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EXHIBIT 10.13
MERGER AGREEMENT
AMONG
SOUTHWEST GAS CORPORATION,
SOUTHWEST GAS CORPORATION OF ARIZONA
AND
NORTHERN PIPELINE CONSTRUCTION CO.
NOEL T. COON, ET UX.
WILLIAM L. JOHNSON, ET UX.
MICHAEL J. KEMPER, ET UX.
DATED AS OF
November 13, 1995
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TABLE OF CONTENTS
Page
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Recitals.......................................................................... 1
1. Plan of Merger.................................................................... 1
1.1 The Merger............................................................... 1
1.2 Effect of the Merger..................................................... 2
1.3 Consummation of the Merger............................................... 2
1.4 Articles of Incorporation and Bylaws; Directors and Officers............. 2
1.5 Conversion of Securities................................................. 3
1.6 Closing of NPL Transfer Books............................................ 4
1.7 Exchange of Certificates................................................. 4
1.8 Taking of Necessary Action; Further Action............................... 5
1.9 Fair Market Value........................................................ 5
2. Effective Time; Closing........................................................... 7
3. Representations and Warranties of NPL............................................. 7
3.1 Organization, Power, Good Standing, Etc.................................. 7
3.2 Capitalization........................................................... 9
3.3 Authority................................................................ 10
3.4 No Violation............................................................. 11
3.5 Consents and Approvals................................................... 11
3.6 Financial Statements..................................................... 12
3.7 Brokerage................................................................ 13
3.8 Absence of Certain Changes or Events..................................... 13
3.9 Litigation, Etc.......................................................... 14
3.10 Taxes and Tax Returns.................................................... 14
3.11 Employees; Employee Benefit Plans........................................ 15
3.12 Compliance With Applicable Law........................................... 21
3.13 Contracts and Agreements................................................. 21
3.14 Disclosure............................................................... 21
3.15 Title to Property........................................................ 22
3.16 Insurance................................................................ 23
3.17 Powers of Attorney....................................................... 24
4. Representations and Warranties of Southwest....................................... 24
4.1 Corporate Organization................................................... 24
4.2 Authority................................................................ 24
4.3 No Violation............................................................. 25
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4.4 Consents and Approvals.................................................................... 26
4.5 Sufficient Resources...................................................................... 26
4.6 Litigation................................................................................ 27
4.7 Capitalization............................................................................ 28
4.8 SEC Filings............................................................................... 28
4.9 Business Changes.......................................................................... 29
4.10 Financial Statements...................................................................... 29
4.11 Disclosure................................................................................ 30
5. Covenants of the Parties........................................................................... 31
5.1 Current Information....................................................................... 31
5.2 NPL Reports............................................................................... 32
5.3 Regulatory Matters........................................................................ 32
5.4 Further Assurances........................................................................ 33
5.5 Public Announcements...................................................................... 33
5.6 Failure to Fulfill Conditions............................................................. 34
5.7 Tax Matters............................................................................... 34
6. Covenants of NPL................................................................................... 36
6.1 Conduct of the Business of NPL............................................................ 36
6.2 No Solicitation........................................................................... 40
6.3 Access to Management, Properties and Records; Confidentiality............................. 40
6.4 Assignment of Contract Rights............................................................. 42
7. Employees; Employee Benefit Plans.................................................................. 42
7.1 Covenants of NPL.......................................................................... 42
8. Closing Conditions................................................................................. 43
8.1 Conditions to Each Party's Obligations Under This Agreement............................... 43
8.2 Conditions to the Obligations of Southwest Under This Agreement........................... 43
8.3 Conditions to the Obligations of NPL Under This Agreement................................. 45
9. Closing............................................................................................ 46
9.1 Date and Place............................................................................ 46
9.2 NPL's Closing Documents................................................................... 47
9.3 Southwest's Closing Documents............................................................. 47
10. Post-Closing Obligations........................................................................... 47
10.1 Registration of Southwest Common Stock.................................................... 47
10.2 Restrictions on Sale of Acquired Stock.................................................... 54
11. Termination, Amendment and Waiver.................................................................. 56
11.1 Termination............................................................................... 56
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11.2 Amendment, Extension and Waiver........................................................... 58
12. Expenses........................................................................................... 58
13. Indemnification.................................................................................... 59
13.1 Indemnification of Southwest.............................................................. 59
13.2 Southwest Indemnification................................................................. 60
13.3 Claims for Indemnity...................................................................... 61
14. Miscellaneous...................................................................................... 63
14.1 Non-Compete Agreements.................................................................... 63
14.2 NPL Promissory Notes to Noel T. Coon...................................................... 64
14.3 Survival.................................................................................. 64
14.4 Notices................................................................................... 64
14.5 Parties in Interest....................................................................... 65
14.6 Entire Agreement.......................................................................... 66
14.7 Counterparts.............................................................................. 66
14.8 Governing Law............................................................................. 66
14.9 Headings.................................................................................. 66
14.10 Enforcement Costs......................................................................... 66
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MERGER AGREEMENT
This Merger Agreement (the "Agreement") is made and entered into as of
the 13th day of November, 1995 by and among Southwest Gas Corporation, a
California corporation ("Southwest"), Southwest Gas Corporation of Arizona, a
Nevada Corporation wholly owned by Southwest (the "Merger Sub"), and Northern
Pipeline Construction Co., a Minnesota corporation ("NPL"), and Noel T. Coon and
Alexa S. Higashi, his wife, William L. Johnson and Judy Johnson, his wife, and
Michael J. Kemper and Frances Kemper, his wife ("NPL Shareholders").
RECITALS
The respective boards of directors of Southwest and NPL have determined
that it is advisable to consummate the Merger described in Section 1 (the
"Merger"), as a result of which all of the outstanding NPL common stock will be
converted into shares of the Common Stock, $1.00 par value per share, of
Southwest ("Southwest Common Stock") and NPL will be owned directly or
indirectly by Southwest; all on the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Plan of Merger. The respective boards of directors of Southwest,
Merger Sub and NPL have approved or will approve, by resolutions duly adopted,
the following provisions of this Section 1 as the Plan of Merger required by the
laws of the states of Minnesota and Nevada in connection with the Merger:
1.1 The Merger. At the Effective Time (as defined in Section
1.3), in accordance with this Agreement and applicable law, NPL shall be merged
with and into
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the Merger Sub, the separate existence of NPL (except as may be continued by
operation of law) shall cease, and the Merger Sub shall continue as the
surviving corporation under the corporate name possessed by NPL immediately
prior to the Effective Time, subject to Section 1.4 of this Agreement. The
Merger Sub, in its capacity as the corporation surviving the Merger, sometimes
is referred to herein as the "Surviving Corporation."
1.2 Effect of the Merger. The Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public as
well as of a private nature, of each of the Merger Sub and NPL (collectively,
the "Constituent Corporations"); and all property, real, personal, and mixed,
and all debts due on whatever account, including subscriptions to shares, and
all other choses in action, and all and every other interest of or belonging to
or due to each of the Constituent Corporations, shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the Surviving Corporation shall be responsible and liable for all
liabilities and obligations of each of the Constituent Corporations.
1.3 Consummation of the Merger. On the Closing Date, the
parties hereto will cause articles of merger relating to the Merger to be
delivered to the Secretary of State of the states of Minnesota and Nevada, in
such form as required by, and executed in accordance with, the relevant
provisions of applicable law. The Merger shall be effective at such time as such
articles of merger are duly filed by the Secretary of State of the states of
Minnesota and Nevada in accordance with the applicable law (the "Effective
Time").
1.4 Articles of Incorporation and Bylaws; Directors and
Officers. The Articles of Incorporation and Bylaws of the Merger Sub, as in
effect immediately prior to
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the Effective Time, shall be the Articles of Incorporation (except that such
Articles of Incorporation shall be amended as of the Effective Time to change
the name to NPL) and Bylaws (except that such Bylaws shall be amended as of the
Effective Time to change the name to NPL) of the Surviving Corporation
immediately after the Effective Time and shall thereafter continue to be its
Articles of Incorporation and Bylaws until amended as provided therein and under
the applicable law. The directors of the Merger Sub holding office immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
immediately after the Effective Time. The officers of the Merger Sub holding
office immediately prior to the Effective Time shall sign letters of resignation
on or prior to the Closing. The officers of NPL (except Noel T. Coon) holding
office immediately prior to the Effective Time shall be the officers (holding
the same offices as they held with NPL) of the Surviving Corporation immediately
after the Effective Time.
1.5 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of the Merger Sub, NPL or the
holder of any of the following securities:
(a) All shares of NPL Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be
canceled pursuant to Section 1.5[b]) shall automatically be canceled
and extinguished and be converted into and become a right to receive
the number of shares of Southwest Common Stock to be calculated in
accordance with Section 1.9 having a total Fair Market Value of
Southwest Common Stock equal to twenty-four million dollars
($24,000,000). Each NPL Shareholder shall be entitled to receive his
proportionate share of such
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Southwest Common Stock based upon his percentage ownership interest of
NPL Common Stock at the Effective Time. Cash will be issued in lieu of
fractional shares based on Fair Market Value.
(b) Each share of NPL Common Stock issued and outstanding
immediately prior to the Effective Time and held in the treasury of
NPL or owned by Southwest or the Merger Sub shall automatically be
canceled and extinguished and no payment shall be made with respect
thereto.
(c) Each share of Merger Sub Common Stock, par value $1.00 per
share, issued and outstanding immediately prior to the Effective Time
shall automatically be converted into and become one validly issued,
fully paid and nonassessable share of Common Stock, par value $1.00 per
share, of the Surviving Corporation.
1.6 Closing of NPL Transfer Books. At the Effective Time, the
stock transfer books of NPL shall be closed and no transfer of shares of NPL
Common Stock issued and outstanding immediately prior to the Effective Time
shall thereafter be made. If, after the Effective Time, valid certificates
previously representing such shares are presented to the Surviving Corporation
or the Disbursing Agent (as defined in Section 1.7), they shall be exchanged as
provided in Section 1.7.
1.7 Exchange of Certificates. After the Effective Time, the
Stock Transfer Department of Southwest shall act as Disbursing Agent (the
"Disbursing Agent") in effecting the exchange of Southwest Common Stock for
certificates which, immediately prior to the Effective Time, represented shares
of NPL Common Stock entitled to such exchange pursuant to Section 1.5(a). Upon
the surrender and exchange of a certificate
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theretofore representing shares of NPL Common Stock, the holder shall be issued
a certificate representing the number of shares of Southwest Common Stock to
which he is entitled pursuant to Section 1.5(a) and the certificate representing
NPL Common Stock shall forthwith be canceled. Until so surrendered and
exchanged, each such certificate shall represent solely the right to receive the
Southwest Common Stock into which the shares of NPL Common Stock it theretofore
represented shall have been converted pursuant to Section 1.5(a), and the
Surviving Corporation shall not be required to issue to the holder thereof the
Southwest Common Stock to which he otherwise would be entitled; provided that
procedures allowing for issuance against lost or destroyed certificates against
receipt of customary and appropriate certifications and indemnities shall be
provided.
1.8 Taking of Necessary Action; Further Action. Southwest and
the Merger Sub, on the one hand, and NPL and NPL Shareholders, on the other
hand, shall use all reasonable efforts to take all such action (including
without limitation action to cause the satisfaction of the conditions of the
other to effect the Merger) as may be necessary or appropriate in order to
effectuate the Merger as promptly as possible. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
possession of all the rights, privileges, immunities and franchises of the
Constituent Corporations, the officers and directors of the Surviving
Corporation are fully authorized in the name of the Constituent Corporations or
otherwise to take, and shall take, all such action.
1.9 Fair Market Value.
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(a) For purposes of this Agreement, the "Fair Market Value" of
a share of Southwest Common Stock shall be determined as follows:
(i) Upon receipt of all required regulatory approvals
of the Merger, the parties shall as promptly as practicable
make a joint public announcement (the "Public Announcement")
that such regulatory approvals have been obtained.
