ASSET PURCHASE AGREEMENT BY AND BETWEEN AMBIT ENERGY, L.P. AND COMMERCE ENERGY, INC. DATED AS OF OCTOBER 23, 2008
EXHIBIT 2.1
BY
AND BETWEEN
AMBIT
ENERGY, L.P.
AND
COMMERCE
ENERGY, INC.
DATED
AS OF OCTOBER 23, 2008
TABLE OF CONTENTS
| PAGE | ||
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ARTICLE
I
|
DEFINITIONS
|
1
|
|
1.1
|
Definitions
|
1
|
|
1.2
|
Certain
Interpretive Matters
|
5
|
|
1.3
|
General
Terms regarding Schedules.
|
6
|
|
ARTICLE
II
|
SALE
AND PURCHASE OF ASSETS
|
7
|
|
2.1
|
Purchased
Assets
|
7
|
|
2.2
|
Excluded
Assets
|
7
|
|
ARTICLE
III
|
ASSUMPTION
OF LIABILITIES
|
8
|
|
3.1
|
Liabilities
Assumed by Purchaser
|
8
|
|
3.2
|
Liabilities
Not Assumed by Purchaser
|
9
|
|
ARTICLE
IV
|
PURCHASE
PRICE AND CUSTOMER TRANSFER
|
9
|
|
4.1
|
Purchase
Price
|
9
|
|
4.2
|
Residual
Payments.
|
10
|
|
4.3
|
Accounts
Receivable
|
12
|
|
4.4
|
Allocation
of Purchase Price
|
13
|
|
ARTICLE
V
|
CLOSING
AND CLOSING DELIVERIES
|
13
|
|
5.1
|
The
Closing
|
13
|
|
5.2
|
Deliveries
of Seller
|
13
|
|
5.3
|
Deliveries
by Purchaser
|
14
|
|
ARTICLE
VI
|
REPRESENTATIONS
AND WARRANTIES OF SELLER
|
15
|
|
6.1
|
Existence
and Power
|
15
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6.2
|
Authorization;
Enforceability
|
15
|
|
6.3
|
Governmental
Authorization
|
15
|
|
6.4
|
Non-Contravention;
Consents
|
15
|
|
6.5
|
Contracts
|
16
|
|
6.6
|
Litigation
|
16
|
|
6.7
|
Compliance
with Laws
|
16
|
|
6.8
|
Purchased
Assets; Properties
|
16
|
|
6.9
|
No
Brokers’ Fees; No Finders’ Fees
|
17
|
|
ARTICLE
VII
|
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
|
17
|
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7.1
|
Corporate
Existence and Power
|
17
|
|
7.2
|
Corporate
Authorization; Enforceability
|
17
|
|
7.3
|
Non-Contravention
|
17
|
|
7.4
|
REP
Certificate and ERCOT Matters
|
18
|
|
7.5
|
Financial
Ability
|
18
|
|
ARTICLE
VIII
|
CERTAIN
COVENANTS AND PROCEDURES
|
18
|
|
8.1
|
Conduct
of Business of Seller
|
18
|
|
8.2
|
Review
of Seller; Confidentiality
|
19
|
|
8.3
|
Reasonable
Commercial Efforts
|
19
|
|
8.4
|
Access
|
20
|
|
8.5
|
Collection
of Payments
|
20
|
|
8.6
|
Further
Assurances
|
20
|
|
8.7
|
Certain
Tax Matters
|
21
|
|
8.8
|
Notice
to Transferred Customers
|
21
|
|
8.9
|
Migration
of Customers; ERCOT
|
21
|
|
8.10
|
Non-Competition
Agreement
|
22
|
|
ARTICLE
IX
|
CONDITIONS
TO CLOSING
|
23
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9.1
|
Conditions
to Obligations of Purchaser
|
23
|
|
9.2
|
Conditions
to Obligations of Seller
|
23
|
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ARTICLE
X
|
SURVIVAL;
INDEMNIFICATION
|
24
|
|
10.1
|
Survival
|
24
|
|
10.2
|
Indemnification
|
25
|
|
10.3
|
Procedures
|
26
|
|
10.4
|
No
Consequential Damages
|
27
|
|
10.5
|
Scope
of Representations and Warranties of Seller
|
27
|
|
10.6
|
Exclusive
Remedy
|
28
|
|
10.7
|
Mitigation
of Damages/Minimization of Claim
|
28
|
|
10.8
|
Remedies
for Breach of this Agreement by the Seller Before the
Closing
|
28
|
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ARTICLE
XI
|
MISCELLANEOUS
|
29
|
|
11.1
|
Termination.
|
29
|
|
11.2
|
Notices
|
29
|
|
11.3
|
Amendments
and Waivers
|
30
|
|
11.4
|
Expenses
|
31
|
|
11.5
|
Successors
and Assigns
|
31
|
|
11.6
|
No
Third-Party Beneficiaries
|
31
|
|
11.7
|
Governing
Law
|
31
|
|
11.8
|
Counterparts
|
31
|
|
11.9
|
Table
of Contents; Headings
|
31
|
|
11.10
|
Entire
Agreement
|
31
|
|
11.11
|
Severability
|
32
|
|
11.12
|
Specific
Performance
|
32
|
|
11.13
|
Notification
of Certain Matters.
|
32
|
|
11.14
|
Announcements
|
33
|
SCHEDULES
*
|
Schedule 2.1(a)
|
Assigned
Contracts
|
|
Schedule 2.1(f)
|
Broker
Contracts
|
|
Schedule 3.1(y)(iii)
|
Assumed
Liabilities
|
|
Schedule 6.3
|
Governmental
Authorization
|
|
Schedule 6.4
|
Non-Contravention;
Consents
|
|
Schedule 6.5(a) and 6.5(b)
|
Contracts
|
|
Schedule 6.6
|
Litigation
|
|
Schedule 6.7
|
Compliance
with Laws
|
|
Schedule 6.8
|
Purchased
Assets; Properties
|
|
Schedule 6.9
|
No
Brokers’ Fees; No Finders’ Fees
|
|
Schedule 8.9
|
Transition
Services Agreement
|
|
Schedule 8.10
|
Non-Competition
Agreement
|
|
Schedule 9.1(e)
|
Termination
of Security Interests
|
* Exhibits
and schedules have been omitted pursuant to Item 601 (b)(2) of
Regulation
S - K
and will be furnished to the Securities and Exchange Commission upon
request.
THIS
ASSET PURCHASE AGREEMENT, dated as of October 23, 2008, by and between Ambit
Energy, L.P., a Texas limited partnership (“Purchaser”), and
Commerce Energy, Inc., a California corporation (“Seller”).
RECITALS
A. Seller
is a retail electricity provider in, among other states, the State of Texas and
in connection thereto sells electric power to its retail customers (with such
business related to the Assigned Contracts referred to herein as the “Business”).
B. Purchaser
wishes to purchase from Seller, and Seller wishes to sell to Purchaser, Seller’s
contracts with its retail customers and certain related assets, upon the terms
and conditions of this Agreement.
Accordingly,
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
1.1 Definitions. In
addition to the terms defined elsewhere herein, the terms below are defined as
follows:
“Accounts Receivable”
has the meaning set forth in Section
2.2(i).
“Active Accounts”
means all of Seller’s active accounts in the ERCOT market as of the Closing Date
in addition to those accounts of Seller that are enrolled with Seller that have
an ERCOT-assigned start date as of the Closing Date or for whom Seller has
received confirmation of enrollment from ERCOT; provided however, that Active
Accounts shall not include those accounts of Seller that, as of the Closing
Date, have an ERCOT-assigned cancel date prior to the Closing Date.
“Affiliate” means,
with respect to any Person, any other Person directly or indirectly controlling,
controlled by or under common control with the first Person. As used
in the preceding sentence, “control” shall mean (i) the ownership of more than
50% of the voting securities or other voting interest of any Person, or (ii) the
possession of the power to direct the management and policies of such
Person.
“Agreement” means this
Asset Purchase Agreement, as the same may be amended from time to time in
accordance with the terms hereof.
“Ancillary Agreements”
means all instruments, certificates, bills of sale and other agreements entered
into by Seller and Purchaser in connection with the consummation of the
transactions contemplated by this Agreement.
-1-
“Assigned Contracts”
has the meaning set forth in Section
2.1(a).
“Assumed
Liabilities” has the meaning set forth in Section 3.1(b).
“Billing
Transfer Notice” has the meaning set forth in Section 8.8.
“Books and
Records” has the meaning set forth in Section 2.1(c).
“Broker
Contracts” has the meaning set forth in Section 2.1(f).
“Business” has the
meaning set forth in Recital A.
“Business
Day” means a day that is not a Saturday, Sunday or a day on which
commercial banking institutions located in Houston, Texas are authorized or
required to close.
“Closing” has the
meaning set forth in Section 5.1.
“Closing
Date” has the meaning set forth in Section 5.1.
“Closing
Date Benchmark” means the number of Active Accounts as of 12:01 a.m.
on the Closing Date, as set forth on a final list of residential, commercial and
industrial ESID numbers of Active Accounts for submission to ERCOT provided by
Seller to Purchaser on the Closing Date.
“Commercial
Active Accounts” means all of Seller’s Active Accounts pursuant to
Assigned Contracts with commercial or industrial customers.
“Commercial
Purchase Price” has the meaning set forth in Section 4.1(a).
“Confidentiality
Agreement” means that certain Confidentiality Agreement dated September
2, 2008, between Purchaser and Seller.
“Customer
Deposits” means the deposits plus accrued interest made by each customer
underlying the Active Accounts in order to receive electric service from
Seller.
“Damages” has the
meaning set forth in Section 10.2(a).
“Deductible” has the
meaning set forth in Section 10.2(a).
“Direct
Claim” has the meaning set forth in Section 10.3(c).
“ERCOT” shall mean the
Electric Reliability Council of Texas or its successor entity.
