ASSET SALE AGREEMENT
BETWEEN
NUI CORPORATION
AND
C&T ENTERPRISES, INC.
Dated as of October 4, 2000
ASSET SALE AGREEMENT
This Asset Sale Agreement (the "Agreement") is made as of
this 4th day of October, 2000 by and between NUI CORPORATION, a New
Jersey corporation having offices at 550 Route 202-206, P.O. Box 760,
Bedminster, New Jersey 07921-0760 (the "Seller") and C&T ENTERPRISES,
INC., a Pennsylvania corporation having offices at 1775 Industrial
Boulevard, P.O. Box 551, Lewisburg, Pennsylvania 17837 (the "Buyer").
WITNESSETH:
WHEREAS, Seller owns certain assets described herein, which
assets are presently used in that portion of the Seller's business
which is operated under the name of "Valley Cities Gas Service" and
"Waverly Gas Service" which are operating divisions of Seller
(hereinafter referred to as the "VCW Business"); and
WHEREAS, Seller wishes to sell the assets constituting the
VCW Business as more fully described herein to Buyer and Buyer wishes
to buy such assets constituting the VCW Business subject to the terms
and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE 1. SALE, TRANSFER AND ASSIGNMENT OF ASSETS.
Subject to the terms and conditions set forth in this
Agreement, Seller agrees to sell, convey, transfer, assign and deliver
to Buyer, and Buyer agrees to purchase from Seller at the Closing
described in Article 3 hereof, the assets, properties and interests
of Seller constituting the VCW Business of every kind, character and
description, whether tangible, intangible, real, personal or mixed,
and wherever located except for the Excluded Assets, all of which are
sometimes collectively referred to in this Agreement as the "Assets",
including, but not limited to, the following:
1.1 Owned Real Property.
Those certain parcels of land more fully described on
Schedule 1.1, together with all privileges and appurtenances thereto
and all buildings, structures, fixtures and other improvements
situated thereon and together with all easements used or useful in
connection therewith (such land, improvements and easements together
hereinafter collectively referred to as the "Owned Real Property").
1.2 Real Property Leases; Easements.
All right, title and interest of Seller in the leases of the
real property more fully described on Schedule 1.2(a), together with
all rights and privileges under such leases (hereinafter referred to
as the "Real Property Leases") and to the real property subject to
such leases (hereinafter referred to as the "Leased Real Property" and
together with the Owned Real Property being hereinafter collectively
referred to as the "Real Property"), and the easements, rights-of-way,
rights of access or licenses relating to the distribution mains and
pipelines utilized in the VCW Business described on Schedule 1.2(b)
(hereinafter referred to as the "Easements").
1.3 Equipment.
All the machinery, tools, appliances, vehicles, furniture,
equipment (including, without limitation, essential spares and
replacement parts), gas distribution mains and pipelines, together
with gate stations, meters and other gas distribution equipment and
other tangible personal property of every kind and description that
are located upon or within the Real Property, and/or are owned or held
by Seller, and are utilized in connection with the operations of the
VCW Business, a current list of which is attached hereto as Schedule
1.3. (hereinafter referred to collectively as the "Equipment").
1.4 Transportation and Storage Contracts / Supply Contracts.
Seller's interest in the transportation and storage
contracts and gas supply contracts relating to the operation of the
VCW Business to be assumed by Buyer pursuant to Article 4, subject to
Seller's continuing interest in such interstate pipeline
deliverability and supply contracts necessary to serve Seller's New
Jersey operations, all as fully described in Schedule 1.4 attached
hereto (hereinafter referred to as the "Contracts").
1.5 Accounts Receivable.
All of Seller's accounts receivable as of the Closing Date
(as defined in Article 3 below) arising out of the operation of the
VCW Business in the ordinary course and unpaid as of the Closing Date
(hereinafter referred to as "Accounts Receivable"), but excluding any
reserves or allowance for bad debt maintained by Seller as of the
Closing Date.
1.6 Intangibles.
All intangible assets of the VCW Business listed on Schedule
5.12 as well as any other trade names (other than names used in the
VCW Business which include the "NUI" name), trademarks, service marks,
copyrights, patents, intellectual property, software licenses,
customer lists, goodwill and other intangibles used exclusively in
the VCW Business, if any, as of the Closing Date (as defined in
Article 3 below) including, without limitation, tort or insurance
proceeds arising out of any damage or destruction of any of the Assets
between the date of this Agreement and the Closing Date.
1.7 Books and Records.
All papers, computerized databases and records in Seller's
care, custody or control relating to any or all of the above described
Assets or exclusive to Seller's operation of the VCW Business,
including, but not limited to all blueprints, plans and
specifications, personnel and labor relations records, environmental
compliance records, sales records, customer records, marketing
materials, accounting and financial records, maintenance records,
plats and surveys of the Real Property, and plans and designs of
buildings, structures, fixtures and equipment.
1.8 Prepaid Expenses.
All prepaid expenses and other prepaid items relating to any
of the Assets and the operation of the VCW Business as of the Closing
Date subject to allocations which may be made by Seller consistent
with the terms of this Agreement and subject to Seller's retention of
amounts attributable to pension payments and pension expenses as
adjusted by Seller after Seller's valuation of its pension obligations
to the employees of the VCW Business.
1.9 Permits, etc.
All permits, licenses, consents or authorizations issued by,
and all registrations and filings with, any governmental agency in
connection with, the VCW Business whenever issued or filed, excepting
only those which by law or by their terms are non-transferable or
those which have expired.
1.10 Plant Material, Merchandise, Gas and Propane.
All plant material and operating supplies, all merchandise,
all gas stored underground and all propane in bulk storage tank
utilized in connection with the VCW Business existing as of the
Closing Date.
1.11 Excluded Assets.
Seller shall not transfer to Buyer and Buyer shall not
acquire Seller's cash, bank deposits or similar cash and cash
equivalent items existing as of the Closing Date, whether or not
arising from Seller's operation of the VCW Business (the "Excluded
Assets") other than restricted cash held for regulatory purposes in
connection with the VCW Business which shall be transferred to Buyer.
ARTICLE 2. PURCHASE PRICE.
2.1 Payment of Purchase Price.
In consideration for the transfer and assignment by Seller
of the Assets, Buyer on the conditions set forth herein,
(a) shall deliver to Seller at the Closing (as
hereinafter defined) (i) Fifteen Million Dollars ($15,000,000)
plus or minus any customary prorations as of the Closing Date
relating to the transfer of the Real Property under this
Agreement, and (ii) an amount required to reimburse Seller for
reasonable amounts expended by Seller for the NUCOR expansion
allocable to the VCW Business as more fully described in Section
8.12 of this Agreement, all payable in cash as more fully
described in Section 3.2 hereof; and
(b) shall assume and discharge, and shall indemnify
Seller against liabilities and obligations of Seller under the
leases, contracts or other agreements, if any, specified on
Schedule 4.
(c) shall pay Three Million Dollars ($3,000,000) to Seller
at such time as the entire amount of the rate increase, consisting of
the sum of: (i) the rate increase of Five Hundred Seventy Thousand
Dollars ($570,000) described in the Regulatory Relief Section of
Seller's Information Memorandum (dated June 2000), Page 5, Part F, and
(ii) One Hundred Thousand Dollars ($100,000) (the agreed amount
representing any annual insurance premium and/or accrual of funds
associated with the remediation described in Section 8.8 of this
Agreement), receives all necessary government approvals subject to
reasonable and customary restrictions and limitations. If a rate
increase of a lesser amount receives all necessary government
approvals subject to reasonable and customary restrictions and
limitations, then a linearly pro rated portion of the aforementioned
$3 million payment shall be paid to Seller, provided, however, that if
the amount of the approved rate increase does not yield additional
annual revenue equal to at least $385,000 - the sum of (x) $285,000 and
(y) $100,000 (the agreed amount of any annual insurance premium and/or
accrual of funds associated with the remediation described in Section
8.8) - then no portion of the $3 million will be paid to Seller. As an
illustration of the above proration, if the total rate increase
approved is $500,000, the portion of the $3 million payable to Seller
shall be calculated as follows: ($500,000 - ($285,000 + $100,000)) /
$285,000 x $3,000,000 = $1,210,526.32.
