Exhibit 10.50
STATE OF TEXAS AGREEMENT TO COMBINE
XXXXX AND CAP ROCK
COUNTIES OF MIDLAND AND XXXXX ELECTRIC COOPERATIVES
THIS AGREEMENT TO COMBINE XXXXX COUNTY ELECTRIC COOPERATIVE
ASSOCIATION AND CAP ROCK ELECTRIC COOPERATIVE, INC. (Agreement) is made and
entered into on or as of the 28th day of October, 1999, by and between CAP
ROCK ELECTRIC COOPERATIVE, INC., headquartered at Midland, Texas (hereinafter
referred to as "Cap Rock" or "Cooperative"), and XXXXX COUNTY ELECTRIC
COOPERATIVE ASSOCIATION, headquartered at Paris, Texas (hereinafter referred
to as "Xxxxx"), both being electric cooperatives organized and operating
under the Texas Electric Cooperative Corporation Act. Cap Rock and Xxxxx may
collectively be referred to in this Agreement as the "Parties".
RECITALS
WHEREAS, Cap Rock has proposed that Xxxxx and its subsidiary
corporations named in Section 1.02 below, join Cap Rock and become a separate
division; and
WHEREAS, Xxxxx is an electric distribution cooperative providing
electric utility service to its members within its duly certificated service
area; and
WHEREAS, Cap Rock is an electric distribution cooperative providing
electric utility service to its members within its certificated service area;
and
WHEREAS, the Board of Directors of Xxxxx previously determined that it
would be in the best interest of its members to explore the possibility of
combining with another electric cooperative; and
WHEREAS, the Board of Directors of Xxxxx, after determining that it
would be in the best interest of its members to explore the possibility of
combining with another electric cooperative, with the aid of advisors and
consultants, developed a Strategic Plan and a Questionnaire with response by Cap
Rock, (incorporated herein for all purposes and attached hereto as EXHIBIT A),
to address items which must be considered in any consolidation study, and
received a response to those questions from Cap Rock Electric; and the Board of
Directors of Xxxxx have determined that a combination with Cap Rock would be
beneficial to the future well-being of Xxxxx and its members; and
WHEREAS, Xxxxx and Cap Rock wish to join in order to promote economies
of scale and provide for a more efficient organization; and
WHEREAS, the combination of Xxxxx and Cap Rock will strengthen the
combined organization by providing load diversity; and
WHEREAS, the combined organization would be better able to acquire a
dependable and economical supply of power; and
WHEREAS, the combination would entail Xxxxx transferring all of its
assets and liabilities to Cap Rock and becoming a division of Cap Rock.
NOW, THEREFORE, in consideration of the foregoing recitals,
the mutual promises and obligations contained herein and other good and
valuable consideration, Xxxxx and Cap Rock hereby contract and agree as
follows:
1.00 Transfer of Xxxxx Properties and
Assumption of Xxxxx Obligations
1.01 The Board of Directors of Xxxxx shall take the necessary action to
obtain a vote of the membership of Xxxxx within ninety (90) days from the date
this Agreement is signed unless the Parties to this Agreement mutually agree
otherwise.
1.02 This Agreement and the resulting combination shall become
effective upon approval by the membership of Xxxxx. Although the Parties
recognize that it may be necessary to obtain approvals from Cooperative Finance
Corporation (CFC), Public Utility Commission of Texas (PUCT),and other related
state and federal regulatory agencies, and wholesale power suppliers (tee.
Xxxxxxx Country Electric Cooperative, Inc.) or G&T, this Agreement and the
resulting combination shall not be contingent upon obtaining any such approvals.
However, Cap Rock shall be responsible for taking the action it deems necessary
in order to comply with the terms of this Agreement and to supply electric
service to the members in the Xxxxx Service Area as set forth in this Agreement.
Cap Rock shall be responsible for all costs which are necessary in order to
comply with the terms of this Agreement, "Close" the transaction (as defined in
Section 9.05) and provide electric service to the persons receiving electric
service in the Xxxxx Service Areas (the "Xxxxx Service Area") as set forth
herein and Cap Rock agrees to indemnify and hold Xxxxx harmless for any and all
costs and expenses of every kind associated therewith, including attorney's fees
and costs of litigation Cap Rock shall become the owner of all assets of every
kind whatsoever of Xxxxx pursuant to this Agreement including, without
limitation, the subsidiary corporations of Xxxxx, identified as Xxxxx Electric
Associated Services Inc., Advance Alarm & Electronics, Inc., Xxxxx Electric
Satellite Services, Inc. and Xxxxx Electric Internet Services, Inc. (which
subsidiaries shall, together with Xxxxx County Electric Cooperative Association,
be hereinafter called "Xxxxx"); and Cap Rock shall assess all liabilities and
obligations of every kind of Xxxxx pursuant to this Agreement. Thereafter, Cap
Rock shall have the right, at its sole option, to take the action it deems
necessary with regard to such assets and obligations, so long as such action is
not in contravention of the Agreement, including, but not limited to, paying off
debt early, among other things, if Cap Rock determines that it is in its best
interest.
