STATE OF TEXAS AGREEMENT TO COMBINE
XxXXXXXXX AND CAP ROCK
COUNTIES OF MIDLAND AND XxXXXXXXX ELECTRIC COOPERATIVES
THIS AGREEMENT TO COMBINE XxXXXXXXX AND CAP ROCK ELECTRIC
COOPERATIVES (Agreement) is made and entered into on or as of the day of June
30, 1999, by and between CAP ROCK ELECTRIC COOPERATIVE, INC., headquartered
at Midland, Texas (hereinafter referred to as "Cap Rock" or "Cooperative"),
and XxXXXXXXX ELECTRIC COOPERATIVE, INC., headquartered at Brady, Texas
(hereinafter referred to as "XxXxxxxxx"), both being electric cooperatives
organized and operating under the Texas Electric Cooperative, Corporation
Act. Cap Rock and XxXxxxxxx may collectively be referred to in this Agreement
as the "Parties".
RECITALS
WHEREAS, Cap Rock has proposed that XxXxxxxxx join Cap Rock and become a
separate division (the "XxXxxxxxx Division"); and
WHEREAS, XxXxxxxxx is an electric distribution cooperative providing
electric utility service to its members within its duly certificated service
area; and
WHEREAS, Cap Rock is an electric distribution cooperative providing
electric utility service to its members within its certificated service area;
and
WHEREAS, the Board of Directors of XxXxxxxxx previously determined that it
would be in the best interest of its members to explore the possibility of
combining with another electric cooperative; and
WHEREAS, the Board of Directors of XxXxxxxxx, after
determining that it would be in the best interest of its members to explore the
possibility of combining with another electric cooperative, with the aid of
advisors and consultants, developed a questionnaire to send to interested
cooperatives; and
WHEREAS, the Board of Directors of XxXxxxxxx, with the aid of management
and consultants hired to assist the Board, evaluated the responses to the
questionnaire and rated the proposals by various cooperatives to determine which
cooperative or cooperatives would be the best fit with XxXxxxxxx and the most
beneficial to combine with; and
WHEREAS, the Board of Directors of XxXxxxxxx have determined that a
combination with Cap Rock would be beneficial to the fixture well-being of
XxXxxxxxx and its members; and
WHEREAS, XxXxxxxxx and Cap Rock wish to join in order to promote economies
of scale and provide for a more efficient organization; and
WHEREAS, the combination of XxXxxxxxx and Cap Rock will strengthen the
combined organization by providing load diversity; and
WHEREAS, the combined organization would be better able to acquire a
dependable and economical supply of power; and
WHEREAS, the combination would entail XxXxxxxxx transferring all of its
assets and liabilities to Cap Rock and becoming a division of Cap Rock.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises and obligations contained herein and other good and valuable
consideration, XxXxxxxxx and Cap Rock hereby
contract and agree as follows;
1.00 Transfer of XxXxxxxxx Properties and
Assumption of XxXxxxxxx Obligations
1.01 The Board of Directors of XxXxxxxxx shall take the necessary
action to obtain a vote of the membership of XxXxxxxxx within ninety (90) days
from the date this Agreement is signed.
1.02 This Agreement and the resulting combination shall become
effective upon approval by the membership of XxXxxxxxx. Although the Parties
recognize that it may be necessary to obtain approvals from Rural Utilities
Service (RUS), Cooperative Finance Corporation (CFC), Public Utility Commission
of Texas (PUCT),and other related state and federal regulatory agencies, this
Agreement and the resulting combination shall not be contingent upon obtaining
any such approvals. However, Cap Rock shall be responsible for taking the action
it deems necessary in order to comply with the terms of this Agreement and to
supply electric service to the members in the XxXxxxxxx Service Area as set
forth in this Agreement. Cap Rock shall be responsible for all costs which are
necessary in order to comply with the terms of this Agreement and provide
electric service to the persons receiving electric service in the XxXxxxxxx
service areas, (the "XxXxxxxxx Service Area"), as set forth herein and Cap Rock
agrees to indemnify and hold XxXxxxxxx harmless for any and all costs and
expenses of every kind associated therewith, including attorney's fees and costs
of litigation. Cap Rock shall become the owner of all assets of every kind
whatsoever of XxXxxxxxx pursuant to this Agreement and shall assume all
liabilities and obligations of every kind of XxXxxxxxx pursuant to this
Agreement. Thereafter,
Cap Rock shall have the right, at its sole option, to take the
action it deems necessary with regard to such assets and obligations, so long as
such action is not in contravention of the Agreement, including, but not limited
to, paying off RUS debt, among other things, if Cap Rock determines that it is
in its best interest.