Buyer shall pursue approval of such rate increase with
diligence and shall commence formal proceedings to obtain such
increase by the later of: (i) eighteen (18) months after the Closing;
or (ii) such date as the New York Public Service Commission and the
Pennsylvania Public Utility Commission permit the Buyer to commence
such proceedings. In the event Buyer breaches its obligation to
diligently pursue such rate increase in accordance with the terms of
this subparagraph, Buyer shall pay to Seller $3 million. Buyer's
obligation to pursue the rate increase shall survive the Closing.
Notwithstanding the foregoing, if Buyer applies for a rate increase
and such increase is not approved, or only partially approved, as a
result of such proceedings, Buyer shall have no obligation to reapply
for a rate increase and Buyer's obligation to make payment to Seller
pursuant to Section 2.1(c) shall be fixed on the basis of such initial
application and decision.
2.2 Allocation of Purchase Price.
The parties agree to make an allocation of the Purchase
Price (defined as the sum of the amounts specified in paragraphs (a)
and (c) of Section 2.1 above) at the Closing and to use such
allocation in reporting the transaction contemplated by this Agreement
for Federal and state tax purposes.
ARTICLE 3. THE CLOSING.
The closing of the purchase and sale of the Assets by Seller to
Buyer (the "Closing") shall take place at the offices of Seller at
10:00 a.m. local time, no later than five (5) business days after all
conditions to the Closing contained in this Agreement have been
satisfied or waived in writing, or at such other place and/or time as
the parties may agree in writing (the "Closing Date").
3.1 Seller's Obligations at the Closing
At the Closing, the Seller shall deliver or cause to be
delivered to Buyer:
(a) For all the owned Real Property and interests in the Owned
Real Property, warranty deeds with covenants against grantor's acts in
recordable form, properly executed and acknowledged, conveying title
to the same;
(b) Assignments of all Real Property Leases and Easements
properly executed by Seller, and accompanied by all consents of
lessors required by this Agreement and the leases being assigned;
(c) Assignment and assumption agreements for personal property
leases, licenses and permits and all Contracts of Seller to be assumed
by Buyer in connection herewith, in a form legally sufficient to
accomplish the assignment of the same and assumptions of the
liabilities thereunder, and accompanied by all third party consents
required by this Agreement and the personal property leases and
Contracts being assigned to Buyer; and
(d) Other instruments of assignment and transfer (including bills
of sale) of all of the other Assets of Seller to be transferred
hereunder reasonably requested by Buyer to effect, evidence or
facilitate the transactions contemplated by this Agreement, in form
legally sufficient to properly assign or convey such title.
Simultaneously with the consummation of the transfer of the Assets,
Seller, through its officers, agents, and employees, shall put Buyer
into full possession and enjoyment of all the Assets to be sold,
conveyed, transferred, assigned and delivered under this Agreement.
3.2 Buyer's Obligations at the Closing.
At the Closing, Buyer shall deliver to Seller against
delivery of the items specified in Section 3.1: (i) a certified or
bank cashier's check, or a wire transfer of immediately available
funds, in the amount of the balance of the Purchase Price, payable to
Seller in accordance with Sections 2.1(a) and 2.1(b) of this
Agreement; and (ii) appropriate instruments of assumption of the
Assumed Obligations as defined herein in form legally sufficient to
accomplish such assumption.
ARTICLE 4. ASSUMPTION OF LIABILITIES
Buyer is assuming certain debts, liabilities or obligations of
Seller relating to the VCW Business, including all Accounts Payable
that have become due and payable in the ordinary course of business no
more than forty-five (45) days prior to the Closing Date and such
other obligations as herein specifically provided. Buyer shall have
the benefit of and shall perform and assume all Real Property Leases,
Contracts (subject to Seller's retained rights thereunder), Easements,
and other agreements and obligations relating to the VCW Business, if
any, specifically listed on Schedule 4, in accordance with the terms
and conditions thereof (the "Assumed Obligations"). Buyer
specifically assumes no debts, liabilities or obligations of Seller
other than those listed in Schedule 4.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller does hereby represent and warrant to Buyer as follows:
5.1 Organization.
Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey and has
full corporate power and authority to carry on its business, and in
particular the VCW Business, and to own, lease or operate its
properties, and in particular, the Assets utilized in the VCW
Business.
5.2 Authority.
Seller has taken all necessary corporate and other action to
authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby. The
Agreement has been duly and validly authorized, executed and delivered
by Seller and constitutes the valid and binding obligation of Seller
enforceable against Seller in accordance with its terms.
5.3 No Violation or Conflict.
Assuming that all of the consents described in Schedule 5.4
and Schedule 6.4 are obtained, neither the execution and delivery nor
performance of this Agreement by Seller will, with or without the
giving of notice or the passage of time, or both, conflict with,
result in a default, right to accelerate or loss of rights under, or
result in the creation of any lien, charge or encumbrance pursuant to,
any provision of Seller's Certificate of Incorporation or Bylaws or,
to Seller's knowledge, any material franchise, mortgage, deed of
trust, lease, license, agreement, understanding, law, ordinance, rule
or regulation or any order, judgment, award or decree to which Seller
is a party or by which it is bound.
5.4 Consents.
Except as set forth on Schedule 5.4, no approval, consent,
withholding of objection or other authorization is required from any
court, administrative agency, regulatory agency, governmental
authority or any other third party in connection with the execution
and delivery of this Agreement by Seller or for the consummation by
Seller of the transactions contemplated by this Agreement.
5.5 Claims and Litigation.
To Seller's knowledge, except as set forth on Schedule 5.5,
there is no material claim, legal action, suit, arbitration,
governmental investigation or other legal, regulatory or
administrative proceeding, or any order, judgment, decree or award in
progress, pending, threatened or in effect against or relating to the
Assets or the VCW Business.
5.6 Compliance with Laws and Other Requirements.
To Seller's knowledge, Seller has not received any notice of
material noncompliance with any laws, statutes, regulations,
ordinances and orders, judgments, decrees and awards applicable to the
Assets or the VCW Business, which notice remains unresolved and which
noncompliance would have a material adverse effect on the Assets or
the VCW Business.
5.7 Real Property.
Schedules 1.1 and 1.2 to this Agreement contain complete
listings of each parcel of real property owned by or leased to Seller
and used in the VCW Business. Schedules 1.1 and 1.2 contain a
description of all buildings, fixtures and other improvements located
on the Real Property and a list of the policies of title insurance
issued, if any, to Seller for these properties. True, correct and
complete copies of the Real Property Leases and Easements are
available for inspection by the Buyer. All the Real Property Leases,
and to Seller's knowledge, all Easements, are valid and in full force,
and there does not exist any default or event that with notice or
lapse of time, or both, would constitute a default under any of such
Leases or Easements. The zoning of each parcel of real property
described in Schedules 1.1 and 1.2 permits the presently existing
improvements and the continuation of the VCW Business presently being
conducted thereon.
5.8 Tangible Personal Property
The Equipment described in Section 1.3 and Schedule 1.3 of
this Agreement constitutes all the items of tangible personal property
owned by, in the possession of, or exclusively used by Seller in
connection with the VCW Business. The Equipment listed in Schedule
1.3 constitutes all tangible personal property necessary for the
conduct by Seller of the VCW Business as now conducted by Seller.
Except as stated in Schedule 1.3, no Equipment used by Seller in
connection with the VCW Business is held under any lease, security
agreement, conditional sales contract, or other title retention or
security arrangement.
5.9 Financial Statements of the VCW Business.
Schedule 5.9(a) to this Agreement sets forth the balance
sheet of the VCW Business as of September 30, 1999, (the "Last Fiscal
Year End"), and the related statement of income for the year then
ending which balance sheet and related statement of income are
included in the consolidated financial statements of the Seller which
are audited annually by Arthur Andersen LLP, Seller's independent
certified public accountants. Schedule 5.9(b) to this Agreement sets
forth the balance sheet of the VCW Business as of June 30, 2000, (the
"Stub Period Date"), together with the related statement of income for
the three month period then ending, certified by the Chief Financial
Officer of Seller. The financial statements in Schedules 5.9(a) and
5.9(b) are hereinafter referred to as the "Financial Statements". The
Financial Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently followed by
Seller throughout the periods indicated, are complete and correct in
all material respects and accurately and fairly present the financial
position of the VCW Business as of the respective dates of the balance
sheets included in the Financial Statements, and the results of
operations of the VCW Business for the respective periods indicated.
