Asset Sale And Purchase Agreement

ASSET SALE AND PURCHASE AGREEMENT


By and Among


SOUTHWESTERN ENERGY COMPANY,


ARKANSAS WESTERN GAS COMPANY


and


ATMOS ENERGY CORPORATION


Dated as of October 15, 1999


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TABLE OF CONTENTS


Page I. DEFINITIONS.............................................................1


II. SALE AND PURCHASE.......................................................5


2.1. Sale and Purchase of Assets..........................................5


2.2. Excluded Assets......................................................6


2.3. Purchase Price; Adjustment...........................................7


2.4. Assumption of Liabilities............................................9


2.5. Closing.............................................................10


2.6. Nonassignable Contracts.............................................11


III. REPRESENTATIONS AND WARRANTIES OF SELLERS..............................11


3.1. Corporate Existence.................................................11


3.2. Authorization and Validity of Agreement.............................12


3.3. No Contravention....................................................12


3.4. Title to Assets; Adequacy; Condition................................12


3.5. Material Contracts..................................................12


3.6. Real Property.......................................................13


3.7. Permits.............................................................13


3.8. Litigation..........................................................13


3.9. Compliance with Laws................................................13


3.10. Governmental Consents............................................13


3.11. Tax Matters......................................................13


3.12. Financial Statements.............................................14


3.13. Employee Matters.................................................14


3.14. Brokerage........................................................15


3.15. Environmental Matters............................................15


3.16. No Undisclosed Liabilities; No Material Adverse Effect...........16


3.17. Customers; Suppliers.............................................16


3.18. Books and Records................................................16


3.19. Insurance........................................................16


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3.20. Accounts Receivable..............................................16


3.21. Y2K Compliance...................................................16


3.22. No Other Representations.........................................16


IV. REPRESENTATIONS AND WARRANTIES OF BUYER................................17


4.1. Organization........................................................17


4.2. Authorization and Validity of Agreement.............................17


4.3. No Contravention....................................................17


4.4. Consents............................................................17


4.5. Brokerage...........................................................17


4.6. Litigation..........................................................17


4.7. Financing...........................................................17


V. OBLIGATIONS OF SELLERS.................................................17


5.1. Consents............................................................18


5.2. Conduct of Business.................................................18


5.3. Access Before Closing...............................................18


5.4. Clearance Certificate...............................................18


VI. OBLIGATIONS OF BUYER...................................................18


6.1. Consents............................................................18


VII. EMPLOYEE MATTERS....................................................19


7.1. Employment of Employees.............................................19


7.2. Severance Benefits..................................................19


7.3. Transfer of Pension Assets and Liabilities..........................19


7.4. Savings Plan........................................................20


7.5. Indemnification for Plan Liabilities................................20


7.6. Service Credit......................................................21


7.7. Medical and Dental Plans............................................21


7.8. Vacation and Sick Day Benefits Accrued Through Closing Date.........22


7.9. Welfare Benefits....................................................22


7.10. Long Term Disability.............................................22


7.11. Flexible Spending Accounts.......................................22


7.12. WARN Act Liability...............................................22


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7.13. Health Care Continuation Coverage................................22


7.14. Employment Taxes.................................................22


VIII. ADDITIONAL RIGHTS AND OBLIGATIONS...................................23


8.1. Access After Closing................................................23


8.2. Further Assurances..................................................23


8.3. Confidentiality.....................................................23


8.4. Schedules...........................................................23


8.5. Tax Matters.........................................................23


8.6. Use of Name and Logos...............................................24


8.7. Environmental Matters...............................................24


8.8. Abstracts...........................................................24


8.9. Y2K.................................................................25


IX. CONDITIONS TO BUYER'S OBLIGATIONS......................................25


9.1. Representations, Warranties and Covenants of Sellers................25


9.2. No Prohibition......................................................25


9.3. Further Action......................................................25


9.4. No Material Adverse Effect..........................................25


9.5. Abstracts...........................................................25


9.6. Omnibus Gas Transportation and Supply Agreement.....................26


9.7. Other Documents.....................................................26


X. CONDITIONS TO SELLERS' OBLIGATIONS.....................................26


10.1. Representations, Warranties and Covenants of Buyer...............26


10.2. No Prohibition...................................................26


10.3. Further Action...................................................26


10.4. Omnibus Gas Transportation and Supply Agreement..................26


10.5. Other Documents..................................................26


XI. TERMINATION PRIOR TO CLOSING...........................................26


11.1. Termination......................................................26


11.2. Effect of Termination............................................27


XII. INDEMNIFICATION AND SURVIVAL........................................27


12.1. Indemnification by Sellers.......................................27


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12.2. Indemnification by Buyer.........................................27


