Asset Purchase Agreement - Williams Power Company Inc. and Bear Energy LP
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
WILLIAMS POWER COMPANY, INC.
AND
BEAR ENERGY LP
May 20, 2007
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS....................................................................1
ARTICLE 2
PURCHASE AND SALE..............................................................8
2.1 Purchase and Sale; Assignment and Assumption..........................8
2.2 Payment of the Initial Purchase Price at Closing; Post-Closing
Adjustment............................................................8
2.3 No Assumption of Retained Liabilities................................11
2.4 Retained Assets......................................................11
2.5 Amounts Held in Trust................................................12
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER..................................12
3.1 Organization.........................................................12
3.2 Authorization........................................................12
3.3 Non-Contravention....................................................12
3.4 Requirements of Law..................................................13
3.5 Governmental Permits.................................................13
3.6 Intellectual Property................................................13
3.7 Title to Purchased Assets............................................13
3.8 Assumed Contracts....................................................13
3.9 Litigation...........................................................14
3.10 [INTENTIONALLY DELETED.] ............................................14
3.11 Tax Representations..................................................14
3.12 Certain Invoices.....................................................14
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER...................................14
4.1 Organization.........................................................14
4.2 Authorization........................................................14
4.3 Non-Contravention....................................................15
4.4 [INTENTIONALLY DELETED.].............................................15
4.5 Litigation...........................................................15
4.6 Buyer's Financial Capacity...........................................15
4.7 Buyer's Knowledge....................................................15
4.8 Tax Representations..................................................15
ARTICLE 5
PRE-CLOSING ACTIVITIES........................................................16
5.1 Conduct of Business..................................................16
5.2 Required Private Consents............................................17
5.3 Business Guaranties..................................................18
5.4 Required Governmental Consents.......................................18
5.5 Non-solicitation.....................................................19
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5.6 Preparation for Transition Services Agreement; Buyer Access to
Seller's Facilities..................................................19
5.7 Knowledge of Breaches................................................19
ARTICLE 6
CONDITIONS PRECEDENT..........................................................20
6.1 Buyer's Conditions to Closing........................................20
6.2 Seller's Conditions to Closing.......................................21
ARTICLE 7
CLOSING.......................................................................22
7.1 Closing..............................................................22
7.2 Seller's Deliveries..................................................22
7.3 Buyer's Deliveries...................................................23
ARTICLE 8
INDEMNIFICATION...............................................................23
8.1 Limitation on and Survival of Representations and Warranties.........23
8.2 Indemnification by the Seller........................................24
8.3 Indemnification by the Buyer.........................................25
8.4 Limitation of Liability..............................................26
8.5 Sole and Exclusive Remedy............................................26
ARTICLE 9
TERMINATION...................................................................27
9.1 Termination..........................................................27
9.2 Effect of Termination................................................27
ARTICLE 10
TAXES AND FURTHER ASSURANCES..................................................27
10.1 Transfer Taxes.......................................................27
10.2 Allocation of Purchase Price.........................................27
10.3 Further Assurances...................................................28
ARTICLE 11
MISCELLANEOUS.................................................................28
11.1 Entire Agreement; Amendment..........................................28
11.2 Expenses.............................................................28
11.3 Governing Law; Jurisdiction..........................................28
11.4 Assignment...........................................................28
11.5 Notices..............................................................28
11.6 Counterparts; Headings...............................................29
11.7 Interpretation.......................................................29
11.8 Schedules and Exhibits...............................................29
11.9 Supplement to Schedules..............................................30
11.10 Closing Over Breaches or Unsatisfied Conditions......................30
11.11 Occasional and Bulk Sales Law........................................30
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11.12 Disclaimers..........................................................30
11.13 Severability.........................................................31
11.14 No Reliance..........................................................32
11.15 Agreement for the Parties' Benefit...................................32
11.16 Non-Waiver...........................................................32
11.17 Public Announcements.................................................32
11.18 Confidentiality......................................................32
11.19 WAIVER OF JURY TRIAL.................................................33
11.20 Post Closing Obligations.............................................33
11.21 Survival.............................................................34
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List of Schedules
Schedule A Assumed Contracts
Schedule B Seller Intellectual Property
Schedule C Key Governmental Approvals
Schedule D Dormant Master Agreements
Schedule E Knowledge of the Buyer
Schedule F Knowledge of the Seller
Schedule G [Reserved]
Schedule H [Reserved]
Schedule I Permitted Encumbrances
Schedule J Purchased Assets
Schedule 3.4 Requirements of Law
Schedule 3.5 Governmental Permits
Schedule 3.6 Intellectual Property
Schedule 3.8(b) Breaches and Defaults Under Material Assumed Contracts
Schedule 3.9 Litigation
Schedule 3.12 AES 4000 Agreement Invoices
Schedule 5.2(c) Permitted TRS Counterparties
Schedule 5.2(d) Third Party Software Licenses
Schedule 5.3 Business Guaranties (Including Williams Guaranties)
Schedule 5.5 Available Personnel
List of Exhibits
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Bill of Sale
Exhibit C Form of Intellectual Property License and Assignment Agreement
Exhibit D Form of Novation Agreement
Exhibit E Form of Transition Services Agreement
Exhibit F Form of TRS Agreement
Exhibit G Form of Facility License Agreement
Exhibit 6.1(g) Form of Seller's Secretary's Certificate
Exhibit 6.2(g) Form of Buyer's Secretary's Certificate
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated May 20, 2007, is
by and between BEAR ENERGY LP, a Delaware limited partnership (the "Buyer"), and
WILLIAMS POWER COMPANY, INC., a Delaware corporation (the "Seller").
RECITALS
The Seller owns and manages a portfolio of (i) tolling agreements, (ii)
power purchase agreements, (iii) energy management agreements and (iv) physical
and financial electric power and natural gas marketing and trading agreements
and transactions.
The Buyer and the Seller each desire that the Buyer acquire substantially
all such agreements and transactions and certain intellectual property rights,
books and records, data and other assets of the Seller on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the recitals and of the premises,
mutual covenants, representations, warranties, conditions and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed that:
ARTICLE 1
DEFINITIONS
"Action" means any complaint, suit, proceeding, claim, arbitration,
demand, assertion or other similar action.
"Adjustment Statement" has the meaning set forth in Section 2.2(c).
"AES 4000 Agreement" means the Material Assumed Contract identified as
such in Schedule A hereto.
"Affiliate" means, as to any Person, any other Person or entity that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person, whether by contract,
voting power or otherwise.
"Agreement" means this Asset Purchase Agreement, together with the
Schedules and Exhibits attached hereto, as the same may be amended from time to
time in accordance with the terms hereof.
"Ancillary Agreements" means the BSC Guaranty, the Transition Services
Agreement, each Assignment and Assumption Agreement, each Novation Agreement,
the Bill of Sale, the Intellectual Property License and Assignment Agreement,
and each other document, instrument or agreement delivered in connection
herewith or therewith according to the terms hereof or thereof.
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"Assignment and Assumption Agreement" means each Assignment and Assumption
Agreement substantially in the form of Exhibit A attached hereto executed and
delivered pursuant to Section 5.2(a).
"Assumed Contracts" means the Contracts listed on Schedule A hereto.
"Assumed Liabilities" has the meaning set forth in Section 2.1.
"Bill of Sale" means the Bill of Sale for the Purchased Assets, other than
the Assumed Contracts and the Seller Intellectual Property, dated as of the
Closing Date, executed by the Seller in favor of the Buyer in the form of
Exhibit B attached hereto.
"Books and Records" means, in respect of any of the Purchased Assets, (a)
the Operational Data, whether hard copy or digital, (b) copies of all Assumed
Contracts and correspondence amending, modifying or waiving any provision or
condition in any Assumed Contract, or otherwise relating to Seller's or a
counterparty's actual or alleged nonperformance thereunder, but specifically
excluding routine matters resolved in the settlement process, (c) copies of all
software licenses and related documentation (including specifications, technical
manuals, user manuals, programming manuals, flow diagrams and file
descriptions), whether owned or licensed, and (d) all other records with respect
to the foregoing in Seller's or any of its Affiliate's possession (including
such records located in off-site storage or held by any Person performing
services for Seller or any of its Affiliates) to the extent Seller or any of its
Affiliates has rights thereto, whether in the form of paper, electronic
(including electronic mail) or voice recording media, including accounts
receivable records, invoice and billing records, records of payment history,
credit support and posting records, databases, correspondence and miscellaneous
records; but in all cases excluding (x) records that are subject to the
attorney-work-product doctrine or records that are subject to attorney-client or
other privilege, the disclosure or delivery of which to the Buyer could result
in the loss of privilege and (y) personnel records and other records that the
Seller as a matter of Requirement of Law is required to retain in its
possession.
"BSC Guaranty" means a guaranty to be provided by The Bear Stearns
Companies Inc. in accordance with the terms of this Agreement.
"Business" means the Seller's and the Seller's subsidiaries' business of
engaging in physical and financial natural gas and electricity marketing and
trading transactions, including, without limitation, entering into and
performing the Assumed Contracts, but excluding the Gas Business and the Equity
Generation Business.
"Business Day" means a day other than Saturday, Sunday or a day on which
banks are authorized to be closed for business in the State of New York, the
State of Oklahoma or the State of Texas.
"Business Guaranty" and "Business Guaranties" have the meanings set forth
in Section 5.3.
"Buyer" has the meaning set forth in the recitals to this Agreement.
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"Buyer Claim" has the meaning set forth in Section 8.2(a).
"Buyer Claim Notice" has the meaning set forth in Section 8.2(b).
"Buyer Indemnified Parties" has the meaning set forth in Section 8.2(a).
"Buyer's Statement" has the meaning set forth in Section 2.2(c).
"Cash Consideration" means an amount equal to Five Hundred and Twelve
Million Dollars ($512,000,000).
"Closing" means the closing of the transactions contemplated hereby on the
Closing Date.
"Closing Date" means the date upon which the Closing occurs, which shall
be on the first day of the month that is at least five (5) Business Days after
the satisfaction or waiver of each of the conditions set forth in ARTICLE 6
(other than such conditions that by their nature are to be satisfied at
Closing).
"Closing Date NACF" has the meaning set forth in Section 2.2(c).
"Contracts" means any contracts, agreements, instruments, license
agreements, physical and financial electric power marketing and trading
transactions, confirmations, cover sheets, commitments, credit support
documents, and invoices, schedules and annexes related thereto, in each case
whether oral or written.
"Counterparty" or "Counterparties" means any of those parties to the
Assumed Contracts other than the Seller or a subsidiary of the Seller.
"Deductible" has the meaning set forth in Section 8.4.
"Dormant Master Agreement" means any of the Contracts that is a master
purchase and sale or financial transaction agreement as set forth in Schedule D.
"Equity Generation Business" means the business related to the electric
generating facilities owned by Seller's Affiliates, Williams Flexible
Generation, LLC and Williams Generation Company - Hazleton.
"Estimated Closing Date NACF" has the meaning set forth in Section 2.2(b).
"Facility License Agreement" means the Facility License Agreement
substantially in the form attached hereto as Exhibit G.
