EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
COMMONWEALTH ENERGY CORPORATION
AS BUYER
AND
ACN UTILITY SERVICES, INC.,
ACN ENERGY, INC.
AND
ACN POWER, INC.,
AS SELLERS
AND
AMERICAN COMMUNICATIONS NETWORK, INC.
AND
COMMERCE ENERGY GROUP, INC.
WITH RESPECT TO CERTAIN
SPECIFIC PROVISIONS HEREIN
DATED AS OF FEBRUARY 9, 2005
TABLE OF CONTENTS
Page
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SECTION 1. Certain Definitions .................................................. 5
SECTION 2. Transfer of Assets ................................................... 10
2.1 Assets To Be Transferred ............................................. 10
2.2 Consents and Novation ................................................ 11
2.3 Option Assets ........................................................ 12
SECTION 3. Consideration for Acquired Assets .................................... 12
3.1 Amount of Purchase Price ............................................. 12
3.2 Assumption of Liabilities ............................................ 13
3.3 Excluded Liabilities ................................................. 13
3.4 Accounts Receivables and Closing Prorations .......................... 14
3.5 Bulk Sales Law Compliance ............................................ 15
3.6 Allocation of Purchase Price ......................................... 15
SECTION 4. Representations and Warranties of Sellers ............................ 15
4.1 Good Standing ........................................................ 15
4.2 ACN Energy Entities .................................................. 15
4.3 Authorization; Consents .............................................. 16
4.4 Governmental Approvals ............................................... 16
4.5 Financial Statements; Liabilities; Books and Records of Account. ..... 16
4.6 Taxes ................................................................ 17
4.7 Title to Assets; Liens and Encumbrances .............................. 17
4.8 Trademarks, Service Marks, Trade Names, Patents and Copyrights ....... 17
4.9 Contracts ............................................................ 18
4.10 Purchase and Sales Commitments and Orders; Customers and Vendors ..... 18
4.11 Employees; Compensation; Labor Relations; Vacation Time, Bonuses, Etc 18
4.12 Employee Benefits .................................................... 19
4.13 Legal Proceedings .................................................... 20
4.14 Orders, Decrees, Etc ................................................. 20
4.15 Compliance With Law; Permits and Licenses ............................ 20
4.16 Actions Not in Ordinary Course; No Change ............................ 21
4.17 Reserved ............................................................. 21
4.18 Bank Accounts; Powers of Attorney .................................... 21
4.19 No Brokers ........................................................... 22
4.20 Arrangements with Related Parties .................................... 22
4.21 No Omissions ......................................................... 22
4.22 Stock Legend; Restricted Securities .................................. 22
SECTION 5. Representations and Warranties of Buyer .............................. 23
5.1 Good Standing ........................................................ 23
5.2 Authorization ........................................................ 23
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5.3 Governmental Approvals ............................................... 24
5.4 No Brokers ........................................................... 24
5.5 Authorization ........................................................ 24
5.6 Shares ............................................................... 24
5.7 SEC Rules ............................................................ 24
SECTION 6. Conduct Prior to the End of the Phase-Out Period ..................... 24
6.1 Investigation by Buyer ............................................... 24
6.2 Ongoing Operations ................................................... 25
6.3 Other Transactions ................................................... 26
6.4 Consents; Third-Party; Regulatory Approvals .......................... 26
6.5 Public Announcements ................................................. 27
6.6 Employees and Employee Benefit Plans ................................. 27
6.7 Notification ......................................................... 29
6.8 Transfer Documents ................................................... 29
6.9 Covenant to Satisfy Conditions ....................................... 29
6.10 Schedules ............................................................ 29
6.11 Schedule 4.2(A) Assets ............................................... 29
SECTION 7. Conditions of Buyer's Obligations to Close ........................... 30
7.1 Agreement and Conditions ............................................. 30
7.2 Representations and Warranties ....................................... 30
7.3 No Legal Proceeding .................................................. 30
7.4 Certificate .......................................................... 30
7.5 Lien Releases ........................................................ 30
7.6 Deliveries ........................................................... 30
7.7 Schedules ............................................................ 30
SECTION 8. Conditions of the Sellers' Obligations to Close ...................... 30
8.1 Agreement and Conditions ............................................. 31
8.2 Representations and Warranties ....................................... 31
8.3 Deliveries ........................................................... 31
8.4 Certificate .......................................................... 31
SECTION 9. Deliveries of Sellers on the Closing Date ............................ 31
9.1 Title to Acquired Assets ............................................. 31
9.2 Certificates ......................................................... 31
9.3 Secretary's Certificate .............................................. 31
9.4 Authorization ........................................................ 31
9.5 Escrow Agreement ..................................................... 31
9.6 Sales Agency Agreement ............................................... 31
9.7 Transition Agreement ................................................. 31
9.8 Security Agreement ................................................... 32
9.9 Energy Agreements .................................................... 32
9.10 Operating Agency Agreement ........................................... 32
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9.11 Other Deliveries ..................................................... 32
SECTION 10. Deliveries of Buyer on the Closing Date .............................. 32
10.1 Purchase Price ....................................................... 32
10.2 Secretary's Certificate .............................................. 32
10.3 Escrow Agreement ..................................................... 32
10.4 Sales Agency Agreement ............................................... 32
10.5 Transition Agreement ................................................. 32
10.6 Security Agreement ................................................... 32
10.7 Energy Agreements .................................................... 32
10.8 Operating Agency Agreement ........................................... 32
SECTION 11. Additional Covenants ................................................. 32
11.1 Mail ................................................................. 33
11.2 Further Assurances ................................................... 33
11.3 Notification to Customers ............................................ 33
11.4 Non-Transferred Assets ............................................... 33
11.5 Trading Restrictions ................................................. 33
SECTION 12. Confidentiality ...................................................... 33
SECTION 13. Indemnification ...................................................... 34
13.1 Indemnification by Sellers ........................................... 34
13.2 Indemnification by Buyer ............................................. 34
13.3 Procedures for Indemnification ....................................... 34
SECTION 14. Survival of Representations; Effect of Certificates .................. 35
SECTION 15. Fees and Disbursements ............................................... 35
SECTION 16. Notices .............................................................. 36
SECTION 17. Termination .......................................................... 36
SECTION 18. Miscellaneous ........................................................ 37
18.1 Entire Agreement ..................................................... 37
18.2 Taxes ................................................................ 37
18.3 Governing Law; Jurisdiction; Waiver of Jury Trial .................... 37
18.4 Severability ......................................................... 38
18.5 Waiver ............................................................... 38
18.6 Binding Effect; Assignment ........................................... 38
18.7 No Third-Party Beneficiaries ......................................... 38
18.8 Expenses Related to Audit Rights ..................................... 38
18.9 Pronouns ............................................................. 38
18.10 Counterparts ......................................................... 39
18.11 Headings ............................................................. 39
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EXHIBITS
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of Sales Agency Agreement
Exhibit C - Form of Transition Agreement
Exhibit D - Form of Security Agreement
Exhibit E - Form of NAESB
Exhibit F - Form of EEI
Exhibit G - Form of ISDA
Exhibit H - Form of Operating Agency Agreements
Exhibit I - Form of Letter Netting Letter
SCHEDULES
Schedule A Acquired Assets
Schedule A-1 Assets with Closing Dates Cash Adjustments
Schedule A-2 Assets with Future Cash Adjustments (upon Assignment)
Schedule B Option Assets
Schedule C Phase-Out-Addendum
Schedule D Disbursement of Share Escrow
Schedule 3.1(c) Estimated Closing Adjustment
Schedule 4.2 Jurisdictions of Qualification
Schedule 4.2A Activities conducted by ACN Energy's subsidiaries
Schedule 4.3 Authorization; Consents
Schedule 4.4 Seller Governmental Approvals
Schedule 4.5A Financial Statements; Liabilities; Books and Records of
Account
Schedule 4.7A Title to Assets; Liens and Encumbrances
Schedule 4.7B Material Assets
Schedule 4.8 Trademarks, Service Marks, Trade Names, Patents and
Copyrights
Schedule 4.9A Material Contracts
Schedule 4.9B Bonds, Deposits, Guarantees or other Credit Support
Schedule 4.10 Purchase and Sales Commitments and Orders; Customers and
Vendors
Schedule 4.11 Employees of ACN Energy; Job Description Compensation
Schedule 4.11C Vacation and Bonuses of Employees of ACN Energy
Schedule 4.12A Employee Benefit Plans
Schedule 4.14 Orders, Decrees, Etc
Schedule 4.15B Permits; Notice of Violation
Schedule 4.16A Actions Not in the Ordinary Course
Schedule 4.18 Bank Accounts; Powers of Attorney
Schedule 4.20 Contracts with Related Parties
Schedule 5.3 Buyer Governmental Approvals
Schedule 5.6 CEG's Shares of Common Stock Reserved for Issuance
Schedule 6.6 Employee Information
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AGREEMENT dated as of February 9, 2005 (the "Agreement") by and
among Commonwealth Energy Corporation, a California corporation ("Buyer"), and
ACN Utility Services, Inc., a Michigan corporation ("ACN Utility Services"), ACN
Energy, Inc., a Michigan corporation ("ACN Energy"), and ACN Power, Inc., a
Michigan corporation ("ACN Power", and collectively with ACN Utility Services
and ACN Energy, "Sellers" or the "ACN Energy Entities"), and, as to Sections
3.1(b) & 4.22 only, Commerce Energy Group, Inc., a Delaware corporation ("CEG"),
and as to Sections 4.22, 6.11 and Article 13 only, American Communications
Network, Inc. ("Parent").
