STOCK PURCHASE AGREEMENT

 

Exhibit A

Form of Transition Services Agreement

 

 

 

THIS STOCK PURCHASE AGREEMENT, dated as of September 21, 2005 (this “ Agreement ”), is entered into by and between Enogex Inc., an Oklahoma corporation (“ Seller ”), and Atlas Pipeline Partners, L.P., a Delaware limited partnership (“ Buyer ”).

 

RECITALS  

 

WHEREAS, Enogex Arkansas Pipeline Corporation, an Oklahoma corporation (“ EAPC ”), owns a 74% general partner interest and a 1% limited partner interest of NOARK Pipeline System, Limited Partnership, an Arkansas limited partnership (“ NOARK ”);

 

WHEREAS, NOARK owns and operates (a) a FERC-regulated interstate natural gas transmission pipeline system extending from southeast Oklahoma through Arkansas to southeast Missouri known as Ozark Gas Transmission, L.L.C. and (b) various natural gas gathering systems that are not subject to FERC regulation, as well as associated equipment and systems;

 

WHEREAS, Seller owns all of the issued and outstanding common stock, par value $1.00 per share (the “ Shares ”) of EAPC; and

 

WHEREAS, on the terms and subject to the conditions set forth herein, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the Shares.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I  

 

DEFINITIONS AND RULES OF CONSTRUCTION  

 

1.1 Definitions . As used herein, the following terms shall have the following meanings:

 

“ Accountants ” has the meaning provided such term in Section 2.3(b)(iv) .

 

“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, such specified Person through one or more intermediaries or otherwise. For the purposes of this definition, “control” means, where used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings.

 

“ Aggregate Redemption Funding Amount ” shall mean the sum of (i) the Redemption Price (as defined in the NOARK Indenture) plus (ii) any unpaid interest on the Seller Portion of the NOARK Notes accrued to the Designated Redemption Date.

 

 

“ Agreed Rate ” means (a) the annual rate of interest published by The Wall Street Journal as one-month LIBOR on the Business Day that interest begins to accrue under Section 2.4 plus (b) 250 basis points per annum, such rate to change each month on the monthly anniversary of such Business Day based on the quotation of one month LIBOR in The Wall Street Journal on the latest day on or prior to such anniversary that The Wall Street Journal is published.

 

“ Agreement ” has the meaning provided such term in the preamble to this Agreement.

 

“ Balance Sheet Date ” means July 31, 2005.

 

“ Base Purchase Price ” has the meaning provided such term in Section 2.2 .

 

“ Business Day ” means any day that is not a Saturday, Sunday or legal holiday in the States of Oklahoma and New York and that is not otherwise a federal holiday in the United States.

 

“ Buyer ” has the meaning provided such term in the preamble to this Agreement.

 

“ Buyer Indemnified Parties ” has the meaning provided such term in Section 10.2(b) .

 

“ CERCLA ” means the Federal Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. § 9601 et seq.

 

“ Claim Notice ” has the meaning provided such term in Section 10.3(a) .

 

“ Closing ” has the meaning provided such term in Section 2.5 .

 

“ Closing Date ” has the meaning provided such term in Section 2.5 .

 

“ Closing Net Working Capital ” has the meaning provided such term in Section 2.3(b)(i) .

 

“ Closing Payment ” has the meaning provided in such term in Section 2.3(a) .

 

“ Closing Statement ” has the meaning provided such term in Section 2.3(b) .

 

“ Code ” means the Internal Revenue Code of 1986, as amended.

 

“ Company Guaranties ” means those guaranties, letters of credit, bonds, sureties and other forms of credit support or assurances provided by Seller or its Affiliates (other than any member of the NOARK Group) in support of obligations of NOARK or any NOARK Subsidiary.

 

“ Company Securities ” has the meaning provided such term in Section 4.3(b) .

 

“ Confidentiality Agreement ” means that certain confidentiality agreement, dated as of June 14, 2005, between Buyer and Seller.

