MASTER SEPARATION AND DISTRIBUTION AGREEMENT
MASTER SEPARATION AND DISTRIBUTION AGREEMENT (this "Agreement") dated
as of May 14, 2004 by and between Resource America, Inc., a Delaware corporation
("RAI") and Atlas America, Inc., a Delaware corporation and an indirect, wholly
owned subsidiary of RAI ("Atlas").
RECITALS
WHEREAS, RAI owns, directly or indirectly, all of the issued and
outstanding common stock, par value $0.01 per share, of the Company;
WHEREAS, RAI presently intends to spin-off in one or more transactions
that collectively have the effect that all or a substantial part of the shares
of RAI Common Stock are distributed to all or some of the stockholders of RAI in
a tax-free transaction (the "Spin-Off");
WHEREAS, prior to the Spin-Off, the Company proposes to issue shares of
its common stock in an initial public offering (the "IPO") registered under the
Securities Act of 1933, as amended; and
WHEREAS, the parties intend in this Agreement, including the Exhibits
attached hereto, to set forth the principal arrangements between them regarding
the IPO and Spin-Off.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
meaning and intending to be bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the following terms will
have the following meanings:
"Affiliates" means, with respect to any specified Person, any Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with such specified Person; provided,
however, that prior to the Spin-Off, Affiliates of Atlas or RAI shall only
include Persons who would be affiliates of Atlas or RAI, respectively, assuming
that the Spin-Off had occurred immediately prior to the determination as to
whether such Person was an affiliate of Atlas or RAI, respectively.
"Ancillary Agreements" means the Registration Rights Agreement,
Transition Services Agreement and the Tax Matters Agreement.
"Atlas Business" has the meaning ascribed thereto in Section
6.01(a)(i).
"Atlas Common Stock" means the common stock, par value $0.01 per share
of Atlas, any other class of Atlas's capital stock representing the right to
vote generally for the election of directors and, for so long as Atlas continues
to be a subsidiary corporation includible in a consolidated federal income tax
return of RAI, any other security of Atlas treated as stock for purposes of
Section 1504 of the Code.
"Atlas Public Filings" has the meaning ascribed thereto in Section
5.01(vi).
"Atlas Transfer Agent" means the company designated by Atlas as the
transfer agent and registrar for the Atlas Common Stock.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, together with the rules and regulations promulgated thereunder.
"Confidential Information" means, with respect to any party hereto, (i)
any Information concerning such party, its business or any of its Affiliates
that was obtained by another party hereto, (ii) any Information concerning such
party that is obtained by another party under Section 4.03, or (iii) any other
Information obtained by, or furnished to, another party hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, together with the rules and regulations promulgated
thereunder.
"Indemnified Party" means any Person who is entitled to receive payment
or defense from an Indemnifying Party pursuant to this Agreement.
"Indemnifying Party" means any party who is required to pay or defend
any other Person pursuant to this Agreement.
"Information" means all records, books, contracts, instruments,
computer data and other data.
"IPO Effective Date" means the date on which the IPO Registration
Statement is declared effective
by the SEC.
"IPO Registration Statement" means the Registration Statement on Form
S-1, Registration No. 333-112653, of Atlas, including all exhibits thereto and
as supplemented and amended from time to time.
"Losses" has the meaning ascribed thereto in Section 6.01(a).
"Owning Party" has the meaning ascribed thereto in Section 4.02.
"Person" means any individual, corporation, limited or general
partnership, limited liability company, joint venture association, joint stock
company, trust unincorporated organization or government or any agency or
political subdivision thereof.
"Prior Relationship" means the ownership relationship between RAI and
Atlas at any time prior to the Spin-Off Date.
"Public Filings" has the meaning ascribed thereto in Section 5.01(vi).
"RAI Business" means any assets, business or operations of RAI or any
of its Affiliates other than the Atlas Business. "RAI Public Filings" has the
meaning ascribed thereto in Section 5.01(vi).
"RAI Transfer Agent" means the company designated by RAI as the
transfer agent and registrar for RAI's common stock.
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"Registration Rights Agreement" means the Registration Rights Agreement
to be entered into on or before the IPO Effective Date between RAI and Atlas, in
substantially the form attached hereto as Exhibit A.
"Related Parties" has the meaning ascribed thereto in Section 4.03.
"Representatives" means directors, officers, employees, agents,
consultants, advisors, accountants, attorneys and representatives.
"Requestor" has the meaning ascribed thereto in Section 4.03.
"Retention Period" has the meaning ascribed thereto in Section 4.04.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, together with the rules and regulations promulgated thereunder.
"Spin-Off Date" is the date upon which the Spin-Off is consummated.