"FERC" means the Federal Energy Regulatory Commission.
"FERC Approval" means the issuance by the FERC of one or more final orders
as required to authorize the transactions contemplated under this Agreement.
"FERC Filing" has the meaning set forth in Section 5.4.
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"Gas Business" means the purchase, sale, or transport of natural gas by
the Seller other than pursuant to any Assumed Contact, including without
limitation related to or in support of any of the businesses of the Seller's
Affiliates, including without limitation, the transport, storage, processing, or
marketing of natural gas produced by the Seller's Affiliates and the purchase of
fuel and shrink for gathering and processing Affiliates of the Seller.
"Governmental Action" means all consents, approvals, permits, waivers,
exceptions, variances, orders, proceedings, exemptions, publications, filings,
notices to or declarations of or with any Governmental Body.
"Governmental Body" means any court, government (federal, state, local or
foreign), department, political subdivision, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority,
including but not limited to the FERC, the Federal Trade Commission, the
Securities and Exchange Commission, any state public service or public utility
or similar commission, any other governmental, quasi-governmental or
non-governmental body administering, regulating or having general oversight over
natural gas, electricity, power or other markets or transmission systems (but
excluding, for the avoidance of doubt, any counterparty to an Assumed Contract
in its capacity as such).
"Governmental Permits" means all licenses, franchises, permits,
privileges, variances, immunities, consents, rulings, exemptions, orders,
judgments, decrees, approvals or other authorizations of any kind issued by any
Governmental Body.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"HSR Act Termination" means the expiration or earlier termination of the
notification waiting period provided for in the HSR Act.
"Initial Purchase Price" means an amount equal to the sum of (a) the Cash
Consideration, and (b) the Estimated Closing Date NACF.
"Intellectual Property" means any or all of the following, and all rights
arising out of or associated therewith: (a) all United States, international and
foreign patents and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part thereof; (b)
all confidential and trade secret information, including all confidential
inventions (whether patentable or not), proprietary software, invention
disclosures, improvements, trade secrets, proprietary information, know-how,
technology, technical data and customer lists, and all documentation relating to
any of the foregoing throughout the world; and (c) all copyrights, copyright
registrations and applications therefor, and all other rights corresponding
thereto throughout the world.
"Intellectual Property License and Assignment Agreement" means that
certain Intellectual Property License and Assignment Agreement by and between
the Parties, substantially in the form of Exhibit C.
"Interim Adjustment Statement" has the meaning set forth in Section
2.2(c).
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"Interim Closing Adjustment" has the meaning set forth in Section 2.2(c).
"Key Governmental Approvals" means the FERC Approval, the HSR Act
Termination and the Required Governmental Consents identified on Schedule C.
"Key Required Private Consents" means the Required Private Consents
applicable to each of the Material Assumed Contracts.
"Knowledge of the Buyer" means the actual knowledge of the individuals
listed on Schedule E.
"Knowledge of the Seller" means the actual knowledge of the individuals
listed on Schedule F.
"Law" means any law, statute, rule, regulation, ordinance order or other
pronouncements, actions or requirements of any Governmental Body.
"Lien" means any lien, mortgage, security interest, tax lien, attachment,
levy, charge, claim, restriction, imposition, pledge, encumbrance, conditional
sale or title retention arrangement, or any other interest in property or assets
(or the income or profits therefrom), whether consensual or nonconsensual and
whether arising by agreement or under any Requirement of Law, or otherwise.
"Losses" has the meaning set forth in Section 8.2(a).
"Material Adverse Effect" means any casualty loss, Governmental Action,
litigation or other event or circumstance that adversely affects (i) the
Purchased Assets or (ii) the Counterparty to, or the generating assets (if any)
that are the subject of, any Assumed Contract that is a tolling agreement,
energy management agreement, or power purchase agreement, and in either case (i)
or (ii), that materially impairs the value of the Purchased Assets taken as a
whole; provided, however, that any adverse change or effect (or changes and/or
effects taken together) attributable to any of the following, in each case shall
not constitute a Material Adverse Effect: (a) any adoption, implementation,
promulgation, repeal, modification, reinterpretation or proposal of any rule,
regulation, ordinance, order, protocol or any other Law of or by any
Governmental Body, (b) changes or developments in international, national,
regional, state or local wholesale or retail markets for electricity or natural
gas or other energy commodities, including, without limitation, changes in
commodity prices, prices of related products (including, without limitation,
financial derivatives), market design, industry standards, or availability or
costs of transportation, (c) system-wide changes or developments in national,
regional or state electric transmission or distribution systems, (d) changes or
developments in financial or securities markets or the economy in general, (e)
the status or condition of the Buyer (including the Buyer's creditworthiness or
credit rating), (f) the accounting treatment for Buyer of the Purchased Assets,
this Agreement or the transactions contemplated hereby, (g) the announcement,
pendency or consummation of the transactions contemplated by this Agreement
(including any decrease in customer demand, any reduction in revenues, any
disruption in supplier, partner or similar relationships, or any loss of
employees); or (h) changes in generally accepted accounting principles; provided
that any loss, claim, occurrence, change or effect that is
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cured (including by the payment of money) prior to the Closing Date shall not be
considered a Material Adverse Effect.
"Material Assumed Contracts" means those Assumed Contracts identified as
such in Schedule A hereto.
"Material Trading Counterparties" means those eight Counterparties
identified as such on Schedule A hereto.
"Maximum Indemnity Amount" has the meaning set forth in Section 8.4.
"Net Accumulated Cash Flow" means, for the period from (and including)
April 1, 2007 to (but not including) the Closing Date, an amount (whether
positive or negative) equal to (a) all of the Seller's payments made to the
Counterparties in the ordinary course of the Seller's Business pursuant to the
terms of the Assumed Contracts during such period (excluding any such payments
constituting postings of collateral or performance security or that relate to
periods prior to April 1, 2007) and all of Seller's payments made to third
Persons (including Counterparties) in the ordinary course of the Seller's
Business pursuant to any physical or financial natural gas or electricity
marketing or trading transactions which relate to the Assumed Contracts minus
(b) all of the payments made to the Seller by the Counterparties in the ordinary
course of the Seller's Business pursuant to the terms of the Assumed Contracts
during such period (excluding any such payments constituting postings of
collateral or performance assurance or that relate to periods prior to April 1,
2007) and all payments made to the Seller by third Persons (including
Counterparties) in the ordinary course of the Seller's Business pursuant to any
physical or financial natural gas or electricity marketing or trading
transactions which relate to the Assumed Contracts, plus (c) whichever of the
following is applicable: $2,500,000 if the Closing occurs during the period of
September 7, 2007 through October 6, 2007; $6,000,000 if the Closing occurs
during the period of October 7, 2007 through November 6, 2007; $10,500,000 if
the Closing occurs during the period of November 7, 2007 through December 6,
2007; or $15,500,000 if the Closing occurs during the period of December 7, 2007
through December 31, 2007.
"Neutral Accounting Arbitrator" has the meaning set forth in Section
2.2(c).
"Novation Agreement" means each Novation Agreement substantially in the
form of Exhibit D attached hereto and executed and delivered pursuant to Section
5.2(a).
"Operational Data" means all computer, digital, electronic, analog,
telecommunications (including voice recording), metering, and billing data
relating to the Purchased Assets and the operations associated therewith and
held by the Seller or any of its Affiliates (to the extent Seller or any of its
Affiliates has rights thereto).
"Party" means the Buyer or the Seller.
"Permitted Encumbrances" means (a) the terms and conditions of this
Agreement and the Purchased Assets, (b) those Liens and other matters listed on
Schedule I, and (c) all rights reserved to or vested in any Governmental Body
controlling or regulating or having jurisdiction over any of the Purchased
Assets in any manner, and in all applicable Laws.
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"Permitted TRS Counterparty" means any Counterparty listed on Schedule
5.2.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association (whether incorporated or unincorporated),
joint-stock company, trust, Governmental Body, unincorporated organization or
other entity.
"Preliminary Statement" has the meaning set forth in Section 2.2(b).
"Purchased Assets" means the Assumed Contracts, the Dormant Master
Agreements, the Books and Records, Seller Hardware and the Seller Intellectual
Property assets identified on Schedule J.
"Purchase Price" has the meaning set forth in Section 2.2(c).
"Required Consents" means all Required Governmental Consents and Required
Private Consents.
"Required Governmental Consents" means all of the Governmental Actions
required by or under any Requirements of Law in connection with the sale or
assignment of the Purchased Assets to the Buyer and the consummation of the
transactions contemplated hereby (including, without limitation, (i) the Buyer's
assumption, enforcement and performance of the Assumed Contracts in accordance
with the terms thereof, and (ii) the Buyer's ownership, use and operation of the
Purchased Assets).
"Required Private Consents" means all of the consents, authorizations and
approvals (other than a Required Governmental Consent) required from any Person
by or under any Assumed Contract in connection with the Seller's sale,
assignment, or novation (as applicable) of the Purchased Assets to the Buyer and
consummation of the transactions contemplated hereby (including, without
limitation, (i) the Buyer's assumption, enforcement and performance of the
Assumed Contracts in accordance with the terms thereof, (ii) the replacement of
any Business Guaranties with a BSC Guaranty as provided in Section 5.3, (iii)
the release of Seller with respect to the Assumed Liabilities and (iv) the
Buyer's ownership, use and operation of the Purchased Assets).
"Requirements of Law" means any requirements of any Law, including but not
limited to the requirements of any applicable Governmental Permits or
Governmental Actions.
"Resolution Periods" has the meaning set forth in Section 2.2(c).
"Restricted Information" has the meaning set forth in Section 11.18(b).
"Retained Assets" has the meaning set forth in Section 2.4.
"Retained Liabilities" means all liabilities and obligations of the Seller
and any of its Affiliates, other than the Assumed Liabilities.
"Seller" has the meaning set forth in the recitals to this Agreement.
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"Seller Claim" has the meaning set forth in Section 8.3(a).
"Seller Claim Notice" has the meaning set forth in Section 8.3(b).
"Seller Hardware" means the Seller-owned servers used to host the
applications listed on Schedule B and Schedule 5.2(d)(A) as of the date of this
Agreement. Seller Hardware does not include proprietary software, third party
software, data, operating systems, non-attached storage, or confidential or
proprietary information.
"Seller Indemnified Parties" has the meaning set forth in Section 8.3(a).
"Seller Intellectual Property" means all Intellectual Property identified
on Schedule B.
"Tax" or "Taxes" means any present or future federal, state, county, local
or foreign taxes, charges, levies, imposts, duties, other assessments or similar
charges or withholding of any kind whatsoever, including interest, penalties and
additions imposed thereon or with respect thereto, imposed by a Governmental
Body.
"Tax Returns" means any reports, returns, information returns or other
information required to be supplied to a taxing authority in connection with
Taxes, including any return of an affiliated or combined unitary group.
"Third Party Software Licenses" means all of the Assumed Contracts
identified as such on Schedule A.
"Transition Services Agreement" means that certain Transition Services
Agreement by and between the Parties, substantially in the form attached hereto
as Exhibit E.
