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Exhibit 2.1
MISSOURI GAS
Asset Purchase Agreement
Table of Contents
EXHIBITS AND SCHEDULES
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (“ Agreement ”), made as of September 21, 2005, by and between Aquila, Inc., a Delaware corporation (“ Seller ”), and The Empire District Electric Company, a Kansas corporation (“ Buyer ”).
WHEREAS, Buyer desires to purchase, and Seller desires to sell, the Purchased Assets (as hereinafter defined) upon the terms and conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the Parties’ respective covenants, representations, warranties, and agreements hereinafter set forth, and intending to be legally bound hereby, the Parties agree as follows:
ARTICLE I
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Term |
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Reference |
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Accounting Principles |
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Exhibit 3.1 |
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Accounts Payable |
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Section 2.4(c) |
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Accrued Liability |
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Exhibit 7.9(e)(ii)(C) |
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Acquisition Proposal |
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Section 7.2(e) |
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Adjustment Dispute Notice |
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Section 3.2(c) |
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Allocated Rights and Obligations |
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Section 7.4(e) |
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Allocated VEBA Amount |
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Section 7.9(e)(ii)(D)(2 |
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Assumed Environmental Liabilities |
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Section 2.3(f) |
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Assumed Obligations |
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Section 2.3 |
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Base Net Plant Amount |
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Exhibit 3.1 |
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Base Price |
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Section 3.1 |
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Benefit Continuation Period |
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Section 7.9(e)(ii)(D)(1) |
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Benefit Plan |
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Section 5.12(a) |
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Book Value |
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Exhibit 3.1 |
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Buyer Pension Plan Trust |
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Exhibit 7.9(e)(ii)(C) |
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Buyer’s VEBA |
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Section 7.9(e)(ii)(D)(2) |
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Closing |
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Section 4.1 |
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Closing Assumed Indebtedness Amount |
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Exhibit 3.1 |
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Closing Date |
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Section 4.1 |
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Closing Payment Amount |
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Section 3.2(a) |
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Collective Bargaining Agreement |
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Section 5.11 |
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Confidential Information |
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Section 7.2(b) |
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Confidential Business Information |
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Section 7.2(d) |
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Current Retirees |
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Section 7.9(e)(ii)(D)(1) |
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Customer Notification |
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Section 7.13 |
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Direct Loss |
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Section 9.3(d) |
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Division Income Statement Information |
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Section 5.5(b) |
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Easements |
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Section 7.4(b) |
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Effective Time |
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Section 4.1 |
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Excluded Assets |
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Section 2.2 |
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Excluded Liabilities |
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Section 2.4 |
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Extraordinary Expenditures |
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Exhibit 3.1 |
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Extraordinary Expenditures Adjustment |
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Exhibit 3.1 |
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Extraordinary Expenditures Reference Amount |
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Exhibit 3.1 |
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FERC Accounting Rules |
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Exhibit 3.1 |
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FERC Accounts |
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Exhibit 3.1 |
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Financial Hedge |
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Section 7.4(c)(ii) |
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Franchises |
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Section 5.13(b) |
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GAAP |
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Exhibit 3.1 |
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Grandfathered Active Employees |
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Section 7.9(e)(ii)(D)(1) |
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Grandfathered Individuals |
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Section 7.9(e)(ii)(D)(1) |
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Indemnifiable Loss |
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Section 9.2(a) |
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Indemnifying Party |
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Section 9.3(a) |
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Indemnitee |
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Section 9.2(c) |
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Initial Transfer Amount |
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Exhibit 7.9(e)(ii)(C) |
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Initial Transfer Date |
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Exhibit 7.9(e)(ii)(C) |
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Lease Buy-Out Amount |
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Exhibit 3.1 |
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Local 695 |
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Section 7.9(a)(i) |
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Local 814 |
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Section 7.9(a)(i) |
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Material Business Agreement |
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Section 5.13(a) |
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Net Plant |
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Exhibit 3.1 |
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Net Plant Adjustment |
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Exhibit 3.1 |
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Net Plant at Closing |
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Exhibit 3.1 |
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New Pension Plan |
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Exhibit 7.9(e)(ii)(C) |
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New Plan Section 4044 Amount |
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Exhibit 7.9(e)(ii)(C) |
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Other Arrangements |
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Section 7.4(e) |
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Other Plan Participants |
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Exhibit 7.9(e)(ii)(C) |
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Post-Closing Adjustment Statement |
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Section 3.2(b) |
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Post-Retirement Welfare Benefits |
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Section 7.9(e)(ii)(D)(1) |
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Purchase Price |
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Section 3.1 |
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Purchased Assets |
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Section 2.1 |
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Purchased Gas Cost Disallowances |
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Section 7.15 |
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Qualifying Offer |
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Section 7.9(b) |
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Real Property |
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Section 2.1(a) |
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Reduction Amount |
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Exhibit 7.9(e)(ii)(C) |
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Retained Agreements |
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Section 2.2(l) |
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Savings Plan |
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Section 7.9(e)(ii)(E) |
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Section 4044 Amount |
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Exhibit 7.9(e)(ii)(C) |
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Selected Balance Sheet Information |
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Section 5.5(a) |
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Seller Pension Plan Trust |
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Exhibit 7.9(e)(ii)(C) |
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Seller’s VEBA |
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Section 7.9(e)(ii)(D)(2) |
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SFAS 132 Assumptions |
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Exhibit 7.9(e)(ii)(C) |
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Shared Agreements |
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Section 7.4(e) |
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Shared Easement Rights |
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Section 7.4(b) |
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Shared Easements |
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Section 7.4(b) |
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Spin-Off Date |
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Exhibit 7.9(e)(ii)(C) |
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Substitute Arrangements |
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Section 7.4(e) |
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Termination Date |
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Section 10.1(b) |
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Third Party Claim |
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Section 9.3(a) |
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Transferable Environmental Permits |
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Section 2.1(h) |
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Transferable Permits |
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Section 2.1(g) |
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Transferred Employee |
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Section 7.9(c) |
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Transition Committee |
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Section 7.1(b) |
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True-Up Amount |
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Exhibit 7.9(e)(ii)(C) |
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True-Up Date |
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Exhibit 7.9(e)(ii)(C) |
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1.2 Other Definitional and Interpretive Matters . Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation apply:
(a) Calculation of Time Period . When calculating the period of time before which, within which, or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period will be excluded. If the last day of such period is a non-Business Day, the period in question will end on the next succeeding Business Day.
(b) Dollars . Any reference in this Agreement to “dollars” or “$” means U.S. dollars.
(c) Exhibits and Schedules . Unless otherwise expressly indicated, any reference in this Agreement to an “Exhibit” or a “Schedule” refers to an Exhibit or Schedule to this Agreement. The Exhibits and Schedules (including the preamble thereto) to this Agreement are hereby incorporated and made a part hereof as if set forth in full herein and are an integral part of this Agreement. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein are defined as set forth in this Agreement.
