Asset Purchase Agreement - Utilipro Inc., AGL Resources Inc. and Alliance Data Systems Corp.
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
UTILIPRO, INC.,
AGL RESOURCES INC.,
AND
ALLIANCE DATA SYSTEMS CORPORATION
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ARTICLE I PURCHASE AND SALE OF ASSETS..........................................1
1.01 Transfer of the Assets...................................................1
1.02 Aggregate Purchase Price of the Assets...................................3
1.03 Allocation...............................................................4
1.04 Liabilities..............................................................4
1.05 Closing..................................................................4
1.06 Use of Corporate Name....................................................7
1.07 Purchase Price Adjustment................................................7
1.08 Taxes, Assessments and Similar Adjustments...............................8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT..................9
2.01 Organization, Authorization and Capitalization...........................9
2.02 Financial Statements; Absence of Undisclosed Liabilities................10
2.03 Indebtedness............................................................10
2.04 No Violation of Law.....................................................10
2.05 Title to and Condition of the Assets....................................11
2.06 Contracts...............................................................11
2.07 Litigation..............................................................11
2.08 Required Licenses and Permits...........................................12
2.09 Consents; No Conflict...................................................12
2.10 Employee Benefit Plans..................................................12
2.11 Intellectual Property...................................................12
2.12 Tax Matters.............................................................14
2.13 Events Subsequent to December 31, 2000..................................14
2.14 Real Property...........................................................15
2.15 Brokerage...............................................................15
2.16 Full Disclosure.........................................................15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................15
3.01 Organization and Authorization..........................................15
3.02 Consents; No Conflict...................................................16
3.03 Litigation..............................................................16
3.04 Financing and Capital Resources.........................................16
3.05 Brokerage...............................................................16
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ARTICLE IV COVENANTS OF PARTIES................................................16
4.01 Covenants of Seller.....................................................16
4.02 Covenants of Purchaser..................................................18
4.03 Covenants of Purchaser and Seller.......................................19
ARTICLE V CONDITIONS TO SELLER'S OBLIGATIONS..................................21
5.01 Representations and Warranties True at Closing Date; Covenants Performed21
5.02 Litigation..............................................................21
5.03 Required Consents and Approvals.........................................21
5.04 Deliveries by Purchaser.................................................21
ARTICLE VI CONDITIONS TO PURCHASER'S OBLIGATIONS...............................21
6.01 Representations and Warranties True at Closing Date.....................22
6.02 Litigation..............................................................22
6.03 Required Consents and Approvals.........................................22
6.04 Deliveries to Purchaser.................................................22
ARTICLE VII TERMINATION PRIOR TO CLOSING........................................22
7.01 Termination.............................................................22
7.02 Effect of Termination...................................................23
ARTICLE VIII INDEMNIFICATION.....................................................23
8.01 Seller and Parent Indemnification.......................................24
8.02 Purchaser Indemnification...............................................24
8.03 Indemnity Claims........................................................24
8.04 Basket..................................................................25
8.05 Notice of Claim.........................................................25
8.06 Defense.................................................................26
8.07 Limitation of Liability.................................................26
8.08 Exclusive Remedy........................................................26
ARTICLE IX ARBITRATION AND EQUITABLE REMEDIES..................................26
9.01 Settlement Meeting......................................................26
9.02 Arbitration Proceedings.................................................26
9.03 Place of Arbitration....................................................27
9.04 Discovery...............................................................27
9.05 Equitable Remedies......................................................27
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9.06 Exclusive Jurisdiction..................................................27
9.07 Judgments...............................................................27
9.08 Expenses................................................................28
9.09 Cost of the Arbitration.................................................28
9.10 Exclusivity of Remedies.................................................28
ARTICLE X MISCELLANEOUS.......................................................28
10.01 Bulk Sales Law..........................................................28
10.02 No Liens Created........................................................28
10.03 Extension Bonus.........................................................28
10.04 Entire Agreement........................................................28
10.05 Amendment...............................................................28
10.06 Parties Bound by Agreement; Successors and Assigns......................29
10.07 Counterparts............................................................29
10.08 Modification and Waiver.................................................29
10.09 Notices.................................................................29
10.10 Governing Law...........................................................30
10.11 No Third-Party Beneficiaries............................................30
10.12 Public Announcements....................................................30
10.13 Knowledge...............................................................30
10.14 Interpretation..........................................................31
10.15 Schedules...............................................................31
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of February
12, 2001, by and among Utilipro, Inc., a Georgia corporation ("Seller"), AGL
Resources Inc., a Georgia corporation ("Parent"), and Alliance Data Systems
Corporation, a Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller provides deregulated energy marketers with a range of
managed customer care services (the "Business");
WHEREAS, upon and subject to the terms and conditions contained herein,
Seller desires to sell to Purchaser, and Purchaser desires to purchase from
Seller, certain of the assets of Seller;
WHEREAS, Parent's wholly-owned subsidiary, AGL Investments, Inc., a
Georgia corporation, owns 100% of the equity ownership of Seller;
WHEREAS, as indirect owner of such preferred stock, Parent has the
authority to execute, deliver and perform this Agreement and the documents and
transactions contemplated herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and upon and subject to the terms and
the conditions hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.01 TRANSFER OF THE ASSETS.
(a) Subject to the terms and conditions set forth in this
Agreement, as of the Closing, Seller agrees to sell, convey, assign, and
transfer to Purchaser, and Purchaser agrees to purchase, accept and take from
Seller, all of the assets, properties and rights of every kind, nature,
character and description, whether personal or mixed, whether tangible or
intangible, whether accrued, contingent or otherwise relating to or utilized in
the Business, directly or indirectly, in whole or in part, whether or not
carried on the books and records of Seller and wherever located (collectively,
the "Assets"), except for those assets, properties and rights defined in Section
1.01(b) as Excluded Assets. The Assets shall include:
(i) the tangible personal property and interests
(including equipment, furniture and fixtures) therein listed on SCHEDULE
1.01(a)(i) (the "Personal Property");
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(ii) [INTENTIONALLY OMITTED];
(iii) all of Seller's (a) inventions (whether
patentable or unpatentable and whether or not reduced to practice), proprietary
ideas, designs, improvements and domestic and foreign patents and patent
applications and design registrations and applications, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations relating thereto, (b) trademarks, service marks, trade dress,
logos, appellations of origin, trade names, domain names and corporate names,
and all goodwill associated therewith, and domestic and foreign mark
registrations and applications for registration, (c) copyrightable works,
translations, adaptations, derivations, and combinations thereof, and all
copyright registrations and registration applications relating thereto, (d) mask
works and all applications, registrations and renewals relating thereto, (e)
trade secrets and confidential business information (including ideas, research
and development, research record, know-how, formulas, compositions,
manufacturing and production processes and techniques, quality control
procedures, technical information, technical data, records of inventions, test
information, designs, drawings, specifications, customer and supplier
information and lists, pricing and cost information, and business and marketing
plans and proposals, market surveys and marketing know-how), and (f) all other
creative works and measures of protection therefor (by way of the common law,
statute or otherwise) and proprietary, personal and moral rights, including but
not limited to rights of publicity, rights of privacy, and neighboring rights of
Seller that are used or held for use primarily in the Business (the
"Intellectual Property"), including but not limited to those Intellectual
Property assets listed in SCHEDULE 2.11;
(iv) all of Seller's rights in computer software
used in the Business to the extent transferable;
(v) all of the intangible rights of Seller
relating to the Business or used in the Business, including going concern value,
goodwill, telephone and e-mail addresses and listings, Seller's website
(www.utilipro.com), the name "Utilipro, Inc." and similar items;
(vi) all Licenses listed on SCHEDULE 2.08 that
are transferable;
(vii) all of Seller's rights, interests and
benefits in, to and under the contracts listed on SCHEDULE 1.01(a)(vii) (the
"ASSIGNED CONTRACTS");
(viii) all operating data and records of Seller,
including, without limitation, all books of account, ledgers, general,
financial, accounting and any personnel records, files, invoices, customers' and
suppliers' lists, other distribution lists, billing records, sales and
promotional literature, manuals, customer and supplier correspondence (in all
cases, in any form or medium), of Seller that are used, held for use or intended
to be used in, or that arise out of, the conduct or operating of the Business
(the "Records"), except for those specifically excluded pursuant to Section
1.01(b);
(ix) the prepaid and deferred items of Seller listed
on SCHEDULE 1.01(a)(ix); and
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(x) those assets subject to the capital leases listed
on SCHEDULE 1.01(a)(x) to which, pursuant to Section 4.01(f), Seller has
obtained good and valid title, subject to Permitted Liens, between the date of
this Agreement and the Closing.
(b) the term "EXCLUDED ASSETS" means:
(i) the assets identified on SCHEDULE
1.01(b)(i);
(ii) all cash, cash equivalents, and accounts
receivable of Seller;
(iii) all rights and obligations of Seller under
this Agreement and the other agreements and instruments executed and delivered
in connection with this Agreement;
(iv) all minute books and stock records;
(v) all records prepared in connection with the
sale of the Business to Purchaser that do not otherwise have to do with the
conduct of the Business in the ordinary course;
(vi) income tax records relating to the Business;
(vii) any other records listed on SCHEDULE 1.01(b)
(vii);
(viii) the capital stock of and the assets held by
Utilipro International, Inc. or Utilipro Canada Company;
(ix) any right or recoveries under any litigation
or proceedings not assumed by Purchaser; and
(x) those assets subject to the capital leases
listed on SCHEDULE 1.01(a)(x) to which, pursuant to Section 4.01(f), Seller has
not obtained good and valid title, subject to Permitted Liens, between the date
of this Agreement and the Closing.
(c) The sale, conveyance, transfer, assignment and delivery of
the Assets by Seller to Purchaser shall be effected by a Bill of Sale in the
form attached as EXHIBIT 1.01(c) and such deeds, endorsements, assignments,
transfers and other instruments of transfer and conveyance as are attached as
exhibits to this Agreement or, if not attached to this Agreement as an exhibit,
as Purchaser shall reasonably request.
1.02 AGGREGATE PURCHASE PRICE OF THE ASSETS. Subject to adjustment as
provided in Section 1.05(b), Section 1.07, and Section 10.03, the aggregate
purchase price of the Assets (the "Purchase Price") shall be Twenty Two Million
Five Hundred Thousand Dollars ($22,500,000) payable as provided in Section
1.05(b).
1.03 ALLOCATION. As soon as practicable but not later than 120 days
after the Closing Date, Purchaser and Seller shall use their good faith efforts
to agree to the allocation (the "Allocation") of the Purchase Price, the Assumed
Liabilities and all other capitalized costs among the Assets and Assumed
Liabilities in accordance with Section 1060 of the Internal
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Revenue Code of 1986, as amended, and shall set forth such allocation on a
statement (the "Allocation Statement"). The Allocation Statement shall be
revised to reflect any changes in the Assets and Assumed Liabilities as a result
of the calculation in Section 1.07. If Purchaser and Seller agree to such
Allocation prior to Closing, Purchaser and Seller covenant and agree that (a)
the values assigned to the assets by the parties' mutual agreement shall be
conclusive and final for all purposes, and (b) neither Purchaser nor Seller will
take any position before any government authority or in any judicial proceeding
that is in any way inconsistent with such Allocation. Notwithstanding the
foregoing, if Purchaser and Seller cannot agree to an Allocation within 120 days
of the Closing Date, Purchaser and Seller covenant and agree to file and to
cause their respective affiliates to file, all Returns and schedules thereto
(including, for example, amended returns, claims for refund, and those returns
and forms required under Section 1060 of the Internal Revenue Code of 1986, as
amended and any treasury regulations promulgated thereunder) consistent with
each of Purchaser's and Seller's good faith Allocations, unless otherwise
required because of a change in applicable law.