"TRS Agreement" means the TRS Agreement by and between the Parties,
substantially in the form of Exhibit F, executed and delivered (if applicable)
pursuant to Section 5.2(c).
"Williams Guaranties" means the guaranties provided by The Williams
Companies, Inc., or Williams Holdings of Delaware, Inc., to various of the
Counterparties or other Persons in connection with the Purchased Assets and
identified on Schedule 5.3.
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale; Assignment and Assumption. As of the Closing, and
subject to all of the terms and conditions of this Agreement (including, without
limitation, Section 5.2(c)), the Seller shall sell, transfer, convey, assign and
deliver, and the Buyer shall purchase, all of the Seller's right, title and
interest in and to the Purchased Assets, and the Buyer shall assume, pay,
discharge and perform, each on a timely basis, all of liabilities and
obligations under contract or at Law as to any Assumed Contract or any other
Purchased Asset that are incurred or accrue or otherwise relate to the period
from and after the Closing Date (the "Assumed Liabilities").
2.2 Payment of the Initial Purchase Price at Closing; Post-Closing
Adjustment.
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(a) At the Closing, and subject to all of the terms and conditions
of this Agreement (including, without limitation, Section 5.2(c)), in
consideration of the Seller's sale, transfer, assignment, conveyance and
delivery of the Purchased Assets, including the Assumed Contracts, the
Buyer shall assume the Assumed Liabilities and pay to the Seller an amount
equal to the Initial Purchase Price, by wire transfer to an account or
accounts designated by the Seller in writing prior to the Closing Date of
immediately available funds.
(b) At least five (5) Business Days prior to the anticipated Closing
Date, the Seller shall prepare and deliver to the Buyer a statement (the
"Preliminary Statement") that sets forth the Seller's good faith estimate
of the Net Accumulated Cash Flow (the "Estimated Closing Date NACF").
(c) The Initial Purchase Price shall be subject to the adjustment
specified in this Section 2.2(c) (the Initial Purchase Price as so
adjusted is herein referred to as the "Purchase Price"). Except as
provided in this Section 2.2(c) (and except that any payments made by the
Seller under ARTICLE 8 shall be treated for Tax purposes as adjustments to
the Purchase Price), the Initial Purchase Price shall not be subject to
any adjustments.
(i) Within ninety (90) calendar days after the Closing Date,
the Seller shall prepare and deliver to the Buyer a statement (the
"Adjustment Statement") that sets forth (A) its calculation of the
Net Accumulated Cash Flow (the "Closing Date NACF") and (B) a
calculation of an amount (whether resulting in a positive or
negative number, the "Closing Adjustment") equal to (1) the Closing
Date NACF minus (2) the Estimated Closing Date NACF. The Seller
shall provide the Buyer and its accountants with access to the
relevant books and records of the Seller and the Seller's employees
to the extent required in connection with their review of and any
dispute with respect to the Adjustment Statement and shall furnish
the Buyer with any other information that might be relevant to the
calculation of Closing Date NACF. If, at any time prior to the final
resolution of all disputed items on the Adjustment Statement,
additional information shall become known to the Buyer or the Seller
that would change the amount of the Closing Date NACF shown on the
calculation set forth in the Adjustment Statement, then the Buyer
shall amend the Adjustment Statement to reflect such additional
information. The Buyer and the Seller shall promptly notify each
other upon it becoming aware of any additional information prior to
the end of the Resolution Period (as defined below).
(ii) After receipt of the Adjustment Statement, the Buyer will
have thirty (30) calendar days from receipt to review the Adjustment
Statement together with the workpapers used in their preparation.
Unless the Buyer delivers to the Seller a written notice setting
forth in reasonable detail the specific items disputed by the Buyer
and a written statement setting forth the Buyer's calculation of
each line item shown on the Adjustment Statement so disputed and the
amount in dispute (the "Buyer's Statement") on or prior to the
thirtieth (30th) day after receipt of the Adjustment Statement, the
Buyer will be deemed to have accepted
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and agreed to the Adjustment Statement and the Closing Adjustment
calculated therein and such agreement will be final, binding and
conclusive. Any items on the Adjustment Statement as to which the
Buyer has not given notice of its objection and provided an
alternative calculation on the Buyer's Statement will be deemed to
have been agreed upon by the Parties, subject to the penultimate
sentence of Section 2.2(c)(ii). If the Buyer so notifies the Seller
of its objection to the Adjustment Statement and provides the Seller
with the Buyer's Statement in a timely manner, the Buyer and the
Seller will, within thirty (30) calendar days following such notice
(the "Resolution Period"), attempt to resolve their differences. Any
resolution by the Buyer and the Seller during the Resolution Period
as to any disputed amounts will be final, binding and conclusive.
(iii) If the Buyer and the Seller do not resolve all disputed
items by the end of the Resolution Period, then all items remaining
in dispute will be submitted within ten (10) days after the
expiration of the Resolution Period to a national independent
accounting firm mutually acceptable to the Buyer and the Seller (the
"Neutral Accounting Arbitrator"); it being understood that no member
of the Neutral Accounting Arbitrator's engagement team shall have an
existing professional relationship with the Buyer or Seller or any
of their Affiliates. The Neutral Accounting Arbitrator shall act as
an arbitrator to determine only those items in dispute. All fees and
expenses relating to the work, if any, to be performed by the
Neutral Accounting Arbitrator will be paid fifty percent (50%) by
the Buyer and fifty percent (50%) by the Seller, provided that the
Neutral Accounting Arbitrator may, upon determination that a Party
did not raise its objections in respect of the matters in dispute in
good faith, determine the fees and expenses to be paid by such Party
up to and including all of such fees and expenses. The Neutral
Accounting Arbitrator will deliver to the Buyer and the Seller a
written determination (such determination to include a work sheet
setting forth all material calculations used in arriving at such
determination and to be based solely on information provided to the
Neutral Accounting Arbitrator by the Seller and the Buyer) of the
disputed items within thirty (30) days of receipt of the disputed
items (or as soon as practicable thereafter), which determination
will be final, binding and conclusive as to such disputed items. The
final Adjustment Statement containing those items which either are
agreed upon by the Buyer and the Seller or are delivered by the
Neutral Accounting Arbitrator in accordance with this Section will
be the "Interim Adjustment Statement". In the event that either the
Buyer or the Seller fails to submit its statement regarding any
items remaining in dispute within the time determined by the Neutral
Accounting Arbitrator, then the Neutral Accounting Arbitrator shall
render a decision based solely on the evidence timely submitted to
the Neutral Accounting Arbitrator by the Buyer and/or the Seller.
(iv) If the Closing Adjustment as shown on the Interim
Adjustment Statement (the "Interim Closing Adjustment") is a
negative number, then the Initial Purchase Price will be reduced by
the amount of the Interim Closing Adjustment and the Buyer shall be
entitled to payment of such amount from the Seller by wire transfer
of immediately available funds to an account or accounts
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designated by the Buyer. If the Interim Closing Adjustment is a
positive number, then the Initial Purchase Price will be increased
by the amount of the Interim Closing Adjustment and the Buyer shall
pay such amount to the Seller by wire transfer of immediately
available funds, to be paid to an account or accounts designated in
writing by the Seller prior to the date when such payment is due.
All payments to be made pursuant to this Section 2.2(c)(iv) will be
made on the fifth Business Day following the date on which the Buyer
and the Seller agree to, or the Neutral Accounting Arbitrator
delivers, the Interim Statement and the Interim Adjustment
Statement.
(v) On or prior to the one year anniversary of the Closing
Date, either Buyer or Seller may notify the other Party of its
desire to update the Interim Adjustment Statement to reflect
additional items (i.e., items not taken into account in the Interim
Closing Adjustment) that would change the Interim Closing
Adjustment. Promptly after such notice is given, the Parties shall
provide to each other a description and the amount of any such
additional items. Any amounts paid in accordance with the terms of
Section 2.5 shall not constitute or be included as additional items.
Buyer shall prepare a statement that reflects the proposed changes
to the Interim Closing Adjustment (which is also referenced to
herein as the "Adjusted Statement") and provide the same to Seller.
If the Parties do not reach an agreement on the Adjustment Statement
within 30 days after Seller's receipt of the same, then the
provisions of clause (iii) above shall apply. The Initial Purchase
Price shall be adjusted to reflect any such adjustment agreed upon
by the Parties or determined by the Neutral Accounting Arbitrator
(as applicable) and the resulting payment due from Seller or Buyer
shall be paid to the other Party by wire transfer of immediately
available funds no later than the fifth Business Day following the
date on which such agreement is reached or determination is made.
(vi) The Parties acknowledge and agree that neither the Net
Accumulated Cash Flow nor any of the items comprising the
calculation thereof include any charges for overhead or labor costs
of Seller or its Affiliates.
2.3 No Assumption of Retained Liabilities. The Buyer does not and will not
assume any of the Retained Liabilities, which shall remain the sole
responsibility of and shall be retained, paid, performed and discharged solely
by the Seller, or as applicable, the Seller's Affiliates.
2.4 Retained Assets. Notwithstanding anything to the contrary contained in
Section 2.1 or elsewhere in this Agreement, any right, interest or claim of the
Seller relating to the Assumed Contracts and the other Purchased Assets that
arises or accrues during, or otherwise relates to, the period prior to the
Closing Date, including without limitation the right to the return of cash
collateral or any Business Guaranties posted or credited to Counterparties as of
the Closing Date (the "Retained Assets"), is excluded from the Assumed Contacts
and the other Purchased Assets and will remain the property of the Seller after
the Closing.
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2.5 Amounts Held in Trust. Any amounts received by the Buyer after the
Closing with respect to any Excluded Asset shall be held by the Buyer in trust
for the benefit of the Seller, shall be segregated from other property and funds
of the Buyer and shall forthwith be paid or delivered to the Seller in the same
form as so received (with any necessary endorsement or assignment). Likewise,
any amounts received by the Seller after the Closing with respect to any
Purchased Asset shall be held by the Seller in trust for the benefit of the
Buyer, shall be segregated from other property and funds of the Seller and shall
be forthwith paid or delivered to the Buyer in the same form as so received
(with any necessary endorsement or assignment).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as of the date hereof and,
if the Closing occurs, as of the Closing, that:
3.1 Organization. The Seller is a corporation duly organized and validly
existing under the laws of the State of Delaware, is duly qualified to transact
business as a foreign corporation in the State of Oklahoma and is in good
standing in the States of Oklahoma and Delaware. The Seller has delivered or
otherwise made available to the Buyer true and complete copies of the Seller's
Articles of Incorporation and By-laws, as in effect on the date hereof.
3.2 Authorization. Seller has all requisite power and authority to execute
this Agreement and the Ancillary Agreements to which it will be a party and to
perform its obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Ancillary Agreements to which it is or will be a party
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized and approved by all requisite action by the
Seller. This Agreement constitutes, and upon execution, the Ancillary Agreements
to which it is a party will constitute, the valid and binding obligations of the
Seller enforceable against the Seller in accordance with its terms, except as
such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar Laws relating to or affecting generally
the enforcement of creditors' rights and (b) the availability of equitable
remedies (whether in a proceeding in equity or at Law).
