EXHIBIT 1.1
EXECUTION COPY
ATMOS ENERGY CORPORATION
(a Texas and Virginia corporation)
$300,000,000 Floating Rate Senior Notes due 2007
$400,000,000 4.00% Senior Notes due 2009
$500,000,000 4.95% Senior Notes due 2014
$200,000,000 5.95% Senior Notes due 2034
PURCHASE AGREEMENT
Dated: October 18, 2004
TABLE OF CONTENTS
Page
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SECTION 1. Representations and Warranties................................................................. 3
(a) Representations and Warranties by the Company.................................................. 3
(i) Compliance with Registration Requirements............................................. 3
(ii) Incorporated Documents................................................................ 4
(iii) Independent Accountants of the Company................................................ 4
(iv) Financial Statements.................................................................. 4
(v) No Material Adverse Change in Business................................................ 5
(vi) Good Standing of the Company.......................................................... 5
(vii) Good Standing of the Subsidiaries..................................................... 5
(viii) Capitalization of the Company......................................................... 6
(ix) Capitalization of the Subsidiaries.................................................... 6
(x) Authorization of Agreement............................................................ 6
(xi) Absence of Defaults and Conflicts..................................................... 7
(xii) Absence of Labor Dispute.............................................................. 8
(xiii) Absence of Proceedings................................................................ 8
(xiv) Accuracy of Exhibits.................................................................. 8
(xv) Possession of Intellectual Property................................................... 8
(xvi) Absence of Further Requirements....................................................... 8
(xvii) Possession of Licenses and Permits.................................................... 9
(xviii) Title to Property..................................................................... 9
(xix) Investment Company Act................................................................ 9
(xx) Environmental Laws.................................................................... 9
(xxi) Registration Rights................................................................... 10
(xxii) Repayment of Debt..................................................................... 10
(xxiii) Independent Accountants of TXU Gas.................................................... 10
(xxiv) Merger................................................................................ 10
(xxv) Internal Controls..................................................................... 10
(xxvi) ERISA................................................................................. 11
(xxvii) Insurance............................................................................. 11
(xxviii) Taxes................................................................................. 11
(xxix) Sarbanes-Oxley........................................................................ 11
(b) Officer's Certificates......................................................................... 11
SECTION 2. Sale and Delivery to Underwriters; Closing..................................................... 12
(a) Securities..................................................................................... 12
(b) Payment........................................................................................ 12
(c) Denominations; Registration.................................................................... 12
SECTION 3. Covenants of the Company....................................................................... 12
(a) Prospectus Supplement; Delivery of Prospectus.................................................. 12
(b) Filing of Amendments........................................................................... 13
(c) Delivery of Registration Statements............................................................ 13
(d) Delivery of Prospectuses....................................................................... 13
(e) Continued Compliance with Securities Laws...................................................... 13
(f) Blue Sky Qualifications........................................................................ 14
(g) Rule 158....................................................................................... 14
(h) Use of Proceeds................................................................................ 14
(i) Notice Upon Effectiveness; Commission Requests................................................. 14
(j) Restriction on Sale of Securities.............................................................. 15
(k) Reporting Requirements......................................................................... 15
(l) Rating of Securities........................................................................... 15
(m) The Depository Trust Company................................................................... 15
SECTION 4. Payment of Expenses............................................................................ 15
(a) Expenses....................................................................................... 15
(b) Termination of Agreement....................................................................... 16
SECTION 5. Conditions of Underwriters' Obligations........................................................ 16
(a) Effectiveness of Registration Statement........................................................ 16
(b) Opinions of Counsels for Company............................................................... 16
(c) Opinion of Counsel for Underwriters............................................................ 16
(d) Officers' Certificate.......................................................................... 17
(e) Accountants' Comfort Letter.................................................................... 17
(f) Bring-Down Comfort Letter...................................................................... 17
(g) Maintenance of Rating.......................................................................... 17
(h) No Objection................................................................................... 17
(i) Additional Documents........................................................................... 18
(j) Termination of Agreement....................................................................... 18
SECTION 6. Indemnification................................................................................ 18
(a) Indemnification of Underwriters................................................................ 18
(b) Indemnification of Company, Directors and Officers............................................. 19
(c) Actions Against Parties; Notification.......................................................... 19
(d) Settlement Without Consent If Failure to Reimburse............................................. 20
SECTION 7. Contribution................................................................................... 20
SECTION 8. Representations, Warranties and Agreements to Survive Delivery................................. 21
SECTION 9. Termination of Agreement....................................................................... 21
(a) Termination; General........................................................................... 21
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(b) Liabilities.................................................................................... 22
SECTION 10. Default by One or More of the Underwriters..................................................... 22
SECTION 11. Notices ...................................................................................... 23
SECTION 12. Parties ...................................................................................... 23
SECTION 13. Representation of Underwriters................................................................. 23
SECTION 14. GOVERNING LAW AND TIME......................................................................... 23
SECTION 15. Effect of Headings............................................................................. 23
SECTION 16. Counterparts................................................................................... 23
SCHEDULES
Schedule A - List of Underwriters
Schedule B - 1 - Information Relating to 2007 Notes
Schedule B - 2 - Information Relating to 2009 Notes
Schedule B - 3 - Information Relating to 2014 Notes
Schedule B - 4 - Information Relating to 2034 Notes
Schedule C - List of Subsidiaries
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel
Exhibit B - Form of Opinion of Virginia Counsel to the Company
Exhibit C - Form of Opinion of General Counsel of the Company
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ATMOS ENERGY CORPORATION
(a Texas and Virginia corporation)
$300,000,000 Floating Rate Senior Notes due 2007
$400,000,000 4.00% Senior Notes due 2009
$500,000,000 4.95% Senior Notes due 2014
$200,000,000 5.95% Senior Notes due 2034
PURCHASE AGREEMENT
October 18, 2004
Merrill Lynch & Co.
Merrill Lynch, Pierce Fenner & Smith
Incorporated
Banc of America Securities LLC
J.P. Morgan Securities Inc.
SunTrust Capital Markets, Inc.
SG Cowen Securities Corporation
KBC Financial Products USA Inc.
U.S. Bancorp Piper Jaffray Inc.
Wachovia Capital Markets, LLC
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Atmos Energy Corporation, a Texas and Virginia corporation (the
"Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce Fenner & Smith Incorporated ("Merrill Lynch"), Banc of America Securities
LLC, J.P. Morgan Securities Inc., SunTrust Capital Markets, Inc., SG Cowen
Securities Corporation, KBC Financial Products USA Inc., U.S. Bancorp Piper
Jaffray Inc. and Wachovia Capital Markets, LLC (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch, is acting as
representative (in such capacity, the "Representative "), with respect to the
issue and sale by the Company and the
purchase by the Underwriters of its (i) Floating Rate Senior Notes due 2007 on
the terms and conditions stated herein and on Schedule B-1 (the "2007 Notes"),
(ii) 4.00% Senior Notes due 2009 on the terms and conditions stated herein and
on Schedule B-2 (the "2009 Notes"), (iii) 4.95% Senior Notes due 2014 on the
terms and conditions stated herein and on Schedule B-3 (the "2014 Notes") and
(iv) 5.95% Senior Notes due 2034 on the terms and conditions stated herein and
on Schedule B-4 (the "2034 Notes" and together with the 2007 Notes, the 2009
Notes and the 2014 Notes, the "Securities") on the terms and conditions stated
herein and in Schedule B. The Securities are to be sold to each Underwriter,
acting severally and not jointly, in the respective principal amounts set forth
in Schedule A hereto opposite the name of such Underwriter. The Securities are
to be issued pursuant to an indenture dated as of May 22, 2001 (the "Indenture")
between the Company and SunTrust Bank, as trustee (the "Trustee") and an
officers' certificate to be dated as of October 22, 2004 pursuant to Section 301
of the Indenture (the "Section 301 Officer's Certificate"). The Securities and
the Indenture are more fully described in the Prospectus (defined below).