1.04 LIABILITIES.
(a) EXCLUDED LIABILITIES. Other than the assumption of Assumed
Liabilities as expressly provided in Section 1.04(b) below, Purchaser shall not
assume any of the liabilities, obligations and commitments of Seller
(collectively, the "Excluded Liabilities").
(b) ASSUMED LIABILITIES. Subject to the terms and conditions
of this Agreement, and as additional consideration for the Assets, Purchaser
shall assume, effective as of Closing, and from and after the Closing, Purchaser
shall pay, and discharge when due, pursuant to the Assumption Agreement attached
as Exhibit 1.04(b) (the "Assumption Agreement") all of the following
liabilities, obligations and commitments of Seller (collectively, the "Assumed
Liabilities"):
(i) all liabilities, obligations and commitments
of Seller under the Assigned Contracts to the extent such liabilities,
obligations and commitments relate to the period from and after the Closing;
(ii) the accounts payable of Seller listed on
SCHEDULE 1.04(b)(ii);
(iii) the other current liabilities, obligations
and commitments of Seller listed on SCHEDULE 1.04(b)(iii);
(iv) liabilities for General Taxes (as defined in
Section 1.08(b)) allocated to Purchaser as provided under Section 1.08);
(v) liabilities related to the Employee Benefit
plans assumed pursuant of Section 4.02(b).
1.05 CLOSING.
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(a) TIME AND LOCATION. Subject to the satisfaction or waiver
of the conditions set forth herein, the consummation of the purchase and sale of
the Assets (the "Closing") shall take place at 10:00 a.m. on February 28, 2001
in the offices of Long Aldridge & Norman LLP, 303 Peachtree Street, Suite 5300,
Atlanta, Georgia, 30308, or on such other date at such other time and place as
the parties shall agree in writing (the "Closing Date").
(b) CALCULATION AND PAYMENT OF THE PURCHASE PRICE AT CLOSING.
(i) Two days prior to the Closing Date, Seller
shall cause to be prepared and delivered to Purchaser a calculation of the
"Adjusted Purchase Price" to be paid to Seller at the Closing. The "Adjusted
Purchase Price" shall equal Twenty Two Million Five Hundred Thousand Dollars (x)
less the amount of any reductions in the purchase price as specified on SCHEDULE
1.05(b)(i) as a result of Seller's failure to obtain good and valid title to
assets subject to capital leases pursuant to Section 4.01(f), and (y) plus
Seller's good faith estimate of Closing Working Capital. "Closing Working
Capital" means the positive or negative number resulting from subtracting the
amount of current liabilities estimated to be assumed by Purchaser as of the
Closing pursuant to Sections 1.04(b)(ii) and 1.04(b)(iii) from the estimated
current assets to be purchased by Purchaser as of the Closing pursuant to
Section 1.01(a)(ix).
(ii) At the Closing, Purchaser shall make payment
of the Adjusted Purchase Price as follows:
(A) to AGL Investments, Inc. the
outstanding principal balance plus all interest accrued as of the Closing Date
under that certain Revolving Promissory Note dated January 1, 2000, as amended
by the certain First Amendment to Revolving Promissory Note dated May 1, 2000
(the "Note"), payable by wire transfer of immediately available funds in United
States currency to an account designated in writing by AGL Investments, Inc. in
full payment and satisfaction of all principal and interest under the Note.
Prior to the Closing, Seller shall provide Purchaser with a letter signed by AGL
Investments, Inc. stating the amount of principal and interest owed with respect
to the Note as of the Closing; and
(B) to Seller, any amounts remaining
after payment pursuant to Section 1.05(b)(ii)(a), payable by wire transfer of
immediately available funds in United States currency to an account designated
in writing by Seller.
(c) TRANSACTIONS TO BE EFFECTED AT THE CLOSING. At the
Closing:
(i) Seller shall deliver to Purchaser:
(A) The Bill of Sale and General
Assignment in the form of EXHIBIT 1.01(c) and such assignments and other
instruments of transfer related to the Assets in form and substance reasonably
satisfactory to Purchaser and its counsel;
(B) A Non-Competition and Non-
Solicitation Agreement in the form of EXHIBIT 1.05(c)(i)(B);
(C) The Assignment and Assumption
Agreement in the form of EXHIBIT 1.04(b);
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(D) The certificate referenced in Section
6.01;
(E) Release of liens for those security
interests, easements or encumbrances listed on SCHEDULE 2.05(a);
(F) Such other documents as Purchaser or
its counsel may reasonably request to effect the sale and transfer of good and
valid title of the Assets to Purchaser free and clear of all encumbrances,
except for Permitted Liens, as defined in Section 2.05, and to demonstrate
satisfaction of the conditions and compliance with the covenants set forth in
this Agreement;
(G) A customary opinion of counsel
substantially in the form of Exhibit 1.04(c)(i)(G);
(H) Executed counterparts of all
consents listed in SCHEDULE 6.03;
(I) A certificate dated as of the
Closing Date and signed by the secretary of each of Seller and Parent,
certifying the articles of incorporation, bylaws, board of directors and
stockholders approvals and the incumbency of the officers authorized to execute
this Agreement and the documents contemplated herein; and
(J) A transition services agreement in
substantially the form of EXHIBIT 1.05(c)(i)(J) covering the services outlined
therein.
(ii) Purchaser shall deliver to Seller:
(A) A Non-Competition and Non-
Solicitation Agreement in the form of EXHIBIT 1.05(c)(i)(B);
(B) The Assignment and Assumption
Agreement in the form of EXHIBIT 1.04(b);
(C) The certificate referenced in
Section 5.01;
(D) Such other documents as Seller or
its counsel may reasonably request to demonstrate satisfaction of the conditions
and compliance with the covenants set forth in this Agreement;
(E) Executed counterparts of all
consents listed in SCHEDULE 5.03;
(F) A certificate dated as of the
Closing Date and signed by the Purchaser's Secretary, certifying the articles of
incorporation, bylaws, board of directors approvals and the incumbency of the
officers authorized to execute this Agreement and the documents contemplated
herein; and
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(G) A transition services agreement in
substantially the form of EXHIBIT 1.05(c)(i)(J) covering the services outlined
therein.
1.06 USE OF CORPORATE NAME. Within two (2) business days following the
Closing Date, Seller shall: (a) amend its Articles of Incorporation and take all
other actions necessary to change its name to one sufficiently dissimilar to
Seller's present name, in Purchaser's judgment, to avoid confusion, and (b) take
all actions reasonably requested by Purchaser to enable Purchaser to change its
name to Seller's present name.
1.07 PURCHASE PRICE ADJUSTMENT.
(a) Within 45 days after the Closing Date, Purchaser shall
cause to be prepared and delivered to Seller an audited statement (the
"STATEMENT") of Closing Working Capital as of the close of business on the
Closing Date and a certificate of Purchaser that the Statement has been prepared
in accordance with the requirements of this Section 1.07.
(b) During the 45-day period following Seller's receipt of the
Statement, Seller and its independent auditors shall be permitted to review the
working papers relating to the Statement. The Statement shall become final and
binding upon the parties on the 45th day following delivery thereof, unless
Seller gives written notice of its disagreement with the Statement (a "NOTICE OF
DISAGREEMENT") to Purchaser prior to such date. Any Notice of Disagreement shall
(i) specify in reasonable detail the nature of any disagreement so asserted, and
(ii) only include disagreements based on mathematical errors or based on Closing
Working Capital not being calculated in accordance with this Section 1.07. If a
Notice of Disagreement is received by Purchaser in a timely manner, then the
Statement (as revised in accordance with this sentence) shall become final and
binding upon Seller and Purchaser on the earlier of (a) the date Seller and
Purchaser resolve in writing any differences they have with respect to the
matters specified in the Notice of Disagreement or (b) the date any disputed
matters are finally resolved in writing by the Accounting Firm (as defined
below). During the 45-day period following the delivery of a Notice of
Disagreement, Seller and Purchaser shall seek in good faith to resolve in
writing any differences that they may have with respect to the matters specified
in the Notice of Disagreement. At the end of such 30-day period, Seller and
Purchaser shall submit to Ernst & Young, LLP (or if Ernst & Young, LLP refuses
to serve, another independent public accounting firm of national standing) (the
"ACCOUNTING FIRM") for arbitration any and all matters that remain in dispute
and which were properly included in the Notice of Disagreement. The Accounting
Firm shall have 45 days from the date of retention to make a final written
determination of all items in dispute. Copies of such written determination
shall be provided promptly to Purchaser and Seller. The Accounting Firm shall be
empowered to assess its fees against the party against whom the Notice of
Disagreement is resolved. The fees and disbursements of Seller's independent
auditors incurred in connection with their review of the Statement and
certification of any Notice of Disagreement shall be borne by Seller, and the
fees and disbursements of Purchaser's independent auditors incurred in
connection with their preparation of the Statement and review of any Notice of
Disagreement shall be borne by Purchaser.
(c) To the extent that the final Closing Working Capital
resulting from this Section 1.07 is greater than the estimated Closing Working
Capital used in Section 1.05, Purchaser shall be obligated to pay the difference
to Seller. To the extent that the final Closing
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Working Capital resulting from this Section 1.07 is less than the estimated
Closing Working Capital used in Section 1.05, Seller shall be obligated to pay
the difference to Purchaser. The party owing the amount to the other under this
Section shall be obligated to pay the amount in immediately available funds
within five business days of the Statement becoming final and binding on the
parties. Any amounts not paid within the foregoing time period shall bear
interest at the prime rate of interest as publicly announced from time to time
by SunTrust Bank.
(d) Following the Closing, Purchaser shall not take any
actions with respect to the accounting books and records of the Business on
which the Statement is to be based that would obstruct or prevent the
preparation of the Statement and the determination of Closing Working Capital as
provided in this Section 1.07. During the period of time from and after the date
of delivery of the Statement to Seller through the resolution of any adjustment
to the Adjusted Purchase Price contemplated by this Section 1.07, Purchaser
shall afford to Seller and any accountants, counsel or financial advisers
retained by Seller in connection with any adjustment to the Adjusted Purchase
Price contemplated by this Section 1.07 reasonable access during normal business
hours to the books and records of the Business forming a part of the Assets to
the extent relevant to the adjustment contemplated by this Section 1.07.
1.08 TAXES, ASSESSMENTS AND SIMILAR ADJUSTMENTS.
(a) Seller shall be responsible for the payment of the
following:
(i) all federal, state and other taxes imposed
upon Seller's net income from the transactions contemplated hereunder (including
but not limited to federal taxes based upon depreciation recapture and federal
taxes based upon the recapture of investment tax credit);
(ii) taxes payable by Seller on gross income from
the sale of the Assets to Purchaser hereunder; and
(iii) any penalties, interest, or similar charges
with respect to the foregoing taxes enumerated in this Section.