“Excluded
Assets” has the meaning set forth in Section 2.2.
“Excluded
Damages” has the meaning set forth in Section 10.4.
-2-
“GAAP” means U.S.
generally accepted accounting principles.
“Governmental
Authority” means the government of the United States or any foreign
country or any state or political subdivision thereof and any entity, body or
authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and also including, for
the avoidance of doubt, ERCOT.
“Indemnified Party”
has the meaning set forth in Section 10.3(a).
“Indemnifying Party”
has the meaning set forth in Section 10.3(a).
“Independent Firm” has
the meaning set forth in Section 4.2(f).
“Intellectual Property
Right” means any trademark, service xxxx, trade name, patent, trade
secret, domain name (including any registrations or applications for
registration or renewal of any of the foregoing).
“IRS” means the
Internal Revenue Service.
“Law” means any
federal, foreign, state or local statute, law, rule, regulation, ordinance,
code, permit or license.
“Lien” means, with
respect to any property or asset, any mortgage, lien, pledge, charge, security
interest, or encumbrance of any kind in respect of such property or
asset.
“Material Adverse
Effect” means (a) with respect to the Seller, a material adverse effect
on the condition of the Purchased Assets taken as a whole and (b) with respect
to the Purchaser any change, circumstance or effect that materially impedes the
ability of Purchaser to consummate the transactions contemplated hereby or to
perform its obligations hereunder; provided, however, that in no event will any
of the following constitute a Material Adverse Effect: (i) any change or
development in international, national, regional, state or local wholesale or
retail markets for electricity or fuel, including, without limitation, changes
in commodity prices, related products or availability or costs of transportation
for such commodities, (ii) any change or development in national, regional or
state electric transmission or distribution systems or fuel transportation
systems, (iii) national or international political conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack upon the United States or upon any military installation,
equipment or personnel of the United States, (iv) any effects, changes, events,
circumstances, developments or conditions generally affecting the industry in
which Seller operates or arising from general business or economic conditions,
including any conditions caused by the weather (including Hurricane Ike), (v)
any effects, changes, events, circumstances, developments or conditions
resulting from any change in Law or GAAP, which affect generally entities
similarly situated or in a similar business to Seller, (vi) any effect from
compliance by Seller with the terms of this Agreement or the announcement of the
transactions contemplated hereby or (vii) any violation or breach of any
covenant, representation or warranty that has been cured within the time periods
provided by Section
11.1.
-3-
“Objection Notice” has
the meaning set forth in Section 4.2(c).
“Order” means any
judgment, injunction, judicial or administrative order or decree.
“Ordinary Course of
Business” means, with respect to any Person, the ordinary course of
business of such Person, consistent with such Person’s past practice and
custom.
“Party” means each of
the Purchaser and Seller, which may collectively be referred to herein as the
Parties.
“Payment Addresses”
has the meaning set forth in Section 2.1(d).
“Permit” means any
government or regulatory license, permit, certificate or franchise that is
material to the Purchased Assets.
“Permitted Lien” means
Liens that will be paid off and extinguished at or prior to
Closing.
“Person” means an
individual, corporation, partnership, limited partnership, limited liability
company, joint venture, association, trust or other entity or
organization.
“PUCT” means the
Public Utility Commission of Texas, or its successor entity.
“Purchase Price” has
the meaning set forth in Section 4.1(a).
“Purchased Assets” has
the meaning set forth in Section 2.1.
“Purchaser” has the
meaning set forth in the introductory paragraph of this Agreement.
“Purchaser’s Accounts
Receivable” has the meaning set forth in Section 4.3.
“Residential Active
Accounts” means all of Seller’s Active Accounts pursuant to Assigned
Contracts with residential customers.
“Residential Purchase
Price” has the meaning set forth in Section 4.1(a).
“Residual Payments”
has the meaning set forth in Section 4.2(b).
“Residual Period” has
the meaning set forth in Section 4.2(b).
“Retained Liabilities”
has the meaning set forth in Section 3.2.
“Schedules” has the
meaning set forth in Section 1.3(a).
“Seller” has the
meaning set forth in the introductory paragraph of this Agreement.
-4-
“Switch Date” means
(i) with respect to a Residential Active Account, the date on which ERCOT
actually effectuates the switch from Seller to Purchaser, as REP of Record for
that particular Residential Active Account (it being understood and agreed that
Seller and Purchaser intend that (and shall take all action reasonably necessary
to facilitate) such switch by ERCOT on the day immediately following the close
of such Residential Active Account’s then current billing cycle as of the
Closing Date) and (ii) with respect to a Commercial Active Account, the date on
which ERCOT actually effectuates the switch from Seller to Purchaser, as REP of
Record for that particular Commercial Active Account (it being understood and
agreed that Seller and Purchaser intend that (and shall take all action
reasonably necessary to facilitate) such switch by ERCOT on a date within ninety
(90) days after the Closing Date as mutually agreed by Seller and
Purchaser.
“Tax” means (a) any
net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad
valorem, value
added, transfer, franchise, profits, license, withholding on amounts paid to or
by Seller, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount
imposed by any Taxing Authority.
“Tax Return” means all
tax returns required to be filed in connection with any Tax or by any Taxing
Authority.
“Taxing Authority”
means any Governmental Authority having jurisdiction over the assessment,
determination, collection or other imposition of any Tax.
“TDSPs” means the
transmission and distribution service providers.
“Third-Party Claim”
means any claim, demand, action, suit or proceeding made or brought by any
Person who or which is not a party to this Agreement and who or which is not an
Affiliate of any party to this Agreement.
“Transfer” has the
meaning set forth in Section 2.1.
“Transferred Customer”
means each customer of Seller that is party to an Assigned Contract that is
Transferred to Purchaser hereunder.
1.2 Certain Interpretive
Matters.
(a) When a
reference is made in this Agreement to an Article, Section, Exhibit or Schedule,
such reference will be to an Article or Section of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated. Whenever the words,
“include,” “includes” or “including” are used in this Agreement, they will be
deemed to be followed by the words “without limitation.” The words
“hereof,” “herein” and “hereunder” and words of similar import when used in this
Agreement refer to this Agreement (including Exhibits and Schedules) as a whole
and not to any particular provision of this Agreement. All terms
defined in this Agreement have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
-5-
therein. Words
of any gender used herein shall be deemed to include each other gender, and
words using the singular or plural number shall also include the plural or
singular number, respectively. All references to “$” or dollar
amounts will be to lawful currency of the United States of
America. References to a Person are also to its permitted successors
and assigns. Each accounting term not otherwise defined in this
Agreement has the meaning assigned to it in accordance with GAAP. To
the extent the term “day” or “days” is used, it will mean calendar days unless
referred to as a “Business
Day.”
(b) No
provision of this Agreement will be interpreted in favor of, or against, any of
the Parties hereto by reason of the extent to which any such Party or its
counsel participated in the drafting thereof or by reason of the extent to which
any such provision is inconsistent with any prior draft hereof or
thereof.
1.3 General Terms regarding
Schedules.
(a) Any terms
used in the Schedules to this Agreement (“Schedules”) but not
defined in the Schedules shall have the same meanings ascribed thereto in this
Agreement.
(b) Any
disclosures contained in the Schedules which refer to a document are qualified
in their entirety by reference to the text of such document.
(c) No
disclosure of any matter contained in the Schedules shall create an implication
that such matter meets any standard of materiality or was required to be
disclosed under this Agreement.
(d) The
headings contained in the Schedules are for reference only and shall not affect
in any way the meaning or interpretation of the Schedules.
(e) For the
purposes of the Schedules, any information, item or other disclosure set forth
in any Schedule shall be deemed to have been set forth in all other applicable
Schedules and disclosed not only in connection with the representation and
warranty specifically referenced on a given Schedule, but for all purposes
relating to the representations and warranties of the Seller set forth in the
Agreement, provided the relevance of such disclosure is reasonably apparent from
the terms of such disclosure. Cross references in the Schedules are
noted for purposes of convenience of reference only.
-6-
ARTICLE
II
SALE AND
PURCHASE OF ASSETS
2.1 Purchased
Assets. At
the Closing, Seller will sell, assign, transfer, convey and deliver (“Transfer”), free and
clear of all Liens to Purchaser, and Purchaser will purchase and accept from
Seller, on the terms and subject to the conditions hereinafter set forth, the
following specific assets and no other assets of Seller (all of such assets,
properties, rights and interests being hereinafter collectively referred to as
the “Purchased
Assets”):
(a) all
retail electric service contracts between Seller and Seller’s customers within
the State of Texas as of the Closing Date as contained on Schedule 2.1(a) (a CD-Rom
provided herewith) (collectively, the “Assigned Contracts”)
with such Transfer of the contracts occurring on the Closing Date;
(b) an amount
of cash equal to the Customer Deposits (which will be transferred by offset
against the Purchase Price pursuant to Section 4.1(b) below,
after which there shall be no further obligation of Seller to Purchaser with
respect to the Customer Deposits) and all of Seller’s rights to the Customer
Deposits;
(c) all books
and records in the control of Seller relating to the Purchased Assets and the
Assumed Liabilities, including all Seller’s rights to the customer files and
lists, sales information, records of historical usage, all correspondence with
any customers and any other reports, promotional materials, marketing studies,
plans and documents prepared by Seller to the extent related to the Purchased
Assets and the Assumed Liabilities, including data stored electronically, but
excluding the corporate books of Seller, any materials subject to a
confidentiality agreement in which Seller is a party or any materials that are
subject to an attorney-client privilege (the “Books and
Records”);
(d) Effective
December 22, 2008, Seller’s rights to the P.O. Box addresses or other addresses
(collectively, the “Payment Addresses”)
to which any Active Account customers have been directed to make any sort of
payments, whether for deposits, invoices, or otherwise;
(e) All of
Seller’s rights to any telephone number and any telecopy number that has an area
code within the State of Texas and that relates exclusively to the Business or
that is an “800 number” used for marketing purposes solely within Texas or for
servicing Active Accounts, specifically excluding 1-800-ELECTRIC;
and
(f) the
agreements between Seller and certain brokers, subject to the Parties obtaining
all necessary consents under such agreements, as set forth in Schedule 2.1(f)
(collectively, the “Broker
Contracts”).