(ii) The "Fair Market Value" of a share of Southwest
Common Stock shall be the average of the closing prices of the
Southwest Common Stock on the New York Stock Exchange, for the
twenty trading days ending on the trading day which is five
trading days prior to the Closing Date. The closing prices
printed in The Wall Street Journal will be presumed to be
correct in the absence of evidence to the contrary.
(b) Notwithstanding Section 1.9(a):
(i) If the Fair Market Value of a share of Southwest
Common Stock determined as provided in Section 1.9(a) is
greater than $17.50, Noel T. Coon may terminate this Agreement
(on behalf of NPL and NPL Shareholders) by written notice to
Southwest delivered not less than two business days prior to
the Closing Date unless Southwest and Merger Sub notify Noel
T. Coon in writing on or prior to the Closing Date that
Southwest and Merger Sub agree that, for purposes of this
Agreement, the Fair Market Value of a share of Southwest
Common Stock shall be $17.50; and
(ii) If the Fair Market Value of a share of Southwest
Common
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Stock determined as provided in Section 1.9(a) is less than
$15.00, Southwest may terminate this Agreement by written
notice to Noel T. Coon delivered not less than two business
days prior to the Closing Date unless Noel T. Coon notifies
Southwest in writing on or prior to the Closing Date that he
agrees (on behalf of NPL and NPL Shareholders) that, for
purposes of this Agreement, the Fair Market Value of a share
of Southwest Common Stock shall be $15.00.
(iii) NPL and NPL Shareholders each agree to be bound
by the decision made by Noel T. Coon pursuant to the
provisions of subsections 1.9(b)(i) and (ii) above.
In the event of any termination of this Agreement
pursuant to Section 1.9(b), the parties hereto shall have no
further obligation whatsoever to each other hereunder except
pursuant to those provisions of this Agreement which expressly
survive the termination hereof.
2. Effective Time; Closing. The Merger shall become effective at the
Effective Time.
3. Representations and Warranties of NPL. The "NPL Disclosure
Schedules" shall mean all of the disclosure schedules required by this
Agreement, dated as of the date hereof, which have been delivered by NPL. NPL
hereby represents and warrants to Southwest as follows:
3.1 Organization, Power, Good Standing, Etc.
(a) NPL is a corporation duly organized, validly existing and
in good
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standing under the laws of the State of Minnesota. NPL has all the
requisite corporate power and authority to own, lease and operate all
of its properties and assets and to carry on its business as currently
conducted. NPL is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the nature of the business
conducted by it makes such licensing or qualification necessary and
where the failure to be so qualified would, individually or in the
aggregate, have a Material Adverse Effect (as defined below) on NPL.
NPL has heretofore delivered to Southwest correct copies of its
Articles of Incorporation (the "Articles") and its Bylaws as in effect
on the date hereof. As used in this Agreement, the term "Material
Adverse Effect" with respect to a party shall mean any change or effect
that is reasonably likely to be materially adverse to the business,
operations, properties, condition (financial or otherwise), assets or
liabilities of such party taken as a whole.
(b) NPL has no subsidiaries. NPL has no affiliates, other than
other businesses, firms, corporations, partnerships, joint ventures, or
similar organizations which are owned in whole or in part by Noel T.
Coon.
(c) The minute books of NPL contain materially complete and
accurate records of all meetings held and other corporate action taken,
since December 31, 1990, by the company's stockholders and Board of
Directors.
(d) Except as set forth on Disclosure Schedule 3.1(d), NPL
does not own (beneficially or otherwise) any capital stock or other
equity interest in any corporation or other entity.
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(e) Except as listed on Disclosure Schedule 3.1(e), NPL is not
a party to nor is it or any of its assets bound by any agreement which
relates to any equity interest of NPL in any partnership, joint
venture, or similar enterprise pursuant to which NPL may be required to
transfer funds in respect of any equity interest to, make an investment
in, or guarantee or assume any debt, dividend or other obligation of,
any person, entity, partnership, joint venture or similar enterprise,
or pursuant to which NPL is or is required to become an equity
investor.
(f) Except as specifically disclosed in this Agreement, no
other agreements, either written or oral, exist between NPL and Noel T.
Coon or businesses owned by Noel T. Coon which would require the
transfer of NPL funds or assets.
3.2 Capitalization. The authorized capital stock of NPL
consists of 15,000 shares of common stock, par value $10 per share ("NPL Common
Stock"). As of the date hereof, 5,771 shares of NPL Common Stock (and no shares
of NPL Preferred Stock) were issued and outstanding. No shares of stock are held
in NPL's treasury. All of the issued and outstanding shares of NPL Common Stock
have been duly authorized, validly issued, and are fully paid and nonassessable,
with no personal liability attaching to the ownership thereof. Other than shares
reserved for issuance under the Stock Purchase Agreement (as hereinafter
defined), there are no shares of NPL Common Stock reserved for issuance for any
reason. NPL is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the transfer,
purchase, or issuance of any shares of its capital stock or any securities
representing the right to
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purchase or otherwise receive any shares of its capital stock or any securities
convertible into or representing the right to purchase or subscribe for any such
shares except for the obligations of NPL under the Stock Purchase Agreement of
March 7, 1994, as amended (the "Stock Purchase Agreement"), providing for the
possible issuance of up to 1,236 additional shares each to Messrs. Johnson and
Kemper (up to 2,472 in total) in order to implement said Agreement.
Notwithstanding the foregoing, NPL further represents that all of its stock is
now owned by Noel T. Coon and that William L. Johnson and Michael J. Kemper have
an option to purchase up to 15 percent each of the outstanding shares of NPL by
purchasing with promissory notes ("Option Notes") newly issued shares of NPL
from NPL as provided in the Amendment to Stock Purchase Agreement dated November
12, 1995. Immediately prior to the exercise of such option, NPL will issue a
dividend to Noel T. Coon in the form of a promissory note ("Dividend Note") in
the amount equal to (and conditioned upon the execution and delivery of) the
Option Notes. NPL will pay and discharge the Dividend Note by transferring the
Option Notes to Coon. Southwest hereby consents to the exercise of the option,
the foregoing dividend and payment of the Dividend Note as provided above, and
agrees to recognize Messrs. Johnson and Kemper as shareholders of NPL in the
event the option is legally exercised in accordance with its terms on or prior
to the Closing Date.
3.3 Authority. NPL and NPL Shareholders have the requisite
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Assuming the due authorization, execution and
delivery hereof by the other parties hereto, this Agreement constitutes a valid
and binding obligation of NPL
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and NPL Shareholders, enforceable against them in accordance with its terms.
3.4 No Violation. Except as listed on Disclosure Schedule 3.4,
neither the execution and delivery of this Agreement nor the consummation by NPL
or NPL Shareholders of the transactions contemplated hereby, nor compliance by
NPL or NPL Shareholders with any of the terms or provisions hereof, will (i)
violate any provision of the Articles or Bylaws of NPL, (ii) assuming the
consents and approvals referred to in Section 3.5 hereof are duly obtained,
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to NPL, or any of its respective properties or
assets, or (iii) violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of NPL, under any of the terms, conditions or provisions of any note,
bond, mortgage indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which NPL is a party, or by which it or any of its
properties or assets may be bound or affected, except with respect to (iii)
above, for such violations, conflicts, breaches, defaults, terminations,
accelerations and encumbrances which would not prevent consummation of the
transactions contemplated hereby and would not have a Material Adverse Effect.
Prior to Closing, NPL and NPL Shareholders shall provide written evidence to
Southwest that NPL has obtained approvals or waivers for all restrictions listed
on Disclosure Schedule 3.4.
3.5 Consents and Approvals. Except for (i) consents and
approvals of,
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deliveries to, or filings or registrations with the Securities and Exchange
Commission (the "SEC"), the Federal Trade Commission (the "FTC"), the United
States Department of Justice (the "Justice Department"), or other applicable
federal and state governmental authorities and (ii) the consents, approvals,
filings or registrations set forth on Disclosure Schedule 3.4, no consents or
approvals of or filings or registrations with any third party or public body or
authority, except for consents, approvals, filings or registrations where the
failure to obtain such consents or approvals or to make such filings or
registrations would not prevent or delay the Merger or have a Material Adverse
Effect, are necessary in connection with the execution and delivery by NPL and
NPL Shareholders of this Agreement and the consummation of the Merger.
3.6 Financial Statements.
(a) NPL has previously delivered or made available to
Southwest copies of (i) the balance sheets of NPL as of December 31,
1992, 1993 and 1994 respectively, and the related statements of income
and retained earnings and statements of cash flows for each of the
three years ended, respectively, on December 31, 1992, 1993 and 1994,
in each case accompanied by the NPL audit reports of Deloitte & Touche
LLP, independent public accountants, with respect to NPL (the "NPL
1992, 1993 and 1994 Financial Statements" respectively), and (ii) the
unaudited balance sheet of NPL as of July 30, 1995 and the related
unaudited income statement for the seven-month period then ended (the
"July 1995 Financial Statements"). The NPL 1992, 1993 and 1994
Financial Statements referred to herein (including the related notes)
present fairly the financial position of NPL, as
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of the respective dates set forth therein, and present fairly the
results of the operations and changes in stockholders' equity and cash
flows of NPL for the respective fiscal periods or as of the respective
dates set forth therein.
(b) The NPL 1992, 1993 and 1994 Financial Statements
(including the related notes) have been prepared in accordance with
generally accepted accounting principles consistently applied during
the periods involved. The July 1995 Financial Statements present fairly
the financial position of NPL as of the respective dates set forth
therein, and present fairly the results of the operations of NPL for
the seven months then ended.
(c) The books and records of NPL have been, and are being,
maintained in accordance with applicable legal and accounting
requirements.
3.7 Brokerage. There are no claims for investment banking
fees, brokerage commissions, finder's fees or similar compensation payable by
NPL in connection with the transactions contemplated by this Agreement.
3.8 Absence of Certain Changes or Events. As of the date of
this Agreement, there has not been any material adverse change in the business,
operations, properties, assets or financial condition of NPL, taken as a whole,
from that described in the audited NPL 1994 Financial Statements and, to the
best of NPL's knowledge, no fact or condition existed as of the date hereof that
NPL believes will cause such a material adverse change prior to the Closing
Date. The parties hereto agree that none of the information disclosed in the
July 1995 Financial Statements shall constitute a material adverse change for
purposes of this Agreement.
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3.9 Litigation, Etc. As of the date of this Agreement, (a)
there are no actions, suits, claims, inquiries, proceedings or investigations
before any court, commission, bureau, regulatory, administrative or governmental
agency, arbitrator, body or authority known to NPL Shareholders or management to
be pending or threatened against NPL which will result in liabilities, including
defense costs, in excess of $1,000 in the aggregate except those listed on
Disclosure Schedule 3.9 and (b) NPL is not subject to any order, judgment or
decree and is not in default with respect to any such order, judgment or decree.
3.10 Taxes and Tax Returns.
(a) The amounts recorded as provisions for taxes in the NPL
July 1995 Financial Statements are sufficient for all material accrued
and unpaid federal, state, county and local taxes, interest and
penalties of NPL, whether or not disputed, for the period ended July
30, 1995, and for all fiscal periods prior thereto. Except as set forth
on Disclosure Schedule 3.10(b), NPL has not been notified of an
Internal Revenue Service examination or of an examination by any state
tax authority. NPL has not granted any waiver of any statute of
limitations with respect to, or any extension of a period for the
assessment of, any Tax (as hereinafter defined). Complete and correct
copies of the income tax returns of NPL for the four years ended
December 31, 1994, as filed with the Internal Revenue Service and all
state and local taxing authorities, together with all related
correspondence and notices, have previously been made available to
Southwest.