W I T N E S S E T H:
WHEREAS, Sellers own and operate a retail electric power and natural
gas sales business (the "Retail Energy Business"); and
WHEREAS, Buyer desires to purchase from Sellers and Sellers desire
to sell, convey, transfer, assign and deliver to Buyer, all of the assets,
properties, rights and business of the Retail Energy Business, other than the
Excluded Assets (as defined below), upon the terms and conditions and for the
purchase price hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration set forth herein, the
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
SECTION 1...Certain Definitions. For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
"ACN Energy" means ACN Energy, Inc., a Michigan corporation and
wholly owned subsidiary of Seller.
"ACN Energy Entities" has the meaning set forth in the recitals.
"ACN Power" means ACN Power, Inc., a Michigan corporation and wholly
owned subsidiary of Seller.
"ACN Utility Services" means ACN Utility Services, Inc., a Michigan
corporation and wholly owned subsidiary of Seller.
"Acquired Assets" means the assets of the Retail Energy Business set
forth on Schedule A attached hereto and those of the Option Assets which Buyer
elects to purchase pursuant to the terms hereof.
"Action" means any claim, action, suit, proceeding or investigation,
whether at law, in equity or in admiralty or before any court, arbitrator,
arbitration panel or Governmental Authority.
"Affiliate" of a party means any Person which, directly or
indirectly, controls, is controlled by or is under common control with such
party.
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"AMEX" means the American Stock Exchange.
"Assumed Liabilities" has the meaning specified in Section 3.2
hereof.
"Balance Sheet" has the meaning specified in Section 4.5 hereof.
"Balance Sheet Date" means December 31, 2004.
"Buyer" has the meaning set forth in the preamble hereof.
"Buyer Designee" has the meaning specified in Section 2.1(b) hereof.
"Closing" means the closing of the transactions contemplated hereby,
which shall take place at the offices of Jaffe Raitt Heuer & Weiss, P.C., on the
Closing Date at 10:00 A.M., or at such other time or place as the parties may
agree upon in writing.
"Closing Date" means February 9, 2005 or such other date as the
parties may agree upon in writing.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"CEG" means Commerce Energy Group, Inc., a Delaware corporation and
the parent of Buyer.
"Contracts" mean contracts, agreements, mortgages, indentures,
licenses, leases, commitments, plans, arrangements, sales orders, purchase
orders and binding commitments of every kind, whether written or oral.
"Counterparty" or "Counterparties" means any Person or Persons, as
applicable, other than the Seller, that is a party or are parties, as
applicable, to one or more of the Contracts.
"Counterparty Consent" means, with respect to each Contract, an
assignment and assumption agreement duly executed and delivered by the
applicable assignor, the applicable assignee and one or more authorized officers
of the sole Counterparty or all Counterparties to such Contract, as applicable
which is reasonably satisfactory to the Buyer.
"Customer Notification" has the meaning specified in Section 11.3.
"Damages" mean all losses, liabilities, damages, deficiencies,
obligations, fines, expenses, claims, demands, actions, suits, proceedings,
judgments or settlements, including interest and penalties recovered by a third
party with respect thereto and out-of-pocket expenses and reasonable attorneys'
and accountants' fees and expenses incurred in the investigation or defense of
any of the same or in asserting, preserving or enforcing any of the Indemnified
Party's rights hereunder, suffered by an Indemnified Party.
"EEI" means the EEI Master Power Purchase and Sale Agreement, dated
January 31, 2005, between ACN Utility and Buyer.
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"Employee Benefit Plan" has the meaning set forth in Section 3(3) of
ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any other corporation or trade or business
controlled by, controlling or under common control with a Seller within the
meaning of Section 414(c) of the Code or Section 4001(a)(14) or Section 4001(b)
of ERISA.
"Escrow Agent" means Computershare Trust Company, Inc., 350 Indiana
Street, Suite 800, Golden, Colorado 80401.
"Escrow Agreement" means the escrow agreement in substantially the
form of Exhibit A attached hereto to be entered into on the Closing Date among
Parent, Buyer CEG and the Escrow Agent.
"Estimated Prepayment Amount" has the meaning set for in Section
3.1(c).
"Excluded Assets" mean those assets of Sellers not listed on
Schedule A attached hereto and the Option Assets which Buyer does not elect to
purchase pursuant to the terms hereof.
"Excluded Liabilities" has the meaning specified in Section 3.3
hereof.
"Financial Statements" has the meaning specified in Section 4.5
hereof.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any agency, instrumentality,
department, commission, court, tribunal or board of any government, whether
foreign or domestic and whether national, federal, state, provincial or local,
including any self-regulatory organization having jurisdiction over the Parties,
the Parent's Subsidiaries, the Contracts set forth on Schedule 4.9, the Retail
Energy Business, the Acquired Assets, the Option Assets, or otherwise relating
in any way to the subject matter hereof.
"Indemnified Party" has the meaning specified in Section 13.3
hereof.
"Indemnifying Party" has the meaning specified in Section 13.3
hereof.
"ISDA" means the International Swaps and Derivatives Association,
Inc. 2002 Master Agreement and Credit Support Annex, dated January 31, 2005,
between ACN Utility and Buyer.
"Last Seller Pay Date" means March 4, 2005.
"Laws" mean laws, rules, regulations, codes, orders, ordinances,
judgments, injunctions, decrees and policies.
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"Liabilities" mean debts, liabilities, obligations, duties and
responsibilities of any kind and description, whether absolute or contingent,
monetary or non-monetary, direct or indirect, known or unknown or matured,
unmatured, or of any other nature.
"Lien" means any security interest, lien, mortgage, claim, charge,
pledge, restriction, equitable interest or encumbrance of any nature.
"NAESB" means the NAESB Base Contract for Sale and Purchase of
Natural Gas, dated January 31, 2005, between ACN Utility and Buyer.
"Netting Letter" means the letter agreement between ACN Utility and
Buyer, dated January 31, 2005, whereby the parties agree to enter into an EEI
Master Netting Agreement.
"Non-Transferred Contract" has the meaning specified in Section
2.2(a) hereof.
"Option Assets" means those assets of the Retail Energy Business set
forth on Schedule B attached hereto, which Buyer has an option to acquire on the
terms set forth herein. To the extent any assets, property, rights or business
of a Seller or any of Parent's Subsidiaries used in connection with or otherwise
related to the Retail Energy Business as a going concern do not appear or
Schedules A and B hereto, the general language shall govern and such assets,
property, rights and business shall be deemed Option Assets.
"Option Expiration Date" means the close of business on the 60th day
after the Closing Date.
"Parent" has the meaning set forth in the preamble hereof.
"Parties" means, collectively, Buyer and Sellers.
"Party" means any of such Persons.
"Permits" has the meaning specified in Section 4.15(b) hereof.
"Person" means any natural person, corporation, business trust,
joint venture, association, company, firm, partnership, or other entity or
government or Governmental Authority.
"Pre-Closing Billed Receivables" has the meaning specified in
Section 3.4(b) hereof.
"Phase-Out Addendum" means Schedule C attached hereto.
"Phase-Out Period" has the meaning specified in the Phase-Out
Addendum.
"Proprietary Right" means patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not reduced
to practice); all registered and unregistered statutory and common law
copyrights; all registered and unregistered trademarks,
8
service marks, licenses, logos, sales materials and trade names; all
registrations, applications and renewals for any of the foregoing; all trade
secrets, confidential information, know-how, customer lists, formulae,
manufacturing and production processes and techniques, research and development
information, product designations, quality standards, investigations, drawings,
specifications, designs, plans, improvements, proposals, technical and computer
data; all license agreements and sublicense agreements to and from third parties
relating to any of the foregoing; all other proprietary rights (including,
without limitation, all computer software and documentation); and all copies and
tangible embodiments of the foregoing (in whatever form or medium).
"Proration Time" means, as to Contracts relating to the sale,
purchase, transportation or delivery of natural gas, 9:01 am Eastern Standard
Time on February 1, 2005, and as to any other Acquired Assets, 12:01 am in the
time zone of the Territory to which such Acquired Asset relates (or if such
Acquired Asset relates to no particular Territory, 12:01 am Eastern Standard
Time) on February 1, 2005.
"PUC(s)" has the meaning specified in Section 11.3.
"Purchase Price" has the meaning specified in Section 3.1 hereof.
"Retail Energy Business" has the meaning set forth in the recitals.