"Subsidiary" means, with respect to any Person, any other Person a
majority of the equity ownership or voting stock of which is at the time owned,
directly or indirectly, by such Person and/or one or more other Subsidiaries of
such Person; provided, however, that prior to the Spin-Off, a Subsidiary of RAI
shall only include Persons who would be a Subsidiary of RAI assuming the
Spin-Off has occurred immediately prior to the determination as to whether such
Person were a Subsidiary of RAI.
"Tax Matters Agreement" means the Tax Matters Agreement to be entered
into on or before the IPO Effective Date between RAI and Atlas, in substantially
the form as attached hereto as Exhibit B.
"Third Party Claim" has the meaning ascribed thereto in Section
6.07(b).
"Transition Services Agreement" means the Transition Services Agreement
to be entered into on or before the IPO Effective Date between RAI and Atlas, in
substantially the form attached hereto as Exhibit C.
ARTICLE II
THE IPO AND THE SPIN-OFF
Section 2.01. The IPO and Other Primary Offerings. Until the Spin-Off Date,
Atlas shall consult with, and cooperate in all respects with, RAI in connection
with any primary offering of the Atlas Common Stock or any other securities of
Atlas and shall, at RAI's direction, promptly take any and all actions necessary
or desirable to consummate such transactions.
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Section 2.02. The Spin-Off. RAI currently intends to effect the Spin-Off prior
to December 31, 2004. Atlas acknowledges that RAI, in its sole and absolute
discretion, determine whether to proceed with all or part of the Spin-Off and
all terms of the Spin-Off, including, without limitation, the form, structure
and terms of any transaction(s) and/or offering(s) to effect the Spin-Off and
the timing of and conditions to the consummation of the Spin-Off. Atlas shall
cooperate with RAI in all commercially reasonable respects to accomplish the
Spin-Off and shall, at RAI's direction, promptly take any and all actions
necessary or desirable to effect the Spin-Off, including, without limitation,
the registration under the Securities Act of Atlas Common Stock on an
appropriate registration form or forms to be designated by RAI. RAI shall select
and be responsible for the fees and expenses of any investment banker(s) and
manager(s) in connection with the Spin-Off, as well as any other institutions
providing services in connection with the Spin-Off.
Section 2.03. Certain Stockholder Matters. From and after the distribution of
Atlas Common Stock in connection with any transaction(s) included as part of the
Spin-Off and until such Atlas Common Stock is duly transferred in accordance
with applicable law, Atlas shall regard the Persons receiving Atlas Common Stock
in such transaction(s) as record holders of Atlas Common Stock in accordance
with the terms of such transaction(s) without requiring any action on the part
of such Persons. Atlas agrees that, subject to any transfers of such stock, (a)
each such holder shall be entitled to receive all dividends payable on, and
exercise voting rights and all other rights and privileges with respect to, the
shares of Atlas Common Stock then held by such holder and (b) each such holder
shall be entitled, without any action on the part of such holder, to receive one
or more certificates representing, or other evidence of ownership of, the shares
of Atlas Common Stock then held by such holder. RAI shall cooperate, and shall
instruct the RAI Transfer Agent to cooperate, with Atlas and the Atlas Transfer
Agent, and Atlas shall cooperate, and shall instruct the Atlas Transfer Agent to
cooperate, with RAI and the RAI Transfer Agent, in connection with all aspects
of the Spin-Off and all other matters relating to the issuance and delivery of
certificates representing, or other evidence of ownership of, the shares of
Atlas Common Stock distributed to the holders of RAI Common Stock in connection
with any transaction(s) included as part of the Spin-Off. Following the
Spin-Off, RAI shall promptly, but in no event no later than two business days
thereafter, instruct the RAI Transfer Agent to deliver to the Atlas Transfer
Agent true, correct and complete copies of the stock and transfer records
reflecting the holders of RAI Common Stock receiving shares of Atlas Common
Stock in connection with any transaction(s) included as part of the Spin-Off.
2.04 The Special Dividend. Immediately before the initial sale of Atlas Common
Stock in the IPO, Atlas shall declare a special dividend to the then sole
stockholder of Atlas in an amount equal to the net proceeds of the IPO less
intercompany debt owed to RAI or its Affiliates plus the net proceeds of the
exercise of the underwriters' overallotment option.
ARTICLE III
EXPENSES
Section 3.01. Except as otherwise provided in this Agreement, the Ancillary
Agreements or any other agreement between the parties relating to the IPO or the
Spin-Off, all costs and expenses of either party hereto in connection with the
IPO and the Spin-Off shall be paid by the party that incurs such costs and
expenses.
