to qualify as part of a like-kind exchange of property covered by
Section 1031 of the IRC. If Seller so elects, Buyer shall cooperate with Seller (but without being required to incur any out-
of-pocket costs in the course thereof) in connection with Seller's efforts to effect such like-kind exchange, which
cooperation shall include, without limitation, taking such actions as Seller requests in order to enable Seller to qua[dy such
transfer as part of a like-kind exchange of property covered by Section 1031 of the IRC (including any actions required to
facilitate the use of a "qualified intermediary"), and Buyer agrees that Seller may assign all or pad of its rights and delegate
all or part of its obligations under this Agreement to a person or entity acting as a qualified intermediary to qualify the
transfer of the Assets as part of a like-kind exchange of property covered by Section 1031 of the IRC. Buyer and
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Seller agree in good faith to use reasonable efforts to coordinate the transactions contemplated by this Agreement with any
other transactions engaged in by either Buyer or Seller; provided that such efforts are not required to include an
unreasonable delay in the consummation of the transactions contemplated by this Agreement.
Section 11.3. Transaction Taxes.
All transfer, documentary, recording, notarial, sales, use, registration, stamp and other similar taxes, fees and expenses
(including, but not limited la, all applicable stock transfer, real estate transfer or gains Taxes and including any penalties,
interest and additions to such tax) ("Transaction Taxes") incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by Buyer, to the extent that Buyer is legally obligated to pay those Transaction Taxes,
and shall be borne by the Seller, to the extent that Seller is legally obligated to pay Transaction Taxes, regardless of
whether the tax authority seeks to collect such Taxes from Seller or Buyer. Buyer and the Seller shall cooperate in timely
making and filing all Tax Returns as may be required to comply with the provisions of laws relating to such Transaction
Taxes. Seller shall prepare all tax filings related to any Transaction Taxes. Fifteen (15) days prior to making such filings,
Seller shah provide to Buyer Seller's work papers for Buyer's review and approval. Ten (10) days prior to the filing date,
Buyer shall provide to Seller approval of such work papers. Buyer shall also be responsible for ti) administering the
payment of such Transaction Taxes, (ii) defending or pursuing any proceedings related thereto, and (iii) paying any
expenses related thereto. Seller shall give prompt written notice to Buyer of any proposed adjustment or assessment of
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any Transaction Taxes with respect to the transaction, or of any examination of said transaction in a sales, use, transfer or
similar tax audit· In any proceedings, whether formal or informal, Seller shall permit Buyer to participate and control the
defense of such proceeding and shall take all actions and execute ali documents required to allow such participation. Seller
shall not negotiate a settlement or compromise of any Transaction Taxes without the prior written consent of Buyer, which
consent shall not be unreasonably withheld or delayed.
Section 11.4. Real and Personal Properly Taxes.
All real and personal property Taxes and assessments arising with respect to the Assets shall be prorated between Buyer
and Seller based on the relative periods of time the Assets were owned by each respective party or their respective
Affiliates during the fiscal period for which such Taxes are imposed by the applicable taxing jurisdiction (as such fiscal
period is or may be reflected on the bill rendered by such taxing jurisdiction). Upon receipt by Buyer of the tax bill, invoice
or other statement regarding such real and personal property Taxes, Buyer shall calculate the pro rata share of such tax
bill, invoice or other statement attributable to Buyer and Seller. Buyer then shall forward, as soon as practicable, to Seller a
copy of such tax bill, invoice or statement along with the suppoding documentation relating to the calculation of the pro rata
share to Seller. Seller then shall forward to Buyer payment in immediately available funds of its pro rata share of such
Taxes as soon as practicable in advance of the due date of the tax bill, invoice or statement and in time to avoid the
incurrence of penalties or interest. Upon its receipt of such payment, Buyer will pay the full amount of the tax bill, invoice or
statement to the applicable taxing authority. In the event Seller first receives a tax bill, invoice or statement relating to the
Assets from a taxing authority, Seller shall immediately forward such tax bill, invoice or statement to Buyer.
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Section 11.5. Taxes Based on Revenues.
All sales, franchise, gross receipts and other similar Taxes based upon revenues of the Business shall be prorated
between Buyer and Seller, with Seller being obligated to reimburse Buyer only for the portion of any such Tax that is
applicable to the cash received by Seller prior to the Closing Date that relates to the revenues of the Business being taxed.
Upon receipt by Buyer of the tax bill, invoice or other statement regarding such Taxes, Buyer shall calculate the pro rata
share of such tax bill, invoice or other statement attributable to Buyer and Seller. Buyer then shall forward, as soon as
practicable, to Seller a copy of such tax bill, invoice or statement along with the suppoding documentation relating to the
calculation of the pro rata share to Seller. Seller then shall forward to Buyer payment in immediately available funds of its
pro rata share of such Taxes as soon as practicable in advance of the due date of the tax bill, invoice or statement and in
time to avoid the incurrenca of penalties or interesL Upon its receipt of such payment, Buyer will pay the full amount of the
tax bill, invoice or statement to the applicable taxing authority. In the event Seller first receives a tax bill, invoice or
statement relating to the revenues of the Business from a taxing authority, Seller shall immediately forward such tax bill,
invoice or statement to Buyer.
ARTICLE XlI.
INDEMNIFICATION
Section 12.1. Indemnification by Seller.
From and after Closing and subject to the other provisions of this Article Xll, Seller shall indemnify and hold harmless
Buyer, its Representatives, Affiliates, successors and permitted assigns (collectively, the "Buyer Indemnitees") from and
against any and all Losses as incurred by a Buyer Indemnitee, payable quarterly upon proper written request, and directly
resulting from:
(a) any representations and warranties made by Seller in this Agreement not being true and correct when made or when
required by this Agreement to be true and correct, or any breach or default by Seller in the performance of its covenants,
agreements, or obligations under this Agreement or the Employee Agreement required to be performed prior to Closing;
(b) any breach or default by Seller in the performance of its covenants, agreements, or obligations under this Agreement or
the Employee Agreement required to be performed after Closing; and
(c) Seller's failure to perform or satisfy any of the Retained Liabilities or liabilities associated with the Excluded Assets.