"Returns" mean all returns, declarations, reports, estimates,
information returns and statements required to be filed with or supplied to any
taxing authority in connection with any Taxes.
"Sales Agency Agreement" means the Agency Agreement in substantially
the form of Exhibit B attached hereto to be entered into on the Closing Date
among Seller, Buyer and an entity designated by Buyer.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" has the meaning set forth in the preamble hereof.
"Seller Ancillary Documents" means all conveyances, covenants,
warranties, deeds, assignments, bills of sale, confirmations, powers of
attorney, approvals, consents and all further instruments as may be necessary,
expedient or proper in order to complete any and all conveyances, transfers, and
assignments provided for herein and to convey to Buyer such title to the
Acquired Assets as Sellers are obligated hereunder to convey.
"Shares" has the meaning specified in Section 3.1(b) hereof.
"Subsidiary" means, with respect to any Person, (i) any corporation
or other Person of which securities or other interests (other than securities or
other interests having such power only upon the happening of a contingency that
has not occurred) having the power (x) to elect a majority of that corporation's
or other Person's board of directors or similar governing body or (y) to direct
the business and policies of that corporation or other Person are held by
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such Person or one or more of Subsidiaries of such Person (or a combination
thereof) and (ii) any partnership or limited liability company (a) the sole
general partner or the managing general partner or managing member of which is
such Person or a Subsidiary of such Person or (b) the only general partners or
managing members of which are such Person or one or more Subsidiaries of such
Person (or a combination thereof).
"Taxes" mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise, real and personal
property, sales, transfer, license, withholding, payroll and franchise taxes,
taxes or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes, fuel taxes, environmental taxes, license,
registration and documentation fees, and customs' duties, tariffs and similar
charges, imposed by any Governmental Authority and shall include any interest,
penalties or additions to tax attributable to any of the foregoing.
"Transaction Documents" means this Agreement, the Sales Agency
Agreement, Transition Agreement, Escrow Agreement, Security Agreement, NAESB,
EEI, ISDA, Operating Agency Agreements, and each Seller Ancillary Document.
"Transferred Contracts" means all Contracts included within the
definition of Acquired Assets, and transactions outstanding under such
Contracts, except for such Contracts or transactions, if any, with respect to
which no Counterparty Consent has been received and such consent is required
under the terms of such Contract or transaction for that assignment thereof.
"Transferred Customers" means those customers of the Retail Energy
Business for which regulatory approval, UDC approval and/or customers' approval
with respect to such transfer to Buyer has been received and which are actually
transferred to Buyer on and/or after the Closing.
"Transferred Employee" has the meaning specified in Section 6.6
hereof.
"Transition Agreement" means the Transition Services Agreement in
substantially the form of Exhibit C attached hereto to be entered into on the
Closing Date between Sellers and Buyer.
"UDC(s)" has the meaning specified in Section 11.3 hereof.
"Unbilled Receivables" has the meaning specified in Section 3.4
hereof.
"WARN" has the meaning specified in Section 6.6 hereof.
SECTION 2. Transfer of Assets.
2.1 Assets To Be Transferred. (a) Based upon and subject to the
terms, agreements, warranties, representations and conditions of this Agreement,
Sellers hereby agree to sell, convey, transfer, assign and deliver to Buyer on
the Closing Date or from time to time thereafter as contemplated by Sections
2.2, 2.3 and 6.4, and Buyer hereby agrees to buy and
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accept on the applicable date, for the Purchase Price, free and clear of all
Liens, all of the Sellers' right, title and interest in and to the Acquired
Assets.
(b) Buyer may designate one or more of its Subsidiaries as the
purchaser hereunder of all or any portion of the Acquired Assets (any such
Subsidiary so designated being referred to herein as a "Buyer Designee").
Buyer's rights under this Agreement shall be deemed automatically assigned to
any Buyer Designee with respect to the portion of the Acquired Assets to be
acquired by such Buyer Designee, provided that any such assignment shall not
relieve Buyer from any liability hereunder.
2.2 Consents and Novation. (a) This Agreement shall not constitute
an agreement to assign any interest in any Contract or any claim, right or
benefit arising thereunder or resulting therefrom if an assignment without the
consent of a third party (including any Governmental Authority), or without
novation of the same, would constitute a breach or violation thereof or affect
adversely the rights of the Seller or the Buyer thereunder (any of such, a
"Non-Transferred Contract"). If novation is required in order to transfer and
assign any interest to the Buyer, or if the consent of a third party is required
in order to assign any such interest and such consent is not obtained prior to
the Closing Date, or if an attempted assignment would be ineffective or would
adversely affect the Sellers' ability to convey the benefit of such
Non-Transferred Contract to the Buyer, (i) the Buyer shall be entitled to the
benefits of each such Non-Transferred Contract accruing after the Proration
Time, (ii) the Buyer shall assume as Assumed Liabilities all obligations and
liabilities relating to or arising out of or incurred in connection with such
Non-Transferred Contract that relate to the period after the Proration Time,
(iii) except as provided in Section 2.2(b), the Sellers shall continue to deal
with the other contracting party(ies) as the prime contracting party and (iv)
the Sellers will use their best efforts to cooperate with Buyer in obtaining all
such consents and cooperate with the Buyer until such consent or novation is
obtained or effected in any lawful and economically feasible arrangement so that
the Buyer shall receive the interest of the Sellers in the benefits under any
such Non-Transferred Contract, including performance by the Sellers or the Buyer
as agent for the Sellers as set forth in Section 2.2(b). The Sellers shall
promptly assign to the Buyer each such Non-Transferred Contract after receipt of
the appropriate consent or novation.
(b) From and after the Closing, Sellers authorize and appoint Buyer
as their exclusive agent to take all actions and administer all Non-Transferred
Contracts to the fullest extent allowed under the applicable contract and, to
the extent within Buyer's reasonable control, to manage the Retail Energy
Business for Sellers. Buyer shall indemnify and hold Sellers harmless from and
against all Liabilities and Damages from third party claims relating to the
period after the Proration Time relating to (x) such Non-Transferred Contract,
or (y) Buyer's management of the Retail Energy Business as aforesaid, except to
the extent arising out of the gross negligence, bad faith or willful misconduct
of the Sellers or their Affiliates. All expenses reasonably incurred by Sellers
with respect to the Non-Transferred Contracts utilized in the Retail Energy
Business from and after the Proration Time shall be paid by Buyer. All revenues
not associated with an unreimbursed expense paid by Sellers with respect to the
Non-Transferred Contracts from and after the Proration Time shall be for the
benefit of and paid to Buyer. Sellers shall take no action, nor cause any action
to be taken under the contracts and arrangements for which Buyer has been
appointed agent unless requested by Buyer to do so. Such Buyer-
11
requested Sellers actions shall not be considered actions of Seller for the
purposes of expense or revenue recognition under this Agreement.
2.3 Option Assets. From the date hereof until the Option Expiration
Date, Buyer shall have the option from time to time to designate any of the
Option Assets as Acquired Assets by delivering notice of such election to
Seller. If Buyer so elects, Buyer shall be required to pay to Sellers any cash
prepayment amounts as set forth in Section 3.1(d); otherwise there shall be no
purchase price adjustment. For purposes of this Agreement, all Option Assets
which Buyer elects to purchase pursuant to this Section shall be deemed Acquired
Assets and all Option Assets which Buyer does not elect to purchase on or before
the Option Expiration Date pursuant to this Section shall be deemed Excluded
Assets. Until the Option Expiration Date, any Option Assets which have not been
acquired pursuant to the terms hereof shall be treated under this Agreement as
Acquired Assets except insofar as doing so would obligate Buyer to acquire such
assets, assume any Liabilities with respect to them or otherwise increase
Buyer's Liabilities hereunder.
SECTION 3. Consideration for Acquired Assets.
3.1 Amount of Purchase Price. The total consideration (the "Purchase
Price") to be paid by Buyer for the Acquired Assets is as follows:
(a) On the Closing Date, Buyer shall pay $6,500,000 plus the
Estimated Prepayment Amount, subject to adjustment as set forth Section 3.1(c),
to Sellers by means of a wire transfer of immediately available funds in such
amount to an account number and depository designated by Sellers.
(b) As soon as practicable following the approval by the AMEX of the
listing of the Shares on the AMEX (CEG to promptly seek such approval), CEG
shall deposit in escrow a number of shares (rounded down to the nearest whole
number) (the "Shares") of CEG common stock, par value $.001 per share, equal to
(i) $2,000,000 divided by (ii) the per-share closing price of CEG's common stock
on the AMEX on the last trading day immediately prior to the Closing Date, (the
"Purchase Price Stock Escrow"). In reliance on the representations of the
Sellers in this Agreement, the Shares shall not be registered under the
Securities Act. The Shares shall be issued in the name of the Escrow Agent and
will be held by the Escrow Agent and released to Parent or CEG as applicable, in
accordance with the provisions set forth in Schedule D hereto and the Escrow
Agreement. Notwithstanding any provision of this Agreement or the Sales Agency
Agreement, CEG shall have no obligation to issue any shares of CEG common stock
pursuant to this Agreement or the Sales Agency Agreement, into escrow or
otherwise, if the issuance of such shares of CEG common stock, together with all
prior issuances under this Agreement and the Sales Agency Agreement in the
aggregate, would result in the issuance of more than 14.9% of the shares of CEG
Common Stock outstanding immediately prior to the execution of this Agreement.