1.03 At closing, as provided for below, XxXxxxxxx will, absolutely and
in fee simple or to whatever may otherwise be the greatest extent legally
possible, transfer, convey, assign and deliver to Cap Rock--and Cap Rock will
receive and acquire all of XxXxxxxxx properties and assets, of every kind
whatsoever, including but not limited to all real and personal property,
tangible and intangible, including all contracts, stock, memberships, ownership
of subsidiaries, easements, rights-of-way, privileges, permits, licenses,
franchises, causes in action, wholesale power contracts, certificates of public
convenience and necessity and Service Area assignments; and Cap Rock will assume
and fulfill, satisfy and carry out--and will relieve and save harmless XxXxxxxxx
of and from--all of XxXxxxxxx'x liabilities and obligations, including the
obligation to provide adequate and dependable electric service on a low cost
basis as such service is currently furnished by XxXxxxxxx--all subject to and in
accordance with the terms and conditions herein set forth.
1.04 Cap Rock and XxXxxxxxx shall be combined pursuant to the terms of
this Agreement. Other than subject to the approval of XxXxxxxxx'x members as set
forth in Section 1.02, the combination shall be regardless of whether or not any
contractual obligations
or rights of XxXxxxxxx with any other third parties are assignable. As such, all
contractual rights and obligations and other rights and responsibilities of
XxXxxxxxx shall become the sole rights and responsibilities of Cap Rock, which
shall assume all such rights and obligations.
1.05 In addition to the other agreements set forth above and hereafter,
Cap Rock specifically agrees to assume the current Wholesale Power Contract
between XxXxxxxxx and Lower Colorado River Authority ("LCRA") including all
obligations and benefits under such contract with LCRA. Cap Rock agrees to
indemnify and hold XxXxxxxxx harmless from any liability whatsoever under such
Wholesale Power Contract with LCRA. XxXxxxxxx agrees to assign all Wholesale
Power Contracts, including the contract with LCRA, to Cap Rock and to take any
and all action necessary to assist Cap Rock in assuming the current power supply
contract with LCRA and any other contracts that XxXxxxxxx currently has.
2.00 XxXxxxxxx'x Members
2.01 All of XxXxxxxxx'x then-existing members, on and after the date of
closing the transaction (the "Closing") as provided for below, shall
automatically become members of and be furnished electric service by Cap Rock;
their XxXxxxxxx membership fees shall, within a reasonable period, be refunded
to them; and they shall have and enjoy and may exercise any and all of the
rights of Cap Rock's other members, including rights of ownership of Cap Rock.
2.02 As provided under Section 5.00 (entitled "Board of Directors")
below persons receiving electric service in the
XxXxxxxxx Service Area shall have representation on Cap Rock's Board.
2.03 As provided in Cap Rock's Bylaws and Articles of Incorporation,
the XxXxxxxxx Division members will have the opportunity to participate and vote
in the annual meeting to elect directors and at all special meetings and they
will have the right to participate in nominating meetings to nominate
director(s) from their nominating district to the same extent as all other
members of Cap Rock.
2.04 All outstanding allocated capital credits of XxXxxxxxx shall
remain allocated to those XxXxxxxxx members entitled to receive the same, as
shown by final audit of XxXxxxxxx, and shall be allocated as book credits of Cap
Rock in the same amounts as allocated on the XxXxxxxxx books. Prospectively,
XxXxxxxxx members will be subject to the same capital credit allocation and
payment terms and conditions as other Cap Rock members. No capital credits will
be reduced merely as the result of the combination and they will be transferred
in full to Cap Rock as set forth above.
2.05 Since the membership of Cap Rock voted in October, 1998, to
convert Cap Rock into a stock company at such time that it becomes feasible to
do so, Cap Rock has offered its current members three choices for receiving
their capital credits. Those three choices are: (1) credit on their electric
xxxx for the amount of their capital credits; (2) Cash through a Dutch Auction
process; or (3) stock in the new company in the amount of their capital credits.
Cap Rock will make those options available to current members of XxXxxxxxx, on
the same terms and conditions as
the options are made available to all Cap Rock members, as soon as possible
after the combination.
2.06 The XxXxxxxxx Division of Cap Rock will continue programs to
schools, communities, members, and the general public in the same fashion as the
other divisions of Cap Rock. This includes support to livestock shows, fire
departments, 4-H Clubs and other organizations in the XxXxxxxxx Service Area.
2.07 Members of XxXxxxxxx will not lose any recourse to directors,
management, regulatory agencies or any of the usual and normal benefits
available to the members currently. As set forth more specifically below in
Section 6.00 (entitled "XxXxxxxxx Advisory Council"), an Advisory Council made
up of the current XxXxxxxxx Board members will continue in effect for the
XxXxxxxxx Division for a period of at least ten (10) years.
2.08 The headquarters office of XxXxxxxxx in Brady, Texas will become a
division office of Cap Rock after the combination.