3.3 Non-Contravention. Neither the execution or delivery of this Agreement
nor the Ancillary Agreements to which it will be a party by the Seller nor the
consummation of the transactions contemplated hereby or thereby, including but
not limited to the assignment of the Assumed Contracts to the Buyer and
retention of the Retained Liabilities, will conflict with or result in the
breach of any term or provision of, or constitute a default under, the Articles
of Incorporation, By-laws or other governing documents of the Seller or any of
its Affiliates; result in a default, or give rise to any right of termination,
cancellation or acceleration, impose any additional obligation under any
provision of any contract or agreement of the Seller or any of its Affiliates,
including, without limitation, any Assumed Contract, any loan agreements,
promissory notes, indentures or instruments to which the Seller or any of its
Affiliates is a party or by which the Seller or any of its Affiliates is bound;
(c) result in the creation or imposition of any Lien on any of the Purchased
Assets, other than Permitted Encumbrances; (d) violate any Requirements of Law
applicable to the Seller; or (e) other than the Required Private Consents and
the Required Governmental Consents, require on the part of the Seller the
approval, consent,
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waiver, authorization or act of, or the making by the Seller of any declaration,
filing or registration with, any Person.
3.4 Requirements of Law. To the Knowledge of the Seller, except as may be
indicated on Schedule 3.4, all of the Purchased Assets and their uses in the
Business as presently conducted by the Seller conform to all Requirements of
Law.
3.5 Governmental Permits. Seller has obtained the Governmental Permits
identified on Schedule 3.5, which are the only Governmental Permits necessary
for it to own, use and manage the Purchased Assets and to carry on and conduct
the Business as currently conducted by the Seller, such Governmental Permits are
in full force and effect and the Seller is in compliance with all such
Governmental Permits.
3.6 Intellectual Property. Except as set forth on Schedule 3.6, the Seller
Intellectual Property is owned by the Seller. To the Knowledge of the Seller,
the conduct of the Business as currently conducted by the Seller does not
infringe, or constitute an infringement or misappropriation of any Intellectual
Property of any Person. To the Knowledge of the Seller, no Person is infringing
or misappropriating the Seller Intellectual Property. Except as set forth on
Schedule 3.6, or otherwise evidenced under the terms of the Seller Intellectual
Property no current or former partner, director, officer, or employee of the
Seller or any third party will, after giving effect to each of the transactions
contemplated herein, own or retain any rights in or to any of the Seller
Intellectual Property, including the right to use, license, sublicense, or
receive royalties or other compensation with respect to such Seller Intellectual
Property.
3.7 Title to Purchased Assets. The Seller has good and valid title to all
of the Purchased Assets free and clear of all Liens, other than Permitted
Encumbrances.
3.8 Assumed Contracts.
(a) Schedule A hereto sets forth a true and complete list of the
Assumed Contracts as of April 1, 2007. The information set forth on
Schedule A is accurate in all material respects as of such date. For the
purposes of this subsection (a), "material" shall mean discrepancies in
Schedule A in the aggregate exceeding Three Million Dollars
($3,000,000.00).
(b) Except as set forth on Schedule 3.8(b), neither the Seller nor,
to the Knowledge of the Seller, any Counterparty to any Material Assumed
Contract is, as of the date hereof, in breach thereof or default
thereunder, and there does not exist under any provision thereof, to the
Knowledge of the Seller, as of the date hereof, any event that, with the
giving of notice or the lapse of time or both, would constitute such a
breach or default of any Material Assumed Contract, except for such
breaches, defaults and events as to which requisite waivers or consents
have been or will, on or prior to the Closing Date, be cured or obtained
or which, collectively or individually, do not have, or would not
reasonably be expected to have, a Material Adverse Effect.
(c) Each of the Material Assumed Contracts is in full force and
effect in all material respects and constitutes a legal, valid and binding
obligation of the Seller and, to the Knowledge of the Seller, of the
Counterparty thereto, except for such failures that,
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collectively or individually, do not have, or would not reasonably be
expected to have, a Material Adverse Effect.
(d) Except (i) as set forth on Schedule A, (ii) otherwise permitted
pursuant to Section 5.1 or (iii) with respect to the Material Assumed
Contracts with the Material Trading Counterparties, no Material Assumed
Contract has been amended, supplemented or modified in any material
respect. True and complete copies of all Assumed Contracts (including all
amendments, supplements and modifications thereto) will be provided to the
Buyer no later than Five (5) Business Days from the date of this
Agreement.
3.9 Litigation. Except as set forth on Schedule 3.9, there is no
Governmental Action or other suit or proceeding initiated by any Person pending
or, to the Knowledge of the Seller, threatened (a) under or in respect of any of
the Purchased Assets (including, but not limited to, any claim related to
environmental contamination, exposure, releases or other environmental matters)
except such as would not have or would not reasonably be expected to have a
Material Adverse Effect or (b) which questions the legality or propriety of the
transactions contemplated by this Agreement.
3.10 [INTENTIONALLY DELETED.] .
3.11 Tax Representations.
(a) The Seller is not required by any applicable Law, as modified by
the practice of any relevant Governmental Body, to make any deduction or
withholding for or on account of any Tax from any payment to be made by it
to the Buyer under this Agreement or any Ancillary Agreement.
(b) The Seller is classified as a domestic corporation for U.S.
federal income tax purposes.
3.12 Certain Invoices. Attached as Schedule 3.12 are true and correct
copies of the monthly summary invoices as issued by the Counterparty to the
Seller under the AES 4000 Agreement with respect to the following periods:
January - December, 2005; January - December, 2006; and January - March, 2007.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as of the date hereof and,
if the Closing occurs, as of the Closing, that:
4.1 Organization. The Buyer is a limited partnership duly formed and
validly existing and in good standing under the laws of the State of Delaware.
The Buyer has full corporate power and authority to own or lease and to operate
and use its assets and carry on its business as now conducted and as it will be
conducted with the Purchased Assets.
4.2 Authorization. Buyer has all requisite power and authority to execute
and deliver this Agreement and the Ancillary Agreements to which it will be a
party and to perform
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its obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Ancillary Agreements to which it is or will be a party and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized and approved by all requisite action by the Buyer. This
Agreement constitutes, and upon execution, the Ancillary Agreements to which it
is a party will constitute, the valid and binding obligations of the Buyer
enforceable against the Buyer in accordance with their respective terms, except
as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar Laws relating to or affecting generally
the enforcement of creditors' rights and (b) the availability of equitable
remedies (whether in a proceeding in equity or at Law).
4.3 Non-Contravention. Neither the execution or delivery of this Agreement
and the Ancillary Agreements to which it will be a party by the Buyer nor the
consummation of the transactions contemplated hereby and thereby, including but
not limited to the assumption of the Assumed Contracts and Assumed Liabilities,
will (a) conflict with or result in the breach of any term or provision of, or
constitute a default under, the Articles of Incorporation, By-laws or other
governing documents of the Buyer or any of its Affiliates; (b) result in a
default, or give rise to any right of termination, cancellation or acceleration
of any material contract or agreement of the Buyer or any of its Affiliates,
including, without limitation, any loan agreements, promissory notes, indentures
or instruments to which the Buyer or any of its Affiliates is a party or by
which the Buyer or any of its Affiliates is bound; (c) violate any Requirements
of Law applicable to the Buyer; or (d) require on the part of the Buyer the
approval, consent, waiver, authorization or act of, or the making by the Buyer
of any declaration, filing or registration with, any Person, except for the
necessary filings and approvals under the HSR Act and from the FERC; and except
as would not prevent or delay in any material respect the consummation of the
transactions contemplated under this Agreement.
4.4 [INTENTIONALLY DELETED.]
4.5 Litigation. There is no Governmental Action, suit or proceeding
initiated by any Person pending or, to the Knowledge of the Buyer, threatened
which questions the legality or propriety of the transactions contemplated by
this Agreement.
4.6 Buyer's Financial Capacity. The Buyer has the present financial
capacity and resources to satisfy its obligations to discharge and satisfy the
Assumed Liabilities and to pay the Purchase Price to the Seller, as and when
due.
4.7 Buyer's Knowledge. To the Knowledge of the Buyer, as of the date of
this Agreement, the Seller is not in breach of any of the representation or
warranties in ARTICLE 3.
4.8 Tax Representations.
(a) The Buyer is not required by any applicable Law, as modified by
the practice of any relevant Governmental Body, to make any deduction or
withholding for or on account of any Tax from any payment to be made by it
to the Seller under this Agreement or any Ancillary Agreement.
(b) The Buyer is classified as a domestic limited partnership for
U.S. federal income tax purposes.
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ARTICLE 5
PRE-CLOSING ACTIVITIES
The applicable Party hereto, as set forth below, covenants and agrees
that, from and after the execution and delivery of this Agreement until the
Closing or the termination of this Agreement:
5.1 Conduct of Business.
(a) The Seller shall, except as the Buyer may otherwise consent in
writing in the Buyer's reasonable discretion, perform the Assumed
Contracts, protect and preserve the Purchased Assets, and conduct the
Business as it relates to the Assumed Contracts in the ordinary and usual
course of business and in accordance with past practices, except as set
forth below. Without limiting the generality of the foregoing, except as
set forth below, the Seller shall (i) duly comply in all material respects
with all applicable Requirements of Law, perform in all material respects
its obligations under all of the Assumed Contracts, maintain the Books and
Records relating to the Assumed Contracts (in a manner consistent with
generally accepted accounting principles as determined by Seller's
independent auditor) and otherwise preserve intact and protect the
Purchased Assets in an ordinary course of business consistent with past
practices, (ii) maintain appropriate staff and management personnel and
make requisite expenditures sufficient to perform the Assumed Contracts,
and (iii) use commercially reasonable efforts to continue and preserve all
business relationships with each party to the Assumed Contracts and any
other Person having business or other dealings relating to the Purchased
Assets and the Business as it related to the Assumed Contracts, including
all Governmental Bodies. In addition to the foregoing, the Seller shall
(A) not sell, assign, convey, lease or otherwise dispose of, or amend,
modify or terminate, any of the Assumed Contracts or other Purchased
Assets, except that the Seller shall be permitted to amend, modify or
terminate any of the Assumed Contracts if such action (1) is done in the
ordinary course of business, (2) is permitted under the Seller's trading
and risk management policies in effect on the date of this Agreement to be
done by an individual trader without approval of any other Person within
the Seller's organization (without regard to any additional delegation of
authority not evidenced in Seller's trading and risk management policies),
and (3) does not involve any extension of the term of any Assumed Contract
by more than one year; (B) not place a Lien on any of the Assumed
Contracts or other Purchased Assets; (C) not enter into new Contracts or
new transactions in respect of the Assumed Contracts existing on the date
hereof, except that the Seller shall be permitted to enter into new
Contracts or new transactions in respect of the Assumed Contracts if such
action (1) is done in the ordinary course of business, (2) is permitted
under the Seller's trading and risk management policies in effect on the
date of this Agreement to be done by an individual trader without approval
of any other Person within the Seller's organization (without regard to
any additional delegation of authority not evidenced in Seller's trading
and risk management policies), (3) does not involve entering into a
Contract having a term beyond December 31, 2008; and (D) hedge fixed price
power purchases or sales with natural gas. Notwithstanding the foregoing,
Seller shall be permitted to enter into new Contracts pursuant to
mandatory or "must offer" programs or auctions affecting the
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Assumed Contracts on the terms of such programs or auctions, including
without limitation, the PJM RPM capacity market auction for years 2008,
2009 and 2010.