 

“ Constituents of Concern ” any substance defined as a hazardous substance, hazardous waste, hazardous material, pollutant or contaminant by any Environmental Law, any petroleumhydrocarbon and any degradation product of a petroleum hydrocarbon, friable asbestos, or PCBs, the handling, storage, treatment or exposure of or to which is subject to regulation under any Environmental Law.

 

 

“ Continuing Employee ” has the meaning provided such term in Section 7.5(b) .

 

“ Contract ” means any legally binding agreement, commitment, lease, license or contract, but excluding Plans.

 

“ Delivering Party ” has the meaning provided such term in Section 2.3(b)(i) .

 

“ Designated Redemption Date ” has the meaning provided such term in Section 7.12 .

 

“ Direct Claim ” has the meaning provided such term in Section 10.3(d) .

 

“ Disclosure Schedule ” means the schedules attached hereto.

 

“ Dispute Notice ” has the meaning provided such term in Section 8.1 .

 

“ Dollars ” and “ $ ” mean the lawful currency of the United States.

 

“ EAPC ” has the meaning provided such term in the recitals of this Agreement.

 

“ EAPC Financial Statements ” has the meaning provided such term in Section 4.6 .

 

“ Easements ” has the meaning provided such term in Section 5.18(b) .

 

“ Eligible Employees ” has the meaning provided such term in Section 7.5(a) .

 

“ Environmental Law ” means all applicable Laws and Environmental Permits of any Governmental Authority relating to the protection of health or the environment, including: (a) all requirements pertaining to liability for reporting, management, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of a Constituent of Concern; and (b) all other limitations, restrictions, conditions, standards, prohibitions, obligations, and timetables contained therein or in any notice or demand letter issued, entered, promulgated or approved thereunder. The term “ Environmental Law ” includes, without limitation, CERCLA, the Federal Water Pollution Control Act (which includes the Federal Clean Water Act), the Federal Clean Air Act, the Federal Solid Waste Disposal Act (which includes the Resource Conservation and Recovery Act), the Federal Toxic Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide Act, each as amended from time to time, any regulations promulgated pursuant thereto, and any state or local counterparts.

 

“ Environmental Permits ” all permits, licenses, registrations, authorizations, certificates and approvals of Governmental Authorities relating to or required by Environmental Laws and necessary for or held in connection with the conduct of the business.

 

“ Existing Interconnect ” means any pipeline interconnect existing on the date hereof that connects a NOARK System with a Seller System.

 

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ FERC ” means the United States Federal Energy Regulatory Commission.

 

“ Financing Commitment ” has the meaning provided such term in Section 6.6 .

 

“ GAAP ” means generally accepted accounting principles of the United States, consistently applied.

 

“ Governmental Authority ” means any federal, state, municipal, local or similar governmental authority, regulatory or administrative agency, court or arbitral body.

 

“ Hire Date ” has the meaning provided such term in Section 7.5(a) .

 

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“ Indebtedness for Borrowed Money ” means all obligations to any Person for borrowed money, including (a) any obligation to reimburse any bank or other Person in respect of amounts paid or payable under a standby letter of credit or (b) any guaranty with respect to indebtedness for borrowed money of another Person.

 

“ Indemnified Party ” has the meaning provided such term in Section 10.3(a) .

 

“ Indemnifying Party ” has the meaning provided such term in Section 10.3(a) .

 

“ Intellectual Property ” means intellectual property rights, statutory or common law, worldwide, including (a) trademarks, service marks, trade dress, slogans, logos and all goodwill associated therewith, and any applications or registrations for any of the foregoing; (b) copyrights and any applications or registrations for any of the foregoing; and (c) patents, all confidential know-how, trade secrets and similar proprietary rights in confidential inventions, discoveries, improvements, processes, techniques, devices, methods, patterns, formulae, specifications, and lists of suppliers, vendors, customers, and distributors.

 

“ IRS ” means Internal Revenue Service of the United States.

 

“ Knowledge ” as to Seller means the actual knowledge of those persons listed on Schedule 1.1(a) .