5.10 Absence of Specified Changes.
Since the Last Fiscal Year End, there has not been any:
(a) Adverse change in the financial condition, liabilities,
Assets, business, operating results or prospects of the VCW Business;
(b) Destruction, damage to, or loss of any Assets of the VCW
Business (whether or not covered by insurance) that adversely affects
the Assets, financial condition, business, operating results or
prospects of the VCW Business;
(c) Labor trouble or other event or condition of any
character adversely affecting the financial condition, business,
Assets or prospects of the VCW Business; or
(d) Other event or condition of any character that has or
might reasonably have an adverse effect on the financial condition,
business, Assets, operating results or prospects of the VCW Business.
5.11 Accounts Receivable.
The Accounts Receivable reflected on the balance sheet dated
the Stub Period Date included in the Financial Statements, and the
Accounts Receivable created after the date thereof, are valid and
genuine and arose from bonafide transactions involving the
distribution of natural gas to the VCW Business customers and the
performance of other services or other transactions in the ordinary
course of the VCW Business.
5.12 Intangible Assets.
Schedule 5.12 to this Agreement is a complete schedule of
all trade names (other than names including the "NUI" name),
trademarks, service marks, copyrights, patents, intellectual property,
software licenses and other intangibles owned by or licensed to Seller
and used exclusively in the VCW Business. Seller owns or has the
right to use all trade names, trademarks, service marks, copyrights,
patents, intellectual property, software licenses and other
intangibles necessary to carry on the VCW Business substantially as
currently conducted, except the failure of which to own or have the
right to use individually or in the aggregate would not reasonably be
expected to have a material adverse effect on the Assets or on the VCW
Business.
5.13 Title to Assets.
Seller has good and marketable title to all the Assets and
its interests in the Assets, whether real, personal, tangible and
intangible, which constitute all the Assets and interests in Assets
that are exclusively used in Seller's operation of the VCW Business.
All the Assets are free and clear of mortgages, liens, pledges,
charges, encumbrances, equities, claims, easements, rights of way,
covenants, conditions or restrictions, except for (i) those disclosed
in Seller's balance sheet as of the Stub Period Date, included in the
Financial Statements, or disclosed in Schedule 5.13 and the other
Schedules to this Agreement; (ii) the lien of current taxes not yet
due and payable; and (iii) possible minor matters that, in the
aggregate, are not substantial in amount and do not materially detract
from or interfere with the present or intended use of any of the
Assets, nor materially impair the business operations of the VCW
Business.
5.14 Employee Agreements and Benefit Plans.
(a) Schedule 5.14(a) contains a complete list of all employment
contracts with respect to the employees of the VCW Business to which
Seller is a party or by which Seller is bound (all the foregoing being
herein called "Employee Agreements"). At the present time there are
no Employee Agreements in effect, and to Seller's knowledge neither
Seller nor any other party is in default under any Employee Agreement
previously in effect. There have been no claims of default and, to
the knowledge of the Seller, there are no facts or conditions which,
if continued, or with the passage of time or compliance with any
applicable notice requirements or both, will result in a default under
the Employee Agreements.
At the present time Seller is not a party to any collective
bargaining agreement other than its collective bargaining agreement
with the International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers (the "Union"), which agreement has expired.
Seller is currently compensating bargaining unit employees of the VCW
Business in accordance with the terms of the expired agreement. There
is no pending or, to the knowledge of the Seller, threatened labor
dispute, strike or work stoppage by the VCW Employees or any
representative of the VCW employees. Seller made its last and best
offer to Union in August, 2000 and Seller believes it is likely that a
new collective bargaining agreement will be reached. A copy of the
Seller's last and best offer has been provided to Buyer.
(b) Schedule 5.14(b) contains a complete list of all pension
plans, practices, policies or arrangements, profit sharing plans,
bonus, deferred compensation, supplemental executive retirement plans,
excess benefit plans, stock options, stock appreciation or other forms
of incentive or other compensation plans or arrangements (including,
"employee pension benefit plans" as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended,
("ERISA")), and all welfare, severance, vacation, and other employee
fringe benefit plans (including "employee welfare benefit plans" as
defined in Section 3(1) of ERISA) maintained, or contributed to, by
Seller for the benefit of the employees of the VCW Business or former
employees of the VCW Business (all the foregoing being herein called
"Benefit Plans").
(c) With respect to the NUI Corporation Savings and Investment
Plan (the "Seller's Savings Plan") and the Pennsylvania & Southern Gas
Company Employees Pension Plan (the "Seller's Pension Plan"), Seller
has made available to Buyer copies of each of the following: (i) plan
document; (ii) summary plan description; (iii) trust agreement; (iv)
most recent annual report on IRS Form 5500 and (v) most recent
Internal Revenue Service determination letter. To the knowledge of
the Seller, the Seller's Savings Plan and the Seller's Pension Plan
are "qualified" within the meaning of Section 401(a) of the Code.
(d) Except as disclosed on Schedule 5.14(d), the Seller's Savings
Plan and Seller's Pension Plan have been maintained in substantial
compliance with their terms and within the requirements prescribed by
any and all statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended
(the "Code"). No "prohibited transaction" (as defined in Section 4975
of the Code or Section 406 of ERISA) has occurred which could subject
the Buyer to the tax or penalty on prohibited transactions imposed by
Section 4975 of the Code or the sanctions imposed under Title I of
ERISA.
5.15 Personnel Identification and Compensation
Schedule 5.15 contains a list of the names of all permanent,
full time employees of the VCW Business stating the rates of
compensation payable to each of them. All of the persons named in
Schedule 5.15 have been employees of the VCW Business for at least One
Hundred Twenty (120) days prior to the date of this Agreement and no
other individuals have been employed by the VCW Business on a
permanent basis during this period.
5.16 Contracts.
Prior to the date hereof, Seller has provided Buyer with
access to true and correct copies of all of the Contracts set forth in
Schedule 1.4. Seller has performed and, to the knowledge of Seller,
every other party has performed, each material term, covenant and
condition of each of the Contracts that is to be performed by any of
them at or before the date hereof. No event has occurred that would,
with the passage of time or compliance with any applicable notice
requirements or both, constitute a default by Seller or, to the
knowledge of Seller, any other party under any of the Contracts and,
to the knowledge of Seller, no party to any of the Contracts intends
to cancel, terminate or exercise any option under any of such
Contracts.
5.17 Environmental Conditions.
(a) When used in this Section 5.17 and elsewhere in this
Agreement:
(i) "Environmental Laws" shall mean any and all
federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees or requirements
of any Governmental Authority regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous
Materials or environmental protection as now or at any time
hereafter in effect, together with any amendment or re-
authorization thereto or thereof,
(ii) "Governmental Authority" shall mean any federal,
state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, or any court.
(iii) "Hazardous Materials" shall mean any hazardous
material, hazardous waste, infectious medical waste, Petroleum
and Natural Gas Products, hazardous or toxic substance defined or
regulated as such in or under any Environmental Law, including,
without limitation, materials exhibiting the characteristics of
ignitability, corrosivity, reactivity or extraction procedure
toxicity, as such terms are now or hereafter defined in
connection with hazardous materials or hazardous wastes or
hazardous or toxic substances in any Environmental Law; and
(iv) "Petroleum and Natural Gas Products" shall mean
crude oil, petroleum or fractions thereof, gasoline, diesel fuel,
motor oil, waste or used oil, heating oil, kerosene and any other
petroleum products and natural gas, natural gas liquids,
liquefied natural gas or synthetic gas useable for fuel.
