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ASSET PURCHASE AGREEMENT
by and between
CITIZENS COMMUNICATIONS COMPANY, as SELLER,
and
UNISOURCE ENERGY CORPORATION, as BUYER,
Dated October 29, 2002
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Relating to Purchase by Buyer of Seller's
Gas Utility Business in the State of Arizona
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.....................................................1
1.1 Definitions...................................................1
1.2 Certain Interpretive Matters.................................14
ARTICLE II PURCHASE AND SALE.............................................14
2.1 Transfer of Assets...........................................14
2.2 Excluded Assets..............................................15
2.3 Assumed Liabilities..........................................17
2.4 Excluded Liabilities.........................................18
2.5 Control of Litigation........................................20
ARTICLE III THE CLOSING..................................................21
3.1 Closing......................................................21
3.2 Closing Payment..............................................21
3.3 Adjustment to Base Purchase Price............................21
3.4 Prorations...................................................24
3.5 Deliveries by Seller.........................................24
3.6 Deliveries by Buyer..........................................26
3.7 Work in Progress.............................................26
ARTICLE IV REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER.........27
4.1 Incorporation; Qualification.................................27
4.2 Authority....................................................27
4.3 Consents and Approvals; No Violation.........................27
4.4 Insurance....................................................28
4.5 Real Property Leases.........................................28
4.6 Environmental Matters........................................28
4.7 Labor Matters................................................29
4.8 Benefit Plans: ERISA........................................29
4.9 Real Property................................................30
4.10 Condemnation.................................................30
4.11 Assigned Agreements..........................................30
4.12 Legal Proceedings............................................31
4.13 Permits......................................................31
4.14 Taxes........................................................31
4.15 Intellectual Property........................................32
4.16 Capital Expenditures.........................................32
4.17 Compliance With Laws.........................................32
4.18 Title........................................................32
4.19 DISCLAIMERS..................................................32
4.20 Financial Statements.........................................33
4.21 SEC Filings; Financial Statements............................33
4.22 Sufficiency of Assets........................................33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER........................34
5.1 Organization.................................................34
5.2 Authority....................................................34
5.3 Consents and Approvals; No Violation.........................34
5.4 Availability of Funds........................................35
5.5 SEC Filings; Financial Statements............................35
5.6 Legal Proceedings............................................35
5.7 No Knowledge of Seller's Breach..............................36
5.8 Qualified Buyer..............................................36
5.9 Inspections..................................................36
5.10 WARN Act.....................................................36
ARTICLE VI COVENANTS OF THE PARTIES......................................37
6.1 Conduct of Business and Operation of Assets..................37
6.2 Access to Information........................................38
6.3 Environmental Inspections and Information....................40
6.4 Confidentiality..............................................41
6.5 Public Statements............................................42
6.6 Expenses.....................................................42
6.7 Further Assurances...........................................42
6.8 Consents and Approvals.......................................43
6.9 Fees and Commissions.........................................44
6.10 Tax Matters..................................................45
6.11 Advice of Changes............................................47
6.12 Seller Employees.............................................47
6.13 Risk of Loss.................................................52
6.14 Tax Exempt Financing.........................................53
6.15 Seller Guarantees and Surety Instruments.....................58
6.16 Citizens Marks...............................................58
6.17 Title Commitments............................................58
6.18 Joint Use Agreement re: Easements............................58
6.19 [Intentionally Omitted] .....................................58
6.20 Post-Execution Delivery of Schedules.........................59
ARTICLE VII CONDITIONS...................................................59
7.1 Conditions to Obligations of Buyer...........................59
7.2 Conditions to Obligations of Seller..........................60
ARTICLE VIII INDEMNIFICATION.............................................61
8.1 Indemnification of Seller by Buyer...........................61
8.2 Indemnification of Buyer by Seller...........................61
8.3 Certain Limitations on Indemnification.......................62
8.4 Defense of Claims............................................64
ARTICLE IX TERMINATION...................................................66
9.1 Termination..................................................66
9.2 Procedure and Effect of Termination..........................67
9.3 Liquidated Damages; Termination Fees.........................68
ARTICLE X MISCELLANEOUS PROVISIONS.......................................69
10.1 Amendment and Modification...................................69
10.2 Waiver of Compliance; Consents...............................69
10.3 [Intentionally Omitted]......................................69
10.4 Notices......................................................69
10.5 Assignment...................................................71
10.6 Governing Law................................................71
10.7 Counterparts.................................................71
10.8 Interpretation...............................................71
10.9 Schedules and Exhibits.......................................71
10.10 Entire Agreement.............................................72
10.11 U.S. Dollars.................................................72
10.12 Bulk Sales Laws..............................................72
10.13 Construction of Agreement....................................72
10.14 Severability.................................................72
10.15 Third Party Beneficiary......................................73
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated October 29, 2002 (this "Agreement"), by
and among Citizens Communications Company, a Delaware corporation ("Seller")
and UniSource Energy Corporation, an Arizona corporation ("Buyer"). Seller
and Buyer are referred to, individually, as a "Party" and, together, as the
"Parties."
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Seller owns all of the Assets (as defined below); and
WHEREAS, Buyer desires to purchase and assume, and Seller desires to
sell and assign, the Assets, and certain associated liabilities, upon the
terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms have
the meanings specified in this Section 1.1.
"ACC" means the Arizona Corporation Commission and any successor
agency thereto.
"ADEQ" means the Arizona Department of Environmental Quality and
any successor agency thereto.
"Advances" has the meaning set forth in Section 3.3(e).
"Adverse Environmental Condition" has the meaning set forth in
Section 6.3(c).
"Affiliate" of any Person means a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Person specified.
"Agreement" means this Asset Purchase Agreement together with the
Schedules and Exhibits attached hereto, as the same may be from time to time
amended.
"Allocation" has the meaning set forth in Section 6.10(f).
"ALTA" has the meaning set forth in Section 6.17.
"Ancillary Agreements" means the agreements, contracts,
documents, instruments and certificates provided for in this Agreement to be
entered into by one or more of the Parties or any of their Affiliates in
connection with the transactions contemplated by this Agreement.
"APBO" has the meaning set forth in Section 6.12(d)(iii)(D).
"Approved Capital Expenditures" means the Capital Expenditures
that have been expressly approved by Buyer in writing and that are identified
in said writing as Approved Capital Expenditures for purposes of this
Agreement.
"Arizona Electric Purchase Agreement" has the meaning set forth
in Section 7.1(j).
"Assets" has the meaning set forth in Section 2.1.
"Asset Material Adverse Effect" means any occurrence or
condition, arising after the date hereof, that has or would reasonably be
expected to have a material adverse effect with an aggregate economic impact,
taking into account all relevant considerations, in excess of $10,000,000
(except as provided otherwise in Sections 6.3(c), 6.13(b)(i) or 6.13(c)(ii))
on the condition of the Assets, taken as a whole, or on the business,
operations, financial condition or results of operations of the Business,
taken as a whole, other than any such occurrence or condition (a) arising
from business, economic or financial market conditions, considered generally,
(b) arising from the conditions in the gas utility industry, considered
generally and not specifically as to the Business, (c) which is remedied,
cured or otherwise reversed (including by the payment of money or application
of insurance proceeds) before the Termination Date, or (d) arising from
entering into this Agreement or the announcement of the transactions
contemplated by this Agreement; it being understood that the occurrences
and/or conditions which could, depending on the nature and extent thereof, be
deemed to result in an Asset Material Adverse Effect shall include, without
limitation, (x) the terms or conditions of a Final Order with respect to any
Required Regulatory Approval, considered individually or together with any
other such Final Order(s) with respect to any other Required Regulatory
Approval(s), other than Regulatory Exceptions, and (y) facts or circumstances
relating to the Assets and/or the Business which come to the attention of
Buyer between the date of this Agreement and the Closing Date, whether as a
result of Buyer's Inspection of the Assets or its examination of information
and data relating to the Assets and/or the Business, as contemplated by
Section 6.2 or 6.3, or otherwise.
"Assigned Agreements" means any contracts, agreements, software
licenses and related contracts, Easements, Real Property Leases and personal
property leases entered into by Seller or any of its Affiliates with respect
to the ownership, operation or maintenance of the Assets or the Business,
including those disclosed on Schedules 4.5 and 4.11(a) and excluding those
disclosed on Schedule 2.2, including without limitation, the IBEW CBA.
"Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement between Seller and Buyer substantially in the form of
Exhibit A attached hereto.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Arizona Electric Purchase Agreement" has the meaning set forth
in Section 7.1(j).
"Balance Sheet" has the meaning set forth in Section 4.20.
"Base Purchase Price" has the meaning set forth in Section 3.2.
"Benefit Plans" means each of Seller's deferred compensation and
each bonus or other incentive compensation, stock purchase, stock option and
other equity compensation plan, program, agreement or arrangement; each
severance or termination pay, medical, surgical, hospitalization, life
insurance and other "welfare" plan, fund or program (within the meaning of
Section 3(1) of ERISA); each profit-sharing, stock bonus or other "pension"
plan, fund or program (within the meaning of Section 3(2) of ERISA); each
employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by
such Party or by any ERISA Affiliate, in any case maintained for employees of
Seller connected with the Business, or in which such employees participate.
"Xxxx of Sale" means the Xxxx of Sale, substantially in the form
of Exhibit B attached hereto, to be delivered at the Closing by Seller with
respect to the Tangible Personal Property included in the Assets transferred
to Buyer.
"Bond Counsel" has the meaning set forth in Section 6.14(c)(i).
"Business" means, collectively, (a) the regulated natural gas
distribution business conducted by Seller within the State of Arizona through
its Arizona Gas divisions, (b) the natural gas transportation business
conducted by Seller within the State of Arizona through its Arizona Gas
divisions and (c) the provision of related services and products and the
engagement in related activities, including financing of conversions to gas
and agreements as to appliances, by Seller within the State of Arizona
through its Arizona Gas divisions.
"Business Day" means any day other than Saturday, Sunday and any
day which is a day on which banking institutions in the States of Arizona and
New York are authorized by law or other governmental action to remain closed.
"Buyer" has the meaning set forth in the Preamble.
"Buyer Indemnifiable Loss" has the meaning set forth in Section
8.2.
"Buyer Indemnitee" has the meaning set forth in Section 8.2.
"Buyer Material Adverse Effect" means a Material Adverse Effect
with respect to Buyer.
"Buyer Required Regulatory Approvals" means the Required
Regulatory Approvals set forth in Schedule 5.3(b).
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended.
"Capital Expenditures" means capital additions to or replacements
of property, plants and equipment included in the Assets or otherwise
relating to the Business and other expenditures or repairs on property,
plants and equipment included in the Assets or otherwise relating to the
Business that would be capitalized by Seller in accordance with its normal
accounting policies.
"Capital Expenditures Schedule" has the meaning set forth in
Section 4.16.
"Citizens Marks" has the meaning set forth in Section 2.2(c).
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" means one minute after 11:59 p.m. on the date
which is five (5) Business Days following the date on which the last of the
conditions precedent to the Closing set forth in Article VII of this
Agreement have been either satisfied or waived by the Party for whose benefit
such conditions precedent exist, subject to such extensions (not to exceed
six (6) months) as may be required by Seller to repair or replace lost or
damaged Assets in accordance with Section 6.13(c), or such other date as the
Parties may mutually agree.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1984.
"COBRA Continuation Coverage" means the requirements of Section
4980B(f) of the Code.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercially Reasonable Efforts" means efforts by a Party which
are reasonably within the contemplation of the Parties at the time of
executing this Agreement and which do not require the performing Party to
expend any funds other than expenditures which are customary and reasonable
in transactions of the kind and nature contemplated by this Agreement in
order for the performing Party to satisfy its obligations hereunder.
"Current Retirees" has the meaning set forth in Section
6.12(d)(iii)(D).
"Direct Claim" has the meaning set forth in Section 8.4(c).
"Easements" means all easements, rights of way, permits,
licenses, prescriptive rights and other ways of necessity, and other similar
real property grants, whether or not of record, relating to real property.
"Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and
charges of any kind.
"Environmental Claim" means any and all pending and/or threatened
administrative or judicial actions, suits, orders, claims, liens, notices,
notices of violations, investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or civil,
pursuant to or relating to any applicable Environmental Law or pursuant to a
common law theory, by any Person (including, but not limited to, any
Governmental Authority, private person and citizens' group) based upon,
alleging, asserting, or claiming any actual or potential (a) violation of, or
liability under any Environmental Law, (b) violation of any Environmental
Permit, or (c) liability for investigatory costs, cleanup costs, removal
costs, remedial costs, response costs, natural resource damages, property
damage, personal injury, fines, or penalties arising out of, based on,
resulting from, or related to any Environmental Condition or any Release or
threatened Release into the environment of any Regulated Substances at any
location related to the Assets, including, but not limited to, any Off-Site
Location to which Regulated Substances, or materials containing Regulated
Substances, were sent for handling, storage, treatment, or disposal.
"Environmental Condition" means the presence or Release of a
Regulated Substance (other than a naturally-occurring substance) on or in
environmental media, or structures on Real Property, at an Off-Site Location
or other property (including the presence in surface water, groundwater,
soils or subsurface strata, or air), including the subsequent migration of
any such Regulated Substance, regardless of when such presence or Release
occurred or is discovered.
"Environmental Data" has the meaning set forth in Section 6.3(e).
"Environmental Laws" means all federal, state, local, provincial,
foreign and international civil and criminal laws, regulations, rules,
ordinances, codes, decrees, judgments, directives, or judicial or
administrative orders relating to pollution or protection of the environment,
natural resources or human health and safety, including, without limitation,
laws relating to Releases or threatened Releases of Regulated Substances
(including, without limitation, Releases to ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, Release,
transport, disposal or handling of Regulated Substances. "Environmental
Laws" include: (a) with respect to federal law, CERCLA, the Hazardous
Materials Transportation Act (49 U.S.C. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. 1251 et seq.), the Clean Air Act (42
U.S.C. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601
et seq.), the Oil Pollution Act (33 U.S.C. 2701 et seq.), the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), the
Occupational Safety and Health Act (29 U.S.C. 651 et seq.), the Safe
Drinking Water Act (42 U.S.C. 300f et. seq.), the Surface Mine Conservation
and Reclamation Act (30 U.S.C. 1251-1279), and regulations adopted
pursuant thereto, and counterpart state and local laws, regulations adopted
pursuant thereto; and (b) with respect to Arizona law, laws comparable to
such federal statutes and regulations adopted pursuant thereto.
"Environmental Permits" means any permits, registrations,
certificates, certifications, licenses and authorizations, consents and
approvals of Governmental Authorities issued under Environmental Laws held by
Seller with respect to the Assets.
"Environmental Price Adjustment" has the meaning set forth in
Section 6.3(c).
"Environmental Reports" has the meaning set forth in Section 4.6.
"Environmental Threshold" has the meaning set forth in Section
6.3(c).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means a trade or business, whether or not
incorporated, that together with a Party would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA.
"Estimated Adjustment" has the meaning set forth in Section
3.3(b).
"Estimated Closing Statement" has the meaning set forth in
Section 3.3(b).
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.4.
"Exempt Facilities" means those facilities listed in Exhibit A to
each Loan Agreement included in the IDRB Documents.
"FERC" means the Federal Energy Regulatory Commission or any
successor agency thereto.
"Final Order" means an action by the relevant Governmental
Authority that has not been reversed, stayed, enjoined, set aside, annulled
or suspended and/or with respect to which any waiting period prescribed by
law before the transactions contemplated hereby may be consummated has
expired and the time period permitted by statute or regulation for filing any
request for a stay, petition for rehearing, reconsideration or application
for review of the action or for filing a court appeal has passed.
"Financial Statements" has the meaning set forth in Section 4.20.
"FIRPTA Affidavit" means the Foreign Investment in Real Property
Tax Act Certification and Affidavit to be executed by Seller.
"GAAP" means U.S. generally accepted accounting principles.
"Good Utility Practices" means any practices, methods, standards,
guides, or acts, as applicable, that (a) are generally accepted in the region
during the relevant time period for use in the gas, transmission and
distribution industry, (b) are commonly used in prudent gas, transmission and
distribution engineering, construction, project management and operations,
and (c) would be expected if the Business is to be conducted at a reasonable
cost in a manner consistent with laws, rules and regulations applicable to
the Business and the objectives of reliability, safety, environmental
protection, economy and expediency. Good Utility Practice is intended to be
acceptable practices, methods, or acts generally accepted in the region, and
is not intended to be limited to the optimum practices, methods, or acts to
the exclusion of all others.
"Governmental Authority" means any foreign, federal, state, local
or other governmental, regulatory or administrative agency, court,
commission, department, board, or other governmental subdivision,
legislature, rulemaking board, court, tribunal, arbitrating body or other
governmental authority.
"Grandfathered Active Employees" has the meaning set forth in
Section 6.12(d)(iii)(D).
"Grandfathered Individuals" has the meaning set forth in Section
6.12(d)(iii)(D).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"IBEW" means International Brotherhood of Electrical Workers.
"IBEW CBA" has the meaning set forth in Section 6.12(a).
"IDRB Documents" has the meaning set forth in Section 6.14(m).
"IDRB Indebtedness" means the indebtedness of Seller owing to the
issuers of the Revenue Bonds and arising under the Loan Agreements included
among the IDRB Documents.
"Income Tax" means any federal, state, local or foreign Tax (a)
based upon, measured by or calculated with respect to gross or net income,
profits or receipts (including, without limitation, capital gains Taxes and
minimum Taxes) or (b) based upon, measured by or calculated with respect to
multiple bases (including, without limitation, corporate franchise taxes) if
one or more of the bases on which such Tax may be based, measured by or
calculated with respect to, is described in clause (a), in each case together
with any interest, penalties, or additions to such Tax.
"Indemnifiable Loss" means any claim, demand, suit, loss,
liability, damage, obligation, payment, cost or expense (including, without
limitation, the cost and expense of any action, suit, proceeding, assessment,
judgment, settlement or compromise relating thereto and reasonable attorneys'
fees and reasonable disbursements in connection therewith).
"Indemnifying Party" means a Party obligated to provide
indemnification under this Agreement.
"Indemnitee" means a Person entitled to receive indemnification
under this Agreement.
"Independent Accounting Firm" means such independent accounting
firm of national reputation as is mutually appointed by the Buyer and Seller.
"Inspection" means all tests, reviews, examinations, inspections,
investigations, interviews, verifications, samplings and similar activities
conducted by Buyer or its Representatives prior to the Closing with respect
to the Assets, including "Phase I" and/or "Phase II" environmental
assessments.
"Intellectual Property" means patents and patent rights,
trademarks and trademark rights, inventions, copyrights and copyright rights,
and all pending applications for registrations of patents, trademarks, and
copyrights.
"Inventories" means materials, spare parts, consumable supplies,
fuel supplies and chemical inventories relating to the Assets or the
operation of the Business.
"Knowledge" means the actual knowledge, as of the date hereof or,
with respect to any certificate delivered pursuant to this Agreement, the
date of delivery of such certificate, of the Persons identified on Schedule
1.1 and successors to each such Person's employment responsibilities.
"Material Adverse Effect" means any occurrence or condition,
arising after the date hereof, that has or would reasonably be expected to
have a material adverse effect with an aggregate an adverse economic impact,
taking into account all relevant considerations, in excess of $10,000,000 on
the business, operations, properties, financial condition or results of
operations of any Party (including its Affiliates, taken as a whole) or on
the ability of either Party to perform in all material respects its
obligations under this Agreement and the Ancillary Agreements.
"Material Taking" has the meaning set forth in Section 6.13(b).
"Non-Union Employees" has the meaning set forth in Section
6.12(b).
"Off-Site Location" means any real property other than the Real
Property.
"Order" means any award, decision, injunction, judgment, order,
consent order, writ, decree, consent decree, ruling, subpoena, or verdict
entered, issued, made or rendered by any court, administrative agency, other
Governmental Authority, or by an arbitrator, each of which possesses
competent jurisdiction.
"Party" has the meaning set forth in the Recitals.
"Permitted Encumbrances" means any of the following:
(a) mechanics', carriers', workers' and other similar liens
arising in the ordinary course of business for charges that are not
delinquent or that are being contested in good faith and have not proceeded
to judgment;
(b) liens for current Taxes and assessments not yet due and
payable;
(c) with respect to the Real Property, usual and customary
nonmonetary Encumbrances, covenants, Easements, restrictions and other title
matters (whether or not recorded) that do not and are not expected to
materially interfere with the operation of that portion of the Business
conducted on such Real Property or the Business as a whole;
(d) Encumbrances securing the payment or performance of any of
the Assumed Liabilities;
(e) all applicable zoning ordinances and land use restrictions
in effect as of the date of this Agreement and all changes to or new
adoptions of zoning ordinances and land use restrictions prior to the Closing
Date that do not and are not expected to materially interfere with the
operation of that portion of the Business conducted on such Real Property or
the Business as a whole;
(f) with respect to any Asset which consists of a leasehold or
other possessory interests in real property, all Encumbrances, covenants,
Easements, restrictions and other title matters (whether or not recorded) to
which the underlying fee estate in such real property is subject that do not
or will not interfere materially with the operation of that portion of the
Business currently conducted on such property or the Business as a whole; and
(g) any other Encumbrances, obligations, defects or
irregularities of any kind whatsoever affecting title to the Assets that will
be terminated, released or waived on or before the Closing Date or that are
not, individually or in the aggregate, reasonably likely to materially
interfere with the present use of the Assets or to materially increase the
cost of conducting the Business.
"Permits" means any permits, licenses, registrations, franchises
and other authorizations, consents and approvals of Governmental Authorities
held by Seller with respect to the Assets or the Business.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, or
governmental entity or any department or agency thereof.
"Post-Closing Adjustment" has the meaning set forth in Section
3.3(d).
"Post-Retirement Welfare Benefits" has the meaning set forth in
Section 6.12(d)(iii)(D).
"Proposed Post-Closing Adjustment" has the meaning set forth in
Section 3.3(c).
"Proprietary Information" of a Party means all information about
the Party or its Affiliates, including their respective properties or
operations, furnished to the other Party or its Representatives by the Party
or its Representatives, before or after the date hereof, regardless of the
manner or medium in which it is furnished and all analyses, reports, tests or
other information created or prepared by, or on behalf of, a Party during the
performance of "Phase I" or "Phase II" environmental site assessments.
Proprietary Information does not include information that: (a) is or becomes
generally available to the public, other than as a result of a disclosure by
the other Party or its Representatives; (b) was available to the other Party
on a nonconfidential basis prior to its disclosure by the Party or its
Representatives; (c) becomes available to the other Party on a
nonconfidential basis from a person, other than the Party or its
Representatives, who is not otherwise bound by a confidentiality agreement
with the Party or its Representatives, or is not otherwise under any
obligation to the Party or any of its Representatives not to transmit the
information to the other Party or its Representatives; or (d) is
independently developed by the other Party.
"Purchase Price" has the meaning set forth in Section 3.2.
"Qualifying Offer" means an offer to a Transferred Non-Union
Employee of the same or similar job that is at least 100% of such employee's
current total cash compensation at the time the offer was made (consisting of
base salary and target incentive bonus), and does not require, as a condition
of acceptance, a relocation of residence as described in Section 6.12(f).
"Real Property" has the meaning set forth in Section 2.1(a). Any
reference to the Real Property includes, by definition, Seller's right, title
and interest in and to the surface and subsurface elements, including the
soils and groundwater present at the Real Property, and any reference to
items "at the Real Property" includes all items "at, on, in, upon, over,
across, under and within" the Real Property.