(c) On the Closing Date Buyer shall pay to the Sellers the estimated
amount set forth in Schedule 3.1(c) in respect of certain cash prepayment items
which relate to the period subsequent to the Proration Time, and which relate to
those Acquired Assets set forth in
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Schedule A-1 ("Estimated Prepayment Amount"). Within 30 days following the
Closing, Sellers shall send to Buyer a statement in reasonable detail
recalculating the prepayment amount. Buyer shall have 30 days after receipt to
review such statement. On the 30th day, Buyer shall pay Sellers, or Sellers
shall pay Buyer, as applicable, any final adjustment to the Estimated Prepayment
Amount as shown on such schedule which has not been disputed by Buyer. If Buyer
disputes Sellers' final adjustment, Buyer shall so notify Sellers, and following
resolution of the dispute, Buyer shall pay Sellers, or Sellers shall pay Buyer,
as applicable, the final adjustment.
(d) With respect to the Acquired Assets set forth on Schedule A-2 or
any Option Assets which Buyer has elected to purchase and which include
prepayment amounts, upon the actual assignment of such Assets to Buyer, Buyer
shall be responsible for paying Sellers the amount of any cash prepayment amount
relating to the period after assignment. On a monthly basis, Seller shall send
Buyer an invoice showing the prepayment amount, and Buyer shall have 30 days
from receipt to review such invoice. Thereafter, the procedures of 3.1(c) shall
apply.
3.2 Assumption of Liabilities. Subject to Sections 2.2, 2.3 and 6.4
with respect to the timing of transfer, the Acquired Assets will be sold,
conveyed, transferred and assigned to the Buyer by Sellers on the Closing Date
(or with respect to any later acquired Option Assets, the date of the applicable
transfer thereof) free and clear of all liens, security interests, mortgages,
claims, restrictions, charges and encumbrances (collectively, "Liens")
whatsoever. The Buyer does not assume, accept or undertake any obligations,
duties, debts or liabilities of the Sellers, their shareholders, subsidiaries or
affiliates of any kind whatsoever, nor will Buyer provide any kind of credit
support to the Sellers, their shareholders, subsidiaries or affiliates pursuant
to this Agreement or otherwise, except as provided in Section 2.2 and except
that Buyer hereby agrees to assume the Sellers' Liabilities with respect to the
Acquired Assets from and after the Proration Time which are set forth on
Schedule A hereto, but in each case only to the extent such Liabilities arose in
the ordinary course of business, are to be performed after the Proration Time
and not in violation of any of the terms, agreements, warranties and
representations in this Agreement (collectively, the "Assumed Liabilities");
provided that if any Liability referred to in this sentence relates both to any
time period prior to the Proration Time and on the Proration Time such Liability
shall be prorated so that the Assumed Liabilities only include the portion
thereof directly relating to the Acquired Assets and/or to the period from and
after the Proration Time. Buyer is not assuming and shall not assume any
Liabilities of Parent or its Subsidiaries other than the Assumed Liabilities.
3.3 Excluded Liabilities. Except as provided in Section 3.2 and
notwithstanding anything else to the contrary contained herein, the Sellers
shall retain, and Buyer is not assuming and shall not be liable for any
Liabilities of Sellers or other Affiliates of Sellers, including, without
limitation, any Liabilities (i) under Contracts which shall not have been
assigned to Buyer pursuant to this Agreement (including, but not limited to, any
union agreements); (ii) for indebtedness for borrowed money; (iii) by reason of
or arising as the result of any default or breach by Sellers of any Contract,
for any penalty assessed against Sellers under any Contract or relating to or
arising out of any event which with the passage of time or after giving of
notice, or both, would constitute or give rise to such a breach, default or
penalty, whether or not such Contract is being assigned to and assumed by Buyer
pursuant to this
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Agreement; (iv) the existence of which would conflict with or constitute a
breach of any representation, warranty, covenant or agreement of Sellers
contained herein; (v) to any shareholder or any ERISA Affiliate of Sellers, to
any present or former employee, officer or director of or consultant to Sellers
or their Affiliates (or independent contractor retained by Seller), or to any
Employee Benefit Plan sponsored or maintained by Sellers or any ERISA Affiliate,
including, without limitation, any bonuses, vacation or sick pay, any
termination or severance pay related to Sellers or Sellers' Affiliates'
employees, and any post retirement medical benefits or other compensation or
benefits; (vi) relating to the execution, delivery and consummation of this
Agreement and the transactions contemplated hereby, including, without
limitation, any and all Taxes incurred as a result of the sale contemplated by
this Agreement; (vii) for any Taxes of the Sellers including federal, state or
local taxes imposed as a result of being or having been a member of a group
filing a combined, consolidated or affiliated return); (viii) relating to or
arising out of any environmental matter, including, without limitation, any
violation of any environmental law or any other law relating to health and
safety of the public or the employees of Sellers or Sellers' Affiliates; (ix)
relating to, or arising out of, services rendered by Sellers or Sellers'
Affiliates, or the conduct or operation of the business of Sellers or Sellers'
Affiliates, prior to the Closing Date; or (x) relating to the Excluded Assets
(collectively, the "Excluded Liabilities").
3.4 Accounts Receivables and Closing Prorations. (a) All prepaid
contracts assumed by Buyer, all unbilled customer accounts receivables and all
liabilities, including residual commissions, shall be prorated as of the
Proration Time such that pursuant to and consistent with the provisions of the
Phase-Out Addendum attached hereto as Schedule C, Sellers receive or are due all
income and pay all expenses related to any period prior to the Proration Time.
(b) As provided herein, to the extent Buyer has hired employees of
Sellers performing such functions, Buyer shall collect receivables existing as
of the Proration Time that were billed as of the Closing (the "Billed
Receivables") and bill and collect (the "Unbilled Receivables"), as herein
provided and in accordance with the Phase-Out Addendum. As also provided herein,
to the extent Buyer has not yet hired employees of Sellers performing such
functions, Sellers shall cause their and their Affiliates' employees, at the
direction of Buyer, to collect the Billed Receivables and bill and collect the
Unbilled Receivables, as herein provided and in accordance with the Phase-Out
Addendum. With respect to all Billed Receivables, to the extent that Buyer has
hired employees of Sellers performing such functions, Buyer agrees to use
ordinary and customary industry efforts to collect the Billed Receivables, at
Buyer's cost. ACN Energy will maintain its current lockbox to which Buyer agrees
to direct payments of Billed Receivables in its ordinary course. Any payments
received by Buyer in its lockbox(es) for Sellers' Billed Receivables shall be
remitted to Sellers promptly, pursuant to the operation of the Phase-Out
Addendum, that it has received collection of such Billed Receivables. With
respect to all Unbilled Receivables, Buyer agrees to act as Sellers' agent and
to use ordinary and customary industry effort to bill the Unbilled Receivables
and to collect the Unbilled Receivables, at Buyer's cost. Buyer shall remit to
Sellers Sellers' pro rata share (based on the operation of the Phase-Out
Addendum) of each Unbilled Receivable which Buyer collects promptly pursuant to
the operation of the Phase-Out Addendum that it has received collection of such
Unbilled Receivables. In the event that any Billed Receivable or Unbilled
Receivable remains unpaid
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ninety (90) days after the date of the first invoice evidencing that Billed
Receivable or Unbilled Receivable and the date on which Seller is entitled to
exercise remedies under applicable Law, Buyer shall have no further obligations
with respect to such Billed Receivable or Unbilled Receivable and Sellers shall
be entitled to institute any such further collection efforts as Sellers deem
appropriate, at Sellers' cost. In the event Sellers receive in their lockbox
receivables attributable to the period following the Proration Time ("Buyer
Receivables"), Sellers shall remit such amount(s) to Buyer promptly pursuant to
the operation of the Phase-Out Addendum.
3.5 Bulk Sales Law Compliance. Sellers agree to pay and discharge
all claims of creditors which may be asserted against Buyer by reason of Sellers
and Sellers' Affiliates' noncompliance with the provisions of the bulk sales or
transfer Law of any state, province or other applicable jurisdiction which may
require such compliance on account of the provisions herein and the transactions
contemplated hereby and to indemnify and hold Buyer harmless from and against
claims suffered or incurred by Buyer by reason of or arising out of (a) the
failure of Sellers or Sellers' Affiliates to pay or discharge the same when due
or (b) such noncompliance with any applicable Bulk Sales Law.