(b) "General Taxes" (as defined hereinafter) shall be prorated
between Seller and Purchaser, so that regardless of when or by whom actually
paid or payable, Seller shall bear any of such taxes levied or assessed against
or with respect to the Assets for or with respect to any period before the date
of the Closing and Purchaser shall bear any of such taxes for or with respect to
any period on or after the date of Closing. Each party shall pay to the other
amounts due in connection with the proration noted above within ten (10) days of
a parties submission of proof that such party has paid the General Taxes in
question. "General Taxes" shall mean (i) all annual or periodic ad valorem fees
and other taxes and assessments, both general and special, and payments made in
lieu thereof, on real or personal property and (ii) all other annual or periodic
fees, taxes and similar charges imposed by any governmental unit, upon or in
respect to the Assets, including, but not limited to, taxes, fees or similar
charges (e.g. licenses) for the privilege of doing business. "General Taxes"
shall not include motor fuel taxes, sales and use taxes, corporate franchise
taxes, transfer taxes, income taxes, or taxes based on gross income. Purchaser
shall prepare and file any returns for General Taxes due from and after the date
of the
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Closing, and Seller shall prepare and file all other returns for General Taxes.
Purchaser and Seller shall jointly prepare returns which determine taxes that
are being prorated.
(c) In the event any deficiencies are assessed or refunds made
with respect to any of the taxes provided for in this Section 1.08 deficiencies
shall be the responsibility of, or refunds shall be paid to, the party having
the responsibility for the payment of the tax pursuant to this Section 1.08.
(d) All sales or transfer taxes, including but not limited to,
document recording fees, and sales and excise taxes, arising out of or in
connection with the consummation of the transactions contemplated hereby shall
be paid by Seller.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Seller and Parent, jointly and severally, hereby represent and warrant
to Purchaser as follows:
2.01 ORGANIZATION, AUTHORIZATION AND CAPITALIZATION.
(a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Georgia and has all
requisite power and authority, corporate or otherwise, to carry on its business
as it is now being conducted and to own or lease its properties and assets.
Seller is duly qualified and in good standing in every state in which the
conduct of the business of Seller or the ownership of its properties and assets
requires it to be so qualified except where the absence of such qualification
would not individually or in the aggregate have a Material Adverse Effect on the
Business. As used in this Agreement, the phrase "Material Adverse Effect" shall
mean an effect which is materially adverse to (i) the Assets, the financial
condition, results of operations, or material customer relationships of an
entity and its subsidiaries taken as a whole, or (ii) the ability of a party to
consummate the material transactions contemplated by this Agreement.
Notwithstanding the foregoing, any effect with respect to Seller relating (a) to
the economy or financial markets in general, (b) to a change in applicable law
with respect to Seller, (C) any change in the industry in which Seller or the
Business operates, or (d) any action taken by Seller as expressly contemplated
by this Agreement, shall not constitute a Material Adverse Effect.
(b) Each of Seller and Parent has the right, power and
capacity to execute, deliver and perform this Agreement and all the documents
and instruments referred to herein and contemplated hereby to be executed or
delivered at the Closing (collectively, the "Seller Transaction Documents") and
to consummate the transactions contemplated hereby. Seller has all requisite
corporate power and authority necessary to own, operate and lease the Assets and
to carry on its Business as and where conducted. The execution, delivery and
performance of this Agreement and the Seller Transaction Documents, and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary action, corporate or otherwise, on the part of
Seller and Parent. This Agreement and the Seller Transaction Documents have been
duly and validly executed and delivered by Seller and Parent and
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constitute Seller's and Parent's legal, valid and binding obligation,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors' rights generally, or equitable principles.
(c) The authorized, issued and outstanding capital stock of
Seller is set forth on SCHEDULE 2.01(c). SCHEDULE 2.01(c) sets forth (i) every
entity, in which Seller owns, or will own prior to the Closing, outstanding
equity, directly or indirectly (each a "Subsidiary" and collectively, the
"Subsidiaries"), and the equity interest in such entity that is owned by Seller.
Except as noted on SCHEDULE 2.01(c), all outstanding shares of capital stock of
the Subsidiaries (the "Subsidiary Shares") are owned by Seller, directly or
indirectly, free and clear of all liens, restrictions, claims, equities,
charges, options, rights of first refusal or encumbrances, with no defects of
title whatsoever. Seller has full power, right and authority to vote all of the
outstanding shares of capital stock of each Subsidiary. Seller is not a party to
or bound by any agreement affecting or relating to its right to transfer or vote
the outstanding shares of capital stock of any Subsidiary.
2.02 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES. Seller
has furnished Purchaser with the internal balance sheet of Seller as of December
31, 2000 and the related internal statements of income for the period then ended
(the "Internal Financial Statements"). The Internal Financial Statements have
been prepared in accordance with GAAP (except as noted therein and the absence
of detailed notes to such statements), and fairly present, in all material
respects, the financial position of Seller as of the date thereof and the
related results of its operations for the periods then ended. Seller had no
material liabilities or obligations, except as and to the extent reserved
against on the balance sheet included in the Internal Financial Statements or as
shown in SCHEDULE 2.02, as of December 31, 2000. Since December 31, 2000, Seller
has not incurred any material liabilities or obligations except for liabilities
and obligations incurred by Seller in the ordinary course of business and
consistent with past practice or as reflected in SCHEDULE 2.02.
2.03 INDEBTEDNESS. SCHEDULE 2.03 sets forth a complete and accurate
list and description of all instruments or other documents relating to any
direct or indirect indebtedness for borrowed money of the Seller, as well as
indebtedness by way of lease-purchase arrangements, guarantees, undertakings on
which others rely in extending credit and all conditional sales contracts,
chattel mortgages and other security arrangements with respect to personal
property used or owned by Seller. Seller has made available to Purchaser a true,
correct, and complete copy of each of the items listed on SCHEDULE 2.03.
2.04 NO VIOLATION OF LAW. Seller is not, with respect to the Business
or the Assets, in violation of any applicable local, state or federal law,
ordinance, regulation, order, injunction or decree, or any other requirement of
any governmental body, agency or authority or court binding on it or relating to
the Assets or the Business, except for violations, if any, which would not
individually or in the aggregate have a Material Adverse Effect on the Business.
Seller has received no written notice and does not otherwise have Knowledge of
an enforcement action against Seller relating to the Business or the Assets in
connection with any violation or alleged violation of applicable law.
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2.05 TITLE TO AND CONDITION OF THE ASSETS. (a) Except for Assets for
which Seller is obligated to attempt to obtain good and valid title pursuant to
Section 4.01(f), Seller has good and valid title to all of the Assets subject
only to the Permitted Liens (as hereinafter defined) and the liens,
restrictions, claims, charges, security interests, easements or other
encumbrances set forth on SCHEDULE 2.05(a) (collectively, with the Permitted
Liens, the "Encumbrances"). (b) Except for the Encumbrances, Seller owns the
Assets free and clear of all title defects or objections, liens, restrictions,
claims, charges, security interests, easements or other encumbrances of any
nature whatsoever. "Permitted Liens" shall mean (i) the security interests,
easements or other encumbrances described in SCHEDULE 2.05(b); (ii) liens in
connection with workers' compensation, unemployment insurance or other social
security obligations; (iii) deposits, pledges or liens to secure the performance
of bids, tenders, contracts, leases, statutory obligations, surety, customs,
appeal, performance and payment bonds and other obligations of like nature
arising in the ordinary course of business; (iv) mechanics', workers',
carriers', warehousemen's, materialmen's, landlords' or other like liens arising
in the ordinary course of business with respect to obligations which are not due
or which are being contested in good faith and by appropriate proceedings
diligently conducted; (v) liens or attachments, judgments or awards with respect
to which an appeal or proceeding for review shall be pending or a stay of
execution shall have been obtained, and which are otherwise being contested in
good faith and by appropriate proceedings diligently conducted; and (vi) liens
for taxes, assessments, fees or governmental charges or levies not yet due and
payable or which are being contested in good faith and by appropriate
proceedings diligently conducted and in each case as to which adequate reserves
have been established in accordance with GAAP. (c) All of the Assets are in the
possession or control of Seller. (d) The equipment owned or leased by Seller and
included among the Assets is structurally sound with no known material defects,
is in good and safe operating condition and repair, normal wear and tear
excepted, and is adequate for the uses to which it is being put. (e) The Assets,
together with the Excluded Assets, include all rights, properties and other
assets necessary to permit Seller to conduct its business in the same manner as
the Business has been conducted during the last 12 months.
2.06 CONTRACTS. SCHEDULE 2.06 sets forth all contracts, agreements, and
other arrangements (including purchase orders) relating to the Assets or the
Business to which the Seller is a party and which provide for payment or
performance obligations by either party thereto having an aggregate value in
excess of $50,000 in any single year or has a term of more than one year
(individually, a "Contract;" collectively, the "Contracts"). Seller is, and at
all times since January 1, 2000 has been, in material compliance with all
applicable terms and requirements of each Contract. To the Knowledge of Seller,
each other person or party who has had any obligation or liability under any
Contract is, and at all times since January 1, 2000 has been, in material
compliance with all applicable terms and requirements of such Contract.
2.07 LITIGATION. Except as set forth in SCHEDULE 2.07, there are no
litigation, claims, suits, actions, Known investigations, indictments or
informations, proceedings or arbitrations, grievances or other procedures
(including Known grand jury investigations, actions or proceedings, and product
liability and workers' compensation suits, actions or proceedings) pending, or
to the Knowledge of Seller, threatened, before any court, commission,
arbitration tribunal, or judicial, governmental or administrative department,
body, agency, administrator or official, grand jury (each, a "Governmental
Authority"), against Seller relating to the Assets or the Business. Further,
there are no judgments, orders, writs, injunctions, decrees, indictments or
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informations, grand jury subpoenas or civil investigative demands, plea
agreements, stipulations or awards (whether rendered by a court, commission,
arbitration tribunal, or judicial, governmental or administrative department,
body, agency, administrator or official, grand jury or any other forum for the
resolution of grievances) against or relating to Seller relating in any way to
the Business or involving any of the Assets.
2.08 REQUIRED LICENSES AND PERMITS. SCHEDULE 2.08 sets forth all
material licenses, permits and other authorizations of Seller necessary for the
conduct of the Business (the "Licenses"). Seller has made available to Purchaser
true, correct, and complete copies of all the Licenses. There is no action
pending, or to the Knowledge of Seller, threatened, seeking the revocation,
cancellation, suspension or adverse modification or amendment of any of the
Licenses.
2.09 CONSENTS; NO CONFLICT. Subject to obtaining the consents and
approvals and making the filings described in SCHEDULE 2.09, the execution and
delivery of this Agreement by Seller and Parent, the consummation of the
transactions contemplated herein by Seller and Parent, and the performance of
the covenants and agreements of Seller and Parent will not: (a) violate or
conflict with any of the provisions of any charter document or bylaws of Seller
or Parent; (b) violate, conflict with or result in a breach or default under or
cause termination of any term or condition of any mortgage, indenture, contract,
license, permit, instrument, trust document, will, or other agreement, document
or instrument to which Seller is a party or by which Seller or its properties
may be bound; (c) require any consent of any third party; (d) violate any
provision of law, statute, regulation, court order or ruling of any governmental
authority, to which Seller, Parent or the Assets is subject; or (e) result in
the creation or imposition of any lien, claim, charge, restriction, security
interest or encumbrance of any kind whatsoever upon the Assets.
2.10 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 2.10 lists all employment, retention, severance,
deferred compensation, change of control or other agreements or contracts with
any employee of Seller, and all "employee benefit plans" as such term is defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") in which any employee of Seller participates, and all stock
option, restricted stock, stock appreciation or other equity plans and all
bonus, severance, change in control, retention, deferred compensation or other
compensatory plans maintained or contributed to by the Seller in which any
employee of Seller participates ("Employee Benefit Plans"). Seller has made
available to Purchaser true and complete copies of all Employee Benefit Plans.