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Registration
No. 333-118706). Such registration statement, as amended at the date hereof,
including the exhibits thereto, schedules thereto, if any, and the documents
incorporated or deemed to be incorporated by reference therein, is hereinafter
referred to as the "Registration Statement". The Registration Statement includes
a prospectus prepared in accordance with Rule 415 under the Securities Act of
1933, as amended (the "1933 Act"), relating to certain debt securities and
common stock of the Company, as the case may be, and the offering thereof from
time to time in accordance with Rule 415 under the 1933 Act pursuant to the
Registration Statement. The Registration Statement has been declared effective
by the Commission and the Indenture has been qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act"). As provided in Section 3(a), a
prospectus supplement reflecting the terms of the Securities, the terms of the
offering thereof and other matters set forth therein has been prepared and will
be filed pursuant to Rule 424 under the 1933 Act. Such prospectus supplement, in
the form first filed after the date hereof pursuant to Rule 424, is herein
referred to as the "Prospectus Supplement." The base prospectus included in the
Registration Statement relating to all offerings of securities under the
Registration Statement, as supplemented by the Prospectus Supplement, is herein
called the "Prospectus," except that, if such base prospectus is amended or
supplemented on or prior to the date on which the Prospectus Supplement is first
filed pursuant to Rule 424, the term "Prospectus" shall refer to the base
prospectus as so amended or supplemented and as supplemented by the Prospectus
Supplement, in either case including the documents filed with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
that are incorporated by reference therein. Any preliminary prospectus
supplement attached to the base prospectus that was filed omitting certain
information regarding the public offering price and description of Securities
pursuant to Rule 424 of the rules and regulations of the Commission under the
1933 Act and used prior to the execution and delivery of this Agreement, is
herein called a "preliminary prospectus." For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
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All references in this Agreement to financial statements and
schedules and other information which is "contained", "included" or "stated" in
the Registration Statement, any preliminary prospectus or the Prospectus (or
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
On October 1, 2004, LSG Acquisition Corporation, a wholly owned
subsidiary of the Company ("LSG"), pursuant to an agreement and plan of merger,
dated as of June 17, 2004, as amended on September 30, 2004 (the "Merger
Agreement"), with TXU Gas Company LP ("TXU Gas") completed the acquisition (the
"Merger") of substantially all the natural gas distribution and pipeline
operations of TXU Gas. In addition, on such date, LSG was merged with and into
the Company, which was the surviving corporation.
The Company understands that the Underwriters propose to make a
public offering of the Securities as soon as the Representative deems advisable
after this Agreement has been executed and delivered.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. The Company meets the
requirements for use of Form S-3 under the 1933 Act. The Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement and any
post-effective amendments thereto became effective and at the time of the
filing by the Company of any annual report on Form 10-K or any quarterly
report on Form 10-Q and at the Closing Time, the Registration Statement
and any amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the published
rules and regulations under the 1933 Act (the "1933 Act Regulations"), the
1939 Act and the published rules and regulations of the Commission under
the 1939 Act (the "1939 Act Regulations") and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement
was issued and at the Closing Time, included or will include an untrue
statement of a
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material fact or omitted or will omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in
writing by any Underwriter through the Representative expressly for use in
the Registration Statement or Prospectus.
Each preliminary prospectus and the Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when
so filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1933 Act, 1933 Act Regulations, 1934 Act and the
published rules and regulations of the Commission thereunder (the "1934
Act Regulations"), and, when read together with the other information in
the Prospectus, at the time the Registration Statement became effective,
at the time the Prospectus was issued and at the Closing Time, did not and
will not contain an untrue statement of a material fact and did not omit
to or will not omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) Independent Accountants of the Company. Ernst & Young LLP
("Ernst & Young"), the accountants who certified the financial statements
and supporting schedules of the Company included or incorporated by
reference in the Registration Statement and the Prospectus, are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations and registered public accountants as required by the
Public Company Accounting Oversight Board ("PCAOB").
(iv) Financial Statements. The financial statements of the Company
included or incorporated by reference in the Registration Statement and
the Prospectus, together with the related schedules and notes, present
fairly in all material respects the financial position of the Company and
its consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. To the knowledge of the Company, the financial
statements of TXU Gas included or incorporated by reference in the
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly in all material respects the financial
position of TXU Gas and its consolidated subsidiaries at and for the dates
indicated and the statement of operations,
4
stockholders' equity and cash flows of TXU Gas and its consolidated
subsidiaries for the periods specified; said financial statements have
been prepared in conformity with GAAP applied on a consistent basis
throughout the periods involved. The supporting schedules, if any,
included in the Registration Statement and the Prospectus with respect to
the Company present fairly in all material respects in accordance with
GAAP the information required to be stated therein. The selected financial
data and the summary financial information included in the Prospectus
present fairly, in all material respects, the information shown therein
and have been compiled on a basis consistent with that of the audited
financial statements of the Company and, to the knowledge of the Company,
TXU Gas, as the case may be, included or incorporated by reference in the
Registration Statement and the Prospectus. The pro forma financial
statements and the related notes thereto included or incorporated by
reference in the Registration Statement and the Prospectus present fairly,
in all material respects, the information shown therein, have been
prepared in accordance with the 1934 Act and the 1934 Act Regulations,
including the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give pro
forma effect to the transactions and circumstances referred to therein.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change, or a development known to the Company involving a
prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the Company
or any of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) except for regular
quarterly dividends on the Common Stock in amounts per share that are
consistent with past practice, there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Texas and the Commonwealth of Virginia and has
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus and to enter into
and perform its obligations under this Agreement and the Indenture; and
the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect.
(vii) Good Standing of the Subsidiaries. Each "significant
subsidiary" (as such term is defined in Rule 1-02 of Regulation S-X) of
the Company (each a "Subsidiary" and, collectively, the "Subsidiaries")
(a) has been duly organized and is validly existing
5
as an entity in good standing under the laws of the jurisdiction of its
formation, (b) has power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and
is duly qualified as a foreign entity to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect. The only
Subsidiaries of the Company are the subsidiaries listed on Schedule C
hereto.