Section 12.2. Indemnification by Buyer.
From and after Closing and subject to the other provisions of this Article Xll, Buyer shall indemnify and hold harmless
Seller, its Representatives, Affiliates, successors and permitted assigns (collectively, the "Seller Indemndees ) from an
against any and ell Losses as incurred by a Seller Indemnitae, payable quarterly upon proper written request, and directly
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resulting from:
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(a) any representations and warranties made by Buyer in this Agreement not being true and correct when made or when
required by this Agreement to be true and correct, or any breach or default by Buyer in the performance of its covenants,
agreements, or obligations under this Agreement or the Employee Agreement required to be performed prior to Closing;
(b) any breach or default by Buyer in the performance of its covenants, agreements, or obligations under this Agreement or
the Empfoyee Agreement required to be performed after Closing; and
(c) the Assumed Liabilities.
Section 12.3. Limitations on Seller's Liability.
Notwithstanding anything to the contrary in this Agreement, the liability of Seller under this Agreement and any documents
delivered in connection herewith or contemplated hereby shall be limited as follows:
(a) IN NO EVENT SHALL SELLER BE LIABLE TO THE BUYER INDEMNITEES FOR ANY EXEMPLARY, PUNITIVE,
SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES; provided, however, that if Buyer is
he d iable to a th rd party for any of such damages and Seller is obligated to indemnify Buyer for the matter that gave rise
to such damages, then Seller shall be liable for, and ob gated to reimburse Buyer for, such damages.
(b) Except as provided below, the representations and warranties of Seller set forth in this Agreement shall survive the
Closing until .June 30, 2003; provided however, that the representations and warranties set forth in
Section 5.2 (Authority Relative to this Agreement and Binding Effect), Section
5.5 (Title to Assets; Encumbrances), and Section 5.18 (Brokers) shall survive indefinitely; the representations and
warranties set forth in Section 5.6 (Financial Statements), Section 5.14 (Environmental Matters), Section 5.15 (Absence of
Certain Changes or Events), and Section 5.21 (Absence of Undisclosed Liabilities) shall survive until March 31,2004; and
the representations and warranties set fodh in Section 5.9 (Taxes) shall survive for a period equal to the applicable statute
of limitations for the taxable year for each Tax. The other terms of this Agreement and the agreements delivered in
connection herewith shall survive the Closing. All representations and warranties, covenants and agreements of Seller
under this Agreement and the indemnities granted by Seller in Section 12.1 shall terminate at 5:00 p.m., East Coast time,
on the applicable survival termination date set forth above; provided, however, that such indemnities shall survive with
respect only to any specific matter that is the subject of a proper Claim Notice delivered in good faith in compliance with the
requirements of this Section 12.3 until the earlier to occur of (A) the date on which a final nonappealable resolution of the
matter described in such Claim Notice has been reached, including the determination of all related Losses, if any,
regardless of when such Losses are finally determined or (B) the date on which the matter described in such Claim Notice
has otherwise reached final resolution, including the determination of all related Losses, if any, regardless of when such
Losses are finally determined. In no event shall any amounts be recovered from Seller under Section 12.1 or otherwise for
any matter for which a Claim Notice is not delivered to Seller prior to the close of business on the applicable date set forth
above.
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(c) Notwithstanding anything to the contrary in this Agreement, in no event shall Seller indemnify the Buyer Indemnitees, or
be otherwise liable in any way whatsoever to the Buyer Indemnitees, for any Losses otherwise subject to indemnification by
Seller (determined after giving effect to the other provisions of this Section 12.3) until the Buyer Indemnitees have incurred
otherwise indemnifiable Losses that in the aggregate exceed $5,000,000 (the "Deductible"), after which Seller shall then be
liable for indemnifiable Losses incurred by the Buyer Indemnitees in excess of such amount up to the maximum amount set
fodh in Section 12.3(d). For the purposes of calculating the Deductible, none of the dollar limitations or Material Adverse
Effect qualifiers contained in the representations and warranties of Article V shall be included in calculating Losses that
comprise the Deductible.
(d) Notwithstanding anything to the contrary in this Agreement, in no event shall Seller indemnify the Buyer Indemnitees, or
be otherwise liable in any way whatsoever to the Buyer Indemnitees, for any Losses otherwise subject to indemnification by
Seller (determined after giving effect to the other provisions of this Section 12.3) that in the aggregate exceed $42,000,000.
(e) No amount shall be recovered from Seller for the breach or untruth of any of Seller's representations, warranties,
covenants or agreements, or for any other matter, to the extent that Buyer had knowledge of such breach, untruth or other
matter at or prior to the Closing, no shall Buyer be entitled to rescission with respect to any such matter, unless and except
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to the extent that Buyer has satisfied Section 6.2(d).