"Real Property Leases" has the meaning set forth in Section 4.5.
"Recovery Costs" has the meaning set forth in Section 8.4(d).
"Regulated Substances" means (a) any petrochemical or petroleum
products, oil or coal ash, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
dielectric fluid containing polychlorinated biphenyls; (b) any chemicals,
materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "hazardous
constituents," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants," "pollutants," "toxic
pollutants" or words of similar meaning and regulatory effect under any
applicable Environmental Law; and (c) any other chemical, material or
substance, exposure to which or whose discharge, emission, disposal or
Release is prohibited, limited or regulated by any applicable Environmental
Law.
"Regulations" has the meaning set forth in Section 6.14(a)(iii).
"Regulatory Exceptions" means any of the following:
(a) a refusal by the ACC or the FERC to authorize an increase
in base rates for the Business, an imposition by the ACC or the FERC of a
rate moratorium for the Business, or a requirement by the ACC or the FERC of
the filing of a rate case for the Business;
(b) an imposition by the ACC requiring Buyer to provide
service, or to improve service, to Persons located in any authorized service
area of the Business, provided such requirement has a corresponding rate
recovery opportunity;
(c) an imposition by the ACC of performance, safety or
reliability standards for Buyer's operation of the Business that are
substantially equivalent to those standards being met by Buyer or its
Affiliates in their other utility operations in Arizona, provided (i) Buyer
is given a reasonable period of time after Closing to meet such imposed
standards and (ii) such imposed standards have a corresponding rate recovery
opportunity; and
(d) terms and conditions imposed by any Governmental Authority
that is required to issue a Required Regulatory Approval that are either (i)
usual and customary; (ii) applicable to the Business or to Buyer or any
Affiliate of Buyer as of the date of this Agreement; or (iii) contemplated by
this Agreement, including the understandings of the Parties referenced in
Section 6.8(c)(i).
"Regulatory Material Adverse Effect" means, with respect to any
Party, a Material Adverse Effect resulting from the effect on such Party of
the terms and conditions of a Final Order with respect to any Required
Regulatory Approval other than Regulatory Exceptions.
"Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, xxxxx, dump or allow to escape into or
through the environment.
"Remediation" means any action taken in the investigation,
removal, confinement, cleanup, treatment, or monitoring of a Release or an
Environmental Condition on Real Property or Off-Site Location, including,
without limitation, (a) obtaining any Permits or Environmental Permits
required for such remedial activities, and (b) implementation of any
engineering controls and institutional controls. The term "Remediation"
includes, without limitation, any action which constitutes "removal action"
or "remedial action" as defined by Section 101 of CERCLA, Section 6901(23)
and (24); or any action which constitutes "remediation" or "remedial action"
as defined by Arizona Revised Statutes Sections 49-151(4), 49-171(8) and 49-
282.02(C)(2).
"Representatives" of a Party means such Party's authorized
representatives, including without limitation, its professional and financial
advisors.
"Required Regulatory Approvals" means with respect to a Party,
any consent or approval of, filing with, or notice to, any Governmental
Authority that is necessary for the execution and delivery of this Agreement
and the Ancillary Agreements by such Party or the consummation thereby of the
transactions contemplated hereby, other than such consents, approvals,
filings or notices (i) which are not required in the ordinary course to be
obtained or made prior to the Closing and the transfer of the Assets, (ii)
which, if not obtained or made, will not prevent such Party from performing
its material obligations hereunder, or (iii) that relate to a Permit that is
not material to the Business, taken as a whole.
"Revenue Bonds" has the meaning set forth in Section 6.14(a)(i).
"Savings Plan" has the meaning set forth in Section
6.12(d)(iii)(E).
"SEC" means the Securities and Exchange Commission and any
successor agency thereto.
"Seller" has the meaning set forth in the Preamble.
"Seller Indemnifiable Loss" has the meaning set forth in Section
8.1.
"Seller Indemnitee" has the meaning set forth in Section 8.1.
"Seller Material Adverse Effect" means a Material Adverse Effect
with respect to Seller.
"Seller Required Regulatory Approvals" means the Required
Regulatory Approvals set forth in Schedule 4.3(b).
"Seller SEC Reports" has the meaning set forth in Section 4.21.
"Seller's Pension Plan" has the meaning set forth in Section
6.12(d)(iii)(C).
"Severance Cost" has the meaning set forth in Section 6.12(b).
"Special Warranty Deed" means a special warranty deed
substantially in the form of Exhibit C attached hereto.
"Subsidiary" when used in reference to any Person means any
entity of which outstanding securities having ordinary voting power to elect
a majority of the Board of Directors or other Persons performing similar
functions of such entity are owned directly or indirectly by such Person.
"Sufficient Notice" has the meaning set forth in Section
6.14(c)(ii).
"Taking" has the meaning set forth in Section 6.13(b).
"Tangible Personal Property" has the meaning set forth in Section
2.1(c).
"Taxes" means all taxes, charges, fees, levies, penalties or
other assessments imposed by any federal, state, local or foreign taxing
authority, including, but not limited to, income, excise, property, sales,
transfer, franchise, payroll, withholding, social security, gross receipts,
license, stamp, occupation, employment or other taxes, including any
interest, penalties or additions attributable thereto.
"Tax Impact" has the meaning set forth in Section 6.14(a)(vi).
"Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any schedule or
related or supporting information) required to be supplied to any taxing
authority with respect to Taxes including amendments thereto.
"Termination Date" has the meaning set forth in Section 9.1(b).
"Third Party Claim" means any claim, action, or proceeding made
or brought by any Person who is not (a) a Party to this Agreement, or (b) an
Affiliate of a Party to this Agreement.
"Title Commitment" has the meaning set forth in Section 6.17.
"Title Company" has the meaning set forth in Section 6.17.
"Title Policies" has the meaning set forth in Section 6.17.
"Transfer Taxes" means any real property transfer or gains tax,
sales tax, conveyance fee, use tax, stamp tax, stock transfer tax or other
similar tax, including any related penalties, interest and additions to tax.
"Transferable Permits" means those Permits and Environmental
Permits with respect to the Assets or the Business which may be transferred
to Buyer with or without a filing with, notice to, consent of or approval of
any Governmental Authority, and excluding those Permits and Environmental
Permits with respect to the Assets or the Business which are non-transferable
to Buyer and with respect to which Buyer must apply for and obtain
replacements.
"Transferred Employees" means Transferred Non-Union Employees and
Transferred Union Employees.
"Transferred Employee Records" means records related to Seller's
employees who become employees of Buyer but only to the extent such records
pertain to (A) skill and development training and biographies, (B) seniority
histories, (C) salary and benefit information, (D) Occupational, Safety and
Health Administration reports, or (E) subject to the limitation of the Health
Insurance Portability and Accountability Act of 1996 and any applicable state
privacy legislation and regulations, active medical restriction forms.
"Transferred Non-Union Employees" has the meaning set forth in
Section 6.12(b).
"Transferred Union Employees" has the meaning set forth in
Section 6.12(a).
"Union Employees" has the meaning set forth in Section 6.12(a).
"UniSource" means UniSource Energy Corporation, an Arizona
corporation and a direct or indirect parent corporation of Buyer.
"UniSource Designee" means a wholly-owned subsidiary, direct or
indirect, of either UniSource or Tucson Electric Power Company, an Arizona
corporation named in the approvals by the ACC and the FERC as an entity that
may acquire the Assets.
"UniSource SEC Reports" has the meaning set forth in Section 5.5.
"WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.
"1954 Code" has the meaning set forth in Section 6.14(a)(iii).
1.2 CERTAIN INTERPRETIVE MATTERS. In this Agreement, unless the
context otherwise requires, the singular shall include the plural, the
masculine shall include the feminine and neuter, and vice versa. The term
"includes" or "including" shall mean "including without limitation." The
terms "hereof," "herein" and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole
(including all of the Schedules and Exhibits hereto) and not to any
particular provision of this Agreement. References to a Section, Article,
Exhibit or Schedule shall mean a Section, Article, Exhibit or Schedule of
this Agreement, and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended, supplemented
or restated through the date as of which such reference is made.
ARTICLE II
PURCHASE AND SALE
2.1 TRANSFER OF ASSTES. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, at the Closing,
Seller will sell, assign, convey, transfer and deliver to Buyer or the
UniSource Designee, and Buyer or such UniSource Designee will purchase,
assume and acquire from Seller, free and clear of all Encumbrances (except
for Permitted Encumbrances), all of Seller's right, title and interest in and
to all the assets (except for Excluded Assets), real, personal or mixed,
tangible, or intangible, used or held for use by Seller in or in connection
with, or otherwise necessary for, the conduct of the Business, including,
without limitation, those assets described below, each as in existence on the
Closing Date (such assets, collectively, the "Assets"):
(a) those certain parcels of real property owned by Seller
together with all buildings, facilities, and other improvements thereon and
all appurtenances thereto as described in Schedule 4.9 (the "Real Property");
(b) all accounts receivable and earned but unbilled revenues
attributable to the Business, and all Inventories;
(c) all machinery (mobile or otherwise), equipment (including
communications equipment and computers), vehicles, tools, furniture and
furnishings and other personal property related to the Business, owned by
Seller and located on the Real Property on the Closing Date, together with
all the personal property of Seller used principally in the operation of the
Business that are in the possession of Seller and whether or not located on
the Real Property (collectively, the "Tangible Personal Property");
(d) subject to the provisions of Section 6.7(c), all Assigned
Agreements;
(e) subject to the provisions of Section 6.7(c), all Real
Property Leases;
(f) all Transferable Permits;
(g) all books, customer lists and customer information
databases, meter reading and service data, accounts payable and receivable
data, operating and maintenance records, warranty information, operating,
safety and maintenance manuals, engineering design plans, blueprints and as-
built plans, specifications, procedures and similar items of Seller relating
specifically to the Assets and necessary for the operation of the Assets and
the Business (subject to the right of Seller to retain copies of same for its
use) other than such items which are proprietary to third parties and
accounting records;
(h) all unexpired, transferable warranties and guarantees from
third parties with respect to any Asset as of the Closing Date;
(i) Seller prepaid expenses; and
(j) xxxxx cash held locally for the benefit of the Business.
2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary in
this Agreement, nothing in this Agreement will constitute a transfer to Buyer
or a UniSource Designee of, or be construed as conferring on Buyer or a
UniSource Designee, and neither Buyer nor said UniSource Designee is
acquiring, any right, title or interest in or to the following specific
assets which are associated with the Assets or the Business, but which are
hereby specifically excluded from the sale and the definition of Assets
herein (the "Excluded Assets"):
(a) assets that Seller uses in both the Business and Seller's
electric or communications businesses, the material items of which are
identified in Schedule 2.2 hereto and any contracts or agreements regarding
the procurement of goods or services by Seller for use in its electric or
communications businesses;
(b) cash and cash equivalents (including checks) in transit, in
hand or in bank accounts, other than xxxxx cash held locally for the benefit
of the Business;
(c) the rights of Seller and its Affiliates to the names
"Citizens Communications Company", "Citizens Utilities", "CZN" or "Citizens"
or any other trade names, trademarks, service marks, corporate names,
corporate symbols or logos or any part, derivative or combination thereof
(the "Citizens Marks");
(d) the stock record and minute books of Seller, duplicate
copies of all books and records transferred to Buyer, all records prepared in
connection with the sale of the Business (including bids received from third
parties and analyses relating to the Business and all original documents
relating to the Revenue Bonds (provided that copies of such documents
relating to the Revenue Bonds have been furnished to Buyer);
(e) assets disposed of by Seller after the date of this
Agreement to the extent such dispositions are not prohibited by this
Agreement;
(f) except in the case of causes of action against third
parties (including indemnification and contribution) relating to an
Environmental Condition or Regulated Substance or arising under Environmental
Laws and not relating to a Retained Liability, the rights of Seller in and to
any causes of action against third parties (including indemnification and
contribution) relating to any Real Property or Tangible Personal Property,
Permits, Environmental Permits, Taxes, Real Property Leases or the Assigned
Agreements, if any, and not relating to the Assumed Liabilities, including
any claims for refunds, prepayments, offsets, recoupment, insurance proceeds
(subject to Section 6.13(c)), condemnation awards (subject to Section
6.13(b)), judgments and the like, whether received as payment or credit
against future liabilities, relating specifically to the Real Property or any
improvements thereon and relating to any period prior to the Closing Date;
(g) all personnel records of Seller and its Affiliates relating
to the Transferred Employees other than Transferred Employee Records or other
records, the disclosure of which is required by law or legal or regulatory
process or subpoena;
(h) any and all of Seller's rights and interests in any
contract that is not an Assigned Agreement or that is an intercompany
transaction between Seller and an Affiliate of Seller and all accounts owing
by and among Seller and any of its Affiliates, whether or not any such
intercompany transaction or account relates to the provision of goods and
services, payment arrangements, intercompany charges or balances, or the
like;
(i) except to the extent set forth in Section 3.4, rights to
refunds of Taxes payable with respect to the Business, the Assets, or any
other assets, properties or operations of Seller or any Affiliate thereof;
(j) all deferred tax assets or collectibles;
(k) any insurance policy, bond, letter of credit or similar
item, and any cash surrender value in regard thereto;
(l) except as otherwise set forth in Section 6.12, assets
attributable to or related to a Benefit Plan; and
(m) all other assets listed in Schedule 2.2 hereto.
2.3 ASSUMED LIABILITIES. On the Closing Date, Buyer or the UniSource
Designee acquiring the Assets shall deliver to Seller the Assignment and
Assumption Agreement pursuant to which Buyer or such UniSource Designee shall
assume and agree to discharge when due, without recourse to Seller, in
accordance with the respective terms and subject to the respective conditions
thereof, all of the Assumed Liabilities. All of the following liabilities
and obligations of Seller or Buyer which relate to, or arise by virtue of
Seller's or Buyer's ownership of the Assets or operation of the Business
(other than Excluded Liabilities) are referred to collectively as the
"Assumed Liabilities":
(a) all liabilities and obligations of Seller or Buyer arising
on or after the Closing Date under the Assigned Agreements, the Real Property
Leases, and the Transferable Permits in accordance with the terms thereof,
including, without limitation, the Assigned Agreements entered into by Seller
(i) prior to the date hereof and (ii) after the date hereof consistent with
the terms of this Agreement, except in each case to the extent such
liabilities and obligations, but for a breach or default by Seller, would
have been paid, performed or otherwise discharged on or prior to the Closing
Date and are not otherwise included among the items causing an adjustment to
the Base Purchase Price contemplated in Section 3.3 or to the extent the same
arise out of any such breach or default or out of any event which after the
giving of notice or passage of time or both would constitute a default by
Seller;
(b) all liabilities and obligations of Seller for accounts
payable to the extent included among the items causing an adjustment to the
Base Purchase Price contemplated in Section 3.3;
(c) all liabilities and obligations associated with the Assets
or the Business in respect of Taxes for which Buyer is liable pursuant to
Section 3.4 or 6.10(a) hereof;
(d) all liabilities and obligations of Seller or Buyer with
respect to the Transferred Employees incurred on or after the Closing Date
for which Buyer is responsible pursuant to Section 6.12;
(e) all liabilities, responsibilities and obligations of Seller
or Buyer arising under Environmental Laws or relating to Environmental
Conditions or Regulated Substances (including common law liabilities relating
to Environmental Conditions and Regulated Substances), whether such
liability, responsibility or obligation is known or unknown, contingent or
accrued as of the Closing Date, including but not limited to: (i) costs of
compliance (including capital, operating and other costs) relating to any
violation or alleged violation of Environmental Laws occurring prior to, on
or after the Closing Date, with respect to the ownership of the Assets or
operation of the Business; (ii) property damage or natural resource damage
(whether such damages were manifested before or after the Closing Date)
arising from Environmental Conditions or Releases of Regulated Substances at,
on, in, under, adjacent to, or migrating from any Assets prior to, on or
after the Closing Date; (iii) any Remediation (whether or not such
Remediation commenced before the Closing Date or commences after the Closing
Date) of Environmental Conditions or Regulated Substances that are present or
have been Released prior to, on or after the Closing Date, at, on, in,
adjacent to or migrating from the Assets; (iv) any violations or alleged
violations of Environmental Laws occurring on or after the Closing Date with
respect to the ownership of any Assets or operation of the Business; (v) any
bodily injury or loss of life arising from Environmental Conditions or
Releases of Regulated Substances at, on, in, under, adjacent to or migrating
from any Asset on or after the Closing Date; (vi) any bodily injury, loss of
life, property damage, or natural resource damage arising from the storage,
transportation, treatment, disposal, discharge, recycling or Release, at any
Off-Site Location, or arising from the arrangement for such activities, on or
after the Closing Date, of Regulated Substances generated in connection with
the ownership of the Assets or the operation of the Business; and (vii) any
Remediation of any Environmental Condition or Release of Regulated Substances
arising from the storage, transportation, treatment, disposal, discharge,
recy.cling or Release, at any Off-Site Location, or arising from the
arrangement for such activities, on or after the Closing Date, of Regulated
Substances generated in connection with the ownership or operation of the
Assets; provided, that nothing set forth in this Section 2.3 shall require
Buyer to assume any liabilities, responsibilities or obligations that are
expressly excluded in Section 2.4;
(f) any Tax that may be imposed by any federal, state or local
government on the ownership, sale (except as otherwise provided in Section
3.4 or 6.10(a)), operation of the Business or use of the Assets on or after
the Closing Date, except for any Income Taxes attributable to the income of
Seller;
(g) all liabilities and obligations of Seller or Buyer arising
on and after the Closing Date under those Orders specifically relating to the
Assets or the Business issued by or entered into with any Governmental
Authority and listed in Schedule 2.3(g) or imposed on Buyer in any Required
Regulatory Approval;
(h) customer advances, customer deposits and construction
advances, unperformed service obligations, Easement relocation obligations,
and engineering and construction required to complete scheduled construction,
construction work in progress, and other capital expenditure projects, in
each case directly related to the Business and outstanding on or arising
after the Closing Date; and
(i) actions and proceedings based on conduct, actions,
circumstances or conditions arising or occurring on or after the Closing
Date, actions and proceedings described in Schedule 2.3(i), actions and
proceedings arising from or directly related to any other Assumed Liability,
and generic or industry-wide actions and proceedings outstanding on or
arising on or after the Closing Date that are applicable to the Business.
2.4 EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
in this Agreement, Buyer shall not assume or be obligated to pay, perform or
otherwise discharge the following liabilities or obligations of Seller
(collectively, the "Excluded Liabilities"):
(a) any liabilities or obligations of Seller in respect of any
Excluded Assets or other assets of Seller that are not Assets;
(b) any liabilities or obligations with respect to Taxes
attributable to Seller's ownership, or use of the Assets or operation of the
Business for taxable periods, or portions thereof, ending before the Closing
Date, except for Taxes for which Buyer is liable pursuant to Section 3.4 or
6.10(a) hereof;
(c) any liabilities or obligations of Seller accruing under any
of the Assigned Agreements prior to the Closing Date or any liability, other
than an Assumed Liability, underlying a Permitted Encumbrance, in each case
to the extent not included among the items causing an adjustment to the Base
Purchase Price contemplated in Section 3.3;
(d) any and all asserted or unasserted liabilities or
obligations to third parties (including employees) for injuries or damages,
whether arising from tortious conduct or otherwise, or similar causes of
action relating to the Assets or the Business arising during or attributable
to the period prior to the Closing Date, other than such that relate to
liabilities or obligations assumed by Buyer;
(e) any fines, penalties and associated costs for defending
related enforcement actions, resulting from any violation or alleged
violation of Environmental Laws with respect to the ownership of the Assets
or the operation of the Business occurring prior to the Closing Date;
(f) any payment obligations of Seller pursuant to the Assigned
Agreements for goods delivered or services rendered prior to the Closing
Date, including, but not limited to, rental payments pursuant to the Real
Property Leases, in each case to the extent not included among the items
causing an adjustment to the Base Purchase Price contemplated in Section 3.3;
(g) any liabilities, responsibilities and obligations of Seller
arising under Environmental Laws or relating to Environmental Conditions or
Regulated Substances (including common law liabilities relating to
Environmental Conditions and Regulated Substances), whether such liability,
responsibility or obligation was known or unknown, contingent or accrued,
which relates to (i) any bodily injury, loss of life, property damage or
natural resource damage arising from the storage, transportation, treatment,
disposal, discharge, recycling or Release of Regulated Substances generated
in connection with the ownership of the Assets or the operation of the
Business at any Off-Site Location, or arising from the arrangement for such
activities, prior to the Closing Date; or (ii) any Remediation of any
Environmental Condition or Regulated Substance at any Off-Site Location,
arising from the storage, transportation, treatment, disposal, discharge,
recycling or Release of Regulated Substances generated in connection with the
ownership of the Assets or the operation of the Business at such Off-Site
Location, or arising from the arrangement for such activities, prior to the
Closing Date; provided, that for purposes of this paragraph, "Off-Site
Location" does not include any location to which Regulated Substances
disposed of or Released at the site of any Asset may have migrated;
(h) any liability to third parties (including employees) for
personal injury or loss of life, to the extent caused (or allegedly caused)
by Environmental Conditions or the Release of Regulated Substances at, on,
in, under, or adjacent to, or migrating from, the Assets prior to the
Closing;
(i) subject to Section 6.12, any liabilities or obligations of
Seller, any Seller Subsidiary or any ERISA Affiliate of Seller relating to
any Benefit Plan including but not limited to any such liability (i) relating
to benefits payable under any Benefit Plan; (ii) relating to the Pension
Benefit Guaranty Corporation under Title IV of ERISA; (iii) relating to a
multi-employer plan; (iv) with respect to non-compliance with the notice and
benefit continuation requirements of COBRA; (v) with respect to any
noncompliance with ERISA or any other applicable laws; or (vi) with respect
to any suit, proceeding or claim which is brought against Seller, Buyer, any
Benefit Plan, or any fiduciary or former fiduciary of any such Benefit Plan;
(j) subject to Section 6.12, any liabilities or obligations
arising from facts or circumstances prior to the Closing Date relating to the
employment or termination of employment, including discrimination, wrongful
discharge, unfair labor practices, or constructive termination by Seller of
any individual, attributable to any actions or inactions by Seller prior to
the Closing Date other than actions or inactions taken at the written
direction of Buyer (it being understood and agreed that Buyer shall have no
liability for action taken by Seller pursuant to Section 6.12 except as
expressly provided therein);
(k) subject to Section 6.12, any obligations of Seller for
wages, overtime, employment taxes, severance pay, transition payments in
respect of compensation or similar benefits accruing or arising prior to the
Closing under any term or provision of any contract, plan, instrument or
agreement relating to any of the employees of Seller;
(l) all obligations of Seller with respect to the Revenue Bonds
and any other indebtedness for money borrowed by Seller (including items due
to Seller's Affiliates) other than payment obligations arising on or after
the Closing Date under any equipment lease of the kind listed in Schedule
4.11(a) or under any line extension contracts or similar construction
arrangements, it being understood and agreed that such leases, contracts and
similar arrangements do not create indebtedness for money borrowed; and
(m) all obligations and liabilities included in Seller's "other
current and accrued liabilities" account; and
(n) any liability of Seller arising out of a breach by Seller
or any of its Affiliates of any of their respective obligations under this
Agreement or the Ancillary Agreements.