 

“ Law ” means any applicable statute, writ, law, common law, rule, regulation, ordinance, order, judgment, injunction, award, determination or decree of a Governmental Authority, or any requirement under the common law, in each case as in effect on and as interpreted on the date of this Agreement or on and as of the Closing Date, as applicable, unless the context otherwise clearly requires a different date, in which case on and as of such date.

 

“ Lien(s) ” means any charges, pledges, options, mortgages, deeds of trust, hypothecations, encumbrances or security interests.

 

 

“ Losses ” has the meaning provided such term in Section 10.2 .

 

“ Management Committee ” means the committee that manages NOARK pursuant to the Partnership Agreement and as further defined therein.

 

“ Material Adverse Effect ” means, with respect to any Person, any circumstance, change or effect that (a) is materially adverse to the business, operations (including results of operation), assets, liabilities or financial condition of such Person and its Subsidiaries, taken as a whole, or (b) that materially impedes the ability of such Person or any of its Affiliates to complete the transactions contemplated herein, but in respect of NOARK and the NOARK Subsidiaries shall exclude for purposes of clause (a) above any circumstance, change or effect resulting or arising from: (i) any change in general economic conditions in the industries or markets in which NOARK or any of the NOARK Subsidiaries operates; (ii) seasonal reductions in revenues and/or earnings of NOARK or any of the NOARK Subsidiaries in the ordinary course of its business and consistent with past performance; (iii) national or international political conditions, including any engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack; (iv) changes in Law, GAAP, RAP or the interpretation thereof; (v) subject to the final sentence of each of Sections 3.3 , 4.2 and 5.2 , the entry into or announcement of this Agreement or actions contemplated by this Agreement or the consummation of the transactions contemplated hereby; (vi) matters that will be reflected in the determination of the Net Working Capital as of the Closing Date; or (vii) the loss of any employee of EAPC, NOARK or any Eligible Employee.

 

“ Material Contracts ” has the meaning provided such term in Section 5.7(a) .

 

“ Net Working Capital ” means, as of any given date, an amount (which may be positive or negative) equal to 75% of the total current assets of NOARK and the NOARK Subsidiaries as of such date minus the sum of 75% of the total current liabilities of NOARK and the NOARK Subsidiaries as of such date (excluding short-term debt identified on the NOARK Financial Statements and excluding accrued interest with respect to the NOARK Notes), in each case determined in accordance with RAP and without giving effect to the transactions contemplated hereby. Notwithstanding any provision in this Agreement to the contrary, and as illustrated on Schedule 2.2 , for purposes of calculating Net Working Capital as of any given date, the cash component included in current assets will be the actual EAPC cash allocation amount as detailed on the monthly “NOARK Pipeline System, LP Recap of Cash Balances Schedule” as of such date.

 

“ NOARK ” has the meaning provided such term in the recitals to this Agreement.

 

“ NOARK Financial Statements ” has the meaning provided such term in Section 5.4 .

 

“ NOARK Group ” means, collectively, EAPC, NOARK and the NOARK Subsidiaries.

 

“ NOARK Group Documents ” means, collectively, all data room materials and all books and records of the NOARK Group that relate to the business or operations of EAPC or NOARK on or before the Closing Date.

 

 

“ NOARK Indenture ” means the Indenture, dated as of June 1, 1998, between NOARK Pipeline Finance L.L.C. and UMB Bank, N.A., successor trustee to The Bank of New York (the “ Trustee ”).

 

“ NOARK Notes ” means the notes in an original aggregate principal amount of $80,000,000 authenticated, issued and delivered pursuant to the NOARK Indenture.

 

“ NOARK Permits ” has the meaning provided such term in Section 5.13(b) .

 

“ NOARK Subsidiaries ” means, collectively, NOARK Pipeline Finance, L.L.C., an Oklahoma limited liability company, Ozark Gas Transmission, L.L.C., an Oklahoma limited liability company, Ozark Gas Gathering, L.L.C., an Oklahoma limited liability company, and NOARK Energy Services, L.L.C., an Oklahoma limited liability company.

 

“ NOARK System ” means any pipeline system owned by any member of the NOARK Group on the date hereof.