Seller shall have no liability for any claim or Loss (A) that would be covered by insurance maintained by or for the benefit
o0f Buyer or any Affiliate of Buyer (including any such insurance coverage applicable to the Business the benefit of which
the Buyer will realize, if Buyer were to maintain insurance coverage as is customary for the industry in which the Business
is conducted consistent with the coverage described in Schedule 5.20) or for which Buyer otherwise recovers payments in
respect of such Loss from any other source(s) (whether in a lump sum or stream of payments} or (B) that is the type
normally recoverable by the Business through rates and is in fact substantially recovered by Buyer through rates, provided
that Buyer shall have made a good faith effod to recover any such claim or loss through rates and that such recovery is not
indeterminable due to the terms of any rate settlement agreed to by Buyer, or is otherwise recovered by Buyer through
rates. No cost or expense relating to any such claim or Loss that is actually recovered based on the foregoing shall be
included in determining the extent of Losses suffered by the Buyer Indemnitees for purposes of Section 12.3(c) or Section
12.3(d). Buyer agrees to use its commercially reasonable effods to give timely and effective written notice to the
appropriate insurance carrier(s) of any occurrence or circumstances which, in the judgment of Buyer consistent with its
customary risk management practices, appear likely to give rise to a claim against Buyer that is likely to involve one or
more insurance policies of Buyer. Any such notice shalt be given in good faith by Buyer without regard to the possibility of
indemnification payments by Seller under Section 12.1, and shall be processed by Buyer in good faith and in a manner
consistent with its risk management practices involving claims for which no third party contractual indemnification is
available. Buyer agrees that (i) if it is entitled to receive payment from Seller for a Loss, and (ii) if Buyer has obtained
insurance which may cover the claim or matter giving rise to such Loss, then (iii) such insurance shah be pdmary coverage
and Buyer will make a claim under such insurance (if such claim can be made in good faith) before enforcing its right to
receive payment from Seller. If at
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any time subsequent to the receipt by a Buyer Indemnitee of an indemnity payment from Seller hereunder, such Buyer
Indemnitee (or any Affiliate thereof} receives any recovery, settlement or other similar payment with respect to the Loss for
which it receives such indemnity payment, such Buyer Indemnitee shall promptly pay to Seller an amount equal to the
amount of such recovery, less any expense incurred by such Buyer Indemnitee (or its Affiliates) in connection with such
recovery, but in no event shall any such payment exceed the amount of such indemnity payment.
(g) Notwithstanding any language contained in any Related Document (including deeds and other conveyance documents
relating to the Real Property), the representations and warranties of Seller set forth in this Agreement will not be merged
into any such Related Document and the indemnification obligations of Seller, and the limitations on such obligations, set
forth in this Agreement shall control. No provision set forth in any such Related Document shah be deemed to enlarge, alter
or amend the terms or provisions of this Agreement.
Section 12.4. Limitation on Buyer's Liability.
IN NO EVENT SHALL BUYER BE LIABLE TO THE SELLER INDEMNITEES FOR ANY EXEMPLARY. PUNITIVE,
SPECIAL. INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES; provided, however, that if Seller is
held liable to a third party for any of such damages and Buyer is obligated to indemnify Seller for the matter that gave rise
to such damages, then Buyer shall be liable for, and obligated to reimburse Seller for, such damages.
Section 12.5. Claims Procedure.
(a) All claims for indemnification under Section 12.1 or 12.2, or any other provision of this Agreement except as otherwise
expressly provided in this Agreement, shall be asserted and resolved pursuant to this Article Xll. Any Person claiming
indemnification hereunder is referred to as the "Indemnified Party" and any Person against whom such claims are asserted
hereunder is hereinafter referred to as the "indemnifying Party." In the event that any Losses are asseded against, sought
to be collected from or threatened to be sought from an Indemnified Party, by a third party, including a Governmental Body,
said Indemnified Party shall with reasonable promptness provide to the Indemnifying Party a Claim Notice. The
Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to any such Losses if the
Indemnified Party fails to notify the Indemnifying Party thereof in accordance with the provisions of this Agreement in
reasonably sufficient time so that the Indemnifying Party's ability to defend against the Losses is not prejudiced. The
Indemnifying Party shall have thirty (30) days from the personal delivery or receipt of the Claim Notice (the "Notice Period")
to notify the Indemnified Party (i) whether or not it disputes the liability of the Indemnifying Party to the Indemnified Party
hereunder with respect to such Losses and/or (ii) whether or not it desires, at the sole cost and expense of the
Indemnifying Party, to defend the Indemnified Party against such Losses; provided, however, that any Indemnified Pady is
hereby authorized prior to and dudng the Notice Period to file any motion, answer or other pleading that it shall deem
necessary or appropriate to protect its interests or those of the Indemnifying Party (and of which it shall have given notice
and oppodunity to comment to the Indemnifying Party) and not prejudicial to the Indemnifying Party. In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice Period that it desires to defend
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the Indemnified Pady against such Losses, the Indemnifying Pady shall have the right to defend all appropriate
proceedings, and with counsel of its own choosing, which proceedings shall be promptly settled or prosecuted by them to a
final conclusion. If the Indemnified Party desires to participate in, but not control, any such defense or settlement it may do
so at its sole cost and expense. If requested by the Indemnifying Pady, the indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Losses that the Indemnifying Pady elects to contest or, if appropriate
and related to the claim in question, in making any counterclaim against the Person asserting the third party Losses, or any
cross-complaint against any Person. No claim may be settled or otherwise compromised without the prior written consent
of the Indemnifying Pady.
(b) The Indemnified Party shall provide reasonable assistance to the Indemnifying Party and provide access to its books,
records and personnel as the Indemnifying Party reasonably requests in connection with the investigation or defense of the
Losses. The Indemnifying Party shall prornptly upon receipt of reasonable supporting documentation reimburse the
Indemnified Party for out-of-pocket costs and expenses incurred by the latter in providing the requested assistance.
(c) With regard to third party claims for which Buyer or Seller is entitled to indemnification under Section 12.1 or 12.2, such
indemnification shall be paid by the Indemnifying Party upon: (i) the entry' of an Order against the Indemnified Party and the
expiration of any applicable appeal period; or
(ii) a settlement with the consent of the indemnifying Pady, provided that no such consent need be obtained if the
Indemnifying Party fails to respond to the Claim Notice as provided in Section 12.4(a). Notwithstanding the foregoing but
subject to Section 12.4(a), and provided that there is no dispute as to the applicabilify of indemnification, expenses of
counsel to the Indemnified Party shall be reimbursed on a current basis by the Indemnifying Party as if such expenses are
a liability of the Indemnifying Party.
Section 12.6. Exclusive Remedy.