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ARTICLE IV
ACCESS TO INFORMATION
Section 4.01. Restrictions on Disclosure of Information. (a) Without limiting
any rights or obligations under any other agreement between or among the parties
hereto and/or any of their respective Affiliates relating to confidentiality,
for a period of 3 years following the date hereof, each of the parties hereto
agrees that it shall not, and shall not permit any of its Affiliates or
Representatives to, disclose any Confidential Information to any Person, other
than to such Affiliates or Representatives on a need-to-know basis in connection
with the purpose for which the Confidential Information was originally
disclosed. Such Information shall no longer be deemed Confidential Information
to the extent that it is or was (i) in the public domain other than by the
breach of this Agreement or by breach of any other agreement between or among
the parties hereto and/or any of their respective Affiliates, (ii) available to
such party outside the context of the Prior Relationship on a nonconfidential
basis prior to its disclosure by the other party, (iii) lawfully acquired
outside the context of the Prior Relationship on a nonconfidential basis or
independently developed by, or on behalf of, such party by Persons who do not
have access to, or descriptions of, any such Confidential Information, (iv)
required to be disclosed by law, governmental order or the rules and regulations
of the SEC, or (v) mutually agreed to by the parties.
(b) Each of the parties hereto shall maintain, and shall cause its
respective Affiliates to maintain, policies and procedures, and develop such
further policies and procedures as shall from time to time become necessary or
appropriate, to ensure compliance with this Section 4.01.
Section 4.02. Legally Required Disclosure of Confidential Information. If any of
the parties to this Agreement or any of their respective Affiliates or
Representatives become legally required to disclose any Confidential
Information, such disclosing party shall promptly notify the party owning the
Confidential Information (the "Owning Party") and shall use all commercially
reasonable efforts to cooperate with the Owning Party so that the Owning Party
may seek a protective order or other appropriate remedy and/or waive compliance
with this Section 4.02. All expenses reasonably incurred in seeking a protective
order or other remedy shall be borne by the Owning Party. If such protective
order or other remedy is not obtained, or if the Owning Party waives compliance
with this Section 4.02, the disclosing party or its Affiliate or Representative,
as applicable, shall (a) disclose only that portion of the Confidential
Information it is compelled by law to disclose, (b) use all commercially
reasonable efforts to obtain reliable assurance requested by the Owning Party
that confidential treatment will be accorded such Confidential Information, and
(c) promptly provide the Owning Party with a copy of the Confidential
Information so disclosed, in the same form and format so disclosed, together
with a description of all Persons to whom such Confidential Information was
disclosed.
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Section 4.03. Access to Information. (a) During the Retention Period, each of
the parties hereto shall cooperate with and afford, and shall cause their
respective Affiliates, Representatives, Subsidiaries, successors and/or
assignees, and shall use reasonable efforts to cause joint ventures that are not
Affiliates (collectively, "Related Parties") to cooperate with, and afford to
the other party, reasonable access upon reasonable advance written request to
all Information (other than Information created after the Spin-Off Date (i) the
disclosure of which would have the effect of waiving a legal privilege, or (ii)
which is the subject of a confidentiality agreement between such party and a
third party which prohibits disclosure to the other party, provided that such
party shall use all commercially reasonable efforts to obtain such third party's
consent to disclosure of such Information) within such party's or any Related
Party's possession. Access to the requested Information shall be provided so
long as it relates to the requesting party's (the "Requestor") assets, business
and operations, and access is reasonably required by the Requestor as a result
of the parties' Prior Relationship for purposes of auditing, accounting, claims
or litigation (except for claims or litigation between the parties hereto),
employee benefits, regulatory or tax purposes or fulfilling disclosure or
reporting obligations including, without limitation, Information reasonably
necessary for the preparation of reports required by or filed under the
Securities Act or the Exchange Act with respect to any period entirely or
partially prior to the Spin-Off Date or any other reasonable purpose.
(b) Each party agrees to cooperate fully to allow access to each
other's employees (i) to the extent that they are reasonably necessary to
discuss and explain all requested Information with and to the requesting party
and (ii) with respect to any claims brought against the other involving the
conduct of the Atlas Business prior to the Spin-Off Date.
Section 4.04. Record Retention. RAI and Atlas shall preserve and keep all of
their respective books and records in the possession of such party or its
Related Parties, whether in electronic form or otherwise, for no less than the
later of (i) the record retention policy of RAI and Atlas as in effect as of the
Spin-Off Date or (ii) any period as may be required by any laws, regulations or
rulings promulgated thereunder of any jurisdiction (or of any political
subdivision or taxing authority thereof) (the "Retention Period"), at such
party's sole cost and expense. RAI shall deliver to Atlas on the Spin-Off Date
any and all original corporate organization books that RAI has in its possession
relating solely to the Atlas Business, copies of which RAI may retain at its own
expense. Upon reasonable prior written request, RAI and Atlas shall deliver to
the other copies of any and all books and records that RAI or Atlas, as the case
may be, has in its possession relating to the Atlas Business.