1.03 At Closing, as provided for below, Xxxxx will, absolutely and in
&e simple or to whatever may otherwise be the greatest extent legally possible,
transfer, convey, assign and deliver to Cap Rock--and Cap Rock will receive
and acquire all of Lamar's properties and assets, of every kind whatsoever,
including but not limited to all real and personal property, tangible and
intangible, including all contracts, stock, memberships, ownership of
subsidiaries, easements, rights-of-way, privileges, permits, licenses,
franchises, causes of action, wholesale power contracts,
certificates of public convenience and necessity and Service Area assignments;
and Cap Rock will assume and fulfill, satisfy and carry out--and will relieve
and save harmless Xxxxx of and from--all of Lamar's liabilities and obligations,
including the obligation to provide adequate and dependable electric service to
Lamar's members on a low cost basis as such service is currently furnished by
Xxxxx--all subject to and in accordance with the terms and conditions herein set
forth.
1.04 Cap Rock and Xxxxx shall be combined pursuant to the terms of this
Agreement. Other than being subject to the approval of Lamar's members as set
forth in Section 1.02, the combination shall occur, regardless of whether or not
any contractual obligations or rights of Xxxxx with any other third parties are
assignable. As such, all contractual rights and obligations and other rights and
responsibilities of Xxxxx shall become the sole rights and responsibilities of
Cap Rock, which shall assume all such rights and obligations.
1.05 In addition to the other agreements set forth above and hereafter,
Cap Rock specifically agrees to assume the current wholesale Power Contract
between Xxxxx and Xxxxxxx Country Electric Cooperative, Inc. ("Xxxxxxx Country")
including all obligations and benefits under such contract with Xxxxxxx Country.
Cap Rock agrees to index and hold Xxxxx harmless from any liability whatsoever
under such wholesale Power Contract with Xxxxxxx Country. Xxxxx agrees to assign
all wholesale Power Contracts, including the contract with Xxxxxxx Country, to
Cap Rock and to take any and all action necessary to assist Cap Rock in assuming
the current power supply contract with Xxxxxxx Country and any other contracts
that Xxxxx currently has.
2.00 Lamar's Members
2.01 All of Lamar's then-existing members, on and after the date of
closing the transaction (the "Closing") as provided for below, shall
automatically become members of and be furnished electric service by Cap Rock;
their Xxxxx membership fees shall,, within a reasonable period, be refunded to
them; and they shall have and enjoy and may exercise any and all of the rights
of Cap Rock's other members, including rights of ownership of Cap Rock.
2.02 As provided under Section 5.00 below (entitled "Board of
Directors"), persons receiving electric service in the Xxxxx Service Area, shall
have representation on Cap Rock's Board.
2.03 As provided in Cap Rock's Bylaws and Articles of Incorporation,
the Xxxxx Division members will have the opportunity to participate and vote in
the annual meeting to elect directors and at all special meetings and they will
have the right to participate in nominating meetings to nominate director(s)
from their nominating district to the same extent as all members of Cap Rock.
2.04 All outstanding allocated capital credits of Xxxxx shall remain
allocated to those Xxxxx members entitled to receive the same, as shown by final
audit of Xxxxx, and shall be allocated as book credits of Cap Rock in the same
amounts as allocated on the Xxxxx books. Prospectively, Xxxxx members will be
subject to
the same capital credit allocation and payment terms and conditions
as other Cap Rock members. No capital credits will be reduced merely as the
result of the combination and they will be transferred in fill' to Cap Rock as
set forth above.
2.05 Since the membership of Cap Rock voted in October, 1998, to
convert Cap Rock into a stock company at such time that it becomes feasible to
do so, Cap Rock has offered its current members three choices for receiving
their capital credits. Those three choices are: (1) credit on their electric
xxxx for the amount of their capital credits; (2) Cash through a Dutch Auction
process; or (3) stock in the new company in the amount of their capital credits.
Cap Rock will make those options available to current members of Xxxxx, on the
same terms and conditions as the options are made available to all Cap Rock
members within six (6) months after the Closing. Any stock issued to Xxxxx
members will have the same rights, prohibitions, restrictions and other terms as
the stock issued to all other members or as may be amended. The term" Dutch
Auction" as just used means a "reverse auction" with the person bidding the
LOWEST amount being the successful bidder.
2.06 The Xxxxx Division of Cap Rock will continue programs to schools,
communities, members, and the general public in the same fashion as the other
divisions of Cap Rock. This includes support to livestock shows, fire
departments, 4-H Clubs and other organizations in the Xxxxx Service Area.