(b) Except for past operations conducted at the Athens,
Pennsylvania manufactured gas plant (the "Athens MGP") and as
otherwise disclosed in Schedule 5.17(b) attached hereto, and except
for such violations that in the aggregate would not have a material
adverse effect on the Assets or the VCW Business, (i) to Seller's
knowledge, Seller has not used, stored, treated, transported,
manufactured, refined, handled, produced, disposed of, managed,
spilled or released any Hazardous Materials on, under, at from or in
any way affecting any Real Estate or other Assets or otherwise, in any
manner which at the time of the action in question violated, or at the
time of this Agreement violate, any Environmental Law governing the
use, storage, treatment, transportation, manufacture, refinement,
handling, production, disposal, management, spill or release of
Hazardous Materials; and (ii) to Seller's knowledge, no prior owner of
such Real Property or Assets or any tenant, subtenant, prior tenant or
prior subtenant thereof has used Hazardous Materials on, from or in
any way affecting any such Real Property or Asset, or otherwise, in
any manner which at the time of the action in question violated, or at
the time of this Agreement violate, any Environmental Law governing
the use, storage, treatment, transportation, manufacture, refinement,
handling, production, disposal, management, spill or release of
Hazardous Materials.
(c) Except as set forth in Schedule 5.17(c), and except for such
permits or noncompliance that in the aggregate would not have a
material adverse effect on the Assets or the VCW Business, to Seller's
knowledge (i) Seller has received all permits as may be required
under applicable Environmental Laws to conduct the VCW businesses,
(ii) Seller is in compliance in all material respects with the terms
and conditions of any such permits, and (iii) Seller has not received
any notices or claims, nor is there a factual basis for such a claim,
that it is a responsible party in connection with any claim or notice
asserted pursuant to 42 U.S.C. Section 9601 et seq., or any state
superfund law with respect to any Real Property or the Assets.
5.18 Fees and Expenses of Brokers and Others
Seller has not had any dealings, negotiations or communications
with any broker or other intermediary in connection with the
transactions contemplated by this Agreement, is not committed to any
liability for any brokers' or finders' fees or any similar fees in
connection with the transactions contemplated by this Agreement, and
has not retained any broker or other intermediary to act on its behalf
in connection with the transactions contemplated by this Agreement,
except that Seller has engaged Berenson, Minella & Company to
represent it in connection with such transactions, and Seller shall
pay all of Berenson Minella's fees and expenses in connection with
such engagement.
5.19 Taxes.
To Seller's knowledge, Seller has not received any notice of
material noncompliance with any federal, state or municipal tax law
and Seller is current in its payment of all taxes including without
limitation all income, gross receipts, property, sales, excise and
franchise taxes, assessments or duties and no such tax is a lien or
encumbrance upon any Asset which is a subject of this Agreement,
except for the lien of current taxes not yet due and payable.
5.20 Gas Operations.
To Seller's knowledge:
(a) there have been no changes in the VCW gas transmission and
distribution system between January 1, 2000 and the date of this
Agreement other than changes made in the ordinary course of the VCW
Business;
(b) VCW's propane air peaking plants are capable of normal and
safe operations; and
(c) None of VCW's largest customers listed in Exhibit 8 of the
June 2000 Information Memorandum have "bypassed" in the period between
January 1, 2000 and the date of this Agreement, and Seller has no
knowledge of any such customer who plans to "bypass."
5.21 Definition of Seller's Knowledge.
As set forth in this Agreement, certain representations and
warranties of Seller are being made to "Seller's knowledge" or
terminology similar to such phrase. In determining Seller's knowledge
and whether Seller has knowledge, Seller shall be deemed to have
knowledge only of information actually known or which ought to be
reasonably known by Seller's management team who are listed on
Schedule 5.19. Each such member, in turn, shall be deemed to have
knowledge of information of which that person has actual knowledge or
which that person ought to reasonably know as of the Closing Date and
information which that person personally possesses or reasonably ought
to possess (including information in that person's respective files),
but that person shall not be deemed to have knowledge of any
information otherwise in the files of Seller or possessed by any other
employee, officer or agent of Seller. The knowledge of each of such
named persons shall not be imputed to any of the other named persons.
Article 6. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer does hereby represent and warrant to Seller as follows:
6.1 Organization.
Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Pennsylvania and has
full corporate power and authority to carry on its business as now
being conducted and to own, lease and operate its properties, as and
in the places where such business is now conducted and such properties
are now owned, leased or operated.
6.2 Authorization.
Buyer has taken all necessary corporate and other action to
authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby. The
Agreement has been duly and validly authorized, executed and delivered
by Buyer and constitutes the valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms.
6.3 No Violation or Conflict.
Assuming that all of the consents described in Schedules 5.4 and
Schedule 6.4 are obtained, neither the execution and delivery nor
performance of this Agreement by Buyer will, with or without the
giving of notice or the passage of time, or both, conflict with,
result in a default, right to accelerate or loss of rights under, or
result in the creation of any lien, charge or encumbrance pursuant to,
any provision of Buyer's Certificate of Incorporation or Bylaws or, to
Buyer's knowledge, any material franchise, mortgage, deed of trust,
lease, license, agreement, understanding, law, ordinance, rule or
regulation or any order, judgment, award or decree to which Buyer is a
party or by which it is bound.
6.4 Consents.
Except as set forth in Schedule 6.4, no approval, consent,
withholding of objection or other authorization is required from any
court, administrative agency, regulatory agency, governmental
authority or any other third party in connection with the execution
and delivery of this Agreement by Buyer or for the consummation by
Buyer of the transactions contemplated by this Agreement.
6.5 Financial Ability to Perform.
Buyer has the financial ability and has access to funding sources
to obtain the funds necessary to consummate the transactions
contemplated to occur at the Closing. As of the date of this
Agreement, Buyer knows of no reason that the funding sources Buyer has
access to will not be able to provide Buyer such funding.
6.6 Fees and Expenses of Brokers and Others.
Buyer has not had any dealings, negotiations or communications
with any broker or other intermediary in connection with the
transactions contemplated by this Agreement, is not committed to any
liability for any brokers' or finders' fees or any similar fees in
connection with the transactions contemplated by this Agreement, and
has not retained any broker or other intermediary to act on its behalf
in connection with the transactions contemplated by this Agreement,
except that Buyer has engaged Management Consulting Services, Inc.
("MCS") to assist it in connection with such transactions, and Buyer
shall pay all of the fees and expenses of MCS in connection with such
engagement.
6.7 Acknowledgment by Buyer.
Buyer has conducted, to its satisfaction, an independent
investigation of the financial condition, Assets, liabilities to be
assumed by Buyer and projected operations of the VCW Business in
making its determination to proceed with the transactions contemplated
by this Agreement, and Buyer has relied on the results of its own
independent investigation, as well as the representations and
warranties of Seller expressly and specifically set forth herein.
6.8 Definition of Buyer's Knowledge.
As set forth in this Agreement, certain representations and
warranties of Buyer are being made to "Buyer's knowledge" or
terminology similar to such phrases. In determining Buyer's knowledge
and whether Buyer has knowledge, Buyer shall be deemed to have
knowledge only of information actually known or which ought to be
reasonably known by Buyer's management team who are listed on Schedule
6.8. Each such member, in turn, shall be deemed to have knowledge of
information of which that person has actual knowledge or which that
person ought to reasonably know as of the Closing Date and information
which that person personally possesses or reasonably ought to possess
(including information in that person's respective files), but that
person shall not be deemed to have knowledge of any information
otherwise in the files of Buyer or possessed by any other employee,
officer or agent of Buyer. The knowledge of each such named persons
shall not be imputed to any of the other named persons.
ARTICLE 7. SELLER'S
Seller covenants and agrees that, except as otherwise agreed in
writing by Buyer, from the date of this Agreement until the Closing
Date:
7.1 Conduct of Business in the Ordinary Course.
Seller shall continue to conduct the VCW Business in the ordinary
course and consistent with past practice. Seller will use all
commercially reasonable efforts to preserve the VCW Business, maintain
all real and personal property, keep available the services of the
present employees of the VCW Business and maintain the goodwill of the
customers, suppliers and others having a business relationship with
the VCW Business. Notwithstanding the foregoing, Seller shall not
extend the term of any expiring interstate pipeline transportation
and/or storage contracts without the consent of Buyer, nor will Seller
enter into a gas "customer choice" program that has a material adverse
effect on VCW's distribution margin, or volume delivered to customers
on a weather normalized basis, except as otherwise required by the
Pennsylvania Public Utility Commission and/or the Public Service
Commission of the State of New York or any other entity having
jurisdiction over such matters.