(b) Except as set forth on Disclosure Schedule 3.10(b), NPL
has timely
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and correctly filed all federal, state, county and local tax and other
returns and reports (collectively, "Returns") required by applicable
law to be filed (including without limitation, estimated tax returns,
income tax returns, excise tax returns, sales tax returns, use tax
returns, property tax returns, franchise tax returns, information
returns and withholding, employment and payroll tax returns), and has
paid all taxes, levies, license and registration fees, charges or
withholdings of any nature whatsoever shown by such Returns to be owed,
or which are otherwise due and payable (hereinafter called "Taxes"),
and to the extent any material liabilities for Taxes as of July 30,
1995 have not been fully discharged, full and complete reserves have
been established in the July 1995 Financial Statements. NPL is not in
default in the payment of any Taxes due or payable or any assessments
received in respect thereof except for Taxes which are being contested
in good faith. Except as listed on Disclosure Schedule 3.10(b), no
additional assessments of Taxes which might be payable by NPL are known
to NPL to be proposed, pending or threatened, other than Taxes for
periods for which returns are not yet filed and which have been
accrued.
(c) There are no intercompany tax-sharing agreements to which
NPL is a party.
3.11 Employees; Employee Benefit Plans.
(a) Except as listed on Disclosure Schedule 3.11(a), other
than union contracts, as of the date hereof NPL is not a party to or
bound by or in any manner liable under any contract, arrangement or
understanding (whether written or oral)
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with respect to the employment or compensation of any officers,
employees or consultants, and consummation of the transactions
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional acts or events) result in payments
(whether of severance pay or otherwise) becoming due from NPL to any
officer or employee other than the existing employment contracts with
Mr. William L. Johnson and Mr. Michael J. Kemper which they each hereby
agree will automatically cancel on December 31, 1996 by mutual
agreement without any penalty or additional compensation, except the
bonuses earned thereunder in 1996 will be paid in 1997 when the audited
1996 financial statements are available to determine NPL's pretax
income. NPL agrees to accrue all costs to be incurred for severance
payments and the Pete Middents award listed on Disclosure Statement
3.11(a) in its 1995 Financial Statements.
(b) Except as listed in Disclosure Schedule 3.11(b), as of the
date hereof, there are not, and there have not been at any time in the
past three years, any actions, suits, claims or proceedings (which have
been served on NPL) before any court, commission, bureau, regulatory,
administrative or governmental agency, arbitrator, body or authority
pending or, to the best of NPL Shareholders' or management's knowledge,
threatened by any employees, former employees or other persons relating
to the employment practices or activities of NPL (except for threatened
actions which have subsequently been resolved).
(c) With respect to all employee benefit plans, NPL represents
and warrants as follows:
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(i) All employee benefit plans, as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and any other pension, bonus, deferred
hospitalization, health and other employee benefit plan,
program or arrangement, whether formal or informal, under
which NPL has any obligation or liability, or under which any
employee or former employee of NPL has any rights to benefits
(the "Benefit Plans") are set forth on Disclosure Schedules
3.11(a) and 3.11(c)(i). All Benefit Plans that are subject to
the funding requirements in Title I, Subtitle B, Part 3 of
ERISA or Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code"), are in compliance with such funding
standards, and no waiver or variance from such funding
requirements has been obtained or applied for under Section
412(d) of the Code. None of the Benefit Plans is subject to
Title IV of ERISA or is a "multi-employer plan," as such term
is defined in Section 3(37) and 4001(a)(3) of ERISA and
Section 414(f) of the Code.
(ii) Except as listed on Disclosure Schedule
3.11(c)(ii), the terms of the Benefit Plans are, and the
Benefit Plans have been administered, in accordance with the
requirements of ERISA, the Code, applicable law and the
respective plan documents. None of the Benefit Plans is under
audit or is the subject of an investigation by the Internal
Revenue Service, the U.S. Department of Labor or any other
federal or state governmental agency. All material reports and
information required to be filed with, or provided to, the
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United States Department of Labor, Internal Revenue Service,
the Pension Benefit Guaranty Corporation (the "PBGC") and plan
participants and beneficiaries with respect to each Benefit
Plan have been timely filed or provided. With respect to each
Benefit Plan for which an annual report has been filed, no
material change has occurred with respect to the matters
covered by the most recent annual report since the date
thereof.
(iii) NPL is not aware of any facts regarding any
Benefit Plan which is an "employee pension benefit plan" as
defined in Section 3(2) of ERISA (collectively, the "Employee
Pension Benefit Plans") that would present a significant risk
that any Employee Pension Benefit Plan would not be determined
by the appropriate District Director of the Internal Revenue
Service to be "qualified" within the meaning of Section 401(a)
of the Code, or with respect to which any trust maintained
pursuant thereto is not exempt from federal income taxation
pursuant to Section 501 of the Code, or with respect to which
a favorable determination letter could not be issued by the
Internal Revenue Service with respect to each such Employee
Pension Benefit Plan.
(iv) With respect to each Benefit Plan, all
contributions, premiums or other payments due or required to
be made to such plans as of the Effective Time have been or
will be made or accrued as required by the respective plan
documents.
(v) To the best of NPL's knowledge, there are not
now, nor have
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there been, any "prohibited transactions", as such term is
defined in Section 4975 of the Code or Section 406 of ERISA,
involving NPL or any officer, director or employee of NPL with
respect to the Benefit Plans that could subject NPL or any
other party in interest to the penalty or tax imposed under
Section 502(I) of ERISA and Section 4975 of the Code.
(vi) As of the date hereof, no claim, lawsuit,
arbitration or other action (which has been served on NPL) has
been instituted, asserted or, to the best of NPL Shareholders'
or management's knowledge, threatened by or on behalf of any
Benefit Plan or by any employee alleging a breach or breaches
of fiduciary duty or violations of other applicable state or
federal law with respect to such Benefit Plan, which could
result in liability on the part of NPL or any Benefit Plan
under ERISA or any other law, nor is there any basis known to
NPL Shareholders or management for successful prosecution of
such a claim, and Southwest will be notified promptly in
writing of any such threatened or pending claim arising
between the date hereof and the Closing.
(vii) Except as may be required by the Consolidated
Omnibus Budget and Reconciliation Act of 1985, as amended
("COBRA"), no Benefit Plan which is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA)
provides for continuing benefits or coverage for any
participant or beneficiary of a participant after such
participant's termination of employment nor does NPL have any
current or projected liability under
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any such plans.
(viii) NPL has not maintained or contributed to, and
does not currently maintain or contribute to, any severance
pay plan under which any employees of NPL, other than union
employees, are entitled to any benefits. All payments (other
than regular wages and vacation pay) made to employees of NPL
coincident with or in connection with termination of
employment from January 1, 1993 to the date hereof, are
disclosed on Disclosure Schedule 3.11(c)(viii).
(ix) Except as otherwise provided in this Agreement,
no individual will accrue or receive any additional benefits,
service, or accelerated rights to payment or vesting of
benefits under any Benefit Plan as a result of the
transactions contemplated by this Agreement.
(x) NPL has to the extent relevant complied in all
material respects with all of the requirements of COBRA.
(xi) All amendments required to bring all Benefit
Plans into conformity with any of the applicable provisions of
ERISA and the Code have been duly adopted or will be duly
adopted as of the Closing Date, subject to further revisions
that may be required by the Internal Revenue Service.
(xii) No individual will accrue or receive from NPL
any payments, benefits, services or accelerated rights to
payment or vesting of benefits, or otherwise receive any other
rights, which would constitute a "parachute payment" as
defined in Section 280G(b)(2) of the Code as a result of or in
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connection with the transactions contemplated by this
Agreement.
3.12 Compliance With Applicable Law.
(a) NPL holds all licenses, certificates, franchises, permits
and other governmental authorizations ("Permits") necessary for the
lawful conduct of its business and such Permits are in full force and
effect, and NPL is in all respects complying therewith, except where
the failure to possess or comply with such Permits would not have a
Material Adverse Effect on NPL.
(b) Except as set forth on Disclosure Schedule 3.12(b), NPL is
and for the past three years has been in compliance with all foreign,
federal, state and local laws, statutes, ordinances, rules, regulations
and orders applicable to the operation, conduct or ownership of its
business or properties except for any noncompliance which is not
reasonably likely to have in the aggregate a Material Adverse Effect on
NPL.
3.13 Contracts and Agreements. Except as listed on Disclosure
Schedule 3.13, as of the date hereof, and except with respect to existing lease
agreements and borrowings in the ordinary course: (a) NPL is not a party to or
bound by any commitment, contract, agreement or other instrument which involves
or could involve aggregate future payments by NPL of more than $50,000; and (b)
no commitment, contract, agreement or other instrument, other than NPL's charter
documents, to which NPL is a party or by which it is bound, limits the freedom
of NPL to compete in any line of business or with any person.
3.14 Disclosure. To the knowledge of NPL, no representation or
warranty
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regarding NPL contained in this Agreement, and no statement contained in the
Disclosure Schedules delivered by NPL hereunder, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
a statement herein or therein, in light of the circumstances under which it was
made, not misleading.
3.15 Title to Property.
(a) Real Property. Disclosure Schedule 3.15(a) contains a
description of all interests in real property, whether owned, leased or
otherwise claimed, including a list of all leases of real property, in
which NPL has or claims an interest as of the date hereof and any
guarantees of any such leases by NPL. Each such lease is legal, valid
and binding as between NPL and the other party or parties thereto, and
the occupant is a tenant or possessor in good standing thereunder, free
of any material default or breach whatsoever and quietly enjoys the
premises provided for therein. NPL does not own any real property on
the date hereof. All real property and fixtures material to the
business, operations or financial condition of NPL are in good
condition and repair, ordinary wear and tear excepted.
(b) Environmental Matters. Except as listed on Disclosure
Schedule 3.15(b), the real property leased by NPL on the date hereof
did not contain any underground storage tanks, asbestos,
ureaformaldehyde, uncontained polychlorinated biphenyls, or, except
for materials which are ordinarily used in office buildings and office
equipment such as janitorial supplies and do not give rise to financial
liability therefor under the hereafter defined Environmental Laws,
releases of hazardous substances as such terms may be defined by all
applicable federal, state
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or local environmental protection laws and regulations ("Environmental
Laws"). As of the date hereof, (i) no part of any such real property
has been listed or, to the knowledge of NPL, proposed for listing on
the National Priorities List pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or on
a registry or inventory of inactive hazardous waste sites maintained by
any state, and (ii) no notices have been received alleging that NPL was
a potentially responsible person under CERCLA or any similar statute,
rule or regulation. NPL knows of no material violation of law,
regulation, ordinance (including, without limitation, laws, regulations
and ordinances with respect to hazardous waste, zoning, environmental,
city planning or other similar matters) relating to its respective
properties. NPL Shareholders agree to reimburse the Surviving
Corporation for any reasonable remediation expenses incurred or claims
made at all the sites listed in Disclosure Schedule 3.15(b) prior to
the first anniversary of the Closing Date in accordance with the
deductible and maximum set forth in Section 13.1(d).
3.16 Insurance. Disclosure Schedule 3.16 contains a true and
complete list and a brief description (including name of insurer, agent,
coverage and expiration date) of all insurance policies in force on the date
hereof with respect to the business and assets of NPL (other than insurance
policies under which NPL is named as a loss payee or additional insured). NPL is
in compliance with all of the material provisions of all insurance policies.
Each such policy is outstanding and in full force and effect and, except as set
forth on Disclosure Schedule 3.16, NPL is the sole beneficiary of such policies
except for
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additional insureds. All premiums and other payments due under any such policy
have been paid or accrued.
3.17 Powers of Attorney. Except as listed on Disclosure
Schedule 3.17, NPL has no powers of attorney outstanding other than those issued
pursuant to the requirements of regulatory authority.
4. Representations and Warranties of Southwest. Southwest hereby
represents and warrants to NPL as follows:
4.1 Corporate Organization.
(a) Southwest is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California. Southwest has all the requisite power and authority to own,
lease and operate all of its properties and assets and to carry on its
business as it is currently conducted, and is duly licensed or
qualified to do business and is in good standing in each jurisdiction
in which the nature of the business conducted by it makes such
licensing or qualification necessary and where failure to be so
qualified would not, individually or in the aggregate, have a Material
Adverse Effect on Southwest.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and
authorized to do business in the State of Arizona.