2.07 Members of Xxxxx will not lose any recourse to directors,
management, regulatory agencies or ally of the usual and normal benefits
available to the members currently. As set forth more specifically below in
Section 6.00 (entitled "Xxxxx Advisory Council"), an Advisory Council made up of
the current Xxxxx Board members will continue in effect for the Xxxxx Division
for a period of at least nine (9) years.
2.08 The headquarters office of Xxxxx in Paris, Texas will become a
division office of Cap Rock after the combination.
2.09 Sufficient equipment and personnel of Xxxxx, and Cap Rock, if
necessary, will remain in the Xxxxx Service Area as necessary to provide
electric service and assistance to the members of Xxxxx on a local basis
consistent with good utility practice and in no case less than the quality of
service and assistance available to Xxxxx members prior to the combination with
Cap Rock. In the event of major system damage, the corporate office of Cap Rock
will when necessary, hastily assemble and dispatch equipment and personnel to
assist in restoring service to the system.
3.00 Service in Xxxxx Service Area
3.01 As used int his Agreement, Xxxxx Service Area means the areas
furnished with electric service by Xxxxx immediately prior to the Closing, as
defined by Lamar's Service Area PUCT certification maps.
3.02 Until the rates for service to all of Cap Rock's members,
including those in the Xxxxx Service Area, become uniform as provided for in
Section 4.00 below (entitled "Rates"), the separate rates and fees for the Xxxxx
Service Area That shall be in effect in that Service Area shall be no higher
than current
rates, subject only to increase in Lamar's wholesale power costs.
3.03 Cap Rock will finish programs and services to improve Lamar's
customer service and reduce outage time on the same basis as Cap Rock currently
does in its other divisions. As soon as feasible after the Closing, Cap Rock
will implement its programs and procedures in the Xxxxx Service Area to cut
outage time and improve service. Cap Rock will install SCADA controls in the
Xxxxx Service Area to be linked into the main Cap Rock SCADA system within
eighteen (18) months after the closing. Cap Rock will train employees in the
Xxxxx Service Area in the procedures that Cap Rock uses to provide exemplary
service to its members and reduce outage times.
3.04 As soon as practical after the Closing, Cap Rock will institute
its outage procedures in the Xxxxx Division, which include the procedures
currently in place at Cap Rock that assure that outage time will be as short as
possible. This includes the procedures outlined in Cap Rock's responses to
Lamar's Questionnaire which is attached hereto as Exhibit "A".
3.05 Cap Rock will as soon as possible after the Closing, implement its
programs in the Xxxxx Service Area and provide the members in the Xxxxx Service
Area the same type of services that it now offers in its other divisions at the
same level as it currently provides those services in its other divisions. Cap
Rock will, after the Closing, complete the current or any future Xxxxx work
plans, including, system improvements that have been planned for by Xxxxx and as
determined by Cap Rock's engineering staff, along with any changes or
modifications the Cap Rock engineering staff deem necessary. Cap Rock will
continue to make improvements as necessary to ensure the quality of the system
in the Xxxxx Service Area.
3.06 Cap Rock will as soon as possible after the Closing, implement its
pro&an)s in the Xxxxx Service Area and provide the members in the Xxxxx Service
Area the same type of services that it now offers in its other divisions at the
same level as it currently provides those services in its other divisions.
Barring unusual circumstances, Cap Rock expects to accomplish this within
eighteen (18) months after the Closing. For example, within eighteen months
after the Closing, Cap Rock will institute its current outage reporting system
that it uses in its other divisions. That is, these outages will be handled out
of the division office through a toll-free number. Cap Rock will also begin to
implement its after hours outage reporting as soon as possible after Closing,
recognizing that it will take time to train its dispatchers to become familiar
with Lamar's Service Area, so that outages after hours are handled the same as
it is in Cap Rock's other divisions, through Cap Rock's toll-free number with
Cap Rock's dispatchers.
3.07 After the Closing, service crews will continue to be located in
the Xxxxx Service Area. Cap Rock does not intend to decrease the number of
service crews or relocate them and anticipates that the same number of service
crews will continue to work out of the Xxxxx Division office in Paris, Texas.
After the Closing, Cap Rock's employees and contractors will support the service
crews located in the Xxxxx Service Area to the extent
necessary in the event of an emergency outage such as a storm, etc.
3.08 After the Closing, Cap Rock will incorporate the Xxxxx Service
Area into Cap Rock's capital improvement plans and will handle system
improvements in the Xxxxx Service Area in the same way that Cap Rock currently
performs those system improvements in its other divisions.
3.09 After the Closing, Cap Rock will represent the Xxxxx Service Area
load in ERCOT at all committee levels etc. and be totally responsible for all
power supply in that service Area.