2.09 Such equipment and personnel will be maintained in the XxXxxxxxx
Service Area as necessary to provide service and assistance to the members on a
local basis consistent with good utility practice. In the event of major system
damage, the corporate office of Cap Rock will, when necessary, hastily assemble
and dispatch equipment and personnel to assist in restoring service to the
system.
3.00 Service in XxXxxxxxx Service Area
3.01 As used in this Agreement, XxXxxxxxx Service Area means the areas
furnished with electric service by XxXxxxxxx immediately prior to the Closing,
as defined by XxXxxxxxx' Service Area PUCT
certification maps.
3.02 Until the rates for service to all of Cap Rock's members,
including those in the XxXxxxxxx Service Area, become uniform as provided for in
Section 4.00 below (entitled "Rates"), the separate rates and fees for the
XxXxxxxxx Service Area that shall be in effect in that Service Area shall be no
higher than current rates, subject only to increase in XxXxxxxxx'x wholesale
power costs, for at least five (5) years.
3.03 Cap Rock will furnish programs and services to improve XxXxxxxxx'x
customer service and reduce outage time on the same basis as Cap Rock currently
does in its other divisions. As soon as feasible after the Closing, Cap Rock
will implement its programs and procedures in the XxXxxxxxx Service Area to cut
outage time and improve service. Cap Rock will install SCADA controls in the
XxXxxxxxx Service Area to be linked into the main Cap Rock SCADA system within
eighteen (18) months after the closing. Cap Rock will train employees in the
XxXxxxxxx Service Area in the procedures that Cap Rock uses to provide exemplary
service to its members and reduce outage times.
3.04 As soon as practical after the Closing, Cap Rock will institute
its outage procedures in the XxXxxxxxx Division, which include the procedures
currently in place at Cap Rock that assure that outage time will be as short as
possible. This includes the outage procedures outlined in Cap Rock's responses
to XxXxxxxxx'x Questionnaire which is attached hereto as Exhibit "A".
3.05 Cap Rock will, after the Closing, take the necessary action and
spend the necessary money to perform system
improvements on facilities in the XxXxxxxxx Service Area as required based on
Cap Rock's engineering studies in order to improve the quality of the system as
Cap Rock has done in its other divisions. Cap Rock will, after the Closing,
complete the __________ XxXxxxxxx work plan, along with any changes or
modifications agreed to by the current XxXxxxxxx Manager and the Cap Rock
engineering staff Cap Rock will continue to make improvements as necessary to
ensure the quality of the system in the XxXxxxxxx Service Area.
3.06 Cap Rock will, as soon as possible after the Closing, implement
its programs in the XxXxxxxxx Service Area and provide the members in the
XxXxxxxxx Service Area the same type of services that it now offers in its other
divisions at the same level as it currently provides those services in its other
divisions. Barring unusual circumstances, Cap Rock expects to accomplish this
within eighteen months after the Closing. For example, within eighteen months
after the Closing, Cap Rock will institute its current outage reporting system
that it uses in its other divisions. That is, these outages will be handled out
of the division office through a toll-free number. Cap Rock will also begin to
implement as soon as possible after Closing, recognizing that it will take time
to train its dispatchers to become familiar with XxXxxxxxx'x Service Area, so
that outages after hours are handled the same as it is in Cap Rock's other
divisions, through Cap Rock's toll-free number with Cap Rock's dispatchers.
3.07 After the Closing, service crews will continue to be located in
the XxXxxxxxx Service Area. Cap Rock does not intend,
after the Closing, to decrease the number of service crews or relocate them and
anticipates that the same number of service crews will work out of the XxXxxxxxx
Division office in Xxxxx, Texas as they currently do. After the Closing, Cap
Rock's employees and contractors will support the service crews located in the
XxXxxxxxx Service Area to the extent necessary in the event of an emergency
outage such as a storm, etc.
3.08 After the Closing, Cap Rock will incorporate the XxXxxxxxx Service
Area into Cap Rock's capital improvement plans and will perform system
improvements in the XxXxxxxxx Service Area in the same way that Cap Rock
currently performs those system improvements in its other divisions. Cap Rock
will complete the _____________ XxXxxxxxx work plan and will provide the same
type of services to the XxXxxxxxx Service Area as Cap Rock provides in its other
divisions.
3.09 After the Closing, Cap Rock will represent the XxXxxxxxx Service
Area load in ERCOT at all committee levels etc. and be totally responsible for
all power supply in that service Area.