(viii) Capitalization of the Company. The authorized, issued and
outstanding capital stock of the Company is as set forth in the Prospectus
in the column entitled "As Adjusted" under the caption "Capitalization"
(except for subsequent issuances, if any, pursuant to reservations,
agreements, acquisitions or employee benefit plans each referred to in the
Prospectus or pursuant to the exercise of convertible securities or
options each referred to in the Prospectus). The shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in violation
of the preemptive or other similar rights of any securityholder of the
Company.
(ix) Capitalization of the Subsidiaries. All of the issued and
outstanding capital stock, limited liability company membership interests,
or other beneficial interests, as the case may be, of each Subsidiary have
been duly authorized and validly issued, are fully paid and non-assessable
and are owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity; none of the outstanding shares of capital stock or limited
liability company membership interests, as the case may be, of any
Subsidiary was issued in violation of the preemptive or similar rights of
any securityholder of such Subsidiary.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(xi) Authorization of Indenture and Section 301 Officers'
Certificate. The Indenture has been duly qualified under the 1939 Act. The
Indenture has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting the enforcement of
creditors' rights generally and by equitable principles of general
applicability, regardless of whether such enforceability is considered in
a proceeding at equity or at law. At the Closing Time, the Section 301
Officers' Certificate will have been duly authorized, executed and
delivered by the Company.
(xii) Authorization of Securities. The Securities have been duly
authorized by the Company and, at the Closing Time, will have been duly
executed by the Company and, when authenticated, issued and delivered in
the manner provided for in the Indenture and delivered against payment of
the purchase price therefor as provided in this Agreement, will constitute
valid and binding obligations of the Company and enforceable
6
against the Company in accordance with their terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting the enforcement of
creditors' rights generally and by equitable principles of general
applicability, regardless of whether such enforceability is considered in
a proceeding at equity or at law, and will be in the form contemplated by
the Indenture and the Section 301 Officers' Certificate, and will be
entitled to the benefits of the Indenture.
(xiii) Description of Securities and the Indenture. The Securities
and the Indenture will conform in all material respects to the respective
statements relating thereto contained in the Prospectus and will be in
substantially the respective forms filed or incorporated by reference, as
the case may be, or to be filed or to be incorporated by reference prior
to the Closing Time, as the case may be, as exhibits to the Registration
Statement.
(xi) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its charter, bylaws or other
organizational documents or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any subsidiary
is subject (collectively, "Agreements and Instruments") except for such
defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement, the Indenture and
any other agreement or instrument entered into or issued or to be entered
into or issued by the Company and any subsidiary of the Company in
connection with the consummation of the transactions contemplated herein
and in the Registration Statement and the Prospectus (including the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds") and compliance by the Company and any subsidiary of the
Company with its obligations hereunder and thereunder have been duly
authorized by all necessary corporate or other action on the part of the
Company and any of the subsidiaries and do not and will not, whether with
or without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges, encumbrances or a
Repayment Event that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the charter,
bylaws or other organizational document of the Company or any subsidiary
or any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any subsidiary or any of
their assets, properties or operations. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
subsidiary.
7
(xii) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(xiii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending against, or, to the
knowledge of the Company, threatened against or affecting the Company or
any of its subsidiaries, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to affect the properties, assets or
operations of the Company and its subsidiaries, except what does not
result in a Material Adverse Effect, or the consummation of the
transactions contemplated in this Agreement or the performance by the
Company and its subsidiaries of its obligations hereunder; the aggregate
of all pending legal or governmental proceedings to which the Company or
any subsidiary is a party or of which any of their respective property,
assets or operations is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental
to the business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xv) Possession of Intellectual Property. The Company and its
Subsidiaries own or possess or have the right to use, or can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xvi) Absence of Further Requirements. There have been issued and,
at the Closing Time, there shall be in full force and effect orders or
authorizations of the regulatory authorities of the States of Colorado,
Georgia, Illinois, Kentucky and Virginia, respectively, authorizing the
issuance and sale of the Securities on terms herein set forth or
contemplated and no other filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any
court or governmental authority or
8
agency is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale
of the Securities hereunder or the consummation of the transactions
contemplated by this Agreement or for the due execution, delivery or
performance of the Indenture by the Company, except such as have been
already obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities or blue sky laws.
(xvii) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure to do so would not have a Material Adverse Effect; the Company and
its subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of
the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, would result in a
Material Adverse Effect.
(xviii) Title to Property. The Company and its subsidiaries have
good title to all real property owned by the Company and its subsidiaries
and good title to all other properties owned by them, in each case, free
and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described
in the Registration Statement and the Prospectus or (b) do not, singly or
in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries and all of the leases and subleases
material to the business of the Company and its subsidiaries, considered
as one enterprise, and under which the Company or any of its subsidiaries
holds properties described in the Prospectus, are in full force and
effect, and neither the Company nor any of its subsidiaries has any notice
of any claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any of its subsidiaries under any of the leases
or subleases mentioned above, or affecting or questioning the rights of
the Company or such subsidiary to the continued possession of the leased
or subleased premises under any such lease or sublease, which, singly or
in the aggregate, would result in a Material Adverse Effect.
(xix) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xx) Environmental Laws. Except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is
9
in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution
or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements, (C)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (D)
there are no events or circumstances that might reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xxi) Registration Rights. There are no persons or entities with
registration rights or other similar rights to have any securities
registered under the Registration Statement who have not properly waived
such rights in connection with the Securities registered pursuant to this
Registration Statement and in connection with this offering.
(xxii) Repayment of Debt. To the knowledge of the Company, there is
no fact which will prevent the Company, at the Closing Time (as
hereinafter defined), from repaying a portion of the Company's
indebtedness incurred in connection with the Merger as contemplated in the
Prospectus Supplement. Immediately prior to the Closing Time, the amount
of such indebtedness owed by the Company will be approximately $1.7
billion.
(xxiii) Independent Accountants of TXU Gas. To the knowledge of the
Company, Deloitte & Touche LLP ("Deloitte & Touche"), the accountants who
certified the financial statements and supporting schedules of TXU Gas
included and incorporated by reference in the Registration Statement and
Prospectus, are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations and registered public accountants as required
by the PCAOB.
(xxiv) Merger. The Merger was completed pursuant to the terms of the
Merger Agreement and the assets and operations of TXU Gas acquired
pursuant to the Merger Agreement and as described in the Prospectus are
now owned by the Company.
(xxv) Internal Controls. Each of the Company and its subsidiaries
(A) makes and keeps accurate books and records and (B) maintains internal
accounting controls which provide reasonable assurance that (i)
transactions are executed in accordance with
10
the Company's management's authorization, (ii) transactions are recorded
as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (iii) access to the Company's
assets is permitted only in accordance with management's authorization and
(iv) the reported accountability for the Company's assets is compared with
existing assets at reasonable intervals. To the knowledge of the Company,
prior to the merger TXU Gas was in compliance, in all material respects,
with the requirements of Section 13(b)(2) of the 1934 Act.