12.3. Limitations on Liability.........................................27


12.4. Indemnification Procedure........................................28


12.5. Exclusive Remedies...............................................29


XIII. MISCELLANEOUS.......................................................29


13.1. Entire Agreement.................................................29


13.2. Waiver of Bulk Transfer Requirements.............................29


13.3. Successors and Assigns...........................................29


13.4. Counterparts.....................................................29


13.5. Headings.........................................................29


13.6. Modification and Waiver..........................................29


13.7. No Third-Party Beneficiary Rights................................30


13.8. Sales and Transfer Taxes.........................................30


13.9. Expenses.........................................................30


13.10. Waiver of Conditions.............................................30


13.11. Notices..........................................................30


13.12. Knowledge of Sellers.............................................31


13.13. Governing Law....................................................31


13.14. Waiver of Jury Trial.............................................31


13.15. Announcements....................................................31


13.16. Severability.....................................................32


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SCHEDULES


2.1.1 - Owned Property 2.1.2 - Leased Property 2.1.4 - List of Machinery, Equipment, etc. 2.1.6 - Contracts 2.1.13 - Intellectual Property 2.2(c) - Names and Logos 2.2(k) - Other Excluded Assets 2.3.3 - Financial Principles 2.4 - Certain Excluded Liabilities 2.5.2(c) - Gas Transportation and Supply Matters 3.3 - Sellers' Third Party Consents 3.4 - Encumbrances on Transferred Assets 3.5 - Material Contracts 3.6 - Real Property 3.7 - Permits 3.8 - Litigation 3.9 - Compliance with Laws 3.10 - Seller Governmental Consents 3.12 - Financial Statements 3.13.1 - Employee Benefit Plans 3.13.2 - Pension Plans 3.13.4 - Labor Matters 3.15 - Environmental Matters 3.16 - Certain Liabilities 3.19 - Insurance Policies 3.20 - Accounts Receivable 4.4 - Buyer's Consents 7.1 - Transferred Employees 7.2 - Severance Benefits 7.3.2 - Accumulated Benefit Obligation and Calculation Assumption 7.11 - Flexible Spending Accounts 9.3 - Required Non-Governmental Third Party Consents


ASSET SALE AND PURCHASE AGREEMENT


ASSET SALE AND PURCHASE AGREEMENT (the "Agreement") dated as of October 15, 1999, by and among SOUTHWESTERN ENERGY COMPANY, a corporation organized under the laws of the state of Arkansas ("Parent"), ARKANSAS WESTERN GAS COMPANY, a corporation organized under the laws of the state of Arkansas ("AWG" and, together with Parent, the "Sellers"), and ATMOS ENERGY CORPORATION, a corporation organized under the laws of Texas and Virginia ("Buyer").


BACKGROUND


Sellers desire to sell and assign to Buyer, and Buyer desires to purchase and assume from Sellers, the Transferred Assets (as defined hereinafter) and the Assumed Liabilities (as defined hereinafter), all on the terms and subject to the conditions of this Agreement.


TERMS


NOW, THEREFORE, intending to be legally bound hereby, the parties agree as follows:


I. DEFINITIONS.


For purposes of this Agreement, the following terms shall have the following meanings:


"Affiliate" means, when used with respect to a specified Person, another Person that, either directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified.


"Abstracts" has the meaning specified in Section 8.8.


"Agreement" has the meaning specified in the first paragraph.


"Assumed Contracts" has the meaning specified in Section 2.1.6.


"Assumed Liabilities" has the meaning specified in Section 2.4.


"Assumption Agreement" has the meaning specified in Section 2.5.3.


"AWG" has the meaning specified in the first paragraph.


"Business" means the gas distribution and transmission business and the unregulated operations conducted by AWG's Associated Natural Gas Company Division in the State of Missouri immediately prior to the date hereof; provided that the Business shall not be deemed to include any operations of the Sellers conducted in the State of Arkansas.


"Buyer" has the meaning specified in the first paragraph.


"Buyer Medical Plan" has the meaning specified in Section 7.7.1.


"Buyer's Pension Plan" has the meaning specified in Section 7.3.1.


"Buyer's Post-Retirement Trusts" has the meaning specified in Section 7.7.3.


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"Buyer's Savings Plan" has the meaning specified in Section 7.4.


"Closing" and "Closing Date" have the meanings specified in Section 2.5.1.


"Closing Purchase Price" has the meaning specified in Section 2.3.1.


"Closing Statement" has the meaning specified in Section 2.3.3.