2.5 CONTROL OF LITIGATION.
(a) The Parties agree and acknowledge that, from and after the
Closing Date, Seller shall be entitled exclusively to control, defend and
settle any litigation, administrative or regulatory proceeding, and any
investigation or Remediation activity (including without limitation any
environmental mitigation or Remediation activities), arising out of or
related to any Excluded Liabilities, and Buyer agrees to cooperate fully in
connection therewith and in connection therewith, shall comply with the
provisions of Section 6.2, provided that, in no event shall Seller's exercise
of its rights under this Section 2.5 (i) unreasonably interfere with Buyer's
conduct or operation of the Business, (ii) place any environmental liens or
deed restrictions on the Real Property, or (iii) cause Buyer to be
responsible for maintaining any institutional or engineering controls that
may be part of a Remediation activity.
(b) The Parties agree and acknowledge that, from and after the
Closing Date, Buyer shall be entitled exclusively to control, defend and
settle any litigation, administrative or regulatory proceeding, and any
investigation or Remediation activity (including without limitation any
environmental mitigation or Remediation activities), arising out of or
related to any Assumed Liabilities, and Seller agrees to cooperate fully in
connection therewith and in connection therewith, shall comply with the
provisions of Section 6.2.
ARTICLE III
THE CLOSING
3.1 CLOSING. Upon the terms and subject to the satisfaction of the
conditions in Article VII of this Agreement, each of (i) the sale,
assignment, conveyance, transfer and delivery of the Assets to Buyer by
Seller, (ii) the payment of the Purchase Price to Seller by Buyer, (iii) the
assumption of the Assumed Liabilities by Buyer, and (iv) the consummation of
the other respective obligations of the Parties contemplated by this
Agreement to be consummated on the Closing Date shall take place at a closing
(the "Closing"), to be held at the offices of Seller in Phoenix, Arizona, or
another mutually acceptable location, at 9:00 a.m. local time on the Closing
Date.
3.2 CLOSING PAYMENT. Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, in consideration of the
aforesaid sale, assignment, assumption, conveyance, transfer and delivery of
the Assets, Buyer will pay or cause to be paid to Seller at the Closing an
aggregate amount in U.S. dollars of one hundred thirty-eight million dollars
($138,000,000) (the "Base Purchase Price") plus or minus any adjustments
pursuant to the provisions of this Agreement (the "Purchase Price"), by wire
transfer of immediately available funds denominated in U.S. dollars or by
such other means as are agreed upon by Seller and Buyer.
3.3 ADJUSTMENT TO BASE PURCHASE PRICE.
(a) Subject to Section 3.3(b), at the Closing, the Base
Purchase Price shall be adjusted to account for the items set forth in this
Section 3.3(a):
(i) the Base Purchase Price shall be decreased by six
million dollars ($6,000,000) if the Closing occurs on or before July 28,
2003;
(ii) [intentionally omitted]
(iii) the Base Purchase Price shall be increased by three
million dollars ($3,000,000) in the event the Closing occurs after the first
anniversary of the date hereof;
(iv) the Base Purchase Price shall be increased by the
aggregate amount of all accounts receivable and earned but unbilled revenues
(other than any amounts that are due from any of Seller's Affiliates or that
otherwise are Excluded Assets) attributable to the Business as of day
immediately preceding the Closing Date net of Seller's reserve for allowance
for bad debt (as reflected in Seller's written policy for allowance for bad
debt as of the date hereof);
(v) the Base Purchase Price shall be decreased by all
accounts payable attributable to the Business as of the day immediately
preceding the Closing Date (other than any liability included in Seller's
"other current and accrued liabilities" account, which shall be an Excluded
Liability or that otherwise is an Excluded Liability);
(vi) the Base Purchase price shall be decreased by (A)
the aggregate amount of customer advances for construction times 25% and (B)
the aggregate amount of customer deposits, in each case to the extent
relating to the Business outstanding as of the day immediately preceding the
Closing Date (other than any amounts due to any of Seller's Affiliates or
that otherwise is an Excluded Liability);
(vii) the Base Purchase Price shall increased by the
aggregate amount of Inventories recorded on Seller's books and records as of
day immediately preceding the Closing Date;
(viii) the Base Purchase Price shall be adjusted to account
for the net balance payable to or by Seller, if any, for items prorated
pursuant to Section 3.4, other than the items addressed in Section 3.4(a);
(ix) the Base Purchase Price shall be increased or
decreased if and to the extent required by Sections 6.3(c), 6.12(b),
6.12(d)(iii)(D) and 6.13;
(x) the Base Purchase Price will be increased by the
aggregate amount of all (i) Approved Capital Expenditures that are accrued by
Seller between the date of this Agreement and the Closing Date (including
expenditures recorded in the Construction Work in Progress account of the
Business as of the day immediately preceding the Closing Date and relating to
the Approved Capital Expenditures), (ii) without duplication, expenditures to
purchase materials, supplies and other capital items that are dedicated to,
but as of Closing have not been used in, the construction or improvement of
the property, plant or equipment and relating to the Approved Capital
Expenditures) and (iii) without duplication, other expenditures recorded as
an asset of the Business as of the day immediately preceding the Closing Date
and relating to such Approved Capital Expenditures; and
(xi) The Base Purchase Price shall be increased or
decreased by the amount of the Seller's Purchased Gas Adjustment account
balance outstanding on the day immediately preceding the Closing Date.
(b) At least ten (10), but no more than thirty (30) days prior
to the Closing Date, Seller shall prepare and deliver to Buyer an estimated
closing statement (the "Estimated Closing Statement") that shall set forth
Seller's best estimate of the estimated adjustments to the Base Purchase
Price required by Section 3.3(a) (regardless of whether notice of such Base
Purchase Price adjustments have been previously delivered to Buyer) (the
"Estimated Adjustment"). Within five (5) days following the delivery of an
Estimated Closing Statement to Buyer, Buyer may object in good faith to such
Estimated Closing Payment in writing. In the event of any such objection,
the Parties shall attempt to resolve their differences by negotiation. If
the Parties are unable to do so before three (3) days prior to the Closing
Date, then (i) the full amount of the Estimated Adjustment shall be made at
the Closing if the amount in dispute is less than $1,000,000, or (ii) the
undisputed portion of the Estimated Adjustment shall be made at the Closing
if the amount in dispute is $1,000,000 or more. The disputed portions shall
be paid as a Post-Closing Adjustment if and to the extent required by Section
3.3(d).
(c) Within sixty (60) days following the Closing Date, Seller
shall prepare and deliver to Buyer a final closing statement setting forth
the final adjustments to the Base Purchase Price required by Section 3.3(a)
(the "Proposed Post-Closing Adjustment"). All calculations of the Proposed
Post-Closing Adjustments shall be prepared using the same accounting
principles, policies and methods as Seller has historically used in
connection with the calculation of the items reflected on such Proposed Post-
Closing Adjustments.
(d) Within thirty (30) days following the delivery of a
Proposed Post-Closing Adjustment to Buyer, Buyer may object to such Proposed
Post-Closing Adjustment in writing. Seller agrees to cooperate with Buyer to
provide Buyer and Buyer's Representatives information used to prepare the
Proposed Post-Closing Adjustments and information relating thereto. If Buyer
objects to a Proposed Post-Closing Adjustment, the Parties shall attempt to
resolve such dispute by negotiation. If such Parties are unable to resolve
such dispute within thirty (30) days of any such objection by Buyer, the
Parties shall appoint an Independent Accounting Firm. The fees and expenses
of such Independent Accounting Firm shall be allocated between Buyer and
Seller so that Seller's share of such fees and expenses shall be in the same
proportion that the aggregate amount of such remaining disputed amounts so
submitted by Buyer to such auditor that is successfully disputed by Buyer (as
finally determined by such auditor) bears to the total amount of such
remaining disputed amounts so submitted by Buyer to such auditor. The
Independent Accounting Firm shall review such Proposed Post-Closing
Adjustment and determine the appropriate adjustment to the Base Purchase
Price, if any, within thirty (30) days of such appointment. The Parties
agree to cooperate with the Independent Accounting Firm and provide it with
such information as it reasonably requests to enable it to make such
determination. The finding of such Independent Accounting Firm shall be
binding on the Parties hereto. Upon determination by agreement of the
Parties or by binding determination of the Independent Accounting Firm of the
appropriate adjustment to the Base Purchase Price (in either case, the "Post-
Closing Adjustment"), if such Post-Closing Adjustment results in a change to
the Base Purchase Price, the Party owing the difference shall deliver such
difference to the Party owed such amount no later than two (2) Business Days
after the determination of such Post Closing Adjustment, in immediately
available funds or in any other manner as reasonably requested by the Party
owed such amount, plus interest at 6.0% per annum on such determined amount
from the Closing Date to (but not including) the date of payment.
(e) If at any time following the Closing Date Buyer actually
returns to customers greater than thirty-five percent (35%) of the aggregate
customer advances for construction directly relating to the Business and
outstanding as of the Closing Date ("Advances"), Seller shall reimburse Buyer
for all amounts returned to customers to the extent said returns exceed
twenty-five percent (25%) of Advances. Buyer may, at any time within seven
(7) years from the Closing Date, provide notice to Seller of a reimbursement
claim under this Section 3.3(e), which notice shall include reasonable
documentary substantiation of returns to customers of Advances. In the event
Seller agrees with said determination, it shall promptly pay such
reimbursement to Buyer. In the event Seller disputes said determination, it
shall initiate the dispute resolution procedures with regard to the Post-
Closing Adjustment, as provided in Section 3.3(d), which shall be binding on
the Parties.
3.4 PRORATIONS. Buyer and Seller agree that all of the items
normally prorated, including those listed below (but not including Income
Taxes), relating to the Business and operation of the Assets shall be
prorated as of the Closing Date, with Seller liable for such items to the
extent such items relate to any time period prior to the Closing Date, and
Buyer liable for such items to the extent such items relate to periods
commencing with the Closing Date (measured in the same units used to compute
the item in question, otherwise measured by calendar days). The Base
Purchase Price shall be increased to the extent Buyer will benefit
financially due to Seller's payment prior to the Closing Date of the portion
of any such item allocable to Buyer, and (except with respect to the items
addressed in clause (a) below) shall be decreased to the extent Seller will
benefit financially due to Buyer's payment on or after the Closing Date of
the portion of any such item allocable to Seller. The items subject to
proration include the following:
(a) Subject to Section 6.10(b), personal property, real estate
and occupancy Taxes, assessments and other charges, if any, on or with
respect to the Business and operation of the Assets;
(b) rent, Taxes (other than Income Taxes) and all other items
(including prepaid services or goods not included in Inventories) payable by
or to Seller under any of the Assigned Agreements to the extent not included
in the account payables of the Business outstanding as of the day immediately
preceding the Closing Date;
(c) any permit, license, registration, compliance assurance
fees or other fees with respect to any Transferable Permit or other Asset;
(d) sewer rents and charges for water, telephone, electricity
and other utilities with respect to the Assets;
(e) rent and Taxes payable by or to Seller under the Real
Property Leases assigned to Buyer to the extent not included in the account
payables of the Business outstanding as of the day immediately preceding the
Closing Date;
(f) deposits made by Seller to the extent transferred to Buyer;
(g) prepaid expenses paid by Seller to the extent transferred
to Buyer; and
(h) xxxxx cash held locally for the benefit of the Business to
the extent transferred to Buyer.
3.5 DELIVERIES BY SELLER. At the Closing, Seller will deliver, or
cause to be delivered, the following to Buyer:
(a) The Xxxx of Sale, duly executed by Seller;
(b) Copies of any and all consents, waivers or approvals
obtained or required to be obtained by Seller from Government Authorities or
non-governmental Persons with respect to the transfer of the Assets, or the
consummation of the transactions contemplated by this Agreement;
(c) One or more Special Warranty Deeds conveying title to the
Real Property to Buyer, duly executed and acknowledged by Seller and in
recordable form;
(d) An opinion from Seller's general counsel, dated the Closing
Date, substantially in the form of Exhibit D attached hereto, and opinions
from Seller's Bond Counsel, dated the Closing Date, substantially in the form
of Exhibit E attached hereto;
(e) The Assignment and Assumption Agreement, duly executed by
Seller;
(f) A FIRPTA Affidavit, duly executed by Seller;
(g) Copies, certified by the Secretary or Assistant Secretary
of Seller, of corporate resolutions authorizing the execution and delivery of
this Agreement and all of the agreements and instruments to be executed and
delivered by Seller in connection herewith, and the consummation of the
transactions contemplated hereby;
(h) A certificate of the Secretary or Assistant Secretary of
Seller identifying the name and title and bearing the signatures of the
officers of Seller authorized to execute and deliver this Agreement and the
other agreements and instruments contemplated hereby;
(i) Certificate of Good Standing with respect to Seller, issued
by the Secretary of State of the State of Delaware;
(j) To the extent available, originals of all Assigned
Agreements, Real Property Leases and Transferable Permits and, if not
available, true and correct copies thereof (delivery of the foregoing
documents will be deemed made in the case of any such documents then located
at any of the offices included in the Assets, but only to the extent that
Seller delivers to Buyer a schedule generally identifying each such office
and the general categories of documents located in each such office);
(k) All such other instruments of assignment, transfer or
conveyance as shall, in the reasonable opinion of Buyer and its counsel, be
necessary to transfer the Assets to Buyer, in accordance with this Agreement
and where necessary or desirable in recordable form;
(l) Such other agreements, documents, instruments and writings
as are required to be delivered by Seller at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably requested by Buyer in
connection herewith; and
(m) A certificate dated the Closing Date executed by Seller's
President, Public Services Sector, to the effect that, to such officer's
Knowledge, the conditions set forth in Sections 7.1(e) and (f) have been
satisfied by Seller.
3.6 DELIVERIES BY BUYER. At the Closing, Buyer will deliver, or
cause to be delivered, the following:
(a) The Purchase Price, as adjusted pursuant to Section 3.3, by
wire transfer of immediately available funds denominated in U.S. dollars in
accordance with Seller's instructions or by such other means as are agreed
upon by Seller and Buyer;
(b) The Assignment and Assumption Agreement, duly executed by
Buyer;
(c) All such other instruments of transfer or assumption as
shall, in the reasonable opinion of Seller and its counsel, be necessary for
the sale, conveyance, assignment and transfer of the Assets to, or the
assumption of the Assumed Liabilities by, Buyer in accordance with this
Agreement;
(d) Copies, certified by the Secretary or Assistant Secretary
of Buyer, of resolutions authorizing the execution and delivery of this
Agreement and all of the agreements and instruments to be executed and
delivered by the Buyer in connection herewith, and the consummation of the
transactions contemplated hereby;
(e) A certificate of the Secretary or Assistant Secretary of
Buyer, identifying the name and title and bearing the signatures of the
officers of Buyer authorized to execute and deliver this Agreement and the
other agreements and instruments contemplated hereby;
(f) An opinion from Buyer's general counsel, dated the Closing
Date, substantially in the form of Exhibit F attached hereto;
(g) Certified copies of any and all consents, waivers or
approvals obtained or required to be obtained by Buyer from Government
Authorities or non-governmental Persons with respect to the transfer of the
Assets or the consummation of the transactions contemplated by this
Agreement;
(h) Such other agreements, documents, instruments and writings
as are required to be delivered by Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably requested by Seller in
connection herewith;
(i) Certificate of Good Standing with respect to Buyer, issued
by the Secretary of State of Arizona; and
(j) A certificate dated the Closing Date executed by Buyer's
Chief Financial Officer to the effect that, to such officer's knowledge, the
conditions set forth in Sections 7.2(e), (f) and (g) have been satisfied by
Buyer.
3.7 WORK IN PROGRESS. The Parties agree to work together before the
Closing Date to effect on the Closing Date an orderly transition with respect
to work in progress.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1 INCORPORATION; QUALIFICATION. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
lease, and operate its material assets and properties and to carry on its
business as is now being conducted. Seller is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which its business, as now being conducted, shall require it
to be so qualified, except where the failure to be so qualified would not
have a Seller Material Adverse Effect.
4.2 AUTHORITY. Seller has full corporate power and authority to
execute and deliver this Agreement and each of the Ancillary Agreements to
which Seller is a signatory and to consummate the transactions contemplated
hereby or thereby. The execution and delivery by Seller of this Agreement
and each of the Ancillary Agreements to which Seller is a signatory and the
consummation by Seller of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action
required on the part of Seller and this Agreement has been duly and validly
executed and delivered by Seller. Each of this Agreement and the Ancillary
Agreements to which Seller is a signatory constitutes the legal, valid and
binding agreement of Seller, enforceable against Seller in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity).
4.3 CONSENTS AND APPROVALS; NO VIOLATION.
(a) Except as set forth in Schedule 4.3(a), neither the
execution, delivery and performance of this Agreement nor the execution,
delivery and performance of the Ancillary Agreements by Seller will (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of Seller, (ii) result in a default (or give rise to
any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
material agreement or other instrument or obligation to which Seller is a
party or by which it, or any of the Assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or that would not,
individually or in the aggregate, result in a Seller Material Adverse Effect
or an Asset Material Adverse Effect; or (iii) subject to obtaining the Seller
Required Regulatory Approvals, constitute violations of any law, regulation,
order, judgment or decree applicable to Seller, which violations,
individually or in the aggregate, would result in a Seller Material Adverse
Effect or an Asset Material Adverse Effect.
(b) Except as set forth in Schedule 4.3(b) (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to as the
"Seller Required Regulatory Approvals"), no consent or approval of, filing
with, or notice to, any Governmental Authority is necessary for the execution
and delivery of this Agreement and the Ancillary Agreements by Seller or the
consummation by Seller of the transactions contemplated hereby and thereby,
other than those the failure to obtain which would not result in a Seller
Material Adverse Effect or an Asset Material Adverse Effect and would not
otherwise result in a material violation of law by Buyer.
4.4 INSURANCE. Schedule 4.4 lists, as of the date of this Agreement,
all material policies of fire, liability, workers' compensation and other
forms of insurance (if any) owned or held by, or on behalf of, Seller with
respect to the Assets and the Business. Except as set forth in such
Schedule, all such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date hereof have
been paid (other than retroactive premiums which may be payable with respect
to auto, general liability and workers' compensation insurance policies), and
no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior
to the date of such cancellation. Except as described in Schedule 4.4,
within the thirty-six (36) months preceding the date of this Agreement,
Seller has not been refused any insurance with respect to the Assets or the
Business nor has its coverage been limited by any insurance carrier to which
it has applied for any such insurance or with which it has carried insurance
during the last twelve (12) months.
4.5 REAL PROPERTY LEASES. Schedule 4.5 lists, as of the date of this
Agreement, all material real property leases under which Seller is a lessee
or lessor and which relate to the Assets, including a separate listing of all
leases of office space used by Seller in the conduct of the Business (the
"Real Property Leases"). Seller will deliver to Buyer true, correct and
complete copies of each of the Real Property Leases in accordance with
Section 6.20.
4.6 ENVIRONMENTAL MATTERS. Seller has heretofore delivered to Buyer
all environmental reports and all environmental site assessments relating to
the Assets that have been identified by Seller after diligent inquiry, which
reports have been identified in schedules delivered to Buyer on or prior to
the date hereof ("Environmental Reports"). Except as disclosed in Schedule
4.6 or in the Environmental Reports:
(a) Seller holds, and is in substantial compliance with, all
Environmental Permits that are required for Seller to conduct the Business
and operate the Assets, and Seller is otherwise in compliance with applicable
Environmental Laws with respect to the Business and operation of the Assets,
except for such failures to hold or comply with required Environmental
Permits, or such failures to be in compliance with applicable Environmental
Laws, as would not, individually or in the aggregate, result in an Asset
Material Adverse Effect;
(b) Seller has not received (i) any written request for
information, or been notified that it is a potentially responsible party,
under CERCLA or any similar state law with respect to any of the Real
Property, or (ii) any written notification from a Governmental Authority with
respect to pending or ongoing investigations or enforcement actions related
to alleged or potential violations of any applicable Environmental Law with
respect to any of the Real Property;
(c) Seller has not entered into or agreed to any consent decree
or order relating to the Assets, and is not subject to any outstanding
judgment, decree, or judicial order relating to compliance with any
Environmental Law or to Remediation of Regulated Substances under any
Environmental Law relating to the Assets; and
(d) To Seller's Knowledge, no Release of Regulated Substances
has occurred at, from, in, on, or under the Real Property, and, except as
legally permitted, no Regulated Substances are present in, on, about or
migrating from the Real Property, in each case that would give rise to an
Environmental Claim related to the Assets for which Remediation would
reasonably be required, except in any such case to the extent that any such
Release or Environmental Claim would not, individually or in the aggregate,
result in an Environmental Claim in excess of $500,000.
4.7 LABOR MATTERS. Schedule 4.7 sets forth the collective bargaining
agreements, and amendments thereto, to which Seller is a party in connection
with the Business. Seller has previously delivered to Buyer true and correct
copies of all such collective bargaining agreements and amendments thereto.
With respect to the Assets and the Business, except to the extent set forth
in Schedule 4.7 and except for such matters as would not, individually or in
the aggregate, result in an Asset Material Adverse Effect, (a) Seller is in
compliance with all applicable laws respecting employment and employment
practices, occupational safety and health, plant closing, mass layoffs, terms
and conditions of employment and wages and hours; (b) Seller has not received
any written notice of any unfair labor practice complaint against Seller
pending before the National Labor Relations Board; (c) no arbitration
proceeding arising out of or under any collective bargaining agreement is
pending against Seller; and (d) Seller has not experienced any work stoppage
within the three-year period prior to the date hereof and to Seller's
Knowledge none is currently threatened.
4.8 BENEFIT PLANS: ERISA.
(a) Schedule 4.8 lists all material Benefit Plans. True and
complete copies of all such Benefit Plans have been made available to the
Buyer.
(b) No liability under Title IV or Section 302 of ERISA has
been incurred by Seller or any ERISA Affiliate of Seller that has not been
satisfied in full, and no condition exists that presents a material risk to
Seller or any ERISA Affiliate of Seller of incurring any such liability,
other than liability for premiums due to the Pension Benefit Guaranty
Corporation (which premiums have been paid when due). Insofar as the
representation made in this Section 4.8 applies to Sections 4064, 4069 or
4204 of Title IV of ERISA, it is made with respect to any employee benefit
plan, program, agreement or arrangement subject to Title IV of ERISA to which
Seller or any ERISA Affiliate of Seller made, or was required to make,
contributions during the five (5)-year period ending on the last day of the
most recent plan year ended prior to the Closing Date.
(c) Except as expressly provided in this Agreement, the
consummation of the transactions contemplated by this Agreement will not,
either alone or in combination with another event, (i) entitle any current or
former employee or officer of Seller or any ERISA Affiliate of Seller to
severance pay, unemployment compensation or any other payment, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer.
(d) There has been no material failure of any of the Benefit
Plans that is a group health plan (as defined in Section 5000(b)(1) of the
Code) to meet the requirements of Section 4980B(f) of the Code with respect
to a qualified beneficiary (as defined in Section 4980B(g) of the Code).
Neither the Seller nor any ERISA Affiliate of Seller has contributed to a
nonconforming group health plan (as defined in Section 5000(c) of the Code)
and no ERISA Affiliate of Seller has incurred a tax under Section 5000(e) of
the Code that is or could become a liability of Buyer.
(e) There are no pending, or to Seller's Knowledge, threatened
claims by or on behalf of any Benefit Plans, by any employee or beneficiary
covered under any such Benefit Plans, or otherwise involving any such Benefit
Plans (other than routine claims for benefits).