Except as otherwise provided in Sections 3.2(b), 6.4, 9.2, 9.3 or 13.6, the rights, remedies and obligations of the Buyer
Indemnitees and the Seller Indemnitees set forth in this Article XII will be the exclusive rights, remedies and obligations of
such Persons after the Closing with respect to all post-Closing claims relating to this A9reement, the events giving rise to
this Agreement and the transactions provided for herein or contemplated hereby or thereby. No Proceeding for termination
or rescission, or claiming repudiation, of this Agreement may be brought or maintained by either party against the other
following the Closing Date no matter how severe, grave or fundamental any breach, default or nonperformance may be by
one party. Accordingly, the parties hereby expressly waive and forego any and all rights they may possess to bring any
such Proceeding.
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Section 12.7. Indemnification for Negligence.
WITHOUT LIMITING OR ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS
AGREEMENT, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION HEREUNDER IN
ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO
SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR COMPARATIVE
NEGLIGENCE, STRICT LIABILITY, VIOLATION OF ANY LAW OR OTHER LEGAL FAULT OF OR BY SUCH
INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.
Section 12.8. Waiver and Release.
Buyer, on behalf of itself and each other Buyer Indemnitee hereby forever waives relieves, releases and discharges the
Seller Indemnitees and their successors and assigns from any and all nghts, iabilities. Proceedings ( ncluding future
Proceedings) and Losses of any Buyer Indemnitee, whether Known or unknown at the Closing Date, which any Buyer
Indemnitee has or incurs, or may in the future have or incur, arising out of or related to any Assumeo Liability.
ARTICLE XIl[.
GENERAL PROVISIONS
Section 13.1. Expenses.
Except as otherwise specifically provided herein, each Party will pay all costs and expenses of its performance of and
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compliance with this Agreement, including Sections 6.7, 11.3 and 11.4. Notwithstanding anything to the contrary herein,
Buyer and Seller will split on a 50/50 basis all filing fees associated with the HSR Act.
Section 13.2. Notices.
All notices, requests and other communications hereunder shall be in writing and shall be deemed to have been given
upon receipt if either (a) personally delivered with written acknowledgment of such receipt, (b) sent by prepaid first class
mail, and registered or certified and a return receipt requested, as ot the date such receipt indicates by signature, (c) sent
by overnight delivery via a nationally recognized carrier with written acknowledgment of such receipt or (d) by facsimile
with, and as o¢ the date of, completed transmission being acknowledged:
If to Seller, to:
Southern Union Company
One PEI Center
Wilkes-Barre, PA 18711-0601
Attention: Thomas F. Karam, President and Chief Operating Officer Telecepier: (570) 829-8900
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with a copy (which shall not constitute notice) to:
Southern Union Company
One PEI Center
Wilkes-Barre, PA 18711-0601
Attention: Dennis K. Morgan, Executive Vice President. Administration and General Counsel
Telecopier: (570) 820-2402
and a copy (wnlcn shall not constitute notice) to
Fleischman and Walsh. LL.P.
1400 Sixteenth Street. N.W.
Washington, D.C 20036
Attention: Stephen A. Bouchard
Telecopier: (202) 265-5706
If to Buyer, to:
ONEOK, Inc.
100 West Fifth Street
Tulsa, OK 74103
Attention: David L. Kyle
Telecopier: (918) 588-7961
with a copy (which shall not constitute notice) to:
ONEOK, Inc.
100 West Fifth Street
Tulsa, OK 74103
Attention: James C. Kneale
Telecopier: (918) 588-7971
and a copy (which shall not constitute notice) to:
Gable & Gotwals
100 West Fifth Street, Suite 1100
Tulsa, OK 74103-4217
Attention: John R. Barker
Telecopier: 918/595-4990
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or at such other address or number as shall be given in writing by a party to the other pady.
Section 13.3. Assignment.
This Agreement may not be assigned, by operation of law or otherwise, by any party hereto without the prior written
consent of the other party hereto, such consent not to be unreasonably withheld; provided, however, in the event of any
such assignment by a party by operation of law
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~vithoui i~c°%ent o~ {i~e other party ,~s~equ-ire-d a-d~ve~'~ch ~ih~l~-ady ~'~¢ co~sent to such assignment after it has
occurred and, in such event, this Agreement and all the provisions hereof shall be binding upon the Person receiving such
assignment by operation of law. Notwithstanding the foregoing, Seller may assign all or part of its rights or delegate all or
part of its duties under this Agreement, without the prior written consent of Buyer, to a qualified intermediary chosen by
Seller to structure all or par[ of the transactions contemplated hereby as a like-kind exchange of properly covered by
Section 1031 of the IRC.
Section 13,4, Successor Bound.
Subject to the provisions of Section 13.3, this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Section 13.5. Governing Law.
The validity, performance, and enforcement of this Agreement and all Related Documents, unless expressly provided to
the contrary, shall be governed by the laws of the State of Delaware without giving effect to the principles of conflicts of law
of such state.
Section 13.6. Dispute Resolution.
Except as otherwise provided in Sections 3.2(b) and 6.4, and this Section 13.6, any dispute, controversy or claim between
the parties relating to, arising out of or in connection with this Agreement (or any subsequent agreements or amendments
thereto), including as to its existence, enforceability, validity, interpretation, performance or breach or as to indemnification
or damages, including claims in tort, whether arising before or after the termination of this Agreement (any such dispute,
controversy or claim being herein referred to as a "Dispute") shall be settled without litigation and only by use of the
following alternative dispute resolution procedure:
(a) At the wdtten request of a party, each party shall appoint a knowledgeable, responsible representative to meet and
negotiate in good faith to resolve any Dispute. The discussions shall be left to the discretion of the representatives. Upon
agreement, the representatives may utilize mediation to assist in the resolution of the Dispute. Discussions and
correspondence among the parties' representatives for purposes of these negotiations and any mediation shall be treated
as confidential information developed for the purposes of settlement, exempt from discovery and production, and without
the concurrence of both parties shall not be admissible in the arbitration described below, or in any lawsuit. Documents
identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so
exempted and may, if otherwise admissible, be admitted in the arbitration.
