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EXHIBIT 99.1
STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT (the "Agreement"), made and entered
into by and between ATMOS ENERGY CORPORATION, a Texas corporation ("Atmos"),
and UNITED CITIES GAS COMPANY, an Illinois and Virginia corporation ("United
Cities"), and effective as of this 13th day of July, 1996,
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain
Confidentiality Agreement, dated July 5, 1996 (the "Confidentiality
Agreement");
WHEREAS, pursuant to the Confidentiality Agreement, the
parties hereto are evaluating a possible merger of United Cities and Atmos,
subject to approval by the boards of directors and shareholders of United
Cities and Atmos (the "Possible Transaction"); and
WHEREAS, this Agreement is not intended to create any
obligations for either party hereto with respect to the Possible Transaction,
other than the agreements expressly set forth herein, and no other contract or
agreement providing for the Possible Transaction shall be deemed to exist
between the parties hereto.
NOW, THEREFORE, for and in consideration of the premises and
the agreements herein contained, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Standstill Provisions. For a period of two years
from the date of this Agreement, except as may otherwise be provided pursuant
to the terms of a written definitive agreement between the parties and approved
by their respective boards of directors with respect to the Possible
Transaction negotiated pursuant to the Confidentiality Agreement, neither party
shall, directly or indirectly:
(a) acquire, or offer or agree to acquire, by
purchase or otherwise, any securities or property of the other party
(or direct or indirect rights or options to acquire any securities or
property of the other party) except by way of stock, dividends or
other distributions made on a pro rata basis with respect to
securities of the other party acquired prior to the date of this
Agreement;
(b) solicit proxies or consents or become a
participant in a "solicitation" (as such term is used in the Proxy
Rules of the Securities and Exchange Commission) of proxies or
consents with respect to securities of the other party with regard to
any matter or otherwise act, alone or in concert with others, to seek
to control or influence the management, board of directors or policies
of the other party;
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(c) induce, attempt to induce or in any manner
assist any other person in initiating any stockholder proposal or a
tender or exchange offer for securities of the other party or any
change of control of the other party, or for the purpose of convening
a stockholders' meeting of the other party;
(d) make any public announcement or make any
written or oral proposal or invitation to discuss any possibility,
intention, plan or arrangement, relating to a tender or exchange offer
for securities of the other party or a merger, consolidation or other
business combination (or other similar transaction which should result
in a change of control), sale of all or a substantial portion of the
assets of the other party, recapitalization, restructuring,
liquidation, dissolution or other extraordinary corporate transaction
between such party and any of its affiliates and the other party or
take any action which might require the other party to make a public
announcement regarding any of the foregoing;
(e) deposit any securities of the other party in
a voting trust or subject any securities of the other party to any
arrangement or agreement with respect to the voting of securities of
the other party;
(f) form, join or in any way participate in a
partnership, limited partnership, syndicate or other group (or
otherwise act in concert with any other person) for the purpose of
acquiring, holding, voting and disposing of securities of the other
party or taking any other actions restricted or prohibited under
clauses (a) through (e) of this paragraph, or announce an intention to
do, or enter into any arrangement or understanding with others to do,
any of the actions restricted or prohibited under clauses (a) through
(e) of this paragraph; or
(g) request the other party (or its directors,
officers, employees or agents), to amend or waive any provision of
this paragraph (including this subsection (g)), except as may
otherwise be provided pursuant to the terms of a written definitive
agreement between the parties and approved by their respective boards
of directors with respect to the Possible Transaction negotiated
pursuant to the Confidentiality Agreement.
2. Exception to Standstill Provisions.
(a) Notwithstanding clauses (a), (e), and (f) of
Paragraph 1 above, the employee benefit plans of either party
may acquire securities of the other party if the aggregate
beneficial ownership of all such plans of such party does not
exceed one percent (1%) of the outstanding securities of the
same class of the other party.
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(b) Nothing in this Agreement shall preclude or
prevent Atmos from making a counter-offer to acquire United
Cities in the event that (A) prior to the earlier of (i) the
termination of negotiations pursuant to the Confidentiality
Agreement relating to a Possible Transaction, or (ii) the
execution of a definitive agreement between the parties and
approved by the respective boards of directors providing for
the Possible Transaction, a third party makes an unsolicited
bona fide publicly announced offer to acquire control of
United Cities pursuant to a tender offer, merger,
consolidation, share exchange, purchase of a substantial
portion of assets, business combination or other similar
transaction (a "Third Party Offer") and (B) United Cities
thereafter (i) issues a statement recommending the Third Party
Offer to its shareholders or (ii) United Cities either issues
a statement not recommending the Third Party Offer or takes no
position with respect to such offer but is required by a court
to furnish the party making the Third Party Offer a list of
shareholders of United Cities.
3. No Further Agreement. This Agreement constitutes the
entire agreement between the parties hereto concerning the subject matter
hereof. This Agreement does not constitute an offer to engage in any
transaction, including without limitation, the Possible Transaction, it does
not impose any obligation to bargain in good faith in connection therewith, and
no party hereto intends to be bound by any agreement concerning a Possible
Transaction unless and until it agrees to and signs a formal written contract
approved by its board of directors. Either party may terminate discussions
regarding the Possible Transaction at any time, for any reason. Each party is
free to pursue any other possible business transactions with any other persons
at any time, and without any obligations to notify the other party that any
such transaction is being considered, including any merger or other business
combination. No person may reasonably rely on any promises inconsistent with
this paragraph.
4. Binding Upon Successors. This Agreement shall be
binding upon and inure to the benefit of (i) the successors in interest of each
of the parties hereto and (ii) any affiliate of any party hereto or any
affiliate of any such successor in interest.
5. Choice of Law. This Agreement shall be governed by
and in accordance with the laws of the State of Illinois, without regard to the
conflict of laws principles thereof.
IN WITNESS WHEREOF, the undersigned have executed this
Standstill Agreement as of the date first written above.
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ATMOS ENERGY CORPORATION UNITED CITIES GAS COMPANY
By: /s/ James F. Purser By: /s/ James B. Ford
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James F. Purser James B. Ford
Executive Vice President and Senior Vice President and Treasurer
Chief Financial Officer
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