4.9 REAL PROPERTY. Schedule 4.9 contains a description of the Real
Property included in the Assets. True and correct copies of any current
surveys, abstracts, title commitments and title opinions identified by Seller
after diligent inquiry to be in Seller's possession and all policies of title
insurance currently in force and identified by Seller after diligent inquiry
to be in the possession of Seller with respect to the Real Property have
heretofore been made available to Buyer.
4.10 CONDEMNATION. Except as set forth in Schedule 4.10, Seller has
not received any written notices of and otherwise has no Knowledge of any
pending or threatened proceedings or actions by any Governmental Authority to
condemn or take by power of eminent domain all or any part of the Assets.
4.11 ASSIGNED AGREEMENTS.
(a) Schedule 4.11(a) lists each Assigned Agreement (other than
Real Property Leases, line extension agreements and similar construction
arrangements, railroad crossing agreements and similar arrangements, and
Easements held by Seller) which is material to the Business, other than those
(i) that are listed or described on another Schedule, (ii) that provide for
annual payments by Seller after the date hereof of less than $100,000 or
(iii) that, when aggregated with all other Assigned Agreements not listed on
Schedule 4.5 or 4.11(a), provide for payments by Seller after the date hereof
of less than $500,000 in the aggregate. Schedule 4.11(a) also lists each
agreement that is material to the Assets or the Business that may expire or
that Seller expects to terminate prior to the Closing Date other than any
agreement that is an Excluded Asset.
(b) Except as disclosed in Schedule 4.11(b), each Assigned
Agreement listed on Schedule 4.5 or 4.11(a) constitutes a legal, valid and
binding obligation of Seller and, to Seller's Knowledge, constitutes a valid
and binding obligation of the other parties thereto, and may be transferred
to the Buyer as contemplated by this Agreement without the consent of the
other parties thereto and will continue in full force and effect thereafter,
unless in such case the impact of such lack of legality, validity or binding
nature, or inability to transfer, would not, individually or in the
aggregate, result in an Asset Material Adverse Effect.
(c) Except as set forth in Schedule 4.11(c), there is not,
under the Assigned Agreements listed on Schedule 4.5 or 4.11(a), any default
or event which, with notice or lapse of time or both, would constitute a
default on the part of the Seller or to Seller's Knowledge, any of the other
parties thereto, except such events of default and other events which would
not, individually or in the aggregate, result in an Asset Material Adverse
Effect.
4.12 LEGAL PROCEEDINGS. Except as set forth in Schedule 4.12, there
is no action or proceeding pending or, to Seller's Knowledge, threatened
against Seller before any court, arbitrator or Governmental Authority, which
would, individually or in the aggregate, reasonably be expected to result in
a Seller Material Adverse Effect or an Asset Material Adverse Effect. Except
as set forth in Schedule 4.12 Seller is not subject to any outstanding Order
that would, individually or in the aggregate, result in a Seller Material
Adverse Effect or an Asset Material Adverse Effect.
4.13 PERMITS. Seller has all Permits (other than Environmental
Permits, which are addressed in Section 4.6 hereof) necessary to own and
operate the Assets except where the failure to have such Permits would not,
individually or in the aggregate, create a Seller Material Adverse Effect or
an Asset Material Adverse Effect. Except as disclosed on Schedule 4.13,
Seller has not received any written notification that it is in violation of
any such Permits, except notifications of violations which would not,
individually or in the aggregate, result in a Seller Material Adverse Effect
or an Asset Material Adverse Effect. Seller is in compliance with all
Permits except where such non-compliance would not, individually or in the
aggregate, result in a Seller Material Adverse Effect or an Asset Material
Adverse Effect.
4.14 TAXES.
(a) Seller has filed or caused to be filed all Tax Returns that
are required to be filed by it with respect to any Tax relating to the
Assets, and has paid or caused to be paid all Taxes that have become due as
indicated thereon, except where such Tax is being contested in good faith by
appropriate proceedings, or where the failure to so file or pay would not
result in a Seller Material Adverse Effect or an Asset Material Adverse
Effect. Seller has complied in all material respects with all applicable
laws, rules and regulations relating to withholding Taxes relating to
Transferred Employees. All Tax Returns relating to the Assets are true,
correct and complete in all material respects. There are no liens for Taxes
upon the Assets except for liens for Taxes not yet due and Permitted
Encumbrances.
(b) Except as set forth in Schedule 4.14, no notice of
deficiency or assessment has been received from any taxing authority with
respect to liabilities for Taxes of Seller in respect of the Assets, which
have not been fully paid or finally settled, and any such deficiency shown in
Schedule 4.14 is being contested in good faith through appropriate
proceedings.
(c) Except as set forth in Schedule 4.14, there are no
outstanding agreements or waivers extending the applicable statutory periods
of limitation for Taxes associated with the Assets that will be binding upon
Buyer after the Closing.
(d) Except as set forth on Schedule 4.14, none of the Assets is
property that is required to be treated as being owned by any other person
pursuant to the so-called safe harbor lease provisions of former Section
168(f) of the Code, and none of the Assets is "tax-exempt use" property
within the meaning of Section 168(h) of the Code.
(e) Schedule 4.14 sets forth the taxing jurisdictions in which
Seller owns assets or conducts business that require a notification to a
taxing authority of the transactions contemplated by this Agreement, if the
failure to make such notification, or obtain Tax clearance certificates in
connection therewith, would either require Buyer to withhold any portion of
the consideration or subject Buyer to any liability for any Taxes of Seller.
4.15 INTELLECTUAL PROPERTY. The Citizens Marks and the software
licenses and related contracts described in Schedules 2.2 and 4.11(a)
constitute all of the material Intellectual Property necessary for the
operation and maintenance of the Assets or the conduct of the Business, each
of which Seller either has all right, title and interest in or valid and
binding rights under contract to use in connection with the operation of the
Assets and the Business. Except as disclosed in Schedule 4.15, (a) Seller is
not, nor has it received any notice that it is, in default (or with the
giving of notice or lapse of time or both, would be in default), under any
contract to use such Intellectual Property, and (b) to Seller's Knowledge,
such Intellectual Property is not being infringed by any other Person.
Except as disclosed in Schedule 4.15, Seller has not received notice that it
is infringing any Intellectual Property of any other Person in connection
with the Assets or the Business, and Seller, to its Knowledge, is not
infringing any Intellectual Property of any other Person which, individually
or in the aggregate, would have an Asset Material Adverse Effect.
4.16 CAPITAL EXPENDITURES. Seller has heretofore delivered to Buyer a
schedule of all Capital Expenditures that, as of the date of this Agreement,
are planned by Seller from the date hereof through December 31, 2003 (the
"Capital Expenditures Schedule").
4.17 COMPLIANCE WITH LAWS. Seller is in compliance with all
applicable laws, rules and regulations with respect to its ownership of the
Assets and operation of the Business except where the failure to be in
compliance would not, individually or in the aggregate, result in a Seller
Material Adverse Effect or an Asset Material Adverse Effect.
4.18 TITLE. Seller has, and will have as of the Closing Date, good,
valid and indefeasible title to the Real Property and the other Assets
purported to be owned by Seller, free and clear of all Encumbrances except
Permitted Encumbrances.
4.19 DISCLAIMERS. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET
FORTH IN THIS ARTICLE IV, THE ASSETS ARE TRANSFERRED "AS IS, WHERE IS", AND
SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
NATURE, EXPRESS OR IMPLIED, AS TO LIABILITIES, OPERATIONS OF THE ASSETS,
CONDITION, VALUE OR QUALITY OF THE ASSETS OR THE PROSPECTS (FINANCIAL AND
OTHERWISE), RISKS AND OTHER INCIDENTS OF THE ASSETS AND SELLER SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS,
OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY
DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENTS,
INCLUDING BUT NOT LIMITED TO ANY ENVIRONMENTAL LAWS, OR WHETHER SELLER
POSSESSES SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE
ASSETS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, SELLER FURTHER
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE
OF HAZARDOUS SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER
ENVIRONMENTAL LAWS WITH RESPECT TO THE ASSETS.
4.20 FINANCIAL STATEMENTS. Schedule 4.20 sets forth the unaudited
balance sheet for the Business as of December 31, 2001 (the "Balance Sheet")
and the unaudited statement of income of the Business for the twelve-month
period ended December 31, 2001 (collectively, the "Financial Statements").
Except as set forth in Schedule 4.20, the Financial Statements have been
prepared on a pre-tax basis in accordance, in all material respects, with
GAAP applied on a basis consistent with prior periods except for the omission
of full footnotes to such Financial Statements. Except as set forth in
Schedule 4.20, the Balance Sheet presents fairly in all material respects the
financial condition of the Business as of its date and the income statement
included in the Financial Statements presents fairly in all material respects
the results of operations of the Business for the periods covered thereby.
The books and records of Seller from which the Financial Statements were
derived were complete and accurate in all material respects at the time of
such preparation.
4.21 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Seller has filed, or caused to be filed, all forms, reports
and documents required to be filed by Seller with the SEC since January 1,
2001, and has heretofore delivered or made available to Buyer in the form
filed with the SEC, together with any amendments thereto, its (i) Annual
Reports on Form 10-K for the fiscal year ended December 31, 2000 and 2001,
(ii) Quarterly Reports on Form 10-Q for the fiscal quarter ended March 31 and
June 30, 2002, and (iii) all other reports or registration statements filed
by Seller with the SEC since January 1, 2001 (collectively, the "Seller SEC
Reports"). The Seller SEC Reports were prepared substantially in accordance
with the requirements of the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, as the case may be, and the
rules and regulations promulgated under each of such respective acts, and did
not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The financial statements, including all related notes and
schedules, contained in the Seller SEC Reports (or incorporated by reference
therein) fairly present the consolidated financial position of Seller as at
the respective dates thereof and the consolidated results of operations and
cash flows of Seller for the periods indicated in accordance with GAAP
applied on a consistent basis throughout the periods involved (except for
changes in accounting principles disclosed in the notes thereto) and subject
in the case of interim financial statements to normal year-end adjustments.
4.22 SUFFICIENCY OF ASSETS. The Assets and the Excluded Assets are
the only assets owned, used, or held for use by Seller in, or in connection
with, or otherwise necessary for, the conduct of the Business as presently
conducted, except for such assets the failure to own, use, or hold for use,
as would not have an Asset Material Adverse Effect or a Material Adverse
Effect for Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 ORGANIZATION. Buyer is an Arizona corporation, duly organized,
validly existing and in good standing under the laws of the state of its
organization and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as is now being
conducted.
5.2 AUTHORITY. Buyer has full corporate power and authority to
execute and deliver this Agreement and each of the Ancillary Agreements to
which Buyer is a signatory and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by Buyer of this Agreement
and the Ancillary Agreements to which Buyer is a signatory and the
consummation by Buyer of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action
required on the part of Buyer and this Agreement and the Ancillary Agreements
have been duly and validly executed and delivered by Buyer. Each of this
Agreement and the Ancillary Agreements to which Buyer is a signatory,
constitute the legal, valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity).
5.3 CONSENTS AND APPROVALS; NO VIOLATION.
(a) Except as set forth in Schedule 5.3(a), neither the
execution, delivery and performance of this Agreement by Buyer nor the
execution, delivery and performance of the Ancillary Agreements by Buyer or
any of its Affiliates nor the consummation by Buyer of the transactions
contemplated hereby and thereby will (i) conflict with or result in any
breach of any provision of the Articles of Incorporation or Bylaws (or other
similar governing documents) of Buyer, or any of its Affiliates, or (ii)
result in a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, material agreement or other instrument or
obligation to which Buyer or any of its Affiliates is a party or by which any
of their respective assets may be bound, except for such defaults (or rights
of termination, cancellation or acceleration) as to which requisite waivers
or consents have been obtained or which would not, individually or in the
aggregate, have a Buyer Material Adverse Effect or (iii) subject to obtaining
the Buyer Required Regulatory Approvals, constitute violations of any law,
regulation, order, judgment or decree applicable to Buyer, which violations,
individually or in the aggregate, would result in a Buyer Material Adverse
Effect.
(b) Except as set forth in Schedule 5.3(b) (the filings and
approvals referred to in such Schedule are collectively referred to as the
"Buyer Required Regulatory Approvals"), no consent or approval of, filing
with, or notice to, any Governmental Authority is necessary for Buyer's
execution and delivery of this Agreement and the Ancillary Agreements or the
consummation by Buyer of the transactions contemplated hereby and thereby,
other than such consents, approvals, filings or notices, which, if not
obtained or made, will not (i) prevent Buyer from performing its obligations
under this Agreement and the Ancillary Agreements or (ii) result in a Buyer
Material Adverse Effect.
5.4 AVAILABILITY OF FUNDS. Buyer acknowledges and agrees that on the
Closing Date, it will have sufficient funds to pay the Purchase Price under
this Agreement and the Arizona Electric Purchase Agreement (including
sufficient cash to fund the equity portions thereof) and to timely perform
all of its obligations under this Agreement, the Ancillary Agreements, and
Arizona Electric Purchase Agreement. Tucson Electric Power Company has the
ability to contribute cash as equity to a wholly-owned subsidiary which
constitutes a "Utility" or "Public Utility" subject to the receipt of
required approvals under Title 14, Chapter 2, Article 8 (Public Utility
Holding Companies and Affiliated Interests) of the Arizona Administrative
Code. As of September 30, 2002, Tucson Electric Power Company held cash in
the amount of approximately $65,000,000.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) UniSource has filed, or caused to be filed, all forms,
reports and documents required to be filed by UniSource with the SEC since
January 1, 2001, and has heretofore delivered or made available to Seller in
the form filed with the SEC, together with any amendments thereto, its (i)
Annual Reports on Form 10-K for the fiscal year ended December 31, 2000 and
2001, (ii) Quarterly Reports on Form 10-Q for the fiscal quarter ended March
31 and June 30, 2002, and (iii) all other reports or registration statements
filed by UniSource with the SEC since January 1, 2001 (collectively, the
"UniSource SEC Reports"). The UniSource SEC Reports were prepared
substantially in accordance with the requirements of the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, as the
case may be, and the rules and regulations promulgated under each of such
respective acts, and did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The financial statements, including all related notes and
schedules, contained in the UniSource SEC Reports (or incorporated by
reference therein) fairly present the consolidated financial position of
UniSource as at the respective dates thereof and the consolidated results of
operations and cash flows of UniSource for the periods indicated in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except for changes in accounting principles disclosed in the notes
thereto) and subject in the case of interim financial statements to normal
year-end adjustments.
5.6 LEGAL PROCEDDINGS. Except as set forth in Schedule 5.6, (a)
there are no actions or proceedings pending or, to Buyer's knowledge
threatened against Buyer or any of its Affiliates before any court or
arbitrator or Governmental Authority, which, individually or in the
aggregate, would result in a Buyer Material Adverse Effect, and (b) neither
Buyer nor any of its Affiliates is subject to any outstanding Orders, which
would, individually or in the aggregate, result in a Buyer Material Adverse
Effect.
5.7 NO KNOWLEDGE OF SELLER'S BREACH. Buyer has no knowledge of any
breach by Seller of any representation or warranty of Seller or of any other
condition or circumstance that would excuse Buyer from its timely performance
of its obligations hereunder. Buyer shall notify promptly Seller if any such
information comes to Buyer's attention prior to the Closing.
5.8 QUALIFIED BUYER. Buyer is qualified to obtain any Permits and
Environmental Permits necessary for Buyer to own and operate the Assets as of
the Closing.
5.9 INSPECTIONS. Buyer is knowledgeable about the Business as
engaged in by Seller and of the usual and customary practices of companies
engaged in businesses similar to the Business and has had access to the
Assets, the officers and employees of Seller, and the books, records and
files of Seller relating to the Business and the Assets. Buyer acknowledges
and agrees that it has, prior to its execution of this Agreement, (i)
reviewed the Environmental Reports and (ii) had an opportunity to conduct
Inspections of the Assets, including the Real Property. Subject to Sections
6.2, 6.3 and 7.1(g), and without waiving Seller's representations and
warranties in Section 4.6, Buyer acknowledges that it is satisfied with such
review and Inspections to date and (ii) Buyer acknowledges and agrees that
past, present, and future physical characteristics and Environmental
Conditions may not have been revealed by its Inspections and the
investigations of the Assets contained in the Environmental Reports. In
making its decision to execute this Agreement, and to purchase the Assets,
Buyer has relied on and will continue to rely upon the results of its
Inspections, the Environmental Reports and Seller's representations and
warranties in Section 4.6. Buyer acknowledges and agrees that the
representations and warranties set forth in Article IV of this Agreement
constitute the sole and exclusive representations and warranties of Seller to
Buyer in connection with the transactions contemplated hereby and by the
Ancillary Agreements, and there are no representations, warranties,
covenants, understandings or agreements, oral or written, in relation thereto
between the Parties other than those incorporated herein, including Section
6.3, and therein. Except for the representations and warranties expressly
set forth in Article IV of this Agreement, Buyer disclaims reliance on any
representations or warranties, either express or implied, by or on behalf of
Seller or its Affiliates or Representatives. Without limiting the generality
of the foregoing, Buyer acknowledges and agrees that, except as provided in
Section 4.6, there are no representations or warranties of Seller with
respect to the Environmental Condition of the Assets, compliance with
Environmental Laws and Environmental Permits of the presence or Releases of
hazardous material in the fixtures, soils, groundwater, surface water or air
on, under or about or emanating from any of the Assets.
5.10 WARN ACT. Buyer does not intend to engage in a "Plant Closing"
or "Mass Layoff" as such terms are defined in the WARN Act within sixty days
of the Closing Date.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 CONDUCT OF BUSINESS AND OPERATION OF ASSETS.
(a) Except as described in Schedule 6.1(a), as required by an
applicable law or by any Governmental Authority, as expressly contemplated by
this Agreement or to the extent Buyer otherwise consents in writing (such
consent not to be unreasonably withheld), during the period from the date of
this Agreement to the Closing Date, Seller shall (i) operate the Assets in
the ordinary course of business consistent with its past practices and Good
Utility Practices, (ii) use all Commercially Reasonable Efforts to preserve
intact the Assets in all material respects, and endeavor to preserve the
goodwill and relationships with customers, suppliers and others having
business dealings with it, (iii) maintain insurance described in Section 4.4
(or replacements thereto providing for substantially the same coverage), and
(iv) comply with all applicable laws relating to the Assets, including
without limitation, all Environmental Laws, except where the failure to so
comply would not result in an Asset Material Adverse Effect. Seller agrees to
incur Capital Expenditures in the ordinary course in respect of (A) growth of
the customer base (see, e.g., items under the heading "Growth" in the Capital
Expenditures Schedule) and (B) maintenance of the Assets and replacement
activities (see, e.g., items under the heading "Replacement" in the Capital
Expenditures Schedule). Buyer agrees that Seller's deferral of Capital
Expenditures in respect of network growth (see, e.g., items under the heading
"Infrastructure" in the Capital Expenditures Schedule) shall not be deemed to
be inconsistent with or to violate Good Utility Practices.
(b) Without limiting the generality of Section 6.1(a) and,
except as contemplated in this Agreement or as described in Schedule 6.1(a),
or as required under applicable law or by any Governmental Authority, prior
to the Closing Date, without the prior written consent of Buyer (such consent
not to be unreasonably withheld), Seller shall not:
(i) Make any material change in the levels of
Inventories customarily maintained by Seller with respect to the Business,
other than changes which are consistent with Good Utility Practices;
(ii) Sell, lease (as lessor), encumber, pledge, transfer
or otherwise dispose of, any Asset (except for Inventories used, consumed or
replaced in the ordinary course of business consistent with past practices of
Seller or with Good Utility Practices) other than to encumber any such Asset
with Permitted Encumbrances;
(iii) Modify, amend or voluntarily terminate, prior to the
respective expiration date of any of the Assigned Agreements or Real Property
Leases or any of the Permits or Environmental Permits with respect to such
Assets in any material respect, other than (A) in the ordinary course of
business, to the extent consistent with the past practices of Seller or Good
Utility Practices, (B) with cause, to the extent consistent with past
practices of Seller or Good Utility Practices, or (C) as may be required in
connection with transferring Seller's rights or obligations thereunder to
Buyer pursuant to this Agreement;
(iv) Except as otherwise provided herein, enter into any
commitment for the purchase, sale, or transportation of fuel for the Business
having a term greater than six months and not terminable on or before the
Closing Date either (A) automatically, or (B) by option of Seller (or, after
the Closing, by Buyer) in its sole discretion, if the aggregate payment under
such commitment for fuel and all other outstanding commitments for fuel for
the Business not previously approved by Buyer would exceed $1,000,000;
(v) Except as otherwise provided herein, enter into any
contract, agreement, commitment or arrangement for the Business that
individually exceeds $250,000 or in the aggregate exceeds $1,000,000 unless
it is terminable by Seller (or, after the Closing Date, by Buyer) without
penalty or premium upon no more than sixty (60) days notice;
(vi) Except as otherwise required by the terms of the
applicable IBEW CBA or as otherwise provided in Section 6.12, (A) hire, or
transfer any employees of or for the Business prior to the Closing, other
than to fill vacancies in existing positions in the reasonable discretion of
Seller, (B) materially increase salaries or wages of employees employed in
connection with such Asset prior to the Closing, (C) take any action prior to
the Closing to affect a material change in the IBEW CBA or (D) take any
action prior to the Closing to materially increase the aggregate benefits
payable to the employees (considered as a group) employed in connection with
the Business; and
(vii) Except as otherwise provided herein, enter into any
written or oral contract, agreement, commitment or arrangement with respect
to any of the proscribed transactions set forth in the foregoing paragraphs
(i) through (vi).
6.2 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Closing Date,
Seller will, at reasonable times and upon reasonable notice, provide Buyer
and its Representatives:
(i) reasonable access to their respective managerial
personnel, to all books, records, plans, equipment, offices and other
facilities and properties constituting part of the Assets;
(ii) such historical financial and operating data and
other information with respect to the Assets as Buyer may from time to time
reasonably request, to the extent reasonably available;
(iii) upon request, a copy of each material report,
schedule or other document, if any, filed by Seller with respect to the
Assets with the SEC, FERC, ACC, ADEQ or any other Governmental Authority;
(iv) access to all Assets for Inspection by Buyer and its
Representatives at reasonable times during regular business hours scheduled
for such Inspections, and shall provide qualified management, engineering,
operations and maintenance and other personnel to make presentations as
required, to escort such Persons and to assist in all aspects of conducting
the Inspections, provided that each of Buyer and Seller shall bear their own
costs of participating in the Inspections; and
(v) access to all such other information in the
possession or control of Seller as shall be reasonably necessary to enable
Buyer or its Representatives to verify the accuracy of the representations
and warranties of Seller contained in this Agreement; provided, however, that
any such Inspections shall be conducted in such a manner as not to interfere
unreasonably with the operation of the Assets. In the event that Seller's
provision of information under this Section 6.2 would (A) constitute a waiver
of any legal privilege, including the attorney-client privilege or work
product privilege, or (B) violate any legal or contractual obligation of
Seller to a third party, then Seller shall first notify Buyer with respect to
the existence and general nature of the restricted information. If the
restricted information relates to the Assets, the Parties shall thereupon
mutually agree upon a reasonable procedure in order to provide Buyer with
access to the information while protecting the legitimate interests of Seller
thereto. The mutually agreed procedure may include, without limitation, a
limited waiver by Seller of the relevant privilege, Buyer's agreement to
maintain the information in strict confidence, limited review or inspection
of the information by specified individuals, or any combination of the
foregoing.