"Code" has the meaning specified in Section 7.3.1.


"Current Assets" means the current assets of the Sellers reported as (i) accounts receivable, (ii) inventory, (iii) stores expense undistributed, (iv) deferred gas purchases and (v) (to the extent not exceeding $100,000) other current assets that are included in the Transferred Assets, all as determined in accordance with the Financial Principles applied consistently with the Financial Statements.


"Current Liabilities" means the current liabilities of the Sellers reported as (i) accounts payable, (ii) other taxes payable, (iii) deferred gas purchases, (iv) customer deposits, (v) accrued vacation payable and (vi) (to the extent not exceeding $50,000) other current liabilities that are Assumed Liabilities, all as determined in accordance with the Financial Principles applied consistently with the Financial Statements.


"Current Period" has the meaning specified in Section 2.3.4.


"Eligible Transferred Employee" has the meaning specified in Section 7.4.


"Encumbrances" has the meaning specified in Section 2.1.


"Environmental Laws" means any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, common law, and any enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, writ, consent decree or judgment, relating: to (a) emissions, discharges, releases or threatened releases of Hazardous Materials into the natural environment, including into ambient air, soil, sediments, land surface or subsurface, buildings or facilities, surface water, groundwater, publicly-owned treatment works, septic systems or land; (b) the generation, treatment, storage disposal, use, handling, manufacturing, transportation or shipment of Hazardous Materials; (c) occupational health and safety; or (d) otherwise relating to the pollution or protection of the environment, health, safety or natural resources; provided that "Environmental Laws" shall not mean or refer to any of the foregoing except to the extent in existence and in full force and effect on and as of the Closing Date and, accordingly, shall not include any of the foregoing as it may be enacted, promulgated, amended, changed or altered (by statute, judicial interpretation, official interpretation or otherwise) at any time with effect after the Closing Date.


"Environmental Permit" means any permit, approval, identification number, license or other authorization required under or issued pursuant to any Environmental Law.


"ERISA" has the meaning specified in Section 3.13.2.


"Excluded Assets" has the meaning specified in Section 2.2.


"Excluded Liabilities" has the meaning specified in Section 2.4.


"Financial Principles" has the meaning specified in Section 2.3.3.


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"Financial Statements" has the meaning specified in Section 3.12.


"FSA's" has the meaning specified in Section 7.11.


"Hazardous Material" means (a) any petroleum, petroleum hydrocarbons, gas, gas liquids, or any other petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials in any form or condition or polychlorinated biphenyls in any form or condition or (b) any solid, chemical, material or substance regulated as toxic or hazardous or as a pollutant, contaminant or waste under any Environmental Law.


"Knowledge of Sellers" has the meaning specified in Section 13.12.


"Leased Property" has the meaning specified in Section 2.1.2.


"Leave" has the meaning specified in Section 7.1.


"Losses" has the meaning specified in Section 12.1.


"Material Adverse Effect" means any change in, or effect on, the Business or the Transferred Assets that is or is reasonably likely to be materially adverse to the Transferred Assets taken as a whole or the assets, liabilities, operations, results of operations or financial condition of the Business taken as a whole, except for any such changes or effects resulting from (i) changes in general economic, regulatory or political conditions or changes that affect the industry in general and (ii) this Agreement or the transactions contemplated hereby .


"Material Contracts" has the meaning specified in Section 3.5.


"Matters of Environmental Concern" has the meaning specified in Section 8.7(a).


"Measurement Period" has the meaning specified in Section 2.3.3.


"Names and Logos" has the meaning specified in Section 2.2(c).


"Net Working Capital" has the meaning specified in Section 2.3.3.


"Non-Assigned Contracts" has the meaning specified in Section 2.6.


"Omnibus Gas Transportation and Supply Agreement" has the meaning specified in Section 2.5.2.


"Owned Property" has the meaning specified in Section 2.1.1.


"Parent" has the meaning specified in the first paragraph.


"Pension Plans" has the meaning specified in Section 3.13.2.


"Permits" has the meaning specified in Section 3.7.


"Permitted Encumbrances" has the meaning specified in Section 3.4.


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"Person" means any individual, partnership, firm, corporation, association, trust, limited liability company, unincorporated organization, governmental authority or other entity.


"Plans" has the meaning specified in Section 3.13.1.


"Post-Retirement Benefits" has the meaning specified in Section 7.7.3.


"Pre-Closing Returns" has the meaning specified in Section 8.5.


"Purchase Price" has the meaning specified in Section 2.3.1.


"Returns" has the meaning specified in Section 3.11.


"Seller Medical Plans" has the meaning specified in Section 7.7.1.