2.2 Excluded
Assets. Notwithstanding
anything in this Agreement to the contrary, Seller shall retain all assets,
rights and privileges not expressly set forth in
-7-
Section 2.1, including
without limitation all assets, rights and privileges (the “Excluded Assets”) set
forth below (such assets, rights and privileges will not be included in the
Purchased Assets):
(a) all books
and records of Seller relating to the Excluded Assets or Retained Liabilities,
including the corporate charter, related organizational and corporate governance
documents, minute books and Tax Returns of Seller;
(b) all
deposits Seller has posted or paid related to the Business, including without
limitation those deposits paid by Seller to ERCOT, the TDSPs, or Seller’s
wholesale energy providers;
(c) Seller’s
cash, proceeds, cash-equivalents, and interest accrued thereon on the day of the
Closing, including all credits, checks and proceeds deposited with Seller before
and up to the Closing Date but not yet cleared, excluding the Customer
Deposits;
(d) all
supply contracts between Seller and Seller’s vendors and suppliers;
(e) all of
Seller’s rights and licenses under any other agreements not assumed by
Purchaser;
(f) the
Intellectual Property Rights of Seller;
(g) the right
to use the name “Commerce Energy” and the goodwill associated with the
foregoing;
(h) any Tax
refunds owed to Seller or any of its Affiliates relating to the ownership or
operation of the Business and/or the Purchased Assets before the
Closing;
(i) all
accounts receivable, rights to receive payments, rights to collect and xxx for
past due payments, and guaranties, performance assurance or other security
relating to any of the Assigned Contracts through the Switch Date and any
accounts in the ERCOT market that have or shall have an ERCOT-assigned cancel
date prior to the Closing Date (the “Accounts
Receivable”); and
(j) all of
Seller’s Renewable Energy Credits.
ARTICLE
III
ASSUMPTION
OF LIABILITIES
3.1 Liabilities Assumed by
Purchaser.
(a) At the
Closing, Purchaser will assume, as of the Closing Date, and agree to pay,
perform and discharge when and as due, all liabilities and obligations of Seller
(other than the Retained Liabilities) (y) arising out of or related to any
event, fact or circumstance occurring or existing on or after the Closing Date
under the terms of (i) the Assigned Contracts, including but not limited to the
obligation to return the Customer
-8-
Deposit(s)
to the customers underlying the Assigned Contracts to the extent required,
(ii) the Broker Contracts, including but not limited to the obligation to
pay commissions thereunder, to the extent required, after the applicable Switch
Date and (iii) all other agreements contained on Schedule 3.1(y)(iii) that Seller
assigns to Purchaser and (z) arising out of or related to any event, fact
or circumstance to the extent arising out of or related to the ownership or
operation of the Business and/or the Purchased Assets on or after the Closing,
which shall include payment of all Taxes due on the Purchaser’s Accounts
Receivable relating to electric power sold after the applicable Switch
Date.
(b) The
liabilities to be assumed by Purchaser pursuant to Section 3.1(a) are
collectively referred to as “Assumed
Liabilities”.
3.2 Liabilities Not Assumed by
Purchaser. Notwithstanding
anything in this Agreement to the contrary, Purchaser will not assume or be
deemed to have assumed, or in any way be liable or responsible for, any
liabilities or obligations of Seller, except as specifically provided in Section 3.1(a). All
liabilities or obligations of Seller other than Assumed Liabilities are
hereinafter sometimes collectively referred to as the “Retained
Liabilities”, which shall include payment of all Taxes due on the
Accounts Receivable relating to electric power sold prior to the applicable
Switch Date, the litigation identified in Schedule 6.6 and any
claims identified in Schedule 6.7.
ARTICLE
IV
PURCHASE
PRICE AND CUSTOMER TRANSFER
4.1 Purchase
Price.
(a) Calculation of the Purchase
Price. The Purchase Price for the Purchased Assets (the “Purchase Price”)
shall be $11,200,000, as adjusted in accordance with Sections 4.1(b) and (c). Of
this Purchase Price, $8,500,000 shall be applicable to the Residential Active
Accounts (the “Residential Purchase
Price”) and $2,700,000 shall be applicable to the Commercial Active
Accounts (the “Commercial Purchase
Price”).
(b) Payment of the Purchase
Price. At Closing, Purchaser shall pay to Seller the
Residential Purchase Price, by wire transfer of immediately available funds to
an account designated in writing by Seller. On or before November 24,
2008, Purchaser shall pay Seller the Commercial Purchase Price, as adjusted in
accordance with Section 4.1(c), less the
amount of the Customer Deposits, by wire transfer of immediately available funds
to an account designated in writing by Seller; provided, however, that if the
sum resulting from the calculation required by this sentence is a negative
number, then Seller shall pay to Purchaser such amount, by wire transfer of
immediately available funds to an account designated in writing by
Purchaser.
(c) Adjustment to the Purchase
Price. The Commercial Purchase Price shall be adjusted either up or down
in accordance with this Section 4.1(c), if, and only
if, the Closing Date Benchmark is either greater than 59,028 or less than
56,148.
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(i) If the
Closing Date Benchmark is greater than 59,028, then the Commercial Purchase
Price shall be increased by an amount equal to the product of (x) $194
multiplied by (y) the difference between (A) Closing Date Benchmark, minus (B)
59,028.
(ii) If the
Closing Date Benchmark is less than 56,148, then the Commercial Purchase Price
shall be reduced by an amount equal to the product of (x) $194 multiplied by (y)
the difference between (A) 56,148, minus (B) the Closing Date
Benchmark.
4.2 Residual
Payments.
(a) General. In
addition to the Purchase Price as described in Section 4.1, the Seller
shall be entitled to receive payments to the extent provided in this Section 4.2, as
additional consideration for the Transfer of the Purchased Assets, to be
calculated as follows: Purchaser shall pay to Seller the Residual
Payments attributable to each calendar month (or any part thereof) during the
Residual Period no later than the 15th day of
the month following each calendar month during the Residual Period, in
accordance with this Section 4.2.
(b) Definitions. The
following definitions shall be applicable for purposes of determining the amount
and payment of the Residual Payments:
“Residual Payments”
shall mean, for each calendar month (or any part thereof) during the Residual
Period, an amount equal to the product of (i) $3.50 multiplied by (ii) the sum
of (x) the number of Transferred Customers (after the Switch Date) for which the
Purchaser receives in the prior calendar month payment for all charges invoiced
by or for Purchaser that are due in such prior calendar month and (y) the number
of Transferred Customers (after the Switch Date) for which the Purchaser
receives in the prior calendar month payment for all outstanding charges
invoiced by or for Purchaser that are due with respect to any other calendar
month in the Residual Period other than the prior calendar month (it being
understood and agreed that a “Transferred Customer” shall, for purposes of
calculating Residual Payments, continue to be a Transferred Customer whether
service is being delivered under an Assigned Contract or any amendment,
extension, renewal or replacement thereof (it being further understood and
agreed that Purchaser, shall make no more than twenty-four (24) Residual
Payments, for a total payment not to exceed $84.00, for each
Transferred Customer)).
“Residual Period”
shall mean the period beginning on the Closing Date through and including
December 31, 2010.
(c) Calculation and
Payment. Concurrent with the payment of the Residual Payments
each month during the Residual Period, Purchaser shall deliver to Seller a
written calculation of Residual Payments for the immediately preceding calendar
month, specifying in reasonable detail the calculation of such Residual
Payments. Seller shall have the right, once each calendar quarter
during the Residual Period and once during the
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first
calendar quarter after the expiration of the Residual Period, to object in
writing to Purchaser (“Objection Notice”)
with respect to the calculation of all Residual Payments that have been made
since the Seller’s most recent objection permitted under this Section 4.2(c), specifying
in reasonable detail the basis of any objection which may be no other reason
than to confirm the calculation of the Residual Payments. With
respect to any such Objection Notice, Purchaser shall make available to Seller
any other information that Seller may reasonably request in order to verify the
amounts reflected on any calculation of the Residual Payments, and Purchaser
will allow a financial representative or accountant of the Seller to review its
books and records relating to the Purchased Assets for purposes of confirming
the amounts reflected on any calculation of the Residual
Payments. The resolution of any dispute regarding any such
calculation shall be conducted in accordance with Section 4.2(f)
below. Payment of all Residual Payments shall be made by Purchaser
(by wire transfer of immediately available funds to a bank account designated by
the Seller) not later than the earlier to occur of the 15th of each calendar
month, as appropriate, or within five (5) Business Days following the final
determination of any Residual Payments in accordance with this Section 4.2(c).
(d) Operation of the
Business. Purchaser shall operate the Business in a
commercially reasonable manner. In addition, Purchaser shall maintain
books and records in a manner so that the Residual Payments can be calculated in
accordance with this Section 4.2, (and it is
understood and agreed that Purchaser shall not take actions, or omit to take
actions, solely for the purpose of reducing the amount of any Residual
Payments).
(e) Successors and
Assigns. Purchaser’s obligations under this Section 4.2 to pay
Residual Payments shall be binding on any successor to any of the Assigned
Contracts whether any assignment occurs by asset sale, stock sale, merger or
other business combination or transfer or assignment of any kind.