Assuming that Purchaser accepts the assignment of all employee severance
contracts as reflected on SCHEDULE 2.10 and hires all employees as required by
this Agreement, this Agreement and the consummation of the transactions
contemplated herein do not create any liabilities or trigger any expenses under
the Employee Benefit Plans.
(b) With respect to each Employee Benefit Plan: (i) if
intended to qualify under Section 401(a) or 401(k) of the Code, such plan
satisfies the requirements of such sections, has received a favorable
determination letter from the Internal Revenue Service with respect to its
qualification, and its related trust has been determined to be exempt from tax
under Section
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501(a) of the Code and, to the knowledge of Parent and Seller, nothing has
occurred since the date of such letter to adversely affect such qualification or
exemption; (ii) each such plan has been administered in substantial compliance
with its terms and applicable law, (iii) neither Parent nor Seller has engaged
in, and neither Parent nor Seller has any knowledge of any Person that has
engaged in, any transaction or acted or failed to act in any manner that would
subject Seller to any liability for a breach of fiduciary duty under ERISA, (iv)
no disputes are pending, or, to the Knowledge of Parent nor Seller, threatened;
(v) neither Parent nor Seller has engaged in, and neither Seller nor Parent has
any Knowledge of any Person that has engaged in, any transaction in violation of
Section 406(a) or (b) of ERISA or Section 4975 of the Code for which no
exemption exists under Section 408 of ERISA or Section 4975(c) of the Code or
Section 4975(d) of the Code or that would result in a civil penalty being
imposed under subsections (i) or (l) of Section 502 of ERISA, (vi) all
contributions due have been made on a timely basis; (vii) no Employee Benefit
Plan is a plan covered by Title IV of ERISA or subject to the funding
requirements of Section 412 of the Code; (viii) except to the extent required
under ERISA Section 601 et seq. and Section 4980B of the Code, Seller does not
provide health or welfare benefits under the Employee Benefit Plans for any
retired or former employee or is obligated to provide health or welfare benefits
to any active employee following such employee's retirement or other termination
of service; (ix) the termination of any Employee Benefit Plan would not result
in any material liability or further obligation on the part of the Parent or
Seller; and (x) all reports and other documents required to be filed by any of
the Employee Benefit Plans with any governmental agency or distributed to plan
participants or beneficiaries (including notices required by the Consolidated
Omnibus Reconciliation Act of 1986, actuarial reports, audits, or tax returns)
have been timely filed or distributed. All contributions made or required to be
made under any Employee Benefit Plan meet the requirements for deductibility
under the Code, and all contributions which are required and which have not been
made have been properly recorded on the books of Parent or Seller.
(c) No Employee Benefit Plan is a "multi-employer plan" (as
defined in Section 4001(a)(3) of ERISA) or a "multiple employer plan" (within
the meaning of Section 413(c) of the Code). No event has occurred with respect
to Seller in connection with which Seller could be subject to any liability,
lien or encumbrance with respect to any Employee Benefit Plan or any employee
benefit plan described in Section 3(3) of ERISA sponsored, maintained or
contributed to by Parent, Seller or any trade or business, whether or not
incorporated, which together with Parent and Seller would be deemed a "single
employer" within the meaning of Section 414(b), (c) or (m) of the Code or
Section 4001(b)(1) of ERISA.
2.11 INTELLECTUAL PROPERTY.
(a) SCHEDULE 2.11 sets forth a complete and accurate list and
description of all (i) domestic and foreign patents and pending patent
applications and design registrations and applications owned or used by Seller,
(ii) domestic (federal and state) and foreign trademark and service mark
registrations and registration applications owned or used by Seller, (iii)
domestic and foreign copyright registrations and registration applications owned
or used by Seller, (iv) mask work registrations and registration applications
relating thereto owned or used by Seller, (v) material unregistered trademarks
and service marks, inventions, and proprietary computer software owned or used
by Seller, (vi) material licenses or contracts by which Seller is licensed or
granted permission to use the intellectual property of another, excluding any
off the shelf
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software subject to a shrinkwrap license, and (vii) material licenses or
contracts by which Seller has granted permission to another to use Seller's
Intellectual Property. Seller has made available to Purchaser correct and
complete written documentation evidencing each item of Intellectual Property
required to be listed on SCHEDULE 2.11 pursuant to subsections 2.11(a)(i), (ii),
(iii), (iv), (vi), and (vii).
(b) Except as set forth on SCHEDULE 2.11, with respect to each
item of Intellectual Property required to be identified in SCHEDULE 2.11 by
Section 2.11(a):
(i) Seller owns and possesses all right, title
and interest in and to the item, free and clear of any security interests or
other encumbrances;
(ii) the item is not subject to any outstanding
order, judgment or decree;
(iii) no action is pending in any administrative
or judicial proceeding, or to Seller's Knowledge is threatened, which challenges
the validity, enforceability, use or ownership of the item;
(iv) to Seller's Knowledge, all items of such
Intellectual Property are valid, subsisting and enforceable;
(v) Seller has not indemnified or agreed to
indemnify any person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item;
(vi) the consummation of the transactions
contemplated by this Agreement will not have a Material Adverse Effect on any
right to or the use of the item;
(vii) Seller has no Knowledge that the use of the
item of Intellectual Property infringes or violates the intellectual property
rights of any third party;
(viii) Seller has no Knowledge of any license
agreement required to be listed on SCHEDULE 2.11 which has been revoked,
terminated or cancelled, where the revocation, cancellation or termination would
have a Material Adverse Effect on the Business;
(ix) Seller has neither received notice nor has
Knowledge that any other person or entity is infringing, misappropriating,
violating or interfering with the rights of Seller in such item; and
(x) there is no material restriction affecting
the use by Seller of such item except as noted in the license agreements and
other documents of Seller made available to Purchaser.
(c) Seller owns, is licensed or otherwise has the right to
use, such Intellectual Property as is necessary for the operation of the
Business as it is now conducted.
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(d) Seller has not been notified or advised, has not been the
recipient of a claim, nor has Knowledge, that any activity of Seller, now
conducted or presently contemplated to be conducted, infringes, violates or
adversely affects the intellectual property rights of any third party.
(e) SOFTWARE. Except as set forth in SCHEDULE 2.11 or in any
written agreement made available to Purchaser, all right, title and interest in
and to the computer software developed by or for Seller (the "Software") is
owned by Seller, free and clear of all security interests or other encumbrances,
and no party other than Seller has any ownership or other proprietary interest
in such Software. The development or sale of the Software by Seller did not and
does not violate any rights of any other person or entity, except for such
violations that, individually or in the aggregate, would not have a Material
Adverse Effect, and Seller has not received any communication alleging such a
violation. Except as set forth in SCHEDULE 2.11 or in any written agreement made
available to Purchaser, Seller does not have any obligation to pay royalties or
similar payments to any person for the development, use, sale or exploitation of
the Software.
2.12 TAX MATTERS. (i) all Federal, state, and local income, franchise,
license and other tax returns ("Returns") required to be filed on behalf of
Seller have been duly filed on a timely basis (including any duly obtained
extensions) and such Returns are true, complete and correct; (ii) all taxes,
license, permit or other fees, assessments and penalties ("Taxes") shown to be
payable on the Returns or on subsequent assessments with respect thereto have
been paid in full on a timely basis, and no other Taxes are payable by Seller
with respect to items or periods covered by such Returns (whether or not shown
on or reportable on such Returns) or with respect to any period prior to the
date of this Agreement; (iii) Seller has withheld and paid over all Taxes
required to have been withheld and paid over, and complied with all information
reporting and backup withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third party; and (iv) there
are no liens on any of the assets of Seller with respect to Taxes, other than
liens for Taxes not yet due and payable or for Taxes that Seller is contesting
in good faith through appropriate proceedings and for which appropriate reserves
have been established, which contested Taxes are disclosed in SCHEDULE 2.12.
2.13 EVENTS SUBSEQUENT TO DECEMBER 31, 2000. Since December 31, 2000
(the "Balance Sheet Date"), there has been no change in the condition of Seller
which would have a Material Adverse Effect on the Assets or the Business. Since
the Balance Sheet Date, the Business has been conducted in the ordinary course
of business, consistent with past practices, in all material respects and Seller
has not:
(a) suffered any material damage or destruction adversely
affecting the Assets or the Business, whether or not covered by insurance;
(b) incurred or discharged any material obligation or
liability, except in the ordinary course;
(c) created or assumed any mortgage, lien, security interest,
or other encumbrance on any of the Assets except for Permitted Liens;
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(d) waived any material claims or rights;
(e) entered into, amended or terminated any material contract,
lease or permit except in the ordinary course of business; or
(f) agreed in writing to take any action described in this
Section 2.13.
2.14 REAL PROPERTY. Seller does not own any real property. SCHEDULE
2.14 sets forth a true and complete list of all agreements pursuant to which
Seller leases or sub-leases any real property (the "Leases"). Except as set
forth on SCHEDULE 2.14, all of the Leases are in full force and effect and have
not been modified and amended, and there are no disputes, oral agreements or
forbearance programs in effect as to the Leases. There has not occurred any
material default by Seller under any Lease and to Seller's Knowledge, there has
not occurred any default thereunder by any other party thereto.
2.15 BROKERAGE. Seller hereby represents and warrants that no broker,
agent, or finder has rendered services to it in connection with the transaction
contemplated under this Agreement except for Windsor Group, LLC, f/k/a Boles,
Knop & Company, LLC, the fees and expenses of which will be paid solely by
Seller.
2.16 FULL DISCLOSURE. No representation or warranty of Seller made in
this Agreement contains or will contain any untrue statement of a material fact
which affects the Business, the Assets, or the financial condition of Seller, or
omits or will omit to state a material fact necessary to make the statements or
facts contained herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.01 ORGANIZATION AND AUTHORIZATION.
(a) Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to effect the transactions
contemplated hereunder.
(b) Purchaser has the right, power and capacity to execute,
deliver and perform this Agreement and all the documents and instruments
referred to herein and contemplated hereby to be executed or delivered at the
Closing (collectively, the "Purchaser Transaction Documents") and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the Purchaser Transaction Documents, and the consummation of
the transactions contemplated hereby, have been duly and validly authorized by
all necessary action, corporate or otherwise, on the part of Purchaser. This
Agreement and the Purchaser Transaction Documents have been duly and validly
executed and delivered by Purchaser and constitute Purchaser's legal, valid and
binding obligation, enforceable in accordance with their respective terms,
except as such enforceability may be limited by
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applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect which affect the enforcement of creditors' rights generally, or equitable
principles.
3.02 CONSENTS; NO CONFLICT. The execution and delivery of this
Agreement by Purchaser, the consummation of the transactions contemplated herein
by Purchaser, and the performance of the covenants and agreements of Purchaser
will not: (a) violate or conflict with any of the provisions of any charter
document or bylaws of Purchaser; (b) violate, conflict with or result in a
breach or default under or cause termination of any term or condition of any
mortgage, indenture, contract, license, permit, instrument, trust document,
will, or other agreement, document or instrument to which Purchaser is a party
or by which Purchaser or its properties may be bound; (c) require any consent of
any third party or (d) violate any provision of law, statute, regulation, court
order or ruling of any governmental authority, to which Purchaser is a party or
by which Purchaser or its properties may be bound.