ARTICLE V
COVENANTS
Section 5.01. Financial and Other Information. For so long as RAI is required to
consolidate Atlas's results of operations and financial position (determined in
accordance with generally accepted accounting principles consistently applied):
(i) Atlas shall maintain a system of internal accounting controls in
accordance with generally accepted accounting principles and SEC and tax related
requirements that will provide reasonable assurance that Atlas's and such
Subsidiaries' books, records and accounts fairly reflect all transactions and
dispositions of assets.
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(ii) Atlas shall maintain a fiscal year which commences and ends on the
same dates as does RAI's fiscal year of each calendar year.
(iii) Atlas shall, as promptly as practicable, deliver to RAI copies of
all annual and other budgets and financial projections (consistent in terms of
format and detail and otherwise with the procedures in effect on the date
hereof) relating to Atlas or any of its Subsidiaries and shall provide RAI an
opportunity to meet with management of Atlas to discuss such budgets and
projections.
(iv) With reasonable promptness, Atlas shall deliver to RAI such
additional financial and other Information and data with respect to Atlas and
its Subsidiaries and their business, properties, financial positions, results of
operations and prospects as from time to time may be reasonably requested by
RAI.
(v) Except with respect to Atlas's quarterly and annual earnings
releases, Atlas shall deliver to RAI as soon as practicable but in no event one
business day prior to issuance, copies of substantially final drafts of all
press releases and other statements to be made available by Atlas or any of its
Subsidiaries to employees of Atlas or any of its Subsidiaries or to the public
concerning material developments in the business, properties, earnings, results
of operations, financial condition or prospects of Atlas or any of its
Subsidiaries or the relationship between (A) Atlas or any of its Subsidiaries
and (B) RAI or any of its Affiliates. In addition, within such one day period,
prior to the issuance of any such press release or public statement, Atlas shall
actively consult with RAI regarding any changes (other than typographical or
other similar minor changes) to such substantially final drafts. Immediately
following the issuance thereof, Atlas shall deliver to RAI copies of final
drafts of all press releases and other public statements.
(vi) RAI and Atlas shall cooperate fully, and cause their respective
accountants to cooperate fully, to the extent requested by the other party in
the preparation of the other party's public earnings releases, annual reports on
Form 10-K, quarterly reports on Form 10-Q, any current reports on Form 8-K and
any other proxy, information and registration statements, reports, notices,
prospectuses and any filings made by RAI or Atlas with the SEC, any national
securities exchange, any interdealer quotation system or otherwise made publicly
available (collectively, "RAI Public Filings" and the "Atlas Public Filings" and
together, the "Public Filings"). RAI and Atlas agree to provide to each other
all information that the other party reasonably requests in connection with any
Public Filings or that, in the judgment of either party, is required to be
disclosed or incorporated by reference therein under any law, rule or
regulation. Such information shall be provided by such party in a timely manner
on the dates requested by the other party (which may be earlier than the dates
on which such party otherwise would be required hereunder to have such
information available) to enable the other party to prepare, print and release
all Public Filings on such dates as such party shall determine. RAI and Atlas
shall each use its reasonable best efforts to cause their respective accountants
to consent to any reference to them as experts in any Public Filing required
under any law, rule or regulation. If and to the extent requested by either
party, the other party shall diligently and promptly review all drafts of such
Public Filing and prepare in a diligent and timely fashion any portion of such
Public Filing pertaining to that party. Prior to any printing or public release
of any Public Filing, an appropriate executive officer of RAI or Atlas shall, if
requested by the other party, certify that the information provided by such
party relating to such party, its Affiliates or its business in such Public
Filing is accurate, true and correct in all material respects. Unless required
by law, rule, regulation or generally accepted accounted principles, Atlas shall
not publicly release any financial or other information which significantly
conflicts with the information with respect to Atlas, any of its Affiliates or
the Atlas Business that is included in any RAI Public Filing without RAI's prior
written consent. Prior to the release or filing thereof, RAI and Atlas shall
provide each other with a draft of any portion of a Public Filing containing
information relating to the other party and its Subsidiaries and shall give such
party an opportunity to review such information and comment thereon; provided
that the other party shall determine in its sole discretion the final form and
content of all Public Filings.
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(vii) Atlas shall not change its independent certified public
accountants without RAI's prior consent.
(viii) Atlas and RAI shall use reasonable efforts to make available to
each other its past and present directors, officers, other employees and agents
as witnesses in any legal, administrative or other proceedings in which the
other party may become involved and the company providing information,
consultant or witness services under this Agreement will be entitled to
reimbursement from the other for reasonable expenses incurred in providing this
assistance.
(ix) Atlas shall give RAI as much prior notice as is reasonably
practical of any proposed changes in its accounting estimates or accounting
principles from those in effect on the date hereof. Atlas will consult with RAI
and, if requested by RAI, Atlas will consult with RAI's independent public
accountants with respect thereto. Atlas will not make such determination or
changes without RAI's prior consent, which shall not be unreasonably withheld.