4.00 Rates
4.01 The electric rates for persons served within the Xxxxx Service
Area shall be adjusted to be the same uniform rates in effect for Cap Rock's
other members within not more than ten (10) years after the Closing, and even
earlier Wit is reasonably practicable and prudent to do so or if Cap Rock's
rates become lower. In the interim, the Xxxxx Service Area rates, as set forth
above, shall remain the same as they currently are and then phased toward such
uniformity with Cap Rock's rates as soon as is reasonably practicable and
prudent.
4.02 Cap Rock's service rules, regulations, policies, practices and
procedures for the Xxxxx Service Area (all together referred to as "Service
Rules") shall, on and after the Closing, be brought or phased into harmony and
uniformity with the service rules and regulations for all Cap Rock service areas
within not more than five (5) years after the Closing, and even earlier if it is
reasonably practicable and prudent to do so.
4.03 All adjustments in rates, and all changes in, additions, or
deletions to, Service Rules or rates classifications, shall be subject to the
approval of any entity or governmental authority having jurisdiction for that
purpose.
5.00 Board of Directors
5.01 After Xxxxx members have approved the agreement to combine the
cooperatives, Cap Rock shall create a directorate district from the present
Xxxxx Service Area (the "Xxxxx District") and shall add one additional position
to the Cap Rock Electric Board which shall be filled by a director chosen by the
present Xxxxx Board (the "Xxxxx District Director") for a three-year term.
Thereafter, the Xxxxx District is expected to remain a distinct district, unless
the Cap Rock board finds clear evidence of disproportionate representation for
members of the district as compared to membership of the entire Cap Rock system;
provided however, that the current "Xxxxx Service Area" will always have at
least one representative serving on the Cap Rock Corporate Board of Directors,
as is provided in Section 5.06 below.
5.02 The initial Cap Rock Corporate Board member from the Xxxxx Service
Area shall be appointed by the current Xxxxx Board.
5.03 Cap Rock shall insure the Xxxxx director an initial term of at
least three years before he or she stands for election.
5.04 Her his or her initial appointment to Cap Rock's Board, the
additional director, like all other directors of Cap Rock, shall be elected by
the members pursuant to the plan of
districting and staggered three-year terms in effect as set forth in Cap Rock's
bylaws.
5.05 The director from the Xxxxx District Director who serves on the
Cap Rock Corporate Board shall be paid the same corporate director fee and
benefits as other Cap Rock corporate directors under the current bylaws and
policies.
5.06 Nothing in this Sec. 5.00 shall preclude Cap Rock in subsequent
years from amending its Bylaws so as to increase or decrease the number of its
Board members or to increase or decrease, or to change the boundaries of
directorate districts if the Board determines that any such change is in the
best interest of the Cooperative and its members. However, in that event, the
Xxxxx Service Area will still have a representative serving on the Board.
6.00 Xxxxx Advisory Council
6.01 Cap Rock acknowledges that for several years after the Closing,
Cap Rock will from time to time need to have access to the knowledge,
consultation and advice of the Directors of Xxxxx as that Board is comprised
just prior to Closing. Therefore, effective immediately upon the Closing, the
Cap Rock Board shall appoint an Advisory Council ("Council") consisting of the
current members of the Xxxxx Board of Directors as it exists on the day prior to
Closing. Except however, that the representative of the Xxxxx Board of Directors
who is appointed to the Cap Rock Corporate Board of Directors, will chair the
Advisory Council but shall not be eligible to serve on the Advisory Council in
the event that he or she is not subsequently elected to or resigns from the Cap
Rock Corporate Board, It shall be the duty of the Council to advise and consult
with Cap Rock's President and Chef Executive Officer ("CEO"), officers and Board
with respect to matters of particular relevance and importance to the Xxxxx
Service Are& The Council shall meet and consult with Cap Rock's Board,
President/CEO (or his staff) or officers when so requested by any of them, but
shall have no vote on any Corporate Board matters.
6.02 While serving on the Council, Lamar's members on the Council shall
receive from the Cooperative the same fees, expenses, benefits, and per diem
allowances as do members of the Advisory Councils from other divisions of Cap
Rock. Council members shall also be entitled to such other benefits or options
generally provided to other Advisory Councils.
6.03 It is anticipated that the Xxxxx Advisory Council will meet
quarterly or less, if they desire. However, the Council may, at its option, meet
monthly during the transition period after the Closing to assist in this
transition period. However, regardless of how the Council meets, the Council
members will be paid the same per diem as other Cap Rock Advisory Councils and
on the same basis.
6.04 If a person resigns from the Council or becomes ineligible or
otherwise unable to continue serving thereon, his seat shall become permanently
vacant. Such a person, or one who is on the Council when it ceases to exist,
shall be entitled to retain such benefits for him/herself as he/she is eligible
for
under the Board Policies of Cap Rock.