 

“ NOARK Workforce ” has the meaning provided such term in Section 5.16 .

 

“ Objection Notice ” has the meaning provided such term in Section 2.3(b)(iii) .

 

“ Organizational Documents ” means any charter, certificate of incorporation, articles of association, partnership agreements, limited liability company agreements, bylaws, operating agreement or similar formation or governing documents and instruments.

 

“ Parties ” means Seller and Buyer.

 

“ Partnership Agreement ” means the Amended and Restated Agreement of Limited Partnership of NOARK Pipeline System, Limited Partnership, dated as of January 12, 1998, as amended.

 

“ Partnership Interests ” has the meaning provided such term in Section 4.4 .

 

“ Permits ” means authorizations, licenses, permits, franchises, grants, variances, exemptions, consents, approvals, orders or certificates issued by Governmental Authorities; provided , right-of-way agreements and similar approvals are not included in the definition of Permits.

 

“ Permitted Liens ” means (a) Liens for Taxes not yet delinquent or being contested in good faith by appropriate proceedings and for which appropriate reserves have been established, (b) statutory Liens (including materialmen’s, warehousemen’s, mechanic’s, repairmen’s, landlord’s, and other similar Liens) arising in the ordinary course of business securing payments not yet delinquent or being contested in good faith by appropriate proceedings and for which appropriate reserves have been established, (c) the rights of lessors and lessees under leases, and the rights of third parties under any agreement, executed in the ordinary course of business and listed on Schedule 1.1(b) , (d) the rights of licensors and licensees under licenses executed in the ordinary course of business, (e) restrictive covenants, easements and defects, imperfections or irregularities of title, if any, as would not reasonably be expected to materially and adverse affect the use or operation of the assets affected thereby, (f) purchase money Liens and Liens securing rental payments under capital lease arrangements listed on Schedule 1.1(b) , (g) preferential purchase rights and other similar arrangements listed on Schedule 1.1(b) with respect to which consents or waivers are obtained for this transaction or as to which the time for asserting such rights has expired at the Closing Date without an exercise of such rights, (h) restrictions on transfer listed on Schedule 1.1(b) with respect to which consents or waivers are obtained for this transaction, (i) any Liens created pursuant to operating or similar agreements, (j) Liens entered into in the ordinary course of business that do not secure the payment of Indebtedness for Borrowed Money and that do not materially and adversely affect the ability of NOARK to conduct its business, (k) Liens referenced in any agreements listed on Schedule 1.1(b) , (l) Liens referenced in the Disclosure Schedules, (m) Liens contained in the Organizational Documents of NOARK, (n) Liens listed on Schedule 1.1(b) and (o) Liens created by Buyer, or its successors or assigns.

 

 

“ Person ” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind.

 

“ Plans ” has the meaning provided such term in Section 5.10(a) .

 

“ Post-Closing Tax Period ” means any Tax period (or a portion thereof) that is not a Pre-Closing Tax Period.

 

“ Pre-Closing Tax Period ” means any Tax period (or a portion thereof) ending on or before the Closing Date.

 

“ Purchase Price ” has the meaning provided such term in Section 2.2 .

 

“ RAP ” means the regulatory accounting principles set forth in the Uniform System of Accounts prescribed by the FERC.

 

“ Reasonable Efforts ” means efforts in accordance with reasonable commercial practice and without the incurrence of material expense.

 

“ Receiving Party ” has the meaning provided such term in Section 2.3(b)(i) .

 

“ Representatives ” means a Person’s directors, officers, employees, agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers, financial advisors and any representatives of those advisors).

 

“ Required Contract ” has the meaning provided such term in Section 7.1(b)(xi) .

 

“ Restricted Information ” has the meaning provided such term in Section 7.2(c) .

 

“ Retention Period ” has the meaning provided such term in Section 7.7(b) .

 

“ Seller ” has the meaning provided such term in the preamble to this Agreement.

 

 

“ Seller Guaranty ” means the Guaranty, dated as of June 1, 1998, by the Seller in favor of the Trustee.