4.2 Authority.
(a) Southwest has full corporate power and authority to
execute and deliver this Agreement and, subject to applicable
regulatory approvals, to
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consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of Southwest. This Agreement has been duly and validly
executed and delivered by Southwest and, assuming the due
authorization, execution and delivery thereof by the other parties
hereto, constitutes valid and binding obligations of Southwest,
enforceable against it in accordance with the terms of the Agreement.
(b) Southwest as the sole shareholder of Merger Sub will cause
it to take any and all action necessary and appropriate to carry out
its obligations under this Agreement.
(c) Merger Sub has full corporate power and authority to
execute and deliver this Agreement and, subject to applicable
regulatory approvals, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and consummation
of the transactions contemplated hereby have been or will be duly and
validly approved by the Board of Directors of Merger Sub. This
Agreement has been duly and validly executed and delivered by Merger
Sub and, assuming the due authorization, execution and delivery
thereof, by the other parties hereto, constitutes valid and binding
obligations of Merger Sub, enforceable against it in accordance with
the terms of the Agreement.
4.3 No Violation. Neither the execution and delivery of this
Agreement nor the consummation by Southwest or Merger Sub of the transactions
contemplated hereby, nor compliance by Southwest or Merger Sub with any of the
terms hereof, will (i) violate
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30
any provision of the Articles of Incorporation or Bylaws of Southwest or Merger
Sub, or (ii) assuming that the consents and approvals referred to in Section 4.4
are duly obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Southwest or Merger
Sub or any of their properties or assets, or (iii) violate, conflict with,
result in the breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of, accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other encumbrance upon
any of the respective properties or assets of Southwest or Merger Sub under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which Southwest or Merger Sub is a party, or by which they or their respective
properties or assets may be bound or affected, except with respect to (iii)
above, for such violations, conflicts, breaches, defaults, terminations,
accelerations or encumbrances which in the aggregate will not prevent or delay
the consummation of the transactions contemplated hereby.
4.4 Consents and Approvals. Except for consents and approvals
of or filings or registrations with the SEC, the FTC, the Justice Department and
other applicable federal and state governmental authorities, no consents or
approvals of or filings or registrations with any third party or any public body
or authority are necessary in connection with the execution and delivery by
Southwest or Merger Sub of this Agreement.
4.5 Sufficient Resources. Southwest will have available at the
Closing sufficient common stock to enable it lawfully to satisfy its payment
obligations pursuant to
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this Agreement subject to approval by the California Public Utilities
Commission. Upon issuance as provided in this Agreement, the Southwest Common
Stock will be duly and validly issued, fully paid and nonassessable and will be
owned by the NPL Shareholders free and clear of any liens or encumbrances.
Southwest has and will have sufficient management and financial resources to
make reasonable efforts to obtain the required regulatory approvals for the
Merger. On the date of this Agreement, there is no pending or, to the knowledge
of Southwest, threatened legal or governmental proceeding against Southwest or
any subsidiary or affiliate thereof which would affect Southwest's ability to
obtain any of the required regulatory approvals or satisfy any of the other
conditions required to be satisfied in order to consummate the transactions
contemplated by this Agreement. Southwest will promptly notify NPL if any of the
representations contained in this Section 4.5 ceases to be true and correct.
4.6 Litigation. No action, suit, counterclaim or other
litigation, investigation or proceeding to which Southwest or any of its
subsidiaries is a party is pending, or is known by the executive officers of
Southwest or any of its subsidiaries to be threatened, against Southwest or any
of its subsidiaries before any court or governmental or administrative agency,
domestic or foreign which would be reasonably expected to result in any
liabilities which would delay or prevent the consummation of the Merger. Except
as disclosed herein or the Southwest Reports (as hereinafter defined),
(i) There are no legal, administrative, arbitration
or other proceedings or claims pending or, to the best of
Southwest's knowledge, threatened against Southwest, nor is
Southwest subject to any existing judgment which
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32
would materially affect the consolidated financial condition
or results of operations of Southwest;
(ii) Southwest has not received any inquiry from an
agency of the federal or of any state or local government
about the transactions contemplated hereby, or about any
violation or possible violation of any law, regulation or
ordinance materially affecting its businesses or assets.
4.7 Capitalization. Southwest is authorized to issue thirty
million (30,000,000) shares of Southwest Common Stock, $1.00 par value. As of
November 1, 1995, there were twenty-four million three hundred twenty thousand
two hundred eighty-eight (24,320,288) shares of Southwest Common Stock issued
and outstanding, and no other outstanding rights to purchase any common stock of
Southwest existed except under the Southwest Dividend Reinvestment and Stock
Purchase Plan, Employees' Investment Plan and Management Incentive Plan.
4.8 SEC Filings. Southwest has provided the NPL Shareholders
with true and correct copies of (i) Southwest's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994; (ii) Southwest's Annual Report to
Stockholders for the fiscal year ended December 31, 1994; (iii) Southwest's
proxy statement for its 1995 Annual Meeting of Shareholders; (iv) Southwest's
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 1995,
June 30, 1995 and September 30, 1995; and (v) any other filings made with the
SEC pursuant to the Securities Exchange Act of 1934 (the "1934 Act") since
January 1, 1995. Between the date hereof and the Closing Date, Southwest will
provide to the NPL Shareholders true and correct copies of all further filings
made with the SEC
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33
pursuant to the 1934 Act, as well as all reports or other communications sent to
Southwest's shareholders generally as soon as reasonably available. All of the
foregoing reports, filings, statements and communications are hereinafter
collectively referred to as the "Southwest Reports." None of the Southwest
Reports, when filed or sent, did or will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
4.9 Business Changes. Except as set forth herein or in the
Southwest Reports, since September 30, 1995, there has not been:
(i) Any material adverse change in the consolidated
working capital, financial condition, assets, liabilities
(whether absolute, accrued, contingent or otherwise), or
operating profits, of Southwest or any material adverse change
in the business of Southwest taken as a whole;
(ii) Any damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting the
business of Southwest taken as a whole; or
(iii) Any termination of any material permit or
material license issued to Southwest or to any of its
employees or agents upon which a material portion of
Southwest's business is dependent.
4.10 Financial Statements.
(a) The consolidated financial statements of Southwest
included within the Southwest Reports fairly present the consolidated
financial position of
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Southwest and the consolidated results of its operations at the dates
and for the periods to which they apply; such statements have been
prepared in conformity with generally accepted accounting principles,
applied on a consistent basis throughout the periods involved, and such
financial statements comply with all applicable provisions of
Regulation S-X of the SEC. The interim consolidated financial
statements presented in such Reports include all adjustments (subject
only to normal recurring year-end adjustments) necessary for a fair
presentation of Southwest's consolidated financial position and
consolidated results of operations as of the dates and for the periods
presented therein.
(b) On September 30, 1995, Southwest had no material
liabilities (whether absolute, accrued, contingent or otherwise) which
were required to be reflected in and disclosed on its balance sheets at
that date or in the notes thereto pursuant to Regulation S-X of the SEC
or in accordance with generally accepted accounting principles,
consistently applied but were not so reflected. Except as set forth
herein and/or the Southwest Reports, since September 30, 1995,
Southwest has incurred no material liabilities (whether absolute,
accrued, contingent or otherwise) in addition to those reflected in or
disclosed on such balance sheets or the related notes, except
liabilities incurred in the ordinary course of its business.
(c) Southwest's books, records and system of internal
accounting controls comply in all material respects with Section 13(b)
of the 1934 Act as in effect on the date hereof.
4.11 Disclosure. To the knowledge of Southwest, no
representation or
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warranty made by Southwest in this Agreement and no certification furnished or
to be furnished by Southwest to NPL pursuant to this Agreement, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein in the light of the
circumstances under which it was made, not misleading.
5. Covenants of the Parties.
5.1 Current Information.
(a) No later than ten (10) days after the date of this
Agreement, NPL (on the one hand) and Southwest (on the other hand)
shall each designate an individual acceptable to the other party (a
"Designated Representative" and, together, the "Designated
Representatives") to be the primary point of contact between the
parties. During the period from the date of their designation to the
Closing, the Designated Representatives or their representatives shall
confer on a regular basis so that Southwest is kept advised as to the
general status of the ongoing operations of NPL. Without limiting the
foregoing, NPL agrees to confer with Southwest's Designated
Representative regarding any proposed significant changes to NPL's
management policies and objectives. NPL will promptly notify
Southwest's Designated Representative or his or her representatives of
any material change in the normal course of business or in the
operation of the properties of NPL or of any governmental complaints,
investigations or hearings (or communications indicating that the same
may be contemplated) or the institution or the threat of any litigation
involving NPL, and will keep Southwest's Designated
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Representative or his or her representatives fully informed of such
events and the progress of any already existing litigation.
(b) Southwest shall immediately notify NPL's Designated
Representative if it appears that there has occurred any change in its
financial or other condition or any other event that will or may affect
Southwest's ability to complete the Merger.
5.2 NPL Reports. As soon as reasonably available, but in no
event more than 20 calendar days after the end of each accounting month, NPL
will deliver to Southwest its monthly financial reports. As soon as reasonably
available, but in no event more than 120 days after the end of the 1995 fiscal
year, NPL will deliver to Southwest its annual audited financial statements.
5.3 Regulatory Matters.
(a) The parties hereto will cooperate with each other and use
all reasonable efforts to prepare all necessary documentation, to
effect all necessary filings and to obtain all necessary permits,
consents, approvals and authorizations of all third parties and
governmental bodies necessary to consummate the transactions
contemplated by this Agreement including, without limitation, those
that may be required from the SEC, the FTC, the Justice Department and
other federal and state regulatory authorities. Southwest and NPL will
each have the right to review reasonably in advance all information
relating to themselves and any of their respective subsidiaries,
together with any other information reasonably requested, which appears
in any filing made with or written material submitted to any
governmental body in connection with the transactions contemplated by
this
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Agreement. The parties hereto agree to attempt to keep confidential any
and all proprietary information which may be of value to their
competition.
(b) Southwest and NPL shall furnish each other with all
reasonable information concerning themselves, their subsidiaries,
directors, officers and stockholders and such other matters as may be
necessary or advisable in connection with any statement or application
made by or on behalf of Southwest or NPL, or any of Southwest's
subsidiaries to any governmental body in connection with the Merger and
the other transactions, applications or filings contemplated by this
Agreement.
(c) Southwest and NPL will promptly furnish each other with
copies of written communications received by or delivered to any
governmental body in respect of the transactions contemplated hereby.
5.4 Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In case that at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of Southwest and NPL shall take all necessary actions, subject to the
terms and conditions of this Agreement.
5.5 Public Announcements. The parties will cooperate and
consult with each other in the development and distribution of all news releases
and other public
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information disclosures with respect to this Agreement or any of the
transactions contemplated hereby, except as may be otherwise limited by law.
5.6 Failure to Fulfill Conditions. In the event that either
Southwest or NPL determines that a condition to its obligation to consummate the
transactions contemplated hereby cannot be, or is not likely to be, fulfilled on
or prior to May 15, 1996, it will promptly notify the other party.
5.7 Tax Matters.
(a) Return Preparation; Tax Payments.
(i) NPL shall prepare, or cause to be prepared, and
shall file, or cause to be filed, any required NPL tax returns
(including amendments thereto) for all taxable periods prior
to and including the Closing Date. NPL shall consult with
Southwest regarding the preparation and filing of such returns
and Southwest shall be afforded the opportunity to review such
returns within a reasonable time prior to the due date for the
filing thereof. NPL shall not file any such tax returns
without the prior consent of Southwest, which consent shall
not be unreasonably withheld or delayed. NPL shall also
provide Southwest with copies of such returns in the form
actually filed and copies of all backup documentation.
Southwest shall be responsible for the preparation
and filing of any tax returns of NPL for all taxable periods
beginning after the Closing Date.