(f) Dispute
Resolution. If within twenty (20) days after the delivery of
any Objection Notice, the Purchaser and the Seller are unable to agree to the
calculation of Residual Payments covered by such Objection Notice, then the
Parties shall engage a mutually-acceptable, nationally recognized accounting
firm (the “Independent
Firm”) to resolve any disputes regarding the calculation of Residual
Payments covered by such Objection Notice. The Independent Firm (A)
shall conduct such review of the books and records of Purchaser as reasonably
necessary, the Objection Notice and any supporting documentation furnished by
the Purchaser or the Seller as the Independent Firm in its sole discretion deems
necessary (including the working papers of the Purchaser and the Seller and,
subject to reasonably requested release letters, their respective independent
auditors, but excluding any settlement offers or related documentation created
by the parties in attempting to resolve any disputed matters relating to this
Section 4.2), (B) shall
be limited to resolving the disputed matters set forth in the Objection Notice
(that remain unresolved at the time of submission of the dispute to the
Independent Firm) in accordance with this Agreement, and (C) shall hear such
presentations by the parties as the Independent Firm in its sole discretion
deems necessary. The Purchaser and the Seller will direct the
Independent Firm to render a determination within thirty (30) days
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of its
retention and the Purchaser and the Seller and their respective agents will
cooperate with the Independent Firm during its engagement. The
determination of the Independent Firm shall be conclusive and shall become final
and binding upon the parties hereto and any amounts owing as a result thereof
shall be paid in accordance with subparagraph (c)
above. The Seller and the Purchaser shall each pay one half of the
fees and expenses of such Independent Firm.
4.3 Accounts
Receivable. As provided in Section 2.2(i), Seller
shall retain all Accounts Receivable attributable to the Assigned Contracts
through the close of business on the day before each applicable Switch Date, and
Seller shall retain, for so long as necessary to collect any Accounts
Receivable, any rights under the Assigned Contracts required to collect the
Accounts Receivable. Accordingly, Seller shall retain the right after
the Closing to xxxx and collect all Accounts Receivable in the Ordinary Course
of Business. Likewise, the Purchaser shall own all accounts
receivable attributable to the Assigned Contracts on and after each applicable
Switch Date (“Purchaser’s Accounts
Receivable”). Without limiting the generality of the
foregoing, Seller and Purchaser agree to the following, to facilitate the
collection of the Accounts Receivable and the Purchaser’s Accounts
Receivable:
(a) Seller
and Purchaser will reasonably cooperate and implement collection strategies and
otherwise exercise all lawful means to collect any past due Accounts Receivable,
including cooperating for purposes of disconnecting service and assessment of
late fees, and promptly forwarding to each other any payments of Accounts
Receivable or Purchaser’s Accounts Receivable, as the case may be, that may be
misdirected to Purchaser or Seller, respectively.
(b) The
Purchaser acknowledges and agrees that the legal obligations of customers under
Assigned Contracts with respect to Accounts Receivable shall not be amended,
modified or altered in any respect by Purchaser, without the prior written
consent of Seller.
(c) In
addition, Purchaser acknowledges and agrees that Seller shall have the right to
exercise good faith, commercially reasonable efforts to collect all Accounts
Receivable. The Seller shall have the right to discuss all collection
efforts with Purchaser, participate in and/or attend conferences or other
meetings relating to such collection efforts, and review and comment upon any
correspondence or other documents related to such collection
efforts. With respect to Active Accounts that are disconnected after
the Closing Date, the Seller shall have the right to utilize collection agencies
and exercise all remedies provided by applicable Law and the Assigned Contracts
without consulting the Purchaser.
(d) All
payments received by Seller or Purchaser from a specific Transferred Customer
shall be allocated to the oldest invoices of that Transferred Customer first,
until all Accounts Receivable pertaining to that Transferred Customer retained
by Seller shall have been paid in full.
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4.4 Allocation of Purchase
Price. The
Purchase Price shall be allocated among the Purchased Assets in accordance with
the principles of Section 1060 of the United States Internal Revenue Code of
1986, as amended, and any applicable treasury regulations
thereunder. The Seller and the Purchaser shall mutually agree upon
such allocation as soon as practicable after Closing and shall report the
federal, state and local income and other Tax consequences of the purchase and
sale contemplated hereby in a manner consistent with such allocation and shall
not take any position inconsistent therewith upon examination of any Tax
Returns, in any refund claim, in any litigation or otherwise. Each
Party will notify the other Party if it receives notice that the IRS proposes
any allocation that is different from the allocation as agreed by the
Parties.
ARTICLE
V
CLOSING
AND CLOSING DELIVERIES
5.1 The
Closing. The
closing of the sale and purchase of the Purchased Assets (the “Closing”) will take
place at the offices of Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP located at
000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, at 10:00 a.m.,
local time, as soon as practicable after satisfaction or waiver of the
conditions to Closing set forth in Article IX, but
in no event later than the earlier to occur of (i) three Business Days after
such satisfaction or waiver or (ii) October 27, 2008, unless the parties agree
in writing to change the Closing to another time, date or place. The
date upon which the Closing occurs is herein called the “Closing
Date.” Notwithstanding any other provision hereof, the Closing
will be deemed effective for accounting, Tax and all other purposes as of 12:01
a.m., local time, on the Closing Date.
5.2 Deliveries of
Seller. At
the Closing, Seller will deliver to Purchaser:
(a) (i) a
Xxxx of Sale, as Purchaser may deem necessary or desirable to Transfer the
Purchased Assets, duly executed by Seller; and (ii) an Assignment and Assumption
Agreement, as Seller may deem necessary or desirable for Purchaser to assume the
Assumed Liabilities, duly executed by Seller;
(b) a
certificate of an officer of the Seller confirming Seller’s compliance with the
condition set forth in Section 9.1(a);
(c) a
certificate of the Secretary of Seller certifying that an officer of the Seller
has been duly authorized to execute this Agreement and each Ancillary Agreement
to which it will be a party at Closing and the taking of any and all actions
deemed necessary or advisable to consummate the transactions contemplated herein
and therein;
(d) each
Ancillary Agreement required by this Agreement to be duly executed and delivered
by parties other than Purchaser;
(e) the
Transition Services Agreement duly executed and delivered by
Seller;
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(f) the
Non-Competition Agreement duly executed by the Seller; and
(g) such
other documents and instruments as may be reasonably required to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements and to
comply with the terms hereof and thereof, including but not limited to a
certificate of good standing from the Comptroller’s office for the State of
Texas.
5.3 Deliveries by
Purchaser. At
the Closing, Purchaser will deliver or cause to be delivered to
Seller:
(a) the
Residential Purchase Price, by wire transfer of immediately available funds to
the account specified pursuant to Section 4.1(b);
(b) (i) a
Xxxx of Sale, as Purchaser may deem necessary or desirable to Transfer the
Purchased Assets, duly executed by Purchaser; and (ii) an Assignment and
Assumption Agreement, as Seller may deem necessary or desirable for Purchaser to
assume the Assumed Liabilities, duly executed by Purchaser;
(c) a
certificate of an authorized officer of Purchaser confirming Purchaser’s
compliance with the condition set forth in Section 9.2(a);
(d) a
certificate of the President of the Purchaser certifying the resolutions
attached to that Certificate authorize the execution of this Agreement and each
Ancillary Agreement to which it will be a party at Closing and the taking of any
and all actions deemed necessary or advisable to consummate the transactions
contemplated herein and therein;
(e) each
Ancillary Agreement required by this Agreement to be duly authorized and
delivered by Purchaser or its Affiliates;
(f) the
Transition Services Agreement duly executed and delivered by
Purchaser;
(g) the
Non-Competition Agreement duly executed by the Purchaser; and
(h) such
other documents and instruments as may be reasonably required to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements and to
comply with the terms hereof and thereof.
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ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
represents and warrants to Purchaser as of the date hereof as
follows:
6.1 Existence and
Power. Seller
is a corporation, validly existing and in good standing under the laws of the
State of California. Seller has all power as a corporation required
to carry on the Business as now conducted.
6.2 Authorization;
Enforceability. The
execution, delivery and performance by Seller of this Agreement and each of the
Ancillary Agreements to which it will be a party at the Closing are, and will be
at the Closing, within Seller’s powers and have been duly authorized by Seller,
and no other corporate action on the part of Seller is necessary to authorize
this Agreement or any of the Ancillary Agreements to which Seller will be a
party at the Closing. This Agreement has been, and each of the
Ancillary Agreements to which Seller will be a party at the Closing will have
been, duly executed and delivered by Seller. Assuming the due
execution and delivery by Purchaser of this Agreement and each of the Ancillary
Agreements to which Seller will be a party at the Closing, this Agreement
constitutes, and each Ancillary Agreement to which Seller will be a party at the
Closing will constitute at the Closing, valid and binding agreements of Seller,
enforceable against each in accordance with their terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting enforcement of creditors’ rights generally and
by general principles of equity (whether applied in a proceeding at law or in
equity).
6.3 Governmental
Authorization. Except
as disclosed in Schedule 6.3, and other than the
notice of transfer explaining that Purchaser purchased the accounts (which
notice shall not offer the recipient an option to reject the transfer or to
otherwise opt out) to be sent by Purchaser to the customers to the Assigned
Contracts as promptly as possible after the Closing and any informational
notices required to be given to the Texas Public Utility Commission and/or
ERCOT, the execution, delivery and performance by Seller of this Agreement and
each Ancillary Agreement to which Seller will be a party at the Closing require
no consent, approval, order, authorization or action by or in respect of, or
filing with, any Governmental Authority, except that which, if not obtained or
filed, could not reasonably be expected have a Material Adverse
Effect.
6.4 Non-Contravention;
Consents. Except
as disclosed in Schedule 6.4, the
execution, delivery and performance by Seller of this Agreement and each
Ancillary Agreement to which Seller will be a party at the Closing, and the
consummation of the transactions contemplated hereby and thereby do not and will
not at the Closing (a) violate the articles or bylaws of Seller, (b)
violate any applicable material Law or Order, (c) require any material Permit,
consent or approval of any Person (including filings, consents or approvals
required under any Permits of Seller or any licenses to which Seller is a
party), except for those consents or approvals the failure to obtain which could
not, individually or in the aggregate, reasonably be expected to have a Material
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Adverse
Effect, or (d) result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default under, or give
rise to any right of termination, cancellation or acceleration of any right or
obligation of Seller or to a loss of any benefit to which Seller is entitled
under, any Assigned Contract.