7.2 Maintenance of Insurance.
Seller shall continue to carry its existing insurance covering
the Assets and the VCW Business subject to variations in amounts
required by the ordinary operations of the VCW
Business.
7.3 Employees and Compensation.
Seller shall not do, or agree to do, any of the following:
(a) grant any increase in salaries payable or to become payable
to any employee of the VCW Business other than such increases which
are made in the ordinary course of business to employees and other
than such increase which may be required under a collective bargaining
agreement or other understanding with the representative of the
employees who are members of a bargaining unit;
(b) increase benefits payable to any employee of the VCW Business
under any bonus or pension plan or other contract or commitment other
than with respect to changes to any such plans, contracts or
commitments made by Seller which affect its employees generally.
Seller shall permit Buyer to contact Seller's employees at all
reasonable times for the purpose of discussing with such employees
prospective employment by Buyer on or after the Closing Date, and
Seller shall take reasonable steps to assist Buyer's efforts to
encourage employees of Seller to accept any employment offered by
Buyer;
(c) hire any new employee for, or transfer any existing employee
to, the VCW Business, or terminate (other than for cause) or transfer
any existing employee of the VCW Business without the consent of
Buyer.
7.4 Access by Buyer.
Seller shall give to Buyer and its authorized representatives
access, during normal business hours and upon reasonable advance
notice, in such a manner as not to disrupt the normal business
activities of Seller's business, to the Assets and books of account
and records of the VCW Business reasonably relevant to an evaluation
of the Assets and the VCW Business. Seller will also cause its
officers to furnish to Buyer any and all material financial, technical
and operating data, and other information pertaining to the VCW
Business operations of Seller and the Assets, as Buyer shall from time
to time reasonably request for such purpose.
7.5 Covenant Not to Compete.
Seller covenants and agrees that, for a period of five (5) years
after the Closing Date (the "Restrictive Period") Seller shall not, in
any capacity, directly or indirectly, distribute natural gas to any
customers in the areas of Pennsylvania or New York (as applicable)
served by the VCW Business. In addition, except as otherwise set
forth in this Section 7.5, Seller covenants and agrees that during the
Restrictive Period Seller shall not, in any capacity, directly or
indirectly, sell natural gas to (i) any residential customer, or (ii)
any other customer that would not be eligible for transportation
service under tariffs in effect for the VCW Business as of the Closing
Date. During the Restrictive Period, Seller shall not solicit non-
transportation customers of the VCW Business to become transportation
customers and it shall not solicit any customers of the VCW Business
to "bypass." The foregoing notwithstanding, Seller shall be permitted
to make bulk sales of natural gas to retail customers who were
transportation customers of the VCW Business on or before the Closing
Date. In the event that Buyer establishes a retail "choice" program
in Pennsylvania and/or New York, permitting retail customers to
purchase supply from a third-party, Buyer agrees to permit Seller to
participate in any such "choice" program as a third-party marketer.
If any court determines that this covenant not to compete, or any
part thereof, is unenforceable because of the duration or geographic
scope of such provision, such court shall have the power to reduce the
duration or scope of such provision, as the case may be, and, in its
reduced form, such provision shall then be enforceable. For purposes
of this section, the term Seller shall include any parent, subsidiary
or affiliated corporation of Seller or any entity, organization, or
enterprise which Seller, directly or indirectly controls or in which
Seller directly or indirectly possesses an ownership interest equal to
or greater than fifty percent (50%)
ARTICLE 8. ADDITIONAL AGREEMENTS.
8.1 Regulatory Matters.
(a) The parties shall cooperate with each other and use all
commercially reasonable efforts promptly to prepare and file all
necessary documentation, to effect all applications, notices,
petitions and filings, and to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all governmental
entities and third parties which are necessary to consummate the
transactions contemplated by this Agreement as set forth in Schedule
5.4 and Schedule 6.4. The Seller and Buyer shall have the right to
review in advance, and, to the extent practicable, each will consult
with the other on, in each case, subject to applicable laws relating
to the exchange of information, all the information relating to the
Seller, the VCW Business or the Buyer, as the case may be, which
appear in any application, notice, petition and filing made with or
written materials submitted to, any governmental entity or third party
in connection with the transactions contemplated by this Agreement.
In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties agree that
they will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all governmental
entities and third parties necessary or advisable to consummate the
transactions contemplated by this Agreement as set forth in Schedule
5.4 and Schedule 6.4, and each party will keep the other apprised of
the status of matters relating to completion of the transactions
contemplated herein.
(b) Seller and Buyer shall promptly furnish each other with
copies of written communications received by Seller and Buyer, as the
case may be, from, or delivered by any of the foregoing to, any
governmental entity in respect of the transactions contemplated
hereby.
8.2 Legal Conditions to the Transaction.
Each of Seller and Buyer shall use all reasonable efforts to
take, or cause to be taken, all actions necessary, proper or advisable
to comply promptly with all legal requirements which may be imposed on
such party with respect to the consummation of the transactions
contemplated by this Agreement and to obtain (and to cooperate with
the other party to obtain) any consent, authorization, order or
approval of or any exemption by, any governmental entity and any other
third party which is required to be obtained by Seller or Buyer in
connection with the transactions contemplated by this Agreement.
8.3 Additional Agreements.
If at any time after the Closing Date any further action is
necessary or desirable to carry out the purpose of this Agreement or
to vest Buyer with full title to the Assets and the VCW Business, the
proper officers of each party to this Agreement shall take all such
necessary actions as may be reasonably requested by the Buyer (without
additional cost to it).
8.4 Disclosure Supplements.
Prior to the Closing Date, each party will supplement or amend
the Schedules hereto delivered in connection with the execution of
this Agreement to reflect any matter which, if existing, occurring or
known at the date of this Agreement, would have been required to be
set forth or described in such Schedules or which is necessary to
correct any information in such Schedules which has been rendered
inaccurate thereby. No supplement or amendment to such Schedules
shall have any effect for the purposes of determining satisfaction of
the conditions set forth in Sections 9.2(a), 9.2(b), 9.3(a) and 9.3(b)
hereof.
8.5 No Inconsistent Actions.
Prior to the Closing Date, except as otherwise permitted by this
Agreement, no party will enter into any transaction or make any
agreement or commitment and will use reasonable efforts not to permit
any event to occur, which could reasonably be anticipated to result in
a denial of the regulatory or governmental approvals referred to in
Schedules 5.4 and 6.4, the imposition of any condition or requirement
that would materially adversely affect the economic or business
benefits to the Buyer of the transactions contemplated by this
Agreement.
8.6 Confidentiality.
The parties agree to continue to comply with the terms of the
Confidentiality Agreement dated May 31, 2000 between Seller and Buyer
the terms of which are incorporated herein by reference.
8.7 Employment Matters.
(a) Buyer will offer to each employee of the VCW Business (the
"VCW Employees") employment in a position of comparable seniority and
at least the same pay as that received by each such VCW Employee
immediately prior to the Closing Date. Each VCW Employee who is
tendered and accepts Buyer's offer of employment will be referred to
as a "Transferred Employee." Buyer agrees not to terminate any
Transferred Employee during the three (3) month period following the
Closing Date except for cause. Buyer will provide the Transferred
Employees with the same benefits it provides to its other employees in
similar positions, subject to any changes that Buyer may negotiate
with any union, which may be the collective bargaining representative
of any of the Transferred Employees. Furthermore, for a one year
period commencing on the Closing Date, Buyer will agree to pay
severance to any Transferred Employee terminated by Buyer (other than
a Transferred Employee terminated for cause) during such one year
period in an amount equal to two weeks' pay for each year of service
to Seller and Buyer up to a maximum of the Transferred Employee's
annual salary, but in no event less than three month's pay or such
amount required to be paid under a collective bargaining agreement, if
applicable. Any severance payment provided for herein shall be
payable in a lump sum and shall be based on the salary payable to the
Transferred Employee at the time of the termination of employment.