(ii) As soon as practicable after the filing of these
returns, but in no event later than April 1, 1996, for the
1995 return, and within four months
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of the Closing Date for the 1996 return, NPL or Surviving
Corporation shall pay to NPL Shareholders, in cash, 46 percent
of their share of the Subchapter S taxable income for such
periods as reflected on the applicable Internal Revenue
Service Form 1120S and related Schedule K-1.
(iii) Southwest hereby consents to and approves the
change by NPL from the cash to the accrual method for tax
reporting purposes, effective with the tax year beginning
January 1, 1996, and the filing with the I.R.S. of whatever
documents are required for such change.
(b) Tax Audits and Litigation.
(i) Representation Prior to Closing Date. Prior to
the Closing Date, NPL shall conduct and control the
representation of NPL with respect to any audit or
administrative or judicial proceeding concerning any tax items
or taxable period of NPL, including, without limitation, the
sole right to contest or concede any tax item, provided,
however, that NPL shall first obtain the consent of Southwest
with respect to any settlement or concession, which consent
shall not be unreasonably withheld or delayed, and shall
afford the opportunity, at Southwest's request, for Southwest
to participate fully in all settlement or concession
discussions relating to any taxable periods ending on or prior
to Closing.
(ii) Representation After Closing Date. For any
taxable period ending on or before the Closing, Noel T. Coon
shall be entitled, at his option and at his expense, to
conduct and exercise sole control over the
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representation of NPL with respect to any audit or
administrative or judicial proceedings, including, without
limitation, the sole right to contest or concede any tax
items, provided, however, that Noel T. Coon shall first obtain
the consent of Southwest with respect to any settlement or
concession, which consent shall not be unreasonably withheld
or delayed, and shall afford Southwest the opportunity, at its
request, to participate fully in all settlement or concession
discussions.
(c) Tax Workpapers. At the time of closing, NPL will provide
Southwest copies of all tax returns, associated workpapers, documents,
memoranda and correspondence prepared by NPL's tax preparers and made
available to NPL for the tax period ended September 30, 1987 and for
each tax period thereafter through the tax period ending with the
closing of this Agreement.
6. Covenants of NPL.
6.1 Conduct of the Business of NPL. During the period from the
date hereof to the Closing, except as otherwise permitted or required hereunder,
NPL will conduct the business of NPL and will engage in transactions only in the
ordinary course and consistent with the past practice and with prudent business
practice, except with the written consent of Southwest (which will not be
unreasonably withheld, delayed or conditioned). For this purpose the parties
shall use the most expeditious means of communication available. During such
period, NPL will use its reasonable efforts in accordance with good business
practice to preserve the business organization of NPL, to keep available to it
and to Southwest the present services of the valued employees of NPL,
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and to preserve for itself and for Southwest the goodwill of the customers of
NPL and others with whom business relationships exist. In addition, without
limiting the generality of the foregoing, NPL agrees that from the date hereof
to the Closing, except as otherwise consented to or approved by Southwest in
writing (which consent or approval shall not be unreasonably withheld, delayed
or conditioned) or as permitted or required by this Agreement or as required by
law (in which case NPL shall notify Southwest in writing), NPL will not:
(a) Change any provisions of NPL's Articles or Bylaws;
(b) Change the number of shares of authorized or issued
capital stock of NPL or issue, or grant any option, warrant, call,
commitment, subscription, right to purchase or agreement of any
character relating to the authorized or issued capital stock of NPL, or
any securities convertible into shares of such stock, or split, combine
or reclassify any shares of its capital stock, or declare, set aside or
pay any dividend, or other distributions (whether in cash, stock or
property or any combination thereof) in respect of the capital stock of
NPL, or redeem or otherwise acquire any shares of such capital stock
except as permitted by Section 6.1(m) and except for the issuance of
additional shares and the declaration and payment of a dividend in the
form of a Dividend Note in connection with the exercise of stock
options by Messrs. Johnson and Kemper under the Stock Purchase
Agreement dated March 7, 1994, as amended by Amendment to Stock
Purchase Agreement dated November 12, 1995;
(c) Grant any severance or termination pay to or enter into or
amend any
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employment agreement with, or increase the amount of payments or fees
to, any of the employees, officers or directors of NPL except for (i)
the payments to Messrs. Sutton and Maple listed on Schedule
3.11(c)(viii), (ii) severance payments under union agreements, (iii)
miscellaneous other severance payments not known, but not to exceed a
total of $10,000, (iv) normal salary increases, such as merit,
promotion, etc., consistent with past practice;
(d) Except as listed on Disclosure Schedule 6.1(d), make any
capital expenditures, including any capitalizable lease obligations, in
amounts individually in excess of (i) $100,000 or (ii) $250,000 in the
aggregate, other than expenditures necessary to maintain existing
assets in good repair;
(e) Make or engage in any financing-related transactions other
than (i) scheduled principal and interest payments on long-term debt,
capital lease obligations, equipment leases, and the note payable to
the current stockholder, (ii) transactions necessary to finance,
consistent with past practices and with prudent business practices,
capital expenditures made in accordance with the provisions of Section
6.1(d) hereof, and (iii) borrowings and payments under the working
capital lines of credit, in the ordinary course of business. Scheduled
principal and interest payments are listed on Disclosure Schedule
6.1(e).
(f) Make application for the opening of, or open, any new
offices involving a lease in excess of one year;
(g) Acquire assets other than those necessary to the conduct
of its business in the ordinary course;
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(h) Sell, transfer, assign, encumber or otherwise dispose of
assets other than has been customary in the ordinary course of
business;
(i) Engage or participate in any material transaction or incur
or sustain any obligation which would result in a cost to NPL,
individually or cumulatively of more than $10,000 (a "Material
Obligation") except for transactions which are in the ordinary course
of business consistent with past practices and with prudent business
practices and which are of similar kinds and involve similar amounts;
(j) Make any contributions to any Benefit Plans except in such
amounts and at such times as consistent with past practice;
discretionary or excess contributions are not permitted;
(k) Increase the number of full-time equivalent employees of
NPL from July 31, 1995 except as consistent with past practice;
(l) Make or grant any safety or other bonuses to any employee
or shareholder, except for bonuses payable to Mr. Johnson or Mr. Kemper
under their existing respective employment contracts and other bonuses
consistent with past practices;
(m) Make or grant any distributions to any shareholder other
than customary salary and related benefits except the following:
(i) Bonuses to Mr. Johnson and Mr. Kemper in
accordance with their existing respective employment
contracts;
(ii) Distributions to NPL Shareholders sufficient for
the payment of their 1995 and 1996 federal and state income
taxes on the taxable income
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of NPL;
(iii) A distribution to Noel T. Coon as a bonus for
1995, computed as fifty percent (50%) of the amount by which
the 1995 pretax income of NPL determined in accordance with
generally accepted accounting principles consistently applied
exceeds four million dollars ($4,000,000), said bonus not to
exceed six hundred thousand dollars ($600,000); and
(iv) The Dividend Note to Noel T. Coon and the
transfer of the Option Notes in payment of the Dividend Note
to Noel T. Coon in connection with the exercise of the Johnson
and Kemper option exercises as described in Section 3.2.
(n) Agree to do any of the foregoing.
6.2 No Solicitation. During the term hereof, neither NPL nor
any of its directors, shareholders, officers, representatives, agents or other
persons controlled by any of them, shall, directly or indirectly, encourage or
solicit, or hold discussions or negotiations with, or provide any information
to, any person, entity or group other than Southwest concerning any merger, sale
of substantial assets not in the ordinary course of business, sale of shares of
capital stock or similar transactions involving NPL. NPL will promptly
communicate to Southwest the terms of any proposal that it may receive in
respect of any such transaction.
6.3 Access to Management, Properties and Records;
Confidentiality.
(a) NPL shall permit Southwest reasonable access to the
properties of NPL, and shall disclose and make available to Southwest
all books, papers and
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records relating to the assets, stock, ownerships, properties,
obligations, operations and liabilities of NPL, including but not
limited to, all books of account (including the general ledger), tax
records, budgets, forecasts, minute books of directors' and
stockholders' meetings, organizational documents, bylaws, material
contracts and agreements, internal audit reports, filings with any
regulatory authority, company work papers and supporting documents,
accountants' work papers, litigation files, plans affecting employees,
and any other business activities or prospects in which Southwest may
have a reasonable interest, in each case during normal business hours
and upon reasonable notice. Between the signing of this Agreement and
the Closing, the parties shall cooperate in accordance with the
Memorandum of Mr. Johnson dated November 3, 1995 which is attached
hereto as Exhibit A.
(b) All information furnished by NPL to Southwest or the
representatives or affiliates of either pursuant to, or in any
negotiation in connection with, this Agreement shall be treated as the
sole property of NPL, until consummation of the Merger and, if the
Merger shall not occur, Southwest and its affiliates, agents and
advisers shall destroy or return to NPL, as appropriate, all documents
or other materials containing, reflecting or referring to such
information, and shall keep confidential all such information and shall
not disclose or use such information for competitive purposes. Any
destruction or return shall be certified in writing to the appropriate
party. The obligation to keep such information confidential shall not
apply to any information which Southwest can establish by convincing
evidence was already in its possession (subject to no obligations of
confidentiality) prior to
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the disclosure thereof by NPL; was then generally known to the public;
becomes known to the public other than as a result of actions by
Southwest or by its directors, officers or employees or agents; or was
disclosed to Southwest or to its directors, officers or employees,
solely by a third party not bound by any obligation of confidentiality.
6.4 Assignment of Contract Rights. NPL shall obtain any
consents, waivers or revisions necessary to allow Merger Sub to accede to all of
the rights of NPL under all existing real property and personal property leases,
lines of credit, governmental licenses, permits and other contracts. Any costs
associated with obtaining such consents, waivers and revisions shall be borne by
NPL.
7. Employees; Employee Benefit Plans.
7.1 Covenants of NPL.
(a) Prior to Closing, NPL shall deliver or make available to
Southwest complete and correct copies (if any) of (i) the most recent
Internal Revenue Service determination letter relating to each Employee
Pension Benefit Plan intended to be tax qualified under Sections 401(a)
and 501(a) of the Code, (ii) the most recent annual report (Form 5500
Series) and accompanying schedules of each Benefit Plan, filed with the
Internal Revenue Service or an explanation of why such annual report is
not required, (iii) the most current summary plan description for each
Benefit Plan, and (iv) the most recent audited financial statements of
each Benefit Plan.
(b) Except as otherwise provided in this Agreement, NPL shall
not
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establish, amend or terminate any Benefit Plan without the prior
consultation and approval of Southwest.
8. Closing Conditions.
8.1 Conditions to Each Party's Obligations Under This
Agreement. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the fulfillment at or prior to the
Closing of the following conditions:
(a) All necessary regulatory or governmental approvals and
consents required to consummate the transactions contemplated hereby
shall have been obtained and shall remain in full force and effect and
all statutory or regulatory waiting periods in respect thereof shall
have expired.
(b) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins
or prohibits the consummation of the Merger.
(c) Any applicable pre-merger/acquisition notification
provisions of Section 7A of the Clayton Act shall have been complied
with by the parties hereto, and no other statutory or regulatory
requirements with respect to the Clayton Act shall be applicable. There
shall be no pending or threatened proceedings with respect to this
Agreement or the Merger under any applicable antitrust law.
8.2 Conditions to the Obligations of Southwest under this
Agreement. The obligations of Southwest under this Agreement shall be further
subject to the satisfaction, at or prior to the Closing, of the following
conditions, any one or more of which may be waived by Southwest:
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(a) Each of the obligations or covenants of NPL required to be
performed by them at or prior to the Closing pursuant to the terms of
this Agreement shall have been duly performed and complied with in all
material respects and each of the representations and warranties of NPL
contained in this Agreement shall be true and correct in all material
respects as of the date hereof and as of the Closing as though made at
and as of the Effective Time (except as to any representation or
warranty that specifically relates to an earlier date, which shall be
true and correct as of such earlier date), provided, however, that if
any representation or warranty has proved untrue or incorrect in any
material respect and the damage or loss resulting from such failure can
be reduced to a dollar amount to which Noel T. Coon and Southwest
agree, then such representation or warranty shall, for purposes of this
closing condition, be deemed to be true and correct in all material
respects at Closing, and the total Fair Market Value of the Southwest
Common Stock to be delivered hereunder shall be reduced by such agreed
amount.