6.5 Contracts.
(a) Except as
set forth on Schedule
6.5(a), each
Assigned Contract is for full requirements service.
(b) All the
Assigned Contracts are valid, binding and in full force and effect with respect
to, and are enforceable in accordance with their terms (except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting enforcement of creditors’ rights generally and
by general principles of equity (whether applied in a proceeding at law or in
equity)) against, Seller and, to Seller’s knowledge, each other party
thereto. Except as set forth on Schedule 6.5(b), there are no
material defaults by Seller under any Assigned Contract and, to Seller’s
knowledge, no events have occurred that with the lapse of time or action or
inaction by any party thereto would result in any material violations thereof or
any material defaults thereunder.
6.6 Litigation. Except
as disclosed in Schedule 6.6, there is no
action, suit, investigation, arbitration or administrative or other proceeding
pending or, to the knowledge of Seller, threatened, against or affecting, or
relating to the ownership, operation or use of the Purchased Assets or the
conduct of the Business of Seller before any court or arbitrator or any
Governmental Authority or which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement and any Ancillary Agreements to which Seller will be a party at
Closing. Except as disclosed in Schedule 6.6, there are no
outstanding judgments, orders, injunctions, decrees, stipulations or awards
(whether rendered by a court, administrative agency, arbitral body or
Governmental Authority) against Seller that affect or relate to the ownership,
operation or use of the Purchased Assets or the conduct of the
Business.
6.7 Compliance with
Laws. Except
as described in Schedule 6.7, Seller has
not received, during the one (1) year period prior to the Closing Date, any
order, notice or other communication in writing from any Governmental Authority
of any alleged violation or failure to comply with any material legal
requirement that affects or relates to the ownership, operation or use of the
Purchased Assets or the conduct of the Business.
6.8 Purchased Assets;
Properties. Seller
has good title to the Purchased Assets, free and clear of all Liens, except for
Permitted Liens and Liens disclosed in Schedule 6.8. No
condition or state of facts exists, which with due notice or lapse of time or
both, would exist, would entitle any Person to obtain any Lien upon any of the
Purchased Assets. The Purchased Assets are managed and operated by
the management and employees and contractors of Seller and are not subject to
any contract, agreement, or arrangement, written or oral, that: (i) purports to
transfer any right or obligation to manage or operate the Purchased Assets to
any third Person; or (ii) restricts the
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management
or operations of the Purchased Assets geographically or
territorially. The information and business documentation made
available to Purchaser in the Seller’s electronic data room, as updated through
the date hereof, together with the Schedules to this Agreement, including the
number of customers, term contract retail prices, average usage per customer,
accounts receivable aging schedules, and broker commissions are true and
accurate, in all material respects, descriptions of, or information relating to,
the Purchased Assets and the Business (to the extent that such information
relates to the Purchased Assets and the Business and not to the Excluded
Assets).
6.9 No Brokers’ Fees; No
Finders’ Fees. Except
as set forth on Schedule 6.9, Seller has
not entered into any agreement, arrangement or understanding with any Person
that will result in the obligation Purchaser to pay any finder’s fees, brokerage
commission or similar payment in connection with the transactions contemplated
by this Agreement (it being understood and agreed that this Section 6.9 does not
apply to any Broker Contracts).
ARTICLE
VII
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Purchaser
represents and warrants to Seller as of the date hereof and the Closing Date as
follows:
7.1 Corporate Existence and
Power. Purchaser
is a limited partnership, validly existing and in good standing under the laws
of the State of Texas. Purchaser has all power as a Texas limited
partnership necessary to carry on its business as now conducted.
7.2 Corporate Authorization;
Enforceability. The
execution, delivery and performance by Purchaser of this Agreement and each of
the Ancillary Agreements to which it will be a party at the Closing are, and
will be at the Closing, within Purchaser’s power and have been duly authorized
in accordance with its organizational documents and no other action on the part
of Purchaser is necessary to authorize this Agreement or any of the Ancillary
Agreements to which Purchaser will be a party at the Closing. This
Agreement has been, and each of the Ancillary Agreements to which Purchaser will
be a party at the Closing will have been, duly executed and delivered by
Purchaser. Assuming the due execution and delivery by Seller of this
Agreement and each of the Ancillary Agreements to which Purchaser will be a
party at the Closing, this Agreement constitutes, and each Ancillary Agreement
to which Purchase will be a party at the Closing will constitute at the Closing,
valid and binding agreements of Purchaser, enforceable against Purchaser in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors’ rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity).
7.3 Non-Contravention. The
execution, delivery and performance by Purchaser of this Agreement and each
Ancillary Agreement to which Purchaser will be a
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party at
the Closing do not and will not at the Closing (a) violate the organizational
documents of Purchaser, (b) violate any applicable Law or Order, (c) require any
filing with or Permit, consent or approval of, or the giving of any notice to,
any Person (including filings, consents or approvals required under any Permits
of Purchaser or any licenses to which Purchaser is a party), or (d) result in a
violation of or breach of, conflict with, constitute (with or without due notice
or lapse of time or both) a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of
Purchaser or to a loss of any benefit to which Purchaser is entitled under, any
contract, agreement or other instrument binding upon Purchaser or any license,
franchise, Permit or other similar authorization held by
Purchaser.
7.4 REP Certificate and ERCOT
Matters. Purchaser
is properly certificated by the PUCT, operates under an REP Certificate from the
PUCT, and will serve the customers underlying the Assigned Contracts under its
REP Certificate after the transfer to Purchaser contemplated herein takes
place. Purchaser is also qualified as an LSE and has retained a QSE,
to whose account the customers underlying the Assigned Contracts will be
transferred and served by Purchaser pursuant to the terms hereof.
7.5 Financial
Ability. Purchaser,
together with its Affiliates, has all funds, or ready access to all funds,
necessary to pay the Purchase Price and perform its other obligations under this
Agreement, and has provided all documentation or other evidence thereof as has
been reasonably requested by Seller.
ARTICLE
VIII
CERTAIN
COVENANTS AND PROCEDURES
8.1 Conduct of Business of
Seller. During
the period from the date of this Agreement to the Closing Date, Seller will
conduct the Business only in the Ordinary Course of Business and use its
reasonable commercial efforts to preserve intact its business organization, and
to maintain its relationships and goodwill with its
customers. Without limiting the generality or effect of the
foregoing, prior to the Closing Date, except with the prior written consent of
Purchaser or as contemplated under this Agreement, Seller will not:
(a) Enter
into any contract or commitment relating to the Business, except for contracts
and commitments entered into by Seller in the Ordinary Course of
Business;
(b) Modify or
amend in any material respect or terminate any contract with an Active Account,
unless a customer is in default, except as is done with Purchaser’s consent or
at the Purchaser’s direction;
(c) Sell,
lease or otherwise dispose of any material asset or property that is part of the
Purchased Assets;
(d) Create or
permit the assumption of any Lien on any Purchased Asset, other than a Permitted
Lien;
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(e) Settle,
release or forgive any claim or litigation or waive any right thereto that
relates to any of the Purchased Assets or the Assumed Liabilities, but excluding
any such claim or right that relates solely to any Excluded Asset or Retained
Liability; or
(f) Agree to
do any of the foregoing.
8.2 Review of Seller;
Confidentiality.
(a) Subject
to the provisions of that certain Confidentiality Agreement dated September 2,
2008, Purchaser may, prior to the Closing Date, directly or through its
representatives, review the properties (including the Purchased Assets), books
and records of Seller to the extent reasonably necessary to familiarize itself
with the Purchased Assets and Retained Liabilities. Seller will
permit Purchaser and its representatives to have reasonable access to the
premises (including the Purchased Assets) and to all the books and records of
Seller and to cause the officers, accountants and other representatives of
Seller to furnish Purchaser with such financial and operating data and other
information with respect to the Business and properties of Seller as Purchaser
may from time to time reasonably request.
(b) Prior to
the Closing, neither Seller nor Purchaser will, without the prior written
consent of the other, disclose to any other Person (other than such Person’s
financing sources, existing stockholders and such Person’s directors, officers,
employees, advisors and other representatives that need to know and other than
as required by applicable Law, including any action or filings required by the
Securities and Exchange Commission) any proprietary, non-public information of
another Party previously delivered or made available to such other Party in
connection with the transactions contemplated hereby (including the existence of
and terms of this Agreement and the Ancillary Agreements), other than to the
extent done under a confidentiality agreement at least as protective as the
confidentiality provisions herein and in the Confidentiality
Agreement.
8.3 Reasonable Commercial
Efforts. Seller
and Purchaser will cooperate and use their respective reasonable commercial
efforts to take, or cause to be taken, all appropriate actions, and to make, or
cause to be made, all filings necessary, proper or advisable under applicable
Laws to consummate and make effective the transactions contemplated by this
Agreement, including their respective commercially reasonable efforts to obtain,
prior to the Closing Date, all licenses, Permits, consents, approvals,
authorizations, qualifications and orders of, or filings with Governmental
Authorities as are necessary to consummate the transactions contemplated by the
Agreement and to fulfill the conditions to the sale contemplated
hereby. The Parties will pay or cause to be paid all of
their own fees and expenses contemplated by this Section, including the fees and
expenses of any broker, finder, financial advisor, legal advisor or similar
person engaged by such Party. Each of the Parties will notify and
keep the other advised in reasonable detail as to such Party’s efforts in
complying with its obligations under this Section 8.3.
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8.4 Access.