(xxvi) ERISA. The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"), except where such non-compliance
would not have a Material Adverse Effect; no "reportable event" (as
defined in Section 4043(c) of ERISA), other than events with respect to
which the 30-day notice requirement under Section 4043 of ERISA has been
waived, has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability that would have a
Material Adverse Effect; the Company has not incurred and does not expect
to incur any liability that would have a Material Adverse Effect (A) under
Title IV of ERISA with respect to the termination of, or withdrawal from,
any "pension plan" or (B) due to an "accumulated funding deficiency" under
Section 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" maintained by the Company that is
intended to be qualified under Section 401(a) of the Code is, to the
knowledge of the Company, so qualified in all material respects and, to
the knowledge of the Company, nothing has occurred, whether by action or
by failure to act, which would cause the loss of such qualification,
except where such failure to qualify or such loss would not have a
Material Adverse Effect.
(xxvii) Insurance. The Company and its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value of
their respective properties, except where the failure to do so would not
have a Material Adverse Effect.
(xxviii) Taxes. The Company and each of its subsidiaries have filed
all federal, state and local income and franchise tax returns required to
be filed through the date hereof and have paid all taxes due thereon,
except such as are being contested in good faith by appropriate
proceedings or where the failure to do so would not have a Material
Adverse Effect, and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had, nor does the Company
have any knowledge of any tax deficiency which would have a Material
Adverse Effect.
(xxix) Sarbanes-Oxley. The Company is in compliance, in all material
respects, with the provisions of the Sarbanes-Oxley Act of 2002 to the
extent currently applicable.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company or any of its subsidiaries delivered to the Representative or to
counsel for the Underwriters shall
11
be deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at the purchase price
set forth in Schedule B, the principal amount of Securities set forth opposite
the name of such Underwriter in Schedule A, plus any additional principal amount
of Securities that such Underwriter may become obligated to purchase pursuant to
Section 10 of this Agreement.
(b) Payment. Payment of the purchase price for, and delivery of, the
Securities shall be made at the offices of Shearman & Sterling LLP, 599
Lexington Avenue, New York, New York 10022, or at such other place as shall be
agreed upon by the Company and the Underwriters, at 9:00 A.M. (Eastern Time) on
Friday, October 22, 2004 (unless postponed pursuant to Section 10), or at such
other time not later than ten business days after such date as shall be agreed
upon by the Underwriters and the Company (such date and time of payment and
delivery being herein called the "Closing Time"). Payment shall be made to the
Company by wire transfer of immediately available funds to an account designated
by the Company, against delivery to the Underwriters for the respective accounts
of the several Underwriters of the Securities to be purchased by them.
(c) Denominations; Registration. The Securities to be purchased by
the Underwriters shall be in such denominations ($1,000 or integral multiples
thereof) and registered in such names as the Representative may request in
writing at least one full business day before the Closing Time. The Securities
will be made available in New York City for examination and packaging by the
Underwriters not later than 10:00 A.M. (Eastern Time) on the last business day
prior to the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Prospectus Supplement; Delivery of Prospectus. The Company has
prepared a Prospectus Supplement that complies with the 1933 Act and the
1933 Act Regulations and that sets forth the principal amount of the
Securities and their terms not otherwise specified in the Indenture, the
name of each Underwriter participating in the offering and the principal
amount of the Securities that each severally and not jointly has agreed to
purchase, the name of each Underwriter, if any, acting as representative
of the Underwriters in connection with the offering, the price at which
the Securities are to be purchased by the Underwriters from the Company,
any initial public offering price, any selling concession and reallowance
and any delayed delivery arrangements, and such other information as the
Underwriters and the Company deem appropriate in connection with the
offering of the Securities. The Company will promptly transmit copies of
the Prospectus Supplement to the Commission for filing pursuant to Rule
424 under the
12
1933 Act and will furnish to the Underwriters as many copies of the
Prospectus as the Underwriters shall reasonably request.
(b) Filing of Amendments. The Company will give the Representative
notice of its intention to file or prepare any amendment to the
Registration Statement, or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it
became effective or to the Prospectus, whether pursuant to the 1933 Act,
the 1934 Act, or otherwise, will furnish the Representative with copies of
any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such
document to which the Representative shall reasonably object.
(c) Delivery of Registration Statements. The Company has furnished
or will deliver to the Representative and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to
be incorporated by reference therein) and signed copies of all consents
and certificates of experts, and will also deliver to the Representative,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the
period when the Prospectus is required to be delivered under the 1933 Act
or the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus
and any amendments or supplements thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations, the 1934 Act and
the 1934 Act Regulations and the 1939 Act and the 1939 Act Regulations so
as to permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Prospectus. If at any time when
a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Securities, any event shall occur or condition shall
exist as a result of which it is necessary, in the opinion of counsel for
the Underwriters or for the Company, to amend the Registration Statement
or amend or supplement the Prospectus in order that the Prospectus will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration
13
Statement or amend or supplement the Prospectus in order to comply with
the requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such
untrue statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to
the Underwriters such number of copies of such amendment or supplement as
the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the Representative may
designate and to maintain such qualifications in effect for a period of
not less than one year from the effective date of the Registration
Statement; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the date of the Prospectus.
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the issuance and sale of the Securities in the manner specified
in the Prospectus under "Use of Proceeds" which shall include the prompt
prepayment of the indebtedness incurred in connection with the Merger.
(i) Notice Upon Effectiveness; Commission Requests. During the
period when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, the Company will notify the
Underwriters immediately, and confirm the notice in writing, (i) of the
effectiveness of any amendment to the Registration Statement, (ii) of the
mailing or the delivery to the Commission for filing of any supplement to
the Prospectus or any document that would as a result thereof be
incorporated by reference in the Prospectus, (iii) of the receipt of any
comments from the Commission with respect to the Registration Statement,
the Prospectus or the Prospectus Supplement, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
supplement to the Prospectus or for additional information relating
thereto or to any document incorporated by reference in the Prospectus and
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
or of the institution or threatening of any proceeding for any of such
purposes. The Company will use every reasonable effort to prevent the
issuance of any
14
such stop order or of any order suspending such qualification and, if any
such order is issued, to obtain the lifting thereof at the earliest
possible moment.
(j) Restriction on Sale of Securities. Between the date hereof and
the Closing Time, the Company will not, without the prior written consent
of the Underwriters, directly or indirectly, issue, sell, offer or
contract to sell, grant any option for the sale of, or otherwise transfer
or dispose of, any debt securities issued or guaranteed by the Company
other than commercial paper backstopped by the Company's existing credit
agreements.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act
in connection with sales of the Securities, will file all documents
required to be filed with the Commission pursuant to the 1934 Act within
the time periods required by the 1934 Act and the 1934 Act Regulations.
(l) Rating of Securities. The Company shall take all reasonable
action necessary to enable Standard & Poor's Ratings Services, a division
of McGraw Hill, Inc. ("S&P"), Moody's Investors Service Inc. ("Moody's")
and Fitch IBCA, Inc. ("Fitch") to provide their respective credit ratings
of the Securities.