Seller shall reimburse Buyer for all severance costs for the first
five (5) Transferred Employees that are terminated without cause
between the Closing Date and one year after the Closing Date. Seller
agrees to indemnify, defend and hold harmless Buyer with respect to
any and all compensation, severance and/or employee benefits claims by
any current or former employee (or any spouse, former spouse,
dependent or former dependents of any such current or former employee)
of Seller accruing prior to the Closing Date.
(b) Subject to Seller's obligations to comply with applicable
labor laws, rules and regulations, Seller agrees that it will not
make, or agree to, any material changes to its last and best offer in
connection with the collective bargaining agreement submitted to the
Union in August, 2000 without consulting Buyer. In the event that
after the Closing Date, Buyer terminates the employment of any
Transferred Employee who is represented by a collective bargaining
representative, Buyer shall pay severance benefits in accordance with
any collective bargaining agreement, if applicable, in lieu of the
severance payments provided in subsection (a) above.
(c) Effective immediately after the Closing Date, all
Transferred Employees shall be eligible to participate in Buyer's
employee benefit plans, including, but not limited to, the defined
benefit pension (the "Buyer's Pension Plan") and 401(k) savings plan
(the "Buyer's Savings Plan") maintained by Buyer, in accordance with
the terms of such plans unless and until different benefit plans are
negotiated with an applicable collective bargaining representative.
Buyer agrees to amend its employee benefit plans to provide that
service completed by Transferred Employees while employed by the
Seller or its predecessor or its affiliates shall be recognized under
Buyer's employee benefit plans for purposes of determining eligibility
for participation and vesting of benefits.
(d) Effective immediately after the Closing Date, all Transferred
Employees shall be eligible to participate in the Buyer's Savings
Plan, unless and until different benefit plans are negotiated with any
applicable collective bargaining representative. Effective as of the
Closing Date, Seller shall amend Seller's Savings Plan to provide that
all Transferred Employees shall be fully vested in their account
balances thereunder. Seller shall cause the trustees of the Seller's
Savings Plan to transfer to the trustees of the Buyer's Savings Plan
the aforementioned fully vested account balances of the Transferred
Employees to the Buyer's Savings Plan as soon as practicable following
the Closing Date but in no event more than 150 days following the
Closing Date ("Transfer Date") and Buyer shall cause the trustees of
the Buyer's Savings Plan to accept such transfer of the account
balances. In no event shall the amount transferred be less than the
amount required to be transferred to satisfy Sections 401(a)(12) and
414(1) of the Code. The transfer of the Transferred Employees account
balances shall be in cash, except that the account balances or
portions thereof invested in notes representing participant loans
shall be transferred in-kind to the Buyer's Savings Plan (except for
mortgage loans, which shall not be transferred to the Buyer's Savings
Plan). Buyer agrees to provide Seller with evidence that the Buyer's
Savings Plan is qualified under Section 401(a) of the Code and Seller
agrees to provide Buyer with evidence that Seller's Savings Plan is
qualified under Section 401(a) of the Code.
(e) Effective as of the Closing Date, all Transferred Employees
shall cease benefit accruals in the Seller's Pension Plan and Seller
shall amend Seller's Pension Plan to provide that all Transferred
Employees shall be fully vested in their accrued benefits as of the
Closing Date. Effective immediately after the Closing Date, all
Transferred Employees shall be eligible to participate in the Buyer's
Pension Plan, unless and until different benefit plans are negotiated
with any applicable collective bargaining representative. Seller
shall cause the trustees of the Seller's Pension Plan to transfer to
the trustees of the Buyer's Pension Plan the assets and liabilities
attributable to the Transferred Employees (as described below) as soon
as practicable following the Closing Date but in no event more than
150 days following the Closing Date (the "Transfer Date") and Buyer
shall cause the trustees of the Buyer's Pension Plan to accept such
transfer of assets and liabilities. The amount transferred to the
Buyer's Pension Plan shall equal the Accumulated Benefit Obligation as
defined below for the Transferred Employees as of the Closing Date,
increased by 7 3/4% interest from the Closing Date to the date of
transfer, and decreased by the amount of any benefit payments to the
Transferred Employees after the Closing Date but prior to the date of
transfer. The Accumulated Benefit Obligation for the Transferred
Employees shall be determined by using the accumulated benefits
obligation methodology of Statement of Financial Accounting Standards
No. 87, on the basis of (i) each participant's age, years of vesting
service and years of benefit accrual service on the Closing Date, and
(ii) the actuarial assumptions and methods used for determining the
accumulated benefits obligation as of the January 1, 2000 actuarial
report for the Seller's Pension Plan including the lump sum
distribution assumption of 50%; provided, however, that the discount
rate shall instead be a rate midway between the GATT annual interest
rate for the month prior to the month during which the Closing Date
occurs and 7 3/4%. In no event shall the amount transferred be less
than the amount required to be transferred to satisfy Sections
401(a)(12) and 414(1) of the Code. The calculation of the above
described present value of accrued benefits shall be made by an
actuary designated by the Seller and shall be reviewed and approved by
an actuary designated by the Buyer (which approval shall not be
unreasonably withheld). The Seller shall cooperate fully in the
gathering of any necessary data to be used by the respective actuaries
and shall certify or cause the certification of the accuracy of such
data to the actuaries. The costs and expenses of any third party
engaged to perform services with regard to this section shall be paid
by the party engaging such third party. Seller shall cause the plan
administrator of the Seller's Pension Plan and Buyer shall cause the
plan administrator of the Buyer's Pension Plan to make such timely
filings as may be required by the Internal Revenue Service with
respect to the transfer of assets and liabilities, including Forms
5310-A. Buyer agrees to provide Seller with evidence that Buyer's
Pension Plan is qualified under Section 401(a) of the Code and Seller
agrees to provide evidence to Buyer that Seller's Pension Plan is
similarly qualified under Section 401(a) of the Code. Buyer's Pension
Plan will provide that each Transferred Employee will be entitled to a
benefit at least equal to his accrued benefit under the Seller's
Pension Plan as of the Closing Date.
(f) With respect to any medical, dental, prescription drug,
vacation, death, accidental death and dismemberment, short-term
disability and long-term disability benefit plans maintained by Buyer
for its employees, immediately after the Closing Date, the Transferred
Employees shall participate in such plans (i) without any waiting
periods , exclusions due to pre-existing conditions and without any
evidence of insurability; and (ii) Buyer shall take into account
claims arising during the calendar year in which occurs the Closing
Date for purposes of satisfying deductibles, out-of-pocket maximums
and all other similar limitations. Notwithstanding the foregoing,
Seller will assume responsibility for any and all outstanding employee
benefits claims, including, but not limited to, any and all heath
insurance claims, relating to claims and/or expenses incurred on or
prior to the Closing Date.
(g) Buyer shall be responsible for any legally-mandated
continuation of health care coverage for all Transferred Employees
and/or their covered dependents who have a loss of health coverage due
to a "qualifying event" (as defined in Section 4980B of the Code) that
occurs on or after the Closing Date.
(h) After the Closing Date, the Buyer will have sole
responsibility for any obligations or liabilities to Transferred
Employees under the Worker Adjustment and Retraining Notification Act
or any similar applicable law of any jurisdiction relating to any
plant closing or mass layoff or as otherwise required by any
applicable law.
8.8 Environmental Condition of the Athens MGP.
Buyer shall, at its sole cost and expense, in accordance with all
applicable Environmental Laws, assume responsibility for the
environmental condition associated with the former operations of the
Athens MGP, including, but not limited to, conducting such
investigations and remediation activities with respect to any
Hazardous Materials that may exist in, on, under or about the Athens
MGP and any contiguous property used in connection with the former
operations of the Athens MGP as may be required by any Governmental
Authority. Notwithstanding anything contained in this Agreement to
the contrary, it is understood and agreed that Buyer shall assume all
risk relating to the past, present and future environmental condition
of the Athens MGP and any contiguous property used in connection with
the former operations of the Athens MGP.
Buyer intends to seek insurance and/or to accrue funds to address
the potential liability stemming from its ownership of the Athens MGP
and its assumption of responsibility for the environmental conditions
described herein. Buyer will seek a rate increase from the
Pennsylvania Public Utility Commission and the New York Public Service
Commission for the amount of the insurance premiums and/or the accrual
of funds for the eventual remediation of the Athens MGP.