(b) The Seller shall provide to a representative of the Buyer as
designated by the Buyer (and whom the Buyer shall ensure is not
responsible for execution of the commercial activity of the Buyer) on a
weekly basis a summary of the trading activity, changes in collateral
postings and holdings and payments received and made, associated with the
Assumed Contracts.
5.2 Required Private Consents.
(a) The Parties agree to use commercially reasonable efforts, and to
cooperate and provide each other with reasonable assistance, to do all
things necessary or appropriate to cause or permit the novation or
assignment of the Assumed Contracts to the Buyer (including, in the case
of Buyer, entering into new master or enabling agreements if necessary)
and to obtain any Required Private Consents (and, if needed, the consent
of any Person providing credit support on behalf of the applicable
Counterparty) so that all right, title and interest of the Seller with
respect to the applicable Assumed Contract shall be novated or assigned to
the Buyer effective as of the Closing. In furtherance of the foregoing,
the Buyer shall provide to each Counterparty to an Assumed Contract within
a reasonable period of time following the date hereof, a form of Novation
Agreement or a form of Assignment and Assumption Agreement, with such
modifications, if any, thereto that have been mutually agreed to by the
Seller and the Buyer acting reasonably. Notwithstanding the foregoing, the
Parties agree that the Required Private Consents for the Third Party
Software Licenses and the Dormant Master Agreements shall not be due upon
Closing.
(b) Except as set forth in Schedule 5.2(d), each Party shall bear
its own costs in connection with obtaining all Required Private Consents.
Neither Party shall have any obligation to make any economic concession to
a third party as a condition to obtaining a Required Consent.
(c) Nothing in this Agreement shall be deemed to be an agreement to
assign the Seller's rights under any Assumed Contract or any other
Purchased Asset to be assigned to the Buyer in the absence of a Required
Consent if such an attempted assignment would constitute a breach thereof
or be unlawful. If any Required Consent in respect of any Assumed Contract
other than a Material Assumed Contract is not obtained, or if an attempted
assignment or assumption of any Assumed Contract other than a Material
Assumed Contract would be ineffective or would adversely affect the rights
or increase the obligations of any Party to this Agreement or any of its
Affiliates with respect to any Assumed Contract, so that the Buyer would
not, in fact, receive the rights, or assume the obligations with respect
thereto as the same exist prior to such attempted assignment or
assumption, then, at the Closing the Parties will enter into the TRS
Agreement in respect of any such Assumed Contracts, if the Counterparty to
such Assumed Contract is a Permitted TRS Counterparty. The establishment
of the TRS shall be deemed, for purposes of Section 6.1(b), the equivalent
of obtaining the subject Required Consents for the Assumed Contracts
covered by the TRS.
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(d) The Parties agree to use commercially reasonably efforts in
assuming the obligations set forth in Schedule 5.2(d) to cause the
assignment of the Third Party Software Licenses identified on Schedule
5.2(d) and the Dormant Master Agreements identified on Schedule D to the
Buyer.
5.3 Business Guaranties. The Buyer shall use commercially reasonable
efforts, (a) to replace, effective as of the Closing, each of the Williams
Guaranties and each of the guaranties, letters of credit, letters of comfort and
performance bonds set forth in Schedule 5.3 hereto (each, a "Business Guaranty",
collectively the "Business Guaranties") with a BSC Guaranty or a replacement
letter of credit, and (b) to assist Seller in obtaining release effective as of
the Closing of all obligations of the Seller or any Affiliate of Seller under
the Business Guaranties, but only to the extent relating to the Assumed
Liabilities under the applicable Assumed Contracts. If the Buyer is unable to so
replace any Business Guaranty, or Seller or any Affiliate of Seller is not so
released, at the Closing after using its commercially reasonable efforts to do
so, or assist Seller in doing so, the Buyer shall provide to the Seller and
maintain in full force and effect in respect of each such Business Guaranty, a
BSC Guaranty in form and substance substantially similar to such Business
Guaranty, with respect to the obligations covered by each Business Guaranty for
which the Buyer does not effect at the Closing such replacement or for which a
release of Seller is not obtained, but only to the extent such Business
Guaranties relate to the Assumed Liabilities under the applicable Assumed
Contracts.
5.4 Required Governmental Consents.
(a) The Buyer and the Seller agree that as soon as practicable, but
in no event later than fifteen (15) days after the date of this Agreement,
(i) each will complete and file the "Antitrust Improvements Act
Notification and Report Form for Certain Mergers and Acquisitions", if and
as required by the HSR Act, and will promptly complete and file responses
to all requests for additional data and information which may be made
under such Act, and (ii) they will jointly file the FERC application (the
"FERC Filing"). The Buyer shall prepare the FERC Filing in consultation
with the Seller. The Buyer shall pay all costs for preparation of the FERC
Filing (other than the Seller's costs) and all HSR Act filing fees
relating to the transactions contemplated hereby, irrespective of whether
the transactions contemplated by this Agreement are consummated.
(b) Each Party shall, and shall cause their respective Affiliates
to, use their commercially reasonable efforts, at their own costs, to (i)
cause the expiration of the notice periods under any Laws with respect to
the transactions contemplated by this Agreement as promptly as is
reasonably practicable before the Closing Date and (ii) resolve on
commercially reasonable terms such objections, if any, as may be asserted
by any Governmental Body with respect to the transactions contemplated by
this Agreement. In connection therewith, if any administrative or judicial
action or proceeding is instituted (or threatened to be instituted)
challenging the transaction contemplated by this Agreement as violative of
any Law, each of the Parties shall, and shall cause their respective
Affiliates to, cooperate and use their commercially reasonable efforts to
contest and resist, except insofar as the Seller and the Buyer may
otherwise agree, any such action or proceeding, including any action or
proceeding that seeks a temporary
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restraining order or preliminary injunction that would prohibit, prevent
or restrict consummation of the transactions contemplated by this
Agreement.
(c) Each Party shall, and shall cause their respective Affiliates,
at their own cost, to furnish to the other all information necessary with
respect to any application or other filing to be made in connection with
the transactions contemplated by this Agreement, including in connection
with any filings, conferences or other submissions related to resolving
any investigation or other inquiry by any such Governmental Body with
respect to the transactions contemplated by this Agreement. Each of the
Seller and the Buyer shall promptly inform the other of any communication
with, and any proposed understanding, undertaking or agreement with, any
Governmental Body in respect of any such filings, investigation or other
inquiry. If a Party intends to independently participate in any meeting
with any Governmental Body in respect of any such filings, investigation
or other inquiry, then such Party shall give the other Party reasonable
prior notice of such meeting such that the other Party has reasonable
opportunity to attend and participate at such a meeting. The Parties shall
consult and cooperate with one another in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments and opinions made
or submitted by or on behalf of any Party in connection with all meetings,
actions and proceedings under or relating to any such application or
filing.
5.5 Non-solicitation. Other than with respect to those individuals listed
on Schedule 5.5 (whom Buyer may solicit but not employ or otherwise engage as an
employee, independent contractor or otherwise prior to the termination of Phase
I of the Transition Services Agreement), until the date that is one year after
the Closing Date, neither the Buyer nor any of its Affiliates shall, directly or
indirectly, (a) induce any employee of the Seller or any of its Affiliates to
leave the employ of the Seller or its Affiliates or (b) employ or otherwise
engage as an employee, independent contractor or otherwise any such employee,
except that the Buyer and its Affiliates shall not be precluded from hiring any
such employee who (i) initiates discussions regarding such employment without
any direct or indirect solicitation by the Buyer or its Affiliates or (ii)
responds to any public advertisement placed by the Buyer or its Affiliates.
5.6 Preparation for Transition Services Agreement; Buyer Access to
Seller's Facilities.
(a) Seller shall use its commercially reasonable efforts to obtain
any consents, waivers, permits or sublicenses necessary in order for
Seller to provide services under the Transition Services Agreement.
(b) From the date of this Agreement through Closing, upon request of
Buyer, Seller shall provide Buyer with reasonable access to Seller's
employees and facilities during normal business hours in order to
facilitate transition planning and post-Closing implementation of the
transactions contemplated herein, including pursuant to the Transition
Services Agreement.
5.7 Knowledge of Breaches. If after the date of this Agreement and prior
to the Closing, either Party becomes aware of any breach by the Seller or Buyer
of any representation and warranty under this Agreement, it will promptly notify
the other Party thereof.
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ARTICLE 6
CONDITIONS PRECEDENT
6.1 Buyer's Conditions to Closing. The obligations of the Buyer under this
Agreement with respect to the purchase and sale of the Purchased Assets and the
assumption of the Assumed Liabilities shall be subject to the fulfillment on or
prior to the Closing of each of the following conditions, any of which may be
waived by the Buyer, in the Buyer's sole discretion.
(a) All of the representations and warranties of the Seller
contained in this Agreement and all other Ancillary Agreements will be, if
qualified by materiality, true and correct in all respects, and if not so
qualified, shall be true and correct in all material respects, except with
respect to the representations and warranties contained in Section 3.2 and
Section 3.7, to which no materiality qualifier shall apply, as of the
Closing Date as though made on and as of the Closing Date (except to the
extent such representations and warranties speak as of an earlier date and
except for the representations and warranties contained in Section 3.8(a),
which shall be deemed made as of the date most recent to the Closing Date
that Schedule A is supplemented and amended pursuant to Section 11.9(b)).
The Seller shall have complied with, performed and satisfied in all
material respects all of the agreements, covenants, and conditions
contained in this Agreement to be performed or complied with by it on or
prior to the Closing.
(b) The Buyer shall have received (i) each of the Key Governmental
Approvals in the form prescribed hereunder or in a form otherwise
reasonably satisfactory to the Buyer, (ii) each of the Key Required
Private Consents in the form prescribed hereunder or in a form otherwise
reasonably satisfactory to the Buyer, and (iii) the assignment or novation
of each Assumed Contract, or the TRS Agreement or such other arrangement
reasonably satisfactory to Buyer with respect to such Assumed Contract as
provided in Section 5.2, effective as of the Closing. Notwithstanding the
foregoing, the Parties agree that neither the assignment nor receipt of
Required Private Consents with respect to either the Third Party Software
Licenses or the Dormant Master Agreements shall be conditions to Closing.
(c) There shall be no Action, pending or threatened by any third
party (including any Governmental Body) and no judgment shall have been
entered and not vacated by any Governmental Body of competent jurisdiction
in any Governmental Action or other Action, arising therefrom, which seeks
to enjoin, restrain, make illegal, or prohibit consummation of the
transactions contemplated by this Agreement or that seeks to prohibit or
limit the Buyer's ownership or performance of any portion of the Purchased
Assets.