(b) if negotiations between the representatives of the padies do not resolve the Dispute within sixty (60) days of the initial
written request, the Dispute shall be submitted to binding arbitration by a single arbitrator pursuant to the commercial
arbitration pules, as then amended and in effect, of the American Arbitration Association (the "Rules"). Either party may
demand such arbitration in accordance with the procedures set out in the Rules. The arbitrator shall be selected by
agreement of the parties within thirty (30) days of the demand for arbitration and if no such
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agreement has been reached, then in accordance with the Rules and shall be reasonably acceptable to both parties. The
arbitration headng shall take place in Chicago, Illinois. The arbitration proceedings shall be commenced within one hundred
twenty (120) days of a party"s demand for arbitration propedy submitted in accordance with the Rules. The arbitrator shall
determine what discovery, if any, shall be apprepdate, shall control the scheduling of the same and rule on all discovery
disputes. At the arbitration hearing, each party may make written and oral presentations to the arbitrator, present testimony
and written evidence and examine witnesses. The arbitrator shall have authority to award only actual damages and shall
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not have the authority to award consequential, punitive or exemplary damages or any other form of relief, The arbitrator
shall rule on the Dispute by issuing a written reasoned opinion within sixty (60) days after the dose of hearings. The
arbitrator shall determine the date on which the hearings are closed. The arbitrator's decision shall be binding and final
Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.
(c) Each party will bear its own costs and expenses ia connection with the arbitration proceedings with respect to any
Dispute; provided, however, that:
if the arbitrator determines that the position taken in the Dispute by the nonprevailing party taken as a whole is
unreasonable, the arbitrator may order the nonprevailing pady to bear such fees and expenses, and reimburse the
prevailing party for all or such podion of its reasonable costs and expenses in connection with the arbitration proceedings
with respect to such Dispute, as the arbitrator shatl reasonably determine to be fair under the circumstances;
if any party files a judicial or administrative action asseding claims properly subject to arbitration as prescribed herein, and
the other pady successfully stays such action and/or compels arbitration of said claims, the party filing said action shall pay
the other pady's costs and expenses incurred in seeking such stay and/or compeIiing arbitration, including reasonable
attorneys' fees; and
each party shall pay one-half of the fees and expenses of the arbitrator and the American Arbitration Association,
id) Notwithstanding any other provision of this Agreement, ii) either party may commence an action to compel compliance
with this Section 13.6 and
(ii} if any party, as part of a Dispute, seeks injunctive relief or any other equitable remedy, including specific enforcement,
then in either instance such party shall be permitted to seek such injunctive or equitable relief in the U.S. District Court of
the Northern District of Illinois, before, during or after the pendency of a mediation or arbitration proceeding under this
Section 13.6.
Section 13.7. Cooperation.
Each of the parties hereto agrees to use its commercially reasonable efforts to take or cause to be taken all action, and to
do or cause to be done all things necessary, proper or advisable under applicable laws, regulations or otherwise, to
consummate and to make effective the transactions contemplated by this Agreement, including the timely performance of
all actions and things contemplated by this Agreement to be taken or done by each of the padies hereto.
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Section 13.8. Construction of Agreement.
The terms and provisions of this Agreement represent the results of negotiations between Buyer and Seller, each of which
has been represented by counsel of its own choosing, and neither of which has acted under duress or compulsion, whether
legal, economic or otherwise. Accordingly, the terms and provisions of this Agreement shall be interpreted and construed in
accordance with their usual and customary meanings, and Buyer and Seller hereby waive the application in connection
with the interpretation and construction of this Agreement of any rule of law to the effect that ambiguous or conflicting terms
or provisions contained in this Agreement shall be interpreted or construed against the party whose attorney prepared the
executed draft or any earlier draft of this Agreement. It is understood and agreed that neither the specification of any dollar
amount in the representations and warranties contained in this Agreement nor the inclusion of any specific item in the
Schedules or Exhibits is intended to imply that such amounts or higher or lower amounts, or the items so included or other
items, are or are not material, and none of the padies shall use the fact of the setting of such amounts or the fact of any
inclusion of any such item in the Schedules or Exhibits in any dispute or controversy between the parties as to whether any
obligation, item or matter is or is not material for purposes hereof. The word "including" in this Agreement shall mean
including without limitation. Words in the singular shall be held to include the plural and vice versa and words of one gender
shall be held to include the other genders as the context requires. The terms "hereof," "herein," and "herewith" and words
of similar impod shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the
Schedules and Exhibits hereto) and not to any particular provision of this Agreement, and Article, Section, paragraph,
Exhibit and Schedule references are to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement
unless otherwise specified.
Section 13.9. Publicity.
No party hereto shall issue, make or cause the publication of any press release or other announcement with respect to this
Agreement or the transactions contemplated hereby, or otherwise make any disclosures relating thereto, without the
consent of the other party, such consent not to be unreasonably withheld or delayed; provided, however, that such consent
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shall not be required where such release or announcement is required by applicable law or the rules or regulations of a
securities exchange, in which event the party so required to issue such release or announcement shall endeavor, wherever
possible, to furnish an advance copy of the proposed release to the other pady.
Section 13,10. Waiver.
Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the pad of any party to
exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or
waiver of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right,
power or privilege available to each party at law or in equity.
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Section 13.11. Padies in Interest.
This Agreement (including the documents and instruments referred to herein) is not intended to confer upon any Person,
other than the parties hereto and their successors and permitted assigns, any rights or remedies hereunder; provided,
however, that the indemnification provisions in Article Xli shall inure to the benefit of the Buyer Indemnitees and the Seller
Indemnitees as provided therein.
Section 13.12. Section and Paragraph Headings.
The section and paragraph headings in this Agreement are for reference purposes only and shall eot affect in any way the
meaning or interpretation of this Agreement.