 

“ Seller Indemnified Parties ” has the meaning provided such term in Section 10.2(a) .

 

“ Seller Marks ” has the meaning provided such term in Section 7.6 .

 

“ Seller Portion ” means the portion of the NOARK Notes guaranteed by the Seller Guaranty.

 

“ Seller System ” means any pipeline system owned by Seller or an Affiliate of Seller that is controlled by Seller (other than a member of the NOARK Group).

 

“ Shared Frequencies ” means those frequencies that (i) are covered by licenses issued by the United States Federal Communications Commission that are listed on Schedule 5.13(b) and (ii) have been historically shared by Seller and certain members of the NOARK Group.

 

“ Shares ” has the meaning provided such term in the recitals to this Agreement.

 

“ Signatory Member ” has the meaning provided such term in Section 5.7(c) .

 

“ Straddle Period ” has the meaning provided such term in Section 8.1 .

 

“ Submission ” has the meaning provided such term in Section 2.3(b)(iv) .

 

“ Submission Deadline ” has the meaning provided such term in Section 2.3(b)(iv) .

 

“ Subsidiary ” means, with respect to any Person, (a) any corporation, of which a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote generally in the election of directors thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (b) any limited liability company, partnership, association or other business entity, of which a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes of this definition, a Person or Persons will be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons will be allocated a majority of limited liability company, partnership, association or other business entity gains or losses, or is or controls the managing member or general partner of such limited liability company, partnership, association or other business entity.

 

“ Tax Authority ” means any Governmental Authority or any subdivision, agency, commission or authority thereof, or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax.

 

“ Tax Returns ” means any report, return, election, document, estimated tax filing, declaration or other filing provided to any Governmental Authority including any amendments thereto.

 

 

“ Taxes ” means all taxes, assessments, charges, duties, fees, levies, imposts or other similar charges imposed by a Governmental Authority, including all income, franchise, profits, capital gains, capital stock, transfer, gross receipts, sales, use, transfer, service, occupation, ad valorem, property, excise, severance, windfall profits, premium, stamp, license, payroll, employment, social security, unemployment, disability, environmental, alternative minimum, add-on, value-added, withholding and other taxes, assessments, charges, duties, fees, levies, imposts or other similar charges of any kind, and all estimated taxes, deficiency assessments, additions to tax, penalties and interest.

 

“ Third Party Claim ” has the meaning provided such term in Section 10.3(a).

 

“ Transition Services Agreement ” has the meaning provided such term in Section 9.1(f).

 

“ Trustee ” has the meaning provided such term in the definition of NOARK Indenture.

 

“ United States ” means United States of America.

 

1.2 Rules of Construction.

 

 

 

 

ARTICLE II  

 

PURCHASE AND SALE; CLOSING  

 

2.1 Purchase and Sale of Shares . At the Closing, upon the terms and subject to the conditions set forth in this Agreement, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase and acquire from Seller, the Shares, free and clear of any Liens other than transfer restrictions imposed thereon by applicable securities Laws.

 

2.2 Consideration . In consideration for the purchase of the Shares contemplated by Section 2.1 , Buyer shall pay to Seller an aggregate of $173,247,812 in cash by wire transfer of immediately available funds to an account designated by Seller, subject to adjustment as provided in Section 2.3 (the “ Purchase Price ”). If Closing Net Working Capital is less than $10,247,812 then the Purchase Price shall be decreased dollar-for-dollar by such amount. If Closing Net Working Capital is greater than $10,247,812, then the Purchase Price shall be increased dollar-for-dollar by such amount.