6.05 The Council shall exist for a period of nine (9) years or until no
members continue to serve on the Council, whichever occurs first. At the end of
such nine (9) year period, the Corporate Board of Cap Rock will determine if
there is a need to continue with an Advisory Council and if so, the makeup of
the Council. Members of the Council who retire, die, or cease to serve on the
Council for any reason prior to the end of the nine (9) year term shall not be
replaced and the Council shall be reduced by attrition.
6.06 An Council members shall be required to sign the Cap Rock
Directors Pledge that all corporate directors are required to sign as a
condition for serving on the Council.
7.00 Xxxxx Employees
7.01 If the employee so consents, each employee of Xxxxx at the time of
Closing will continue as an employee of Cap Rock and will receive, until
retirement or earlier separation from the Cooperative, the same or better
compensation and fringe benefits to which he or she would have received had he
or she continued to be employed by Xxxxx. No employee's employment with Xxxxx
will be terminated solely as a result of the combination of Xxxxx with Cap Rock.
An employees of Xxxxx who continue as employees of Cap Rock after the closing
shall be required to sign the Cap Rock "Employee Pledge and Proprietary Rights
and Information Agreement" as a condition of continued employment.
7.02 After thee Closing, all current employees of Xxxxx who desire to
continue as employees of Cap Rock, will be convened to the Cap Rock pay and
benefit package, unless those employees choose to keep their current total pay
and benefit package as currently provided by Xxxxx. Each employee shall have the
option of choosing to be covered by the Cap Rock employee benefit package
instead of the current employee benefit package provided by Xxxxx if they desire
unless the law and/or NRECA rules and regulations prevent such employee from
receiving the current employee benefit package provided by Xxxxx. However, an
employee choosing to be covered by the Xxxxx employee benefit package would have
to choose the entire package and employees would not be allowed to pick and
choose between the Xxxxx and Cap Rock employee benefit package with regard to
individual items. Notwithstanding any of the above, even though the Cap Rock
total pay and benefit package, currently exceeds the total Xxxxx pay and benefit
package, in addition notwithstanding the above provisions, for a period of two
(2) years after the Closing, Xxxxx employees will continue to receive, at no
additional costs to the Xxxxx employees, health insurance benefits equivalent to
or under the same policy that they now have with Xxxxx.
7.03 If the law and/or NRECA rules and regulations prevent Lamar's
employees from continuing to receive the current Xxxxx employee benefit package,
Xxxxx employees existing retirement savings plan shall be placed into a rollover
XXX account and will be self-directed by each individual employee.
Simultaneously, the Xxxxx employees will be placed on the existing Cap Rock
employee retirement, savings and benefit plan. In the event that applicable
law and/or NRECA rules and regulations prevent an employee of Xxxxx from
continuing to receive the current employee benefit package provided by Xxxxx
and in the further event that such current benefit package as it applies to
any Xxxxx employee exceeds the current benefit package of Cap Rock for such
employee, Cap Rock will take such action as is necessary in order to assure
that the employee will receive a benefit package equal to or exceeding the
current Xxxxx benefit package by purchasing an annuity or taking such other
action as is necessary.
7.04 Current employees of Xxxxx will not have their pay reduced as a
result of the combination After the Closing, such employees shall continue to
receive the same pay as they currently receive from Xxxxx. As soon as
practicable after the Closing, at Cap Rock's discretion, employees will be
tested, and based upon testing results, the employees will be provided with
opportunities to increase their rates of pay. However, no matter how the test
results come out, no employee's pay will be reduced. Further, as soon as
practicable after the Closing, the Xxxxx employees will be paid in accordance
with Cap Rock's pay and benefit package in accordance with the job and grade,
unless it would not benefit an employee, in which case the employee would
continue to receive the Xxxxx pay and benefit package.
7.05 Current employees of Xxxxx will not be required to transfer or
relocate to any other Service Area solely because of this combination.
7.06 within sixty (60) days after Closing, all Xxxxx employees will be
offered a lump sum cash severance payment equal to one month's pay for each
continuous year of service at the time of the severance payment. All employees
receiving such offer will have ninety (90) days after the offer to notify
management of their desire to accept such offer. Acceptance of the option shall
be at the option of the employee. At Cap Rock's sole option, such offer may be
extended to some or all employees (who do not accept such offer within the time
period specified above) at a later time.
7.07 Cap Rock will provide employees of Xxxxx with job enhancement
training on the same basis as other Cap Rock employees. Such job enhancement
training will be available to all current employees of Xxxxx who continue as
employees of Cap Rock. This job enhancement training should provide employees of
Xxxxx with opportunities to receive increases in pay that are currently
unavailable to them.
7.08 Xxxxx employees who are already retired at the date of Closing or
who thereafter retire from the Cooperative's employment shall be entitled to
retain, their health insurance in the same manner and method as in effect for
Xxxxx other retired employees.
7.09 Except as otherwise specifically detailed in this Agreement, Xxxxx
employees who continue to be employed by Cap Rock shall be covered by Cap Rock's
policies that apply to all other employees.