Notwithstanding anything in this Section 6.2(a) to the contrary, with respect
to employee records Seller will only furnish or provide such access to
Transferred Employee Records and will not furnish or provide access to other
employee personnel records or medical information unless required by law or
specifically authorized by the affected employee.
(b) The Parties shall cooperate to schedule Buyer's Inspections
of the Assets so that, to the extent reasonably feasible, any interference
with the operation of the Business is minimized, and Buyer may complete its
Inspections of the Assets within ninety (90) working days of commencement of
Inspections and within six (6) months after the execution of this Agreement.
(c) Until the conclusion of Buyer's next rate case for the
Business (or such longer period as may be required by applicable law), each
Party and its Representatives shall have reasonable access to all of the
books and records relating to the Assets and the Business (for the Seller,
only to the extent relating to periods prior to the Closing Date), including
all Transferred Employee Records in the possession of Buyer or Seller to the
extent that such access may reasonably be required in connection with the
Assumed Liabilities or the Excluded Liabilities, or other matters relating to
or affected by the operation of the Assets. Such access shall be afforded by
the Party in possession of any such books and records upon receipt of
reasonable advance notice and during normal business hours. The Party
exercising this right of access shall be solely responsible for any costs or
expenses incurred by it or the holder of the information with respect to such
access pursuant to this Section 6.2(c). If the Party in possession of such
books and records shall desire to dispose of any books and records upon or
prior to the expiration of such above-stated period (or any such longer
period), such Party shall, prior to such disposition, give the other Party a
reasonable opportunity, at the latter's expense, to segregate and remove such
books and records as it may select.
(d) Buyer agrees that, prior to the Closing Date, neither it
nor its Representatives will contact any vendors, suppliers, employees, or
other contracting parties of Seller or its Affiliates with respect to any
aspect of the Assets or the transactions contemplated hereby, without the
prior written consent of Seller, which consent shall not be unreasonably
withheld.
6.3 ENVIRONMENTAL INSPECTIONS AND INFORMATION.
(a) [Intentionally omitted.]
(b) Buyer has conducted various environmental assessment
activities with respect to the Assets, including reviewing existing
environmental reports, correspondence, permits and related materials
regarding the Assets and certain other "Phase I" and "Phase II" activities as
set forth in the ASTM protocol regarding "Phase I" and "Phase II"
environmental assessments. Seller acknowledges that, between the date of
this Agreement and the Closing Date, Buyer will continue to conduct
Inspections with respect to environmental matters, including "Phase I" and
"Phase II" environmental assessments to the extent Buyer reasonably concludes
that such assessments are warranted by the Environmental Reports or the
findings of Buyer's assessments prior to the date of this Agreement. Any
such Inspections shall be conducted as provided in Section 6.2.
(c) If any environmental inspection conducted by Buyer or
Seller before or after the date of this Agreement and before the Closing Date
results in the discovery of one or more Environmental Conditions that are
reasonably likely to give rise to one or more Environmental Claims related to
the Assets, for which Remediation would reasonably be required (an "Adverse
Environmental Condition"), and if the Adverse Environmental Condition,
aggregated with all other Adverse Environmental Conditions identified by
Buyer or Seller prior to the Closing Date, is reasonably likely to give rise
to Remediation expenses of Buyer after Closing in excess of $1,500,000 in the
aggregate (the "Environmental Threshold"), then either (i) the Base Purchase
Price shall be reduced, to the extent such Adverse Environmental Condition is
not Remediated prior to the Closing Date, by a mutually agreed amount, which
amount shall be equal to the excess of (A) the estimated out-of-pocket costs
and expenses which Buyer reasonably can be expected to incur to Remediate, in
accordance with Good Utility Practices, such Adverse Environmental Condition
after the Closing over (B) the Environmental Threshold (the "Environmental
Price Adjustment") or (ii) if the Parties are not able to mutually agree on
an Environmental Price Adjustment, Seller shall reimburse Buyer for all
actual out-of-pocket costs and expenses that Buyer reasonably incurs after
Closing to Remediate such Adverse Environmental Condition in excess of the
Environmental Threshold. Any Adverse Environmental Condition which has or is
reasonably expected to have an aggregate economic impact on Buyer, taking
into consideration all relevant circumstances, in excess of $25,000,000,
shall be conclusively deemed to be an Asset Material Asset Effect.
Notwithstanding the foregoing, any single Adverse Environmental Condition
which is reasonably expected to give rise to Remediation expenses of less
than $25,000 shall not be counted toward the Environmental Threshold and
shall not result in an Environmental Price Adjustment.
(d) Buyer either has provided or shall provide to Seller,
promptly following Buyer's receipt thereof, copies of all audits, reports,
studies, assessments and other information composed or compiled, or to be
composed or compiled, by Buyer or Buyer's Representatives in connection with
environmental assessment activities. Buyer shall treat all such information
delivered to, or composed or compiled by, Buyer or Buyer's Representative as
Environmental Data in accordance with the procedures of Section 6.3(e).
(e) All audits, reports, studies and assessments delivered to
or prepared by Buyer and all other information collected and generated as a
result of Buyer's environmental due diligence ("Environmental Data") will be
subject to the terms and conditions of the Confidentiality Agreement, dated
June 3, 2002, between Seller and Buyer, except as otherwise expressly
provided in this Section 6.3(e). Neither Buyer nor its Representatives shall
disclose or release any Environmental Data without the prior written consent
of Seller and all such information shall be kept strictly confidential. To
the extent reasonably practicable, the Environmental Data shall be prepared
at the request of counsel to Buyer and, to the fullest extent permitted by
law, shall be the work product of such counsel and constitute confidential
attorney/client communications. The Environmental Data shall be transferred
among Buyer and its Representatives in a manner that will preserve, to the
extent reasonably practicable, such privileges. Buyer expressly agrees that
until the Closing, it will not distribute the Environmental Data to any third
party without Seller's prior written consent (such consent not to be
unreasonably withheld). After the Closing, Buyer agrees that it will not
distribute the Environmental Data to any third party without Seller's prior
written consent, except as required by law or by express provisions of
Buyer's corporate compliance program if Seller is provided written notice at
least ten (10) days prior to such distribution; provided, however, that Buyer
may distribute the Environmental Data to any potential purchaser of any of
the Assets or an ownership interest therein (either directly or through the
purchase of an ownership interest in an entity holding any of the Assets)
only after first notifying the Seller.
6.4 CONFIDENTIALITY.
(a) Each Party shall, and shall use its reasonable best efforts
to cause its Representatives to, (i) keep all Proprietary Information of any
other Party confidential and not to disclose or reveal any such Proprietary
Information to any person other than such Party's Representatives and (ii)
not use such Proprietary Information other than in connection with the
consummation of the transactions contemplated hereby. After the Closing Date
and except as provided in Section 6.3(e), any Proprietary Information, to the
extent related to the Assets acquired by Buyer, shall no longer be subject to
the restrictions set forth herein. The obligations of the Parties under this
Section 6.4(a) shall be in full force and effect for three (3) years from the
date hereof and will survive the termination of this Agreement, the discharge
of all other obligations owed by the Parties to each other and the Closing
Date.
(b) Notwithstanding the terms of Section 6.4(a) above, the
Parties agree that prior to the Closing, Buyer may reveal or disclose
Proprietary Information to any other Persons in connection with (i) the
financing of Buyer's purchase of the Assets or any equity participation in
Buyer's purchase of the Assets and (ii) obtaining insurance for the Assets;
provided that such Persons agree in writing to maintain the confidentiality
of the Proprietary Information in accordance with this Agreement.
(c) Upon the other Party's prior written approval (which shall
not be unreasonably withheld), any of the Parties may provide Proprietary
Information of the other Parties to the SEC, FERC, ACC, ADEQ or any other
Governmental Authority with jurisdiction or any securities exchange, as may
be necessary to obtain Required Regulatory Approvals or to comply generally
with any relevant law or regulation. The disclosing Party will seek
confidential treatment for the Proprietary Information provided to any
Governmental Authority and the disclosing Party will notify the other Party
as far in advance as is practicable of its intention to release to any
Governmental Authority any Proprietary Information.
6.5 PUBLIC STATEMENTS. Subject to the requirements imposed by law,
any Governmental Authority or securities exchange, prior to the Closing Date,
no press release or other public announcement or public statement or comment
in response to any inquiry relating to the transactions contemplated by this
Agreement shall be issued or made by any Party without the prior approval of
the other Party (which approval shall not be unreasonably withheld). The
Parties agree to cooperate in preparing any such announcements.
6.6 EXPENSES. Except to the extent specifically provided herein,
whether or not the transactions contemplated hereby are consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the Party incurring such
costs and expenses. Notwithstanding anything to the contrary herein, Buyer
will be responsible for all filing fees under the HSR Act relating to the
Assets it would acquire hereunder.
6.7 FURTHER ASSURANCES.
(a) Subject to the terms and conditions of this Agreement, each
Party shall use its Commercially Reasonable Efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the purchase, sale, transfer and delivery of the Assets and
the assumption of the Assumed Liabilities pursuant to this Agreement. Such
actions shall include, without limitation, each Party using its Commercially
Reasonable Efforts to ensure satisfaction of the conditions precedent to its
obligations hereunder, including obtaining all necessary consents, approvals,
and authorizations of third parties and Governmental Authorities required to
be obtained in order to consummate the transactions hereunder, and to
effectuate a transfer of the Transferable Permits to Buyer. Seller shall
cooperate with Buyer in its efforts to obtain all other Permits and
Environmental Permits necessary for Buyer to operate the Assets. None of the
Parties hereto shall, without prior written consent of the other Party, take
or fail to take any action, which might reasonably be expected to prevent or
materially impede, interfere with or delay the transactions contemplated by
this Agreement.
(b) In the event that any Asset shall not have been assigned,
conveyed, transferred and delivered hereunder to Buyer at the Closing, Seller
shall, subject to Section 6.7(c), use Commercially Reasonable Efforts to
assign, convey, transfer and deliver such Assets to Buyer as promptly as is
practicable after the Closing.
(c) (i) To the extent that Seller's rights under any
Assigned Agreement or Real Property Lease may not be assigned without the
consent of another Person which consent has not been obtained by the Closing
Date, this Agreement shall not constitute an agreement to assign the same, if
an attempted assignment would constitute a breach thereof or be unlawful.
(ii) Seller agrees that if any consent to an assignment
of any Assigned Agreement or Real Property Lease shall not be obtained or if
any attempted assignment would be ineffective or would impair the Buyer's
rights and obligations under the Assigned Agreement or Real Property Lease in
question, so that Buyer would not in effect acquire the benefit of all such
rights and obligations, Seller, at the Buyer's option and to the maximum
extent permitted by law and such Assigned Agreement or Real Property Lease,
shall, after the Closing Date, appoint Buyer to be Seller's agent with
respect to such Assigned Agreement or Real Property Lease, or, to the maximum
extent permitted by law and such Assigned Agreement or Real Property Lease,
enter into such reasonable arrangements with Buyer or take such other actions
as are necessary to provide Buyer with the same or substantially similar
rights and obligations of such Assigned Agreement or Real Property Lease as
Buyer may reasonably request. Seller shall cooperate and shall use
Commercially Reasonable Efforts prior to and after the Closing Date to obtain
an assignment to Buyer of each Assigned Agreement or Real Property Lease.
(iii) To the extent that any fuel supply contract or power
purchase agreement is not assignable or the contracting party withholds
consent to assignment, then Seller agrees to continue to purchase fuel and/or
power pursuant to such contract(s) and to resell it to Buyer at the purchase
price for the remainder of the term of such contract(s), provided that the
term of such contract(s) shall not be extended. Buyer shall make payment to
Seller in this circumstance on an as-incurred basis.
(d) To the extent that Seller's rights under any warranty or
guaranty described in Section 2.1(h) may not be assigned without the consent
of another Person, which consent has not been obtained by the Closing Date,
this Agreement shall not constitute an agreement to assign the same, if an
attempted assignment would constitute a breach thereof, or be unlawful.
Seller agrees that if any consent to an assignment of any such warranty or
guaranty shall not be obtained, or if any attempted assignment would be
ineffective or would impair Buyer's rights and obligations under the warranty
or guaranty in question, so that Buyer would not in effect acquire the
benefit of all such rights and obligations, Seller, at Buyer's option and
expense, shall use Commercially Reasonable Efforts, to the extent permitted
by law and by such warranty or guaranty, to enforce such warranty or guaranty
for the benefit of Buyer so as to provide Buyer to the maximum extent
possible with the benefits and obligations of such warranty or guaranty.
6.8 CONSENTS AND APPROVALS.
(a) As promptly as advisable after the execution of this
Agreement, Buyer and Seller shall each file or cause to be filed with the
Federal Trade Commission and the United States Department of Justice any
notifications required to be filed under the HSR Act and the rules and
regulations promulgated thereunder with respect to the transactions
contemplated hereby. Each Party shall file any HSR Act notifications with
respect to this Agreement and with respect to the Arizona Electric Purchase
Agreement simultaneously and in the same filing. Buyer and Seller shall use
their respective reasonable best efforts to respond promptly to any requests
for additional information made by either of such agencies, and to cause the
waiting periods under the HSR Act to terminate or expire at the earliest
possible date after the date of filing of such notification. Buyer will pay
all filing fees under the HSR Act relating to the Assets, but each of Seller
and Buyer will bear its own costs of the preparation of any such filing.
(b) The Parties shall cooperate and use all Commercially
Reasonable Efforts to promptly prepare and file all necessary documentation,
to effect all necessary applications, notices, petitions, filings and other
documents, and to obtain all necessary permits, consents, approvals and
authorizations of all Governmental Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement, including,
without limitation, the Required Regulatory Approvals. Buyer shall have the
right to review and approve in advance all the information relating to Buyer,
on the one hand, and Seller shall have the right to review and approve in
advance all the information relating to Seller, on the other hand, in either
case, which appear in any filing made in connection with the transactions
contemplated by this Agreement. Buyer and Seller agree that they will
consult and cooperate with each other with respect to the obtaining of all
such necessary permits, consents, approvals and authorizations of
Governmental Authorities.
(c) In connection with applications and other filings for the
Required Regulatory Approvals, and the prosecution of any pending regulatory
proceedings material to the Business Buyer and Seller shall jointly, and on
an equal basis, coordinate the overall development of the positions to be
taken and the regulatory actions to be requested in such applications and
filings for approval of the sale by the Seller and the purchase by the Buyer
of the Assets and the Business, of all other matters contemplated by this
Agreement which require regulatory approval and of all other regulatory
matters incidental thereto which are to be addressed in such applications and
filings. Efforts to obtain any necessary approvals (including from the ACC
and the FERC) shall be prosecuted by counsel mutually agreed upon by the
Parties, and acting as joint counsel to the Parties, it being understood,
however, that (i) all positions taken in the filings with such Governmental
Authorities shall be consistent with the mutual understandings of the Parties
and (ii) any SEC approvals required by Buyer shall be prosecuted by Buyer's
counsel.
(d) Seller and Buyer shall cooperate with each other and
promptly prepare and file notifications with, and request Tax clearances
from, state and local taxing authorities in any jurisdictions in which a
portion of the Purchase Price may be required to be withheld or in which
Buyer would otherwise be liable for any Tax liabilities of Seller pursuant to
such state and local Tax law.
(e) Seller shall have primary responsibility for securing the
transfer of the Transferable Permits, effective as of the Closing Date.
Buyer shall have the primary responsibility for securing the transfer,
reissuance or procurement of the Permits and Environmental Permits (other
than Transferable Permits) effective as of the Closing Date. Seller shall
cooperate with Buyer's efforts in this regard and assist in any transfer or
reissuance of a Permit or Environmental Permit held by Seller, or the
procurement of any other Permit or Environmental Permit when so requested by
Buyer.
6.9 FEES AND COMMISSIONS. Each of Seller and Buyer represent and
warrant to the other that, except for Xxxxxx Xxxxxxx & Co. Incorporated,
which is acting for and at the expense of Seller, and Credit Suisse First
Boston Corporation, which is acting for and at the expense of Buyer, no
broker, finder or other Person is entitled to any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated hereby by
reason of any action taken by the Party making such representation. Each of
Seller and Buyer will pay to the others or otherwise discharge, and will
indemnify and hold the others harmless from and against, any and all claims
or liabilities for all brokerage fees, commissions and finder's fees (other
than the fees, commissions and finder's fees payable to the party listed
above) incurred by reason of any action taken by the indemnifying party.
Buyer has a preexisting business relationship with New Harbor, Incorporated
and agrees to be responsible for any brokerage fees, commissions or finder's
fees of New Harbor, Incorporated, if any, arising from the transactions
contemplated by this Agreement.
6.10 TAX MATTERS.
(a) All Transfer Taxes incurred in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, (A) Arizona sales tax; (B) the Arizona transfer tax, conveyance
fees or conveyances of interests in real and/or personal property; and (C)
Arizona sales tax and transfer tax on deeds shall be borne as follows: fifty
percent (50%) by the Buyer and fifty percent (50%) by the Seller. Seller
shall file, to the extent required by, or permissible under, applicable law,
all necessary Tax Returns and other documentation with respect to all such
Transfer Taxes, and, if required by applicable law, Buyer shall join in the
execution of any such Tax Returns and other documentation. Prior to the
Closing Date, to the extent applicable, Buyer shall provide to Seller
appropriate certificates of Tax exemption from each applicable taxing
authority.
(b) With respect to Taxes to be prorated in accordance with
Section 3.4 of this Agreement, Buyer shall prepare and timely file all Tax
Returns required to be filed after the Closing Date with respect to the
Assets, if any, and shall duly and timely pay all such Taxes shown to be due
on such Tax Returns. Buyer's preparation of any such Tax Returns shall be
subject to Seller's approval, which approval shall not be unreasonably
withheld. Buyer shall make such Tax Returns available for Seller's review
and approval no later than fifteen (15) Business Days prior to the due date
for filing each such Tax Return. Upon receipt by Buyer of the tax xxxx,
invoice or other statement regarding such real and personal property Taxes,
Buyer shall calculate the pro rata share of such tax xxxx, invoice or other
statement attributable to Buyer and Seller. Buyer shall then forward, as
soon as possible, to Seller a copy of such tax xxxx, invoice or statement
along with the supporting documentation relating to the calculation of the
pro rata share to Seller and Seller will promptly pay to Buyer Seller's pro
rata share of such tax xxxx, invoice or statement. In the event Seller first
receives a tax xxxx, invoice or statement relating to the Assets from a
taxing authority, Seller shall promptly forward such tax xxxx, invoice or
statement to Buyer.
(c) Buyer and Seller shall provide the other with such
assistance as may reasonably be requested by the other Party in connection
with the preparation of any Tax Return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each shall retain and provide the requesting Party
with any records or information which may be relevant to such return, audit,
examination or proceedings. Any information obtained pursuant to this
Section 6.10(c) or pursuant to any other Section hereof providing for the
sharing of information or review of any Tax Return or other instrument
relating to Taxes shall be kept confidential by the Parties hereto.
(d) In the event that a dispute arises between Buyer and
Seller, with respect to Taxes in Sections 6.10(a) and 6.10(b), or concerning
any amount due under this Section 6.10, the Parties shall attempt in good
faith to resolve such dispute and any agreed upon amount shall be paid to the
appropriate Party. If such dispute is not resolved within thirty (30) days,
the Parties to such dispute shall submit the dispute to the Independent
Accounting Firm for resolution, which resolution shall be final, conclusive
and binding on such Parties. Notwithstanding anything in this Agreement to
the contrary, the fees and expenses of such Independent Accounting Firm shall
be allocated between the Parties so that the non-disputing Party's share of
such fees and expenses shall be in the same proportion that the aggregate
amount of such remaining disputed amounts so submitted by the disputing Party
to such auditor that is successfully disputed by the disputing Party (as
finally determined by such auditor) bears to the total amount of such
remaining disputed amount so submitted by the disputing Party to such
auditor. Any payment required to be made as a result of the resolution of
the dispute by the Independent Accounting Firm shall be made within ten days
after such resolution, together with any interest determined by the
Independent Accounting Firm to be appropriate.
(e) Buyer agrees that Seller may, at Seller's election prior to
the Closing Date, direct that all or a portion of the Purchase Price be
delivered to a "qualified intermediary" (as defined in Treasury Regulation
Section 1.1031(k) - (g)(4)) as to enable Seller's relinquishment of the
Assets to qualify as part of a like-kind exchange of property covered by
Section 1031 of the Code. If Seller so elects, Buyer shall cooperate with
Seller (but without being required to incur any out-of-pocket costs in the
course thereof) in connection with Seller's efforts to effect such like-kind
exchange, which cooperation shall include, without limitation, taking such
actions as Seller requests in order to enable Seller to qualify such transfer
as part of a like-kind exchange of property covered by Section 1031 of the
Code (including any actions required to facilitate the use of a "qualified
intermediary"), and Buyer agrees that Seller may assign all or part of its
rights and delegate all or part of its obligations under this Agreement to a
person or entity acting as a qualified intermediary to qualify the transfer
of the Assets as part of like-kind exchange of property covered by Section
1031 of the Code. Buyer and Seller agree in good faith to use reasonable
efforts to coordinate the transactions contemplated by this Agreement with
any other transactions engaged in by either Buyer or Seller; provided that
such efforts are not required to include an unreasonable delay in the
consummation of the transactions contemplated by this Agreement.
(f) Prior to the Closing Date, Buyer and Seller shall use their
good faith efforts to agree upon the allocation (the "Allocation") of the
Purchase Price, the Assumed Liabilities and other relevant items (including,
for example, adjustments to the Base Purchase Price) to the individual assets
or classes of assets within the meaning of Section 1060 of the Code. If
Buyer and Seller agree to such Allocation prior to Closing, Buyer and Seller
covenant and agree that (i) the values assigned to the assets by the Parties'
mutual agreement shall be conclusive and final for all purposes, and (ii)
neither Buyer nor Seller will take any position before any Governmental
Authority or in any Proceeding that is in any way inconsistent with such
Allocation. Notwithstanding the foregoing, if Buyer and Seller cannot agree
to an Allocation, Buyer and Seller covenant and agree to file, and to cause
their respective Affiliates to file, all Tax Returns and schedules thereto
(including, for example, amended returns, claims for refund, and those
returns and forms required under Section 1060 of the Code and any Treasury
regulations promulgated thereunder) consistent with each of such Party's good
faith Allocations, unless otherwise required because of a change in any
applicable law.
6.11 ADVICE OF CHANGES. Prior to the Closing, each Party will timely
advise the other in writing with respect to any matter arising after
execution of this Agreement which becomes known to that Party and which, if
existing or occurring at the date of this Agreement, would have been required
to be set forth in this Agreement, including any of the Schedules or Exhibits
hereto. Any such written notice will not be deemed to have amended this
Agreement, including the appropriate Schedule or Exhibit, or to have
qualified any representation or warranty contained in this Agreement, or to
have cured any misrepresentation or breach of warranty that otherwise might
have existed hereunder by reason of the development.
6.12 SELLER EMPLOYEES.
(a) Buyer shall give Qualifying Offers of employment to all
employees of Seller who are covered by the IBEW Local Union No. 387
collective bargaining agreement with Seller (the "IBEW CBA") and are employed
in positions relating to the Business (collectively, "Union Employees").
Each such person who becomes employed by Buyer pursuant to this section shall
be referred to herein as a "Transferred Union Employee".
