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EXHIBIT 99.1
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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<PAGE>
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
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