 

2.3 Purchase Price Adjustment .

 

 

 

 

 

2.4 Final Purchase Price . If, after Closing Net Working Capital has been determined under Section 2.3(b) , the Purchase Price is less than the Closing Payment, Seller shall, within five Business Days after the final determination of Closing Net Working Capital under Section 2.3(b) , promptly pay to Buyer in cash by wire transfer of immediately available funds to an account designated by Buyer, an amount equal to such difference. If the Closing Payment is less than the Purchase Price, Buyer shall, within five Business Days after the final determination of Closing Net Working Capital pursuant to Section 2.3(b) , promptly pay to Seller in cash by wire transfer of immediately available funds to the accounts designated by Seller, an amount equal to such difference. Any payment due either Buyer or Seller under this Section 2.4 shall accrue interest at an annual rate equal to the Agreed Rate, which interest shall begin to accrue on the Business Day following the day such payment was due and end on the date such payment is made.

 

 

2.5 The Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Jones Day, 717 Texas Avenue, Houston, Texas 77002, commencing on the third Business Day following the satisfaction or waiver of all conditions to the obligations of the Parties set forth in Article IX or such other date as Buyer and Seller may mutually determine (the date on which the Closing occurs is referred to herein as the “ Closing Date ”).

 

ARTICLE III  

 

REPRESENTATIONS AND WARRANTIES RELATING TO SELLER  

 

Except as disclosed in the Disclosure Schedule, Seller hereby represents and warrants to Buyer as follows:

 

3.1 Organization of Seller . Seller is a corporation, duly incorporated, validly existing and in good standing under the laws of Oklahoma.

 

3.2 Authorization; Enforceability . Seller has all requisite corporate power and authority to execute and deliver this Agreement and to perform all obligations to be performed by it hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by all requisite corporate action on the part of Seller. This Agreement has been duly and validly executed and delivered by Seller, and this Agreement constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

 

3.3 No Conflict; Consents . Except as would not reasonably be expected to have a Material Adverse Effect on the ability of Seller to enter into and perform its obligations under this Agreement, the execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby by Seller do not and shall not:

 

 

 

 

For purposes of this Section 3.3 , Material Adverse Effect shall be determined without giving effect to clause (v) of the exclusions to the definition of Material Adverse Effect.

 

3.4 Ownership of Shares .

 

 

3.5 Litigation . As of the date of this Agreement (a) there are no lawsuits or actions before any Governmental Authority pending or, to the Knowledge of Seller, threatened in writing against Seller that would reasonably be expected to have a Material Adverse Effect on the ability of Seller to perform its obligations under this Agreement and (b) there are no orders or unsatisfied judgments from any Governmental Authority binding upon Seller that would reasonably be expected to have a Material Adverse Effect on the ability of Seller to perform its obligations under this Agreement.

 

3.6 Brokers’ Fees . Except for Lehman Brothers, Inc., no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by Seller or any of its Affiliates. No Person other than Seller has any liability or obligations for any costs or expenses related to Seller’s engagement of Lehman Brothers, Inc.

 

ARTICLE IV  

 

REPRESENTATIONS AND WARRANTIES RELATED TO EAPC  

 

Except as disclosed in the Disclosure Schedule, Seller hereby represents and warrants to Buyer as follows:

 

4.1 Organization of EAPC . EAPC is a corporation, duly incorporated, validly existing and in good standing under the laws of Oklahoma and has the requisite corporate power and authority to own or lease its assets and to conduct its business as it is now being conducted.

 

 

EAPC is duly licensed or qualified in each jurisdiction in which the ownership or operation of its assets or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not reasonably be expected to have a Material Adverse Effect on EAPC or NOARK. Seller has made available to Buyer true copies of all existing Organizational Documents of EAPC. The minute books of EAPC, NOARK and each NOARK Subsidiary, true and complete copies of which have been made available to Buyer, contain true and correct records of all meetings and other corporate or organizational actions held or taken of its stockholders (or, if applicable, members) and board of directors or similar governing body (including committees thereof). No meeting of any of any such board or body or such committees has been held for which minutes have not been prepared and are not contained in such minute books.

 

4.2 No Conflict; Consents . Except as would not reasonably be expected to have a Material Adverse Effect on the ability of EAPC to enter into and perform its obligations under this Agreement, the execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby by Seller do not and shall not:

 

 

For purposes of this Section 4.2 , Material Adverse Effect shall be determined without giving effect to clause (v) of the exclusions to the definition of Material Adverse Effect.