3.6 Allocation of Purchase Price. As soon as reasonably practicable
after the Closing Date, Buyer's and Sellers' independent auditors shall agree on
an allocation of the Purchase Price and other consideration paid pursuant to
this Agreement, and based on such allocation, Buyer and Sellers shall prepare
Internal Revenue Service Form 8594, in accordance with Section 1060 of the Code
and the regulations thereunder, and such forms with respect to other
jurisdictions as may be required by all applicable laws relating to allocation
of the Purchase Price. Any adjustment to the Purchase Price or other
consideration paid pursuant to this Agreement shall result in an appropriate
adjustment to such allocation. Sellers and Buyer shall timely file with the
appropriate Governmental Authorities copies of said Form 8594 and any other such
required form as prepared by Buyer and Sellers and shall utilize the allocation
of the Purchase Price and other consideration paid pursuant to this Agreement
contained on said Form 8594 in the preparation of any Returns and forms
(including attachments thereto) which relate to the transactions contemplated
hereby. Neither Sellers nor Buyer shall file any Return containing an allocation
of the Purchase Price that differs from an allocation established pursuant to
this Section 3.6.
SECTION 4. Representations and Warranties of Sellers. Each Seller
hereby warrants and represents to Buyer as of the date hereof and as of the
Closing as follows:
4.1 Good Standing. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan and has
all power and authority to own or lease its assets and to operate and carry on
its business as presently conducted.
4.2 ACN Energy Entities. Except as listed in Schedule 4.2(A), all of
the activities of the Retail Energy Business are currently conducted by or
through the ACN Energy Entities, the ACN Energy Entities and all the Acquired
Assets and Option Assets are owned by the ACN Energy Entities, Parent has no
Subsidiaries involved in any aspect of the business of the Retail Energy
Business and neither Parent nor any of its Subsidiaries of Parent has made any
advances to or investments in, or owns any securities of or other interests in,
any firm,
15
corporation, association, business organization, enterprise or entity, which are
related to the Retail Energy Business or its assets, properties or business.
Each ACN Energy Entity is duly organized, validly existing and in good standing
under the laws of its state of incorporation or organization, has full corporate
power and authority to conduct its business as it is presently being conducted
and to own, lease and operate its properties and assets. Each ACN Energy Entity
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the ownership of property or nature of its
business requires such qualification. Each jurisdiction in which each ACN Energy
Entity is qualified to do business as a foreign corporation is listed on
Schedule 4.2 hereto. There are no other jurisdictions where the failure of any
ACN Energy Entity to be qualified as a foreign corporation would materially
adversely affect the Acquired Assets, the business of the Retail Energy Business
or the transactions contemplated herein.
4.3 Authorization; Consents. The execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Parent and each Seller, to the extent required by applicable law,
the shareholders of Sellers and all other corporate action of Parent and Sellers
necessary to authorize the execution and delivery of this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been taken. This Agreement and each
Transaction Document constitutes the legal, valid and binding obligation of
Parent and each Seller enforceable against them in accordance with its terms.
Except as set forth on Schedule 4.3 hereto, no consent of any lender, trustee,
security holder of Parent or any Seller, or other Person, is required for Parent
or any Seller to enter into and deliver this Agreement and each Transaction
Document or to consummate the transactions contemplated hereby, nor do the
articles of incorporation or by-laws or any Material Contract or other
instrument to which any Seller or Parent is bound, or affecting any of their
respective properties, conflict with or restrict the execution and delivery of
this Agreement or the other Transaction Documents or the consummation of the
transactions contemplated hereby or thereby.
4.4 Governmental Approvals. Except as set forth in Schedule 4.4, no
governmental authorization, approval, order, license, permit, franchise, or
consent and no registration, declaration or filing by Parent or any Seller with
any Governmental Authority (including, without limitation, any filing or
registration pursuant to the Securities Act or the securities or blue sky laws
of any state or territory) is required in connection with the execution and
delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby or thereby.
4.5 Financial Statements; Liabilities; Books and Records of Account.
(a) Annexed hereto as Schedule 4.5A are the following financial statements
(collectively, the "Financial Statements") with respect to the Retail Energy
Business: (a) the audited consolidated financial statements of the Retail Energy
Business for the years ended December 31, 2002 and 2003; and (b) the unaudited
consolidated financial statements of the Retail Energy Business as of December
31, 2004 (the unaudited consolidated statement of net worth of the Retail Energy
Business as of December 31, 2004 is referred to herein as the "Balance Sheet").
The Financial Statements, in each case, are true and complete with respect to
each item therein and have been
16
prepared in conformity with GAAP heretofore adopted by, and applied consistently
with the past practices of, Sellers and fairly present the financial position,
results of operations and changes in financial position of the Retail Energy
Business as at, or for the periods ended on, such dates in all material
respects. All Financial Statements include all material elements of revenue and
cost associated with the conduct of the business of the Retail Energy Business
(whether direct or indirect and whether incurred at any of the leased premises
or at any other locations), including, without limitation, the allocated or
directly charged costs of any materially significant services provided to the
Retail Energy Business by Sellers or any Affiliate of Sellers. Other than
corporate overhead and rent, Schedule 4.5A reflects all group and division
overhead charges and intercompany allocations attributed to the Retail Energy
Business. Since December 31, 2002, the Retail Energy Business has conducted its
accounting procedures in a consistent manner without material change of policy
or procedure.
(b) On the Balance Sheet Date, other than as listed on Schedule 4.5
there were no Liabilities of any Seller in connection with the Acquired Assets
other than those Liabilities disclosed or provided for in the Balance Sheet. On
the date hereof and on the Closing Date, there are no and will be no other
Liabilities any Seller in connection with the Acquired Assets except those
incurred since the Balance Sheet Date, in the ordinary course of the business of
the Retail Energy Business, and not in material violation of or in conflict with
any of the terms, agreements, warranties, representations and conditions of
Sellers contained in this Agreement.
(c) The records and books of account of each Seller in any way
relating to the Retail Energy Business are complete and accurate in all material
respects. Copies of all such books and records have been provided or made
available to Buyer.
4.6 Taxes. With respect to Taxes relating to the Retail Energy
Business, each Seller is in compliance with all applicable Laws, whether or not
such Taxes are owed by Seller.
4.7 Title to Assets; Liens and Encumbrances. The ACN Energy Entities
are the owners of, and except as set forth in Schedule 4.7A, have good and
marketable title to, all of the Acquired Assets subject to no Liens. Except as
set forth in Schedule 4.7B, the Acquired Assets constitute all of the material
assets used in, related to or required by the Sellers for, the normal conduct of
the Retail Energy Business's business. The Acquired Assets do not include any
owned real property.
4.8 Trademarks, Service Marks, Trade Names, Patents and Copyrights.
Schedule 4.8 hereto sets forth a true, correct and complete list of all
Proprietary Rights used by the Retail Energy Business in the conduct of its
business. Except as indicated on Schedule 4.8, each such Proprietary Right is
owned by the Sellers and is not subject to any license, royalty arrangement or
dispute. To Sellers' knowledge (a) no other Proprietary Rights are used in or
are necessary for the conduct of the Retail Energy Business's business as now
conducted, (b) none of such Proprietary Rights used by the Sellers nor the
Retail Energy Business as now conducted infringes any Proprietary Right or other
such right of any other Person and (c) no claim has been asserted or threatened
by any Person with respect to the ownership, validity, license or use of, or any
infringement resulting from, any of the Proprietary Rights used by the Retail
Energy Business and there is no basis for any such claim. No shareholder,
officer, director or employee
17
of Parent or any of its Subsidiaries owns or has any interest in any Proprietary
Rights or any trade secret, invention or process, if any, used by the Retail
Energy Business in connection with its business.
4.9 Contracts. (a) Schedule 4.9 hereto contains a true and complete
list of each Material Contract, including all amendments and modifications
thereto, to which any Seller is a party or to which it is subject or by which it
is bound relating to, or in any way affecting, the Retail Energy Business or the
Acquired Assets. As used herein, "Material Contract" means any contract that has
involved in calendar year 2004, or is likely (absent any unforeseen change from
the status quo) throughout calendar year 2005 or any year thereafter to involve
an annualized revenue or expense of $50,000.00 or more. True, correct and
complete copies of all Material Contracts listed on Schedule 4.9 have heretofore
been delivered by Sellers to Buyer. Except as set forth on Schedule 4.9, no
Material Contract requires the consent of any other Person or results in early
termination or acceleration of any right or obligation by reason of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. Each of the Material Contracts constitutes the
legal, valid binding obligation of such Seller enforceable in accordance with
its terms and, to Sellers' knowledge, is a valid and binding obligation of all
of the other parties thereto enforceable against them in accordance with their
terms and each such Material Contract is in full force and effect without
modification. To Seller's knowledge, each Seller has performed all obligations
required to be performed by it and is not in default under any Material
Contract, and no event has occurred thereunder which, with or without the lapse
of time or the giving of notice, or both, would constitute a default by it
thereunder. To Sellers' knowledge, no other party is in default under any
Material Contract. No shareholder, partner, member, officer, director or
employee of Parent or any of its Subsidiaries is a party to or subject to or
bound by any Material Contract or has any right which in any way relates to the
Acquired Assets.