"Seller Pension Plan" has the meaning specified in Section 7.3.1.


"Seller Pension Plan Trust" has the meaning specified in Section 7.3.1.


"Seller Savings Plan" has the meaning specified in Section 7.4.


"Sellers" has the meaning specified in the first paragraph.


"Seller's Post-Retirement Trusts" has the meaning specified in Section 7.7.3.


"SFAS 106 Obligations" has the meaning specified in Section 3.13.5.


"System Property" has the meaning specified in Section 2.1.3.


"Taxes" means all federal, state, local and other taxes and similar levies, fees, charges and assessments imposed by a governmental authority, including without limitation, income, gross receipts, sales, use, transfer, business and occupation, franchise, profits, license, lease, service, service use, duties, excise, severance, stamp, occupation, ad valorem, real and personal property, withholding, payroll, and value added taxes.


"Threshold" has the meaning specified in Section 8.7.


"Transfer Taxes" has the meaning specified in Section 13.8.


"Transferred Assets" has the meaning specified in Section 2.1.


"Transferred Employee" and "Transferred Employees" have the meanings specified in Section 7.1.


"Transferred Pension Plan Participants" has the meaning specified in Section 7.3.1.


"Transition Services Agreement" has the meaning specified in Section 2.5.2.


"WARN Act" has the meaning specified in Section 7.12.


"Welfare Plans" has the meaning specified in Section 3.13.3.


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II. SALE AND PURCHASE.


2.1. Sale and Purchase of Assets. Subject to the terms and conditions of this Agreement, at the Closing, each Seller shall sell, transfer and assign to Buyer, free and clear of any lien, pledge, option, security interest, claim, charge or other encumbrance ("Encumbrances"), except Permitted Encumbrances, and Buyer shall purchase and assume from each Seller, the Transferred Assets. For purposes of this Agreement, "Transferred Assets" shall mean the following assets:


2.1.1. The real property owned in fee by Sellers and listed on
Schedule 2.1.1 (the "Owned Property"), together with all improvements,
fixtures, rights, and other appurtenances thereto of Sellers;


2.1.2. The leasehold interests of Sellers in all possessory
leases of real property listed on Schedule 2.1.2 (the "Leased
Property");


2.1.3. All rights of way, easements, appurtenances and similar
realty interests of Sellers relating to the Owned Property or the
Leased Property or necessary for or relating primarily to the Business
(the "System Property");


2.1.4. Machinery, equipment, tools and fixed assets owned by
Sellers listed on Schedule 2.1.4, subject to such additions,
substitutions or deletions thereto as shall have occurred in the
ordinary course of the conduct of the Business prior to the Closing
Date that is consistent with past practice;


2.1.5. All vehicles and other tangible assets of Sellers which
are used primarily in or related primarily to the Business;


2.1.6. All rights of Sellers under the contracts listed on
Schedule 2.1.6, subject to such additions, substitution or deletions
thereto as shall have occurred in the ordinary course of Sellers'
conduct of the Business prior to the Closing Date that is consistent
with past practice (the "Assumed Contracts");


2.1.7. To the extent assignable to Buyer, all of the
governmental permits, franchises, licenses, consents or other
authorizations issued or given to Sellers which relate primarily to the
Business or any of the Transferred Assets and which are required in
connection with the conduct, use, operation or ownership thereof;


2.1.8. Copies of all customer, supplier and personnel records
and other records as are in either Seller's possession or control which
are used primarily in or related primarily to the Business;


2.1.9. Accounts and notes receivable of Sellers which arose
from the operations of the Business (other than accounts and notes
receivable relating to inter-company accounts between the Sellers,
which accounts and notes receivable shall not be included on the
Closing Statement);


2.1.10. All inventories of gas, materials and spare parts of
Sellers used primarily in or relating primarily to the Business;


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2.1.11. All prepaid expenses of Sellers relating primarily to
the Business, except for prepaid expenses attributable to any Excluded
Asset or Excluded Liability;


2.1.12. To the extent the rights and benefits thereunder are
assignable to Buyer, all rights and benefits under any manufacturer's,
subcontractor's, supplier's, repairman's or other third-party
warranties, guarantees, and service and replacement programs, and all
rights of indemnification, insurance proceeds, claims against insurers
and similar rights of Sellers relating to the Transferred Assets or the
Business, except to the extent any such rights or benefits relate to
Excluded Assets or losses or conditions which Sellers have fully
remedied prior to the Closing;


2.1.13. All patents, patent rights, trademarks, trade names
and logos used in the Business listed on Schedule 2.1.13, other than
...