(b) Buyer shall give Qualifying Offers of employment to
substantially all of the salaried employees of Seller who are employed in
positions relating to the Business (collectively, "Non-Union Employees").
Each such person who becomes employed by Buyer pursuant to this section shall
be referred to herein as a "Transferred Non-Union Employee." Buyer shall
reimburse Seller for 50 percent of the aggregate Severance Cost (as defined
below) relating to those Non-Union Employees whose employment is terminated
by Seller prior to or as of the Closing Date. "Severance Cost" means the sum
of the following costs incurred by Seller resulting from a Non-Union
Employee's termination of employment with Seller: (i) all cash severance
benefits payable pursuant to Seller's severance policy, (ii) the cost of
outplacement services provided pursuant to Seller's severance policy, (iii)
Seller's subsidized portion of COBRA Continuation Coverage provided by
Seller's health plan in accordance with Seller's severance policy, (iv) the
additional severance benefits payable pursuant to arrangements with the
specific individuals identified in a schedule delivered to Buyer prior to the
date hereof; and (v) any retention bonuses paid by Seller to Non-Union
Employees who do not receive Qualifying Offers of employment and who are
deemed in Seller's discretion to be critical to the ongoing operation of the
Business. With respect to the Severance Cost components described in clauses
(i), (ii), (iv) and (v) of the preceding sentence, Buyer shall pay such
reimbursement to Seller at the later of Closing or five days after receipt of
a list of such terminated Non-Union Employees and the amount of such
Severance Cost components with respect to such employees. With respect to
the Severance Cost component described in clause (iii), Seller shall provide
Buyer during the COBRA Continuation Coverage period with a monthly schedule
setting forth the cumulative amount of such cost component for the preceding
month, and Buyer shall pay such reimbursement to Seller within five days
after receipt of each such schedule.
(c) All offers of employment made by Buyer pursuant to Sections
6.12(a) and (b) shall be made in accordance with all applicable laws and
regulations, and for Union Employees, in accordance with the IBEW CBA and
shall remain open for a period of ten (10) working days. Any such offer
which is accepted within such ten (10) working day period shall thereafter be
irrevocable, except for good cause, until the earlier of the Closing Date or
the termination of this Agreement pursuant to its terms. Additionally, such
offers shall be contingent upon the Non-Union Employee's or Union Employee's
successful completion of drug testing pursuant to Buyer's policies and in
compliance with the IBEW CBA. Following acceptance of such offers, Buyer
shall provide written notice thereof to Seller and Seller shall provide Buyer
with access to the files and records of employees accepting such offers, to
the extent permitted by contract, the IBEW CBA and/or applicable law.
(d) The following shall be applicable with respect to
Transferred Employees:
(i) From and after the Closing Date, Transferred
Employees shall accrue no additional benefits under any employee benefit
plan, policy, program or arrangement of Seller or its Affiliates.
(ii) For such Transferred Union Employees, Buyer shall
recognize the IBEW as the exclusive collective bargaining representative and
shall assume the terms and conditions of the IBEW CBA, to the extent
applicable to such Transferred Union Employees, until the expiration of said
agreement, and will further comply with all applicable legal obligations with
respect to collective bargaining under federal labor law thereafter.
(iii) As of the Closing Date, Buyer shall cause
Transferred Non-Union Employees to be covered by the Buyer benefit plans
listed on Schedule 6.12(d)(iii), and shall cause Transferred Union Employees
to be provided with benefits that are consistent with the terms of the IBEW
CBA or are otherwise acceptable to the applicable union. The commitments
under this paragraph shall require the following:
(A) With respect to health care plans, Buyer
agrees to waive or to cause the waiver of all limitations as to pre-existing
conditions and actively-at-work exclusions and waiting periods for such
employees, except that Buyer may require the employee or his/her dependents
who, on the Closing Date, is then in the process of satisfying any similar
exclusion or waiting period under the Seller health care plans to satisfy
fully the balance of the applicable time period for such exclusion or waiting
period under the applicable Buyer plan. With respect to the calendar year in
which the Closing Date occurs, all health care expenses incurred by any such
employees and/or any eligible dependent thereof, including without limitation
any alternate recipient pursuant to qualified medical child support orders,
in the portion of the calendar year preceding the Closing Date that were
qualified to be taken into account for purposes of satisfying any deductible
or out-of-pocket limit under any Seller health care plans shall be taken into
account for purposes of satisfying any deductible or out-of-pocket limit
under the health care plan of Buyer for such calendar year.
(B) With respect to service and seniority, Buyer
shall recognize each such employee's service and seniority with Seller and
any affiliate of Seller for all non-pension purposes, including the
determination of eligibility and extent of service or seniority-related
welfare benefits such as vacation and sick pay benefits. Seller agrees to
pay each such employee for all vacation benefits banked, accrued, and unused,
as of the Closing Date, or otherwise according to Seller's policies and
applicable law. For purposes of this Section 6.12(d)(iii)(B), Transferred
Employees who have prior service with Southern Union Company, and who are
identified on a schedule delivered to Buyer prior to the date hereof, shall
be treated as service with Seller.
(C) The Citizens Pension Plan ("Seller's Pension
Plan") shall retain all liabilities and assets for pension benefits accrued
by Transferred Employees through the day immediately preceding the Closing
Date, and Seller shall cause all such accrued benefits to become fully vested
as of the Closing Date. Seller shall, within 90 days following the Closing
Date, notify Transferred Employees who are entitled to deferred vested
benefits under Seller's Pension Plan of the amount of such benefits. Buyer
shall take all actions necessary to cause the Buyer's qualified pension plan
listed on Schedule 6.12(d)(iii) in which Transferred Employees are eligible
to participate pursuant to Section 6.12(d)(iii) to provide benefits no less
valuable than those provided in Seller's Pension Plan and to recognize the
service that the Transferred Employees had under Seller's Pension Plan for
purposes of such Transferred Employees' eligibility to participate, vesting,
attainment of retirement dates, subsidized benefits, entitlement to optional
forms of payment, and benefit accrual; provided, however that a Transferred
Employee's benefit under Buyer's Pension Plan shall be offset by his or her
accrued benefit under Seller's Pension Plan. The offset referred to in the
preceding sentence shall be based on the benefit that would have been
available with respect to such Transferred Employee under the terms of
Seller's Pension Plan had such Seller's Pension Plan benefit commenced on the
Transferred Employee's annuity starting date under Buyer's Pension Plan and
been paid in the same form as the benefit paid under Buyer's Pension Plan.
Notwithstanding the preceding sentence, in the event that a Transferred
Employee is ineligible to commence receipt of his or her accrued benefit
under Seller's Pension Plan on his or her annuity starting date under Buyer's
Pension Plan or in the form elected under the Buyer's Pension Plan, the
offset shall be based on the hypothetical benefit that is the actuarial
equivalent (as determined using the then current actuarial assumptions of
Seller's Pension Plan) of the Transferred Employee's accrued benefit under
Seller's Pension Plan, such hypothetical benefit being assumed to be payable
in the same form and with the same annuity starting date as the Transferred
Employee's benefit under Buyer's Pension Plan. At Buyer's request, Seller
shall provide Buyer with the benefit calculations applicable to a Transferred
Employee under Seller's Pension Plan.
(D) Buyer shall assume all liabilities,
obligations and responsibilities with respect to providing post-retirement
health and life insurance benefits ("Post-Retirement Welfare Benefits") to
(i) retirees of the Business as of the Closing Date (the "Current Retirees")
and (ii) Transferred Employees who have satisfied the age and service
eligibility requirements for Post-Retirement Welfare Benefits under the
applicable Seller plans (the "Grandfathered Active Employees" and, together
with the Current Retirees, the "Grandfathered Individuals"). The
Grandfathered Individuals are listed in Schedule 6.12(d)(iii)(D). Buyer
shall continue to provide to the Current Retirees Post-Retirement Welfare
Benefits that are comparable to those Post-Retirement Welfare Benefits
provided to such Current Retirees immediately prior to the Closing Date,
under cost-sharing structures that are at least as favorable as the cost-
sharing structures in effect for and available to the Current Retirees
immediately prior to the Closing Date. Buyer shall provide to the
Grandfathered Active Employees Post-Retirement Welfare Benefits that are
comparable to those Post-Retirement Welfare Benefits provided to such
Grandfathered Active Employees immediately prior to the Closing Date,
commencing at the time such Grandfathered Active Employees retire. The Base
Purchase Price shall be decreased by the amount by which the APBO (as
hereinafter defined) exceeds two million dollars ($2,000,000). The "APBO"
means the accumulated post-retirement benefit obligation (within the meaning
of the Statement on Financial Accounting Standards No. 106) of the
Grandfathered Individuals receiving or eligible for the Post-Retirement
Welfare Benefits to the extent Buyer has committed to provide such Post-
Retirement Welfare Benefits pursuant to this Section 6.12(d)(iii)(D),
determined using a discount rate of 6.75% and the remaining assumptions
disclosed in the January 1, 2001 Actuarial Valuation Report dated September
17, 2002, as set forth on Schedule 6.12(d)(iii)(D).
(E) With respect to the Seller's 401(k) Savings
Plan (the "Savings Plan"), Seller shall vest Transferred Employees in their
Savings Plan account balances as of the Closing Date. Seller hereby
represents to Buyer that the Savings Plan is intended to be qualified within
the meaning of Section 401 of the Code. Buyer shall take all actions
necessary to cause the Buyer's qualified 401(k) plan listed on Schedule
6.12(d)(iii) in which Transferred Employees are eligible to participate
pursuant to Section 6.12(d)(iii) (x) to recognize the service that the
Transferred Employees had in the Savings Plan for purposes of determining
such Transferred Employees' eligibility to participate, vesting, attainment
of retirement dates, contribution levels, and, if applicable, eligibility for
optional forms of benefit payments, and (y) to accept direct-rollover
transfers of Transferred Employees' account balances in the Savings Plan,
including transfers of loan balances and related promissory notes, provided
that such loans would not be treated as taxable distributions at any time
prior to such transfer.
(F) Within sixty (60) days after the Closing Date,
Seller shall transfer to Buyer's flexible benefits plan any balances standing
to the credit of Transferred Employees under Seller's flexible benefits plan
as of the day immediately preceding the Closing Date. As soon as practicable
after the Closing Date, Seller shall provide to Buyer a list of those
Transferred Employees that have participated in the health or dependent care
reimbursement accounts of Seller, together with their elections made prior to
the Closing Date with respect to such account, and balances standing to their
credit as of the day immediately preceding the Closing Date.
(e) With respect to severance benefits, Buyer shall provide to
any Transferred Non-Union Employee who is terminated by Buyer (other than for
cause) prior to the date which is one year following the Closing Date,
severance benefits at the level set forth in a schedule provided to Seller
prior to the date hereof. Any employee provided severance benefits under this
section may be required to execute a release of claims against Seller and
Buyer, in such form as Buyer shall prescribe, as a condition for the receipt
of such benefits.
(f) Each Transferred Non-Union Employee who is initially
assigned, or assigned within twelve (12) months of the Closing Date, by Buyer
to a principal place of work that requires such employee to relocate his
residence will be reimbursed by Buyer for all relocation expenses in
accordance with the relocation benefits plans set forth in a schedule
provided to Seller prior to the date hereof. For purposes of the foregoing a
required relocation of residence shall include a change in the principal
place of work that is more than 30 miles farther from such employee's
principal place of work immediately prior to the Closing Date and requires an
average commute from his current residence of at least one hour in each
direction.
(g) Seller shall be responsible, with respect to the Business,
for performing and discharging all requirements under the WARN Act and under
applicable state and local laws and regulations for the notification of its
employees of any "employment loss" within the meaning of the WARN Act which
occurs on or prior to the Closing Date.
(h) Buyer shall not be responsible for, but Seller shall be
responsible for, extending COBRA Continuation Coverage to any employees and
former employees of Seller, or to any qualified beneficiaries of such
employees and former employees, who become or became entitled to COBRA
Continuation Coverage on or before the Closing Date, including those for whom
the Closing Date occurs during their COBRA election period.
(i) Seller or its Affiliates shall pay or cause to be paid to
all Transferred Employees, all compensation (including vacation pay),
workers' compensation or other employment benefits to which they are entitled
under the terms of the applicable compensation or Seller benefit plans or
programs as of the Closing Date. Buyer shall pay to each Transferred
Employee all unpaid salary or other compensation or employment benefits which
have accrued to such employees following the Closing Date, at such times as
provided under the terms of the applicable compensation or benefit programs.
Notwithstanding the foregoing, if the Closing Date is on or after July 1 of
any calendar year, Seller and Buyer shall pro-rate the obligation to pay any
bonuses declared by Seller on or after the Closing Date (but prior to March 1
of the calendar year following the year in which the Closing Date occurs)
that would have been payable to the Transferred Employees had the Transferred
Employees remained employed by Seller or its Affiliates throughout the
calendar year in which the Closing Date occurs, in accordance with the
provisions of any policy, plan, practice or arrangement of Seller under which
such bonus would have been paid. Buyer shall be obligated to pay that
portion of each such bonus determined by multiplying the amount of such bonus
by a fraction, the numerator of which is the number of days from and after
the Closing Date through the end of the calendar year in which the Closing
Date occurs, and the denominator of which is 365.
(j) Seller shall be responsible for maintaining workers'
compensation coverage for all Union Employees and Non-Union Employees for
claims relating to occurrences prior to the Closing Date.
(k) Individuals who are otherwise Union Employees or Non-Union
Employees but who on any date are not actively at work due to a leave of
absence covered by the Family and Medical Leave Act (FMLA), or due to any
other authorized leave of absence, including, without limitation, short-term
disability, or who are on long-term disability, shall nevertheless be treated
as "Union Employees" or as "Non-Union Employees", as the case may be, on such
date if they are able (i) to return to work within the protected period under
the FMLA or such other leave (which in any event shall not extend more than
twelve (12) weeks after the Closing Date), whichever is applicable, and (ii)
to perform the essential functions of their job, with or without a reasonable
accommodation.
(l) Buyer shall be responsible, with respect to the Business,
for performing and discharging all requirements under the WARN Act and under
applicable state and local laws and regulations for the notification of its
employees of any "employment loss" within the meaning of the WARN Act which
occurs following the Closing Date.
(m) Buyer is responsible for extending and continuing to extend
COBRA Continuation Coverage to all Transferred Employees, and qualified
beneficiaries of such employees who become entitled to such COBRA
Continuation Coverage following the Closing Date.
(n) The provisions of this Section 6.12 shall not be construed
as being for the benefit for any person other than the Parties hereto, and
shall not be enforceable by persons other than such Parties (including,
without limitations, the Transferred Employees).
6.13 RISK OF LOSS.
(a) From the date hereof through the Closing Date, all risk of
loss or damage to the assets included in the Assets shall be borne by Seller,
other than loss or damage caused by the acts or negligence of Buyer or any
Buyer Representative, which loss or damage shall be the responsibility of
Buyer.
(b) If, before the Closing Date, all or any portion of the
Assets are taken by eminent domain, municipalization or condemnation or are
the subject of a pending taking which has not been consummated, (such event
being called, in either case, a "Taking"), then Seller shall notify Buyer
promptly in writing of such Taking.
(i) If such Taking relates to Assets of Seller having an
aggregate net book value in excess of $50,000,000, then such Taking shall be
a "Material Taking." Upon a Material Taking, Seller and Buyer shall
negotiate to settle the loss, if any, resulting from such Material Taking
(and such negotiation shall include, without limitation, the negotiation of a
fair and equitable reduction in the Base Purchase Price to offset such loss,
if any, based on consideration of all relevant circumstances). If Seller and
Buyer shall fail to agree to settle the loss, if any, resulting from said
Material Taking, said Material Taking shall be conclusively deemed to be an
Asset Material Adverse Effect. Any Taking relating to any Assets of Seller's
Santa Xxxx division shall not be deemed to be a Material Taking.
(ii) If such Taking is not a Material Taking, then (A)
Buyer may elect to, in the name of Seller, negotiate for, claim, contest and
receive the portion of the award properly allocable to those Assets that are
the subject of the Taking, (B) to the extent the Taking shall have been
consummated prior to the Closing, Seller shall be relieved of its obligation
to convey to Buyer those Assets that were the subject of the Taking, (C) at
the Closing, Seller will assign to Buyer all of its rights to damages payable
as a result of the Taking, and will pay to Buyer all damages previously paid
to it in connection with the Taking, in each case to the extent properly
allocable to those Assets that are the subject of the Taking, and (D)
following the Closing, Seller will give to Buyer any further assurances of
such rights and assignment with respect to the Taking as Buyer reasonably may
request from time to time.
(c) (i) If any casualty loss or damage to the Assets shall
occur before the Closing Date, then the Base Purchase Price shall be reduced,
to the extent such loss or damage is not remedied prior to the Closing Date,
by an amount mutually acceptable to the Parties, which amount shall be equal
to the estimated out-of-pocket costs and expenses which Buyer reasonably can
be expected to incur to repair or replace, in accordance with Good Utility
Practices, such lost or damaged Assets after Closing. If the actual out-of-
pocket costs and expenses which Buyer reasonably incurred to repair or
replace, in accordance with Good Utility Practices, such lost or damaged
Assets exceeds such estimated amount, Seller shall reimburse Buyer for such
excess costs. If the Parties do not agree to an adjustment to the Base
Purchase Price in respect of the casualty loss, then the Closing shall be
postponed for such period of time (not to exceed six (6) months), and Seller
shall repair or replace the lost or damaged Assets in accordance with Good
Utility Practices and Buyer or its Representatives will have the right to
inspect and observe and approve, all repairs or replacements made by Seller
to remedy such casualty loss.
(ii) Notwithstanding anything to the contrary in Section
6.13(c)(i) above, if Seller shall have failed to remedy, cure or otherwise
reverse by the Closing Date any casualty loss or damage to the Assets such
that the estimated out-of-pocket costs and expenses that Buyer reasonably can
be expected to incur to repair or replace such lost or damaged Assets exceeds
$25,000,000, such loss or damage shall be conclusively deemed to be an Asset
Material Adverse Effect.
6.14 TAX EXEMPT FINANCING
(a) Seller represents that:
(i) The Exempt Facilities have been financed, and
refinanced, in whole or in part, with the proceeds of the issuance and sale
by various governmental authorities of industrial development revenue bonds
or private activity bonds the interest on which, with certain exceptions, is
excluded from gross income for purposes of Federal income taxation (such
bonds, as currently outstanding, the "Revenue Bonds"); and Seller is the
economic obligor in respect of such Revenue Bonds;
(ii) The Revenue Bonds are described in Schedule 6.14(a);
(iii) The basis for the exclusion of interest on the
Revenue Bonds from gross income for Federal income tax purposes is the use of
the Exempt Facilities for "the local furnishing of electric energy or gas"
under Sections 142(a)(8) and 142(f) of the Code or, if applicable, Section
103(b)(4)(E) of the Internal Revenue Code of 1954, as amended (the "1954
Code"), and in either case the applicable Treasury Regulations (the
"Regulations") thereunder;
(iv) The use of the Exempt Facilities for a purpose other
than a qualifying purpose indicated in subsection (iii) above could impair
(A) such exclusion from gross income of the interest on the Revenue Bonds,
possibly with retroactive effect, unless appropriate remedial action were
taken (which could include prompt defeasance or redemption of the Revenue
Bonds) and/or (B) the deductibility of payments by Seller or Buyer of
interest based on the restrictions in Section 150(b) of the Code;
(v) After August 20, 1996, at least the following bonds
exempt from tax under Section 103 of the Code and in whole or in part
described in Section 142(a)(8) of the Code have been issued with respect to
facilities of Seller for the "local furnishing of electric energy or gas":
The Industrial Development Authority of the County of Navajo, Industrial
Development Revenue Bonds (Citizens Utilities Company Project) 1997 Series B
($12,380,000), and The Industrial Development Authority of the County of
Yavapai, Industrial Development Revenue Bonds (Citizens Utilities Company
Project) 1998 Series ($20,000,000); and
(vi) Any breach by Buyer of its obligations under this
Section 6.14 could result in the incurrence by Seller of additional costs and
expenses with respect to the Revenue Bonds, including, without limitation,
increased interest costs, loss of the interest deduction for tax purposes and
transaction costs relating to any refinancing, redemption and/or defeasance
of all or part of the Revenue Bonds (cumulatively, the "Tax Impact").
(b) Buyer agrees that Buyer will indemnify Seller for costs
incurred by Seller in respect of any Tax Impact that would not have arisen
but for Buyer's breach of its obligations under Section 6.14(c) (except as
excused elsewhere in this Section 6.14).
(c) After August 20, 1996, at least the following bonds exempt
from tax under Section 103 of the Code and described in whole or in part in
Section 142(a)(8) of the Code have been issued with respect to facilities of
Buyer for the "local furnishing of electric energy": The Industrial
Development Authority of the County of Pima, Industrial Development Revenue
Bonds (Tucson Electric Power Company Project) 1997 Series A, B and C
($247,460,000), and The Industrial Development Authority of the County of
Apache, Pollution Control Revenue Bonds (Tucson Electric Power Company
Project) 1998 Series A, B and C ($200,000,000). So long as any Revenue Bonds
remain outstanding with respect to gas Exempt Facilities in any county, Buyer
agrees that it shall not use, or take any deliberate act to permit the use
of, or fail to take any act within its control that would prevent the use of,
the gas Exempt Facilities within that county for any purpose or in any manner
other than as shall be consistent with the Exempt Facility Operating
Protocols (as such Exempt Facility Operating Protocols may have been updated,
amended or corrected by Seller for the purpose of their accuracy on or before
the Closing Date; provided that such changes do not materially impact Buyer's
operation of the Assets) delivered by Seller to Buyer on or before the date
of this Agreement, unless Buyer:
(i) has obtained at its own expense an opinion addressed
to Seller of nationally recognized bond counsel reasonably acceptable to
Seller ("Bond Counsel") that such use will not impair (x) the exclusion from
gross income of the interest on any issue of Revenue Bonds for Federal income
tax purposes and (y) the deductibility of Seller's payments of interest based
on the restrictions in Section 150(b) of the Code; or
(ii) has provided written notice to Seller of any act or
failure to act either (x) not later than 45 days after the effective date of
such action, or (y) if any of such affected Revenue Bonds are not then
eligible for optional or mandatory redemption by the terms thereof,
sufficiently in advance of such act or failure to act to permit Seller to
request from the IRS a private letter ruling to the effect that such action
does not constitute an event that would adversely affect the exclusion of the
interest on such Revenue Bonds from gross income for Federal income tax
purposes, to receive a final ruling to such effect from the IRS, and to
dispose of the Revenue Bonds in a manner not inconsistent with such ruling
("Sufficient Notice"). (Reference is made to Schedule 6.14(a) for a listing
of the respective optional redemption dates of the Revenue Bonds.)