(d) Gender and Number . Any reference in this Agreement to gender includes all genders, and the meaning of defined terms applies to both the singular and the plural of those terms.
(e) Headings . The provision of a Table of Contents, the division of this Agreement into Articles, Sections, and other subdivisions, and the insertion of headings are for convenience of reference only and do not affect, and will not be utilized in construing or interpreting, this Agreement. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.
(f) “ Herein ”. The words such as “ herein ,” “ hereinafter ,” “ hereof ,” and “ hereunder ” refer to this Agreement (including the Schedules and Exhibits to this Agreement) as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.
(g) “ Including ”. The word “ including ” or any variation thereof means “ including, without limitation ” and does not limit any general statement that it follows to the specific or similar items or matters immediately following it.
(h) “ To the extent ”. The words “ to the extent ” when used in reference to a liability or other matter, means that the liability or other matter referred to is included in part or excluded in part, with the portion included or excluded determined based on the portion of such liability or other matter exclusively related to the subject. For example, if 40 percent of a liability is attributable to the Business, then a statement that Buyer will assume the liability “to the extent related to the operation of the Business” means that Buyer will assume 40 percent of the liability. As an additional example, if a performance obligation attributable to the Business is by its terms to be performed prior to and following the Effective Time, a statement that Buyer will assume the obligation “to the extent such obligation relates to the period from and after the Effective Time” means that Buyer will assume all liability for the performance from and after the Effective Time, and
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that Seller would remain liable for any failure to perform such obligations prior to the Effective Time.
(i) “ Principally in the Business ”. With reference to assets owned by Seller, and liabilities of Seller, which are used by, in, or for, or relate to, the Business, the phrases “principally in the Business,” “principally for the Business,” and other statements of similar import will be construed to refer to assets or liabilities that are: (A) specifically listed in a Schedule setting forth Purchased Assets or Assumed Obligations; or (B) otherwise are devoted principally to (or in the case of liabilities, are related principally to) the Business other than Excluded Assets and Excluded Liabilities.
1.3 Joint Negotiation and Preparation of Agreement . The Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as jointly drafted by the Parties hereto and no presumption or burden of proof favoring or disfavoring any Party will exist or arise by virtue of the authorship of any provision of this Agreement.
ARTICLE II
PURCHASE AND SALE
2.1 The Sale . Upon the terms and subject to the satisfaction of the conditions contained in this Agreement, at the Closing, Seller will sell, assign, convey, transfer, and deliver to Buyer, and Buyer will purchase and acquire from Seller, free and clear of all Encumbrances (except for Permitted Encumbrances), all of Seller’s right, title, and interest in, to, and under the real and personal property, tangible or intangible, described below, as the same exists at the Effective Time (and, as applicable and as permitted or contemplated hereby, with such additions and deletions as may occur from the date hereof through the Effective Time), except to the extent that such assets are Excluded Assets (collectively, the “ Purchased Assets ”):
(a) the real property and real property interests described on Schedule 2.1(a) , including buildings, structures, other improvements, and fixtures located thereon, the leasehold and subleasehold interests under the leases described on Schedule 5.9 (to the extent such leasehold and subleasehold interests are assignable), and the Easements and Shared Easement Rights to be conveyed at the Closing pursuant to Section 7.4(b) (to the extent such Easements and Shared Easement Rights are assignable) (collectively, the “ Real Property ”);
(b) the accounts receivable, billed and unbilled, inventories, and other assets, in each case, as reflected in the applicable FERC Accounts;
(c) the Documents;
(d) all assets reflected in Net Plant as set forth on Exhibit 3.1. and, to the extent not reflected in Net Plant, the machinery, equipment, vehicles, furniture, pipeline system and other tangible personal property owned by Seller and used principally in the Business, including the vehicles and equipment listed on Schedule 2.1(d) , and all warranties against manufacturers or vendors relating thereto, to the extent that such warranties are freely transferable;
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(e) the Business Agreements and the Franchises, in each case, to the extent the same are assignable;
(f) the Allocated Rights and Obligations to the extent transferred to Buyer pursuant to Section 7.4(e);
(g) the Permits listed on Schedule 5.15 , in each case to the extent the same are assignable (the “ Transferable Permits ”);
(h) the Environmental Permits listed on Schedule 5.10(a)-2 , in each case to the extent the same are assignable (the “ Transferable Environmental Permits ”);
(i) Claims and defenses of Seller to the extent such Claims or defenses arise solely with respect to the Assumed Obligations, provided that any such Claims and defenses will be assigned to Buyer without warranty or recourse;
(j) any assets acquired by Seller pursuant to Section 7.4(d) for inclusion in the Purchased Assets;
(k) assets transferred pursuant to Section 7.9; and
(l) any other assets owned by Seller and used principally in the Business.
2.2 Excluded Assets . The Purchased Assets do not include any property or assets of Seller not described in Section 2.1 and, notwithstanding any provision to the contrary in Section 2.1 or elsewhere in this Agreement, the Purchased Assets do not include the following property or assets of Seller (all assets excluded pursuant to this Section 2.2, the “ Excluded Assets ”):
(a) cash, cash equivalents, and bank deposits;
(b) certificates of deposit, shares of stock, securities, bonds, debentures, evidences of indebtedness, and any other debt or equity interest in any Person;
(c) the Seller Marks;
(d) properties and assets used in or for the conduct of the Electric Operation which are not used principally in the Business;
(e) subject to Section 3.4 hereof, any refund or credit (i) related to Taxes paid by or on behalf of Seller, whether such refund is received as a payment or as a credit against future Taxes payable, or (ii) relating to a period before the Closing Date;
(f) all books, records, or the like other than the Documents;
(g) any assets that have been disposed of in the ordinary course of business or otherwise in compliance with this Agreement prior to Closing;
(h) except as expressly provided in Section 2.1(d) and Section 2.1(i), all of the Claims or causes of action of Seller against any Person;
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(i) assets used for performance of the Central or Shared Functions;
(j) all insurance policies, and rights thereunder, including any such policies and rights in respect of the Purchased Assets or the Business, except as otherwise provided in Section 7.10(b);
(k) the rights of Seller arising under or in connection with this Agreement, any certificate or other document delivered in connection herewith, and any of the transactions contemplated hereby and thereby;
(l) all (i) agreements and contracts set forth on Schedule 2.2(l) (the “ Retained Agreements ”), (ii) Shared Agreements (except to the extent provided by Section 7.4(e)), and (iii) other agreements and contracts not specifically included in the Business Agreements and Franchises that are not principally used for (or do not exist principally for the benefit of) the Business;
(m) all software, software licenses, information systems, and any items set forth in or generally described in subparts (i) through (vi) of the definition of “Documents” in Section 1.1(a); and
(n) the assets and other rights set forth on Schedule 2.2(n) .