(b) Any consents, waivers, clearances, approvals and
authorizations of regulatory or governmental bodies or third parties
that are necessary in connection with the consummation of the
transactions contemplated hereby shall have been obtained, and none of
such consents, waivers, clearances, approvals or authorizations shall
contain any term or condition that would have a Material Adverse Effect
on NPL or Southwest or the Surviving Corporation. For purposes of
Section 8 hereof, any "approval" which contains any of the foregoing
unacceptable terms or conditions shall be deemed to be a regulatory
"denial."
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(c) Southwest shall have received an opinion, dated the date
of the Closing, from Squire, Sanders & Dempsey and/or Arnold R.
Madigan, counsel to NPL, substantially to the effect set forth in
Exhibit B hereto.
(d) Since the date of this Agreement, there shall have been no
material adverse change in the overall financial condition, business or
results of operations of NPL taken as a whole. Normal seasonal
variations are deemed not to be such a material adverse change.
(e) Except as otherwise requested, the directors of NPL shall
have resigned effective on or prior to the Closing.
(f) NPL shall have furnished Southwest with such certificates
of NPL officers and such other documents to evidence fulfillment of the
conditions set forth in this Section 8.2 as Buyer may reasonably
request.
8.3 Conditions to the Obligations of NPL Under This Agreement.
The obligations of NPL under this Agreement shall be further subject to the
satisfaction, at or prior to the Closing, of the following conditions, any one
or more of which may be waived by Noel T. Coon on behalf of NPL and NPL
Shareholders:
(a) Each of the obligations of Southwest required to be
performed by it at or prior to the Closing pursuant to the terms of
this Agreement shall have been duly performed and complied with in all
material respects.
(b) Each of the representations and warranties of Southwest
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing as
though made at and as of the Closing
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except as to any representation or warranty which specifically relates
to an earlier date, which shall be true and correct as of such earlier
date, except in the case of such representations and warranties, where
the failure to be true would not have a Material Adverse Effect on
Southwest.
(c) NPL shall have received an opinion, dated the date of the
Closing, from Thomas J. Trimble, General Counsel to Southwest,
substantially to the effect set forth in Exhibit C hereto.
(d) Southwest shall have furnished NPL with such certificates
of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 8.3 as NPL may
reasonably request.
(e) NPL shall have received the opinion of Deloitte & Touche
LLP that the merger qualifies as a tax-free reorganization under
Section 368(a)(2)(D) of the Code and the Regulations thereunder.
(f) Since the date of this Agreement, there shall have been no
material adverse change in the overall financial condition, business or
results of operations of Southwest taken as a whole. Normal seasonal
variations are deemed not to be such a material adverse change.
9. Closing.
9.1 Date and Place. The closing of the Merger (the "Closing")
shall take place on the last day of the four or five week accounting period of
NPL, as applicable, during which all of the conditions to the obligations of the
parties hereunder, other than those to be performed at Closing, have been
satisfied or waived (the "Closing Date");
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provided, however, that if the Closing Date in accordance with the foregoing
provisions of Section 9.1 would be less than five trading days prior to the end
of such accounting period, the Closing Date shall be the last day of the next
succeeding four or five week accounting period of NPL, as applicable. All
actions taken at the Closing shall be deemed to have occurred simultaneously at
the Effective Time. The Closing shall take place at the offices of Southwest in
Las Vegas, Nevada, or at such other place as the parties hereto may mutually
agree.
9.2 NPL's Closing Documents. At the Closing, NPL shall deliver
to Southwest:
(a) One or more stock certificates registered in the name(s)
of NPL Shareholders representing all of the issued and outstanding
shares of NPL Capital Stock, duly endorsed on behalf of NPL
Shareholders;
(b) Such other documents and instruments as required by
Section 8 to be delivered by NPL or NPL Shareholders.
9.3 Southwest's Closing Documents. At the Closing, Southwest
and Merger Sub shall deliver to NPL Shareholders:
(a) The Purchase Price of twenty-four million dollars
($24,000,000), payable in Southwest's Common Stock as provided for in
this Agreement; and
(b) Such other documents and instruments as required by
Section 8 to be delivered by Southwest.
10. Post-Closing Obligations.
10.1 Registration of Southwest Common Stock.
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(a) As soon as practicable after the Closing Date, but in no
event more than 30 days thereafter, Southwest shall (i) file a Form S-3
registration statement pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), under Rule 415 thereunder, that
includes all shares of Southwest Common Stock acquired by the NPL
Shareholders in the Merger ("Acquired Stock"); (ii) file a request for
exemption under Section 359-f(2) of the Fraudulent Practices Act
("Martin Act") with the Bureau of Investor Protection and Securities,
Department of Law, State of New York; and (iii) take such other action
as may be necessary to register or qualify the offer and sale of the
Acquired Stock in any other state in which its Common Stock does not
qualify as an "exempt security." Southwest agrees that it will use
reasonable efforts to cause the Form S-3 registration statement to be
declared effective by the SEC and the request for exemption to be
granted by the Department of Law of the State of New York and to
complete any other action which may be necessary to register or qualify
the offer and sale of the Acquired Stock as provided in clause (iii)
above. All expenses (exclusive of underwriting discounts and
commissions and expenses for registration or licensing of the NPL
Shareholders as a broker-dealer, dealer, salesperson, agent or
associated person, if any, and fees and expenses of counsel for the NPL
Shareholders) incurred in connection with such registration, request
for exemption and actions shall be borne by Southwest. No transferee of
the Acquired Stock shall be entitled to the rights and benefits of this
Section 10.1, except transferees under Section 10.2(a)(ii).
(b) It shall be a condition precedent to the obligations of
Southwest to file
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a registration statement or to register any securities pursuant to
Section 10.1(a) that the NPL Shareholders furnish Southwest such
undertakings as may be required by the Securities Act and other
applicable law to permit the registration statement to be filed in
accordance with Rule 415 under the Securities Act, and such information
regarding the NPL Shareholders, the Acquired Stock, the intended
method(s) of disposition of such securities and such other information
(other than information known to Southwest with respect to contractual
arrangements between the NPL Shareholders and Southwest) as, in the
reasonable opinion of counsel to Southwest, is necessary to enable
Southwest to cause such registration statement to be properly prepared
and filed in accordance with applicable laws and to obtain acceleration
of the effective date thereof. All underwriting discounts and
commissions and expenses for registration or licensing of the NPL
Shareholders as a broker-dealer, dealer salesperson, agent or
associated person under state blue sky or securities laws, if any,
shall be borne by the NPL Shareholders.
(c) Southwest agrees that it will keep each NPL Shareholder
advised in writing as to the completion of any registrations or
qualifications pursuant to this Section 10.1 and will, at its expense:
(i) use reasonable efforts to keep such registrations and
qualifications effective under the Securities Laws until such time as
the Acquired Stock can be sold by the NPL Shareholders within the
applicable volume limitation of Rule 144(e) or without any volume
limitation in compliance with Rule 144(k), whichever first occurs (the
"Restriction Lapse Date"); and (ii) furnish such number of prospectuses
and other documents incident thereto as any NPL
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Shareholder from time to time may reasonably request. If, in the
opinion of counsel to Southwest, the Form S-3 registration statement
filed pursuant to Section 10.1(a) cannot be maintained in effect until
the Restriction Lapse Date, then, not later than twenty (20) days prior
to the expiration of the effectiveness of such Form S-3 registration
statement, Southwest shall file another Form S-3 registration statement
covering the remaining Acquired Stock, and shall use reasonable efforts
to cause such registration statement to be declared effective and
maintained in effect until the Restriction Lapse Date. In connection
therewith, Southwest shall take the same actions with respect to such
new registration statement and the registration and qualification of
the remaining Acquired Stock under the Securities Laws as was required
hereunder with respect to the original Form S-3 registration statement
and the original registration and qualification of the Acquired Stock.
(d) If, at any time during the effectiveness of a Form S-3
registration statement filed hereunder, Southwest shall notify the NPL
Shareholders that the prospectus contained therein contains an untrue
statement of material fact or omits to state a material fact necessary
to make the statements made therein not misleading, each NPL
Shareholder agrees not to sell any of the Acquired Stock pursuant to
such Form S-3 registration statement thereafter until such time as
Southwest notifies the NPL Shareholders that such material misstatement
or omission has been corrected through the filing of an appropriate
supplement to such prospectus, the filing and effectiveness of an
amendment to such registration statement, or the filing of a document
incorporated by reference therein. Southwest
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shall use its reasonable efforts to file any such required
supplement, amendment (and to have any such amendment declared
effective) or such document as promptly as practicable; provided,
however, that such filing may be delayed during any period of time that
the executive officers and directors of Southwest have been asked to
refrain from selling, offering to sell or otherwise disposing of any
shares of its Common Stock or contracting to sell or otherwise
disposing of any securities convertible into or exercisable or
exchangeable for Common Stock.
(e) To the extent permitted by law, Southwest will indemnify
and hold harmless each NPL Shareholder, any underwriter (as defined in
the Securities Act) for any such NPL Shareholder and each person, if
any, who controls such NPL Shareholder or underwriter within the
meaning of the Securities Act or the 1934 Act (collectively, the "NPL
Indemnified Parties") against any losses, claims, damages, or
liabilities (joint or several) to which they or any of them may become
subject under the Securities Act, the 1934 Act or any other federal or
state law (the "Securities Laws"), insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise from or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto; (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading; or (iii) any violation or alleged violation by
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Southwest of the Securities Laws; and Southwest will reimburse such NPL
Indemnified Parties for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 10.1(e) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of Southwest (which consent shall not be unreasonably withheld), nor
shall Southwest be liable in any case for any such loss, claim, damage,
liability, or action to the extent that it arises from or is based upon
a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such NPL Indemnified Parties.
(f) To the extent permitted by law, each NPL Shareholder will
indemnify and hold harmless Southwest, each of its directors, each of
its officers who have signed the registration statement, each person,
if any, who controls Southwest within the meaning of the Securities
Act, any underwriter within the meaning of the Securities Act or the
1934 Act for Southwest, any person who controls such underwriter, and
any other person or entity selling securities in such registration
statement, if any (the "Other Selling Stockholders") or any of such
Other Selling Stockholders' directors, officers, partners, general
partners or any person who controls such Other Selling Stockholders
(collectively, the "Southwest Indemnified Parties") against any losses,
claims, damages or liabilities (joint or several) to which any such
Southwest Indemnified Parties may become subject under the Securities
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Laws, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise from or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written information
furnished by such NPL Shareholder in connection with such registration;
and such NPL Shareholder will reimburse any legal or other expenses
reasonably incurred by any Southwest Indemnified Parties in connection
with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement
contained in this Section 10.1(f) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such NPL Shareholder,
which consent shall not be unreasonably withheld.
(g) Promptly after receipt by any party entitled to
indemnification under this Section 10.1 (an "Indemnified Party") of
notice of the commencement of any action (including any governmental
action ), such Indemnified Party will, if a claim in respect thereof is
to be made under this Section 10.1 against any party required to
indemnify such Indemnified Party (an "Indemnifying Party"), notify the
Indemnifying Party in writing of the commencement thereof and the
Indemnifying Party shall have the right to participate in, and, to the
extent the Indemnifying Party so desires, jointly with any other
Indemnifying Party similarly noticed, to assume the defense thereof
with counsel mutually satisfactory to the parties; provided, however,
that an Indemnified Party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnifying
Party, if representation of such
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Indemnified Party by the counsel retained by the Indemnifying Party
would be inappropriate due to actual or potential differing interests
between such Indemnified Party and any other party represented by such
counsel in such proceeding. The failure to notify an Indemnifying Party
within a reasonable time of the commencement of any such action, to the
extent prejudicial to its ability to defend such action, shall relieve
such Indemnifying Party of any liability to the Indemnified Party under
this Section 10.1, but the omission to so notify the Indemnifying Party
will not relieve it of any liability that it may have to any
Indemnified Party otherwise than under this Section 10.1.