Notwithstanding the foregoing, Atlas shall make any changes in its accounting
estimates or accounting principles that are requested by RAI in order for
Atlas's accounting estimates and principles to be consistent with those of RAI.
For the purposes of these covenants, RAI and Atlas understand and agree that
their mutual interests will be best served by effecting a rapid and fair
resolution of any claims or disputes which may arise out of this Section 5.01.
Therefore, each party agrees to use its reasonable best efforts to resolve all
such disputes as rapidly as possible on a fair and equitable basis. Toward this
end, each party agrees to develop and follow a process for presenting, rapidly
assessing, and settling claims and other disputes on a fair and equitable basis.
If any dispute or claim arising under this Section 5.01 cannot be readily
resolved by the parties, the parties agree to refer the matter to the chief
financial officers of each party who shall meet and attempt to resolve the
dispute within 15 days from the date the dispute arose. If any dispute or claim
arising under this Section 5.01 cannot be resolved by the chief financial
officers, the parties agree to refer the matter to a senior auditing partner of
a nationally recognized accounting firm not currently providing services to
either party.
Section 5.02. Covenants. For so long as RAI beneficially owns at least 50% of
the Atlas Common Stock, Atlas covenants and agrees that it will
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(a) not take any action or enter into any commitment or agreement which
may reasonably be anticipated to result, with or without notice and with or
without lapse of time or otherwise, in a contravention of or event of default by
it or any of its Affiliates under (i) any provisions of applicable law or
regulation, including but not limited to provisions pertaining to the Code or
the Employee Retirement Income Security Act of 1974, as amended, (ii) any
provision of RAI's certificate of incorporation or bylaws, (iii) any credit
agreement or other material agreement (including agreements relating to
covenants not to compete) binding upon RAI or (iv) any judgment, order or decree
of any governmental body, agency or court having jurisdiction over RAI or any of
its respective assets; and
(b) not take any action which would limit the ability of RAI or its
transferee to transfer its shares of Atlas Common Stock.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification by Atlas. (a) Atlas for itself and on behalf of
its Subsidiaries agrees to indemnify and hold harmless RAI and its past, present
or future Subsidiaries and Affiliates and any of their past, present or future
Representatives, heirs, executors and any of their successors and assigns from
and against any and all payments, losses, liabilities, damages, claims, and
expenses (including without limitation, attorney's fees and expenses incurred in
good faith) and costs whatsoever ("Losses"), as incurred, arising out of or
relating to Atlas' and its Subsidiaries' past, present and future assets,
businesses and operations (collectively, the "Atlas Business").
(b) The obligations of the parties under this Section 6.01 shall be in
addition to any liability which any party may otherwise have to the other party.
Section 6.02. Indemnification by RAI. (a) RAI agrees to indemnify and hold
harmless Atlas and its past, present or future Subsidiaries and Affiliates and
any of their past, present or future Representatives, heirs and any of their
executors, successors and assigns against any and all Losses, as incurred,
arising out of or relating to RAI's and its Subsidiaries' past, present and
future assets, businesses and operations other than the Atlas Business (the "RAI
Business").
(b) The obligations of the parties under this Section 6.02 shall be in
addition to any liability which any party may otherwise have to the other party.
Section 6.03. Certain Tax Matters. Notwithstanding anything to the contrary
herein, the rights and obligations of the parties with respect to
indemnification for the tax matters that are the subject matter of the Tax
Matters Agreement dated as of the date hereof between the parties thereto shall
be governed solely by such agreement.
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Section 6.04. Registration Indemnification. (a) Atlas for itself and on behalf
of its Subsidiaries agrees to indemnify and hold harmless RAI and each Person,
if any, who controls RAI within the meaning of the Securities Act and Affiliates
and Representatives of each of the foregoing from and against any and all Losses
(including, without limitation, any legal or other expenses incurred in
connection with defending or investigating any such action or claim), as
incurred, arising out of or relating to any untrue statement or alleged untrue
statement of a material fact contained in, or incorporated by reference into (i)
any Atlas registration statement filed at or prior to the date of the Spin-Off,
including, without limitation, the IPO Registration Statement and (ii) any
Spin-Off registration statement, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except that Atlas and its Subsidiaries shall
not be liable in any such case to the extent that any such Losses arise out of
or relate to any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to RAI furnished to Atlas by RAI
expressly for use therein. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of RAI and shall survive
the transfer of any of the securities included within the foregoing registration
statements. In the case of an offering with respect to which RAI has designated
the lead or managing underwriters (or RAI is offering securities of Atlas
directly, without an underwriter), this indemnity does not apply to any Losses
arising out of or relating to any untrue statement or alleged untrue statement
or omission or alleged omission in any preliminary prospectus or offering
memorandum if a copy of a final prospectus or offering memorandum was not sent
or given by or on behalf of any underwriter or RAI to such Person asserting such
Loss at or prior to the written confirmation of the sale of the securities of
Atlas as required by the Securities Act and such untrue statement or omission
had been corrected in such final prospectus or offering memorandum.