2.3 Assumed Obligations . On the Closing Date, Buyer will deliver to Seller the Assignment and Assumption Agreement pursuant to which Buyer will assume and agree to discharge all of the debts, liabilities, obligations, duties, and responsibilities of Seller of any kind and description, whether absolute or contingent, monetary or non-monetary, direct or indirect, known or unknown, or matured or unmatured, or of any other nature, to the extent principally related to the Purchased Assets or the Business, other than Excluded Liabilities (the “ Assumed Obligations ”), in accordance with the respective terms and subject to the respective conditions thereof, including the following liabilities and obligations:
(a) all liabilities and obligations of Seller under the Business Agreements, the Transferable Permits, the Transferable Environmental Permits, and the Allocated Rights and Obligations transferred to Buyer pursuant to Section 7.4(e), and any other agreements or contractual rights assigned to Buyer pursuant to the terms of the Agreement, except as provided in Section 2.4(b);
(b) all liabilities and obligations of Seller with respect to customer deposits, customer advances for construction and other similar items to the extent reflected in the applicable FERC Accounts;
(c) all liabilities and obligations relating to unperformed service obligations, Easement relocation obligations, and engineering and construction required to complete scheduled construction, construction work in progress, and other capital expenditure projects, in each case related principally to the Business and outstanding on or arising after the Effective Time;
(d) all liabilities and obligations associated with the Purchased Assets or the Business in respect of Taxes for which Buyer is liable pursuant to Section 3.4;
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(e) all liabilities and obligations for which Buyer is responsible pursuant to Section 7.9;
(f) all liabilities, obligations, Environmental Claims, and demands arising under, in respect of, or relating to compliance or non-compliance by Seller with past, present, and future Environmental Laws, existing, arising, or asserted with respect to the Business or the Purchased Assets, whether before, on, or after the Closing Date (the “ Assumed Environmental Liabilities ”). For avoidance of doubt, the Assumed Environmental Liabilities include all liabilities and obligations (including liabilities and obligations based upon the presence, Release, or threatened Release of Hazardous Materials at any location) of Seller directly or indirectly relating to, caused by, or arising in connection with the operation, ownership, use, or other control of or activity of or relating to any installation, facility, plant (including any manufactured gas plant), or site (including any manufactured gas plant site) that at the Closing is, or at any time prior to the Closing was, (i) operated, owned, leased, or otherwise under the control of or attributed to any of Seller, the Business, or any predecessor in interest of Seller or the Business, and (ii) located in the Territory or any areas previously served by the Business or any predecessor of the Business; provided, however, that the Assumed Environmental Liabilities do not include any such liabilities, obligations, Environmental Claims, or demands in respect of real property that is both (A) owned or leased by Seller as of the date of this Agreement, and (B) not included in the Purchased Assets;
(g) all liabilities and obligations of Seller or Buyer arising on or after the Effective Time under (i) any Regulatory Orders applicable to the Business or the Purchased Assets, or (ii) imposed on Buyer or the Purchased Assets or Business in connection with any Required Regulatory Approval; and
(h) the liabilities and obligations set forth on Schedule 2.3(h) .
2.4 Excluded Liabilities . Buyer does not assume and will not be obligated to pay, perform, or otherwise discharge any of the following liabilities or obligations (collectively, the “ Excluded Liabilities ”):
(a) any liabilities or obligations of Seller to the extent related to any Excluded Assets;
(b) any liabilities or obligations of Seller for any breach or default by Seller prior to the Effective Time, or any event prior to the Effective Time, which after the giving of notice or passage of time or both (it being understood that the giving of notice or passage of time may occur prior to or after the Effective Time) would constitute a default or breach by Seller, of or under the Business Agreements, the Permits, or the Environmental Permits, except to the extent that such liability or obligation is taken into account in determining the Adjustment Amount;
(c) all trade accounts payable and other accrued and unpaid expenses in respect of goods and services incurred by or for the Business in the ordinary course of business or otherwise, to the extent attributable to the period prior to the Effective Time (the “ Accounts Payable ”);
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(d) any liabilities or obligations of Seller in respect of indebtedness for borrowed money;
(e) any liabilities or obligations in respect of Taxes of Seller or any Tax Affiliate of Seller, or any liability of Seller for unpaid Taxes of any Person under Treasury Regulation section 1.1502-6 (or similar provision of state, local, or foreign law) as a transferee or successor, by contract or otherwise, except for Taxes for which Buyer is liable pursuant to Section 3.4 or Section 7.7;
(f) any obligations of Seller for wages, employment Taxes, or severance pay to the extent attributable to the period prior to the Effective Time (except, with respect to vacation days and severance pay, as otherwise provided in Section 7.9);
(g) except for the Assumed Environmental Liabilities, Losses from an Actionable Incident related to the Purchased Assets or Business;
(h) except as otherwise provided in Section 7.9, any liability or obligation of Seller under any deferred compensation arrangement or severance policy or any obligation to make any parachute or retention payment;
(i) any liabilities or obligations of Seller arising under or in connection with this Agreement or the Ancillary Agreements delivered in connection herewith, and any of the transactions contemplated hereby and thereby;
(j) any Claims or Losses arising out of, in connection with or related to (i) the lawsuit filed on September 4, 2004 and pending, with consolidated lawsuits, in the U.S. District Court for the Western District of Missouri as described on Schedule 5.12(d) , Item 2 (including indemnification obligations owed or claimed to be owed to members of Seller’s Board and/or employees); (ii) any liabilities of the Business owed or claimed to be owed to Seller as of the Effective Time (including intercompany or interdivisional accounts payable); (iii) any actions or inactions by Seller or any employee of Seller prior to Closing which constitute illegal or criminal activity in connection with Seller’s (A) receipt of any rebates, payments, commissions, promotional allowances or any other economic benefit, regardless of its nature or type, from any customer, supplier, trading company, shipping company, governmental employee or other Person with whom Seller has done business directly or indirectly, or (B) giving or agreeing to give any gift or similar benefit to any customer, supplier, trading company, shipping company, governmental employee or other person or entity who is or may be in a position to help or hinder the business of Seller (or assist Seller in connection with any actual or proposed transaction); or (iv) customer deposits, customer advances for construction and other similar items to the extent not reflected in the FERC Accounts; and
(k) any criminal fines, penalties, or sanctions imposed as a result of actions or omissions by Seller or any employee of Seller prior to the Closing.
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ARTICLE III
PURCHASE PRICE
3.1 Purchase Price . The purchase price for the Purchased Assets (the “ Purchase Price ”) will be an amount equal to $84,000,000 (the “ Base Price ”), adjusted as follows: (i) the Base Price will be increased by the Adjustment Amount if the Adjustment Amount is a positive number; and (ii) the Base Price will be reduced by the Adjustment Amount if the Adjustment Amount is a negative number. The Adjustment Amount will be determined in accordance with the requirements set forth on Exhibit 3.1 .