4.00 Rates
4.01 The electric rates for the persons served within the XxXxxxxxx
Service Area shall remain unchanged for at least five (5) years from the date of
Closing, unless Cap Rock's rates become lower than the XxXxxxxxx rates prior to
the expiration of five (5) years. In that event, the rates for persons receiving
electricity in the XxXxxxxxx Service Area will be adjusted to the lower Cap Rock
rate. Otherwise, the XxXxxxxxx Service Area rates, as stated
above,shall remain the same as they currently are for a period of at least five
(5) years and then phased toward such uniformity with Cap Rock's rates as is
reasonably practicable and prudent as determined by Cap Rock.
4.02 Cap Rock's service rules, regulations, policies, practices and
procedures for the XxXxxxxxx Service Area (all together referred to as "Service
Rules") shall, on and after the Closing, be brought or phased into harmony and
uniformity with the service rules and regulations for all Cap Rock service areas
within not more than five (5) years after the Closing, and even earlier if it is
reasonably practicable and prudent to do so as determined by Cap Rock. As stated
above in Section 4.01, XxXxxxxxx'x rates shall remain unchanged for a period of
at least five (5) years unless Cap Rock's rates become lower than the XxXxxxxxx
rates within that time period.
4.03 All adjustments in rates, and all changes, additions, or deletions
to, Service Rules or rates classifications, shall be subject to the approval of
any entity or governmental authority having jurisdiction for that purpose.
5.00 Board of Directors
5.01 After XxXxxxxxx members have approved the agreement to combine the
cooperatives, Cap Rock shall create a directorate district from the present
XxXxxxxxx Service Area (the "XxXxxxxxx District") and shall add one additional
position to the Cap Rock Electric Board which shall be filled by a director
chosen by the present XxXxxxxxx Board (the "XxXxxxxxx District Director") for a
three-year term. Thereafter, the XxXxxxxxx District is expected to
remain a distinct district, unless the Cap Rock board finds clear evidence of
disproportionate representation for members of the district as compared to
membership of the entire Cap Rock system.
5.02 The initial Cap Rock Corporate Board member from the XxXxxxxxx
Service Area shall be appointed by the current XxXxxxxxx Board.
5.03 Cap Rock shall insure the XxXxxxxxx director an initial term of at
least three years before he or she stands for election.
5.04 After his or her initial appointment to Cap Rock's Board, the
additional director, like all other directors of the Cap Rock, shall be elected
by the members pursuant to the plan of districting and staggered three-year
terms in effect as set forth in Cap Rock's bylaws.
5.05 The XxXxxxxxx District Director who serves on the Cap Rock
Corporate Board shall be paid the same corporate director fee as other Cap Rock
corporate directors (currently at $380.00 corporate board per meeting, plus
mileage). The XxXxxxxxx District Director shall also be paid an additional
per-overnight stay meeting fee of$190.00 (i.e. for the average one-night
overnight trip for a director meeting, the XxXxxxxxx District Director would
initially receive $570.00 plus expenses per meeting). Therefore, the XxXxxxxxx
District Director will receive $570.00 plus expenses for each meeting (6 per
year) under the current bylaws and policies.
5.06 Nothing in this Sec. 5.00 shall preclude Cap Rock in subsequent
years from amending its Bylaws 50 as to increase or decrease the number of its
Board members or to increase or
decrease, or to change the boundaries of directorate districts if the Board
determines that any such change is in the best interest of Cap Rock and its
members. However, in that event, the XxXxxxxxx Service Area will still have a
representative serving on the Board.
6.00 XxXxxxxxx Advisory Council
6.01 Cap Rock acknowledges that for several years after the Closing,
Cap Rock will from time to time need to have access to the knowledge,
consultation and advice of the Directors of XxXxxxxxx as that Board is comprised
just prior to Closing. Therefore, effective immediately upon the Closing, the
Cap Rock Board shall appoint an Advisory Council ("Council") consisting of the
current members of the XxXxxxxxx Board of Directors as it exists on the day
prior to Closing. It shall be the duty of the Council to advise and consult with
Cap Rock's President and Chief Executive Officer ("CEO"), officers and Board
with respect to matters of particular relevance and importance to the XxXxxxxxx
Service Area. The XxXxxxxxx District Director shall chair the Advisory Council
at Advisory Council meetings. The Council shall meet and consult with Cap Rock's
Board, President/CEO(or his staff) or officers when so requested by any of them,
but shall have no vote on any Corporate Board matters.
6.02 While serving on the Council, its members shall receive from the
Cooperative the same fees, expenses, benefits, (including medical insurance and
retirement plans) and travel privileges as Cap Rock currently allows directors
($190.00 per month per diem, plus thirty-five cents (.35) per mile travel
allowance and meals),
except for any payments to corporate board members resulting from their
performance as Board members. Travel privileges shall include, but not be
limited to, attendance at the annual membership meetings of the Texas Electric
Cooperatives and the National Rural Electric Cooperatives Association, and also
shall include any airline travel expenses of a spouse or thirty-five cents(.35)
per mile when using personal transportation.
