ARIZONA GAS
EXECUTION VERSION
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Exhibit 10.13
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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
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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
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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
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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
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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
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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.
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"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.
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"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).
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"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 X.X.X.xx.xx. 1801 et
seq.), the Resource Conservation and Recovery Act (42 X.X.X.xx.xx. 6901 et
seq.), the Federal Water Pollution Control Act (33 X.X.X.xx.xx. 1251 et
seq.), the Clean Air Act (42 X.X.X.xx.xx. 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. xx.xx. 2601 et seq.), the Oil Pollution
Act (33 X.X.X.xx.xx. 2701 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 X.X.X.xx.xx. 11001 et seq.), the Occupational Safety
and Health Act (29 X.X.X.xx.xx. 651 et seq.), the Safe Drinking Water Act
(42 X.X.X.xx. 300f et. seq.), the Surface Mine Conservation and Reclamation
Act (30 X.X.X.xx.xx. 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.
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"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.
6
"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.
7
"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.
8
"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.
9
"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.
10
"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).
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"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).
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"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.
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"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 Assets. 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"):
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(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;
15
(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;
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(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,
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 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;
17
(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;
18
(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;
19
(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.
20
(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);
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(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).
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(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.
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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:
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(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.
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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.
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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.
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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
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(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.
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(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.
30
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.
31
(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.
32
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.
33
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.
34
(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 Proceedings. 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.
35
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.
36
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;
37
(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
38
(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.
39
(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).
40
(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.
41
(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.
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(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.
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(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.
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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.
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(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.
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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.
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(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.
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(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.
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(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.
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(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.
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(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.
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(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;
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(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:
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(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.
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(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.
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(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.
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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]
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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;
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(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;
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(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.
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(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
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(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.
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(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.
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(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.
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(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.
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(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.
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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.
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(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):
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(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
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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.
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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.
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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.
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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. DeConsini By: /s/ Xxxxxxx X. Xxxxx
--------------------------- -------------------------
Name: Xxxxxxx X. DeConsini Name: Xxxxxxx X. Xxxxx
-------------------------- -----------------------
Title: Senior Vice President Title: Vice President
----------------------- ----------------------
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