(m) The Depository Trust Company. The Company will cooperate with
the Underwriters and use its best efforts to permit the Securities to be
eligible for clearance and settlement through the facilities of The
Depository Trust Company.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits, including any documents incorporated therein
by reference) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, the
Indenture, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the delivery of the Securities to the Underwriters,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including the filing fees
incident to any necessary filings under state securities laws and the reasonable
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, and of the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the
Securities, if any, (ix) any fees payable in connection with the rating of the
Securities and (x) the reasonable fees and expenses of the Trustee,
15
including the fees and disbursements of counsel for the Trustee, in connection
with the Indenture and the Securities.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof as
of the Closing Time or in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement has become effective and at the Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated, pending or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A Prospectus
Supplement shall have been filed with the Commission in accordance with
Rule 424(b).
(b) Opinions of Counsels for Company. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of
Closing Time, of (i) Gibson, Dunn & Crutcher LLP, counsel for the Company,
in form and substance reasonably satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters to the effect set forth in Exhibit A
hereto, (ii) Hunton & Williams, Virginia counsel for the Company, in form
and substance reasonably satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the
other Underwriters to the effect set forth in Exhibit B hereto and (iii)
Louis P. Gregory, General Counsel of the Company, in form and substance
reasonably satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Exhibit C hereto. At the Closing
Time, the Trustee shall have received opinion letters, dated as of Closing
Time, from Gibson, Dunn & Crutcher LLP and Hunton & Williams, as the
Trustee may reasonably require.
(c) Opinion of Counsel for Underwriters. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of
Closing Time, of Shearman & Sterling LLP, counsel for the Underwriters, as
the Representative may reasonably require. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York and the federal law of the
United States, upon the opinions of counsel satisfactory to the
Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries
and certificates of public officials.
16
(d) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change or a
development known to the Company involving a prospective material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the Representative shall have received a
certificate of the President or a Senior Vice President of the Company and
of the Treasurer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are contemplated by the
Commission.
(e) Accountants' Comfort Letter. At the time of the execution of
this Agreement, the Representative shall have received from each of Ernst
& Young LLP and Deloitte & Touche LLP a letter dated such date, in form
and substance satisfactory to the Representative, together with signed or
reproduced copies of such letter for each of the other Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information relating to the
Company, with respect to Ernst & Young, and TXU Gas, with respect to
Deloitte & Touche, contained in or incorporated by reference in the
Registration Statement and the Prospectus.
(f) Bring-Down Comfort Letter. At the Closing Time, the
Representative shall have received from each of Ernst & Young and Deloitte
& Touche, a letter, dated as of Closing Time, to the effect that each of
Ernst & Young and Deloitte & Touche reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section, except that
the specified date referred to shall be a date not more than three
business days prior to Closing Time.
(g) Maintenance of Rating. At the Closing Time, the Securities shall
be rated at least Baa3 by Moody's, BBB by S&P and BBB+ by Fitch, and since
the date of this Agreement, there shall not have occurred a downgrading in
the rating assigned to the Securities or any of the Company's other debt
securities by any "nationally recognized statistical rating agency", as
that term is defined by the Commission for purposes of Rule 436(g)(2)
under the 1933 Act, and no such securities rating agency shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the
Company's other debt securities.
(h) No Objection. If required, the NASD has confirmed that it has
not raised any objection with respect to the fairness and reasonableness
of the underwriting terms and arrangements.
17
(i) Additional Documents. At the Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as
they may reasonably require for the purpose of enabling them to pass upon
the issuance and sale of the Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance
and sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to the Representative and counsel for
the Underwriters.
(j) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement may be terminated by the Representative by
notice to the Company at any time at or prior to Closing Time, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto) or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus, Prospectus Supplement or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Representative),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
18
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representative expressly for use in the Registration
Statement (or any amendment thereto), or any preliminary prospectus, Prospectus
Supplement or the Prospectus (or any amendment or supplement thereto). The
foregoing indemnity with respect to any untrue statement contained in or any
omission from the Prospectus shall not inure to the benefit of any Underwriter
(or any person controlling such Underwriter) from whom the person asserting any
such loss, liability, claim, damage or expense purchased any of the Securities
that are the subject thereof if the Company shall sustain the burden of proving
that (i) the untrue statement or omission contained in the Prospectus was
corrected; (ii) such person was not sent or given a copy of the Prospectus
(excluding documents incorporated by reference) which corrected the untrue
statement or omission at or prior to the written confirmation of the sale of
such Securities to such person if required by applicable law; and (iii) the
Company satisfied its obligation pursuant to Section 3(d) of this Agreement to
provide a sufficient number of copies of the Prospectus to the Underwriters.
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus, Prospectus
Supplement or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representative expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) Actions Against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
above, counsel to the indemnified parties shall be selected by the
Representative, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
19
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement Without Consent If Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel and such
indemnified party shall be entitled to such reimbursement, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and
the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus bear to the aggregate
initial public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact
20
relates to information supplied by the Company or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section are several in
proportion to the number of Securities set forth opposite their respective names
in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is
21
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representative, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal,
New York, Texas or Virginia authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representative shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representative shall not have completed
such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities does
not exceed 10% of the aggregate principal amount of the Securities to be
purchased on such date, the non-defaulting Underwriters shall be
obligated, each severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the aggregate principal amount of Securities to be
purchased on such date, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representative or the Company shall
have the right to postpone the
22
Closing Time, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at Merrill Lynch, Pierce,
Fenner & Smith Incorporated, 4 World Financial Center, New York, New York 10080
and notices to the Company shall be directed to it at 1800 Three Lincoln Centre,
5430 LBJ Freeway, Dallas, Texas, 75240, attention of Louis P. Gregory.
SECTION 12. Parties. This Agreement shall inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons within the meaning of Section 15 of the 1933 Act and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the Company and their respective
successors and assigns, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. Representation of Underwriters. The Representative will
act for the several Underwriters in connection with the transactions
contemplated by this Agreement, and any action under or in respect of this
Agreement taken by the Representative will be binding upon all Underwriters.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
SECTION 16. Counterparts. This Agreement may be executed in one or
more counterparts, and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
23
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
ATMOS ENERGY CORPORATION
By: /s/ LAURIE M. SHERWOOD
---------------------------------
Name: Laurie M. Sherwood
Title: Vice President, Corporate
Development and Treasurer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE FENNER & SMITH
INCORPORATED
BANC OF AMERICA SECURITIES LLC
J.P. MORGAN SECURITIES INC.
SUNTRUST CAPITAL MARKETS, INC.
SG COWEN SECURITIES CORPORATION
KBC FINANCIAL PRODUCTS USA INC.
U.S. BANCORP PIPER JAFFRAY INC.
WACHOVIA CAPITAL MARKETS, LLC
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
For itself and as Representative of the other Underwriters named in Schedule A
hereto.