(d) Except for (i) matters that are the subject of the Seller's
representations and warranties in ARTICLE 3 (which representations and
warranties constitute the Buyer's exclusive assurance with respect to the
subject matters thereof), (ii) facts or circumstances of which the Buyer
has Knowledge on the date hereof not required to be corrected or
remediated on or before the Closing Date and (iii) matters resulting from
acts
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or omissions of the Buyer or any of its Affiliates or representatives,
since the date of this Agreement, no event or circumstance has occurred
and is continuing that has had or reasonably would be expected to have a
Material Adverse Effect.
(e) A duly authorized officer of the Seller shall have certified the
satisfaction of the conditions in paragraph (a) of this Section 6.1.
(f) The Seller shall have made or stand willing and able to make all
of the deliveries to the Buyer set forth in Section 7.2.
(g) The Secretary of the Seller shall have executed a certificate
substantially in the form attached hereto as Exhibit 6.1(g).
6.2 Seller's Conditions to Closing. The obligations of the Seller under
this Agreement with respect to the purchase and sale of the Purchased Assets and
the assumption of the Assumed Liabilities by the Buyer shall be subject to the
fulfillment on or prior to the Closing of each of the following conditions, any
of which may be waived by the Seller in the Seller's sole discretion:
(a) All of the representations and warranties of the Buyer contained
in this Agreement and all other Ancillary Agreements will be, if qualified
by materiality, true and correct in all respects, and if not so qualified,
shall be true and correct in all material respects, as of the Closing Date
as though made on and as of the Closing Date (except to the extent such
representations and warranties speak as of an earlier date). The Buyer
shall have complied with, performed and satisfied in all material respects
all of the agreements, covenants, and conditions contained in this
Agreement to be performed or complied with by it on or prior to the
Closing.
(b) The Seller shall have received (i) each of the Key Governmental
Approvals in the form prescribed hereunder or in a form otherwise
reasonably satisfactory to the Seller, (ii) each of the Key Required
Private Consents in the form prescribed hereunder or in a form otherwise
reasonably satisfactory to the Seller, and (iii) the assignment or
novation of each Assumed Contract, or the TRS Agreement or such other
arrangement reasonably satisfactory to Seller with respect to such Assumed
Contract as provided in Section 5.2, effective as of the Closing.
Notwithstanding the foregoing, the Parties agree that neither the
assignment nor receipt of Required Private Consents with respect to either
the Third Party Software Licenses or the Dormant Master Agreements shall
be conditions to Closing.
(c) The Williams Companies, Inc. and Williams Holdings of Delaware,
Inc. shall have been unconditionally released, subject only to Closing,
from all Williams Guaranties and other Business Guaranties (but only to
the extent the Business Guaranties relate to the Assumed Liabilities).
(d) There shall be no Action, pending or threatened by any third
party (including any Governmental Body) and no judgment shall have been
entered and not vacated by any Governmental Body of competent jurisdiction
in any Governmental Action or other Action, arising therefrom, which seeks
to (i) enjoin, restrain, make illegal,
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or prohibit consummation of the transaction contemplated by this Agreement
or (ii) prohibit or limit the Buyer's ownership or performance of any
portion of the Purchased Assets.
(e) The Buyer shall have made or stand willing and able to make all
of the deliveries to the Seller set forth in Section 7.3.
(f) A duly authorized officer of the Buyer shall have certified the
satisfaction of the paragraph (a) of this Section 6.2.
(g) The Secretary of the Buyer shall have executed a certificate
substantially in the form attached hereto as Exhibit 6.2(g).
ARTICLE 7
CLOSING
7.1 Closing. The Closing shall take place on the Closing Date at the
Buyer's offices in Houston, Texas, or at such other location as may be
designated by the Parties.
7.2 Seller's Deliveries. On the Closing Date, the Seller shall deliver or
cause to be delivered to the Buyer the following:
(a) A certificate of good standing from the Secretaries of State of
the States of Delaware and Oklahoma stating that the Seller is a validly
existing corporation in good standing and qualified to do business as a
foreign corporation, as applicable;
(b) A duly executed Bill of Sale;
(c) Duly executed Novation Agreements or Assignment and Assumption
Agreements for each Assumed Contract to be conveyed at Closing;
(d) Duly executed Transition Services Agreement and Facility License
Agreement;
(e) The certificates described in Section 6.1(d) and Section 6.1(f);
(f) To the extent not previously delivered, originals or true and
correct copies of all Assumed Contracts and originals or true and correct
copies of all Books and Records;
(g) A duly executed Intellectual Property License and Assignment
Agreement;
(h) A duly executed TRS Agreement (if any shall be required pursuant
to Section 5.2(c)); and
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(i) The Preliminary Statement (if not already delivered) and such
other documents and instruments as shall be reasonably necessary to effect
the intent of this Agreement and consummation of the transaction
contemplated hereby.
7.3 Buyer's Deliveries. On the Closing Date, the Buyer shall deliver or
cause to be delivered to the Seller the following:
(a) The Initial Purchase Price payable by wire transfer of
immediately available funds to such bank account pursuant to written
instructions of the Seller delivered to the Buyer prior to the Closing
Date;
(b) A certificate of good standing from the Secretaries of State of
Delaware stating that the Buyer is a validly existing limited partnership
in good standing;
(c) A duly executed Bill of Sale;
(d) Duly executed Novation Agreements or Assignment and Assumption
Agreements for each Assumed Contract to be conveyed at Closing;
(e) Duly executed Transition Services Agreement and Facility License
Agreement;
(f) The certificates described in Section 6.2(f) and Section 6.2(g);
(g) A duly executed Intellectual Property License and Assignment
Agreement;
(h) A duly executed TRS Agreement (if any shall be required pursuant
to Section 5.2(c)); and
(i) Such other documents and instruments as shall be reasonably
necessary to effect the intent of this Agreement and consummation of the
transactions contemplated hereby.
ARTICLE 8
INDEMNIFICATION
8.1 Limitation on and Survival of Representations and Warranties. All
representations and warranties contained in this Agreement, or in any agreements
or instruments executed in connection herewith or delivered pursuant hereto,
shall survive the Closing for a period of fifteen (15) months beginning on the
Closing Date, but not longer, except that the representations and warranties set
forth in (a) Sections 3.2 and 3.7 shall survive and (b) Section 3.11 shall
survive until the thirtieth (30th) day after the expiration of the applicable
statute of limitations relating thereto. Such representations and warranties
shall only be effective with respect to any breach or claim when notice of such
breach or claim shall have been given in writing to the other Party in breach or
against whom indemnification is sought within such period. Any claim for
indemnification for which written notice has been given within the
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prescribed period may be prosecuted to conclusion notwithstanding the subsequent
expiration of such period.
8.2 Indemnification by the Seller.
(a) Subject to the limitations set forth in this ARTICLE 8, the
Seller hereby agrees to indemnify and hold the Buyer and its directors,
officers, employees and Affiliates (collectively, the "Buyer Indemnified
Parties") harmless from and against any and all claims, demands, suits,
proceedings, judgments, losses, liabilities, damages, costs and expenses
(including, but not limited to, reasonable attorneys' fees) (collectively,
"Losses") imposed upon or incurred by the Buyer Indemnified Parties (any
claims for such Losses by a Buyer Indemnified Party, a "Buyer Claim") as a
result of or in connection with any of the following:
(i) any inaccuracy or breach of a representation or warranty
made by the Seller in this Agreement or in any agreement or
instrument executed in connection herewith or pursuant hereto (and
for purposes of determining the accuracy of any such representation
and warranty and the Losses attributable thereto, all materiality
and Material Adverse Effect qualifiers set forth therein shall be
disregarded);
(ii) the breach of, or default in the performance by the
Seller of, any covenant, agreement or obligation to be performed by
the Seller pursuant to this Agreement or any agreement or instrument
delivered pursuant to Section 7.2(b), Section 7.2(c), or Section
7.2(g); and
(iii) any Retained Liabilities.
(b) Promptly after receipt by a Buyer Indemnified Party of notice of
an Action or other event giving rise to a Buyer Claim with respect to
which the Buyer Indemnified Party is entitled to indemnification under
this Section 8.2, the Buyer Indemnified Party receiving such notice shall
notify (the "Buyer Claim Notice") the Seller in writing of the
commencement of such Action or the assertion of such Buyer Claim;
provided, however, that failure to give such notice shall not affect the
right to indemnification hereunder except to the extent of actual
prejudice to the Seller. The Seller shall have the option, and shall
notify the Buyer Indemnified Party in writing within thirty (30) Business
Days after the date of the Buyer Claim Notice of its election, either: (i)
to participate (at the expense of the Seller) in the defense of such
Action or Buyer Claim (in which case the defense of such Action or Buyer
Claim shall be controlled by the Buyer) or (ii) to take charge of and
control the defense of such Action or Buyer Claim (at the expense of the
Seller). If the Seller elects to control the defense, it will not
compromise or settle the Action or Buyer Claim absent each Buyer
Indemnified Party's written consent, which may be granted or denied in
such Party's reasonable discretion, if (A) the amount to be paid in
settlement exceeds the Maximum Indemnity Amount or (B) the settlement does
not include a provision reasonably satisfactory to the Buyer Indemnified
Party releasing the Buyer Indemnified Party from all liabilities with
respect thereto. If the Seller fails to notify the Buyer Indemnified Party
of its election within the applicable response period, then the
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Seller shall be deemed to have elected not to control the defense of such
Action or Buyer Claim. If the Seller elects to control the defense of any
Action or Buyer Claim, the Buyer Indemnified Party shall have the right to
employ separate counsel and participate in the defense of such Action or
Buyer Claim, but the fees and expenses of such counsel shall be at the
expense of the Buyer Indemnified Party unless: (1) the named parties in
such Action or Buyer Claim (including any impleaded parties) include both
the Buyer Indemnified Party and the Seller and the Buyer Indemnified Party
shall have been advised by such counsel that there may be one or more
legal defenses available to it that are different from or additional to
those available to the Seller, or (2) the Buyer Indemnified Party has
reasonably determined that Losses that may be incurred may exceed either
individually, or when aggregated with other Buyer Claims, the Maximum
Indemnity Amount (in which case, the Seller shall not have the right to
control the defense of such Action or Buyer Claim on behalf of the Buyer
Indemnified Party, it being understood, however, that the Seller shall
not, in connection with such Action or Buyer Claim, be liable for the fees
and expenses of more than one (1) separate firm of attorneys (in addition
to any local counsel) and that all such fees and expenses shall be
reimbursed as they are incurred).
(c) If the Seller does not control the defense of any Action or
Buyer Claim, then the Buyer Indemnified Party may settle such Action or
Buyer Claim with the written consent of the Seller (not to be unreasonably
withheld).