3.03 LITIGATION. There is no litigation, suit, action investigation,
indictment or information, or proceeding or arbitration, pending, or to
Purchaser's knowledge, threatened, before any court, arbitration tribunal, or
judicial, governmental or administrative agency, against Purchaser which would
prevent Purchaser from performing its obligations hereunder or which seeks to
prevent the consummation of the transactions contemplated herein.
3.04 FINANCING AND CAPITAL RESOURCES. Purchaser has adequate cash on
its balance sheet or unrestricted borrowing capacity under existing credit
facilities to pay the Purchase Price as contemplated by this Agreement, together
with all fees and expenses of Purchaser associated with the transactions
contemplated hereby, and to make any other payments necessary to consummate the
transactions contemplated hereby.
3.05 BROKERAGE. Purchaser hereby represents and warrants that no
broker, agent, or finder has rendered services to it in connection with the
transaction contemplated under this Agreement.
ARTICLE IV
COVENANTS OF PARTIES
4.01 COVENANTS OF SELLER.
(a) CONDUCT OF BUSINESS. From the date hereof until the
Closing Date, except as provided in SCHEDULE 4.01 or otherwise expressly
permitted by this Agreement, Seller shall (w) conduct its business in the
ordinary course in a manner consistent with past practice; (x) maintain the
Assets in their present state of repair (ordinary wear and tear excepted); (y)
use commercially reasonable efforts to preserve substantially the relationships
with its suppliers and customers, including but not limited to SouthStar and
PowerCom; (z) perform its obligations under all contracts, leases, and permits
in all material respects; (aa) notify Purchaser regarding operational matters of
a material nature; and (bb) report periodically to Purchaser regarding the
status of the Business and the results of operations; PROVIDED, HOWEVER, that
nothing in this Section 4.01(a) shall require Seller to incur capital or other
expenditures beyond the normal maintenance of its business or prevent Seller
from taking the actions described on SCHEDULE 4.01.
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In addition, Seller shall be permitted to manage its cash and accounts
receivable billings and collections in any manner Seller sees fit provided,
however, Seller shall not prebill for any services which have not yet been
rendered other than in the ordinary course. In furtherance and not in limitation
of the foregoing, the Seller shall not, without the prior written consent of
Purchaser:
(i) Dispose of any Assets other than in the
ordinary course of business consistent with past practice;
(ii) Mortgage, pledge or subject to liens or
other encumbrances any Assets, except for incurring Permitted Liens in the
ordinary course;
(iii) Purchase or commit to purchase any capital
asset for a price exceeding $10,000, or which in the aggregate exceed $50,000;
(iv) Except for planned or normal increases in
the ordinary course of business consistent with past practice with respect to
non-officer employees, increase (or announce any increase of) any salaries,
wages or employee benefits, or hire, commit to hire or terminate any employee;
(v) Amend any charter document or bylaw of
Seller;
(vi) Issue, sell or repurchase any of its capital
stock or make any change in its issued and outstanding capital stock, or issue
any warrant, option or other right to purchase shares of its capital stock or
any security convertible into its capital stock;
(vii) Incur, assume or guarantee any obligation or
liability for borrowed money, or exchange, refund or renew any outstanding
indebtedness in such a manner as to reduce the principal amount of such
indebtedness and increase the interest rate or balance outstanding;
(viii) Cancel any debts; or
(ix) Amend or terminate any material agreement,
including any Employee Benefit Plan (except as otherwise contemplated by this
Agreement) or any insurance policy, in force on the date hereof, or enter into
any new Employee Benefit Plan that was not in force on the date of this
Agreement.
(b) PRE-CLOSING ACCESS. Prior to the Closing, Seller shall:
(i) provide Purchaser and its designees (including officers, counsel,
accountants, and other authorized representatives) with such information as
Purchaser may from time to time reasonably request with respect to Seller and
the transactions contemplated by this Agreement; (ii) provide Purchaser and its
designees access during regular business hours to the books, records, offices,
personnel, counsel and accountants of Seller, as Purchaser or its designees may
from time to time reasonably request; and (iii) permit Purchaser and its
designees to make such inspections thereof as Purchaser may reasonably request.
Any investigation shall be conducted in such a manner so as not to interfere
unreasonably with the operation of the Business. No such investigation shall
limit or modify Seller's obligations with respect to any breach of its
representations, warranties,
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covenants or agreements contained herein. Any information made available
pursuant to this Section 4.01(b) hereto shall be subject to the confidentiality
obligations of Section 4.03(c).
(c) POST-CLOSING CONDUCT OF BUSINESS. Immediately following
the Closing, Seller shall take all actions and do all things necessary to cease
all activities which constitute the conduct of the Business (other than matters
related to the transition of the Business to Purchaser).
(d) STANDSTILL. Until the earlier to occur of the Closing or
the termination of this Agreement pursuant to Article VII, neither Seller nor
Parent shall, nor shall Seller or Parent permit any of its representatives to,
(a) directly or indirectly, encourage, solicit or initiate, or engage in any
negotiations with any Person (other than Purchaser and its representatives)
concerning any merger, sale of securities, sale of substantial assets,
investment proposals, or similar transaction involving Seller, or (b) disclose
to any third party any non-public information concerning Seller, the Business,
or Seller's financial condition.
(e) CASUALTY. Seller shall bear the risk of any loss or damage
or destruction to any of the Assets from fire or other casualty or cause at all
times prior to the Closing. Upon the occurrence of any loss or damage to any
material portion of the Assets as a result of fire, casualty, or other causes
prior to the Closing, Seller shall immediately notify Purchaser of the same in
writing, stating the extent of loss or damage incurred, the cause thereof, if
known, and the extent to which restoration, replacement, and repair of the
Assets lost or destroyed will be reimbursed under any insurance policy with
respect thereto. Purchaser shall have the option, exercisable within thirty (30)
days after receipt of such notice from Seller, to: (i) postpone the Closing
until such time as such Assets have been completely repaired, replaced, or
restored through available insurance proceeds, which postponement shall not
exceed one hundred and eighty (180) days without Seller's consent; (ii) elect to
consummate the Closing and accept the Assets in their "then" condition, in which
event Seller shall assign to Purchaser all rights under any insurance claim
covering the loss and pay over to Purchaser any proceeds under any such
insurance policy theretofore received by Seller with respect thereto; or (iii)
terminate this Agreement by written notice to Seller. Any failure by Purchaser
to act within the foregoing thirty (30) day period shall be deemed an election
pursuant to subsection (i) above.
(f) ASSETS RELATED TO CERTAIN LEASES. Seller shall use
commercially reasonable efforts to purchase those assets subject to the leases
set forth on SCHEDULE 1.01(a)(x) prior to the Closing; provided however, nothing
contained herein shall obligate Seller to purchase such assets if the terms of
such purchase are not commercially reasonable as determined by Seller in
Seller's discretion.
4.02 COVENANTS OF PURCHASER.
(a) POST-CLOSING ACCESS. It is recognized that Seller may need
tax, financial or other data after the Closing Date with respect to the Business
covering fiscal periods prior to the Closing Date to facilitate the preparation
of Tax Returns or in connection with any audit, investigation, litigation,
amended return, claim for refund or any proceeding in connection therewith or to
comply with the rules and regulations of the Internal Revenue Service, the
Securities and Exchange Commission or any other governmental organization or
agency. Purchaser will render reasonable cooperation and will afford access
during normal business
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hours to all books, records, data and personnel concerning the operation and
conduct of the Business with respect to periods prior to and including the
Closing Date to Seller and its auditors, accountants, counsel or other
authorized representatives for such purpose. Seller will bear all reasonable
out-of-pocket costs and expenses incurred by Purchaser (excluding salaries or
wages of its employees) with respect to Purchaser's obligations pursuant to this
Section 4.02(a).
(b) EMPLOYEE BENEFIT PLANS. At the Closing Date, Purchaser
shall adopt, assume, and otherwise become responsible for, either primarily or
as a successor employer, the Employee Benefit Plans currently sponsored by
Seller, other than Employee Benefit Plans sponsored by Parent (including
Parent's 401(k) plan) in which Seller's employees participate. Purchaser
covenants to collect and pay over to Seller or Parent any 401(k) contributions
of Seller's employees who are hired by Purchaser and which relate to periods
prior to the Closing.
(c) EMPLOYEES. Purchaser agrees to hire all of Seller's
employees (the "Employees"), effective as of the Closing Date. Purchaser agrees
to provide immediate coverage for the Employees, effective as of 12:00 a.m. on
the Closing Date, under a group health insurance plan sponsored or assumed by
Purchaser, which provides group health insurance coverage consistent with that
provided to similarly situated employees of Purchaser. Purchaser agrees to waive
all waiting or qualification periods and preexisting conditions limitations of
such plans for the Employees. Purchaser agrees to grant past service credit to
the Employees for purposes of eligibility and vesting under Purchaser's
tax-qualified retirement plan.
(d) LITIGATION. Purchaser agrees to make former employees of
Seller available to Seller following the Closing Date upon Seller's reasonable
requests that such employees assist Seller in defending the lawsuits listed in
SCHEDULE 2.07, including, without limitation, participation in discovery,
depositions and any related trials.
4.03 COVENANTS OF PURCHASER AND SELLER.
(a) APPROVALS OF THIRD PARTIES; SATISFACTION OF CONDITIONS TO
CLOSING. Seller and Purchaser will use their reasonable, good faith efforts, and
will cooperate with one another, to secure all necessary consents, approvals,
authorizations and exemptions from governmental agencies and other third
parties, as may be required after the Closing.
(b) FURTHER ASSURANCES. In addition to such actions as Seller
or Purchaser may otherwise be required to take under this Agreement or
applicable law in order to consummate this Agreement and the transactions
contemplated hereby, Seller and Purchaser shall take such action, shall furnish
such information, and shall prepare, or cooperate in preparing, and execute and
deliver such certificates, agreements and other instruments as Purchaser or
Seller may reasonably request from time to time, at or after the Closing, with
respect to compliance with obligations of Purchaser or Seller in connection with
the transactions contemplated herein.
(c) CONFIDENTIALITY. In connection with this Agreement the
parties will have access to information which is nonpublic, confidential or
proprietary in nature. All of such information, in whole or in part, together
with any analyses, compilations, studies or other documents prepared by any
party, which contain or otherwise reflect any such information is hereinafter
referred to as the "Information". Each party hereby agrees as follows:
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(i) the Information will be kept confidential
and shall not, without the prior mutual written consent of the parties, be
disclosed, in any manner whatsoever, in whole or in part, and shall not be used
by any party following the termination of this Agreement. Each party agrees to
transmit the Information only to its respective employees and representatives
who need to know the Information and who shall agree to be bound by the terms
and conditions of this Agreement. In any event, each party shall be responsible
for any breach of this Agreement by its respective employees or representatives;
(ii) each party agrees to keep a record of the
location of the Information. If the transactions contemplated hereunder are not
consummated, the Information, except for that portion of the Information which
consists of analyses, compilations, studies or other documents prepared by each
party's respective employees and representatives, will be returned to the other
promptly upon request and no party shall retain any copies. That portion of the
Information, and all copies thereof, which consists of analyses, compilations,
studies or other documents prepared by each party's respective employees and
representatives will promptly be destroyed, and such fact shall be certified in
writing to the providing party by an officer of the recipient party; and
(iii) in the event any party becomes legally
compelled to disclose any of the Information, such party will provide to the
other parties prompt notice so that each other party may seek a protective order
or other appropriate remedy and/or waive compliance with the provisions of this
Agreement. In the event that such protective order or other remedy is not
obtained, or compliance with the provisions of this Agreement is waived, a party
will furnish only that portion of the Information which is legally required, and
to the extent requested by the other party, will exercise its best efforts to
obtain a protective order or other reliable assurance that confidential
treatment will be accorded the Information.