 

4.3 Capitalization .

 

 

 

 

4.4 Ownership of Partnership Interests . EAPC has good title to, holds of record and owns beneficially 75% of the partnership interests in NOARK comprised of a 74% general partner interest and a 1% limited partner interest (collectively, the “ Partnership Interests ”). Except as set forth in the Partnership Agreement, EAPC owns the Partnership Interests free and clear of any Liens or other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such interests, subject only to applicable securities Laws). The Partnership Interests are duly authorized, validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or other similar right. There are no (i) outstanding partnership interests, equity interests or other securities of NOARK other than the Partnership Interests and the 25% general partner interest owned by Southwestern Energy Pipeline Company, (ii) outstanding securities of NOARK convertible into, exchangeable or exercisable for partnership interests, equity interests or other securities of NOARK, (iii) authorized or outstanding options, warrants or other rights to purchase or acquire from NOARK, or obligations of NOARK to issue, any partnership interests, equity interests or other securities, including securities convertible into or exchangeable for partnership interests or other securities of NOARK or (iv) authorized or outstanding bonds, debentures, notes or other indebtedness that entitles the holders to vote (or convertible or exercisable for or exchangeable into securities that entitle the holders to vote) with holders of interests of NOARK on any matter. There are no outstanding obligations of NOARK to repurchase, redeem or otherwise acquire any partnership interests in NOARK.

 

4.5 Litigation . As of the date of this Agreement (a) there are no lawsuits or actions before any Governmental Authority pending or, to the Knowledge of Seller, threatened in writing against EAPC that would reasonably be expected to have a Material Adverse Effect on EAPC or on the ability of Seller to perform its obligations under this Agreement and (b) there are no orders or unsatisfied judgments from any Governmental Authority binding upon EAPC that would reasonably be expected to have a Material Adverse Effect on EAPC or on the ability of Seller to perform its obligations under this Agreement.

 

4.6 EAPC Financial Statements . Schedule 4.6 sets forth true and complete copies of the unaudited balance sheets of EAPC as of December 31, 2004 and the Balance Sheet Date (collectively, the “ EAPC Financial Statements ”). The EAPC Financial Statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP, in all material respects, the financial position of EAPC as of such dates, except for normal year-end adjustments and the absence of footnotes.

 

 

4.7 EAPC Taxes . Except as set forth on Schedule 4.7 , or as would not reasonably be expected to have a Material Adverse Effect on EAPC, (a) all Tax Returns required to be filed by EAPC have been filed, (b) all Taxes shown as due on such Tax Returns have been paid, (c) there are no Liens on any of the assets of EAPC that arose in connection with any failure to pay any Tax, (d) there is no claim pending by any Governmental Authority in connection with any Tax, (e) no Tax Returns are under audit or examination by any Governmental Authority, (f) there are no agreements or waivers currently in effect that provide for an extension of time with respect to the filing of any Tax Return or the assessment or collection of any Tax, (g) to the Knowledge of Seller, no written claim has been made by any Governmental Authority in a jurisdiction where EAPC does not file a Tax Return that it is or may be subject to taxation in that jurisdiction and (h) EAPC is not a party to any Tax allocation or sharing arrangement.

 

4.8 No Other Business . Except as disclosed on Schedule 4.8 , since November 6, 1997, EAPC has not engaged in any business or other activity other than in connection with its ownership of the Partnership Interests.

 

ARTICLE V  

 

REPRESENTATIONS AND WARRANTIES RELATING TO NOARK  

 

Except as disclosed in the Disclosure Schedule, Seller hereby represents and warrants to Buyer as follows:

 

5.1 Organization of NOARK . NOARK is duly formed, validly existing and in good standing under the laws of Arkansas and has the requisite limited partnership power and authority to own or lease its assets and to conduct its business as it is now being conducted. NOARK is duly licensed or qualified in each jurisdiction in which the ownership or operation of its assets or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not reasonably be expected to have a Material Adverse Effect on the NOARK Group, taken as a whole. Seller has made available to Buyer true copies of all existing Organizational Documents of NOARK and each of its Subsidiaries.