(b) Schedule 4.9B sets forth a true and complete list of all bonds,
deposits, guarantees or other credit support posted or accepted under any
Material Contract or otherwise in connection with the Acquired Assets.
4.10 Purchase and Sales Commitments and Orders; Customers and
Vendors. Schedule 4.10 hereto sets forth a true and complete description and
number in accordance with the customary recordkeeping practices of the Seller of
the customers of the Retail Energy Business broken down by UDC. To Sellers'
knowledge, no Seller has received any oral or written notice from any
Governmental Authority threatening or intending to take action that would be
materially adverse to the Retail Energy Business, the Acquired Assets or with
respect to more than 10% of the Retail Energy Business customer base. To
Sellers' knowledge, no Seller has received any notice or has any knowledge that
any existing, significant group or sub-group of customers of the Retail Energy
Business (i) intends to terminate or is considering terminating its business
relationship with the Retail Energy Business or (ii) has requested such group or
sub-group be granted economic concessions, rebates or changes with respect to
products or services provided by the Retail Energy Business that would be
adverse to Buyer.
4.11 Employees; Compensation; Labor Relations; Vacation Time,
Bonuses, Etc. (a) Schedule 4.11 hereto lists the names, title or job
description, employer and total annual
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compensation of all employees of ACN Energy, Inc. as of the date hereof (the
"Existing Employees").
(b) There are no labor strikes, disputes, slow downs, work stoppages
union organizing efforts or other labor troubles or grievances pending or, to
any Sellers' knowledge, threatened against or involving the Retail Energy
Business. No unfair labor practice complaint before the National Labor Relations
Board or any similar or comparable state, local or foreign agency, no discharge
or grievance before the Equal Employment Opportunity Commission and no
complaint, charge or grievance of any nature before any similar or comparable
state, local or foreign agency, in any case relating to the Retail Energy
Business or the conduct of its business or the Acquired Assets is pending or, to
Seller's knowledge, threatened. To Seller's knowledge, no Seller has received
notice, nor has knowledge, of the intent of any Governmental Authority
responsible for the enforcement of labor or employment laws to conduct any
investigation of or relating to the Retail Energy Business or the conduct of its
business or the Acquired Assets. To the knowledge of each Seller, no officer or
key employee of the Retail Energy Business has any plans to terminate his or her
employment with the Retail Energy Business. No Existing Employees are subject to
any employment agreement or collective bargaining agreement. All such Existing
Employees are "at will."
(c) The vacation periods for the Existing Employees normally occur
during the periods described on Schedule 4.11C hereto, which Schedule also sets
forth the method for accruing vacation pay used by Sellers on their books and
records. Except as set forth on such Schedule 4.11C, at the Balance Sheet Date
there were, at the date hereof there are and on the Last Seller Payment Date
there will be, no bonuses, profit sharing, incentives, commissions or other
compensation of any kind with respect to work done prior to the Balance Sheet
Date, the date hereof or the Last Seller Payment Date, respectively, due to or
expected by the Existing Employees, not fully paid prior to such date or, with
respect to compensation for work done prior to the Balance Sheet Date, not fully
accrued on the Balance Sheet. Except as set forth on Schedule 4.11C, no bonuses,
profit sharing or incentives and no increases in compensation have been paid,
accrued or granted by any Seller to Existing Employees for any period after the
Balance Sheet Date. The Existing Employees are employed by ACN Energy, Inc. All
brochures, agreements and other documents setting forth personnel policies
relating to the Existing Employees, including, without limitation, information
concerning compensation, severance, termination and other employee perquisites
and benefits, have been furnished to the Existing Employees by Seller's
affiliates and have been furnished to Buyer and are listed in Schedule 4.11C
hereof.
4.12 Employee Benefits. (a) Except for those plans set forth on
Schedule 4.12A hereto (the "Plans"), Sellers do not maintain, contribute to or
have or have had an obligation to contribute to any Employee Benefit Plan,
whether or not such plan has been terminated and whether or not such plan is of
a legally binding nature or in the form of an informal understanding in which
former or present employees of the Retail Energy Business have participated or
currently participate.
(b) True, correct and complete copies of all the material documents
embodying the Plans, including, without limitation, the plan and trust
instruments and summary
19
plan description, have been furnished to Buyer. Each Plan which is intended to
comply with Section 401(a) of the Code and each trust related thereto is
qualified and exempt within the meaning of Sections 401 and 501 of the Code,
respectively, and a determination letter has been received from the Internal
Revenue Service with respect to each such Plan stating that such Plan and its
related trust are qualified and exempt within the meaning of Sections 401 and
501 of the Code, respectively, and a copy of each such determination letter has
been furnished to Buyer. To Seller's knowledge, nothing has occurred since the
date of the most recent determination letter of each such Plan that could
adversely affect the qualified status of such Plan or tax-exempt status of any
related trust.
(c) With respect to any group health plan, the group health plan
continuation coverage requirements of Section 4980B of the Code and Part 6 of
Title I of ERISA ("COBRA"), have been fulfilled in all material respects.
(d) Neither any Seller nor any ERISA Affiliate has ever (i)
terminated an Employment Benefit Plan subject to Title IV of ERISA or (ii)
contributed to any "multiemployer plan," as such term is defined in Section
3(37) of ERISA, and neither any Seller nor any ERISA Affiliate has effected
either a "complete withdrawal" or a "partial withdrawal," as those terms are
defined in Sections 4203 and 4205, respectively, of ERISA, from any such
multiemployer plan.
(e) Sellers do not maintain or contribute to any "employee welfare
benefit plan" (as such term is defined in Section 3(1) of ERISA), or other
employee benefit plan or arrangement, providing post-employment or
post-retirement benefits (other than an "employee pension benefit plan," as such
term is defined in Section 3(2) of ERISA and other than COBRA continuation
coverage) or, if any such plan exists, it is listed on Schedule 4.12A. There has
been no written or oral communication to the Transferred Employees by the Parent
or any of its Subsidiaries that would reasonably be expected to promise or
guarantee such Transferred Employees retiree health or life insurance or other
retiree death benefits on a permanent basis.
4.13 Legal Proceedings. To Sellers' knowledge, there are no material
Actions pending or, to the knowledge of Sellers, threatened against any Seller
respect to or otherwise affecting the Retail Energy Business or the Acquired
Assets. To the best knowledge of each Seller, no Seller is in default with
respect to any order, writ, injunction or decree of any Governmental Authority.
4.14 Orders, Decrees, Etc. To Sellers' knowledge, except as set
forth in Schedule 4.14 hereto, there are no orders, decrees, injunctions,
rulings, publications, decisions, directives, consents, pronouncements or
regulations of any court or any Governmental Authority issued against, or
binding on, any Seller in any way relating to the Acquired Assets or the Retail
Energy Business's business which may have a material adverse effect over the
Acquired Assets or the Retail Energy Business's method or manner of doing
business.
4.15 Compliance With Law; Permits and Licenses.
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(a) To Seller's knowledge, each Seller is in current compliance
with all Laws of any Governmental Authority applicable to the Retail Energy
Business, its assets, property, business, employees or operations in all
material requests.
(b) The Sellers presently hold, and will hold at the Closing Date
or the time of transfer of the applicable Acquired Assets, all required permits,
licenses, certificates and franchises from applicable Governmental Authorities
(the "Permits") which are necessary for or material to the ownership or
operation of the Acquired Assets or the conduct of the Retail Energy Business,
each of which is listed in Schedule 4.15(b) hereto; all such Permits are in full
force and effect and each Seller is in full compliance with the terms and
provisions of its applicable Permit. Except as set forth in Schedule 4.15(b), no
notice of violation of any Permit has been received. For any Permits which may
expire during the Phase Out Period, which are set forth in Schedule 4.15(b),
renewal applications have been or will be timely filed and prosecuted.
4.16 Actions Not in Ordinary Course; No Change.
(a) Except as set forth on Schedule 4.16A hereto, since the
Balance Sheet Date, the Sellers have not, relating to the Retail Energy Business
or the Acquired Assets, (i) incurred any Liability, except current liabilities
in the ordinary course of business and Liabilities incurred under Contracts
entered into in the ordinary course of business of the Retail Energy Business;
(ii) made with respect to the Retail Energy Business any capital expenditures or
additional commitments for capital expenditures and none are planned; (iii)
discharged any Liability, other than current liabilities shown on the Balance
Sheet and current liabilities incurred since the Balance Sheet Date in the
ordinary course of business of the Retail Energy Business; (iv) sold or
transferred any assets or written off any receivables other than in the ordinary
cause of the Retail Energy Business; (v) mortgaged, pledged or subjected to any
other Lien any of its assets or properties; (vi) suffered any losses or waived
any rights of substantial value; (vii) granted any material bonuses or
commissions or materially increased the compensation payable to any of its
employees, directors or officers or increased the aggregate payment of any fees;
(viii) made any loans to any individuals, firms, corporations or other entities;
(ix) made any change in any method of accounting or auditing practice; or (x)
entered into any transaction not in the ordinary course of business or agreed
(whether or not in writing) to do any of the foregoing. From the Balance Sheet
Date to the Closing Date, the Retail Energy Business and the Acquired Assets has
been and will be operated only in the regular and ordinary course.