10.2 Restrictions on Sale of Acquired Stock.
(a) For a period of two years from the Closing Date, Noel T.
Coon agrees that he will not sell, dispose of or otherwise transfer
more shares of Acquired Stock than he would be permitted to sell under
the volume limitations of Rule 144 of the Securities Act as in effect
on the date hereof, assuming that such volume limitation provisions of
Rule 144 would be fully applicable to sales of Acquired Stock by Noel
T. Coon for the duration of such two-year period. Notwithstanding the
foregoing, to the extent permitted by applicable law, (i) Noel T. Coon
shall be permitted to sell any amount of Acquired Stock held by him if
(A) the most recent closing per share price of Southwest Common Stock
prior to such sale as reported by the principal exchange on which such
Common Stock is listed shall be less than $10 or (B) if Southwest
publicly announces a plan or other agreement or arrangement providing
for the merger of Southwest with or into another entity, the
acquisition or other sale
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of all or substantially all of the assets of Southwest (except for
PriMerit Bank) by another entity or any other reorganization or
business combination in which the Acquired Stock will be converted into
cash or the securities of another person (collectively, an
"Acquisition"); provided that if any Acquisition is submitted to a vote
of the stockholders of Southwest, Noel T. Coon agrees to vote any
shares of Acquired Stock he holds on the record date for determining
stockholders entitled to vote on the Acquisition on a pro-rata basis
with all other shareholders; and (ii) Noel T. Coon shall be permitted
to transfer Acquired Stock by donation to any trust, foundation or
charitable organization so long as such entity agrees to be bound by
the provisions of Sections 10.2(b) and (c) hereof, in which event any
sales of Acquired Stock by such entities shall be aggregated with any
sales by Noel T. Coon in determining compliance herewith.
(b) Noel T. Coon agrees not to sell, either directly or
indirectly, during any three-month period more than 240,000 shares of
Acquired Stock to any one person or group, other than a broker-dealer
who acquires the Acquired Stock for resale to any other person or group
in a transaction which would not violate these provisions. Unless he
has actual knowledge to the contrary, Noel T. Coon shall be entitled to
rely upon a written representation from a purchaser that it is not
acquiring the Acquired Stock in concert with any other person or with a
view to resale in violation of these restrictions.
(c) The Acquired Stock acquired by Noel T. Coon shall bear the
following legend:
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THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION. THESE SECURITIES ARE FURTHER
SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN THAT CERTAIN
MERGER AGREEMENT DATED AS OF NOVEMBER 13,1995.
(d) The Acquired Stock acquired by William L. Johnson and
Michael J. Kemper shall bear the following legend:
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.
This legend shall also appear on any Acquired Stock
transferred by either Mr. Johnson or Mr. Kemper to a family trust or
foundation.
11. Termination, Amendment and Waiver.
11.1 Termination. This Agreement may be terminated at any time
prior to the Closing, whether before or after approval of the Merger by the
governmental agencies:
(a) By mutual written consent of Southwest and Noel T. Coon
(on behalf of NPL and NPL Shareholders);
(b) By either Southwest or Noel T. Coon (on behalf of NPL and
NPL Shareholders) if all pre-closing conditions are not satisfied on or
prior to May 15, 1996, unless (i) the failure of such occurrence shall
be due to the failure of the party
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seeking to terminate this Agreement to perform or observe its
agreements and conditions set forth herein to be performed or observed
by such party at or before the Closing; or (ii) Southwest and Noel T.
Coon (on behalf of NPL and NPL Shareholders) mutually agree to extend
the time;
(c) By Southwest (i) if at the time of such termination there
shall have been a material adverse change in the financial condition,
business or operations of NPL taken as a whole from that set forth in
the audited financial statements for the year ended December 31, 1994,
it being understood that any of the matters set forth in NPL's
Disclosure Schedules as of the date of this Agreement are not deemed to
be a material adverse change for purposes of this paragraph (c); or
(ii) if there shall have been any material breach of any covenant of
NPL hereunder and such breach shall not have been remedied within 45
days after receipt by NPL of notice in writing from Southwest
specifying the nature of such breach and requesting that it be
remedied;
(d) By Noel T. Coon (on behalf of NPL and NPL Shareholders)
(i) if at the time of such termination there shall have been a material
adverse change in the financial condition, business or result of
operations of Southwest taken as a whole from that set forth in the
audited financial statements for the year ended December 31, 1994; of
(ii) if there shall have been any material breach of any covenant of
Southwest hereunder and such breach shall have not been remedied within
45 days after receipt by Southwest of notice in writing from NPL
specifying the nature of such breach and requesting that it be
remedied.
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11.2 Amendment, Extension and Waiver. Subject to applicable
law, at any time prior to the consummation of the Merger, the parties may (a)
amend this Agreement, (b) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (c) waive any inaccuracies
in the representations and warranties of any other party contained herein or in
any document delivered pursuant hereto, or (d) waive compliance with any of the
agreements or conditions contained herein. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Any agreement on the part of a party hereto to any extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party, but such waiver or failure to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
12. Expenses.
(a) All expenses incurred by or on behalf of NPL in connection
with the negotiation, authorization, preparation, execution and
consummation of this Agreement (including the costs of complying with
any covenants or conditions to Closing) and the transactions
contemplated hereby (other than expenses incurred in connection with
the operation of NPL in the ordinary course which would have been
incurred notwithstanding the transactions contemplated hereby or
thereby), including, without limitation, all fees and expenses of
agents, representatives, accountants, investment bankers and counsel
employed by NPL shall be borne solely by Noel T. Coon, except that NPL
may pay up to $240,000 in 1995 and up
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to $160,000 in 1996 based on services rendered on the basis of the
usual and customary hourly rates previously charged by its attorneys
and accountants.
(b) All expenses incurred by or on behalf of Southwest in
connection with the negotiation, authorization, preparation, execution
and consummation of this Agreement and the transactions contemplated
hereby and thereby, including, without limitation, all fees and
expenses of agents, representatives, accountants, investment bankers
and counsel employed by Southwest, shall be borne solely by Southwest.
13. Indemnification.
13.1 Indemnification of Southwest. NPL Shareholders shall
indemnify Southwest and its officers, directors and subsidiaries from and
against all claims, losses, damages, costs, assessments, judgments, awards,
liabilities and expenses (including, without limitation, reasonable costs and
expenses of litigation, and, to the extent permitted by law, reasonable
attorneys' fees) incurred by Southwest or its officers, directors, agents or
subsidiaries by reason of:
(a) The untruthfulness or inaccuracy of any of the
representations or warranties of NPL or the breach of any obligations
of NPL contained in this Agreement.
(b) Any judgments, fines, penalties, settlement payments,
settlement costs and attorneys' fees and expenses and interest related
thereto entered, paid or incurred by NPL after July 31, 1995 in
connection with any currently existing but undisclosed actions, suits,
claims, inquiries, proceedings or investigations before
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any court, commission, bureau, regulatory, administrative or
governmental agency, arbitrator body or authority in excess of $10,000
in the aggregate and not reimbursed by insurance.
(c) Any liability of NPL, other than liabilities for benefits
or contributions payable under or pursuant to Benefit Plans provided
the existence of such liabilities does not violate any representation
or warranty in Section 4.12(c) which is attributable to facts existing,
or actions taken (or omissions occurring) prior to the Closing, which
liability arises under ERISA due to (i) the acts or omissions of NPL
with respect to the Benefit Plans or (ii) the acts or omissions of
fiduciaries of the Benefit Plans to whom NPL is obligated to provide
indemnification by contract or otherwise.
(d) The aggregate liability of NPL Shareholders, if any, shall
be limited to a maximum of one million two hundred thousand dollars
($1,200,000) and the NPL Shareholders shall only be liable to the
extent that indemnifiable amounts hereunder exceed, in the aggregate,
two hundred forty thousand dollars ($240,000). The NPL Shareholders'
share of any liability shall be in proportion to their respective NPL
stock ownership at Closing and may be paid either in cash or in
Southwest stock valued at the same price as at the Closing.
13.2 Southwest's Indemnification. Southwest shall indemnify
NPL and NPL Shareholders from and against all claims, losses, damages, costs,
assessments, judgments, awards, liabilities and expenses (including, without
limitation, costs and expenses of litigation and, to the extent permitted by
law, reasonable attorneys' fees)
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incurred by NPL or NPL Shareholders by reason of the untruthfulness or
inaccuracy of any of Southwest's representations or warranties or the breach of
any Southwest obligations contained in this Agreement.
13.3 Claims for Indemnity.
(a) Making of Claims for Indemnity. A claim for indemnity
under this Agreement may be made by the indemnified party any time
prior to one year after the Closing. Except for a claim for fraud, a
claim for indemnity under this Agreement shall be the exclusive remedy
of any indemnified party against any indemnifying party with respect to
any claims, losses, damages, costs, assessments, judgments, awards,
liabilities and expenses which arise out of or in any way relate to any
act or omission in connection with the negotiation, execution, delivery
or performance of this Agreement. Notwithstanding the foregoing, an
indemnified party may pursue any available legal proceedings to enforce
the obligation of an indemnifying party if such indemnifying party
refuses or fails to perform such obligation, but the recovery in any
such proceedings shall be limited to amounts which the indemnified
party would have been entitled to be paid by the indemnifying party
hereunder, together with the costs and expenses of such enforcement
proceeding as provided in Section 14.10 hereof.
In the event that any such claim is made within such
prescribed period, the indemnity relating to such claim shall survive
until such claim is resolved. Claims not made within the applicable
period shall not be indemnified hereunder. Each written notice of a
claim for indemnity shall set forth in reasonable detail the basis
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upon which such claim for indemnity is made.
(b) Conduct of Lawsuits. In the event that any person or
entity not a party to this Agreement shall make any demand or claim or
file or threaten to file any lawsuit, which demand, claim or lawsuit
may result in any loss, cost or expense subject to indemnification
under this Agreement, then the indemnified party shall provide written
notice of such demand, claim or lawsuit to the indemnifying party as
soon as is reasonably practicable but, in any event, within five (5)
days after discovery or receipt of such demand, claim or lawsuit (but
failure to notify within such time period shall not rescind or revoke
the indemnifying party's obligation to indemnify but shall only reduce
the amount of the indemnification to the extent that the indemnifying
party is damaged by such delay), and the indemnifying party shall have
the option, at its cost and expense, to defend itself or to retain
counsel for the indemnified party to defend any such demand, claim or
lawsuit. In the event that the indemnifying party shall fail to respond
to the indemnified party within five days after receipt of such written
notice of any such demand, claim or lawsuit, then the indemnified party
may retain counsel and conduct the defense of such demand, claim or
lawsuit as it may in its reasonable discretion deem proper, at the
reasonable cost and expense of the indemnifying party, subject,
however, to the indemnifying party's right to intervene in such defense
at any time upon the giving of reasonable notice. The indemnified party
shall use its best reasonable efforts to cooperate and assist the
indemnifying party in defending any such demand, claim or lawsuit,
which shall include, but not be limited to, the pursuit of all
cross-
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claims and counterclaims associated therewith. In effecting the
settlement of any such demand, claim or lawsuit, an indemnified party
shall act in good faith, shall consult with the indemnifying party, and
shall enter into only such settlement as the indemnifying party shall
approve, which approval will not be unreasonably withheld and will be
implied if the indemnifying party does not respond within 15 days of
its receipt of the notice of such settlement offer.
14. Miscellaneous.
14.1 Non-Compete Agreements. Noel T. Coon agrees that he will
not, directly or indirectly, engage in competition with NPL or the Surviving
Corporation in the states where either is now operating or has current plans to
operate at the time of Closing for a period of four years following the Closing.