(b) RAI agrees to indemnify and hold harmless Atlas and each Person, if
any, who controls Atlas within the meaning of the Securities Act and Affiliates,
and Representatives of each of the foregoing, from and against any and all
Losses (including, without limitation, any legal or other expenses incurred in
connection with defending or investigating any such action or claim), as
incurred, arising out of or relating to any untrue statement or alleged untrue
statement of a material fact contained in, or incorporated by reference into,
(i) any Atlas registration statement filed at or prior to the date of the
Spin-Off, including, without limitation, the IPO Registration Statement, and
(ii) any Spin-Off registration statement, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only with reference to Losses arising
out of or relating to any untrue statement or omission or alleged untrue
statement or omission based on information relating to RAI furnished to Atlas in
writing by RAI expressly for use therein. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of Atlas
and shall survive the transfer of any of the securities included within the
foregoing registration statements. In the case of an offering with respect to
which Atlas has designated the lead or managing underwriters (or Atlas is
offering securities of Atlas directly, without an underwriter), this indemnity
does not apply to any Losses arising out of or relating to any untrue statement
or alleged untrue statement or omission or alleged omission in any preliminary
prospectus or offering memorandum if a copy of a final prospectus or offering
memorandum was not sent or given by or on behalf of any underwriter or Atlas to
such Person asserting such Loss at or prior to the written confirmation of the
sale of the securities of Atlas as required by the Securities Act and such
untrue statement or omission had been corrected in such final prospectus or
offering memorandum.
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(c) If the indemnification provided for in this Section 6.04 shall for
any reason be unavailable (other than in accordance with its terms) to an
Indemnified Party in respect of any Loss referred to therein, then each
Indemnifying Party shall, in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a result
of such Loss as between Atlas on the one hand and RAI on the other, in such
proportion as is appropriate to reflect the relative fault of Atlas and of RAI
in connection with such statements or omissions which resulted in such Loss as
well as any other relevant equitable considerations. The relative fault of Atlas
on the one hand and of RAI on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission, but not by reference to RAI's stock ownership in Atlas. The amount
paid or payable by an Indemnified Party as a result of the Loss in respect
thereof, referred to above in this paragraph (c) shall be deemed to include, for
purposes of this paragraph (c), any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any such
action or claim. Atlas and RAI agree that it would not be just and equitable if
contribution pursuant to this Section 6.04 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this paragraph. Notwithstanding any
other provisions of this Section 6.04, RAI shall not be required to contribute
any amount in excess of the net proceeds received by RAI from the securities
offered. No party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
party who was not guilty of such fraudulent misrepresentation.
(d) Indemnification and contribution similar to that specified in the
preceding paragraphs of this Section 6.04 (with appropriate modifications) shall
be given by Atlas and RAI with respect to any required registration or other
qualification of securities under any state law or regulation or governmental
authority.
(e) The obligations of the parties under this Section 6.04 shall be in
addition to any liability which any party may otherwise have to the other party.
Section 6.05. Payments. The indemnification or contribution required by this
Agreement shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or Loss
is incurred, subject to refund if the party receiving such payments is
subsequently found not to have been entitled thereto hereunder. The amount which
any Indemnifying Party is required to pay to any Indemnified Party pursuant to
this Agreement shall be reduced (including, but not limited to, retroactively)
by any recovery, judgment, settlement or other amounts actually recovered,
including insurance proceeds, by such Indemnified Party with respect to such
Losses. If an Indemnified Party shall have received payment with respect to
Losses and shall subsequently actually receive a recovery, judgment, settlement
or other amount with respect to such Losses, then such Indemnified Party shall
promptly, but in no event later than 15 business days after such recovery,
judgment, settlement or other amount actually received, pay to such Indemnifying
Party a sum equal to the lesser of (i) the amount of such recovery, judgment,
settlement or other amount actually received or (ii) the amount of payments
actually received previously in respect of such Loss.
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(b) All amounts which any Indemnifying Party is required to pay to any
Indemnified Party pursuant to this Agreement shall be calculated on an after-tax
basis, taking into account the net present value of any tax cost and/or tax
benefit to the Indemnified Party in connection with such indemnification payment
and the applicable Loss.
Section 6.07. Indemnification Procedures. (a) The indemnification procedures set
forth in Section 6.07(b) herein are applicable to any indemnity granted pursuant
to the Ancillary Agreements (other than the Tax Matters Agreement).