7.10 Retired Xxxxx employees who are already retired at the Closing
shall be entitled to retain, the same benefits in the same manner and method as
is currently in effect for Lamar's retired employees as shown on Exhibit "B"
attached hereto.
7.11 Xxxxx employees who continue to be employed by Cap Rock shall have
the same opportunities to advance in position and/or compensation and fringe
benefits or the equivalent, as will Cap Rock's other employees. Xxxxx employees
who continue as Cap Rock employees will be tested to determine their
qualifications and appropriate grade Regardless of test scores, no employees
salary will be reduced.
7.12 The provisions of this Sec. 7.00 that enable Xxxxx employees to
continue employment, equal training, opportunities for advancement, and that
prohibit decreases in wages, salaries or related fringe benefits shall not
necessarily apply to such an employee if and after, because of his or her
becoming partially disabled or because of his or her own request, he or she is
allowed to continue in Cap Rock's employment in a different position. Nothing in
this Sec. 7.00 or in any other provision of this Agreement shall preclude or
impair the right of Cap Rock to terminate any employee as allowed by Federal or
Texas law. Further, nothing in this Sec. 7.00 or anywhere in this Agreement
shall constitute an employment contract with any employee and nothing herein
shall change or modify the standing of the Lamar's employees as
employees-at-will.
8.00 Xxxxx Identity
8.01 Xxxxx will, after the Closing, become a division of Cap Rock.
Initially, during a transition period, the Xxxxx Service Area will be called
"Xxxxx Electric Cooperative, a division of Cap Rock Electric Cooperative, Inc."
Later, with the advice of the Advisory Council and employees of Xxxxx, the Xxxxx
Service Area will eventually be known as "Cap Rock Electric - Xxxxx Division."
This local presence and identity will also be carried out, initially, by the
continuation of a Xxxxx Division business office in Paris, Texas alter the
combination. Consistent with prudent practices and convenience to the Xxxxx
Service Area members, Cap Rock may maintain accounts in one or more banks
located within the Xxxxx Service Area Cap Rock will continue to maintain an
office in Paris as currently utilized in the Xxxxx system.
9.00 Miscellaneous Matters
9.01 Xxxxx shall recommend to its members such amendments to its
articles of incorporation and bylaws as necessary, to facilitate and expedite
the unconditional approval of this Agreement by its members and their related
simultaneous authorization for Xxxxx to be dissolved.
9.02 Cap Rock will also amend its Articles of incorporation or Bylaws
in whatever ways, if any, that are necessary to carry out this Agreement.
However, no changes are known to be needed at this time to fulfill this
Agreement by Cap Rock.
9.03 After execution of this Agreement by the parties and until the
closing, Xxxxx will not take any action that will or might materially affect its
operations or financial condition without first giving timely notice thereof to
Cap Rock and conferring with Cap Rock with respect thereto. Xxxxx will timely
notify Cap Rock of any actual or potential development or event beyond its
control that will or might materially affect its operations or financial
condition, and the parties will consider
and address that matter in such ways as they mutually agree upon Xxxxx will
also periodically inform Cap Rock, at least monthly, of its operations,
revenues, expenses, balance sheet and other information and data routinely
reported to its own Board of Directors.
9.04 From the date of execution of this Agreement, Cap Rock shall bear
the costs directly attributable to promoting the Xxxxx member approval of this
Agreement, so long as this Agreement is submitted to the membership for their
approval with an affirmative recommendation from the Board of Directors and
management. The Board of Directors of Xxxxx hereby agree to use their best
efforts with all resources available after the execution of this Agreement to
recommend and promote this combination with Cap Rock to the members of Xxxxx,
pursuant to the terms and conditions of this Agreement. Cap Rock shall also bear
the costs directly attributable to securing all other necessary approvals, which
may include a joint application of the parties to the Texas Public Utility
Commission for transfer of Lamar's service area assignments to the Cooperative,
provided the Acquisition is completed. If the combination is not completed, then
Cap Rock and Xxxxx shall share proportionately the costs directly related to
this Agreement. However, Cap Rock, without charge and at its own expense, will
make available to Xxxxx any of its personnel or consultants to assist in
securing member approval.
9.05 Notwithstanding the above provisions, if prior to the completion
of this combination and prior to the completion of a "Closing" (defined herein
to be the event whereby all assets and liabilities of Xxxxx are transferred to
and assumed by Cap Rock), Xxxxx cannot complete or elects not to complete the
combination set forth in this Agreement and the "Closing" does not take place
because of (i) the failure of Lamar's members to approve the combination, or
(ii) any of the representations, statements or warranties of Cap Rock which are
made to Xxxxx are shown to be untrue, and the default of Cap Rock in (ii) cannot
be cured or corrected, then management and the Board will continue to operate
Xxxxx as before, and may consider other strategic alternatives. However, if
after the execution of this Agreement, the combination is not completed and the
"Closing" does not occur, for any reason other than (i) or (ii) just stated,
then Xxxxx shall be responsible for all of its costs and expenses under this
Agreement and reimbursement to Cap Rock for all of its costs and expenses.