8.3 Indemnification by the Buyer.
(a) Subject to the limitations set forth in this ARTICLE 8, the
Buyer hereby agrees to indemnify and hold the Seller and its directors,
officers, employees, and Affiliates (collectively, the "Seller Indemnified
Parties") harmless from and against any and all Losses imposed upon or
incurred by the Seller Indemnified Parties (any claim for such Losses by a
Seller Indemnified Party, a "Seller Claim") as a result of or in
connection with any of the following:
(i) any inaccuracy or breach of a representation or warranty
made by the Buyer in this Agreement or in any agreement or
instrument executed in connection herewith or pursuant hereto;
(ii) the breach of or default in the performance by the Buyer
of any covenant, agreement or obligation to be performed by the
Buyer pursuant to this Agreement or any agreement or instrument
delivered pursuant to Section 7.3(c), Section 7.3(d), or Section
7.3(g); and
(iii) any Assumed Liabilities or a breach or default in the
performance by the Buyer of its obligations under Section 5.3.
(b) Promptly after receipt by a Seller Indemnified Party of notice
of an Action or other event giving rise to a Seller Claim with respect to
which the Seller Indemnified Party is entitled to indemnification under
this Section 8.3, the Seller Indemnified Party receiving such notice shall
notify (the "Seller Claim Notice") the Buyer in writing of the
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commencement of such Action or the assertion of such Seller Claim;
provided, however, that failure to give such notice shall not affect the
right to indemnification hereunder except to the extent of actual
prejudice to the Buyer. The Buyer shall have the option, and shall notify
each Seller Indemnified Party in writing within thirty (30) Business Days
after the date of the Seller Claim Notice of its election, either: (i) to
participate (at the expense of the Buyer) in the defense of the Action or
Seller Claim (in which case the defense of such Action or Seller Claim
shall be controlled by the Seller) or (ii) to take charge of and control
defense of such Action or Seller Claim (at the expense of the Buyer). If
the Buyer fails to notify the Seller Indemnified Party of its election
within the applicable response period, then the Buyer shall be deemed to
have elected not to control the defense of such Action or Seller Claim. If
the Buyer elects to control the defense of any Action or Seller Claim, the
Seller Indemnified Party shall have the right to employ separate counsel
and participate in the defense of any such Action or Seller Claim, but the
fees and expenses of such counsel shall be at the expense of the Seller
Indemnified Party unless the named parties in such Action or Seller Claim
(including any impleaded parties) include both the Seller Indemnified
Party and the Buyer and the Seller Indemnified Party shall have been
advised by such counsel that there may be one or more legal defenses
available to it that are different from or additional to those available
to the Buyer (in which case, the Buyer shall not have the right to control
the defense of such Action or Seller Claim on behalf of the Seller
Indemnified Party, it being understood, however, that the Buyer shall not,
in connection with such Action or Seller Claim be liable for the fees and
expenses of more than one (1) separate firm of attorneys (in addition to
any local counsel) and that such fees and expenses shall be reimbursed as
they are incurred).
(c) If the Buyer does not control the defense of any Action or
Seller Claim, then the Seller Indemnified Party may settle such Action or
Seller Claim with the written consent of the Buyer (not to be unreasonably
withheld).
8.4 Limitation of Liability. Notwithstanding the foregoing, the Seller
shall not be obligated to indemnify the Buyer Indemnified Parties pursuant to
Section 8.2(a)(i) or Section 8.2(a)(ii) except to the extent the amount of all
Losses incurred by the Buyer Indemnified Parties thereunder exceeds Five Million
Dollars ($5,000,000.00) in the aggregate (the "Deductible"), in which event the
Buyer may recover all Losses incurred in excess of the Deductible and (net of
insurance proceeds or other compensatory reimbursement from third parties
actually received less expenses incurred in connection therewith) the Seller's
maximum liability for Losses under Section 8.2(a)(i) or Section 8.2(a)(ii) shall
be Two Hundred Fifty Six Million Dollars ($256,000,000.00) (the "Maximum
Indemnity Amount"); provided, however, that for Losses incurred by the Buyer
Indemnified Parties for breaches of the representations and warranties in
Sections 3.2 and 3.7, the Seller's maximum liability shall be the Purchase
Price.
8.5 Sole and Exclusive Remedy. If the Closing occurs, the indemnification
provisions of this ARTICLE 8 shall be the sole and exclusive remedy of each
Party (including the Seller Indemnified Parties and the Buyer Indemnified
Parties) (a) for any breach of the other Party's representations, warranties,
covenants, or agreements contained in this Agreement or (b) otherwise with
respect to this Agreement, the agreements and instruments executed in connection
herewith, the Purchased Assets, or the transactions contemplated hereby.
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ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, as follows:
(a) at any time before the Closing, by either Party, by written
notice from one Party to the other Party, if any Law or final order
restrains, enjoins or otherwise prohibits or makes illegal the
transactions contemplated pursuant to this Agreement;
(b) at any time before the Closing, by either Party, by written
notice from one Party to the other, if such other Party has materially
breached its representations or warranties or its obligations hereunder
and such breach (other than a breach of the Buyer's obligation to pay the
Purchase Price in accordance with the terms of ARTICLE 2, which for
purposes of clarification shall have no cure period, and other than with
respect to Sections 3.2 and 3.7 to which no materiality qualifier shall
apply) has not been cured within thirty (30) days following written
notification thereof;
(c) on and after December 31, 2007, by either Party, by written
notice from one Party to the other, if the Closing has not occurred by
such date, unless the Parties mutually agree in writing (i) to extend the
period in which such Closing must occur or (ii) to waive or amend the
provisions of this Section 9.1(c); provided that the failure of the
Closing to occur by such date is not the result of a breach of this
Agreement by the Party seeking to terminate; or
(d) by mutual written consent of the Parties.
9.2 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 9.1(a) or 9.2(c), notwithstanding anything in this Agreement
to the contrary, there will be no liability or obligation on the part of the
Seller or the Buyer (or any of their respective Representatives or Affiliates),
provided that (a) Sections 11.1, 11.2, 11.3, 11.5 through 11.8, inclusive, and
11.12 through 11.19, inclusive, will survive any such termination and (b) each
Party shall continue to be liable for any breach of this Agreement by it
occurring prior to such termination.
ARTICLE 10
TAXES AND FURTHER ASSURANCES
10.1 Transfer Taxes. The Buyer shall pay all transfer, sales, recording
and similar Taxes arising in connection with the transactions contemplated
hereunder, whether such Taxes are imposed on the Seller or the Buyer. The
Parties shall cooperate to comply with all requirements for such Taxes and shall
provide such documentation and take such other actions as may be necessary to
minimize the amount of any such Taxes.
10.2 Allocation of Purchase Price. The Parties will use their commercially
reasonable efforts to agree upon the allocation of the Purchase Price for Tax
purposes. In the event the Parties are unable to so agree, each Party shall be
free to make its own allocation of the Purchase Price.
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10.3 Further Assurances. At any time and from time to time at or after the
Closing, at any Party's request and without further consideration, the Parties
agree to cooperate with each other, to execute and deliver such other documents,
instruments of transfer or assignment, files, books and records and do all such
further acts and things as may be reasonably required to carry out the
transactions contemplated hereby.
ARTICLE 11
MISCELLANEOUS
11.1 Entire Agreement; Amendment. This Agreement and the documents
referred to herein to be delivered pursuant hereto constitute the entire
agreement between the Parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements, understandings, negotiations
and discussions of the Parties, whether oral or written, and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein. No amendment, supplement, modification or termination of this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision of this Agreement, whether or
not similar, nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
11.2 Expenses. Except as specifically set forth herein, each of the
Parties shall pay the fees and expenses of their respective counsel, accountants
and other experts and the other expenses incident to the negotiation and
preparation of this Agreement and consummation of the transactions contemplated
hereby.
11.3 Governing Law; Jurisdiction. This Agreement shall be construed and
interpreted according to the laws of the State of New York, without regard to
the conflicts of law rules thereof.
11.4 Assignment. This Agreement and each Party's respective rights
hereunder may not be assigned, by operation of Law, change of control, or
otherwise, without the prior written consent of the other Party, which consent
may be withheld in the discretion of such other Party. Notwithstanding the
foregoing, the Buyer shall have the right to designate one or more Affiliates to
take title to and/or assume any or all of the Purchased Assets at Closing, but
the Buyer shall remain liable to the Seller hereunder notwithstanding any such
delegation.
11.5 Notices. All communications, notices and disclosures required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the date (a) when delivered personally or by messenger
or by overnight delivery service by a recognized commercial carrier, (b) five
(5) days after being mailed by registered or certified United States mail,
postage prepaid, return receipt requested, or (c) when received via telecopy,
telex, facsimile or other electronic transmission, in all cases addressed to the
Person for whom it is intended at his address set forth below or to such other
address as a Party shall have designated by notice in writing to the other Party
in the manner provided by this Section 11.5:
If to the Buyer: Bear Energy LP
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700 Louisiana Street, Suite 1000
Houston, TX 77002
Phone: 713.236.3000
Fax: 713.236.5000
Attention: President
With a copy to: Bear Energy LP
700 Louisiana Street, Suite 1000
Houston, TX 77002
Phone: 713.236.3000
Fax: 713.236.5000
Attention: Legal Department
If to the Seller: Williams Power Company, Inc.
One Williams Center, WRC 2
Tulsa, OK 74172
Phone: 918.573.2000
Fax: 918.573.1717
Attention: Chief Financial Officer
With a copy to: The Williams Companies, Inc.
One Williams Center, Suite 4900
Tulsa, OK 74172
Phone: 918.573.2000
Fax: 918.573.5942
Attention: General Counsel
11.6 Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same agreement. The headings in this
Agreement are inserted for convenience of reference only and shall not
constitute a part, or impact the interpretation, hereof.
11.7 Interpretation. Unless the context requires otherwise, all words used
in this Agreement in the singular number shall extend to and include the plural,
all words in the plural number shall extend to and include the singular and all
words in any gender shall extend to and include all genders. All references to
contracts, agreements, leases or other understandings or arrangements shall
refer to oral as well as written matters. This Agreement has been negotiated
between the Parties and shall not be read in a light more favorable to one Party
relative to the other.
11.8 Schedules and Exhibits. Disclosure of any fact or item in any
Schedule or Exhibit hereto referenced by a particular paragraph or Section in
this Agreement shall, should the existence of the fact or item or its contents
be relevant to any other paragraph or Section, be deemed to be disclosed with
respect to that other paragraph or Section whether or not an explicit
cross-reference appears.
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11.9 Supplement to Schedules.
(a) The Seller may, from time to time prior to the Closing by
written notice to the Buyer, supplement or amend the Schedules to this
Agreement, provided that, for purposes of determining whether Buyer's
condition set forth in Section 6.1 has been fulfilled, the Schedules
(except Schedule A and Schedule 5.3, each of which shall be amended and
supplemented only as provided in Section 11.9(b)) shall be deemed to
include only that information contained therein on the date of this
Agreement and shall be deemed to exclude all information contained in any
supplement or amendment thereto. .
(b) Not earlier than ten (10) Business Days and no later than three
(3) Business Days prior to the Closing, the Seller shall, by written
notice to the Buyer, supplement or amend Schedule A and Schedule 5.3 to
reflect all activity since April 1, 2007 related to the Assumed Contracts.