(a) From and
after the Closing Date, each Party will give the other Party and its
representatives reasonable access to such documentation and information and
reasonable access to, and cause the cooperation of, employees of such Party that
the requesting Party may reasonably require to (i) prepare and file Tax Returns
and respond to any issues which may arise with respect to Taxes for which the
requesting Party is responsible to the extent relating to the Purchased Assets
or Assumed Liabilities, or (ii) defend any claim that the requesting Party is
required to defend pursuant to this Agreement or in connection with the
operation of the Business after the Closing Date.
(b) Information
that is obtained by either Party pursuant to this Section 8.4 will be kept
confidential by such Party; provided, however, that in the
event the Party or any of its representatives is requested or required pursuant
to applicable Law by any Governmental Authority to disclose any such
information, the Party may do so after providing the other Party with notice of
the request or requirement so that the other Party may attempt, at its own
expense, to obtain a protective order. Each Party will use reasonable
efforts to limit access to such information on a “need to know”
basis.
8.5 Collection of
Payments. Following
the Closing, (a) Seller will promptly, and in any event, not later than five
Business Days following receipt, forward to Purchaser any payments received by
Seller with respect to any of the Purchased Assets, and any checks, drafts or
other instruments payable to Seller will, when so delivered, bear all
endorsements required to effectuate the Transfer of the same to Purchaser, (b)
Seller will promptly forward to Purchaser any mail or other communications
received by Seller relating to the Purchased Assets or the Assumed Liabilities,
(c) Purchaser will promptly, and in any event, not later than five Business Days
following receipt, forward to Seller any payments received by Purchaser with
respect to any of the Excluded Assets, and any checks, drafts or other
instruments payable to Purchaser shall, when so delivered, bear all endorsements
required to effect the Transfer of the same to Seller, and (d) Purchaser will
promptly forward to Seller any mail or other communications received by
Purchaser relating to the Excluded Assets or the Retained
Liabilities.
8.6 Further
Assurances. From
time to time, as and when requested by either Party hereto, the other Party will
execute and deliver, or cause to be executed and delivered, all such documents
and instruments and will take, or cause to be taken, all such further actions,
as the requesting Party may reasonably deem necessary or desirable to consummate
the transactions contemplated by this Agreement. Seller hereby agrees
to perform, execute or deliver, or cause to be performed, executed or delivered,
such further acts, assurances and instruments as Purchaser may reasonably
require to complete or perfect the conveyance and Transfer to Purchaser of all
of its right, title and interest in and to the Purchased Assets free and clear
of any and all Liens consistent with this Agreement, and to do any and all such
further acts and things as may be reasonably necessary to effect completely the
intent of this Agreement including providing reasonable assistance to Purchaser,
upon Purchaser’s request, in enforcing Purchaser’s ownership interests in the
Purchased Assets and facilitating the Transfer of the Assigned
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8.7 Certain Tax
Matters. Any
sales, use, transfer, vehicle transfer, stamp, conveyance, value added or other
similar Taxes that may be imposed by any Governmental Authority, and all
recording or filing fees, notarial fees and other similar costs of Closing with
respect to the purchase and sale of the Purchased Assets or on account of this
Agreement or the transactions contemplated hereby, will be borne by
Purchaser.
8.8 Notice to Transferred
Customers. A
customer notification package and plan (including timing for giving notice) will
be developed jointly by Seller and Purchaser, provided that nothing herein shall
require the Seller to obtain any particular right or privilege on behalf of the
Purchaser nor shall the ability of the Purchaser to obtain any such right or
privilege be a condition to Closing. Promptly after the Closing Date,
Purchaser shall provide notification to ERCOT, and take other necessary actions,
to prevent ERCOT from sending notices to customers with Active Accounts
informing them of the Transfer from Seller to Purchaser. Purchaser
instead will notify such customers of the Transfer via a notice mutually agreed
upon by the Parties and provided to the PUCT (“Billing Transfer
Notice”). Such notice will be provided in accordance with the
Transfer Services Agreement. As provided in the Transition Services
Agreement, each customer’s xxxx will be co-branded with the company logos of
both the Purchaser and Seller, in a manner to be agreed upon by the
Parties. Except to comply with an Order from a Governmental Authority
or as otherwise provided in this Agreement, Purchaser shall not otherwise
provide written communications to customers of Active Accounts regarding the
Transfer of such customers from Seller to Purchaser, without first obtaining the
consent for such communication from the Seller.
8.9 Migration of Customers;
ERCOT.
(a) Migration of
Customers. For each customer with an Active Account, prior to
such customer’s Switch Date, Seller shall continue to (i) be the REP of Record
for such customer, (ii) supply such customer based on the forecasted load, and
(iii) provide its own bilateral supply schedule to its QSE. On and
after the Switch Date, the foregoing services shall be provided to such customer
by, and the REP of Record for such customer shall be, the
Purchaser. Seller will be responsible for the costs associated with
the service of such customer prior to the Switch Date. Purchaser will
be responsible for the costs associated with the service of such customer on and
after the Switch Date.
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(b) QSE Obligations –
ERCOT.
(i) Purchaser
and Seller will work together to file the necessary documents with ERCOT so that
each customer with an Active Account will be served by Seller’s QSE prior to
such customer’s Switch Date and by Purchaser on and after the Switch Date. The
Parties will work together to submit the necessary requests and documents as
soon as is possible after execution of this Agreement.
(ii) Seller
will continue to serve each customer with an Active Account pursuant to its
respective Assigned Contract under Seller’s QSE and to schedule and procure
balancing energy to be supplied to the Assigned Contracts prior to such
customer’s Switch Date. On and after such customer’s Switch Date,
Purchaser shall so serve that customer. Seller shall be responsible
for costs and regulatory fees incurred associated with serving a customer’s
Active Account prior to such customer’s Switch Date. Purchaser shall
be responsible for costs and regulatory fees incurred associated with serving a
customer’s Active Account on and after such customer’s Switch Date.
(iii) Seller
agrees that it will retain in good standing a QSE services agreement and LSE
license up to ninety (90) days following the Closing Date, as necessary to
facilitate the Switch Dates for the Commercial Active Accounts and the
Residential Active Accounts in accordance with this Agreement.
(c) ERCOT and TDSP
Filings. By the end of three (3) Business Days following the
Closing Date, Purchaser shall have filed the necessary documents and entered
into the necessary transactions with ERCOT, the TDSPs, and all applicable taxing
or governmental authorities so that Purchaser becomes the REP-of-record (using
its own name) with respect to the customers underlying the Assigned Contracts as
of each of such customer’s Switch Date.
(d) Transition Services
Agreement. At Closing, the Parties shall have entered into the
Transition Services Agreement substantially in the form attached as Schedule 8.9 hereto
setting forth the transitional services to be provided by each Party after
Closing, including billing, customer service, and transaction management
activities as described on Schedule 8.9. The
Parties shall negotiate the Transition Services Agreement in good faith and on
commercially reasonable terms.
8.10 Non-Competition
Agreement. At
Closing, in consideration of the transactions contemplated by this Agreement,
Seller shall have entered into the Non-Competition Agreement in the form
attached as Schedule
8.10
hereto.
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ARTICLE
IX
CONDITIONS
TO CLOSING
9.1 Conditions to Obligations of
Purchaser. The
obligations of Purchaser to consummate the Closing are subject to the
satisfaction (or waiver by Purchaser) at or prior to the Closing of the
following conditions:
(a) Representations, Warranties
and Covenants of Seller.
(i) The
representations and warranties of Seller made in this Agreement shall be true
and correct as of the date hereof and as of the Closing, as though made anew at
and as of the Closing, except, in each case, when any failure of a
representation or warranty to be true and correct would not result in a Material
Adverse Effect; and (ii) Seller shall have performed and complied in all
material respects with all terms, agreements and covenants contained in this
Agreement required to be performed or complied with by Seller on or before the
Closing Date.
(b) No Injunction,
etc. No provision of any applicable Law and no judgment,
injunction, order or decree of any Governmental Authority shall be in effect
that shall prohibit the consummation of the Closing.
(c) No
Proceedings. No action, suit or proceeding affecting the
Purchased Assets or challenging this Agreement, the Ancillary Agreements or the
transactions contemplated hereby or thereby or seeking to prohibit, alter,
prevent or materially delay the Closing or seeking material damages shall have
been instituted or threatened by any Person.
(d) Delivery of
Documents. Each of the deliveries required by Section 5.2 shall have been
made.
(e) Termination of Security
Interests. Seller shall at Closing have obtained releases and
other documentation reasonably requested by Purchaser in form and substance
reasonably satisfactory to Purchaser providing for the termination and release
of all Liens on the Purchased Assets, as listed on the attached Schedule 9.1(e).
(f) Transition Services
Agreement. The Parties shall at Closing have executed and
delivered the Transition Services Agreement.
(g) Non-Competition. Seller
shall at Closing have executed and delivered the Non-Competition
Agreement.
9.2 Conditions to Obligations of
Seller. The
obligations of Seller to consummate the Closing are subject to the satisfaction
(or waiver by Seller) at or prior to the Closing of the following
conditions:
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(a) Representations, Warranties
and Covenants of Purchaser. (i) The representations and warranties of
Purchaser made in this Agreement shall be true and correct as of the date hereof
and as of Closing, as though made anew at and as of the Closing, except, in each
case, when any failure of a representation or warranty to be true and correct
would not result in a Material Adverse Effect; and (ii) Purchaser shall have
performed and complied in all material respects with all terms, agreements and
covenants contained in this Agreement required to be performed or complied with
by Purchaser on or before the Closing Date.
(b) No Injunction,
etc. No provision of any applicable Law and no judgment,
injunction, order or decree of any Governmental Authority shall be in effect
which shall prohibit the consummation of the Closing.
(c) No
Proceedings. No action, suit or proceeding affecting the
Purchased Assets or challenging this Agreement, the Ancillary Agreements or the
transactions contemplated hereby or thereby or seeking to prohibit, alter,
prevent or materially delay the Closing or seeking material damages shall have
been instituted or threatened by any Person.