(b) Since the Balance Sheet Date, there has not been (i) any
material adverse change (whether or not in the ordinary course of business) in
the business, condition (financial or otherwise), prospects, operations,
customer base, employee or vendor relations, assets or Liabilities of the Retail
Energy Business or the Acquired Assets or (ii) any material damage, destruction
or loss, whether or not covered by insurance, materially affecting the business,
assets, properties or rights of the Retail Energy Business or the Acquired
Assets.
4.17 Reserved.
4.18 Bank Accounts; Powers of Attorney. Set forth on Schedule 4.18
hereto is a list of each bank or other financial institution in which the
Sellers maintain an account or safe
21
deposit box related to the Retail Energy Business, including the current
lockbox, the corresponding number of each such account or safe deposit box and
the names of all persons holding check-signing or withdrawal powers or other
authority with respect thereto. Also set forth on Schedule 4.18 are the names of
all persons, if any, holding powers of attorney from the Sellers and a summary
statement of the terms thereof.
4.19 No Brokers. None of the Sellers or any Affiliate of Sellers has
entered into any contract, agreement, arrangement or understanding with any
Person or firm which will result in the obligation of Buyer or its Affiliate to
pay any finder's fee or financial advisory fee, brokerage fee or commission or
similar payment in connection with the transactions contemplated hereby.
4.20 Arrangements with Related Parties. Schedule 4.20 sets forth a
true and complete list of all contracts or other arrangements relating to the
Retail Energy Business among Parent or any of its Affiliates on one hand and any
other Affiliate of the Parent on the other. Except as expressly provided herein,
none of the Assumed Liabilities include any Liabilities owed to Sellers, their
Affiliates or their respective stockholders, partners, members, directors,
managers, officers, employees or agents.
4.21 No Omissions. Sellers do not know of any facts or circumstances
not disclosed to Buyer which indicate that the Acquired Assets may be materially
adversely affected or which otherwise should be disclosed to Buyer in order to
make any of the representations or warranties made herein on the part of the
Sellers not misleading. To Seller's knowledge, no representation or warranty by
Sellers contained in this Agreement, and no statement contained in any Schedule,
Exhibit, certificate or other instrument furnished to Buyer under or in
connection with this Agreement, contains any untrue statement of any material
fact, or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading.
4.22 Stock Legend; Restricted Securities. Parent and Sellers
represent and warrant to Buyer and CEG as follows:
(a) Parent is acquiring the Shares, when and if released to Parent
pursuant to Schedule D hereto and the Escrow Agreement, for its own account and
not with a present view to, or for sale in connection with, any distribution
thereof. Sellers consent to the placement of the following legend on each
certificate representing the Shares and acknowledge that stop transfer
instructions will be placed with CEG's transfer agent:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED OR SOLD UNLESS (i) A REGISTRATION STATEMENT UNDER
SUCH ACT (OR AN EXEMPTION FROM SUCH REGISTRATION) IS THEN IN
EFFECT WITH RESPECT THERETO, (ii) A WRITTEN OPINION FROM
COUNSEL FOR THE ISSUER OR OTHER COUNSEL FOR THE HOLDER
REASONABLY ACCEPTABLE
22
TO THE ISSUER HAS BEEN OBTAINED TO THE EFFECT THAT NO SUCH
REGISTRATION IS REQUIRED OR (iii) A `NO ACTION' LETTER OR ITS
THEN EQUIVALENT HAS BEEN ISSUED BY THE STAFF OF THE SECURITIES
AND EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER OR
SALE."
(b) Parent and Sellers understand that the Shares will not be
registered under the Securities Act for the reason that the sale provided for in
this Agreement is exempt pursuant to Section 4 of the Securities Act and that
the reliance of CEG and the Buyer on such exemption is predicated in part on the
Parent's and Sellers' representations set forth herein. Parent and each Seller
represents that it is experienced in evaluating companies such as CEG, has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment, and has the ability to suffer
the total loss of its investment in the Shares. Parent and each Seller is an
accredited investor within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act. Each Seller further represents that it has had access
during the course of the transaction and prior to its acquisition of the Shares
to such information relating to CEG as it has desired and that it has had the
opportunity to ask questions of and receive answers from CEG concerning the
transaction and to obtain additional information (to the extent CEG and the
Buyer possessed such information or could acquire it without unreasonable effort
or expense) necessary to verify the accuracy of any information furnished to it
or to which it had access.
(c) Parent and Sellers understand that the Shares may not be sold,
transferred or otherwise disposed of without registration under the Securities
Act or an exemption therefrom and that in the absence of an effective
registration statement covering the Shares or an available exemption from
registration under the Securities Act, the Shares must be held indefinitely.
SECTION 5. Representations and Warranties of Buyer. Buyer
warrants and represents to Sellers as of the date hereof and the Closing
as follows:
5.1 Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California.
5.2 Authorization. The execution and delivery of this Agreement
and the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Buyer, and all other corporate action of Buyer, including all
necessary shareholder approvals, authorizations and ratifications, necessary to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been taken. This Agreement and the
other Transaction Documents constitute the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms. No consents of
any lender, trustee or security holder of Buyer or other Person is required for
Buyer to enter into and deliver this Agreement and the other Transaction
Documents and to consummate the transactions contemplated hereby and thereby.
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5.3 Governmental Approvals. Except as set forth on Schedule 5.3,
no authorization, approval, order, license, permit, franchise, or consent and no
registration, declaration or filing by Buyer with any Governmental Authority is
required in connection with the execution and delivery of this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby.
5.4 No Brokers. Neither Buyer nor any of its Affiliates has
entered into any contract, agreement, arrangement or understanding with any
Person or firm which will result in the obligation of Sellers or their
Affiliates to pay any finder's fee or financial advisory fee, brokerage fee or
commission or similar payment in connection with the transactions contemplated
hereby.
5.5 Authorization. No approval or authorization of this Agreement
or any other agreement to be entered into in connection with the transactions
contemplated by this Agreement is required by law or otherwise in order to make
this Agreement or any other agreements entered into in connection herewith
binding upon the Buyer, except for approval of the listing of the Shares on the
AMEX. Upon the execution and delivery of this Agreement and any other agreement
in connection therewith, such agreements will constitute legal, valid and
binding obligations of Buyer, enforceable in accordance with their respective
terms.
5.6 Shares. The authorized common equity capital of CEG consists
of 150,000,000 shares of Common Stock , par value $.001 per share, of which
30,499,290 shares have been issued and are outstanding. Except for any shares of
Common Stock reserved for issuance under CEG's equity incentive plans or as
disclosed in CEG's SEC reports or Schedule 5.6 hereto, there are no options,
warrants, conversion privileges, preemptive rights, subscription or other rights
(or agreements for any such rights), commitments, arrangements or understandings
of any kind obligating CEG to issue or sell any shares of capital stock of any
class of CEG or any securities convertible into or exchangeable for any such
shares. The Shares, when issued, sold and delivered in accordance with the terms
and for the consideration set forth in this Agreement, will be validly issued,
fully paid and nonassessable and free of any liens or restrictions on transfer
other than restrictions on transfer under applicable state and federal
securities laws. Assuming the accuracy of the representations of the Parent and
Sellers in Section 4.22 of this Agreement, the Shares will be issued in
compliance with all applicable federal and state securities laws.
5.7 SEC Rules. To Buyer's knowledge, CEG is in compliance with SEC
and AMEX rules and regulations.
SECTION 6. Conduct Prior to the End of the Phase-Out Period.
6.1 Investigation by Buyer. Buyer may, prior to the end of the
Phase-Out Period (as defined in the Phase-Out Addendum), through its own
representatives (including its counsel, accountants and consultants) make such
reasonable inquiries and document reviews with respect to the Option Assets and
general operations of the Retail Energy Business and such review of the
financial records of the Retail Energy Business as it deems necessary or
advisable in connection with the transactions contemplated hereby to familiarize
itself with such Option
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Assets and general operations and financial records; such activities shall not,
however, affect Sellers' representations, warranties and agreements hereunder.
Sellers shall permit Buyer and its authorized representatives to have, after the
date hereof, reasonable access to the officers, employees and premises of each
Seller and to all books and records of the Retail Energy Business or related to
the Acquired Assets and Option Assets; and Buyer shall have the right to make
copies thereof and excerpts therefrom. Sellers shall furnish Buyer with such
financial and operating data and other information with respect to the Acquired
Assets, Option Assets and the Retail Energy Business as Buyer may from time to
time reasonably request. Sellers agree to permit Buyer and its authorized
representatives to visit suppliers, customers and others having business
relations with the Retail Energy Business. Sellers acknowledge that the rights
set forth in this Section 6.1 are essential to Buyer as a means of evaluating
the Acquired Assets and Option Assets and Sellers agree that in no event will
Sellers seek to recover costs or damages of any kind incurred as a result of the
exercise by Buyer of such rights and hereby waives any and all rights it might
have to recover any such costs or damages.