(b) If a claim or demand is made against an Indemnified Party by any
Person who is not a party to this Agreement or the Ancillary Agreements (a
"Third Party Claim") as to which such Indemnified Party is entitled to
indemnification pursuant to this Agreement or the Ancillary Agreements, such
Indemnified Party shall give the Indemnifying Party notice of such Third Party
Claim, as promptly as practicable, but in any event no later than 15 days of the
receipt by the Indemnified Party of such notice; provided, however, that the
failure to provide such notice shall not release the Indemnifying Party from any
of its obligations under the Ancillary Agreements except to the extent the
Indemnifying Party is materially prejudiced by such failure and shall not
relieve the Indemnifying Party from any other obligation or liability that it
may have to any Indemnified Party otherwise than under the Ancillary Agreements.
If the Indemnifying Party acknowledges in writing its obligations to indemnify
the Indemnified Party hereunder against any Losses that may result from such
Third Party Claim, then such Indemnifying Party shall be entitled to assume and
control the defense of such Third Party Claim at its expense and through counsel
of its choice, subject to the approval of the Indemnified Party (which approval
shall not be unreasonably withheld or delayed), if it gives notice of its
intention to do so to the Indemnified Party within 15 business days of the
receipt of such notice from the Indemnified Party; provided, however, that if
there exists or is reasonably likely to exist a conflict of interest that would
make it inappropriate in the reasonable judgment of the Indemnified Party for
the same counsel to represent both the Indemnified Party and the Indemnifying
Party, then the Indemnified Party shall be entitled to retain its own counsel,
in each jurisdiction for which the Indemnified Party determines counsel is
required to participate in such defense, at the expense of the Indemnifying
Party. In the event the Indemnifying Party exercises the right to undertake any
such defense against any such Third Party Claim as provided above, the
Indemnified Party shall cooperate with the Indemnifying Party in such defense
and make available to the Indemnifying Party, at the Indemnifying Party's
expense, all witnesses, pertinent records, materials and information in the
Indemnified Party's possession or under the Indemnified Party's control relating
thereto as is reasonably required by the Indemnifying Party. Similarly, in the
event the Indemnified Party is, directly or indirectly, conducting the defense
against any such Third Party Claim, the Indemnifying Party shall cooperate with
the Indemnified Party in such defense and make available to the Indemnified
Party all such witnesses, records, materials and information in the Indemnifying
Party's possession or under the Indemnifying Party's control relating thereto as
is reasonably required by the Indemnified Party, subject to reimbursement of
reasonable out-of-pocket expenses. No such Third Party Claim may be settled by
the Indemnifying Party without the prior written consent of the Indemnified
Party (which shall not be unreasonably withheld or delayed) unless such
settlement is solely for money and includes an unconditional release of each
Indemnified Party from any and all Losses arising out of such action, claim,
suit or proceeding and would not otherwise adversely affect the Indemnified
Party.
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Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to assume the defense of any Third Party Claim and shall be liable for
the fees and expenses of counsel incurred by the Indemnified Party in defending
such Third Party Claim if the Third Party Claim seeks an order, injunction or
other equitable relief or relief for other than money damages against the
Indemnified Party which the Indemnified Party reasonably determines, after
conferring with its counsel, cannot be separated from any related claim for
money damages. If such equitable relief or other relief portion of the Third
Party Claim can be so separated from that for money damages, the Indemnifying
Party shall be entitled to assume the defense of the portion relating to money
damages.
Section 6.08. Remedies Cumulative. The remedies provided in this Agreement shall
be cumulative and shall not preclude assertion by any Indemnified Party of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party which may be available to the Indemnified Party.
ARTICLE VII
RELEASE
Section 7.01. General Release. (a) Atlas for itself and on behalf of its
Subsidiaries hereby releases, remises and forever discharges each of RAI and its
Subsidiaries or Affiliates and any of their Representatives from any losses,
obligation or responsibility for any and all past actions or failures to take
action, including any actions which may be deemed to have been negligent or
grossly negligent, relating to, resulting from or arising out of the operation
or conduct of any assets, businesses and operations managed or operated by, or
operationally related or ancillary to, directly or indirectly, the Atlas
Business and the RAI Business, except for any Losses, obligation or
responsibility for any willful or intentional misconduct in the operation or
conduct of the Atlas Business or the RAI Business prior to the date hereof.
(b) RAI for itself and on behalf of its Subsidiaries hereby releases,
remises and forever discharges each of Atlas and its Subsidiaries or Affiliates
and any of their Representatives from any losses, obligation or responsibility
for any and all past actions or failures to take action, including any actions
which may be deemed to have been negligent or grossly negligent, relating or
ancillary to, resulting from or arising out of the operation or conduct of any
assets, businesses and operations managed or operated by, or operationally
related to, directly or indirectly, the Atlas Business and the RAI Business,
except for any Losses, obligation or responsibility for any willful or
intentional misconduct in the operation or conduct of the Atlas Business or the
RAI Business prior to the date hereof.