 

5.2 No Conflict; Consents . Except as set forth on Schedule 5.2 and except as would not reasonably be expected to have a Material Adverse Effect on the NOARK Group, taken as a whole, the execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby by Seller do not and shall not:

 

 

 

 

For purposes of this Section 5.2 , Material Adverse Effect shall be determined without giving effect to clause (v) of the exclusions to the definition of Material Adverse Effect.

 

5.3 NOARK Subsidiaries . NOARK does not have any Subsidiaries except for the NOARK Subsidiaries. Each NOARK Subsidiary is duly formed, validly existing and in good standing as a limited liability company under the laws of Oklahoma and has the requisite limited liability company power and authority to own or lease its assets and to conduct its business as it is now being conducted. Schedule 5.3 sets forth the jurisdictions in which each NOARK Subsidiary is duly licensed or qualified. NOARK has good and valid title to, holds of record and owns beneficially 100% of the membership interests in each NOARK Subsidiary, free and clear of any Liens or other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such interests, subject only to applicable securities Laws) and is the sole member of each NOARK Subsidiary. Such membership interests are duly authorized, validly issued, fully paid and nonassessable and were not issued in violation of any preemptive or other similar right.

 

5.4 NOARK Financial Statements . Schedule 5.4 sets forth true and complete copies of the following financial statements (collectively, the “ NOARK Financial Statements ”): (a) the audited consolidated balance sheet of NOARK and the NOARK Subsidiaries as of, and for the year ended, December 31, 2004, together with the related audited consolidated statements of income, changes in partners’ capital and cash flow for the period then ended prepared in accordance with RAP; and (b) the unaudited consolidated balance sheet of NOARK and the NOARK Subsidiaries as of, and for the year-to-date ended on, the Balance Sheet Date, together with the related unaudited consolidated statements of income, changes in partners’ capital and cash flow for the period then ended prepared in accordance with GAAP. The NOARK Financial Statements present fairly in accordance with RAP and GAAP, in all material respects, the financial position and the results of operations of NOARK and the consolidated NOARK Subsidiaries as of, and for the periods ended on, such dates, except for normal year-end adjustments and the absence of footnotes with respect to the NOARK Financial Statements described in clause (b) of this Section 5.4 .

 

5.5 No Undisclosed Liabilities . Except as disclosed on Schedule 5.5 , or as would not reasonably be expected to have a Material Adverse Effect on the NOARK Group, taken as a whole, neither NOARK nor any NOARK Subsidiary has any Indebtedness for Borrowed Money, obligation or liability of any kind (whether accrued, absolute, contingent or otherwise, and whether due or to become due) that would have been required to be reflected in, reserved against or otherwise described on the EAPC Financial Statements or the NOARK Financial Statements or in the notes thereto in accordance with RAP, that (a) is not shown on the EAPC Financial Statements or the NOARK Financial Statements or the notes thereto or (b) in the case of any obligation or liability other than Indebtedness for Borrowed Money, was not incurred in the ordinary course of business since the Balance Sheet Date.

 

 

5.6 Absence of Certain Changes . Except as disclosed on Schedule 5.6 , since the Balance Sheet Date, (a) there has not been any Material Adverse Effect on the NOARK Group, taken as a whole, and (b) the business of NOARK and the NOARK Subsidiaries has been conducted, in all material respects, only in the ordinary course of business consistent with past practice.

 

5.7 Contracts .

 

 

 

 

 

 

5.8 Intellectual Property . Except as would not reasonably be expected to have a Material Adverse Effect on the NOARK Group, taken as a whole, to the Knowledge of Seller, (a) the NOARK Group owns or has the right to use pursuant to license, sublicense, agreement or otherwise all items of Intellectual Property required in the operation of the business of the NOARK Group as presently conducted, (b) no third party has asserted in writing against the NOARK Group a claim that the NOARK Group is infringing on the Intellectual Property of such third party and (c) no third party is infringing on the Intellectual Property owned by the NOARK Group.