8.9 Bulk Sales Law.
No action is required by either party with respect to any bulk
sales or bulk transfer laws. In the event that any such law is deemed
to apply to the sale of the Assets and the VCW Business by Seller, by
execution of this Agreement Seller agrees that it shall be solely
liable and Seller hereby waives any and all obligations and
requirements imposed upon Buyer under such laws.
8.10 Existing Arrangements between NUI and VCW.
Buyer will have the right, as its sole option, to assume under
existing terms and conditions, renegotiate, or immediately terminate
any arrangements that existed between Seller and the VCW Business as
of January 1, 2000 or at any time thereafter, up to and including the
Closing Date; provided, however that Buyer shall not have the right to
renegotiate or terminate any arrangement with Seller's New Jersey
division relating to interstate pipeline capacity or deliverability
and gas supply. Buyer intends to continue the current contract
between the VCW Business and Utility Business Services, Inc., a
wholly-owned subsidiary of Seller ("UBS"), for billing services at
least until August 31, 2001 or until the Closing Date whichever is
later. In the event that Buyer terminates such contract after such
period, Seller agrees to cause UBS to waive any termination fee,
penalty or any other termination payment which may be provided for
under the terms of such contract.
8.11 Post-Closing Servicing Agreements.
The parties agree to use commercially reasonable efforts to
negotiate certain post-Closing servicing agreements on mutually
acceptable terms relating to the provision of on-going services by
Seller to Buyer in connection with the operation of the VCW Business
relating to gas supply procurement, billing, information systems and
other administrative functions. It is understood and agreed by the
parties that the Closing of the transactions contemplated by this
Agreement is not subject to or in any way conditioned upon the
successful negotiation and execution of any such post-Closing
servicing agreements.
8.12 The NUCOR Expansion.
The parties agree that Seller shall use commercially reasonable
efforts to obtain the franchise, permits and approvals to secure grant
monies from the State of New York and to expend the funds reasonably
necessary to secure the same and for the construction required for the
NUCOR expansion. Seller has provided Buyer with cost estimates for
the NUCOR expansion. It being understood that such expansion will
benefit the future of the VCW Business, Buyer agrees to reimburse
Seller at Closing for Seller's reasonable NUCOR expansion expenses
properly allocable to the VCW Business in excess of the grant monies
awarded to Seller.
ARTICLE 9. CONDITIONS TO CLOSING
9.1 Conditions to Each Party's Obligation to Effect the Sale.
The respective obligation of each party to effect the
transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) Regulatory Approvals. All necessary approvals,
authorizations and consents of all governmental entities required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired or have been
terminated.
(b) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the transactions contemplated by this
Agreement shall be in effect and no proceeding initiated by any
governmental entity seeking an injunction shall be pending. No
statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any governmental entity
which prohibits, restricts or makes illegal consummation of the
transactions contemplated by this Agreement.
9.2 Conditions to Obligations of Buyer.
The obligation of the Buyer to effect the transactions
contemplated in this Agreement is also subject to the satisfaction or
waiver by Buyer, at or prior to the time set for performance of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Seller set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date. Buyer
shall have received a certificate signed on behalf of the Seller by
its Chief Financial Officer to the foregoing effect.
(b) Performance of Obligations of Seller. The Seller shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date,
and the Buyer shall have received a Certificate signed on behalf of
the Seller by its Chief Financial Officer.
(c) Third Party Consents. The consent, approval, or waiver of
each person (other than the governmental entities) whose consent or
approval shall be required in order to permit the sale, transfer or
assignment of the Assets (including, but not limited to, all gas
supply contracts identified on Schedule 1.4) shall have been obtained.
9.3 Conditions to Obligations of the Seller.
The obligations of the Seller to effect the transactions
contemplated in this Agreement are also subject to the satisfaction,
or waiver by the Seller, at or prior to the Closing of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Buyer set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent
such representations and warranties speak as of a earlier date) as of
the Closing Date as though made on and as of the Closing Date. The
Seller shall have received a certificate signed on behalf of the Buyer
by its Chief Financial Officer to the foregoing effect.
(b) Performance of Obligations of Buyer. The Buyer shall have
performed in all material respects all obligations required to be
performed by the Buyer under this Agreement at or prior to the Closing
Date, and the Seller shall have received a Certificate signed on
behalf of Buyer by its Chief Financial Officer to such effect.
ARTICLE 10. TERMINATION AND AMENDMENT
10.1 Termination.
This Agreement may be terminated and the transactions
contemplated herein abandoned at any time prior to the Closing Date:
(a) by mutual consent of the Seller and the Buyer in a written
instrument, if the Board of Directors of each so determines by a vote
of a majority of the members of its entire Board;
(b) by either the Seller or the Buyer upon written notice to the
other party (i) at least thirty (30) days after the date on which any
request or application for an approval of a governmental entity
required to consummate the transactions contemplated by this Agreement
shall have been denied or withdrawn at the request or recommendation
of the governmental entity which must grant such requisite approval;
provided however, that no party shall have the right to terminate this
Agreement pursuant to this Section 10.1(b)(i) if such denial or
request or recommendation for withdrawal shall be due to the failure
of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein, or (ii)
if any governmental entity having jurisdiction over the transactions
contemplated by this Agreement shall have issued a final nonappealable
order enjoining or otherwise prohibiting the consummation of any of
the transactions contemplated in this Agreement;
(c) by either the Seller or the Buyer if the purchase and sale of
the Assets shall not have been consummated on or before the first
anniversary date of the execution of this Agreement by the parties;
provided, however, that if all of the conditions provided in Article 9
hereof, other than the receipt of Regulatory Approvals described in
Article 9.1(a) have been satisfied or waived, and diligent efforts are
being undertaken to satisfy the conditions in Article 9.1(a), then the
references to the first anniversary date in this Article 9.1(c) shall
be deemed to be the second anniversary of the date of this Agreement.
(d) by either the Seller or the Buyer (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
representations or warranties set forth in this Agreement on the part
of the other party, (i) which breach (if susceptible to cure) is not
cured within twenty (20) business days following receipt by the
breaching party of written notice of such breach by the other party
hereto, or (ii) which breach, by its nature, cannot be cured; or
(e) by either the Seller or the Buyer (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
covenants or agreements set forth in this Agreement on the party of
the other party, (i) which breach (if susceptible to cure) is not
cured within twenty (20) business days following receipt by the
breaching party of written notice of such breach from the other party
hereto, or (ii) which breach, by its nature, cannot be cured.
10.2 Effect of Termination.
In the event of termination of this Agreement by either the
Seller or the Buyer as provided in Section 10.1, this Agreement shall
forthwith become void and have no effect, except that Sections 8.6 and
10.3 shall survive any termination of this Agreement, and there shall
be no further obligation on the part of the Buyer, the Seller or their
respective officers or directors except for the obligations under such
provisions. Notwithstanding anything to the contrary contained in
this Agreement, no party shall be relieved or released from any
liabilities or damages arising out of its intentional breach of any
provision of this Agreement; provided, however, that no claim for any
intentional breach shall survive the Closing.
10.3 Expenses; Break-Up Fee
(a) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
(b) In order to induce Seller to enter into this Agreement and to
deal exclusively with Buyer, and to reimburse the Seller for incurring
the costs and expenses related to entering into this Agreement and
consummating the transactions contemplated by this Agreement, in the
event that the transactions contemplated by this Agreement are not
consummated as a result of any failure to satisfy the conditions set
forth in Section 9.3(b) of this Agreement, Seller shall be entitled to
receive from Buyer the payment of Five Hundred Thousand Dollars
($500,000) as liquidated damages in full satisfaction of Seller's
claims under this Agreement. Notwithstanding the foregoing, Buyer
shall have no obligation to make such payment to Seller if the
transactions contemplated by this Agreement are not consummated as a
result of any failure to satisfy the conditions set forth in Sections
9.1, 9.2(a) or 9.2(b) of this Agreement or if any material consents
under Section 9.2(c) are not obtained, provided the failure to obtain
such material consents is not due to the financial condition of Buyer,
whether or not the conditions set forth Section 9.3(b) have been
satisfied.