3.2 Determination of Purchase Price .
(a) No later than 15 days prior to the Closing Date, Seller will prepare and deliver to Buyer a good faith estimate of the Purchase Price, based on Seller’s good faith estimates of the Adjustment Amount (such estimated Purchase Price being referred to herein as the “ Closing Payment Amount ”).
(b) Within 90 days after the Closing Date, Seller will prepare and deliver to Buyer a statement (the “ Post-Closing Adjustment Statement ”) that reflects Seller’s determination of (i) the Adjustment Amount, and (ii) the Purchase Price based on the Adjustment Amount. In addition, Seller will provide Buyer with supporting calculations, in reasonable detail, for such determinations at the time it delivers the Post-Closing Adjustment Statement. Buyer agrees to cooperate with Seller in connection with Seller’s preparation of the Post-Closing Adjustment Statement and related information, and will provide Seller with access to its books, records, information, and employees as Seller may reasonably request.
(c) The amounts determined by Seller as set forth in the Post-Closing Adjustment Statement will be final, binding, and conclusive for all purposes unless, and only to the extent, that within 60 days after Seller has delivered the Post-Closing Adjustment Statement Buyer notifies Seller of any dispute with matters set forth in the Post-Closing Adjustment Statement. Any such notice of dispute delivered by Buyer (an “ Adjustment Dispute Notice ”) will identify with specificity each item in the Post-Closing Adjustment Statement with respect to which Buyer disagrees, the basis of such disagreement, and Buyer’s position with respect to such disputed item.
(d) If Buyer delivers an Adjustment Dispute Notice in compliance with Section 3.2(c), then (i) the undisputed portion of the total proposed Adjustment Amount set forth in the Post-Closing Adjustment Statement (together with interest thereon for the period commencing on the Closing Date through the date of payment calculated at the Prime Rate in effect on the Closing Date) will be paid by the appropriate Party, in accordance with the payment procedures set forth in Section 3.2(e); and (ii) Buyer and Seller will attempt to reconcile their differences and any resolution by them as to any disputed amounts will be final, binding, and conclusive for all purposes on the Parties. If Buyer and Seller are unable to reach a resolution with respect to all disputed items within 45 days of delivery of the Adjustment Dispute Notice, Buyer and Seller will submit any items remaining in dispute for determination and resolution to the Independent Accounting Firm, which will be instructed to determine and report to the Parties, within
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30 days after such submission, upon such remaining disputed items. The report of the Independent Accounting Firm will be final, binding, and conclusive on the Parties for all purposes. The fees and disbursements of the Independent Accounting Firm will be allocated between Buyer and Seller so that Buyer’s share of such fees and disbursements will be in the same proportion that the aggregate amount of such remaining disputed items so submitted to the Independent Accounting Firm that is unsuccessfully disputed by Buyer (as finally determined by the Independent Accounting Firm) bears to the total amount of such remaining disputed amounts so submitted to the Independent Accounting Firm.
(e) Within five days following the final determination of the Purchase Price pursuant to Sections 3.2(c) and 3.2(d), (i) if the Purchase Price is greater than the Closing Payment Amount, Buyer will pay the difference (adjusted to reflect any payment pursuant to Section 3.2(d)(i)) to Seller; or (ii) if the Purchase Price is less than the Closing Payment Amount, Seller will pay the difference (adjusted to reflect any payment pursuant to Section 3.2(d)(i)) to Buyer. Any amount paid under this Section 3.2(e) will be paid with interest for the period commencing on the Closing Date through the date of payment, calculated at the Prime Rate in effect on the Closing Date, in cash by wire transfer of immediately available funds to the account specified by the Party receiving payment.
3.3 Allocation of Purchase Price . The sum of the Purchase Price and the Assumed Obligations will be allocated among the Purchased Assets on a basis consistent with section 1060 of the Code and the Treasury Regulations thereunder. The Parties will work together in good faith to agree upon such allocation as soon as practicable following the Closing Date. In the event that such agreement has not been reached within 30 days after the final determination of the Purchase Price pursuant to Sections 3.2(c) and 3.2(d), the allocation will be determined by the Independent Accounting Firm, and such determination will be binding on the Parties. Each Party will pay one-half of the fees and expenses of the Independent Accounting Firm in connection with such determination. Each Party will report the transactions contemplated by the Agreement for federal Income Tax and all other Tax purposes in a manner consistent with such allocation. Each Party will provide the other promptly with any other information required to complete Form 8594 under the Code. Each Party will notify the other, and will provide the other with reasonably requested cooperation, in the event of an examination, audit, or other proceeding regarding the allocations provided for in this Section 3.3.
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3.4 Proration .
(a) All Taxes, utility charges, and similar items customarily prorated, including those listed below, to the extent relating to the Business or the Purchased Assets will be prorated as of the Effective Time, with Seller liable to the extent such items relate to any period prior to the Effective Time, and Buyer liable to the extent such items relate to any period from and after the Effective Time. To the extent that Seller determines in good faith that amounts to be prorated under this Section 3.4 can be reasonably estimated at Closing, Seller will provide Buyer with such estimate and the Parties will adjust the amounts paid at Closing to reflect such prorations. Such items to be prorated will include:
(i) personal property and real property Taxes, assessments, franchise Taxes, and other similar charges, including charges for water, telephone, electricity, and other utilities;
(ii) any permit, license, registration, compliance assurance fees or other fees with respect to any Transferable Permits and Transferable Environmental Permits; and
(iii) rents under any leases of real or personal property.
(b) In connection with any real property Tax prorations, including installments of special assessments, Buyer will be credited with an amount equal to the amount of the current real property Tax or installment of special assessments, as the case may be, multiplied by a fraction, in each instance (i) the numerator of which is the number of days from the first day of the tax or assessment period in which the Closing Date occurs to the day before the Closing Date, and (ii) the denominator of which is the total number of days in the tax or assessment period in which the Closing Date occurs. In connection with any other prorations, in the event that actual amounts are not available at the Closing Date, the proration will be based upon the Taxes, assessments, charges, fees, or rents for the most recent period completed prior to the Closing Date for which actual Taxes, assessments, charges, fees, or rents are available. All prorations will be based upon the most recent available Tax rates, assessments, and valuations. Any prorations will be made so as to avoid duplication of any items, and will not include items which are otherwise taken into account in determining the Purchase Price, including the Adjustment Amount.
(c) The proration of all items under this Section 3.4 will be recalculated by Buyer within 60 days following the date upon which the actual amounts become available to Buyer. Buyer will notify Seller promptly of such recalculated amounts, and will provide Seller with all documentation relating to such recalculations, including tax statements and other notices from third parties. The Parties will make such payments to each other as are necessary to reconcile any estimated amounts prorated as of the Effective Time with the final amounts to be prorated. Seller and Buyer agree to furnish each other with such documents and other records as may be reasonably requested in order to confirm all proration calculations made pursuant to this Section 3.4.