(d) Delivery of
Documents. Each of the deliveries required by Section 5.3 shall have
been made.
(e) Termination of Security
Interests. Seller shall at Closing have obtained releases and
other documentation in form and substance reasonably satisfactory to Seller
providing for the termination and release of all Liens on the Purchased Assets,
as listed on the attached Schedule 9.1(e).
(f) Transition Services
Agreement. The Parties shall at Closing have executed and
delivered the Transition Services Agreement.
ARTICLE
X
SURVIVAL;
INDEMNIFICATION
10.1 Survival. The
representations and warranties of the Parties contained in this Agreement will
survive the Closing but will terminate on the one (1) year anniversary of the
Closing Date, except that the representations of Seller set forth in Sections 6.1 and 6.2, and the
representations of Purchaser set forth in Sections 7.1 and 7.2, shall
survive indefinitely. Notwithstanding the immediately preceding
sentence, any representation or warranty in respect of which indemnity may be
sought under this Agreement will survive the time at which it would otherwise
terminate pursuant to the immediately preceding sentence if written notice of
the inaccuracy or breach thereof giving rise to such right of indemnity shall
have been given to the Party against whom such indemnity may be sought prior to
such time; provided, however, that the
applicable representation or warranty will survive only with respect to the
particular inaccuracy or breach specified in such written notice. All
covenants and agreements of the parties
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contained
in this Agreement will survive the Closing for the time periods specified
herein.
10.2 Indemnification.
(a) If the
Closing occurs, Seller shall indemnify, defend and hold harmless Purchaser
against any and all liabilities, damages, losses, costs or expenses, including
reasonable attorneys’ and consultants’ fees and expenses incurred in respect of
Third-Party Claims or claims between the parties hereto (“Damages”), incurred
or suffered only to the extent caused by (i) the failure of any representation
or warranty made by Seller in Article VI to be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as if made anew at and as of the Closing Date, (ii) the breach
of any covenant or agreement made or to be performed by Seller pursuant to this
Agreement, or (iii) any Retained Liabilities; provided, however,
that Seller will not be liable under this Section 10.2(a) unless (and
only to the extent that) the aggregate amount of Damages exceeds 2% of the
Purchase Price (the “Deductible”).
(A) Notwithstanding
anything to the contrary, Seller’s aggregate liability under Sections 10.2(a)(i) through (iii)
shall not exceed, in the aggregate, an amount equal to 10% of the Purchase Price
for any and all claims made hereunder. With respect to any claim
asserted under Sections 10.2(a)(i) through (iii),
Purchaser shall then have the right to withhold any Residual Payments due
thereafter, to the extent necessary to satisfy any such claim for Damages,
subject, however, to all limitations set forth in this Agreement, including the
limit set forth in the preceding sentence of this Clause (A), by depositing the
same into an escrow account established for this purpose under the terms of an
escrow agreement in form and substance mutually acceptable to the
Parties. After the Damages have been finally determined, the funds
held in escrow shall be distributed to the appropriate Parties.
(B) Purchaser
shall indemnify, defend and hold harmless Seller against Damages incurred or
suffered to the extent caused by (i) the failure of any representation or
warranty made by Purchaser in Article VII to be
true and correct in all material respects as of the date hereof and as of the
Closing Date as if made anew at and as of the Closing Date, (ii) the breach of
any covenant or agreement made or to be performed by Purchaser pursuant to this
Agreement, (iii) any Assumed Liabilities, or (iv) Purchaser’s ownership or
operation of the Business and/or the Purchased Assets after the Closing; provided, however, that
Purchaser will not be liable under Section 10.2(a)(B) unless (and only
to the extent) the aggregate amount of Damages exceeds the
Deductible. Notwithstanding anything to the contrary, Purchaser’s
aggregate liability under Sections 10.2(a)(B)(i) and (ii)
shall not exceed, in the aggregate, an amount equal to 10% of the Purchase Price
for any and all claims made hereunder.
(C) Payments
of all amounts owing by an Indemnifying Party under this Article X shall take
into account and be appropriately reduced by amounts received or receivable by
the Indemnified Party under insurance, indemnification, contribution,
reimbursement or similar contracts, and by any Tax benefit
in favor of an Indemnified Party.
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10.3 Procedures.
(a) If any
Person who or which is entitled to seek indemnification under Section 10.2 (an “Indemnified Party”)
receives notice of the assertion or commencement of any Third-Party Claim
against such Indemnified Party with respect to which the Person against whom or
which such indemnification is being sought (an “Indemnifying Party”)
is obligated to provide indemnification under this Agreement, the Indemnified
Party will give such Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than ten (10) days after receipt of such
written notice of such Third-Party Claim. Such notice by the
Indemnified Party will describe the Third-Party Claim in reasonable detail, will
include copies of all available material written evidence thereof and will
indicate the estimated amount, if reasonably estimable, of the Damages that have
been or may be sustained by the Indemnified Party. The Indemnifying
Party will have the right to participate in, or, by giving written notice to the
Indemnified Party, to assume, the defense of any Third-Party Claim at such
Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel
(which will be reasonably satisfactory to the Indemnified Party), and the
Indemnified Party will cooperate in good faith in such defense.
(b) If,
within ten (10) days after giving notice of a Third-Party Claim to an
Indemnifying Party pursuant to Section 10.3(a), an
Indemnified Party receives written notice from the Indemnifying Party that the
Indemnifying Party has elected to assume the defense of such Third-Party Claim
as provided in the last sentence of Section 10.3(a), the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof; provided, however, that if the
Indemnifying Party fails to take reasonable steps necessary to defend diligently
such Third-Party Claim within ten (10) days after receiving written notice from
the Indemnified Party or if the Indemnified Party reasonably believes the
Indemnifying Party has failed to take such steps or if the Indemnifying Party
has not undertaken fully to indemnify the Indemnified Party in respect of all
Damages relating to the matter, the Indemnified Party may assume its own
defense, and the Indemnifying Party will be liable for all reasonable costs and
expenses paid or incurred in connection therewith. Without the prior
written consent of the Indemnified Party, the Indemnifying Party will 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 Indemnified Party
for which the Indemnified Party is not entitled to indemnification hereunder, or
which provides for injunctive or other non-monetary relief applicable to the
Indemnified Party, or does not include an unconditional release of all
Indemnified Parties. 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 Indemnified Party for which the Indemnified Party
is not entitled to indemnification hereunder and the Indemnifying Party desires
to accept and agree to such offer, the Indemnifying Party will give written
notice to the
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Indemnified
Party to that effect. If the Indemnified Party fails to consent to
such firm offer within ten (10) days after its receipt of such notice, the
Indemnified Party may continue to contest or defend such Third-Party Claim and,
in such event, the maximum liability of the Indemnifying Party as to such
Third-Party Claim will not exceed the amount of such settlement
offer. The Indemnified Party will provide the Indemnifying Party with
reasonable access during normal business hours to books, records and employees
of the Indemnified Party necessary in connection with the Indemnifying Party’s
defense of any Third-Party Claim which is the subject of a claim for
indemnification by an Indemnified Party hereunder.
(c) Any claim
by an Indemnified Party on account of Damages which does not result from a
Third-Party Claim (a “Direct Claim”) will
be asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than ten (10) days after the Indemnified
Party becomes aware of such Direct Claim. Such notice by the
Indemnified Party will describe the Direct Claim in reasonable detail, will
include copies of all available material written evidence thereof and will
indicate the estimated amount, if reasonably practicable, of Damages that has
been or may be sustained by the Indemnified Party. The Indemnifying
Party will have a period of ten (10) days within which to respond in
writing to such Direct Claim. If the Indemnifying Party does not so
respond within such ten (10) day period, the Indemnifying Party will be deemed
to have rejected such claim, in which event the Indemnified Party will be free
to pursue such remedies as may be available to the Indemnified Party on the
terms and subject to the provisions of this Agreement.
(d) A failure
to give timely notice or to include any specified information in any notice as
provided in Section
10.3(a), 10.3(b) or 10.3(c) will not
affect the rights or obligations of any Party hereunder, except and only to the
extent that, as a result of such failure, any Party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise materially prejudiced as a result
of such failure.
10.4 No Consequential
Damages. Notwithstanding
any other provision of this Agreement, no Indemnified Party shall be entitled to
any consequential damages including exemplary, punitive, incidental, indirect or
special damages (collectively “Excluded Damages”)
suffered by an Indemnified Party except to the extent such Excluded Damages are
the subject of a Third-Party Claim.
10.5 Scope of Representations and
Warranties of Seller. Purchaser
acknowledges that except as expressly provided in this Agreement the Seller has
not made, and the Seller hereby expressly disclaims and negates any
representation or warranty, express, implied, at common law, by statute or
otherwise relating to, the accuracy, completeness or materiality of any
information, data or other materials (written or oral), heretofore furnished to
Purchaser and its representatives by or on behalf of the
Seller. Except as expressly provided in this Agreement, the Seller
expressly disclaims and negates, as to personal property, equipment and fixtures
constituting a part of the assets owned or operated by the Company, (i) any
implied or express warranty of
-27-
merchantability,
(ii) any implied or express warranty of fitness for a particular purpose,
(iii) any rights of purchasers under appropriate legal requirements to
claim diminution of consideration, (iv) any claims by Purchaser for damages
because of any latent or patent defects or other defects, whether known or
unknown and (v) any and all implied warranties existing under applicable
legal requirements. The Seller and Purchaser agree that, to the
extent required by applicable legal requirements to be effective, the
disclaimers of the warranties contained in this Section are
“conspicuous.”