(iv) The term "Information" does not include
information which (i) was known to any party about another party prior to its
disclosure, provided that such information was lawfully obtained or developed,
(ii) becomes generally available to the public other than as a result of a
disclosure by a party in violation of this Agreement, or (iii) becomes available
from a source other than a party to this Agreement, if the source is not bound
by a confidentiality obligation or agreement and such source lawfully obtained
such information.
(d) SUPPLEMENT TO SCHEDULES. If between the signing date and
the Closing Date either party becomes aware that any of its representations and
warranties in this Agreement or the schedules to this Agreement were inaccurate
when made, or if during such period any event occurs or condition changes that
would cause any of such representations and warranties to be inaccurate if made
on such date, then such party shall promptly amend its Schedules with respect to
such matters and forward a copy of such amended schedules to the other party.
Such amended schedules shall be deemed a part of this Agreement for all
purposes; provided, however, that unless otherwise agreed in writing by the
other party, such amendment shall not be deemed to have been disclosed (i) with
respect to any representation or warranty made as of the signing date with
respect to matters in existence as of the signing date, or (ii) for the purpose
of determining whether the conditions in Sections 5.01 or 6.01 have been
satisfied.
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ARTICLE V
CONDITIONS TO SELLER'S OBLIGATIONS
Each of the obligations of Seller to consummate the transactions
contemplated hereby will be subject to the satisfaction (or written waiver by
Seller) at the Closing Date of each of the following conditions:
5.01 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING DATE; COVENANTS
PERFORMED. Other than representations and warranties made expressly as of a
specific date (which only need be accurate in all material respects as of such
date), each representation and warranty set forth in Article III must have been
accurate in all material respects (except with respect to any provisions
including the word "material" or words of similar import, with respect to which
such representations and warranties must have been accurate) as of the date of
this Agreement, and must be accurate in all material respects (except with
respect to any provisions including the word "material" or words of similar
import, with respect to which such representations and warranties must have been
accurate) as of the Closing Date, as if made on the Closing Date, without giving
effect to any supplements to the Schedules; Purchaser shall have performed and
complied in all material respects with the covenants and agreements set forth
herein to be performed or complied with by it on or before the Closing Date; and
Purchaser shall have delivered to Seller a certificate dated as of the Closing
Date and signed by a duly authorized officer of Purchaser to all such effects.
5.02 LITIGATION. No suit, investigation, action or other proceeding
shall be pending against Seller, Parent or Purchaser before any court or
governmental agency which has resulted in the restraint or prohibition of
Seller, Parent or Purchaser, in connection with this Agreement or the
consummation of the transactions contemplated hereby.
5.03 REQUIRED CONSENTS AND APPROVALS. All authorizations, consents and
approvals (governmental or otherwise) set forth in SCHEDULE 5.03 shall have been
obtained and shall be in full force and effect. All applicable governmental
pre-acquisition filing, information furnishing and waiting period requirements
must have been met or such compliance must have been waived by the governmental
authority having authority to grant such waivers.
5.04 DELIVERIES BY PURCHASER. Purchaser shall have executed and
prepared the documents required to be delivered to Seller as provided in Section
1.05.
ARTICLE VI
CONDITIONS TO PURCHASER'S OBLIGATIONS
Each of the obligations of Purchaser to consummate the transactions
contemplated hereby is subject to the satisfaction (or written waiver by
Purchaser) at or prior to the Closing Date of each of the following conditions:
6.01 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING DATE. Other than
representations and warranties made expressly as of a specific date, which only
need be accurate in all material
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respects as of such date, each representation and warranty set forth in Article
II must have been accurate in all material respects (except with respect to any
provisions including the word "material" or words of similar import, with
respect to which such representations and warranties must have been accurate) as
of the date of this Agreement, and must be accurate in all material respects
(except with respect to any provisions including the word "material" or words of
similar import, with respect to which such representations and warranties must
have been accurate) as of the Closing Date, as if made on the Closing Date,
without giving effect to any supplements to the Schedules; Seller and Parent
each shall have performed and complied in all material respects with their
respective covenants and agreements set forth herein to be performed or complied
with by it on or before the Closing Date; and each of Seller and Parent shall
have delivered to Purchaser a certificate dated as of the Closing Date and
signed by a duly authorized officer of each of Seller and Parent to all such
effects.
6.02 LITIGATION. No suit, investigation, action or other proceeding
shall be pending or overtly threatened against Purchaser, Parent or Seller
before any court or governmental agency which has resulted in the restraint or
prohibition of Purchaser, Parent or Seller, in connection with this Agreement or
the consummation of the transactions contemplated hereby.
6.03 REQUIRED CONSENTS AND APPROVALS. All authorizations, consents and
approvals (governmental or otherwise) set forth in SCHEDULE 6.03 must have been
obtained and must be in full force and effect. All applicable governmental
pre-acquisition filing, information furnishing and waiting period requirements
must have been met or such compliance must have been waived by the governmental
authority having authority to grant such waivers.
6.04 DELIVERIES TO PURCHASER. Seller shall have executed and prepared
the documents required to be delivered to Purchaser pursuant to Section 1.05.
ARTICLE VII
TERMINATION PRIOR TO CLOSING
7.01 TERMINATION. Anything herein to the contrary notwithstanding, this
Agreement may be terminated at any time (such date of termination being the
"Termination Date") before the Closing as follows, and in no other manner:
(a) MUTUAL CONSENT. By mutual written consent of Purchaser and
Seller;
(b) BY SELLER. By Seller in writing, without liability, if
Purchaser shall have (i) failed to perform in any material respect its
agreements contained herein required to be performed by it on or prior to the
Closing, or (ii) materially breached any of its representations, warranties or
covenants contained herein, which failure or breach is not cured within twenty
(20) days after Seller has notified Purchaser of its intent to terminate this
Agreement pursuant to this subparagraph (b);
(c) BY PURCHASER. By Purchaser in writing, without liability,
if Seller shall have (i) failed to perform in any material respect its
agreements contained herein required to be performed by it on or prior to the
Closing, or (ii) materially breached any of its representations,
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warranties or covenants contained herein, which failure or breached is not cured
within twenty (20) days after Purchaser has notified Seller of its intent to
terminate this Agreement pursuant to this subparagraph (c);
(d) RESTRAINT. By either Seller or Purchaser in writing,
without liability, if there shall be any order, writ, injunction or decree of
any court or governmental or regulatory agency binding on Purchaser, Parent or
Seller, which prohibits or restrains Purchaser, Parent or Seller from
consummating the transactions contemplated hereby, provided that Purchaser,
Parent and Seller shall have used their reasonable, good faith efforts to have
any such writ, injunction or decree lifted and the same shall not have been
lifted within 30 days after entry, by any such court or regulatory agency;
(e) EXPIRATION DATE. By either Purchaser or Seller if the
Closing shall not have occurred on or prior to March 31, 2001; PROVIDED,
HOWEVER, that no entity may terminate this Agreement in accordance with this
Section 7.01(e) if the failure to consummate the Closing shall be due to the
action or failure to act of the party seeking to terminate this Agreement in
violation of its covenants under this Agreement; or
(f) CASUALTY. By Purchaser as provided in Section 4.01(e).
7.02 EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated pursuant to Section 7.01, all obligations of the parties hereto under
this Agreement shall terminate and there shall be no liability of any party to
any other party hereto and each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance of and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel, its auditors and its actuaries (the
"Preparation Expenses"), PROVIDED, HOWEVER, that if this Agreement shall be
terminated pursuant to Section 7.01(b), Section 7.01(c) or Section 7.01(e), such
termination shall not release any party hereto from any liability that such
party may have for any breach occurring prior to the Termination Date of any
representation, warranty or covenant made by such party in this Agreement and
the non-breaching party shall have the right to recover its Preparation Expenses
from the breaching party, in addition to any other claims for damages that the
non-breaching party may have.
ARTICLE VIII
INDEMNIFICATION
8.01 SELLER AND PARENT INDEMNIFICATION. Except as otherwise provided in
this Article VIII, Seller and Parent will jointly and severally indemnify and
reimburse Purchaser for any and all claims, losses, liabilities, damages,
penalties, fines, costs and expenses (including reasonable attorneys' fees,
court costs and settlement costs but excluding consequential, incidental,
exemplary or punitive damages) (individually, a "Loss", collectively, "Losses")
incurred by Purchaser and its affiliates and their successors or assigns, and
their respective directors, officers, employees, consultants and agents (the
"Purchaser Protected Parties"), as a result of, with respect to, or arising out
of (i) any breach or inaccuracy of any representation or warranty of Seller set
forth in this Agreement or the certificate delivered to the Purchaser pursuant
to Section 6.01
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hereof; (ii) any breach of or noncompliance by Seller with any covenant of
Seller contained in this Agreement to be performed after the Closing; (iii) that
certain case styled Peachtree Natural Gas, LLC v. Utilipro, Inc., Atlanta Gas
Light Company and AGL Resources Inc., Civil Action No. 00VS009106F in the State
Court of Fulton County, State of Georgia; (iv) any liability relating to
Employee Benefit Plans sponsored by Parent (including Parent's 401(k) plan) in
which Seller's employees participated prior to the Closing; (v) any liability
due to claims of creditors which could be asserted against Purchaser by reason
of non-compliance with the bulk sales law of any state to the extent such
liabilities are not Assumed Liabilities; (vi) any claim by any broker, agent,
finder, or other person or entity, including Windsor Group, LLC, based upon any
agreement or arrangement made or alleged to have been made by Seller in
connection with the transaction contemplated under this Agreement; (vii) the
amount of liquidated damages set forth on SCHEDULE 8.01 as a result of (a) a
"termination for convenience" pursuant to Section 8.3(a) of that certain Service
Agreement between Seller and SouthStar Energy Services, LLC ("SouthStar") dated
September 1, 2000 (the "SouthStar Agreement") or (b) SouthStar's movement of
then "Active Accounts" of SouthStar (as defined on SCHEDULE 8.01) to a provider
of services other than Purchaser (including Southstar providing such services
for its own benefit); provided, however, (x) the indemnity provided under
subsection (vii) shall only apply to the Southstar Agreement as presently
drafted (unless any amendment or modification thereof is consented to in writing
by Parent, whose consent shall not be unreasonably withheld, a response from
whom must be provided within 5 business days of Parent's receipt of written
notice from Purchaser attaching or outlining in reasonable detail the proposed
amendment or modification, and whose consent shall be deemed given in the event
of a failure to respond within such time period) and shall not apply to any
other termination of the SouthStar Agreement; (y) after a right to
indemnification accrues under Section 8.01(vii)(a), no further indemnification
rights shall exist under Section 8.01(vii)(b) (other than rights which have
accrued prior to such time); and (z) the amount of liquidated damages to which
Purchaser is entitled on SCHEDULE 8.01(VII) shall be the only "Loss" recoverable
in connection with such claim; or (viii) third party claims related to the
Excluded Assets or Excluded Liabilities.