9.06 The parties, through their officials and other representatives,
shall consult and confer with each other to the end of developing and agreeing
upon all document necessary or desirable to close this transaction and
thereafter to consummate and carry out the combination as herein contemplated.
"Documents", as used in this Sec. 9.05, means all such documents created on a
prospective basis following execution of this Agreement and shall include but
not be limited to the following: correspondence, including opinions of legal
counsel; studies and analysis; notices, related articles and bylaw changes;
contracts; ballots and/or proxy forms; cooperative member communications; Board
and member resolutions; deeds, title transfers, and other documents of
conveyance; and applications or petitions for approvals or
consents required from any governmental authority or private entity. This
commitment to consult and confer is without regard to whether a document is
the responsibility of; or may be sponsored by, one or by both parties. At no
charge and at its own expense, Cap Rock will make available to Xxxxx, ,if
Xxxxx so desires, any of its personnel or consultants to draft or assist in
the drafting of any such document. Either party may cause any such document
to be drafted and recommended to the other.
9.07 The Closing and legal effectiveness of the combination shall take
place as soon as practicable and legally possible after the Agreement has been
approved by the Xxxxx members and all documents of transfer, sale and conveyance
are prepared for execution by the parties, as of 10:00 a.m. on the date, and at
such site as the parties agree upon. The Closing shall include the execution and
delivery of all documents and the taking of any other action necessary to
complete the transaction resulting in the combination. Unless mutually agreed to
otherwise, such date will be the first of a calendar month.
9.08 After the execution of this Agreement, the Parties will cooperate
in all appropriate ways to enable The Parties (a) to conduct an inventory and
inspection of the Parties' properties, including materials and supplies to
inspect and review all books and records of the Parties that either Party deems
necessary, and to conduct an inventory and inspection of any executory contracts
to which Xxxxx or Cap Rock is a party or of which it is a third parry
beneficiary, and (b) to conduct such audits, including a management audit if a
Party so elects, as a Party may deem desirable or appropriate in connection with
this Agreement.
9.09 Each party hereto warrants and covenants with the other that it
has, or will use its best efforts to obtain, all authority necessary for it to
execute and carry out the provisions of This Agreement, and each will furnish to
the other, at or prior to Closing, an opinion of counsel with usual
qualifications and assumptions, satisfactory to the other, that it is so
authorized, that it has taken all action legally necessary to validly consummate
the Agreement. Also, at or prior to Closing, Xxxxx will furnish to Cap Rock a
commitment for an owner's title policy issued by Stone Title Company, Inc., in
Paris, Texas (the "Title Company"), subject to the printed exceptions and all
matters of record, in the amount of the book value of all fee property to be
conveyed to Cap Rock; a properly endorsed certificate of title for all
certificated property included in the assets; and an affidavit of the President
of Xxxxx that (i) Xxxxx has paid in full for all items of personal property
included among the assets shown on its books as of closing and (ii) that such
assets are in the possession of Xxxxx, (iii) subject to such debts, liens and
encumbrances That the parties agree should not be paid in fill' at Closing, but
should, instead, be assumed by Cap Rock. At the Closing the Title Company will
issue the Owner Policies of Title Insurance to Cap Rock covering Lamar's
acquired real property, and Cap Rock shall pay the premiums therefor, based upon
the book values of the respective real properties.
9.10 Prior to closing Xxxxx will furnish Cap Rock with a Certificate of
Litigation and other claims which sets forth a
description of all pending litigation and all other asserted or non-asserted
claims known by Xxxxx to exist. Cap Rock agrees to assume the liability for
payment of any damages, costs, expenses and attorneys fees adjudicated
against Xxxxx and any of its officers and directors relating to the
performance of their duties as such with Xxxxx, regarding the litigation and
claims disclosed in the Certificate of Litigation, and Cap Rock agrees to
assume and be responsible for the defense of such litigation and claims
disclosed in the Certificate of Litigation. This agreement of Cap Rock just
stated shall never be construed to eliminate or release the liability of any
insurance carrier to pay such liabilities of Xxxxx under any existing
liability policies Xxxxx owns; and if Cap Rock assumes the liabilities it has
agreed to assume in this Section 9.10, Cap Rock shall be entitled to The
proceeds of any liability insurance policy that are payable with respect to
such litigation and claims. Also at or prior to Closing, Xxxxx will furnish
Cap Rock with an affidavit from Management and the Board that there has been
no material change in its system, operations or financial condition or any
development or event portending such a change of which the other party has
not theretofore been fully notified pursuant to Sec. 10.03 of the Agreement.