By: /s/ TRAVIS ARMAYOR
----------------------------
Authorized Signatory
SCHEDULE A
Principal Amount Principal Amount Principal Amount Principal Amount
Name of Underwriter of 2007 Notes of 2009 Notes of 2014 Notes of 2034 Notes
- ------------------- ------------- ------------- ------------- -------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................... 150,000,000 200,000,000 250,000,000 100,000,000
Banc of America Securities LLC.................. 29,400,000 39,200,000 49,000,000 19,600,000
J.P. Morgan Securities Inc...................... 29,400,000 39,200,000 49,000,000 19,600,000
SunTrust Capital Markets, Inc................... 29,400,000 39,200,000 49,000,000 19,600,000
SG Cowen Securities Corporation................. 24,000,000 32,000,000 40,000,000 16,000,000
KBC Financial Products USA Inc.................. 15,900,000 21,200,000 26,500,000 10,600,000
U.S. Bancorp Piper Jaffray Inc.................. 15,900,000 21,200,000 26,500,000 10,600,000
Wachovia Capital Markets, LLC................... 6,000,000 8,000,000 10,000,000 4,000,000
----------- ----------- ----------- -----------
Total.................................... 300,000,000 400,000,000 500,000,000 200,000,000
=========== =========== =========== ===========
SCHEDULE B-1
ATMOS ENERGY CORPORATION, as Issuer
Floating Rate Senior Notes due 2007
Aggregate principal amount to be issued: $300,000,000
Current ratings: Moody's Baa3, S&P BBB and Fitch BBB+
Interest rate: 3-month LIBOR + 0.375% payable quarterly on January 15, April 15,
July 15 and October 15 of each year, beginning January 15, 2005
Interest accrues from: October 22, 2004
Date of maturity: October 15, 2007
Redemption provisions: The Securities will be redeemable, as a whole or in part,
at the option of the Company, on any Interest Payment Date on or after April 17,
2006, at a redemption price equal to 100% of the principal amount of the
Securities to be redeemed, plus accrued interest to the date of redemption.
Sinking fund requirements: None
Initial public offering price: 100.0% of the principal amount plus accrued
interest from October 22, 2004.
Purchase price to be paid by the Underwriters: 99.650% of the principal amount
plus accrued interest from October 22, 2004, equal to $298,950,000.
Closing date, time and location: October 22, 2004, 9:00 A.M., New York City
time, at Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York
Delayed delivery contracts: Not authorized
Listing requirement: None
Other terms and conditions: As described in this Purchase Agreement and the
related Indenture.
SCHEDULE B-2
ATMOS ENERGY CORPORATION, as Issuer
4.0% Senior Notes due 2009
Aggregate principal amount to be issued: $400,000,000
Current ratings: Moody's Baa3, S&P BBB and Fitch BBB+
Interest rate: 4.00% payable semiannually on April 15 and October 15 of each
year, beginning April 15, 2005
Interest accrues from: October 22, 2004
Date of maturity: October 15, 2009
Redemption provisions: The Securities will be redeemable, as a whole or in part,
at the option of the Company, at any time or from time to time, at a redemption
price equal to the greater of (i) 100% of the principal amount of the Securities
to be redeemed or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest on the Securities discounted to the
redemption date on a semi-annual basis at the treasury rate plus 15 basis
points, plus, in the case of each clause (i) and (ii), accrued interest to the
date of redemption.
Sinking fund requirements: None
Initial public offering price: 99.608% of the principal amount plus accrued
interest from October 22, 2004.
Purchase price to be paid by the Underwriters: 99.008% of the principal amount
plus accrued interest from October 22, 2004, equal to $396,032,000.
Closing date, time and location: October 22, 2004, 9:00 A.M., New York City
time, at Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York
Delayed delivery contracts: Not authorized
Listing requirement: None
Other terms and conditions: As described in this Purchase Agreement and related
Indenture.
SCHEDULE B-3
ATMOS ENERGY CORPORATION, as Issuer
4.95% Senior Notes due 2014
Aggregate principal amount to be issued: $500,000,000
Current ratings: Moody's Baa3, S&P BBB and Fitch BBB+
Interest rate: 4.95% payable semiannually on April 15 and October 15 of each
year, beginning April 15, 2005
Interest accrues from: October 22, 2004
Date of maturity: October 15, 2014
Redemption provisions: The Securities will be redeemable, as a whole or in part,
at the option of the Company, at any time or from time to time, at a redemption
price equal to the greater of (i) 100% of the principal amount of the Securities
to be redeemed or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest on the Securities discounted to the
redemption date on a semi-annual basis at the treasury rate plus 20 basis
points, plus, in the case of each clause (i) and (ii), accrued interest to the
date of redemption.
Sinking fund requirements: None.
Initial public offering price: 99.993% of the principal amount plus accrued
interest from October 22, 2004.
Purchase price to be paid by the Underwriters: 99.343% of the principal amount
plus accrued interest from October 22, 2004, equal to $496,715,000.
Closing date, time and location: October 22, 2004, 9:00 A.M., New York City
time, at Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York.
Delayed delivery contracts: Not authorized
Listing requirement: None
Other terms and conditions: As described in this Purchase Agreement and related
Indenture.
SCHEDULE B-4
ATMOS ENERGY CORPORATION, as Issuer
5.95% Senior Notes due 2034
Aggregate principal amount to be issued: $200,000,000
Current ratings: Moody's Baa3, S&P BBB and Fitch BBB+
Interest rate: 5.95% payable semiannually on April 15 and October 15 of each
year, beginning April 15, 2005
Interest accrues from: October 22, 2004
Date of maturity: October 15, 2034
Redemption provisions: The Securities will be redeemable, as a whole or in part,
at the option of the Company, at any time or from time to time, at a redemption
price equal to the greater of (i) 100% of the principal amount of the Securities
to be redeemed or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest on the Securities discounted to the
redemption date on a semi-annual basis at the treasury rate plus 25 basis
points, plus, in the case of each clause (i) and (ii), accrued interest to the
date of redemption.
Sinking fund requirements: None
Initial public offering price: 99.392% of the principal amount plus accrued
interest from October 22, 2004.
Purchase price to be paid by the Underwriters: 98.517% of the principal amount
plus accrued interest from October 22, 2004, equal to $197,034,000.
Closing date, time and location: October 22, 2004, 9:00 A.M., New York City
time, at Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York
Delayed delivery contracts: Not authorized
Listing requirement: None
Other terms and conditions: As described in this Purchase Agreement and related
Indenture.
SCHEDULE C
List of Subsidiaries
1. Atmos Energy Holdings, Inc.
2. Atmos Energy Marketing, LLC
3. Atmos Pipeline and Storage, LLC
4. Atmos Power Systems, Inc.
5. Atmos Energy Services, LLC
6. PDH I Holding Company, Inc.
EXHIBIT A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(i)
For the purposes of this opinion the term "Prospectus" shall have
the meaning set forth in the Purchase Agreement and shall include the Prospectus
Supplement, the Company's Annual Report on Form 10-K for the year ended
September 30, 2003 (the "Form 10-K") and any other document incorporated by
reference therein.
(i) The Company is validly existing as a corporation in good
standing under the laws of the State of Texas.
(ii) The Company has corporate power and authority to conduct its
business as described in the Prospectus and to execute, deliver and perform its
obligations under the Purchase Agreement.
(iii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(iv) The Registration Statement has been declared effective under
the 1933 Act; any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule 424(b); no
stop order suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act and, to our knowledge, no proceedings for that purpose
have been instituted or are pending or threatened by the Commission.
(v) The Indenture has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms. The Section 301
Certificate has been duly authorized, executed and delivered by the Company.
(vi) The authentication and delivery of the Securities by the
Trustee are authorized and permitted by the Indenture.