8.02 PURCHASER INDEMNIFICATION. Except as otherwise provided in this
Article VIII, Purchaser will indemnify and reimburse Seller for any and all
Losses incurred by Seller or its affiliates and their successors or assigns, and
their respective directors, officers, employees, consultants and agents (the
"Seller Protected Parties"), as a result of, or with respect to, or arising out
of (i) any breach or inaccuracy of any representation or warranty of Purchaser
set forth in this Agreement or the certificate delivered to Seller pursuant to
Section 5.01 hereof; (ii) any breach of or noncompliance by Purchaser with any
covenant or agreement of Purchaser contained in this Agreement to be performed
after the Closing; (iii) the Assumed Liabilities and Purchaser's operation of
the Business, in each case after the Closing Date; or (iv) any claim by any
broker, agent, finder or other person or entity based upon any agreement or
arrangement made or alleged to have been made by Purchaser in connection with
the transaction contemplated under this Agreement.
8.03 INDEMNITY CLAIMS.
(a) SURVIVAL. The representations, warranties, covenants and
agreements contained herein will survive the Closing, subject to the limitations
set forth in subsection (b) below with respect to the time periods within which
claims for indemnity must be asserted. The
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covenants and agreements to be performed by the parties prior to the Closing
shall expire at the Closing.
(b) TIME TO ASSERT CLAIMS. All claims for indemnification (i)
under Section 8.01(i), 8.01(ii), 8.02(i), and 8.02(ii) must have accrued and be
asserted no later than eighteen (18) months after the Closing Date, except for
claims for indemnification under Section 8.01(i) for a breach of Section 2.05,
or for any tax related breach which must be asserted before the expiration of
the applicable statute of limitations; (ii) under Section 8.01(iii), 8.01(iv),
8.01(v), 8.01(vi), 8.02(iii), and 8.02(iv) must have accrued and be asserted no
later than three (3) years after the Closing Date; (iii) under 8.01(vii)(a) must
have accrued and be asserted no later than sixty (60) days after a "termination
for convenience" under Section 8.3(a) of the Southstar Agreement; (iv) under
8.01(vii)(b) must have accrued and be asserted no later than sixty (60) days
after a movement of "Active Accounts" by SouthStar; and (v) under Section
8.01(viii) must have accrued and be asserted by the earlier of thirty (30) days
after the assertion of a claim by a third party or one (1) year after the
Closing Date.
8.04 BASKET. The Purchaser Protected Parties may make no claim against
Seller or Parent for indemnification pursuant to this Agreement until the
aggregate amount of all such claims exceeds two and one-half percent (2.5%) of
the final adjusted Purchase Price (the "Basket"), in which event the Purchaser
Protected Parties may claim indemnification for the amount of such claims
beginning from dollar one. Notwithstanding the foregoing, claims made under
Section 8.01(vii) shall not be subject to, and no claim thereunder shall
satisfy, the Basket.
8.05 NOTICE OF CLAIM. The Purchaser Protected Parties or the Seller
Protected Parties, as the case may be, will promptly notify the party against
whom indemnification under this Agreement is sought (the "Indemnifying Party"),
in writing, of any claim for indemnification, specifying in reasonable detail
the nature of the Loss, and, if known, the amount, or an estimate of the amount,
of the liability arising therefrom. The Purchaser Protected Parties or the
Seller Protected Parties, as the case may be, will provide to the Indemnifying
Party, as promptly as practicable thereafter, such information and documentation
as may be reasonably requested by the Indemnifying Party to support and verify
the claim asserted, so long as such disclosure would not violate the
attorney-client privilege of the Purchaser Protected Parties or the Seller
Protected Parties, as the case may be.
8.06 DEFENSE. If the facts pertaining to a loss arise out of the claim
of any third party, or if there is any claim against a third party (other than a
Purchaser Protected Party or a Seller Protected Party, as the case may be)
available by virtue of the circumstances of the Loss, the Indemnifying Party may
assume the defense or the prosecution thereof by prompt written notice to the
affected Protected Party, including the employment of counsel or accountants, at
its cost and expense. The affected Protected Party will have the right to employ
counsel separate from counsel employed by the Indemnifying Party in any such
action and to participate therein, but the fees and expenses of such counsel
employed by the affected Protected Party will be at its expense and shall not be
considered a Loss hereunder. The Indemnifying Party will not be liable for any
settlement of any such claim effected without its prior written consent, which
will not be unreasonably withheld; provided that if the Indemnifying Party does
not assume the defense or prosecution of a claim as provided above within thirty
(30) days after notice thereof from any Protected Party, the affected Protected
Party may settle such claim without the Indemnifying
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Party's consent. The Indemnifying Party will not agree to a settlement of any
claim which provides for any relief other than the payment of monetary damages
without the affected Protected Party's prior written consent. Whether or not the
Indemnifying Party chooses to so defend or prosecute such claim, the
Indemnifying Party and the affected Protected Party will cooperate in the
defense or prosecution thereof and will furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith. The
Indemnifying Party will be subrogated to all rights and remedies of any
Protected Party, except to the extent they apply against another Protected
Party.
8.07 LIMITATION OF LIABILITY. In no event shall the combined liability
of Parent or Seller for indemnity obligations under this Agreement exceed the
final adjusted Purchase Price pursuant to Section 1.07, except for indemnity
obligations related to an intentional or willful breach of this Agreement by
Parent or Seller. Moreover, in no event shall the liability of Purchaser for
indemnity obligations under this Agreement exceed the final adjusted Purchase
Price pursuant to Section 1.07, except for indemnity obligations related to an
intentional or willful breach of this Agreement by Purchaser or Purchaser's
failure to pay the Purchase Price.
8.08 EXCLUSIVE REMEDY. From and after the Closing, the indemnification
provided pursuant to this Article VIII shall be the sole and exclusive remedy
hereto for any Losses as a result of, with respect to or arising out of the
breach of this Agreement or any representation or warranty contained herein, any
of the transactions or other agreements or instruments contemplated or entered
into in connection herewith (including all exhibits, the Schedules, or any other
schedule attached hereto or referenced herein), or any matter related to the
Business.
ARTICLE IX
ARBITRATION AND EQUITABLE REMEDIES
9.01 SETTLEMENT MEETING. The parties shall attempt in good faith to
resolve promptly through negotiations any claim or dispute under this Agreement.
If any such claim or dispute should arise, the parties shall meet at least once
to attempt to resolve the matter (the "Settlement Meeting"). Either party may
request the other party to attend a Settlement Meeting at a mutually agreed time
and place within ten days after delivery of a notice of a claim or dispute. The
occurrence of a Settlement Meeting with respect to a claim or dispute shall be a
condition precedent to seeking any arbitration or judicial remedy, provided that
if a party refuses to attend a Settlement Meeting the other party may proceed to
seek such remedy.
9.02 ARBITRATION PROCEEDINGS. If the parties have not resolved a
monetary claim or dispute at the Settlement Meeting either party may submit the
matter to arbitration. A panel of three arbitrators shall conduct the
arbitration proceedings in accordance with the provisions of the Federal
Arbitration Act (99 U.S.C. Section 1 et seq.) and the Commercial Arbitration
Rules of the American Arbitration Association (the "Arbitration Rules"). The
decision of a majority of the panel shall be the decision of the arbitrators.
(a) ARBITRATION NOTICE. To submit a monetary claim or dispute
to arbitration, a party shall furnish the other party and the American
Arbitration Association with a notice (the
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"Arbitration Notice") containing (i) the name and address of such party, (ii)
the nature of the monetary claim or dispute in reasonable detail, (iii) the
party's intent to commence arbitration proceedings under this Agreement, and
(iv) the other information required under the Federal Arbitration Act and the
Arbitration Rules.
(b) SELECTION OF ARBITRATORS. Within ten days after delivery
of the Arbitration Notice, Purchaser and Seller shall each select one arbitrator
from the list of the American Arbitration Association's National Panel of
Commercial Arbitrators. Within ten (10) days after the selection of the last of
those two arbitrators, those two arbitrators shall select the third arbitrator
from such list. If the first two arbitrators cannot select a third arbitrator
within such ten day period, the American Arbitration Association shall select
such third arbitrator from the list. Each arbitrator shall be an individual not
subject to disqualification under Rule No. 19 (or any successor rule) of the
Arbitration Rules (or any successor rule) with experience in settling complex
litigation involving mergers and acquisitions.
(c) ARBITRATION FINAL. The arbitration of the matters in
controversy and the determination of any amount of damages or indemnification
shall be final and binding upon the parties to the maximum extent permitted by
law, provided that any party may seek any equitable remedy available under Law
as provided in this Agreement. This agreement to arbitrate is irrevocable.
9.03 PLACE OF ARBITRATION. Any arbitration proceedings shall be
conducted in Atlanta, Georgia or at such other location as the parties may
agree. The arbitrators shall hold the arbitration proceedings within sixty (60)
days after the selection of the third arbitrator.
9.04 DISCOVERY. During the period beginning with the selection of the
third arbitrator and ending upon the conclusion of the arbitration proceedings,
the arbitrators shall have the authority to permit the parties to conduct such
discovery as the arbitrators consider appropriate.
9.05 EQUITABLE REMEDIES. Notwithstanding anything else in this
Agreement to the contrary, after the Settlement Meeting a party shall be
entitled to seek any equitable remedies available under law before a court as
provided in Section 9.06, including an order requiring Seller to perform this
Agreement. Any such equitable remedies shall be in addition to any damages or
indemnification rights that such Party may assert in an arbitration proceeding.
9.06 EXCLUSIVE JURISDICTION. The parties agree that any claim for
equitable relief relating to this Agreement shall be instituted in a federal or
state court sitting in Atlanta, Georgia, which courts and their respective
appellate courts shall be the exclusive venue for any such claim. Each party
waives any objection that it may have to the laying of such venue, and
irrevocably submits to the jurisdiction of any such court with respect to any
such claim. Any service of process and other notice in any such case shall be
effective against a party when transmitted in accordance with Section 10.08,
provided that a party also may serve process in any manner permitted by Law.
9.07 JUDGMENTS. Any arbitration award under this Agreement shall be
final and binding. Any court having jurisdiction may enter judgment on such
arbitration award upon application of a party.
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9.08 EXPENSES. If any party commences arbitration proceedings or court
proceedings seeking equitable relief with respect to this Agreement, the
prevailing party in such arbitration proceedings or case may receive as part of
any award or judgment reimbursement of such party's reasonable attorneys' fees
and expenses to the extent that the arbitrators or court considers appropriate.
Notwithstanding whether the arbitration or court proceedings involved a
purported breach of a party's representations and warranties, the portion of any
award or judgment reimbursing the prevailing party's attorneys' fees and
expenses shall not be subject to the other party's deductible or limitation of
liability.
9.09 COST OF THE ARBITRATION. The arbitrators shall assess the costs of
the arbitration proceedings, including their fees, to the parties in such
proportions as the arbitrators consider reasonable under the circumstances.
9.10 EXCLUSIVITY OF REMEDIES. To the extent permitted by law, the
arbitration and judicial remedies contained in this Article IX shall be the
exclusive remedies available to the parties with respect to any dispute under
this Agreement or claim for damages or indemnification under this Agreement.
ARTICLE X
MISCELLANEOUS
10.01 BULK SALES LAW. Purchaser hereby waives compliance by Seller with
the provisions of the bulk sales law of any state.
10.02 NO LIENS CREATED. This Agreement shall not be construed to create
any lien or encumbrance on any of the Assets, or to create any rights in any
third persons or to indicate that Purchaser is assuming any liabilities of
Seller except as specifically provided for in Section 1.04(b).