6.03 It is anticipated that the Council will meet quarterly or less, if
they desire. However, the Council may, at its option, meet monthly during the
transition period after the Closing to assist in this transition period.
However, regardless of how often the Council meets, the Council members will be
paid per diem as if they met regularly on the same basis as the Cap Rock
Corporate Board, six times per year with a current per diem, per meeting of
$380.00 ($2280.00 per year).
6.04 If a person resigns from the Council or becomes ineligible or
otherwise unable to continue to serving thereon, his seat shall become
permanently vacant. Such a person, or one who is on the Council when it ceases
to exist, shall be entitled to retain such benefits for himself as he is
eligible for under the Board Policies of Cap Rock. Such Council members may at
their sole option, elect to resign from the Council and receive a discounted
present value lump sum payment of the remainder of their Council pay and benefit
package.
6.05 The Council shall exist for a period often (10) years or until no
members continue to serve on the Council, whichever occurs first. At the end of
such ten (10) year period, the
Corporate Board of Cap Rock will determine if there is a need to continue with
an Council and if so, the makeup of the Council. Members of the Council who
retire, die, or cease to serve on the Council for any reason prior to the end of
the ten (10) term shall not be replaced and the Council shall be reduced by
attrition.
6.06 All Council members shall be required to sign the Cap Rock
Directors Pledge that all corporate directors are required to sign as a
condition for serving on the Council.
7.00 XxXxxxxxx Employees
7.01 If the employee so consents, each employee of XxXxxxxxx at the
time of Closing will continue as an employee of Cap Rock and will receive, until
retirement or earlier separation from the Cooperative, the same or better
compensation and fringe benefits to which he or she would have received had he
or she continued to be employed by XxXxxxxxx. No employee's employment with
XxXxxxxxx will be terminated solely as a result of the combination of XxXxxxxxx
with Cap Rock. All employees of XxXxxxxxx who continue as employees of Cap Rock
after the Closing shall be required to sign the Cap Rock "Employee Pledge and
Proprietary Rights and Information Agreement" as a condition of continued
employment.
7.02 After the Closing, all current employees of XxXxxxxxx who desire
to continue as employees of Cap Rock, will be converted to the Cap Rock pay and
benefit package, unless those employees choose to keep their current total pay
and benefit package as currently provided by XxXxxxxxx. Each employee shall have
the option of choosing to be covered by the Cap Rock employee benefit
package instead of the current employee benefit package provided by XxXxxxxxx if
they desire or if the law and/or NRECA rules and regulations prevents such
employee from receiving the current employee benefit package provided by
XxXxxxxxx. However, an employee choosing to be covered by the XxXxxxxxx employee
benefit package would have to choose the entire package and employees would not
be allowed to pick and choose between the XxXxxxxxx and Cap Rock employee
benefit package with regard to individual items.
7.03 If the law and/or NRECA rules and regulations prevent XxXxxxxxx'
employees from continuing to receive the current XxXxxxxxx employee benefit
package, XxXxxxxxx employees existing retirement savings plan shall be placed
into rollover XXX accounts that will be self-directed by each individual
employee. Simultaneously, the XxXxxxxxx employees will be placed on the existing
Cap Rock employee retirement, savings and benefit plan..
7.04 Current employees of XxXxxxxxx will not have their pay reduced as
a result of the combination. After the Closing, such employees shall continue to
receive the same pay as they currently receive from XxXxxxxxx. As soon as
practicable after the Closing, at Cap Rock's discretion, employees will be
tested, and based upon testing results, the employees will be provided with
opportunities to increase their rates of pay. However, no matter how the test
results come out, no employee's pay will be reduced. Further, as soon as
practicable after the Closing, the XxXxxxxxx employees will be paid in
accordance with Cap Rock's pay and benefit package in accordance with the job
and grade, unless it would not benefit an employee, in which case the employee
would continue to receive
the XxXxxxxxx pay and/or benefit package.
7.05 Current employees of XxXxxxxxx will not be required to transfer to
another location except under an emergency situation as reasonably determined by
Cap Rock. In the case of an emergency situation regarding requiring a transfer,
any employees required to transfer will be paid a moving allowance. Nothing in
this Section shall prevent Cap Rock from transferring an employee when it
determines that such a situation exists. However, no such situation is
anticipated.
7.06 Within 60 days after Closing, all XxXxxxxxx employees will be
offered a lump sum cash severance payment equal to one month's pay for each year
of service. All employees receiving such offer will have ninety (90) days after
the Closing to notify management of their desire to accept such offer.
Acceptance of the option shall be at the option of the employee At Cap Rock's
sole option, such offer may be extended to some or all employees (who do not
accept such offer within the time period specified above) at a later time.