(d) Notwithstanding any other provision of this Agreement, it
is expressly understood and agreed that the provisions of Section 6.14(c)
shall not prohibit Buyer from (and Buyer shall incur no liability to Seller
for or in connection with Buyer) suspending the operation of the Exempt
Facilities (in whole or in part) on a temporary basis, or from terminating
the operation of the Exempt Facilities (in whole or in part) on a permanent
basis and shutting down, retiring, abandoning and/or decommissioning the
Exempt Facilities (in whole or in part); provided, however, that if the
Exempt Facilities, in whole or in part, are dismantled and sold, including
any sale for scrap, at any time when any Revenue Bonds remain outstanding,
then the proceeds of such sale of Exempt Facilities shall within six months
from the date of sale be expended to acquire replacement property to be used
as described in the related Exempt Facility Operating Protocol, unless (I)
Buyer has obtained at its own expense an opinion addressed to Seller of Bond
Counsel that the failure to take this action will not impair (x) the
exclusion from gross income of the interest on any issue of Revenue Bonds for
Federal income tax purposes and (y) the deductibility of Seller's payments of
interest based on the restrictions in Section 150(b) of the Code; (II) the
proceeds of such sales are less than $50,000 in a calendar year; or (III)
Buyer has provided Sufficient Notice of such action to Seller.
(e) Buyer agrees that it shall not issue, or have issued on its
behalf, any tax-exempt bonds to finance or refinance its acquisition of the
Exempt Facilities, provided that it is expressly understood and agreed that
this clause (e) shall not prohibit Buyer's use of tax-exempt bonds to finance
or refinance any improvement to the Exempt Facilities made after the date of
acquisition or to any assets other than the Exempt Facilities.
(f) Buyer agrees to provide prompt written notice to Seller of
any condemnation of, or casualty loss with respect to, the Exempt Facilities,
in whole or in substantial part, to cooperate in good faith with Seller in
Seller's efforts to ascertain the consequences of any such eminent domain
proceeding or casualty loss for the (A) exclusion of interest on the Revenue
Bonds from gross income for Federal income tax purposes and (B) the
deductibility of Seller's payments of interest based on the restrictions in
Section 150(b) of the Code.
(g) Seller agrees that the Revenue Bonds shall be redeemed no
later than the earlier of (I) their respective stated maturity dates, and
(II) their respective first optional redemption dates on or after the Closing
Date. Seller also agrees that none of the Revenue Bonds shall be refunded.
(h) Seller hereby represents that it has performed all duties
and obligations of "Company" under the documents relating to the Revenue
Bonds, that the representations and warranties under the documents relating
to the Revenue Bonds remain true and correct, and that there has been no
breach of any covenant or agreement by Seller under the documents relating to
the Revenue Bonds. Seller hereby covenants that, until all of the Revenue
Bonds have been redeemed, Seller will perform all duties and obligations of
"Company" under the documents relating to the Revenue Bonds, that Seller's
representations and warranties under such documents will remain true and
correct and that Seller will not breach any covenant or agreement of Seller
under such documents; provided that Seller's covenant in this sentence shall
not extend to any such duties, obligations, representations, warrantees,
covenants or agreements the necessary predicate for which is Seller's actual
ownership, possession or control of the Exempt Facilities from and after the
Closing Date. Seller acknowledges and agrees that although Seller from and
after the Closing Date will not own, possess or control the Exempt
Facilities, Seller shall remain primarily obligated under the documents
relating to the Revenue Bonds and, as between itself and each issuer of the
Revenue Bonds, shall remain subject to each of Seller's representations,
warranties, covenants and agreements thereunder. Buyer shall have no
liability under this Section 6.14 unless interest on the Revenue Bonds would
be excluded from gross income for Federal income tax purposes absent an act
or failure to act by Buyer in contravention of the terms of Section 6.14(c).
(i) In any case where Buyer has provided notice to Seller under
this Section 6.14, Buyer agrees that it will join and cooperate with Seller
with respect to any request by Seller to the Internal Revenue Service to
obtain a private letter ruling regarding any Tax Impacts of the act or
failure to act by Buyer that prompted such notice. Seller will join and
cooperate with Buyer with respect to any request by Buyer to the Internal
Revenue Service to obtain a private letter ruling regarding any Tax Impacts.
The Party seeking the private letter ruling shall bear all costs of the
filing, legal and related out-of-pocket expenses incurred in the course of
such request.
(j) Seller agrees that it has sole responsibility to make any
required payments of principal and interest on the Revenue Bonds and that
Buyer has no responsibility to make such payments. Seller agrees that it
will indemnify, protect, defend and hold harmless Buyer from and against any
claim that Buyer owes any payment of principal or interest on the Revenue
Bonds. Seller agrees that Buyer shall retain any payments with respect to
any casualty event or any condemnation of the Exempt Facilities and that,
except as Buyer has otherwise agreed under Section 6.14(c), Buyer shall not
be restricted in its use of any such proceeds.
(k) If Buyer shall sell, exchange, transfer or otherwise
dispose of the Exempt Facilities in whole or substantial part (aggregate
price of $500,000 or more in a calendar year) to one or more third parties,
Buyer shall cause to be included in the documentation relating to such
transaction covenants and agreements on the part of such third party
substantially identical to those on the part of Buyer contained in this
Section 6.14.
(l) The covenants and agreements on the part of Buyer and
Seller contained in this Section 6.14 shall continue in effect so long as any
of the Revenue Bonds shall remain outstanding. Seller shall notify Buyer
promptly when there shall be no Revenue Bonds outstanding.
(m) Buyer acknowledges and agrees that Seller's bond counsel
may rely on Buyer's representations, warranties and covenants as hereinabove
provided for the purpose of rendering legal opinions, as required by the
Indentures of Trust, the Loan Agreements and the Tax Regulatory Agreements
relating to the Revenue Bonds ("IDRB Documents") as a precondition to the
sale by Seller of such Exempt Facilities, to the effect that the sale of such
Exempt Facilities will not result in (I) the inclusion of the interest on the
Revenue Bonds in the gross income of the recipient for purposes of Federal
income taxation, and (II) disallowance of interest expense to Seller under
Section 150(b) of the Code. Seller acknowledges and agrees that Buyer shall
be an addressee of the above-described opinion letters of Seller's bond
counsel or shall receive a reliance letter from Seller's bond counsel
authorizing Buyer to rely on such opinion letters.
(n) Nothing in this Agreement is intended to nor shall it be
interpreted as (i) an assignment to, and assumption by, Buyer of any of the
IDRB Documents, or (ii) as an undertaking or agreement by Buyer to assume,
guarantee or pay any of Seller's loan or other payment obligations pursuant
to the IDRB Documents. Other than as stated in this Section 6.14, Buyer
shall have no liability in respect of the Revenue Bonds.
(o) Each of Buyer and Seller shall use its Commercially
Reasonable Efforts, and shall cooperate with the other Party in the other
Party's efforts, to obtain all Consents, bond counsel opinions and IRS
rulings as may be required under the IDRB Documents and the Code to enable
Seller to defease, prepay, redeem or retain until the first possible
redemption date the IDRB Indebtedness and to sell the Assets to Buyer without
the result that the interest on the Revenue Bonds will be included in the
gross income of the recipient for purposes of Federal income taxation;
provided, however, that Buyer shall have no obligation in respect of its
ownership or operation of the Exempt Facilities (including but not limited to
rates imposed by Buyer in respect of utility service provided by the Exempt
Facilities or by any other facilities of Buyer or affiliates of Buyer) other
than to comply with the Exempt Facility Operating Protocols.
6.15 SELLER GUARANTEES AND SURETY INSTRUMENTS. Buyer shall use
Commercially Reasonable Efforts to assist Seller in obtaining full and
complete releases of the guarantees, letters of credit, bonds and other
surety instruments listed in Schedule 6.15. In this connection, Buyer agrees
to provide a guaranty, letter of credit, bond or other surety instrument at
Closing to replace those listed in Schedule 6.15.
6.16 CITIZENS MARKS. Buyer acknowledges and agrees with Seller that
Seller has the absolute and exclusive proprietary right to the Citizens
Marks, all rights to which and the goodwill represented thereby and
pertaining thereto are being retained by Seller. Within ninety (90) days
after the Closing Date, Buyer shall cease using any Citizens Xxxx and shall
remove from the Assets any and all Citizens Marks. Thereafter, Buyer shall
not use any Citizens Xxxx in connection with the sale of any products or
services or otherwise in the conduct of the businesses. In the event that
Buyer breaches this Section 6.16, Seller shall be entitled to specific
performance and to injunctive relief against further violations, as well as
any other remedies at law or in equity available to Seller.
6.17 TITLE COMMITMENTS. Prior to Closing, Seller shall cooperate with
Buyer and use Commercially Reasonable Efforts to assist Buyer if Buyer
desires to obtain American Land Title Association ("ALTA") title insurance
commitments (collectively, the "Title Commitments," and each a "Title
Commitment"), in final form, from one or more title insurance companies
(collectively, the "Title Company"), committing the Title Company (subject
only to the satisfaction of any industry standard requirements contained in
the Title Commitment) to issue ALTA (or its local equivalent) form of title
insurance policies in an amount acceptable to the Buyer and the Title Company
insuring good, valid, indefeasible fee simple title to the Real Property in
Buyer, in all cases, at Buyer's sole expense and in the respective amounts
that Buyer requests prior to Closing, subject to no Encumbrances or other
exceptions to title other than Permitted Encumbrances (collectively the
"Title Policies"). On or prior to the Closing Date, Seller shall execute and
deliver, or cause to be executed and delivered, to the Title Company, at no
cost to Seller, any customary affidavits, standard gap indemnities, evidence
of corporate existence and authority, and similar documents reasonably
requested by the Title Company in connection with the issuance of the Title
Commitments or the Title Policies; provided that such efforts and Buyer's
request for Title Policies or Title Commitments shall, in no event, result in
any delay in the consummation of the transactions contemplated by this
Agreement, except to the extent caused by or resulting from Seller's breach
of this Agreement; and provided further, that nothing in this Section 6.17
shall obligate Seller to execute or deliver any document that affects, in a
manner adverse to Seller, Seller's liability to Buyer as expressed herein and
in the Special Warranty Deed.
6.18 JOINT USE AGREEMENT RE: EASEMENTS. To the extent reasonably
requested by either Party, at least sixty (60) days before Closing, Buyer and
Seller (or its appropriate Affiliate) will commence good faith negotiations
of a joint use agreement, to be fully executed and delivered by the Parties
at Closing, regarding the shared Easements to be partially assigned to Buyer
at Closing as contemplated in Schedule 2.2. Such joint use agreement will be
partially assignable by Seller to any purchaser of Seller's or its
Affiliate's other utility plant permitted to be located on the real property
that is the subject of any such shared Easements.
6.19 [Intentionally Omitted]
6.20 POST-EXECUTION DELIVERY OF SCHEDULES. Within one hundred eighty
days (180) following the date of execution of this Agreement, Seller shall
deliver to Buyer a schedule, to be identified as Schedule 6.20, which sets
forth all of the following identified by Seller after reasonable
investigation (i) all Permits, (ii) all material items of Tangible Personal
Property (other than Inventories), (iii) quantities of Inventories recorded
in Seller's books and records for the Business as of the last day of the
month preceding the date of this Agreement, together with the net book values
of such Inventories as of such date, (iv) all Easements held by Seller in
connection with the Business, (v) all line extension agreements and similar
construction arrangements, railroad crossing agreements and similar
arrangements, and (vi) all Real Property Leases. Schedule 6.20 will also
designate those Permits that require the consent of the respective
Governmental Authority to transfer and those that purport to be non-
transferable.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of Buyer to
effect purchase of the Assets and the other transactions contemplated by this
Agreement shall be subject to the fulfillment of the following conditions, or
waiver thereof, by Buyer at or prior to the Closing Date:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Assets contemplated hereby shall have expired
or been terminated;
(b) No preliminary or permanent injunction or other order or
decree by any Governmental Authority which prevents the consummation of the
sale of the Assets contemplated herein shall have been issued and remain in
effect (each Party agreeing to use its reasonable best efforts to have any
such injunction, order or decree lifted) and no statute, rule or regulation
shall have been enacted by any state or federal government or Governmental
Authority prohibiting the consummation of the sale of the Assets;
(c) Buyer shall have received all of Buyer's Required
Regulatory Approvals by Final Order, and such Required Regulatory Approvals
shall not contain terms and conditions that would result in a Regulatory
Material Adverse Effect for Buyer or an Asset Material Adverse Effect;
(d) Seller shall have received all of Seller's Required
Regulatory Approvals by Final Order, and such Required Regulatory Approvals
shall not contain terms and conditions that would result in a Regulatory
Material Adverse Effect for Buyer or an Asset Material Adverse Effect;
(e) Seller shall have performed and complied with each of its
covenants and agreements contained in this Agreement which are required to be
performed and complied with by Seller on or prior to the Closing Date except
where the failure to so perform or comply, when taken in the aggregate, would
not have a Buyer Material Adverse Effect or an Asset Material Adverse Effect;
(f) The representations and warranties of Seller set forth in
this Agreement shall be true and correct as of the Closing Date as though
made at and as of the Closing Date, except (i) subject to Section 6.11, to
the extent due to changes expressly permitted by this Agreement or otherwise
in writing by Buyer, (ii) that representations and warranties made as of, or
in respect of, only a specified date or period shall be true and correct as
of, or in respect of, such date or period and (iii) to the extent that any
failure of such representations and warranties to be true and correct as
aforesaid when taken in the aggregate would not have a Buyer Material Adverse
Effect or an Asset Material Adverse Effect (it being understood and agreed
that the economic impact of any Adverse Environmental Condition shall not be
considered in the determination of an Asset Material Adverse Effect except as
otherwise provided in Section 6.3);
(g) No Asset Material Adverse Effect shall have occurred and be
continuing;
(h) Seller shall have delivered, caused to be delivered, or be
standing ready to deliver, to Buyer at the Closing, Seller's closing
deliveries described in Section 3.5;
(i) Buyer shall have received any consents of third parties
required for the assignment to Buyer of any of the Assigned Agreements other
than consents that, if not obtained, would not have an Asset Material Adverse
Effect or a Buyer Material Adverse Effect, in form and substance reasonably
acceptable to Buyer; and
(j) Buyer shall be reasonably satisfied that the consummation
of the asset purchase and sale transaction contemplated by the Asset Purchase
Agreement, dated as of the date hereof, between Seller and Buyer relating to
purchase by Buyer of Seller's electric utility business in the State of
Arizona (the "Arizona Electric Purchase Agreement"), will occur concurrently
with the Closing.
7.2 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
to effect the sale of the Assets and the other transactions contemplated by
this Agreement shall be subject to the fulfillment of the following
conditions, or the waiver thereof, by Seller at or prior to the Closing Date:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Assets contemplated hereby shall have expired
or been terminated;
(b) No preliminary or permanent injunction or other order or
decree by any Governmental Authority which prevents the consummation of the
sale of the Assets contemplated herein shall have been issued and remain in
effect (each of Seller and Buyer agreeing to use its reasonable best efforts
to have any such injunction, order or decree lifted) and no statute, rule or
regulation shall have been enacted by any state or federal government or
Governmental Authority in the United States prohibiting the consummation of
the sale of the Assets;
(c) Seller shall have received all of Seller's Required
Regulatory Approvals by Final Order, and such Required Regulatory Approvals
shall not contain terms and conditions that would have an Asset Material
Adverse Effect or a Seller Material Adverse Effect;
(d) Seller shall have received any consents of third parties
required for the assignment to Buyer of any of the Assigned Agreements other
than consents that, if not obtained, would not have a Seller Material Adverse
Effect;
(e) Buyer shall have performed and complied with each of its
covenants and agreements contained in this Agreement which are required to be
performed and complied with by Buyer on or prior to the Closing Date except
where the failure to so perform or comply, when taken in the aggregate, would
not have a Seller Material Adverse Effect;
(f) The representations and warranties of Buyer set forth in
this Agreement shall be true and correct as of the Closing Date as though
made at and as of the Closing Date, except (i) subject to Section 6.11, to
the extent due to changes expressly permitted by this Agreement or otherwise
in writing by Seller, (ii) that representations and warranties made as of, or
in respect of, only a specified date or period shall be true and correct as
of, or in respect of, such date or period and (iii) to the extent that any
failure of such representations and warranties to be true and correct as
aforesaid when taken in the aggregate would not have a Seller Material
Adverse Effect;
(g) Buyer shall have assumed, as set forth in and subject to
Section 6.12, all of the applicable obligations under the IBEW CBA;
(h) Buyer shall have delivered, caused to be delivered or
standing ready to deliver, to Seller at the Closing, Buyer's closing
deliveries described in Section 3.6;
(i) Seller shall be reasonably satisfied that the consummation
of the Arizona Electric Purchase Agreement will occur concurrently with the
Closing; and
(j) Seller shall have received opinions from Seller's Bond
Counsel, dated the Closing Date, substantially in the form attached hereto as
Exhibit E.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION OF SELLER BY BUYER. Subject to Section 8.3,
Buyer shall indemnify, defend and hold harmless Seller, its officers,
directors, employees, shareholders, Affiliates and agents (each, a "Seller
Indemnitee") from and against any and all Indemnifiable Losses asserted
against or suffered by any Seller Indemnitee (each, a "Seller Indemnifiable
Loss") in any way relating to, resulting from or arising out of or in
connection with (i) any breach by Buyer of any covenant or agreement of Buyer
contained in this Agreement or any failure or inaccuracy of any
representation or warranty of Buyer contained in this Agreement, (ii) the
Assumed Liabilities, (iii) any loss or damages resulting from or arising
solely out of any Inspection of the Assets, and (iv) any Third Party Claims
against a Seller Indemnitee to the extent arising out of or in connection
with Buyer's ownership or operation of the Assets on or after the Closing
Date.
8.2 INDEMNIFICATION OF BUYER BY SELLER.
(a) Subject to Section 8.3, Seller shall indemnify, defend and
hold harmless Buyer, its officers, directors, employees, shareholders,
Affiliates and agents (each, a "Buyer Indemnitee") from and against any and
all Indemnifiable Losses asserted against or suffered by any Buyer Indemnitee
(each, a "Buyer Indemnifiable Loss") in any way relating to, resulting from
or arising out of or in connection with (i) any breach by Seller of any
covenant or agreement of Seller contained in this Agreement or failure or
inaccuracy of any representation or warranty of Seller contained in this
Agreement, (ii) the Excluded Liabilities, (iii) noncompliance by Seller with
any bulk sales or transfer laws as provided in Section 10.12, and (iv) any
Third Party Claims against a Buyer Indemnitee arising out of or in connection
with Seller's ownership or operation of the Excluded Assets on or after the
Closing Date.
(b) Subject to Sections 8.3(a), (e), (f) and (g) and the other
provisions of this Section 8.2(b) and so long as Buyer complies with the
Exempt Facilities Operating Protocols relating to an issue of outstanding
Revenue Bonds, Seller agrees to indemnify, defend and hold harmless the Buyer
Indemnitees from and against Buyer's Tax Losses (as defined below) upon a
final decree or judgment of any federal court or a final action by the IRS (a
"Final Determination") that the related Exempt Facilities are "tax-exempt
bond financed property" under Section 168(g)(5) of the Code by reason of such
issue of Revenue Bonds remaining outstanding from and after the Closing Date.
No such decree or action shall be considered to be a Final Determination
unless Seller has been given written notice and, if it is so desired and is
legally allowed, has been afforded the opportunity to contest the same either
directly or in the name of Buyer, and until conclusion of any appellate
review, if sought. The maximum aggregate amount of Buyer's Tax Losses for
which Seller shall be obligated to indemnify the Buyer Indemnitees both (i)
under this Section 8.2(b) and (ii) under the corresponding Section 8.2(b) of
the Arizona Electric Purchase Agreement shall be $1,500,000. "Buyer's Tax
Losses" shall mean the amount equal to the present value (calculated using a
discount rate of 10 percent per annum) of the difference (multiplied by the
applicable combined federal and State of Arizona corporate tax rate of Buyer
Indemnitee) for each affected tax year between the respective dollar amounts
of (x) depreciation of the related Exempt Facilities allowed under Section
168(g) of the Code, and (y) the depreciation of such Exempt Facilities that
would be allowable under Section 168 of the Code if the Exempt Facilities
were not "tax-exempt bond financed property." The indemnity granted by
Seller in this Section 8.2(b) shall terminate at 5:00 p.m., local time in New
York, New York, on the seventh anniversary of the Closing Date, provided that
such termination shall not affect Seller's obligations under this Section
8.2(b) if Buyer provided Seller with proper notice of the claim or event for
which indemnification is sought prior to such termination.
8.3 CERTAIN LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding anything to the contrary contained herein:
(i) any Indemnitee shall use Commercially Reasonable
Efforts to mitigate all losses, damages and the like relating to a claim
under these indemnification provisions, including availing itself of any
defenses, limitations, rights of contribution, claims against third persons
and other rights at law or equity. The Indemnitee's Commercially Reasonable
Efforts shall include the reasonable expenditure of money to mitigate or
otherwise reduce or eliminate any loss or expenses for which indemnification
would otherwise be due, and the Indemnifying Party shall reimburse the
Indemnitee for the Indemnitee's reasonable expenditures in undertaking the
mitigation; and
(ii) any Indemnifiable Loss shall be net of the dollar
amount of any insurance or other proceeds actually received by the Indemnitee
or any of its Affiliates with respect to the Indemnifiable Loss. Any Party
seeking indemnity hereunder shall use Commercially Reasonable Efforts to seek
coverage (including both costs of defense and indemnity) under applicable
insurance policies with respect to any such Indemnifiable Loss.
(b) Except as otherwise provided in this Section 8.3(b), the
representations, warranties, covenants and agreements of the Parties set
forth in this Agreement shall survive the Closing Date for a period of
eighteen (18) months, and all representations, warranties, covenants and
agreements of the Parties under this Agreement and the related indemnities
granted in this Article VIII shall terminate at 5:00 p.m., local time in New
York City, New York, on the day that is eighteen (18) months after the
Closing Date. The expiration, termination or extinguishment of any covenant
or agreement shall not affect the Parties' obligations under Section 8.1 or
8.2 hereof if the Indemnitee provided the Indemnifying Party with proper
notice of the claim or event for which indemnification is sought prior to
such expiration, termination or extinguishment. Notwithstanding the foregoing
provisions of this Section 8.3(b), the representations, warranties, covenants
and agreements contained in Sections 3.3(e), 6.2(c), 6.3(c), 6.3(e), 6.4(a),
6.10, 6.12, 6.14, 6.16, and in Articles VIII and X, will survive the Closing
in accordance with their terms.
(c) Notwithstanding anything to contrary in this Agreement, in
no event shall Buyer indemnify Seller Indemnitees or Seller indemnify Buyer
Indemnitees, or otherwise be liable in any way whatsoever to said
Indemnitees, for any Losses otherwise subject to indemnification by the
Indemnifying Party (determined after giving effect to the other provisions of
this Section 8.3) until the Buyer Indemnitees or the Seller Indemnitees, as
the case may be, have incurred otherwise indemnifiable Losses that in the
aggregate exceed a threshold amount equal to one percent (1%) of the
Purchase Price, after which Buyer or Seller, as the case may be, shall then
be liable for all Losses incurred by the Seller Indemnitees or the Buyer
Indemnitees, as applicable. The limitations on indemnification set forth in
this Section 8.3(c) shall not apply to any losses asserted against or
suffered by an Indemnitee in any way relating to, resulting from or arising
out of or in connection with the failure of (i) the appropriate Party to make
the payment required to be made by it in accordance with Section 3.3(d), (ii)
Buyer to discharge Assumed Liabilities other than those specified in Sections
2.3(e) and 2.3(i), (iii) Seller to discharge Excluded Liabilities other than
those specified in Sections 2.4(d), 2.4(g), 2.4(h), 2.4(j) and 2.4(n), (iv)
Seller to make any payment to Buyer if and to the extent required by Section
3.3(e), 6.3(c), 6.10(b), 6.13(c) or 8.2(b), and (v) Buyer to make any payment
to Seller if and to the extent required by Section 6.12(b). Any such losses
also shall be disregarded when determining whether the threshold set forth in
this Section 8.3(c) has been exceeded.