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(c) Nothing set forth in subsections (a) and (b) shall limit or
otherwise affect any party's rights or obligations pursuant to, or contemplated
by this Agreement and the Ancillary Agreements or the liability of any party for
any payables or similar obligation for advances or money borrowed.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Limitation of Liability. Except as otherwise specifically set
forth in this Agreement, neither RAI nor Atlas shall be liable to the other for
any special, indirect, incidental or consequential damages of the other arising
in connection with this Agreement.
Section 8.02. Further Assurances. Each party agrees to execute, acknowledge,
deliver, file, record and publish such further certificates, amendments to
certificates, instruments and documents, and do all such other acts and things
as may be required by law, or as may be required to carry out the intent and
purposes of this Agreement and the Ancillary Agreements and the translations
contemplated thereby.
Section 8.03. Waiver. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in writing signed by a duly authorized officer of the
party against which such waiver is to be asserted. Unless otherwise expressly
provided in this Agreement, no delay or omission on the part of any party in
exercising any right or privilege under this Agreement shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right or privilege
under this Agreement operates as a waiver of any other right or privilege under
this Agreement nor shall any single or partial exercise of any right or
privilege preclude any other or future exercise thereof or the exercise of any
other right or privilege under this Agreement. No failure by either party to
take any action or assert any right or privilege hereunder shall be deemed to be
a waiver of such right or privilege in the event of the continuation or
repetition of the circumstances giving rise to such right unless expressly
waived in writing by the party against whom the existence of such waiver is
asserted.
Section 8.04. Remedies. Each of RAI and Atlas acknowledges and agrees that under
certain circumstances the breach by RAI or any of its Affiliates or Atlas or any
of its Affiliates of a term or provision of this Agreement will materially and
irreparably harm the other party, that money damages will accordingly not be an
adequate remedy for such breach and that the non-defaulting party, in its sole
discretion and in addition to its rights under this Agreement and any other
remedies it may have at law or in equity, may apply to any court of law or
equity of competent jurisdiction for specific performance and/or other
injunctive relief in order to enforce or prevent any breach of the provisions of
this Agreement.
Section 8.05. Performance. Each of the parties hereto shall use all commercially
reasonable efforts to cause to be performed all actions, agreements and
obligations set forth herein to be performed by any Affiliate of such party.
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Section 8.06. References; Construction. The section and other headings and
subheadings contained in this Agreement and the exhibits hereto are solely for
the purpose of reference, are not part of the agreement of the parties hereto,
and shall not in any way affect the meaning or interpretation of this Agreement
or any exhibit hereto. All references to days or months shall be deemed
references to calendar days or months. Unless the context otherwise requires,
any reference to a "Section" or an "Exhibit" shall be deemed to refer to a
section of this Agreement or an exhibit to this Agreement, as applicable. The
words "hereof," "herein" and "hereunder" and words of similar import referring
to this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. This Agreement shall be construed without regard to
any presumption or rule requiring construction or interpretation against the
party drafting or causing the document to be drafted.
Section 8.07. Amendments. This Agreement shall not be supplemented, amended or
modified in any manner whatsoever (including without limitation by course of
dealing or of performance or usage of trade) except in writing signed by the
parties.
Section 8.08. Successors and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as set forth below, this Agreement may not be assigned
by any party by operation of law or otherwise without the express written
consent of the other party (which consent may be granted or withheld).
Section 8.09. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law. If any portion of this Agreement is declared invalid for any
reason in any jurisdiction, such declaration shall have no effect upon the
remaining portions of this Agreement, which shall continue in full force and
effect as if this Agreement had been executed with the invalid portions thereof
deleted; provided that the entirety of this Agreement shall continue in full
force and effect in all other jurisdictions.
Section 8.10. Entire Agreement. Other than the Ancillary Agreements, this
Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior agreements, and
undertakings, both written and oral, between the parties with respect to the
subject matter hereof and thereof.
Section 8.11. Notices. All notices, consents, requests, approvals and other
communications provide for in this Agreement, shall be in writing and shall be
deemed validly duly given when sent by confirmed fax, upon personal delivery or
on the third Business Day after being sent by registered or certified U.S. mail
(postage prepaid, return receipt requested) to the parties at the fax number or
address set forth below or at such other fax number or address as a party may
designate to the other parties:
If to Atlas, to:
Atlas America, Inc.
000 Xxxxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: General Counsel
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If to RAI, to:
Resource America, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: General Counsel
Section 8.12. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
Section 8.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Master Separation and
Distribution Agreement to be duly executed and delivered as of the date and year
first written above.
ATLAS AMERICA, INC.
By:
Name:
Its:
RESOURCE AMERICA, INC.
By:
Name:
Its:
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