Section 13.13. Amendment.
This Agreement may be amended only by an instrument in writing executed by the parties hereto.
Section 13.14. Entire Agreement,
This Agreement, the Exhibits and Schedules hereto and lhe documents specifically referred to herein and the
Confidentiality Agreement constitute the entire agreement, understanding, representations and warranties of the parties
hereto, and supersede all prior agreements, both written and oral, between Buyer and Seller. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set fodh in full
herein. Disclosure of any fact or item in any Schedule referenced by a particular paragraph or Section in this Agreement
shall, should the existence of the fact or item or its contents be relevant to any other paragraph or Section, be deemed to
be disclosed with respect to that other paragraph or Section whether or not any explicit cross-reference appears therein.
Section 13.15. Counterparts.
This Agreement may be executed in multiple counterpads, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
Section 13.16. Severability.
If any term or other provision of this Agreement is invalid, illegal or incapable of being enfomed by any rule of law or public
policy, alt other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the greatest
extent possible.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above.
SOUTHERN UNION COMPANY
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By:
Title:
/$/
ONEOK, INC.
.By:
Title:
~si
[Signature page to Purchase and Sale Agreement between Southern Union Company and ONEOK, Inc.]
49
poweree by EDGAR Online
http://ir.oneok.com/EdgarDetail.cfm?CIK= 1039684&FID=930661-02-3537&SID=02-00 2/5/03
EXHIBIT "B'
PRODUCTION
GATHERING AND
PROCESSING
TRANSPORTATION AND
STORAGE
MARKETING AND TRADING
DISTRIBUTION
ABOUT ONEOK
Transportation and Storage
ONEOK's transDodation and storage segment
provides affiliated and nonaffiliated companies
access to key natural gas producing areas
through 9,689 miles of integrated gathering and
pipeline systems. A company within the segment,
ONEOK Gas Storage, EEC., owns 10
unaerground storage facilities and leases
capacity of approximate y 58 billion cubic feet to
third parties
ONEOK's transDortation system is dynamic, and
that flexibility allows customers to take advantage
of the marketplace based on pricing and demand
profiles. While the system primarily serves local
distribution companies and large industrial
customers during winter months, deregulation
has allowed the transpor~auon segment to
become a year-round business. Today, demand
from industries such as the electric generatior
businesses has helped ,fill pipeline capacity
during summer months. During 2001. for
example, the segment signed a long-term
agreement to provide firm gas transportation
service of up to 200 billion cubic feet per day to a
1,100-megawatt, combined-cycle generating
plant under construction just northeast of
Oklahoma City.
Click.here ~or Jarge~ imag~ ...L'
2001 Transportation and Storage Highlights
Volumes transported
Capital expenditures
Operating ncome
538.2 million cubic feet
$35.9 million
$57.6 million
http://www.oneok.com/about/transport_storage.jsp 2/5/03
PNOUUCTION
GATHf- RING AN{}
PROCESSING
'I'RANSPORTATION AND
SIORAGE
MARKETING AND TRADING
DISTRIBUTION
. t.'.~'Z_.-~, :,: ,.
ABOUT ONEOK
Gathering and Processing
ONEOK's gathering and processing segment
includes ONEOK Field Services Company and
ONEOK Gas Processing, EEC. These
companies conduct gas gathering and
processing. They also fractionate, store and
market natural gas liquids (NGL) products.
Because this business segment is especially
price-sensitive, its exposure to processing spread
volatility is limited to the volume of gas
purchased under its "keep-whole" contracts.
At 2001 year-end, 20 percent of the segment's
purchased gas was uneer keep-whole contracts,
down from 35 percent one year ago. ONEOK's
gathering ape processmg companies continue in
their efforts to mitigate spreae risk by amenolng
KeeD-wr~ole contracts to include fee-based
gatherings and/or conditioning fees. while adding
more volume uneer fee-based and percent-of-
proceeds type contracts.
Click there for larger 'immcje
2001 Gathering and Processing Highlights
Natural gas liquids (NGL)
and condensate sales
NGL sales
Gas sales
Gas sales
Operating income
$587.8 million
27.7 million barrels
$635.5 million
142.8 million Btus
$43.5 million
http://ww~v.oneok.com/abouffgathering~grocessing.j sp 2/5/03
ABOUT ONEOK
ONEOK, Inc. is a diversified energy company. Originally founded in 1906 as an
intrastate pipeline business ONEOK today is involved in all aspecm of the
natural gas industry, it als } markets and traoes energy commoemes including
wholesale electricity.
Core values that revere high integrity in business ethics are the heartbeat of
ONEOK. As a result, the company is extremely conservative in mark-to-market
accounting, reportmc~ the requ red accounting method for a marketable
securities. The compan) also trades around real assets, never stock.
ONEOK's business segments provide safe, reliable energy and services to their
diverse customers. By following a strategy that blends the performance and
profitability of all of the segments, ONEOK's balanced business mix enables it to
deliver sustainable earnings growth for shareholders. The company is listed on
the New York Stock Exchange under the symbol OKE.