10.03 EXTENSION BONUS. If at any time prior to or within one year of
the expiration of the term of the SouthStar Agreement that will be assigned to
Purchaser hereunder Purchaser and SouthStar agree to an extension of such
agreement or a new agreement with a term of at least four (4) years, Purchaser
shall pay to Seller, its successor, or its shareholder a one time payment of Two
Million Dollars ($2,000,000) within thirty (30) days of such extension or new
agreement; PROVIDED, HOWEVER, Purchaser shall not be obligated to make such
payment in the event that (i) prior to the agreement regarding an extension or
new agreement, Seller has made or is obligated to make any payment to Purchaser
pursuant to Section 8.01(vii) of this Agreement, or (ii) during the one year
period after expiration of the term of the SouthStar Agreement, Purchaser no
longer services any SouthStar accounts.
10.04 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits) constitutes the entire agreement and understanding of the parties and
supersedes all prior agreements and understandings, both oral and written with
respect to the subject matter hereof; provided, however, that this provision is
not intended to abrogate any other written agreement between the parties
executed with or after this Agreement.
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10.05 AMENDMENT. No amendment, modification or alteration of the terms
or provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto.
10.06 PARTIES BOUND BY AGREEMENT; SUCCESSORS AND ASSIGNS. The terms,
conditions and obligations of this Agreement shall inure to the benefit of and
be binding upon the parties hereto and the respective successors and assigns
thereof. Neither party may assign its rights, duties or obligations hereunder or
any part thereof to any other person or entity without the prior written consent
of the other party; provided, however, if Purchaser decides to acquire the
Assets and assume the Assumed Liabilities through an acquisition subsidiary,
such acquisition subsidiary will sign a counterpart of this agreement agreeing
to be bound by the terms hereof. The addition of the acquisition subsidiary to
this Agreement shall not relieve Purchaser of any obligation hereunder other
than the obligation to be the entity which acquires the Assets and assumes the
Assumed Liabilities.
10.07 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
10.08 MODIFICATION AND WAIVER. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof. No waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other provision hereof (whether
or not similar).
10.09 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party hereto shall be in
writing and delivered personally (including by overnight courier or express mail
service) or by facsimile or sent by registered or certified mail, postage or
fees prepaid,
if to Seller or Parent to:
AGL Resources Inc.
817 W. Peachtree Street, 10th Floor
Atlanta, Georgia 30308
Attention: Paul R. Shlanta, Esq., General Counsel
With a copy to:
Long Aldridge & Norman LLP
303 Peachtree Street, Suite 5300
Atlanta, Georgia 30308
Attention: Johnathan H. Short, Esq.
30
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if to Purchaser to:
Alliance Data Systems Corporation
17655 Waterview Parkway
Dallas, Texas 75252
Attention: President of Utility Services
With a copy to General Counsel
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gemma L. Descoteaux, Esq.
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or the office of such party. Any notice which is addressed
and mailed in the manner herein provided shall be conclusively presumed to have
been duly given to the party to which it is addressed at the close of business,
local time of the recipient, on the fourth business day after the day it is so
placed in the mail or, if earlier, the time of actual receipt.
10.10 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
10.11 NO THIRD-PARTY BENEFICIARIES. With the exception of the parties
to this Agreement, the Purchaser Protected Parties and Seller Protected Parties,
there shall exist no right of any person to claim a beneficial interest in this
Agreement or any rights occurring by virtue of this Agreement.
10.12 PUBLIC ANNOUNCEMENTS. No public announcement may be made by any
person with regard to the transactions contemplated by this Agreement without
the prior consent of Seller and Purchaser, provided that either party may make
such disclosure if advised by counsel that it is required to do so by applicable
law or regulation of any governmental agency or stock exchange upon which
securities of such party are or will be registered and such party has consulted
with the other regarding the necessity and content of such announcement. Seller
and Purchaser will discuss any public announcements or disclosures concerning
the transactions contemplated by this Agreement with the other parties prior to
making such announcements or disclosures.
10.13 KNOWLEDGE. As used in this Agreement, the phrase "to Seller's
Knowledge," "Known" and phrases of like kind or import shall mean to the actual
knowledge of those officers of the Seller or Parent set forth on SCHEDULE 10.13
hereto, as of the date of this Agreement or the date as of which a particular
representation or warranty is given.
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10.14 INTERPRETATION. Words of the masculine gender will be deemed and
construed to include correlative words of the feminine and neuter genders. Words
importing the singular number will include the plural number and vice versa
unless the context will otherwise indicate. References to Articles, Sections and
other subdivisions of this Agreement are to the Articles, Sections and other
subdivisions of this Agreement as originally executed. The headings of this
Agreement are for convenience and do not define or limit the provisions hereof.
Words importing persons include firms, associations and corporations. The term
"herein," "hereunder," "hereby," "hereto," "hereof" and any similar terms refer
to this Agreement; the term "heretofore" means before the date of execution of
this Agreement; and the term "hereafter" means after the date of execution of
this Agreement. References herein to "include", "includes" or "including" shall
mean without limitation.
10.15 SCHEDULES. The term "Schedules" means the schedules, including
all attachments to all schedules, attached hereto and, together with all
exhibits hereto, part hereof. The Schedules will be arranged in paragraphs
corresponding to the applicable lettered and numbered sections and subsections
of this Agreement. Matters listed once on the Schedules shall be deemed
disclosed with reference to all sections, subparts and subdivisions of the
Schedules and all Sections of Articles 2 and 3 of this Agreement, to the extent
the subject matter of any item is applicable and reference to such subject
matter is made. Any capitalized and undefined term used in the Schedules shall
have the same meaning assigned to such term herein. Unless expressly labeled
within the Schedules as being "material", the description or listing of a
matter, event or thing within the Schedules (whether in response for a
description or listing of material items or otherwise) shall not be deemed an
admission or acknowledgment that such matter, event or thing is "material" for
any other purpose, including the purposes of determining termination or
indemnification based on materiality. Matters reflected in the Schedules are not
necessarily limited to matters required by this Agreement to be reflected in the
Schedules. Such additional matters may be set forth for informational purposes
only and do not necessarily include other matters of a similar nature.
(SIGNATURES BEGIN ON FOLLOWING PAGE)
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date indicated on the
first page hereof.
PURCHASER:
ALLIANCE DATA SYSTEMS CORPORATION
By: /s/ Michael Beltz
--------------------------------------------------
Name: Michael Beltz
------------------------------------------------
Title: President, Transaction SVCS
-----------------------------------------------
SELLER:
UTILIPRO, INC.
By: /s/ James A. Hopkins
--------------------------------------------------
Name: James A. Hopkins
------------------------------------------------
Title: President
-----------------------------------------------
PARENT:
AGL RESOURCES INC.
By: /s/ Donald Weinstein
--------------------------------------------------
Name: Donald Weinstein
------------------------------------------------
Title: SVP & CFO
-----------------------------------------------
33
<PAGE>
FIRST AMENDMENT TO THE ASSET PURCHASE AGREEMENT
BY AND AMONG UTILIPRO, INC., AGL RESOURCES INC.
AND ALLIANCE DATA SYSTEMS CORPORATION
This First Amendment (this "Amendment") to the Asset Purchase Agreement
dated February 12, 2001 by and among Utilipro, Inc., AGL Resources Inc. and
Alliance Data Systems Corporation is entered into this 2nd day of March, 2001,
by and among Utilipro, Inc., a Georgia corporation ("Seller"), AGL Resources
Inc., a Georgia corporation ("Parent") and Allliance Data Systems Corporation, a
Delaware corporation ("Purchaser").
WHEREAS, Seller, Purchaser and Parent entered into that certain Asset
Purchase Agreement dated February 12, 2001 (the "Purchase Agreement");
WHEREAS, Seller, Purchaser and Parent desire to make certain amendments to
the Purchase Agreement and desire to enter into certain other agreements in
relation thereto;
WHEREAS, all capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the Purchase Agreement;
NOW, THEREFORE, for and in consideration of the premises and mutual
promises herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties agree as
follows:
1. Section 1.02 of the Purchase Agreement is amended by deleting the amount
"Twenty Two Million Five Hundred Thousand Dollars ($22,500,000)" and
replacing it with "Twenty Million Two Hundred Fifty Thousand Dollars
($20,250,000)."
2. Section 1.05(b)(i) of the Purchase Agreement is amended by deleting the
amount "Twenty Two Million Five Hundred Thousand Dollars" and replacing it
with "Twenty Million Two Hundred Fifty Thousand Dollars ($20,250,000)."
3. Section 1.06 of the Purchase Agreement is amended by deleting the phrase
"Within two (2) business days following the Closing Date" and replacing it
with the phrase "No later than March 5, 2001."
4. The parties acknowledge that the actual closing of the Purchase Agreement
has occurred on March 2, 2001. Notwithstanding the foregoing, and except
as otherwise set forth herein, the Closing shall be treated as having
occurred at 11:59 p.m. on February 28, 2001 (the "Effective Time"). The
parties acknowledge and agree, however, that given the Effective Time,
Seller will have run the Business on behalf of Purchaser for all periods
after the Effective Time and prior to the actual Closing on behalf of
Purchaser. In light of the foregoing, the parties agree that appropriate
reimbursements shall be made for expenditures made by Seller on behalf of
Purchaser relating to such period, or for amounts collected by Seller on
behalf of Purchaser relating to such period, all with appropriate
consideration of the Closing Working
<PAGE>
Capital measured as of the Effective Time and any adjustments for payroll
items already taken into account in connection with the calculation of
Adjusted Purchase Price pursuant to Section 1.05(b)(i) of Purchase
Agreement. By way of illustration, but not limitation, any amounts paid
by Seller or an Affiliate after the Effective Time and up to 11:59 p.m. on
the Closing Date, which decrease a current liability assumed by Purchaser
as of the Effective Time (such as accrued payroll measured as of February
28, 2001) would be reimbursed to Seller. In addition, any cash collected
by Seller from customers for accounts receivable, which did not relate to
periods prior to the Effective Time would be collected on behalf of
Purchaser and paid over to Purchaser. All such payments shall be made as
soon as reasonably possible, but in no event later than any payments for a
purchase price adjustment under Section 1.07 of the Purchase Agreement.
5. The Schedules to the Purchase Agreement are hereby amended as set forth on
Exhibit A hereto.
6. Each party hereby acknowledges that upon its execution of this Amendment,
(i) all of the conditions to Closing set forth in the Purchase Agreement
shall have been satisfied or waived by the appropriate party, and (ii)
each party agrees to immediately transmit the documents required for
Closing pursuant to Section 1.05(c) of the Purchase Agreement by overnight
delivery service and by facsimile to the other party's attorney to be held
in escrow by Long Aldridge & Norman, LLP (in the case of Purchaser) and
Akin, Gump, Strauss, Hauer & Feld, L.L.P. (in the case of Seller and
Parent), which documentation shall be released from escrow and the
transaction under the Asset Purchase Agreement deemed "closed" upon
receipt by wire transfer of the Adjusted Purchase Price by AGL
Investments, Inc. and Seller pursuant to Section 1.05(b)(ii) of the
Purchase Agreement on March 2, 2001. Purchaser agrees that such wire
transfer shall be made no later than one o'clock p.m. EST (1:00 p.m.) on
March 2, 2001.
7. Except as otherwise expressly stated herein, all provisions of the
Purchase Agreement remain in full force and effect.
8. This Amendment may be signed in two or more counterparts, which when taken
together shall constitute one and the same Amendment.
[SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be duly executed on its behalf as of the above date.
PURCHASER:
----------
ALLIANCE DATA SYSTEMS CORPORATION
By:
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SELLER:
-------
UTILIPRO, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
PARENT:
-------
AGL RESOURCES INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
3