7.07 Cap Rock will provide employees of XxXxxxxxx with job enhancement
training on the same basis as other Cap Rock employees. Such job enhancement
training will be available to all current employees of XxXxxxxxx who continue as
employees of Cap Rock. This job enhancement training should provide employees of
XxXxxxxxx with opportunities to receive increases in pay that are currently
unavailable to them.
7.08 XxXxxxxxx employees who are already retired at the Closing, or who
thereafter retire from the Cooperative's
employment, shall be entitled to retain their health insurance in the same
manner and method as in effect for XxXxxxxxx' other retired employees.
7.09 Except as otherwise specifically detailed in this Agreement,
XxXxxxxxx employees who continue to be employed by Cap Rock shall be covered by
Cap Rock's policies that apply to all other employees.
7.10 Retired XxXxxxxxx Directors and employees who are already retired
at the Closing shall be entitled to retain, the same benefits in the same manner
and method as is currently in effect for XxXxxxxxx' retired Directors and
employees, as shown on Exhibit "B" attached hereto.
7.11 XxXxxxxxx employees who continue to be employed by Cap Rock shall
have the same opportunities to advance in position and/or compensation and
fringe benefits or the equivalent, as will Cap Rock's other employees. XxXxxxxxx
employees who continue as Cap Rock employees will be tested to determine their
qualifications and appropriate grade. Regardless of test scores, no employees
salary will be reduced.
7.12 The General Manager of XxXxxxxxx will be treated as any other
employee under this Agreement. However, as has been the practice in past
acquisitions, the General Manager may be offered a separate employment contract
with Cap Rock.
7.13 The provisions of this Sec. 7.00 that enable XxXxxxxxx employees
to continue employment, equal training, opportunities for advancement, and that
prohibit decreases in wages, salaries or related fringe benefits shall not
necessarily apply to such an
employee if and after, because of his or her becoming partially disabled or
because of his or her own request, he or she is allowed to continue in Cap
Rock's employment in a different position. Nothing in this Sec. 7.00 or in any
other provision of this Agreement shall preclude or impair the right of Cap Rock
to terminate any employee as allowed by Federal or Texas law. Further, nothing
in this Sec. 7.00 or anywhere in this Agreement shall constitute an employment
contract with any employee and nothing herein shall change or modify the
standing of the XxXxxxxxx' employees as employees-at-will.
8.00 XxXxxxxxx Identity
8.01 XxXxxxxxx will, after the Closing, become a division of Cap Rock.
Initially, during a transition period, the XxXxxxxxx Service Area will be called
"XxXxxxxxx Electric Cooperative, a division of Cap Rock Electric Cooperative,
Inc." Later, with the advice of the Advisory Council and employees of XxXxxxxxx,
the XxXxxxxxx Service Area will eventually be known as "Cap Rock Electric -
XxXxxxxxx Division." This local presence and identity will also be carried out,
initially, by the continuation of a XxXxxxxxx Division business office in Brady,
Texas after the combination. Consistent with prudent practices and convenience
to the XxXxxxxxx Service Area members, Cap Rock may maintain accounts in one or
more banks located within the XxXxxxxxx Service Area. Cap Rock will continue to
maintain an office in Brady as currently utilized in the XxXxxxxxx system.
8.02 The identity of XxXxxxxxx provided for in Sec. 8.01
shall continue after the Closing unless conditions and circumstances so develop
that the Cooperative determines such is no longer practicable and prudent and
there are compelling reasons to shorten the period.
9.00 Miscellaneous Matters
9.01 XxXxxxxxx shall alter its articles of incorporation and bylaws as
necessary, to facilitate and expedite the unconditional approval of this
Agreement by its members and their related simultaneous authorization for
XxXxxxxxx to be dissolved.
9.02 Cap Rock will also amend its Articles of Incorporation or Bylaws
in whatever ways, if any, that are necessary to carry out this Agreement.
However, no changes are known to be needed at this time to fulfill this
Agreement by Cap Rock.
9.03 After execution of this Agreement by the parties and until the
closing, XxXxxxxxx will not take any action that will or might materially affect
its operations or financial condition without first giving timely notice thereof
to Cap Rock and conferring with Cap Rock with respect thereto. XxXxxxxxx will
timely notify Cap Rock of any actual or potential development or event beyond
its control that will or might materially affect its operations or financial
condition, and the parties will consider and address that matter in such ways as
they mutually agree upon. However, if the parties cannot reach a mutual
agreement, XxXxxxxxx may take the action it deems necessary and Cap Rock shall
have the option of continuing with this Agreement or canceling this Agreement.
XxXxxxxxx will also periodically inform Cap Rock, at
least monthly, of its operations, revenues, expenses, balance sheet and other
information and data routinely reported to its own Board of Directors.