ONEOK. Inc. 2001 At a Glance
Operating revenues
Operating income
Net income
Number of employees
$6.8 billion
$295 million
$101.5 million
3,657
http://www.oneok.com/about/index.jsp 2/5/03
ABOUT ONEOK
Production
ONEOK Resources Company produces natural
gas and oil primarily in Oklahoma Kansas and
Texas. Following its strategy to exploit acquired
or legacy properties, the production segment
completed 155 wells during 2001. That number is
almost a 20-year recom and a hefty 50 percent
DUBD over the 103 wells comnleted in 2000. The
completion success rate for the year was 94
percent. In light of higher commodity prices
during most of fiscal 2001. ONEOK Resources
Company focused on sma,. stramglc acquisitions
and avoided the higher-priced ano larger
production packages. The company participates
as operator of some projects and as 8
nonoBermor. ]nteresl padner in others
Click here for larger
2001 Production Highlights
Natural gas sales
Natural gas Droauction
Od sales
Oil production
Capital expenc tures
Operating income
Proveo reserves: Gas
Proveo reserves: Oil
$107.8 million
27.5 million cubic feet
$12.2 million
493.000 barrels
$55.9 million
$57.9 million
233 billion cubic feet
4,511,000 barrels
http://www.oneok.com/about/production.j sp 2/5/03
EXHIBIT "C"
SOUTHERN JEFFERSON COUNTY RATE CASE FACTS
33~000 Gas Customers In South Jefferson Count~ 16~500 of which are in Pt. Arthur
SUG/Texas Gas Service (TGS) Hasn't Requested A Rate Increase In 12 Years
SUG/TGS Has Invested $7~500~000 in Pla at Since Last Case
Last Rate of Return = 11.38%
Current Requested Rate of Return = 9.74%
SUG ryGS Requested Increase = $27 PER CUSTOMER PER YEAR
(Avg. per customer per year: ~$518,950 + 375.000) / 33,000 = $27.09~
Recent Rate Case Expenses
(recently litigated at Railroad Commission of Texas & Paid By Customers)
Energas = $2.7 million
TXU = $2.1 million
SUG = $ t.3 million
AVERAGE RATE CASE EXPENSE =$2.03 MILLION
POTENTIAL RATE CASE COST TO CUSTOMERS -- $123.23 PER CUSTOMER
$2,033,333/16,500 customers - $123.23
# Of Years It Would Take For SUG's Requested Increase To Equal Legal Fees
4.56 years to recover legal & consulting costs ($123.23 / $27 = 4.56~
Customers In Port Arthur Will Save On Average $10 This Winter Due To The New
Rate Design Tentatively Approved By The Por[ Arthur City Council
Customers In The Other Cities Will Not Benefit From Those Savings.
SUG/TGS Could Have Filed A Much Larger Case But Chose To Make A Good Faith
Offer To Save Our Customers Money.
If SUG/TGS Is Forced To Appeal This Case, We Will File For +/- $1,400,000
SUG Has Not Hired Lawyers Or Consultants YET, But We Must Hire Them Shortly
To Defend Ourselves. Costs Will Rise Rapidly If We Must Go Forward
THE ONLY WINNERS IN CONTESTED CASES ARE LAWYERS AND CONSULTANTS
EXHIBIT "D'
EXHIBIT ~D"
Southern Union Gas Company has sold the gas lines and
related assets to ONEOK for approximately $420 million dollars,
effective January 1, 2003. Due to such, it no longer seems
prudent for the City to grant a rate increase for Southern Union
Gas. Therefore, the rate increase filed by Southern Union Gas on
or about November 5, 2002 is herein denied. The City Council is
willing to reconsider the rates if ONEOK files updated accounting
data reflecting the affect of their purchase of the assets, as
well as the savings that should be obtained since ONEOK owns
production facilities and transmission facilities.
INTER
OFFICE
MEMO
To:
From:
Subject:
Date:
Mayor, City Council & City Manager
Mark T. Sokolow, City Attorney /~ ~
P. O. No. 5313 - March 4, 2003 Council Meeting
February 24, 2003
Attached is P. O. 5313 adding Section 2-229 to the Code
of Ordinances as it pertains to communications with
regulatory authorities by public utilities. Attached is
Section 14.153 of the utility Code, V.T.C.A., requiring
regulatory authorities to adopt rules thereon. This was
tabled at the last meeting.
MTS/ts
Attachment
ACT
'itle 2
;y, in
~f all
, and
nsid-
racy,
SS Of
h the
form
tition
for a
ities.
the
pRO~qSIONS APPLICABLE TO ALL UTILITIES § 14.153
Ch. 14
ltistorica[ and Statutory Notes
prior Laws: Vernon's Ann.Civ. St. a~t 1446c. § 27(a), (d),
Acts 1975.64thLeg.,p. 2327, ch 721.
Acts 1983,68th Leg..p 1220. ch. 263.§ 22. Acts 1995,74thLeg.,ch. 9.§ I.
Acts 1983.68th Leg.p. 1259, ch.274.§ I. Vernon'sAnn.Civ.$t. art- 1446c~),§ 1.201.
Notes of Decisions
In general I adequate methods of accounting did not set out
mandatoO' factors to cons[der. Office of Public
Utility Counsel v. Public Utility Com'n (App. 3
1. In general Dist. 1990) 808 S.W.2d 497. motion to file man-
Statute authorizing Public Utilities Commis- damus overruled, writ granted, reversed 888
sion to prescribe forms of accounts and fix S W.2d 804.
§ 14.152. Maintenance of Office and Records in This State
(a) Each public utility shall maintain an office in this state in a county in
which some part of the utility's property is located. The utility shall keep in
this office all books, accounts, records, and memoranda required by the
commission to be kept in this state.
(b) A book, account, record, or memorandum required by the regulatory
authority to be kept in this state may not be removed from this state, except as:
(1) provided by Section 52.255; and
(2) prescribed by the commission.
Acts I997, 75th Leg., ch. 166, § 1, elf. SepL I, 1997.
The revised law adds a cross-reference to Section 52.255, which specifies an
exception to Section 1~204, V.A.C.S. Article 1446c4Z
Historical and Statutory Notes
Prior Laws: Vernon's Ann.Civ. St. art. 1446c, § 33.
Acts 1975.64th Leg., p, 2327, ch. 721. Acts 1995, 74th Leg., ch. 9, § 1.
Acts 1983, 68th Leg., p. 1222, ch. 263. § 26. Vernon's Ann.Civ. St. art. 1446c4}. § 1.204.
Acts 1983.68th Leg., p. 1259, ch. 274, § 1.
§ 14.153. Communications With Regulatory Authority
(a) The regulatory authority shall adopt rules governing communications
with the regulatory authority or a member or employee of the regulatory
authority by:
(i) a public utility;
(2) au affiliate; or
(3) a representative of a public utility or affiliate.