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ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing . Upon the terms and subject to the satisfaction of the conditions contained in Article VIII of this Agreement, the closing of the purchase and sale of the Purchased Assets and assumption of the Assumed Obligations (the “ Closing ”) will take place at the offices of Blackwell Sanders Peper Martin LLP in Kansas City, Missouri, beginning at 10:00 A.M. (Kansas City, Missouri time) on the first Business Day of the calendar month following the calendar month during which the conditions set forth in Article VIII (other than conditions to be satisfied by deliveries at the Closing) have been satisfied or waived, or at such other place or time as the Parties may agree. The date on which the Closing occurs is referred to herein as the “ Closing Date .” The purchase and sale of the Purchased Assets and assumption of the Assumed Obligations will be effective as of 12:01 A.M., Kansas City, Missouri time, on the Closing Date (the “ Effective Time ”).
4.2 Payment of Closing Payment Amount . At the Closing, Buyer will pay or cause to be paid to Seller the Closing Payment Amount, by wire transfer of immediately available funds or by such other means as may be agreed upon by Seller and Buyer.
4.3 Deliveries by Seller . At or prior to the Closing, Seller will deliver the following to Buyer:
(a) the Bill of Sale, duly executed by Seller;
(b) the Assignment and Assumption Agreement and the Transition Services Agreement, duly executed by Seller;
(c) all consents, waivers or approvals, in form reasonably satisfactory to Buyer, obtained by Seller from third parties in connection with this Agreement;
(d) the certificate contemplated by Section 8.2(d);
(e) one or more deeds of conveyance of the parcels of Real Property with respect to which Seller holds fee interests, substantially in the form of the Special Warranty Deed, duly executed and acknowledged by Seller and in recordable form;
(f) one or more (as reasonably requested by Buyer) instruments of assignment or conveyance, substantially in the form of the Assignment of Easements, as are necessary to transfer the Easements and the Shared Easement Rights pursuant to Section 7.4(b);
(g) all such other instruments of assignment or conveyance as are reasonably requested by Buyer in connection with the transfer of the Purchased Assets to Buyer in accordance with this Agreement;
(h) certificates of title for certificated motor vehicles or other titled Purchased Assets, duly executed by Seller as may be required for transfer of such titles to Buyer pursuant to this Agreement;
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(i) terminations or releases of Encumbrances on the Purchased Assets other than the Permitted Encumbrances; and
(j) such other agreements, documents, instruments, and writings as are required to be delivered by Seller at or prior to the Closing Date pursuant to this Agreement.
4.4 Deliveries by Buyer . At or prior to the Closing, Buyer will deliver the following to Seller:
(a) the Assignment and Assumption Agreement and the Transition Services Agreement, duly executed by Buyer;
(b) the certificate contemplated by Section 8.3(c);
(c) a notarized statement in a form provided by Seller that satisfies the requirements of 10 CSR 25-10.010(3)(B)(3) relating to the former manufactured gas plant site in Chillicothe, Missouri;
(d) all consents, waivers, or approvals, in form reasonably satisfactory to Seller, obtained by Buyer from third parties in connection with this Agreement;
(e) all such other documents, instruments, and undertakings as are reasonably requested by Seller in connection with the assumption by Buyer of the Assumed Obligations in accordance with this Agreement; and
(f) such other agreements, documents, instruments and writings as are required to be delivered by Buyer at or prior to the Closing Date pursuant to this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby, except as set forth in, or qualified by any matter set forth in, the Seller Disclosure Schedule (as the same may be supplemented or amended pursuant to Section 7.8), Seller represents and warrants to Buyer as set forth in this Article V.
5.1 Organization; Qualification . Seller is a corporation duly organized, validly existing, and in good standing under the laws of Delaware and has all requisite corporate power and authority to own, lease, and operate the Purchased Assets and to carry on the Business as presently conducted. Seller is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of the Business, or the ownership or operation of any Purchased Assets, by Seller makes such qualification necessary.
5.2 Authority Relative to this Agreement and the Ancillary Agreements . Seller has all corporate power and authority necessary to execute and deliver this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Ancillary Agreements and the consummation
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of the transactions contemplated hereby and thereby have been duly and validly authorized by the board of directors of Seller and no other corporate proceedings on the part of Seller are necessary to authorize this Agreement and the Ancillary Agreements or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and the Ancillary Agreements at Closing will be, duly and validly executed and delivered by Seller, and constitute (and will constitute in the case of the Ancillary Agreements) valid and binding agreements of Seller, enforceable against Seller in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, or other similar laws affecting or relating to enforcement of creditors’ rights generally or general principles of equity.
5.3 Consents and Approvals; No Violation . Except as set forth in Schedule 5.3 , the execution and delivery of this Agreement and the Ancillary Agreements by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby, do not:
(a) conflict with or result in any breach of Seller’s Governing Documents;
(b) result in a default (including with notice, lapse of time, or both), or give rise to any right of termination, cancellation, or acceleration, under any of the terms, conditions, or provisions of any note, bond, mortgage, indenture, agreement, lease, or other instrument or obligation to which Seller or any of its Affiliates is a party or by which Seller or any of its Affiliates, the Business or any of the Purchased Assets may be bound, except for such defaults (or rights of termination, cancellation, or acceleration) as to which requisite waivers or consents have been, or will prior to the Effective Time be, obtained or which if not obtained or made would not, individually or in the aggregate, prevent or materially delay the consummation of the transactions contemplated by this Agreement;
(c) violate any Law or Order applicable to Seller, any of its Affiliates, the Business or any of the Purchased Assets;
(d) require any declaration, filing, or registration with, or notice to, or authorization, consent, or approval of any Governmental Entity, other than (i) the Seller Required Regulatory Approvals, (ii) such declarations, filings, registrations, notices, authorizations, consents, or approvals which, if not obtained or made, would not, individually or in the aggregate, prevent or materially delay the consummation of the transactions contemplated by this Agreement, or (iii) any requirements which become applicable to Seller as a result of the specific regulatory status of Buyer (or any of its Affiliates) or as a result of any other facts that specifically relate to any business or activities in which Buyer (or any of its Affiliates) is or proposes to be engaged.
5.4 Governmental Filings . Since December 31, 2004, Seller has filed or caused to be filed with the PSC all material forms, statements, reports, and documents (including all exhibits, amendments, and supplements thereto) required by Law or Order to be filed by Seller with the PSC with respect to the Business and the Purchased Assets. As of the respective dates on which such forms, statements, reports, and documents were filed, each (to the extent prepared by Seller and excluding information prepared or provided by third parties) complied in all material
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respects with all requirements of any Law or Order applicable to such form, statement, report, or document in effect on such date.