(c) In order to induce Buyer to enter into this Agreement and to
deal exclusively with Seller, and to reimburse the Buyer for incurring
the costs and expenses related to entering into this Agreement and
consummating the transactions contemplated by this Agreement, in the
event that (i) the transactions contemplated by this Agreement are not
consummated as a result of any failure to satisfy the conditions set
forth in Section 9.2(b) of this Agreement or (ii) Seller terminates
this Agreement without cause hereunder and, at the time of termination
Seller has received, or thereafter receives, an alternative offer to
purchase the VCW Business which offer is accepted by Seller within six
(6) months after such termination, Seller shall pay to Buyer an amount
equal to Five Hundred Thousand Dollars ($500,000.00) as liquidated
damages in full satisfaction of Buyer's claims under this Agreement.
Notwithstanding the foregoing, Seller shall not be obligated to make
such payment to Buyer if the transactions contemplated by this
Agreement are not consummated as a result of any failure to satisfy
the conditions set forth in Sections 9.1, 9.3(a) or 9.3(b) of this
Agreement, whether or not the conditions set forth in Section 9.2(b)
have been satisfied.
10.4 Amendment.
Subject to compliance with applicable law, this Agreement may be
amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time. This Agreement may not
be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
10.5 Extension; Waiver
The parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed,
extend the time for the performance of any of the obligations or other
acts of the parties hereto, waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such party,
but such extension or waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
ARTICLE 11. POST-CLOSING INDEMNIFICATION OBLIGATIONS
11.1 Indemnification.
(a) Seller shall indemnify and hold Buyer harmless against and in
respect of all claims, costs, losses, expenses, liabilities, suits,
actions or damages, including reasonable attorneys' and accountants'
fees and disbursements (hereinafter "Damages") arising out of Seller's
breach of its representations and warranties contained in this
Agreement or asserted against Buyer relating to or directly arising
from Seller's ownership of the Assets or the conduct of the VCW
Business prior to the Closing Date other than Assumed Obligations;
(b) Buyer shall indemnify and hold Seller harmless against and in
respect of all Damages arising out of Buyer's breach of its
representations and warranties contained in this Agreement or asserted
against Seller relating to or directly arising from Buyer's ownership
of the Assets or conduct of the VCW Business or Buyer's failure to
satisfy the Assumed Obligations or Buyer's Obligations under Section
8.7 of this Agreement as of and subsequent to the Closing Date;
(c) Buyer shall indemnify and hold Seller harmless against and in
respect of all Damages asserted against Seller relating to the
environmental condition associated with the former operations of the
Athens MGP or Buyer's failure to satisfy its obligations contained in
Section 8.8 concerning the environmental condition of the Athens MGP
and any contiguous property used in connection with the former
operations of the Athens MGP.
(d) In the event of a claim for indemnification under this
Section 11.1, the party seeking indemnification shall promptly notify
the indemnifying party in writing of the nature of the claim for which
indemnification is sought within a reasonable time after the assertion
of the claim. The indemnifying party shall be entitled to participate
at its own expense in the defense, or if it so elects, within a
reasonable time after receipt of such notice, to assume the defense of
any suit brought to enforce any such claim. If the indemnifying party
so elects to assume the defense, such defense shall be conducted by
counsel chosen by the indemnifying party and reasonably satisfactory
to the party seeking indemnification. In the event that the
indemnifying party elects to assume the defense of any such suit and
retain its own counsel, the party seeking indemnification shall (i)
bear the fees and expenses of any additional counsel thereafter
retained by it, and (ii) not settle such suit without the prior
written consent of the indemnifying party, which consent shall not be
unreasonably withheld.
In the event the party seeking indemnification fails to promptly
notify the indemnifying party, the indemnifying party shall be
relieved of liability for such claim to the extent such delay
materially adversely affects the indemnifying party's ability to
defend the claim.
(e) Notwithstanding anything to the contrary contained herein:
(i) all claims by either party arising out of or relating to this
Agreement shall be brought under this Section 11.1; (ii) all claims
arising under subparagraphs (a) and (b) of this Section 11.1 must be
made within eighteen (18) months from the Closing Date; and (iii)
neither Buyer nor Seller shall be liable for any claim arising under
subparagraphs (a) and (b) of this Section 11.1 until the aggregate
amount of all such claims made against such party exceeds $100,000.00,
it being understood that, once the aggregate amount of claims exceeds
$100,000.00, the indemnifying party shall be fully liable for any
claims made by the other party (including the first $100,000.00 of any
such claims) up to an aggregate amount equal to the Purchase Price.
The limitations on the indemnification obligation of the parties
contained in this subparagraph shall not limit in any way Buyer's
indemnification obligation contained in subparagraph (c) of this
Section 11.1.
ARTICLE 12. GENERAL PROVISIONS
12.1 Survival of Representations and Warranties.
Notwithstanding any term or provision of this Agreement to the
contrary and regardless of any investigation made by any party, the
representations and warranties contained in this Agreement or
otherwise made or delivered pursuant to, or in connection with, this
Agreement, the transaction contemplated hereunder or any related
transactions shall survive the Closing for a period of twenty-four
(24) months from the Closing Date.
12.2 Notices.
All notices and other communications hereunder shall be in
writing and shall be deemed given when personally delivered or
telecopied (with confirmation from recipient), three (3) days after
mailed by registered or certified mail (return receipt requested) or
on the day delivered by any express courier (with confirmation from
recipient) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to the Buyer, to:
C&T Enterprises, Inc.
1775 Industrial Boulevard
P.O. Box 551
Lewisburg, PA 17837
Attn: General Counsel
With copies to:
Management Consulting Services, Inc.
1667 K Street, N.W., 210
Washington, D.C. 20006
and
Facer & Stamoulas, P.C.
1025 Connecticut Avenue, N.W., #610
Washington, D.C. 20036
(b) if to the Seller, to:
NUI Corporation
550 Route 202-206
P.O. Box 760
Bedminister, New Jersey 07921-0760
Attn: General Counsel
with a copy to:
Bourne, Noll & Kenyon
382 Springfield Avenue
P.O. Box 690
Summit, New Jersey 07902-0690
Attention: Roger Mehner, Esq
Facsimile No.: (908) 277-6808
12.3 Interpretation.
When a reference is made to this Agreement to Sections, or
Schedules, such reference shall be to a Section of or Schedule to this
Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation." The phrases "the date of this Agreement,"
"the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to be October 4, 2000.
12.4 Counterparts.
This Agreement may be executed in counterparts, all of which
shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
12.5 Entire Agreement.
This Agreement (including the documents and instruments referred
to herein), constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
12.6 Governing Law.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Pennsylvania, without regard to
any applicable conflicts of law, and the Seller consents to
jurisdiction in a Court of Common Pleas in Pennsylvania with respect
to any claims arising out of this Agreement.
12.7 Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and
provision of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in
any other jurisdiction. If any provision of this Agreement is deemed
to be so broad as to be unenforceable, the provisions shall be
interpreted to be only so broad as is enforceable.
12.8 Publicity.
Except as otherwise required by law, neither the Seller nor the
Buyer nor either of their subsidiaries shall be permitted to issue or
cause the publication or any press release or other public
announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without
the consent of the other party, which consent shall not by
unreasonably withheld.
12.9 Assignment.
Neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written
consent of the other parties except that Buyer and Seller shall each
have the right to assign its right, interest or obligations hereunder
to a wholly-owned subsidiary of Buyer so long as Buyer remains liable
for all terms, conditions, obligations and agreements contained in
this Agreement. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except as
otherwise expressly provided herein, this Agreement (including the
documents and instruments referred to herein) is not intended to
confer upon any person other than the parties any rights or remedies
hereunder.
IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement
to be executed by their respective officers thereunto duly authorized
as of the date first above written.
NUI CORPORATION (SELLER)
By: /s/John Kean, Jr.
President and
Chief Executive Officer
C & T ENTERPRISES, INC. (BUYER)
By: /s/ Robert O. Toombs
President and Chief Executive Officer