(d) Notwithstanding anything to the contrary in this Agreement,
in no event shall Seller indemnify the Buyer Indemnitees or Buyer indemnify
Seller Indemnitees, or be otherwise liable in any way whatsoever to said
Indemnitees, for any Losses otherwise subject to indemnification by the
Indemnifying Party (determined after giving effect to the other provisions of
this Section 8.3) that in the aggregate exceed an amount equal to fifty
percent (50%) of the Purchase Price.
(e) Except to the extent otherwise provided in Section 3.3
(relating to adjustments to the Base Purchase Price), Section 6.3(c)
(relating to post-Closing reimbursement of excess environmental Remediation
costs), Section 6.10(b) (relating to post-Closing reimbursements for Taxes),
Section 6.12(b) (relating to post-Closing reimbursements for Severance
Costs), Section 6.13(c) (relating to post-Closing reimbursement of excess
costs and expenses of repairing lost or damaged Assets), and Section 6.16
(relating to specific performance and injunctive relief with respect to
Citizens Marks), the rights and remedies of Seller and Buyer under this
Article VIII are exclusive and in lieu of any and all other rights and
remedies which each of Seller and Buyer may have under this Agreement or
otherwise for monetary relief, with respect to (i) all post-Closing claims
relating to this Agreement, the events giving rise to this Agreement and the
transactions provided for herein or contemplated hereby or thereby, or (ii)
the Assumed Liabilities or the Excluded Liabilities, as the case may be.
Notwithstanding any language contained in any Ancillary Agreement (including
the Special Warranty Deed), the representations and warranties of Seller set
forth in this Agreement will not be merged into any such Ancillary Agreement
and the indemnification obligations of Seller, and the limitations on such
obligations, set forth in this Agreement shall control. No provision set
forth in any such Ancillary Agreement shall be deemed to enlarge, alter or
amend the terms or provisions of this Agreement.
(f) Notwithstanding anything to the contrary contained herein,
no Party (including an Indemnitee) shall be entitled to recover from any
other Party (including an Indemnifying Party) for any liabilities, damages,
obligations, payments, losses, costs, or expenses under this Agreement any
amount in excess of the actual compensatory damages, court costs and
reasonable attorney's and other advisor fees suffered by such Party. Each of
Buyer and Seller waive any right to recover punitive, incidental, special,
exemplary and consequential damages arising in connection with or with
respect to this Agreement. The provisions of this Section 8.3(d) shall not
apply to indemnification for a Third Party Claim.
(g) The limitations set forth in this Section 8.3 do not apply
to fraud or willful misconduct of a Party.
(h) No amount shall be recovered from a Party for the breach or
untruth of any of such Party's representations, warranties, covenants or
agreements, or for any other matter, to the extent that the other such Party
had knowledge of such breach, untruth or other matter at or prior to the
Closing, nor shall the other Party be entitled to rescission with respect to
any such matter.
8.4 DEFENSE OF CLAIMS.
(a) If any Indemnitee receives notice of the assertion or
commencement of any Third Party Claim made or brought by any Person who is
not a Party to this Agreement or any Affiliate of a Party to this Agreement
with respect to which indemnification is to be sought from an Indemnifying
Party, the Indemnitee shall give such Indemnifying Party reasonably prompt
written notice thereof, but in any event such notice shall not be given later
than ten (10) calendar days after the Indemnitee's receipt of notice of such
Third Party Claim. Such notice shall describe the nature of the Third Party
Claim in reasonable detail and shall indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee. The Indemnifying Party will have the right to participate in
or, by giving written notice to the Indemnitee, to elect to assume the
defense of any Third Party Claim at such Indemnifying Party's expense and by
such Indemnifying Party's own counsel, provided that the counsel for the
Indemnifying Party who shall conduct the defense of such Third Party Claim
shall be reasonably satisfactory to the Indemnitee. The Indemnitee shall
cooperate in good faith in such defense at such Indemnitee's own expense. If
an Indemnifying Party elects not to assume or to participate in the defense
of any Third Party Claim, the Indemnitee may compromise or settle such Third
Party Claim over the objection of the Indemnifying Party, which settlement or
compromise shall conclusively establish the loss for which the Indemnified
Party may seek indemnification from the Indemnifying Party pursuant to this
Agreement.
(b) (i) If, within ten (10) calendar days after an
Indemnitee provides written notice to the Indemnifying Party of any Third
Party Claims, the Indemnitee receives written notice from the Indemnifying
Party that such Indemnifying Party has elected to assume the defense of such
Third Party Claim as provided in Section 8.4(a), the Indemnifying Party will
not be liable for any legal expenses subsequently incurred by the Indemnitee
in connection with the defense thereof; provided, however, that if the
Indemnifying Party shall fail to take reasonable steps necessary to defend
diligently such Third Party Claim within twenty (20) calendar days after
receiving notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps, the Indemnitee may assume
its own defense and the Indemnifying Party shall be liable for all reasonable
expenses thereof.
(ii) Without the prior written consent of the Indemnitee,
the Indemnifying Party shall not enter into any settlement of any Third Party
Claim which would lead to liability or create any financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder. If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of a financial
or other obligation on the part of the Indemnitee for which the Indemnitee is
not entitled to indemnification hereunder and the Indemnifying Party desires
to accept and agree to such offer, the Indemnifying Party shall give written
notice to the Indemnitee to that effect. If the Indemnitee fails to consent
to such firm offer within ten (10) calendar days after its receipt of such
notice, the Indemnifying Party shall be relieved of its obligations to defend
such Third Party Claim and the Indemnitee may contest or defend such Third
Party Claim at its own expense. In such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim will be the amount of such
settlement offer plus reasonable costs and expenses paid or incurred by
Indemnitee up to the date of said notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") shall
be asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event such notice shall not
be given later than ten (10) calendar days after the Indemnitee becomes aware
of such Direct Claim, and the Indemnifying Party shall have a period of
thirty (30) calendar days within which to respond to such Direct Claim. If
the Indemnifying Party does not respond within such thirty (30) calendar day
period, the Indemnifying Party shall be deemed to have accepted such claim.
If the Indemnifying Party rejects such claim, the Indemnitee will be free to
seek enforcement of its right to indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage or pursuant to any claim, recovery, settlement or payment
by, from or against any other entity, the amount of such reduction (less any
out-of-pocket costs incurred in connection therewith and the cost of any
adjusted premium charges to the extent directly relating to the claim for
such Indemnifiable Loss ("Recovery Costs"), together with interest thereon
from the date of payment thereof at the publicly announced prime rate then in
effect of Citibank, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(e) A failure to give timely notice as provided in this Section
8.4 shall not affect the rights or obligations of any Party hereunder except
if, and only to the extent that, as a result of such failure, the Party which
was entitled to receive such notice was actually prejudiced as a result of
such failure.
ARTICLE IX
TERMINATION
9.1 TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Closing Date by mutual written consent of Seller and Buyer.
(b) This Agreement may be terminated by Seller or Buyer if (i)
any federal or state court of competent jurisdiction shall have issued an
order, judgment or decree permanently restraining, enjoining or otherwise
prohibiting the Closing, and such order, judgment or decree shall have become
final and nonappeallable; (ii) any statute, rule, nonappeallable order or
regulation shall have been enacted or issued by any Governmental Authority
which prohibits the consummation of the Closing; or (iii) the Closing shall
have not occurred on or before the day which is fifteen (15) months from the
date of this Agreement, subject to such extensions (not to exceed six months)
as may be required by Seller to repair or replace lost or damaged Assets in
accordance with Section 6.13(c) (the "Termination Date"); provided that the
right to terminate this Agreement under this Section 9.1(b)(iii), and any
other Section, shall not be available to any Party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in the
event giving rise to the applicable termination right.
(c) Except as otherwise provided in this Agreement, this
Agreement may be terminated by Buyer if any of the Buyer Required Regulatory
Approvals, the receipt of which is a condition to the obligation of Buyer to
consummate the Closing as set forth in Section 7.1(c), shall have been denied
(and a petition for rehearing or refiling of an application initially denied
without prejudice shall also have been denied) or, if such Required
Regulatory Approval is obtained, contains terms or conditions that would have
a Regulatory Material Adverse Effect for Buyer (after Buyer's petition for
rehearing objecting to such terms and conditions has been denied) or an Asset
Material Adverse Effect, in either case that is not cured or otherwise
addressed in a manner reasonably acceptable to Buyer by the Closing Date.
(d) Except as otherwise provided in this Agreement, this
Agreement may be terminated by Seller if any of the Seller Required
Regulatory Approvals, the receipt of which is a condition to the obligation
of Seller to consummate the Closing as set forth in Section 7.2(c), shall
have been denied (and a petition for rehearing or refiling of an application
initially denied without prejudice shall also have been denied) or, if such
Required Regulatory Approval is obtained, contains terms or conditions that
would have a Regulatory Material Adverse Effect for Seller (after Seller's
petition for rehearing objecting to such terms and conditions has been
denied), in either case that is not cured or otherwise addressed in a manner
reasonably acceptable to Seller by the Closing Date.
(e) This Agreement may be terminated by Buyer if there has been
a violation or breach by Seller of any covenant, representation or warranty
contained in this Agreement provided that such violation or breach would have
an Asset Material Adverse Effect or a Buyer Material Adverse Effect that is
not cured or otherwise addressed by Seller in a manner reasonably acceptable
to Buyer by the Closing Date and such violation or breach has not been waived
by Buyer.
(f) This Agreement may be terminated by Seller, if there has
been a violation or breach by Buyer of any covenant, representation or
warranty contained in this Agreement provided that such violation or breach
would have a Seller Material Adverse Effect, (including, without limitation,
Buyer's failure to pay the Purchase Price on the Closing Date) and such
violation or breach is not cured or otherwise addressed by Buyer in a manner
reasonably acceptable to Seller by the Closing Date, and such violation or
breach has not been waived by Seller.
9.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of termination
of this Agreement by either or both Seller and Buyer pursuant to this Article
IX, written notice thereof shall forthwith be given by the terminating Party
to the other Party, whereupon the liabilities of the Parties hereunder will
terminate, except as otherwise expressly provided in this Agreement
(including Section 9.3), and thereafter none of the Parties shall have any
recourse against any other Party by reason of this Agreement. If prior to
Closing either Party resorts to legal proceedings to enforce this Agreement,
the prevailing Party in such proceedings shall be entitled to recover all
costs incurred by such Party, including reasonable attorney's fees, in
addition to any other relief to which such Party may be entitled; provided,
however, and notwithstanding anything to the contrary in this Agreement, in
no event shall either Party be entitled to receive any punitive, indirect or
consequential damages. If a Party terminates this Agreement pursuant to this
Article IX, the Arizona Electric Purchase Agreement shall be automatically
terminated, without any further liability to the parties thereto (including
payment of liquidated damages or termination fees pursuant to Section 9.3 of
the Arizona Electric Purchase Agreement, and both Parties agree that if the
Arizona Electric Purchase Agreement is terminated pursuant to Article IX of
the Arizona Electric Purchase Agreement, this Agreement shall be
automatically terminated, without any further liability to the parties
thereto.
9.3 LIQUIDATED DAMAGES; TERMINATION FEES.
(a) Seller shall pay to Buyer $10,000,000 if (i) Buyer
terminates this Agreement pursuant to Section 9.1(e) or (ii) Buyer terminates
this Agreement pursuant to Section 9.1(c) due to a Regulatory Material
Adverse Effect on Buyer which is due in whole or in substantial part to
concern by the ACC about the condition of the Assets and which is reasonably
expected to have an aggregate economic impact on Buyer, taking into
consideration all relevant circumstances, in excess of $25,000,000.
(b) Buyer shall pay to Seller $25,000,000 if (i) Seller
terminates this Agreement pursuant to Section 9.1(f), (ii) Seller terminates
this Agreement pursuant to Section 9.1(d) because the requisite Required
Regulatory Approval from the ACC or the FERC has not been obtained due in
whole or in substantial part to concerns about Buyer's financial
qualifications or capabilities, or (iii) Buyer terminates this Agreement
pursuant to Section 9.1(c), because the requisite Required Regulatory
Approval from the ACC or the FERC has not been obtained, due in whole or in
substantial part to concerns about Buyer's financial qualifications or
capabilities, or has been obtained and contains financial terms and
conditions that are unacceptable to Buyer.
(c) Buyer may terminate this Agreement upon payment of a
$25,000,000 termination fee upon any of the following events:
(i) There shall have occurred an Asset Material Adverse
Effect having or reasonably expected to have a financial or economic impact,
taking into account all relevant considerations, in excess of $25,000,000;
(ii) Regulatory Exceptions (after Buyer's petition for
rehearing objecting to such Regulatory Exceptions has been denied) shall have
been imposed against Buyer having a financial or economic impact on Buyer,
taking into account all relevant considerations in excess of $25,000,000; or
(iii) There shall have occurred a casualty loss to the
Assets having an aggregate financial or economic impact, taking into account
all relevant considerations, in excess of $25,000,000.
(d) Seller may terminate this agreement upon payment of a
$10,000,000 termination fee if there shall have occurred a casualty loss to
the Assets having or reasonably expected to have an aggregate financial or
economic impact, taking into account all relevant considerations, in excess
of $25,000,000.
(e) In view of the difficulty of determining the amount of
damages which may result to the non-terminating Party from a termination
pursuant to any of Sections 9.3(a) through 9.3(d) or pursuant to any of the
Sections of this Agreement referenced in Section 9.3(a) through 9.3(d), and
the failure of the terminating Party to consummate the transactions
contemplated by this Agreement, Buyer and Seller have mutually agreed that
each of the payments set forth in Section 9.3(a) through 9.3(d) shall be made
to the non-terminating Party as liquidated damages, and not as a penalty, and
this Agreement shall thereafter become null and void except for those
provisions which by their terms survive termination of this Agreement. In
the event of any such termination, the Parties have agreed that each of the
payments set forth in Section 9.3(a) through Section 9.3(d) shall be the non-
terminating Party's sole and exclusive remedy. ACCORDINGLY, THE PARTIES
HEREBY ACKNOWLEDGE THAT (1) THE EXTENT OF DAMAGES TO THE NON-TERMINATING
PARTY CAUSED BY THE FAILURE OF THIS TRANSACTION TO BE CONSUMMATED WOULD BE
IMPOSSIBLE OR EXTREMELY DIFFICULT TO ASCERTAIN, (2) THE AMOUNT OF THE
LIQUIDATED DAMAGES PROVIDED FOR IN EACH OF SECTIONS 9.3(a) THROUGH 9.3(d) ARE
FAIR AND REASONABLE ESTIMATES OF SUCH DAMAGES UNDER THE CIRCUMSTANCES AND (3)
RECEIPT OF SUCH LIQUIDATED DAMAGES BY THE NON-TERMINATING PARTY DOES NOT
CONSTITUTE A PENALTY. THE PARTIES HEREBY FOREVER WAIVE AND AGREE TO FOREGO
TO THE FULLEST EXTENT UNDER APPLICABLE LAW ANY AND ALL RIGHTS THEY HAVE OR IN
THE FUTURE MAY HAVE TO BRING ANY ACTION OR ARBITRAL PROCEEDING DISPUTING OR
OTHERWISE OBJECTING TO ANY OR ALL OF THE FOREGOING PROVISIONS OF THIS SECTION
9.3.
(f) All payments under this Section 9.3 shall be from payor to
payee by wire transfer of immediately available funds to a bank account in
the United States of America designated in writing by payee not later than
three (3) business days following payor's receipt of such account designation
from payee.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of the Parties.
10.2 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided in
this Agreement, any failure of any of the Parties to comply with any
obligation, covenant, agreement or condition herein may be waived by the
Party entitled to the benefits thereof only by a written instrument signed by
the Party granting such waiver, but any such waiver of such obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent failure to comply therewith.
10.3 [Intentionally Omitted]
10.4 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by facsimile
transmission with completed transmission acknowledgment, or mailed by
overnight delivery via a nationally recognized courier or registered or
certified first class mail (return receipt requested), postage prepaid, to
the recipient Party at its address (or at such other address or facsimile
number for a Party as shall be specified by like notice; provided; however,
that notices of a change of address shall be effective only upon receipt
thereof):
(a) If to Seller, to:
Citizens Communications Company
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Citizens Communications Company
Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: L. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and:
Xxxxxxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) if to Buyer, to:
Tucson Electric Power Company
Xxx Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Xx.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Attention: Xxxx X. Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
10.5 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
by any Party hereto, including by operation of law, without the prior written
consent of each other Party, nor is this Agreement intended to confer upon
any other Person except the Parties hereto any rights, interests, obligations
or remedies hereunder; provided, however, in the event of any such assignment
by a Party by operation of law without the consent of the other Party, this
Agreement and all the provisions hereof shall be binding upon the Person
receiving such assignment by operation of law. Notwithstanding the
foregoing, Buyer may (i) assign any or all of its rights and obligations
hereunder to a UniSource Designee, or (ii) make a security assignment to any
lender providing financing in respect of the Buyer's acquisition of the
Assets. Upon receipt of notice by Seller from Buyer of any such assignment
to a UniSource Designee, such assignee will be deemed to have assumed,
ratified, agreed to be bound by and perform all such obligations, and all
references herein to "Buyer" shall thereafter be deemed to be references to
such assignee, in each case without the necessity for further act or evidence
by the Parties hereto or such assignee; provided, however, that no such
assignment shall relieve or discharge UniSource from any of its obligations
hereunder.
10.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the law of the State of Arizona (without giving effect to
conflict of law principles) as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies (except
to such matters of real estate law that must be governed by the law of the
State of Arizona). THE PARTIES HERETO AGREE THAT VENUE IN ANY AND ALL
ACTIONS AND PROCEEDINGS RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT SHALL
BE IN THE STATE AND FEDERAL COURTS IN AND FOR PHOENIX, ARIZONA, WHICH COURTS
SHALL HAVE EXCLUSIVE JURISDICTION FOR SUCH PURPOSE, AND THE PARTIES HERETO
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY MANNER
RECOGNIZED BY SUCH COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
10.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.8 INTERPRETATION. The articles, section and schedule headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not in any way affect the
meaning or interpretation of this Agreement.
10.9 SCHEDULES AND EXHIBITS. Except as otherwise provided in this
Agreement, all Exhibits and Schedules referred to herein are intended to be
and hereby are specifically made a part of this Agreement. Any matter or
item disclosed on any Schedule shall not be deemed to give rise to
circumstances which result in an Asset Material Adverse Effect or a Material
Adverse Effect solely by reason of it being so disclosed. Any matter or item
disclosed pursuant to any Schedule shall be deemed to be disclosed for all
purposes under this Agreement reasonably related thereto and any matter
disclosed in one Schedule will be deemed disclosed with respect to another
Schedule if such disclosure is made in such a way as to make its relevance
with respect to such other Schedule readily apparent.
10.10 ENTIRE AGREEMENT. This Agreement, the Ancillary Agreements and
the Exhibits, Schedules, documents, certificates and instruments referred to
herein or therein, embody the entire agreement and understanding of the
Parties hereto in respect of the transactions contemplated by this Agreement.
There are no restrictions, promises, representations, warranties, covenants
or undertakings, other than those expressly set forth or referred to herein
or therein. This Agreement and the Ancillary Agreements supersede all prior
agreements and understandings between the Parties other than the
Confidentiality Agreement with respect to such transactions.
10.11 U.S. DOLLARS. Unless otherwise stated, all dollar amounts set
forth herein are United States (U.S.) dollars.
10.12 BULK SALES LAWS. Buyer acknowledges that, notwithstanding
anything in this Agreement to the contrary, Seller will not comply with the
provision of the bulk sales laws of any jurisdiction in connection with the
transactions contemplated by this Agreement. Buyer hereby waives compliance
by Seller with the provisions of the bulk sales laws of all applicable
jurisdictions to the extent permitted by law.
10.13 CONSTRUCTION OF AGREEMENT. The terms and provisions of this
Agreement represent the results of negotiations between Buyer and Seller,
each of which has been represented by counsel of its own choosing, and
neither of which has acted under duress or compulsion, whether legal,
economic or otherwise. Accordingly, the terms and provisions of this
Agreement shall be interpreted and construed in accordance with their usual
and customary meanings, and Buyer and Seller hereby waive the application in
connection with the interpretation and construction of this Agreement of any
rule of law to the effect that ambiguous or conflicting terms or provisions
contained in this Agreement shall be interpreted or construed against the
Party whose attorney prepared the executed draft or any earlier draft of this
Agreement. It is understood and agreed that neither the specification of any
dollar amount in the representations and warranties contained in this
Agreement nor the inclusion of any specific item in the Schedules or Exhibits
is intended to imply that such amounts or higher or lower amounts, or the
items so included or other items, are or are not material, and none of the
Parties shall use the fact of the setting of such amounts or the fact of any
inclusion of any such item in the Schedules or Exhibits in any dispute or
controversy between the Parties as to whether any obligation, item or matter
is or is not material for purposes hereof.
10.14 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any Party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the Parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the greatest extent possible.
10.15 THIRD PARTY BENEFICIARY. No provision of this Agreement shall
create any third party beneficiary rights in any employee or former employee
of Seller (including any beneficiary or dependant thereof) in respect of
continued employment or resumed employment, and no provision of this
Agreement shall create any rights in any such Persons in respect of any
benefits that may be provided, directly or indirectly, under any employee
benefit plan or arrangement.
IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be
signed by their respective duly authorized officers as of the date first
above written.
UNISOURCE ENERGY CORPORATION CITIZENS COMMUNICATIONS COMPANY
By: /s/ Xxxxxxx X. XxXxxxxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------------- --------------------------
Name: Xxxxxxx X. XxXxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President Title: President and C.O.O.
LIST OF EXHIBITS AND SCHEDULES
------------------------------
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C Special Warranty Deed
Exhibit D Form of Seller General Counsel Opinion
Exhibit E Form of Seller Bond Counsel Opinion
Exhibit F Form of Buyer General Counsel Opinion
SCHEDULES
1.1 Seller Employees on Whose Knowledge Buyer May Rely
2.2 Excluded Assets
2.3(g) Governmental Orders
2.3(i) Assumed Actions and Proceedings
4.3(a) Seller Conflicts, Defaults and Violations
4.3(b) Seller Required Regulatory Approvals
4.4 Seller Insurance
4.5 Seller Real Property Leases
4.6 Seller Environmental Matters
4.7 Seller Labor Matters
4.8 Seller Benefit Plans
4.9 Seller Real Property
4.10 Seller Condemnation Matters
4.11(a) Certain Seller Material Agreements
4.11(b) Certain Seller Material Agreements Requiring Consent to
Transfer
4.11(c) Defaults Under Certain Material Agreements
4.12 Legal Proceedings Involving Seller
4.13 Seller Permit Violations
4.14 Seller Tax Matters
4.15 Seller Intellectual Property Exceptions
4.20 Seller Financial Statements
5.3(a) Buyer Conflicts, Defaults and Regulations
5.3(b) Buyer Required Regulatory Approvals
5.6 Legal Proceedings Involving Buyer
6.1(a) Exceptions to Conduct of Business and Operation of the
Assets
6.12(d)(iii) Buyer Benefit Plans
6.12(d)(iii)(D) Retirees
6.14(a) Seller Revenue Bonds
6.15 Seller Surety Instruments