5.5 Financial Information .
(a) Schedule 5.5(a) sets forth the Book Values, as of December 31, 2004, and June 30, 2005, respectively, of selected balance sheet information with respect to the Purchased Assets and the Business. The information set forth in Schedule 5.5(a) is referred to herein as the “ Selected Balance Sheet Information .”
(b) Schedule 5.5(b) sets forth the division income statements for the Business for the 12-month period ended December 31, 2004, and the six-month period ended June 30, 2005. The information set forth in Schedule 5.5(b) is referred to herein as the “ Division Income Statement Information .”
(c) The Selected Balance Sheet Information and the Division Income Statement Information fairly present as of the dates thereof or for the periods covered thereby, in all material respects, the items reflected therein, all in accordance with (i) FERC Accounting Rules applied on a consistent basis in accordance with the Seller’s normal accounting practices, and (ii) except as indicated in the notes thereto, the basis upon which the financial information set forth on Schedule 3.1-C was prepared.
5.6 No Material Adverse Effect . Except as set forth in Schedule 5.6 , or as otherwise contemplated by this Agreement, since December 31, 2004, and until the date hereof, no change or event has occurred which, either individually or in the aggregate, has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.
5.7 Operation in the Ordinary Course . Except as otherwise disclosed herein or set forth in Schedule 5.7 , or otherwise contemplated or permitted pursuant to the terms hereof, since December 31, 2004, and until the date hereof, the Business has been operated in the ordinary course of business consistent with Good Utility Practice.
5.8 Title . Except as set forth on Schedule 5.8 , Seller (i) owns good and marketable title to (or in the case of leased property, to Seller’s knowledge, has a valid and enforceable leasehold interest in) the Real Property, the Easements, and the Shared Easements, and (ii) has good title to the other Purchased Assets, in each case, free and clear of all Encumbrances other than Permitted Encumbrances. The Easements and the Shared Easements are all of the easements, railroad crossing rights and rights-of-way, and similar rights (other than public rights-of-way) necessary for the operation of the Business as currently conducted.
5.9 Leases . Schedule 5.9 lists all real property leases under which Seller is a lessee or lessor that relate principally to the Business or the Purchased Assets.
5.10 Environmental . The only representations and warranties given in respect to Environmental Laws, Environmental Permits, Environmental Claims, or other environmental matters are those contained in this Section 5.10, and none of the other representations and warranties contained in this Agreement will be deemed to constitute, directly or indirectly, a representation and warranty with respect to Environmental Laws, Environmental Permits, Environmental Claims, other environmental matters, or matters incident to or arising out of or in
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connection with any of the foregoing. All such matters are governed exclusively by this Section 5.10 and by Articles II and IX.
(a) Except as set forth on Schedule 5.10(a)-1 , to Seller’s Knowledge, (i) Seller presently possesses all Environmental Permits necessary to operate the Business as it is currently being operated, and (ii) the Purchased Assets and the Business are in compliance, in all material respects, with the requirements of such Environmental Permits and Environmental Laws. Schedule 5.10(a)-2 sets forth a list of all material Environmental Permits held by Seller for the operation of the Business.
(b) Except as set forth on Schedule 5.10(b) , to Seller’s Knowledge, neither Seller nor any Affiliate of Seller has received within the last three years any written notice, report, or other information regarding any actual or alleged violation of Environmental Laws or any liabilities or potential liabilities, including any investigatory, remedial, or corrective obligations, relating to the operation of the Business or the Purchased Assets arising under Environmental Laws.
(c) Except as set forth on Schedule 5.10(c) , (i) to Seller’s Knowledge, there is and has been no Release from, in, on, or beneath the Real Property that could form a basis for an Environmental Claim, and (ii) there are no Environmental Claims related to the Purchased Assets or the Business, which are pending or, to Seller’s Knowledge, threatened against Seller.
(d) Seller has advised Buyer of the existence of, or made available to Buyer, all material correspondence, studies, audits, reviews, investigations, analyses, and reports on material environmental matters relating to the Purchased Assets or the Business that are in the possession or reasonable control of Seller.
5.11 Labor Matters . Schedule 5.11 lists each collective bargaining agreement covering any of the Business Employees to which Seller is a party or is subject (each, a “ Collective Bargaining Agreement ”). Except to the extent set forth in Schedule 5.11 , (i) Seller is in compliance with all Laws applicable to the Business Employees respecting employment and employment practices, terms and conditions of employment, and wages and hours; (ii) Seller has not received written notice of any unfair labor practice complaint against Seller pending before the National Labor Relations Board with respect to any of the Business Employees; (iii) Seller has not received notice that any representation petition respecting the Business Employees has been filed with the National Labor Relations Board; (iv) Seller is in compliance with its obligations under the Collective Bargaining Agreements; (v) no arbitration proceeding arising out of or under the Collective Bargaining Agreements is pending against Seller; and (vi) there is no labor strike, slowdown, work stoppage, or lockout actually pending or, to Seller’s Knowledge, threatened against Seller in respect of the Purchased Assets or the Business. Except for obligations to be assumed or undertaken by Buyer pursuant to Section 7.9, there are no employment, severance, or change in control agreements or contracts between Seller and any Business Employee under which Buyer would have any liability.
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5.12 ERISA; Benefit Plans .
(a) Schedule 5.12(a) lists each employee benefit plan (as such term is defined in section 3(3) of ERISA) and each other plan, program, or arrangement providing benefits to employees that is maintained by, contributed to, or required to be contributed to by Seller as of the date hereof on account of current Business Employees or persons who have retired or may retire from the Business (each, a “ Benefit Plan ”). Copies of such plans and all amendments thereto, together with the most recent annual report and actuarial report with respect thereto, if any, have been made available to Buyer.
(b) Each Benefit Plan that is intended to be qualified under section 401(a) of the Code has received a determination from the Internal Revenue Service that such Benefit Plan is so qualified, and each trust that is intended to be exempt under section 501(a) of the Code has received a determination letter that such trust is so exempt. Nothing has occurred since the date of such determination that would materially adversely affect the qualified or exempt status of such Benefit Plan or trust, nor will the consummation of the transactions provided for by this Agreement have any such effect. Seller has made available to Buyer a copy of the most recent determination letter of the IRS with respect to each such Benefit Plan or trust.