9.11 Each party represents, covenants and warrants to The other that
its execution of this Agreement, action and/or inactions consummating the
combination resulting therefrom, do not violate The provisions of the party's
Articles of Incorporation, Bylaws, The provisions of law, or any other
instrument to which either is a xxxxx.
9.12 All representations and warranties made by the parties each to the
other pursuant to this Agreement shall survive the closing date and the delivery
of items as specified in this Agreement, except to the extent provided in this
Agreement.
9.13 Each party agrees to indemnify the other and to hold it harmless,
at all times after the date of this Agreement, against and with respect to:
(1) any and all damage, loss, cost, and expense resulting
from any misrepresentations, breach of warranty, or
nonfulfillment of any obligation on the part of
itself under this Agreement or from any
misrepresentation in or omission from any instrument
furnished to the other party under this Agreement,
and
(2) any and all actions, suits proceedings, demands,
assessments, judgments, costs, and legal and other
expenses incident to liabilities specified in
subsection (1) above; and,
(3) any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and legal and other
expenses arising as a result of the consummation of
this Agreement caused by the misrepresentation or
other wrongful conduct of the other pay hereto.
9.14 Nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the parties and their successors, any rights
or remedies under this Agreement, or to impose any personal liability upon any
individual officer, director, attorney or employee for any representation,
statement or action made in good faith and in the performance of their
respective offices with or duties to a party hereto.
10.00 Xxxxx Dissolution
10.01 Within a reasonable time after the Closing, after the Xxxxx
members authorize Lamar's dissolution, and after any necessary regulatory
approvals or contract assignments are obtained, and Cap Rock determines that it
is no longer necessary for Xxxxx to continue in existence as a corporation, the
Xxxxx Board, acting in such manner as agreed to by the parties and in conformity
with the applicable laws of Texas, shall duly cause Xxxxx to be dissolved.
10.02 The cost and expense of all matters covered in Sec. 10.01 shall
be borne by Cap Rock.
11.00 Amendment or Abandonment of Agreement
11.01 From and after the approval of this Agreement by the Xxxxx
members and their authorization for Xxxxx to be dissolved and until the Closing,
the Agreement may be amended by action of the two Cooperative's Board of
Directors (a) upon their determination that such is necessary or desirable to
accomplish or enhance the principal purposes of the Agreement or (b) because of
a requirement so to amend as a condition of securing any necessary approval of
the Agreement by a governmental agency or private entity, but only if such
amendment(s) will not substantially defeat or impair the achievement of the
principal purposes of the Agreement.
11.02 At any time after the execution of this Agreement and prior to
Closing, this Agreement may be terminated and abandoned (a) upon the mutual
agreement of the parties based upon their joint determination that it is in the
best interest of either party or (b) unilaterally if developments of a material
nature occur upon the basis of which it may reasonably conclude that failure to
so terminate and abandon will result in a substantial detriment to itself or its
members with respect to the cost, adequacy or dependability of its member's
electric service. If a party unilaterally decides to terminate and abandon, it
shall deliver written notice thereof to the other party, specifying the facts
upon which it has based its decision, as soon as possible after such decision is
made.
IN WITNESS WHEREOF, The parties have duly authorized and caused their
respective officers to execute this Agreement in quadruplicate originals, with
two of the same being retained by each party, on or as of the 28 day of OCT.,
1999.
XXXXX ELECTRIC CAP ROCK ELECTRIC
COOPERATIVE, INC. COOPERATIVE, INC.
By:______________________________ By:____________________________
Xxxxxxx Xxxxx, Xxxxxxx X. Xxxxx,
Chairman of the Board Chairman of the Board
ATTEST:__________________________ _______________________________
Secretary Xxxxxx X. Xxxxxxxx, Secretary
CORPORATE ACKNOWLEDGEMENT
THE STATE OF TEXAS )(
)(
COUNTY OF XXXXX )(
-----
THIS instrument was acknowledged before me on the 28TH day OCTOBER ,
1999 by XXXXXXX XXXXX, Chairman of the Board, and ZED XXXXX, Secretary of Xxxxx
County Electric Cooperative, Inc., a Texas electric cooperative corporation, on
behalf of said corporation.
----------------------------------
Notary Public, State of Texas
Notary's Printed Name:____________
My Commission Expires:____________
(SEAL)
THE STATE OF TEXAS )(
)(
COUNTY OF MIDLAND )(
THIS instrument was acknowledged before me on the 26TH day of OCTOBER,
1999 by XXXXXXX X. XXXXX, Chairman and XXXXXX X. XXXXXXXX, Secretary of
Cap Rock Electric Cooperative, Inc., a Texas electric cooperative
corporation, on behalf of said corporation.
---------------------------------
Notary Public, State of Texas
Notary's Printed Name:___________
My Commission Expires:___________
(SEAL)