10.6 Exclusive
Remedy. The
indemnities provided for in this Article X shall be
the sole and exclusive remedy of the Parties after the Closing with respect to,
arising out of, or resulting from this Agreement (including for any inaccuracy
of any representation or warranty or any failure or breach of any covenant,
obligation, condition or agreement contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith); provided, however, that the
foregoing shall not (i) limit the rights of any Party to seek specific
performance or any other equitable remedy available to enforce the rights of
such Party under this Agreement or (ii) limit the right of a Party to seek any
available remedy for fraud involving a knowing and intentional
misrepresentation. Each Party covenants and agrees that following the
Closing it shall not seek or assert any other remedy hereunder, other than
specific performance or any other equitable remedy available to enforce the
rights of such Party under this Agreement and the right of such Party to seek
any available remedy for fraud involving a knowing and intentional
misrepresentation. Purchaser specifically waives and releases Seller
from any liability and any rights it might otherwise have pursuant to Law other
than pursuant to the terms of this Agreement and other than any liability
arising from fraud involving a knowing and intentional
misrepresentation.
10.7 Mitigation of
Damages/Minimization of Claim. Purchaser
and Seller agree to use commercially reasonable efforts to (a) resolve all
Third-Party Claims and Direct Claims for which indemnification is sought under
this Article X
on the lowest cost basis that complies with the requirements of applicable Laws
and (b) mitigate the costs and expenses as well as any Damages arising out of
any Third-Party Claim or Direct Claim. Prior to making any claim for
indemnification hereunder, each Party will, to the extent practicable, first
notify the other Party and afford the other Party an opportunity to cure such
breach (not to exceed ten (10) days).
10.8 Remedies for Breach of this
Agreement by the Seller Before the Closing. Notwithstanding
any provision of this Agreement to the contrary, upon execution of this
Agreement through and including the Closing, the exclusive remedy for any
material breach of any representation or warranty in this Agreement by the
Seller shall be termination of this Agreement by the Purchaser in accordance
with and subject to Section 11.1.
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ARTICLE
XI
MISCELLANEOUS
11.1 Termination.
(a) This
Agreement may be terminated at any time prior to the Closing:
(i) By the
mutual written agreement of Purchaser and Seller;
(ii) by either
the Seller or Purchaser if the Closing has not been consummated by October 27,
2008; provided,
however, that
the right to terminate this Agreement under this Section 11.1(a)(ii) 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 failure of the Closing Date
to occur on or before such date;
(iii) By
Purchaser, if there has been a material violation or breach by Seller of any
covenant, representation or warranty contained in this Agreement which has
prevented the satisfaction of any condition to the obligations of Purchaser at
the Closing, and such violation or breach has not been waived by Purchaser, or
cured by Seller no later than the earlier to occur of (x) the expiration of 5
days after written notice thereof from Purchaser or (y) October 27, 2008;
or
(iv) By
Seller, if there has been a material violation or breach by Purchaser of any
covenant, representation or warranty contained in this Agreement which has
prevented the satisfaction of any condition to the obligations of Seller at the
Closing, and such violation or breach has not been waived by Seller, or cured by
Purchaser no later than the earlier to occur of (x) the expiration of 5 days
after written notice thereof from Seller or (y) October 27, 2008.
(b) If this
Agreement is terminated prior to Closing in accordance with Section 11.1(a), this
Agreement shall become void and of no further force and effect, except for the
provisions of Section
8.2 and Article XI (relating
to certain miscellaneous provisions) which shall survive such
termination. Notwithstanding the foregoing, nothing herein shall
preclude any action or claim for damages to which any Party is otherwise
entitled as a result of a breach by any other Party hereto.
11.2 Notices. All
notices and other communications required or permitted hereunder will be in
writing and, unless otherwise provided in this Agreement, will be deemed to have
been duly given when delivered in person or when dispatched by electronic
facsimile transfer (receipt confirmed) or one (1) Business Day after having been
dispatched by a nationally recognized overnight courier service to the
appropriate Party at the address specified below:
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If to
Purchaser to:
Ambit
Energy, L.P.
0000
Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Attention: Xxxx
X. Xxxxxxxx, Xx.
Phone: (000)
000-0000
Fax
No.: (000)
000-0000
With a
copy to:
Xxxxx
& Xxxxxxx, PLLC
0000
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000-0000
Attention: Xxxxxx
X. Xxxxxxx
Phone: (000)
000-0000
Fax
No.: (000)
000-0000
Email: xxxxxx@xxxxxxxxxxxxxxx.xxx
If to
Seller to:
Commerce
Energy, Inc.
000 Xxxxx
Xxxx., Xxxxx 0000
Xxxxx
Xxxx, Xxxxxxxxxx 00000
Attention: General
Counsel
Phone: (000)
000-0000
Fax
No.: (000)
000-0000
With a
copy to:
Xxxxxxxxxx
Xxxxxx & Xxxxxxx LLP
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Attention.: Xxxx
X. Xxxxxx
Fax
No.: (000)
000-0000
Email: Xxxx.Xxxxxx@xxxxxxxxxx.xxx
or to
such other address or addresses as any such Party may from time to time
designate as to itself by like notice.
11.3 Amendments and
Waivers.
(a) Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each Party to this Agreement, or in the case of a waiver, by the Party against
whom the waiver is to be effective.
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(b) No
failure or delay by any Party in exercising any right, power or privilege
hereunder will operate as a waiver thereof nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
11.4 Expenses. Whether
or not the transactions contemplated by this Agreement are consummated, except
as otherwise expressly provided for herein, the parties will pay or cause to be
paid all of their own fees and expenses incident to this Agreement and in
preparing to consummate and in consummating the transactions contemplated
hereby, including the fees and expenses of any broker, finder, financial
advisor, investment banker, legal advisor or similar person engaged by such
Party.
11.5 Successors and
Assigns. The
provisions of this Agreement will be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. No
Party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement (including any transfer by way of merger or
operation of law) without the consent of each other Party hereto.
11.6 No Third-Party
Beneficiaries. Except
as provided in Article
X and Section 11.5, this
Agreement is for the sole benefit of the parties hereto and their permitted
successors and assigns, and nothing herein expressed or implied will give or be
construed to give to any Person, other than the parties hereto and such
permitted successors and assigns, any legal or equitable rights
hereunder.
11.7 Governing
Law. This
Agreement will be governed by, and construed in accordance with, the laws of the
State of Texas, regardless of the Laws that might otherwise govern under
principles of conflict of laws thereof.
11.8 Counterparts. This
Agreement may be executed in one or more counterparts (which may be by
facsimile), all of which will be considered one and the same agreement and will
become effective when one or more counterparts have been signed by each of the
parties and delivered to the other Party.
11.9 Table of Contents;
Headings. The
table of contents and headings in this Agreement are for convenience of
reference only and will not control or affect the meaning or construction of any
provisions hereof.
11.10 Entire
Agreement. This
Agreement (including the Schedules and Exhibits hereto) and the Ancillary
Agreements constitute the entire agreement among the parties with respect to the
subject matter of this Agreement. This Agreement (including the
Schedules and Exhibits hereto) and the Ancillary Agreements supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof of this Agreement.
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11.11 Severability. If
any provision of this Agreement or the application of any such provision to any
Person or circumstance is held invalid, illegal or unenforceable in any respect
by a court of competent jurisdiction, the remainder of the provisions of this
Agreement (or the application of such provision in other jurisdictions or to
Persons or circumstances other than those to which it was held invalid, illegal
or unenforceable) will in no way be affected, impaired or invalidated, and to
the extent permitted by applicable Law, any such provision will be restricted in
applicability or reformed to the minimum extent required for such provision to
be enforceable. This provision will be interpreted and enforced to
give effect to the original written intent of the parties prior to the
determination of such invalidity or unenforceability.
11.12 Specific
Performance. The
Parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled, without posting any bond, to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy they are entitled pursuant to this Agreement. Notwithstanding
the foregoing, no Party shall be entitled to specific performance of any
representation or warranty (including compelling a Party to cure a breach of its
representations and warranties); provided that this prohibition shall in no way
affect a Party's entitlement to specifically enforce other provisions of this
Agreement.
11.13 Notification of Certain
Matters.
(a) The
Seller shall promptly give notice to the Purchaser of (i) the occurrence or
non-occurrence of any event that could reasonably be expected to cause either
(A) any representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect if qualified by materiality, and in any material
respect if not so qualified, at any time from the date hereof to the Closing
Date or (B) any condition set forth in Article IX to be
unsatisfied in any material respect at any time from the date hereof to the
Closing Date and (ii) any material failure of the Seller or the Purchaser or any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
(b) The
Purchaser shall promptly give notice to the Seller of (i) the occurrence or
non-occurrence of any event that could reasonably be expected to cause either
(A) any representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect if qualified by materiality, and in any material
respect if not so qualified, at any time from the date hereof to the Closing
Date or (B) any condition set forth in Article IX to be
unsatisfied in any material respect at any time from the date hereof to the
Closing Date and (ii) any material failure of the Seller or the Purchaser or any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
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11.14 Announcements. No
announcement with respect to this Agreement will be made by any Party hereto
without the prior approval of the other parties. The foregoing will
not apply to any announcement by any Party required in order to comply with Laws
pertaining to timely disclosure or related stock exchange or securities laws,
provided that the parties will consult with each other before making any such
announcement to the extent practicable in accordance with applicable
law.
[Signatures
appear on the following page.]
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The
Parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above
written.
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COMMERCE
ENERGY, INC.
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By:
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/s/ Xxxxxxx X.
Xxxxxxxxx
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Name:
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Xxxxxxx X.
Xxxxxxxxx
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|
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Title:
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Chief Operating
Officer
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AMBIT
ENERGY, L.P.
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By:
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/s/ Xxxx X. Xxxxxxxx,
Xx.
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Name:
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Xxxx X. Xxxxxxxx,
Xx.
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| Title: |
President of Ambit
Systems, Inc.,
authorized
signatory for the General
Partner of Ambit Energy, L.P.
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