(c) Each Benefit Plan has been maintained, funded, and administered in material compliance with its terms, the terms of any applicable Collective Bargaining Agreements, and all applicable Laws, including ERISA and the Code. There is no “accumulated funding deficiency” within the meaning of section 412 of the Code with respect to any Benefit Plan which is an “employee pension benefit plan” as defined in section 3(2) of ERISA. No reportable event (within the meaning of section 4043 of ERISA) and no event described in sections 4041, 4042, 4062 or 4063 of ERISA has occurred in connection with any Benefit Plan other than events which would not, individually or in the aggregate, have an adverse effect on the Purchased Assets or Business. No proceeding has been initiated to terminate the Seller Pension Plan. Neither Seller nor any ERISA Affiliate has any obligation to contribute to or any other liability under or with respect to any multiemployer plan (as such term is defined in section 3(37) of ERISA). No liability under Title IV or section 302 of ERISA has been incurred by Seller or any ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a material risk to Seller or any ERISA Affiliate of incurring any such liability, other than liability for premiums due to the Pension Benefit Guaranty Corporation. No Person has provided or is required to provide security to the Seller Pension Plan under section 401(a)(29) of the Code due to a plan amendment that results in an increase in current liability.
(d) Except as set forth on Schedule 5.12(d) , the administrator and the fiduciaries of each Benefit Plan have in all material respects complied with the applicable requirements of ERISA, the Code, and any other requirements of applicable Laws, including the fiduciary responsibilities imposed by Part 4 of Title I, Subtitle B of ERISA. Except as set forth on Schedule 5.12(d) , there have been no non-exempt “prohibited transactions” as described in section 4975 of the Code or Title I, Part 4 of ERISA involving any Benefit Plan, and to Seller’s Knowledge there are no facts or circumstances
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which could give rise to any tax imposed by section 4975 of the Code with respect to any Benefit Plan.
(e) All contributions (including all employer matching and other contributions and all employee salary reduction contributions) for all periods ending prior to the Effective Time (including periods from the first day of the current plan year to the Effective Time) have been paid to the Benefit Plans within the time required by Law or will be paid to the Benefit Plans prior to or as of the Closing, notwithstanding any provision of any Benefit Plan to the contrary. All returns, reports, and disclosure statements required to be made under ERISA and the Code with respect to the Benefit Plans have been timely filed or delivered. No amount of income or any assets of any Benefit Plan, is subject to tax as unrelated business taxable income.
(f) Each Benefit Plan that is a group health plan (within the meaning of section 5000(b)(1) of the Code) in all material respects complies with and has been maintained and operated in material compliance with each of the health care continuation requirements of section 4980B of the Code and Part 6 of Title I, Subtitle B of ERISA and the requirements of the Health Insurance Protection and Portability Act of 1996.
(g) Schedule 5.12(g) sets forth the medical and life insurance benefits currently provided by Seller to any currently retired or former employees of the Business other than pursuant to Part 6 of Subtitle B of Title I of ERISA, section 4980B of the Code, or similar provisions of state law.
(h) Except as provided in Section 7.9, no provision of any Benefit Plan would require the payment by Buyer of any money or other property, or the provision by Buyer of any other rights or benefits, to any employee or former employee of Seller as a result of the transactions contemplated by this Agreement, whether or not such payment would constitute a parachute payment within the meaning of section 280G of the Code.
5.13 Certain Contracts and Arrangements .
(a) Except for contracts, agreements, leases, commitments, understandings, or instruments which (i) are listed on Schedule 5.9 , Schedule 5.11 , or Schedule 5.13(a) (the “ Material Business Agreements ”), or (ii) have been entered into in the ordinary course of business and do not individually involve annual payment obligations in excess of $50,000, Seller is not a party to any contract, agreement, lease, commitment, understanding, or instrument which is principally related to the Business or the Purchased Assets other than the Retained Agreements, the Shared Agreements, and any other contracts, agreements, personal property leases, commitments, understandings, or instruments which are Excluded Assets. Except as disclosed in Schedule 5.13(a) , each Material Business Agreement constitutes a valid and binding obligation of Seller and, to Seller’s Knowledge, constitutes a valid and binding obligation of the other parties thereto and is in full force and effect. Seller is not in breach or default (nor has any event occurred which, with notice or the passage of time, or both, would constitute such a breach or default) under, and has not received written notice that it is in breach or default under, any Material Business Agreement, except for such breaches or defaults as to which requisite waivers or consents have been obtained. Except as set forth in
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Schedule 5.13(a) , to Seller’s Knowledge, no other party to any Material Business Agreement is in breach or default (nor has any event occurred which, with notice or the passage of time, or both, would constitute such a breach or default) under any Material Business Agreement.
(b) Schedule 5.13(b) sets forth a list of each municipal or county franchise agreement relating to the Business to which Seller is a party (the “ Franchises ”). Except as disclosed in Schedule 5.13(b) , Seller (i) has all Franchises necessary for the operation of the Business as presently conducted, and (ii) is not in default under such agreements and, to Seller’s Knowledge, each such agreement is in full force and effect.
5.14 Legal Proceedings and Orders . Except as set forth in Schedule 5.14 , there are no material Claims relating to the Purchased Assets or the Business, which are pending or, to Seller’s Knowledge, threatened against Seller. Except for any Regulatory Orders, or as set forth in Schedule 5.14 , Seller is not subject to any outstanding Orders that would reasonably be expected to apply to the Purchased Assets or the Business following Closing.
5.15 Permits . Schedule 5.15 sets forth a list of all material Permits held by Seller and required for the operation of the Business as presently conducted. Except as disclosed in Schedule 5.15 , Seller (i) has all Permits required by Law for the operation of the Business as presently conducted, and (ii) is not in breach or default (nor has any event occurred which, with the giving of notice or the passage of time, or both, would constitute such a breach or default) under such Permits and, to Seller’s Knowledge, each such Permit is in full force and effect.
5.16 Compliance with Laws . Seller is in material compliance with all Laws and Orders applicable to the Purchased Assets or the Business.
5.17 Insurance . Except as set forth on Schedule 5.17 , since December 31, 2004, the Purchased Assets have been continuously insured with financially sound insurers in such amounts and against such risks and losses as are customary in the natural gas utility industry, and Seller has not received any written notice of cancellation or termination with respect to any material insurance policy of Seller providing coverage in respect of the Purchased Assets. All insurance policies of Seller covering the Purchased Assets are in full force and effect; however, coverage of the Purchased Assets under Seller’s insurance policies will terminate as of the Effective Time.
5.18 Taxes .
(a) All Tax Returns relating to the Business or the Purchased Assets required to be filed by or on behalf of Seller have been filed in a timely manner, and all Taxes required to be shown on such Tax Returns have been paid in full, except to the extent being contested in good faith by appropriate proceedings. None of the Purchased Assets is (i) an asset or property that is or will be required to be treated as described in section 168(f)(8) of the Internal Revenue Code of 1954 as in effect immediately before the enactment of the Tax Reform Act of 1986, or (ii) tax-exempt use property within the meaning of section 168(h)(1) of the Code.
(b) Seller has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee or independent
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contractor of the Business, and all forms W-2 and 1099 required with respect thereto have been properly completed and timely filed.
(c) None of the Assumed Obligations is an obligation to make a payment that is not or will not be deductible under Code section 280G. Seller is not a party to any Tax allocation or sharing agreement relating to the Business or the Purchased Assets.