(vii) The Securities are in the form contemplated by the Indenture,
have been duly authorized, executed and delivered by the Company and, when
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters in accordance with the terms of the
Underwriting Agreement, will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and will be
entitled to the benefits of the Indenture.
A-1
(viii) Insofar as the statements in the Prospectus under the
captions "Description of Debt Securities" and "Description of the Notes"
constitute a summary of the documents referred to therein, such statements
fairly present in all material respects the information required to be disclosed
under the 1933 Act and the 1933 Act Regulations relating to registration
statements on Form S-3 and prospectuses.
(ix) The information in the Registration Statement under Item 15, to
the extent that it constitutes matters of law, summaries of legal matters, or
legal conclusions, has been reviewed by us and is correct in all material
respects.
(x) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency under any law or regulation of the States of Texas or New
York or the United States of America that is generally applicable to the
transactions of the nature contemplated under the Purchase Agreement (other than
under the 1933 Act and the 1933 Act Regulations, which have been obtained, or as
may be required under state securities or blue sky laws or with respect to
regulatory matters, as to which we express no opinion), is necessary or required
in connection with the due authorization, execution and delivery of the Purchase
Agreement or the due execution, delivery and performance of the Indenture by the
Company or for the offering, issuance, sale or delivery of the Securities by the
Company.
(xi) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Securities by the Company, and the issuance and
sale of the Securities by the Company do not and will not, whether with or
without the giving of notice or lapse of time or both, violate or constitute a
breach of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to, any document filed or incorporated by reference as an
exhibit to the Registration Statement or incorporated by reference therein
(except for such violations, breaches, or defaults, or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the articles of
incorporation or bylaws of the Company or, to our knowledge, any order, judgment
or decree of any court or governmental agency or body of the States of Texas or
New York or the United States of America binding on the Company (other than as
to orders, judgments or decrees with respect to regulatory matters, as to which
we express no opinion).
(xii) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Securities by the Company, and the issuance and
sale of the Securities by the Company, do not and will not violate, any law,
statute, rule, or regulation of any government or government instrumentality of
the States of Texas or New York or the United States of America that is
generally applicable to transactions of the nature of those contemplated by the
Purchase Agreement (other than as to regulatory matters, as to which we express
no opinion). We express no opinion in this paragraph regarding federal or state
securities laws.
(xiii) The Company is not an "investment company" as such term is
defined in the 1940 Act that is required to be registered under the 1940 Act.
A-2
(xiv) The Company is not a "holding company" or, to our knowledge, a
"subsidiary of a holding company," within the meaning of such terms as defined
in the Public Utility Holding Company Act of 1935; and to our knowledge, no
person or corporation which is a "holding company" or a "subsidiary of a holding
company," as so defined, directly or indirectly owns, controls or holds with
power to vote 10% or more of the outstanding voting securities of the Company.
(xv) The Indenture has been duly qualified under the 1939 Act.
(xvi) To the extent that the statements in the Prospectus under
"Material U.S. Federal Income Tax Considerations" purport to describe specific
provisions of the Internal Revenue Code of 1986, as amended, such statements
present in all material respects an accurate summary of such provisions.
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent auditors of
the Company, and your representatives and counsel at which the contents of the
Registration Statement and the Prospectus and related matters were discussed.
Because the purpose of our professional engagement was not to establish or
confirm factual matters and because the scope of our examination of the affairs
of the Company did not permit us to verify the accuracy, completeness or
fairness of the statements set forth in the Registration Statement or the
Prospectus, we are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements set forth in the
Registration Statement or the Prospectus except insofar as such statements
specifically relate to us and except to the extent set forth in the final
sentence of the following paragraph.
On the basis of the foregoing, and except for the financial statements and
schedules, pro forma financial information and other information of an
accounting or financial nature included or incorporated by reference therein, as
to which we express no opinion or belief, no facts have come to our attention
that led us to believe: (a) that the Registration Statement, at the time it
became effective (which, for the purposes of this paragraph, shall have the
meaning set forth in Rule 158(c) under the 1933 Act), or the Prospectus, as of
its date or as of the date hereof, were not appropriately responsive in all
material respects to the requirements of the 1933 Act and the applicable rules
and regulations of the Commission thereunder; or (b)(i) that the Registration
Statement, at the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein,
or necessary to make the statements therein not misleading or (ii) that the
Prospectus, as of its date or as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The opinions expressed above, and the statements made above, are solely
for your benefit in connection with the transactions contemplated by the
Purchase Agreement and are not to be used for any other purpose, or circulated,
quoted or otherwise referred to for any purpose, without, in each case, our
written permission. We are aware that Shearman & Sterling LLP, your counsel, is
relying, solely with respect to matters involving the laws of the State of
Texas, on
A-3
opinion paragraphs (i)-(iii) and (v) herein in rendering their opinion to you
required under Section 5(c) of the Purchase Agreement.
* * *
In rendering such opinion, such counsel may state that its opinion
is limited to the Federal laws of the United States and the laws of the State of
Texas and the State of New York.
A-4
EXHIBIT B
FORM OF OPINION OF VIRGINIA COUNSEL TO THE COMPANY
TO BE DELIVERED PURSUANT TO SECTION 5(b)(ii)
For the purposes of this opinion the term "Prospectus" shall have
the meaning set forth in the Purchase Agreement and shall include the Prospectus
Supplement, the Form 10-K and any other document incorporated by reference
therein.
(i) The Company is validly existing as a corporation in good
standing under the laws of the Commonwealth of Virginia.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) Each of the Indenture and the Section 301 Officers'
Certificate has been duly authorized, executed and delivered by the Company.
(iv) The Securities have been duly authorized, executed and
delivered by the Company.
Except with our prior written consent, no person other than the
addressees of this opinion and Shearman & Sterling LLP, counsel for the
Underwriters, shall be entitled to rely upon it; provided, however, that
SunTrust Bank, may rely on this letter as trustee under, and in connection with
the transactions contemplated by, the Indenture we are aware that this opinion
will be relied upon by Shearman & Sterling LLP and SunTrust Bank.
* * *
In rendering such opinion, such counsel may state that its opinion
is limited to the Federal laws of the United States and the laws of the
Commonwealth of Virginia.
B-1
EXHIBIT C
FORM OF OPINION OF GENERAL COUNSEL OF THE COMPANY
TO BE DELIVERED PURSUANT TO SECTION 5(b)(iii)
For the purposes of this opinion the term "Prospectus" shall have
the meaning set forth in the Purchase Agreement and shall include the Prospectus
Supplement, the Form 10-K and any other document incorporated by reference
therein.
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Texas and the
Commonwealth of Virginia.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus in the column entitled "As Adjusted"
under the caption "Capitalization" (except for subsequent issuances, if any,
pursuant to the Purchase Agreement or pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus or pursuant to the exercise
of convertible securities or options referred to in the Prospectus); the shares
of issued and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive or other similar rights of any securityholder of the Company.