(b) A record of a communication must contain:
(1) the name of the person contacting the regulatory authority or member
or employee of the regulatory authority;
61
§ 14.153 PUBLIC UTILITY REGULATORY ACT
Title 2
(2) the name of the business entity represented;
(3) a brief description of the sub, ecl matter of the communication; and
(4) the action, if any, requested by tim public utility, affiliate, ur representa-
tive·
(c) Records compiled under Subsection (b) shall be available to the public
monthly.
Acts 1997.75th Leg.,ch. t66,§ l,eff. Sept. 1, 1997.
ltistoricaI and Statutory Notes
Vernon's Ann. CiwSt. art. 1446c. § 34.
Prior Laws: Acts 1995. 74th Leg . ch 9,§ I.
Acts 1975.64th Leg., p. 2327, ch. 721.
Acts 1983, 68th Leg.. p. 1259, ch. 274, § I. Vernon's Ann.Civ.St art 1446c~0, § 1.205
§ 14.154. Jurisdiction Over Affiliate
(a) The commission has jurisdiction over an affiliate that has a transaction
· ' ' ' ' O of access
with a public utility under the commission s 1TM sdictlon t the extent
to a record of the affiliate relating to the transaction, including a record of joint
or general expenses, any portion of which may be applicable to the transaction,
(b) A record obtained by the commission relating to sale of electrical energy
at wholesale by an affiliate to the public utility is confidential and is not subject
to disclosure under Chapter 552, Government Code.
Acts 1997,75th Leg.,ch. 166.§ 1,elf. Sept. 1, 1997.
Revtsor Note
(1) Section 1.271, V.A.C.S. Article 1446c~0, refers to the "accounts and
records" relating to certain transactions. The reference to "accounts" is
omitted from the revised law because, in context, accounts is included within
the meaning of "records."
(2) Section 1.271. V.A.C.S. Article 1446c~0, refers to !'including but in no
way Limited to." "lB]ut in no way limited to" is omitted as unnecessary
because Section 311.005(13), Government Code (Code Construction Act), and
Section 312.011 (19), Government Code, provide that "includes" and "includ-
ing'' are terms of enlargement and not of limitation and do not create a
presumption that components not expressed are excluded.
Historical and Statutory Note~
Vernon's Ann.Civ.St. art. 1446c, § 67.
Prior [aws: Acts 1995.74th Leg., ch. 9, § I.
Acts 1975, 64th Leg., p· 2327, ch. 721.
Acts 1983,68thLeg.,p. 1222, ch 263,§ 26. Acts 1995,74thLeg.,ch. 765,§ 1.26.
Acts 1983,68thLeg.,P. 1289, ch. 274,§ 1. Vernon's Ann.Civ St. art. 1446c-0,§ 1.27l.
[Sections 14.155 to 14.200 reserved for expansion]
62
P.O. No. 5313
02/11/03 ts
ORDINANCE NO.
AN ORDINANCE ADDING SECTION 2-229 TO
THE CODE OF ORDINANCES AS IT PERTAINS
TO COMMUNICATIONS WITH REGULATORY
AUTHORITIES BY PUBLIC UTILITIES WITH A
PENALTY NOT TO EXCEED $500 PER
VIOLATION AND PROVIDING FOR THE
PUBLICATION THEREOF
WHEREAS, Section 14.153
regulatory authorities to
Utility Code requires
adopt rules governing
a public utility, (2)an affiliate, or
of a public utility or affiliate with
authority or a member or employee of the
communications by (1)
(3) a representative
the regulatory
regulatory authority.
NOW THEREFORE, BE IT ORDAINED AND RESOLVED BY THE CITY
COUNCIL OF THE CITY OF PORT ARTHUR:
Section 1. That the facts and opinions in the
preamble are true and correct.
Section 2.
Port Arthur is
Section:
"Section
(a)
That the Code of
herein amended
2-229
Any public utility, as
representative thereof,
Ordinances of the City of
by adding the following
well as any affiliate or
shall maintain a record of
z.po5313
the following as it pertains to material business
(b)
(c)
communications:
(1) the name of
(2)
the person contacting the City of
Port Arthur or member or employee of the City
of Port Arthur;
the name of the business entity represented;
(3) a brief description of
the communication; and
(4) the action, if any,
utility, affiliate,
the subject matter of
requested by the public
or representative.
These records will be filed by the public utility
with the City Secretary within thirty (30) days of
the communication. If the communication pertains
to a proposed council action, it shall be filed
with the City Secretary prior to the council
Section 4.
provisions of this
meeting thereon.
If a person fails to comply herewith,
fined for each violation thereof.
That any person who
he shall be
violates any
Ordinance or who shall neglect to comply
with the terms hereof shall be guilty of a misdemeanor and
shall, on conviction thereof, be fined in any sum not less
z.po5313
that
Dollars
violation shall
Section 5.
One ($1.00) Dollar nor more than Five Hundred ($500.00)
and each
as provided in the Code of Ordinances,
constitute a separate offense.
That this Ordinance or its caption
penalty shall be published one (1)
after final passage hereof in the
City of Port Arthur. This Ordinance
in~nediately after date of publication.
Section 6. That a copy of the caption of this
and
time within ten (10) days
official newspaper of the
shall take effect
Ordinance be spread upon the Minutes of the City Council.
READ, ADOPTED AND APPROVED on this day of
, A.D., 2003, at a Regular Meeting of the City
Council of the City of Port Arthur, Texas, by the
following vote: AYES: Mayor , City
Council:
NOES:
OSCAR ORTIZ, MAYOR
ATTEST:
EVANGELINE GREEN, CITY SECRETARY
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APPROVED AS TO FORM:
MARK T. SOKOLOW, CITY ATTORNEY
APPROVED FOR ADMINISTRATION:
STEVE FITZGIBBONS, CITY M3%NAGER
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