(c) If the Closing shall occur, then any matters disclosed to Buyer
pursuant to any supplement or amendment at or prior to the Closing shall
be deemed to be waived by Buyer and Buyer shall not be entitled to make a
claim thereon under this Agreement.
11.10 Closing Over Breaches or Unsatisfied Conditions. Notwithstanding
anything to the contrary contained in this Agreement, if the Seller or the Buyer
elects to proceed with the Closing, and any failure of any condition in its
favor to be satisfied or the breach of any representation, warranty or covenant
by the other Party is within the Knowledge of the Buyer or the Knowledge of the
Seller, as applicable, the condition that is unsatisfied, or the representation,
warranty or covenant that is breached, at the Closing Date will be deemed waived
by such Party, and such Party will be deemed to fully release and forever
discharge the other Party on account of any and all claims, demands or charges,
known or unknown, with respect to the same.
11.11 Occasional and Bulk Sales Law. The Buyer and the Seller each agree
to waive compliance by the other with the provisions of the Bulk Sales Law of
any jurisdiction.
11.12 Disclaimers.
(a) Buyer's Review. The Buyer has reviewed and has access to all
documents, records and information which it has desired to review in
connection with its decision to enter into this Agreement, and to
consummate the transactions contemplated hereby. The Buyer has not relied
upon any representation, warranty, statement, advice, document,
projection, or other information of any type provided by the Seller, its
Affiliates, or any of their representatives, except for those expressly
set forth in this Agreement. In deciding to enter into this Agreement, and
to consummate the transactions contemplated hereby, the Buyer has relied
solely upon its own knowledge, investigation, and analysis (and that of
its representatives) of the Purchased Assets and the Business and not on
any disclosure or representation made by, or any duty to disclose on the
part of, the Seller, its Affiliates, or any of their representatives,
other than the representations and warranties of the Seller expressly set
forth herein.
(b) Information. Except as provided in ARTICLE 3, the Seller makes
no representation or warranty, express, implied, at common law, statutory
or otherwise, with
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respect to the accuracy or completeness of the information, records, and
data now, heretofore, or hereafter made available to the Buyer in
connection with this Agreement (including any description of the Business
or the Purchased Assets, revenue, price and expense assumptions, price
forecasts, or any other information furnished to the Buyer by the Seller
or any Affiliate of the Seller or any director, officer, employee,
counsel, agent, or advisor thereof).
(c) Purchased Assets. Notwithstanding anything contained to the
contrary in any other provision of this Agreement, it is the explicit
intent of each Party that the Seller and its Affiliates are not making any
representation or warranty whatsoever, express, implied, at common law,
statutory or otherwise, except for the representations or warranties given
in this Agreement, and it is understood that the Buyer, with such
exceptions, takes the Purchased Assets "as is" and "where is". Without
limiting the generality of the immediately preceding sentence, except as
provided in this Agreement, the Seller hereby expressly disclaims and
negates any representation or warranty, express or implied, at common law,
statutory, or otherwise, relating to (i) the condition of the Purchased
Assets (including any implied or express warranty of merchantability or
fitness for a particular purpose, or of conformity to models or samples of
materials), or (ii) any infringement by the Seller, or any of its
Affiliates of any patent or proprietary right of any third party. The
Buyer has agreed not to rely on any representation made by the Seller with
respect to the condition, quality, or state of the Purchased Assets except
for those in this Agreement, but rather, as a significant portion of the
consideration given to the Seller for this purchase and sale, has agreed
to rely solely and exclusively upon its own evaluation of the Purchased
Assets, except as provided herein. The provisions contained in this
Agreement are the result of extensive negotiations between the Buyer and
the Seller and not other assurances, representations or warranties about
the quality, condition, or state of the Purchased Assets were made by the
Seller in the inducement thereof, except as provided herein.
(d) Waiver of Damages. Notwithstanding anything contained to the
contrary in this Agreement, the Seller and the Buyer agree that the
recovery by either Party of any damages suffered or incurred by it as a
result of any breach by the other Party of any of its obligations under
this Agreement shall be limited to the actual damages suffered or incurred
by the non-breaching Party as a result of the breach by the breaching
Party of its obligations hereunder and in no event shall the breaching
Party be liable to the non-breaching Party for any indirect,
consequential, special, exemplary, or punitive damages (including any
damages on account of lost profits or opportunities or lost or delayed
generation) suffered or incurred by the non-breaching Party as a result of
the breach by the breaching Party of any of its obligations hereunder;
provided, however, that the foregoing shall not be considered a waiver of
cover damages.
11.13 Severability. If any provision, clause or part of this Agreement, or
the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause or
part under other circumstances, shall not be affected thereby.
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11.14 No Reliance. No third party is entitled to rely on any of the
representations, warranties and agreements contained in this Agreement. The
Buyer and the Seller assume no liability to any third party because of any
reliance on the representations, warranties and agreements of the Buyer or the
Seller contained in this Agreement.
11.15 Agreement for the Parties' Benefit. Except for the provisions of
Section 5.3 which is also intended to benefit and to be enforceable by any
Affiliate of the Seller that is obligated under one or more of the Business
Guaranties, and the provisions of ARTICLE 8, which are also intended to benefit
and to be enforceable by any of the Buyer Indemnified Parties and the Seller
Indemnified Parties, this Agreement is not intended to confer upon any Person
not a Party any rights or remedies hereunder, and no Person other than the
Parties or such Persons described above is entitled to rely on any
representation, warranty or covenant contained herein.
11.16 Non-Waiver. No waiver by either Party hereto of any one or more
defaults by the other in performance of any of the provisions of this Agreement
shall be construed as a waiver of any other default or defaults, whether of a
like kind or different nature.
11.17 Public Announcements. Except pursuant to a Requirement of Law or the
rules of a national securities exchange applicable to the Buyer, the Seller or
their respective Affiliates, neither Party hereto may make any public
announcements regarding this Agreement or the subject matter hereof without the
prior written consent of the other Party. Notwithstanding the foregoing,
following the execution of this Agreement, the Parties shall cooperate in
issuing public announcements regarding the transactions described herein,
including the Purchase Price, with such announcement to be released within five
(5) Business Days or on an earlier date agreed to by the Parties.
11.18 Confidentiality.
(a) This Agreement is confidential and, except pursuant to a
Requirement of Law or the rules of a national securities exchange
applicable to the Buyer, the Seller or their respective Affiliates,
neither the fact that the Parties have entered into this Agreement, nor
any of the terms and conditions herein, may be disclosed to a third party
without the other Party's prior written consent, except that either Party
may disclose this Agreement and its contents to its financial, accounting,
engineering and legal advisors who have a need to know such information
and who agree to maintain its confidentiality.
(b) From and after the Closing, the Seller shall, and shall cause
their respective Affiliates to, keep confidential and not disclose all
information relating to the Purchased Assets (the "Restricted
Information"), and shall not directly or indirectly use such Restricted
Information for any purpose, except as and to the extent permitted by the
terms of this Agreement or the Ancillary Agreements. The confidentiality
obligation set forth in this Section shall not apply to any information
that (i) is in the public domain, (ii) is published or otherwise becomes
part of the public domain through no fault of the Seller or any of its
Affiliates or (iii) becomes available to the Seller or any of its
Affiliates on a non-confidential basis from a source that did not acquire
such information (directly or indirectly) from the Seller or the Buyer or
any of their respective Affiliates on a confidential basis.
Notwithstanding the foregoing, the Seller may make disclosures
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required by Law and in connection with disputes hereunder; provided,
however, that the Seller, to the extent practicable, shall provide the
Buyer with prompt notice thereof so that the Buyer may seek a protective
order or other appropriate remedy or waive compliance with the provisions
of this Section 11.18. In the event that such protective order or other
remedy is not obtained or the Buyer waives compliance with the provisions
of this Section 11.18, the Seller shall or shall cause the Person required
to disclose such Restricted Information to furnish only that portion of
the information that such Person is legally required, and, to the extent
practicable, the Seller shall exercise commercially reasonable efforts to
obtain reliable assurance that confidential treatment is accorded the
Restricted Information so furnished. The Seller's confidentiality
obligations under this Section shall continue for (5) years from the date
hereof; provided that, with respect to Restricted Information relating to
any Assumed Contract, such obligation shall terminate on a date that is
the later of (A) the end of such five (5) year period and (B) the date of
termination of such Assumed Contract.
(c) From and after the Closing, any restrictions contained herein or
in the Confidentiality Agreement dated December 22, 2006 among the Buyer,
the Seller and The Williams Companies, Inc., as amended, relating to the
Buyer's use or disclosure of any Restricted Information shall be null and
void.
11.19 WAIVER OF JURY TRIAL. THE SELLER AND THE BUYER EACH HEREBY
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY ANCILLARY AGREEMENT.
11.20 Post Closing Obligations.
(a) At any time or from time to time after the Closing, each Party
will, upon the reasonable request of the other Party, execute and deliver
any further instruments or documents, and exercise commercially reasonable
efforts to take such further actions as may reasonably be required, to
fulfill and implement the terms of this Agreement or realize the benefits
intended to be afforded hereby. In addition, at any time or from time to
time after the Closing, each Party will cooperate reasonably with the
other Party (and the other Party's counsel, as applicable) and make
available their personnel, and provide such testimony and access to their
books and records as shall be reasonably requested, (i) in connection with
the contest or defense against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (A)
any transaction contemplated under this Agreement or (B) any fact,
situation, circumstances, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction
relating to the Purchased Assets (including during such period prior to
Closing) or (ii) otherwise at the other Party's reasonable request in
connection with any other matter arising and relating to the Purchased
Assets, all at the reasonable out-of-pocket expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor
hereunder).
(b) For a period of seven (7) years after the Closing Date, neither
Party will dispose of any books, records, documents or information
reasonably relating to the
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Purchased Assets without first giving notice to the other Party thereof
and permitting the other Party to retain or copy such books and records as
it may select. During such period, each Party will permit the other Party
to examine and make copies, at the other Party's expense, of such books,
records, documents and information for any reasonable purpose, including
any litigation now pending or hereafter commenced against the Party or its
Affiliates, or the preparation of income or other tax returns; provided,
however, that all such examinations by the other Party shall occur and all
such access shall be provided to a Party at times and places reasonably
set by the other Party.
11.21 Survival. Subject to limitations in respect of representations and
warranties set forth in Section 8.1, all representations, warranties, covenants
and obligations in this Agreement, the Ancillary Agreements and any other
certificate or document delivered pursuant to this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby.
[Signature Page Follows]
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IN WITNESS WHEREOF, each Party hereto has caused this Agreement to
be executed in its name by a duly authorized officer as of the day and year
first above written.
BEAR ENERGY LP
By: /s/ Paul J. Posoli
-------------------------------------
Name: Paul J. Posoli
Title: President
WILLIAMS POWER COMPANY, INC.
By: /s/ Andrew D. Sunderman
-------------------------------------
Name: Andrew D. Sunderman
Title: Vice President