(v) Each Subsidiary has been duly organized and is validly existing
as an entity in good standing under the laws of the jurisdiction of its
formation, has the power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and is duly qualified
as a foreign entity to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect; except as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock, or limited liability company
membership interests, or other beneficial interests, as the case may be, of each
Subsidiary have been duly authorized and validly issued, are fully paid and
non-assessable and,
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to the best of my knowledge, are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; none of the outstanding shares of capital stock or
limited liability company membership interests, as the case may be, of any
Subsidiary was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary.
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(vii) The documents incorporated by reference in the Registration
Statement and the Prospectus (other than financial statements and schedules, pro
forma financial information and other information of an accounting or financial
nature included or incorporated by reference therein, as to which I express no
opinion or belief), when they were filed with the Commission, complied as to
form in all material respects with the requirements of the 1934 Act and the 1934
Act Regulations.
(viii) To the best of my knowledge, there is no pending or
threatened action, suit, proceeding, inquiry or investigation, to which the
Company or any subsidiary is a party, or to which the property of the Company or
any subsidiary is subject, before or brought by any court or governmental agency
or body, domestic or foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to affect the
properties or assets thereof, except what does not result in a Material Adverse
Effect, or the consummation of the transactions contemplated in the Purchase
Agreement or the performance by the Company of its obligations thereunder or
which is required to be described in the Prospectus that is not described as
required.
(ix) The information in (a) the Prospectus under "Prospectus
Supplement Summary--Atmos Energy Corporation", "The TXU Gas
Acquisition--Description of the TXU Gas Acquisition", "The TXU Gas
Acquisition--Financing for the Acquisition" and "Description of the Notes", (b)
the Form 10-K under "Item 1. - Business--Regulation", as modified or
supplemented in the Prospectus by "Business--Regulation"; under "Item 1. -
Business--Ratemaking Activity" in the Form 10-K, as modified or supplemented in
the Prospectus by "Business--Rates"; under "Item 1. - Corporate Governance" in
the Form 10-K; under "Item 2. - Properties" in the Form 10-K, as modified or
supplemented in the Prospectus by "Business--Properties"; under "Item 3. - Legal
Proceedings" in the Form 10-K, (c) "Note 13. - Commitments and Contingencies" to
the Company's 2003 Consolidated Financial Statements (contained in the Form
10-K) and (d) "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations - Factors that May Affect our Future
Performance - Our Operations Are Subject to Regulation Which Can Directly Impact
Our Operations" in the Form 10-K, to the extent that it constitutes matters of
law, summaries of legal matters, the Company's Restated Articles of
Incorporation, as amended, and Amended and Restated Bylaws or legal proceedings,
or legal conclusions, has been reviewed by me and is correct in all material
respects.
(x) To the best of my knowledge, there are no statutes or
regulations that are required to be described in the Prospectus that are not
described as required.
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(xi) All descriptions in the Registration Statement and the
Prospectus of contracts and other documents to which the Company or its
subsidiaries are a party are accurate in all material respects; to the best of
my knowledge, there are no franchises, contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be described or
referred to in the Registration Statement or the Prospectus or to be filed as
exhibits thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(xii) To the best of my knowledge, neither the Company nor any
subsidiary is in violation of its charter, bylaws or other organizational
document and no default by the Company or any subsidiary exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by reference
as an exhibit to the Registration Statement, except for such defaults that would
not result in a Material Adverse Effect.
(xiii) The material franchises, permits and rights of the Company
and its subsidiaries in each jurisdiction in which such franchise, permit or
right is required are valid and adequate for the business in which they are
engaged, and there do not exist, to the best of my knowledge, any restrictions
in connection therewith that, solely or in the aggregate, would result in a
Material Adverse Effect.
(xiv) There have been issued and, as of the date hereof, are in full
force and effect orders or authorizations of the regulatory authorities of
Colorado, Georgia, Illinois, Kentucky and Virginia, respectively, authorizing
the issuance and sale of the Securities by the Company on the terms set forth or
contemplated in the Purchase Agreement; and no other filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or foreign
(other than under the 1933 Act and the 1933 Act Regulations, which have been
obtained, or as may be required under the securities or blue sky laws of the
various states, as to which I express no opinion), is necessary or required in
connection with the due authorization, execution and delivery of the Purchase
Agreement, the Indenture, or for the offering, issuance, sale or delivery of the
Securities by the Company.
(xv) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Securities by the Company and the consummation
of the transactions contemplated in the Purchase Agreement, the Indenture and in
the Registration Statement and the Prospectus (including the issuance and sale
of the Securities by the Company and the use of the proceeds from the sale of
the Securities as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations under the Purchase
Agreement, the Indenture and the Securities do not and will not, whether with or
without the giving of notice or lapse of time or both, violate or constitute a
breach of, or default or Repayment Event (as defined in Section 1(a)(xi) of the
Purchase Agreement) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, any contract, indenture, mortgage, deed of trust, loan
or credit
B-4
agreement, note, lease or any other agreement or instrument, known to me, to
which the Company or any subsidiary is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (except for such violations, breaches or defaults or
liens, charges or encumbrances or a Repayment Event that would not have a
Material Adverse Effect), nor will such action result in any violation of the
provisions of the articles of incorporation or bylaws of the Company or the
charter, bylaws or other organizational documents of any subsidiary, or any
applicable law, statute, rule, regulation, judgment, order, writ or decree,
known to me, of any government, government instrumentality or court, domestic or
foreign, binding on the Company or any subsidiary or any of their respective
properties, assets or operations. I express no opinion in this paragraph
regarding federal or state securities laws.
(xvi) The Company is not a "holding company" or, to the best of my
knowledge after due inquiry, a "subsidiary of a holding company" , within the
meaning of such terms as defined in the Public Utility Holding Company Act of
1935; and to the best of my knowledge after due inquiry, no person or
corporation which is a "holding company" or a "subsidiary of a holding company,"
as so defined, directly or indirectly owns, controls or holds with power to vote
10% or more of the outstanding voting securities of the Company.
Except for the financial statements and schedules, pro forma financial
information and other information of an accounting or financial nature included
or incorporated by reference therein, as to which I express no opinion or
belief, no facts have come to my attention that led me to believe: (a) that the
Registration Statement, at the time it became effective (which, for the purposes
of this paragraph, shall have the meaning set forth in Rule 158(c) under the
1933 Act), contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein, or necessary to make the
statements therein not misleading or (b) that the Prospectus, as of its date or
as of the date hereof, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
This opinion is furnished by me as General Counsel for the Company to
you pursuant to the terms of the Purchase Agreement. Except with my prior
written consent, no person other than the addressees of this opinion, Shearman &
Sterling LLP, counsel for the Underwriters, and SunTrust Bank, as Trustee under
the Indenture shall be entitled to rely on it. I am aware that this opinion will
be relied upon by Shearman & Sterling LLP and SunTrust Bank. This opinion may
not be quoted, in whole or in part, or copies hereof furnished, to any other
person without my prior written consent, except that you may furnish copies
hereof to Shearman & Sterling LLP, your counsel, and SunTrust Bank.
* * *
In rendering such opinion, such counsel may state that his opinion
is limited to the Federal laws of the United States, the laws of the State of
Texas and the Virginia Stock Corporation Act.
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