William L. Johnson and Michael J. Kemper each agrees that he will not, directly
or indirectly, engage in competition with NPL or the Surviving Corporation in
the states where Surviving Corporation is operating at the time William L.
Johnson or Michael J. Kemper, respectively, leaves the employment of the
Surviving Corporation (except for the state of Michigan as to Mr. Johnson) for a
period of two years following termination of his employment. The foregoing
provisions shall apply to competition in any manner whatsoever including but not
limited to, as an employee, independent contractor, consultant, owner, manager,
shareholder, director, officer, principal, agent or trustee of or for any person
or entity engaged in a business the same as or similar to that of NPL or
Surviving Corporation or for their own account. Each NPL Shareholder further
agrees that the foregoing non-competition provisions are reasonable as applied
to him, would not impose any undue hardship on him if in force and is no wider
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in scope than necessary to afford reasonable protection to Southwest and
Surviving Corporation. This section becomes effective upon the Closing and at
that time supersedes the non-compete agreements contained in the existing
Johnson and Kemper employment agreements.
14.2 NPL Promissory Notes to Noel T. Coon. The outstanding
promissory notes in the approximate amount of $3.9 million from NPL to Noel T.
Coon may be paid off in full by NPL prior to the Closing provided that NPL has
adequate cash and credit to continue its operations in its usual and customary
manner.
14.3 Survival. Subject to Section 13.3, the respective
representations and warranties, covenants and agreements set forth in this
Agreement and all Disclosure Schedules shall survive the Closing.
14.4 Notices. All notices, requests, claims, demands or other
communica tions hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by delivery, by registered or
certified mail (return receipt requested) or by cable, telecopier, or telex to
the respective parties as follows:
(a) If to Southwest, to:
Michael O. Maffie
President and Chief Executive Officer
Southwest Gas Corporation
5241 Spring Mountain Road
P.O. Box 98510
Las Vegas, Nevada 89193-8510
Telephone: (702)876-7250
Telecopier: (702)876-7037
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With a copy to:
Thomas J. Trimble
Senior Vice President/General Counsel
and Corporate Secretary
Southwest Gas Corporation
5241 Spring Mountain Road
P.O. Box 98510
Las Vegas, Nevada 89193-8510
Telephone: (702)876-7189
Telecopier: (702)876-7037
(b) If to NPL, to:
Noel T. Coon
10840 East Candlewood Drive
Scottsdale, Arizona 85255
Telephone: (602)585-9803
With a copy to:
William L. Johnson
12500 Summit Street
Kansas City, Missouri 64145
Telephone: (816)942-6069
or such other address as shall be furnished in writing by any party to the
others in accordance herewith, except that notices of change of address will
only be effective upon receipt.
14.5 Parties in Interest. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties. Nothing in this
Agreement is intended to confer, expressly
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or by implication, upon any other person any rights or remedies under or by
reason of this Agreement.
14.6 Entire Agreement. This Agreement, including the documents
and other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. There are no restrictions, agreements, promises, warranties, covenants
or undertakings between the parties other than those expressly set forth herein
or therein. This Agreement supersedes all prior agreements and understandings
between the parties, both written and oral, with respect to its subject matter.
14.7 Counterparts. This Agreement may be executed in one or
more counterparts all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
14.8 Governing Law. This Agreement, in all respects,
including all matters of construction, validity and performance, is governed by
the internal laws of the state of Nevada applicable to contracts executed and
delivered in Nevada by citizens of such state, to be performed wholly within
such state without giving effect to the principles of conflicts of laws thereof.
This Agreement is being delivered in Las Vegas, Nevada.
14.9 Headings. The Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
14.10 Enforcement Costs. In the event of litigation or other
proceeding to enforce this Agreement, the prevailing party or parties shall be
entitled to recover
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reasonable costs and attorneys' fees to be set by the court and not by the jury.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement this 13th day of November, 1995.
NORTHERN PIPELINE NPL SHAREHOLDERS
CONSTRUCTION CO.,
a Minnesota corporation
/s/ NOEL T. COON
----------------------------------
Noel T. Coon
By: /s/ WILLIAM L. JOHNSON
------------------------------
William L. Johnson
/s/ ALEXA S. HIGASHI
----------------------------------
Title: Chief Executive Officer Alexa S. Higashi, his wife
Attest: /s/ ROBERT DIGAN /s/ WILLIAM L. JOHNSON
--------------------------- ----------------------------------
Robert Digan William L. Johnson
Title: Assistant Secretary
/s/ JUDY JOHNSON
----------------------------------
Judy Johnson, his wife
/s/ MICHAEL J. KEMPER
----------------------------------
Michael J. Kemper
/s/ FRANCES KEMPER
----------------------------------
Frances Kemper, his wife
SOUTHWEST GAS CORPORATION, a
California corporation
By /s/ MICHAEL O. MAFFIE
-------------------------------
Michael O. Maffie
Title: President and Chief Executive
Officer
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ATTEST: /s/ THOMAS J. TRIMBLE
---------------------------------
Thomas J. Trimble
TITLE: Senior Vice President/General
Counsel and Corporate Secretary
SOUTHWEST GAS CORPORATION
OF ARIZONA, a Nevada corporation
By: /s/ MICHAEL O. MAFFIE
-------------------------------------
Michael O. Maffie
TITLE: President and Chief Executive
Officer
ATTEST: /s/ THOMAS J. TRIMBLE
---------------------------------
Thomas J. Trimble
TITLE: Senior Vice President/General
Counsel and Corporate Secretary
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EXHIBIT B
Ladies and Gentlemen:
This firm has acted as counsel for Northern Pipeline Construction Co.,
a Minnesota corporation ("NPL"), and NPL Shareholders in connection with the
proposed acquisition of NPL by Southwest Gas Corporation, a California
corporation ("Southwest"), pursuant to the Merger Agreement between Southwest
and Southwest Gas Corporation of Arizona, a Nevada corporation (the "Merger
Sub"), and NPL and NPL Shareholders dated as of November 13, 1995 (the
"Agreement"). This opinion is delivered to you pursuant to Section 8.2 of the
Agreement. Unless otherwise defined herein, all capitalized terms used in this
opinion shall have the meanings attributed to them in the Agreement.
In our capacity as counsel for NPL and NPL Shareholders and for
purposes of this opinion, we have made those examinations and investigations of
the local and factual matters we deemed advisable, and have examined the
originals, or copies identified to our satisfaction as being true copies of the
originals, of the certificates, documents, corporate records, and other
instruments which we, in our judgment, have considered necessary or appropriate
to enable us to render the opinion expressed below. For these purposes, we have,
without independent investigation or confirmation, relied upon certificates
provided by public officials and officers of NPL as to certain factual matters
including those certificates described below. In the course of our examinations
and investigations we have assumed the genuineness of all signatures on original
documents, and the due execution and delivery of all documents requiring due
execution and delivery for the effectiveness thereof.
Based upon and subject to the foregoing and in reliance thereon, and
subject to the assumptions, exceptions and qualifications set forth herein, it
is our opinion that:
1. NPL is a corporation duly organized, validly existing and
in good standing under the laws of Minnesota, with the corporate powers
and authority to own, lease and operate all of its properties and
assets and to carry on its business as presently being conducted;
2. NPL is duly licensed and qualified to do business as a
foreign corporation and is in good standing in Arizona, Colorado,
Illinois, Kansas, Missouri, Montana, Nebraska, Nevada, New Jersey,
Pennsylvania, Utah, Washington, and Wisconsin and in any other
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jurisdiction in which, to the best of our knowledge after due inquiry,
the nature of the business conducted by it makes such licensing or
qualification necessary and where the failure to be so qualified would,
individually or in the aggregate, have a Material Adverse Effect;
3. NPL has the corporate Power and authority to consummate the
transactions contemplated by the Agreement, and NPL has duly taken all
requisite corporate action to authorize, execute and deliver the
Agreement and perform the transactions contemplated by the Agreement.
The Agreement and appropriate Exhibits thereto have been duly executed
and delivered by NPL and constitute valid, binding and enforceable
obligations of NPL and NPL Shareholders;
4. The authorized capital stock of NPL consists solely of
15,000 shares of Common Stock, par value $10.00 per share, of which
________ shares are issued and outstanding. All shares of the
outstanding capital stock of NPL have been duly authorized and validly
issued and are fully paid and nonassessable. After due inquiry, other
than as described in the Agreement, we are not aware of any
reservations for the issuance of NPL Common Stock or any outstanding
subscriptions, options, warrants, calls, commitments, or agreements of
any character calling for the transfer, purchase, or issuance of any
shares of its Common Stock or any securities representing the right to
purchase or otherwise receive any shares of its Common Stock or any
securities convertible into or representing the right to purchase or
subscribe to any such shares;
5. On the Closing Date and prior to the consummation of the
transactions contemplated by the Agreement, the NPL Shareholders were
the record owners of all of the issued and outstanding shares of NPL's
Common Stock;
6. Neither the execution and delivery by NPL of the Agreement,
nor the consummation of the transactions contemplated thereby, will (i)
constitute a breach or violation of the Articles of Incorporation or
Bylaws of NPL, (ii) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction, after due
inquiry, known to us to be applicable to NPL, or any of its respective
properties or assets, or (iii) to the best of our knowledge after due
inquiry, violate, conflict with, result in a breach of any provisions
of,
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constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, result in the termination
of, accelerate the performance required by, or result in the creation
of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of NPL, under any of the terms, conditions, or
provisions of any note, bond, mortgage indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
NPL is a party, or by which it or any of its properties or assets may
be bound or affected, except where such violations, conflicts,
breaches, defaults, termination, accelerations and encumbrances would
not have a Material Adverse Effect, nor prevent the consummation of the
transactions contemplated by the Agreement.
7. There are no pending or, to the best of our knowledge after
due inquiry, threatened actions, suits, claims inquiries, proceedings
or investigations involving NPL before any court, commission, bureau,
regulatory, administrative or governmental agency, arbitrator, body or
authority that could have a Material Adverse Effect or which affect
NPL's obligations under or purport to affect the legality, validity or
enforceability of the Agreement or the transactions contemplated
thereby;
8. Assuming due authorization of the Merger by all necessary
corporate proceedings on the part of Southwest and Merger Sub and that
Southwest and Merger Sub have taken all action required to be taken by
them prior to the Closing Date, in accordance with the provision of the
Agreement, the Merger will be validly consummated in accordance with
the Agreement and Minnesota law, and each outstanding share of NPL
Common Stock, including shares issued upon exercise of options to
purchase NPL Common Stock which will have been exercised, prior to the
Closing will be converted as provided in the Agreement; and
9. All governmental consents and approvals required to be
obtained by NPL in order to permit the consummation by it of the
Agreement and transactions contemplated thereby have been obtained, and
all filings required to be made by NPL in order to permit such
consummation have been made.
We express no opinion with respect to the laws of any jurisdiction,
other than the United States and Arizona, the general corporate law of the State
of
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Minnesota and with respect to the opinion set forth in paragraph 2 only the laws
of the States of Colorado, Illinois, Kansas, Missouri, Montana, Nebraska,
Nevada, New Jersey, Pennsylvania, Utah, Washington and Wisconsin. The Agreement
is governed by Nevada law and we have assumed with your consent that, to the
extent applicable to our opinions set forth herein, Nevada law is the same as
Arizona law, to the extent Nevada law is controlling.
With respect to our opinion relating to the enforceability of any
agreement or contract, our opinion is qualified in that enforceability may be
limited by the application of bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws), and by general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
This opinion is being delivered to you for your sole use and benefit in
connection with the acquisition of NPL by Southwest pursuant to the Agreement
and may not be relied upon by, nor may copies be delivered to, any other person
without our prior written consent. This opinion is given as of the date hereof
and we assume no obligation to advise you of changes that may hereinafter be
brought to our attention.
Very truly yours,