9.04 From the date of execution of this Agreement, Cap Rock shall bear
the costs directly assignable to promoting the approval of this Agreement by the
XxXxxxxxx membership, so long as this Agreement is submitted to the membership
for their approval with an affirmative recommendation from the Board of
Directors and management. Cap Rock shall also bear the costs directly assignable
to securing all other necessary approvals, which may include a joint application
of the parties to the Texas Public Utility Commission for transfer of
XxXxxxxxx'x service area assignments to the Cooperative, provided the
Acquisition is completed. If not completed, then each Cooperative shall share
proportionately the cost directly related to this Agreement. However, Cap Rock,
without charge and at its own expense, will make available to XxXxxxxxx any of
its personnel or consultants to assist in securing member approval, if so
desired by XxXxxxxxx.
9.05 The parties, through their officials and other representatives,
shall consult and confer with each other to the end of developing and agreeing
upon all documents necessary or desirable to close this transaction and
thereafter to consummate and carry out the combination as herein contemplated.
"Documents", as used in this Sec. 9.05, means all such documents created on a
prospective basis following execution of this Agreement and shall include but
not be limited to the following: correspondence, including opinions of legal
counsel; studies and analysis;
notices, related articles and bylaw changes; contracts; ballots and/or proxy
forms; cooperative member communications; Board and member resolutions; deeds,
title transfers, and other documents of conveyance; and applications or
petitions for approvals or consents required from any governmental authority or
private entity. This commitment to consult and confer is without regard to
whether a document is the responsibility of, or may be sponsored by, one or by
both parties. At no charge and at its own expense, Cap Rock will make available
to XxXxxxxxx, regardless of closing or not, if XxXxxxxxx so desires, any of its
personnel or consultants to draft or assist in the drafting of any such
document. Either party may cause any such document to be drafted and recommended
to the other.
9.06 The Closing and legal effectiveness of the combination shall take
place as soon as practicable and legally possible after the Agreement has been
approved by the XxXxxxxxx members, as of 12:01 a.m. Central Time of such date
and at such site as the parties agree upon. The Closing shall include the
execution and delivery of all documents and the taking of any other action
initially necessary to complete the transaction resulting in the combination.
Unless mutually agreed to otherwise, such date will be on the first day of a
calendar month.
9.07 After the execution of this Agreement, the Parties will cooperate
in all appropriate ways to enable the Parties (a) to conduct an inventory and
inspection of the Parties' properties, including materials and supplies to
inspect and review all books and records of the Parties that either Party deems
necessary, and
to conduct an inventory and inspection of any executory contracts
to which XxXxxxxxx or Cap Rock is a party or of which it is a third party
beneficiary, and (b) to conduct such audits, including a management audit if a
Party so elects, as a Party may deem desirable or appropriate in connection with
this Agreement.
9.08 Each party hereto warrants and covenants with the other that it
has, or will use its best efforts to obtain, all authority necessary for it to
execute and carry out the provisions of this Agreement, and each will furnish to
the other, at or prior to Closing, an opinion of counsel with usual
qualifications and assumptions, satisfactory to the other that it is so
authorized, that it has taken all action legally necessary to validly consummate
the Agreement. . Also, at or prior to Closing, XxXxxxxxx will furnish to Cap
Rock a commitment for an owner's title policy, subject to the printed exceptions
and all matters of record, in the amount of the book value of all fee property
to be conveyed to Cap Rock; a UCC-3 from the State of Texas in the name of
XxXxxxxxx; a properly endorsed certificate of title for all certificated
property included in the assets; and an affidavit of the President of XxXxxxxxx
that XxXxxxxxx has paid in full for all items of personal property included
among the assets shown on its books as of closing and that such assets are in
the possession of XxXxxxxxx, subject to such exceptions as may be shown by the
UCC-3 or in the affidavit.
9.09 Prior to closing XxXxxxxxx will furnish Cap Rock with a
Certificate of Litigation and Other Claims or opinion of Counsel which sets
forth a description of all pending litigation and all
other asserted or non-asserted claims known by XxXxxxxxx to exist. Also at or
prior to Closing, XxXxxxxxx will furnish Cap Rock with an affidavit from
Management and the Board that there has been no material change in its system,
operations or financial condition or any development or event portending such a
change of which the other party has not theretofore been fully notified pursuant
to Sec. 9.03 of the Agreement.
9.10 Each party represents, covenants and warrants to the other that
its execution of this Agreement, and the individual's party's action and/or
inactions consummating the combination resulting therefrom, do not violate the
provisions of the party's Articles of Incorporation, Bylaws, the provisions of
law, or any other instrument to which either is a party.
9.11 All representations and warranties made by the parties each to the
other pursuant to this Agreement shall survive the closing date and the delivery
of items as specified in this Agreement, except to the extent provided in this
Agreement.