5.19 Regulation as a Utility . Neither Seller nor any of its Affiliates is a “Holding Company,” a “Subsidiary Company,” or an “Affiliate” of a “Holding Company” within the meaning of the Holding Company Act. The Business is regulated as a public utility only in the State of Missouri.
5.20 Fees and Commissions . No broker, finder, or other Person is entitled to any brokerage fees, commissions, or finder’s fees for which Buyer could become liable or obligated in connection with the transactions contemplated hereby by reason of any action taken by Seller.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby, Buyer represents and warrants to Seller as follows:
6.1 Organization . Buyer is a Kansas corporation duly organized, validly existing, and in good standing under the laws of Missouri and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as is now being conducted.
6.2 Authority Relative to this Agreement and the Ancillary Agreements . Buyer has all corporate power and authority necessary to execute and deliver this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the board of directors of Buyer and no other corporate proceedings on the part of Buyer are necessary to authorize this Agreement and the Ancillary Agreements or to consummate the transactions contemplated hereby and thereby. This Agreement and the Ancillary Agreements have been duly and validly executed and delivered by Buyer, and constitute valid and binding agreements of Buyer, enforceable against Buyer in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, or other similar laws affecting or relating to enforcement of creditors’ rights generally or general principles of equity.
6.3 Consents and Approvals; No Violation . Except as set forth in Schedule 6.3 , the execution and delivery of this Agreement and the Ancillary Agreements by Buyer, and the consummation by Buyer of the transactions contemplated hereby and thereby, do not:
(a) conflict with or result in any breach of Buyer’s Governing Documents;
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(b) result in a default (including with notice, lapse of time, or both), or give rise to any right of termination, cancellation, or acceleration, under any of the terms, conditions, or provisions of any note, bond, mortgage, indenture, agreement, lease, or other instrument or obligation to which Buyer or any of its Affiliates is a party or by which Buyer or any of its Affiliates or any of their respective assets may be bound, except for such defaults (or rights of termination, cancellation, or acceleration) as to which requisite waivers or consents have been, or will prior to the Effective Time be, obtained or which if not obtained or made would not, individually or in the aggregate, prevent or materially delay the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements;
(c) violate any Law or Order applicable to Buyer, any of its Affiliates, or any of their respective assets;
(d) require any declaration, filing, or registration with, or notice to, or authorization, consent, or approval of any Governmental Entity, other than (i) the Buyer Required Regulatory Approvals, or (ii) such declarations, filings, registrations, notices, authorizations, consents, or approvals which, if not obtained or made, would not, individually or in the aggregate, prevent or materially delay the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements.
6.4 Regulation as a Utility . Neither Buyer nor any of its Affiliates is a “Holding Company,” a “Subsidiary Company,” or an “Affiliate” of a “Holding Company” within the meaning of the Holding Company Act.
6.5 Buyer’s Knowledge . Buyer represents that it is a sophisticated party, and has conducted a full due diligence investigation of the Business, the Purchased Assets, and the Assumed Obligations. Buyer understands and agrees that any financial forecasts or projections relating to the Business prepared by or on behalf of Seller have been provided to Buyer with the understanding and agreement that Seller is making no representation or warranty with respect to such forecasts or projections and that actual future results will vary from those forecast or projected based upon numerous factors.
6.6 Fees and Commissions . No broker, finder, or other Person is entitled to any brokerage fees, commissions, or finder’s fees for which Seller could become liable or obligated in connection with the transactions contemplated hereby by reason of any action taken by Buyer.
6.7 Financial Capability . Buyer (i) has, and at the Closing will have, sufficient internal funds (without giving effect to any unfunded financing regardless of whether any such financing is committed) available to pay the Purchase Price and any expenses incurred by Buyer in connection with the transactions contemplated by this Agreement, (ii) has, and at the Closing will have, the resources and capabilities (financial or otherwise) to perform its obligations hereunder, and (iii) has not incurred any obligation, commitment, restriction, or liability of any kind, which would impair or adversely affect such resources and capabilities.
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ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business .
(a) Except as contemplated in this Agreement, required by any Business Agreement, Law, or Order, or otherwise described in Schedule 7.1 , during the period from the date of this Agreement to the Closing Date, Seller will operate the Purchased Assets and the Business in the ordinary course consistent with Good Utility Practice and will use commercially reasonable efforts to preserve intact the Business, and to preserve the goodwill and relationships with customers, suppliers, and others having business dealings with the Business. Without limiting the generality of the foregoing, except as contemplated in this Agreement, required by any Business Agreement, Law, or Order, or otherwise described in Schedule 7.1 , prior to the Closing Date, without the prior written consent of Buyer, which will not be unreasonably withheld, delayed or conditioned, Seller will not:
(i) create, incur, assume, or suffer to exist any Encumbrance (other than Permitted Encumbrances) upon the Purchased Assets;
(ii) make any material change in the level of inventories customarily maintained by Seller with respect to the Business, other than in the ordinary course of business or consistent with Good Utility Practice;
(iii) other than any such sales, leases, transfers, or dispositions involving any Purchased Assets involving less than $25,000 on an individual basis, or $100,000 in the aggregate, sell, lease (as lessor), transfer, or otherwise dispose of any of the Purchased Assets, other than (A) in the ordinary course of business, (B) consistent with Good Utility Practice, or (C) to the extent that any such sales, leases, transfers, or dispositions are reflected in the Adjustment Amount;
(iv) other than in the ordinary course of business or consistent with Good Utility Practice, (A) enter into, terminate, extend, renew, or otherwise amend any material Business Agreement, or (B) waive any material default by, or release, settle, or compromise any material claim against, any other Person who is a party thereto; provided, that with respect to Financial Hedges, the protocol set forth on Schedule 7.1(a)(iv) will also apply;
(v) grant severance or termination pay to any present or former employee of the Business that would be the responsibility of Buyer;
(vi) enter into any collective bargaining agreement in which the terms and conditions to be applicable to Transferred Employees materially differ from those currently applicable to Business Employees, except where such differences are appropriate based upon job classifications or seniority;
(vii) grant any increase in the compensation of or grant or agree to any bonus for Business Employees not covered by collective bargaining who will
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become Transferred Employees, except for increases and bonuses in the ordinary course of business and consistent with past practice; or
(viii) agree or commit to take any action which would be a violation of the restrictions set forth in Section 7.1(a)(i) through Section 7.1(a)(vii).
(b) A committee comprised of one Person designated by Seller and one Person designated by Buyer, and such additional Persons as may be appointed by the Persons originally appointed to such committee (the “ Transition Committee ”) will be established promptly following the execution of this Agreement to examine transition issues relating to or arising in connection with the transactions contemplated hereby. From time to time, the Transition Committee will report its findings to the senior management of each of Seller and Buyer.
AGREEMENTS / CONTRACTS
CLAUSES
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