9.12 Cap Rock agrees to indemnify and hold harmless XxXxxxxxx, and
XxXxxxxxx'x Directors, officers, employees and members, at all times after the
date of this Agreement, against and with respect to:
(1) any and all damage, loss, cost, and expense resulting from any
misrepresentations, breach of warranty, or nonfulfillment of
any obligation on the part of Cap Rock under this Agreement or
from any misrepresentation in or omission from any instrument
furnished to XxXxxxxxx under this Agreement; and
(2) any and all actions, suits, proceedings, demands, assessments,
judgments, costs, and legal and other expenses incident to
liabilities specified in subsection (1) above; and (3) any and
all actions, suits, proceedings, demands, assessments,
judgments,
costs, and legal and other expenses arising as a
result of the consummation of this Agreement, except for the
items set forth in Sec. 9.13 below.
9.13 XxXxxxxxx agrees to indemnify and hold harmless Cap Rock at all
times after the date of this Agreement, against and with respect to:
(1) any and all damage, loss, cost, and expense resulting from any
misrepresentations, breach of warranty, or nonfulfillment of
any obligation on the part of XxXxxxxxx under this Agreement
or from any misrepresentation in or omission from any
instrument furnished to Cap Rock under this Agreement; and
(2) any and all actions, suits, proceedings, demands, assessments,
judgments, costs, and legal and other expenses incident to
liabilities specified in subsection (1) above.
10.00 XxXxxxxxx Dissolution
10.01 Timely after the XxXxxxxxx members authorize its dissolution, and
after any necessary regulatory approvals or contract assignments are obtained,
and Cap Rock determines that it is no longer necessary for XxXxxxxxx to continue
in existence as a corporation, the XxXxxxxxx Board, acting in such manner as
agreed to by the parties and allowed by law, shall duly cause XxXxxxxxx to be
dissolved.
10.02 The cost and expense of all matters covered in Sec. 10.01 shall
be borne by Cap Rock.
11.00 Amendment or Abandonment of Agreement
11.01 From and after the approval of this Agreement by the XxXxxxxxx
members and their authorization for XxXxxxxxx to be dissolved and until the
Closing, the Agreement may be amended by action of the two Cooperative's Board
of Directors (a) upon their
determination that such is necessary or desirable to accomplish or enhance the
principal purposes of the Agreement or (b) because of a requirement so to amend
as a condition of securing any necessary approval of the Agreement by a
governmental agency or private entity, but only if such amendment(s) will
neither substantially defeat or impair the achievement of the principal purposes
nor alter a material term of the Agreement.
11.02 At any time after the execution of this Agreement and prior to
Closing, this Agreement may be terminated and abandoned (a) upon the mutual
agreement of the parties based upon their joint determination that it is in the
best interest of either party or (b) unilaterally if developments of a material
nature occur upon the basis of which it may reasonably conclude that failure to
so terminate and abandon will result in a substantial detriment to itself or its
members with respect to the cost, adequacy or dependability of its member's
electric service. If a party unilaterally decides to terminate and abandon, it
shall deliver written notice thereof to the other party, specifying the facts
upon which it has based its decision, as soon as possible after such decision is
made.
IN WITNESS WHEREOF, the parties have duly authorized and caused their
respective officers to execute this Agreement in quadruplicate originals, with
two of the same being retained by each party, on or as of the _____ day xx___
,0000.
XxXXXXXXX ELECTRIC CAP ROCK ELECTRIC
COOPERATIVE, INC. COOPERATIVE, INC.
By;__________________________ By:__________________________
Xxxxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxx
President of the Board President/CEO
ATTEST:_____________________ Attest_______________________
Xxxxx X. Xxxxxxx, Secretary Xxxxxx X. Xxxxxxxx, Secretary
CORPORATE ACKNOWLEDGEMENT
ThE STATE OF TEXAS )(
)(
COUNTY OF ____________ )(
THIS instrument was acknowledged before me on the ______ day
of _____ 1999 by Xxxxxxx X. Xxxxxxxxx, President, and Xxxxx X. Xxxxxxx,
Secretary of XxXxxxxxx Electric Cooperative, Inc., a Texas electric cooperative
corporation, on behalf of said corporation.
----------------------------
Notary Public, State of Texas
Notary's Printed Name________
My Commission Expires________
(SEAL)
THE STATE OF TEXAS ) (
) (
COUNTY OF MIDLAND ) (
THIS instrument was acknowledged before me on the ____ day of
_____ 1999 by XXXXX X. XXXXXX, President/CEO and XXXXXX X. XXXXXXXX,
Secretary of Cap Rock Electric Cooperative, Inc., a Texas electric cooperative
corporation, on behalf of said corporation.
---------------------------
Notary Public, State of Texas
Notary's Printed Name: ______
My Commission Expires: ______
(SEAL)