6.2 Ongoing Operations.
(a) From the date hereof until the date that all Transferred
Customers and Acquired Assets have transferred to Buyer, Sellers shall take
direction from Buyer as to the conduct and operation of the business of the
Retail Energy Business and the Acquired Assets consistent with the requirements
of law and regulation applicable to the Retail Energy Business and the Acquired
Assets, conduct and operate the business of the Retail Energy Business and the
Acquired Assets in the ordinary and usual course consistent with past practice,
preserve intact the business organization of the Retail Energy Business, use
commercially reasonable efforts to preserve for Buyer the present relationship
between the Retail Energy Business on the one hand and its suppliers, customers
and others having business relations with it on the other, and take directions
from Buyer in conducting the Retail Energy Business in a manner which will
safeguard and maintain the commercial value of the Acquired Assets in all
material respects. From and after the Last Seller's Pay Day, Sellers'
obligations as aforesaid shall be limited to matters within their control. From
the date hereof until the date that all Transferred Employees have transferred
to Buyer, Sellers shall use commercially reasonable efforts to keep available to
Buyer the services of Existing Employees of the Retail Energy Business.
(b) Without limiting the generality of Section 6.2(a), Seller and
its Subsidiaries will not, in connection with the conduct of the business of the
Retail Energy Business, without the prior written consent of Buyer:
(i) change for 2004 any accounting practices which would
have the effect of altering its calculation of EBITDA from that which would be
computed using the policies and practices in place with respect to 2003;
(ii) increase the rate of salary, benefits or other
compensation of any employee or hire any employees other than to replace
terminated employees or make any changes in any benefit plan;
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(iii) enter into any agreement, Contract or commitment or
incur any Liability other than in the ordinary course of business and consistent
with its existing policies and having value of greater than $25,000.00 per
annum;
(iv) waive any rights of substantial value;
(v) dispose of, permit to lapse, or otherwise fail to
preserve any of its Proprietary Rights or other similar rights, dispose of or
permit to lapse any license, permit or other form of authorization, or dispose
of or disclose to any person, other than an authorized representative of Buyer,
any customer list, trade secret, formula process or know-how;
(vi) pay, loan or advance any amount to or in respect of, or
sell, transfer or lease any assets (whether real, personal or mixed, tangible or
intangible) to, or enter into any agreement, arrangement or transaction with,
any of its officers or directors, any of its Affiliates or associates or any
Person having any direct or indirect interest in it or in which it or any of its
officers, directors, Affiliates or associates, has any direct or indirect
interest;
(vii) agree, whether in writing or otherwise, to take any
action prohibited in this Section 6.2; or
(viii) without limiting any of the foregoing, take or refrain
from taking any action the result of which would render any representation or
warranty made to Buyer in or in connection with this Agreement inaccurate.
(c) Sellers shall inform Buyer of any material action taken or
threatened to be taken by: (i) any party supplying energy or gas to Parent or
any of its Subsidiaries, (ii) any Governmental Authority having jurisdiction
over Parent or any of its Subsidiaries or any of their customers, (iii) any
financial institution with which Parent or any of its Subsidiaries has a
relationship, or (iv) any other party whose action or threatened action could
reasonably be determined to be materially adverse to the interests of Buyer with
respect to the Acquired Assets.
6.3 Other Transactions. Sellers will not, and will cause their
Affiliates and their respective directors, officers, employees and agents not
to, directly or indirectly, solicit or initiate any discussions or negotiations
with, or encourage or respond to any inquiries or proposals by, or participate
in any negotiations with, or provide any information to, or otherwise cooperate
in any other way with, any corporation, partnership, person or other entity or
group, other than Buyer and its representatives, concerning (A) any sale or
other transfer of all or any substantial portion of the Retail Energy Business
or the Acquired Assets; or (B) any joint venture, agency, or similar agreement
that binds Sellers to sell or cause to be sold energy or energy-related products
or services with any entity other than Buyer.
6.4 Consents; Third-Party; Regulatory Approvals. As soon as
practicable following the execution of this Agreement, Buyer and Sellers shall
work together to cause (a) the transfer of all state and federal licenses and
other Permits to Buyer, to the extent required and allowed by law for Buyer to
operate the Retail Energy Business, including any UDC and PUC notifications
and/or approvals, (b) assignment of Contracts which are included as Acquired
Assets to and assumption of such Contracts by Buyer, to the extent permissible
under such
26
Contracts and by law, including any UDC and PUC notifications and/or approvals,
to the extent required by law, and (c) any other consents or approvals required
by law to transfer any of the Acquired Assets being acquired by Buyer pursuant
to this Agreement and any other consents required by law with respect to
approval of this Agreement. Buyer will take the lead with respect to all
activities identified in this Section 6.4 and bear the costs associated with
such activities with the exception of costs associated with obtaining the
approval of Seller's and its Affiliates' lenders and other such financing
parties. Sellers agree to assist in effectuating such approvals where requested
by Buyer and will bear their reasonable costs associated with such assistance.
In accordance with the foregoing, Buyer shall be responsible, and shall
reimburse Sellers for, all direct out-of-pocket costs and expenses incurred or
paid by them in connection with securing necessary approvals from, giving
required notices to, or making required filings with any third parties, provided
that any such costs and expenses incurred or paid by Sellers shall have been
first approved by Buyer in its reasonable judgment. Notwithstanding the
foregoing, Sellers will be unconditionally obligated at their expense to obtain
any required consents and releases of liens from their Affiliates.
6.5 Public Announcements. Sellers and Buyer agree that they will
consult with each other before issuing any press releases or otherwise making
any public statements with respect to this Agreement or the transactions
contemplated hereby and shall not issue any press release or make any public
statement (including with respect to SEC reports and stock exchange disclosures
where reasonably practicable) prior to such consultation, except as may be
required by law.
6.6 Employees and Employee Benefit Plans.
(a) Employment Offer. On or before the Last Seller Pay Date, Buyer
will deliver a letter in form and substance satisfactory to it to each employee
identified on Schedule 6.6 offering such employee employment with Buyer or an
Affiliate of Buyer. The offer of employment will be: (a) at pay levels
substantially equivalent to the levels in effect for such individuals
immediately prior to the Closing Date, as disclosed in Schedule 6.6 hereto; (b)
with benefits consistent with individuals in the employ of Buyer (which
individuals are performing similar work and receiving similar pay); (c)
conditioned on Buyer's usual terms and conditions with respect to offers of
employment; and (d) effective as of the close of business on the Last Seller Pay
Date. Those employees accepting such offer of employment shall be known as the
"Transferred Employees." All employees listed on Schedule 6.6 who are not
Transferred Employees shall be known as "Non-Transferred Employees." If Sellers,
between the date hereof and the Last Seller Payment Date hire additional
employees, Buyer is not required to hire or offer to hire such employees which
were not previously identified on such Schedule 6.6.
(b) Employee Benefits. Neither Buyer nor any of its Subsidiaries
shall assume any Liabilities with respect to, and shall not receive any right or
interest in, any Employee Benefit Plans of Sellers in which any of the
Transferred Employees participate. The Sellers shall cause all Transferred
Employees to be fully vested in their accrued benefits earned under any of
Sellers' defined contribution or defined benefit plans as of the Last Seller
Payment Date. Each Transferred Employee shall be credited with the period of
service for which he/she was credited under the employee pension benefit and
employee welfare benefit plans of Seller
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for purposes of (i) eligibility to participate in Buyer's Employee Benefit
Plans, and (ii) benefit accruals under each of Buyer's employee benefit plans
that is a vacation or sick leave plan. Those Transferred Employees who were
participants in Seller's employee welfare benefit plans (as defined in Section
3(1) of ERISA) as of the Closing Date shall participate in Buyer's employee
welfare benefit plans immediately upon commencement of employment with Buyer.
Transferred Employees shall not be subject to any waiting period or preexisting
condition limitation under any employee benefit plan of Buyer that is an
employee welfare benefit plan (as defined in Section 3(1) of ERISA), and any and
all year-to-date deductibles and co-pays for 2005 under the employee welfare
benefit plans of Seller shall be credited to the Transferred Employees for
purposes of their applicable deductibles and co-pay limits for 2005 under each
corresponding plan of Buyer. Transferring Employees who meet any applicable
service requirements for any Employee Benefit Plan of Buyer that an employee
pension benefit plan (as defined in Section 3(2) of ERISA) (after receiving
credit for service with Seller) shall become a participant in such plan of Buyer
no later than the last day of the month in which such Transferred Employee
commences employment with Buyer.
(c) Acceptance of Rollovers. Each employee benefit plan of Buyer
that is a tax-qualified defined contribution plan (as defined in Section 3(34)
of ERISA) that accepts rollover contributions shall accept qualifying rollover
contributions of benefits distributed from each Plan of Seller that is a
tax-qualified defined contribution plan, including to the extent possible notes
attributable to loans to Transferred Employees that are outstanding as of the
date of distribution from such Plan.
(d) Payments to Transferred Employees. Sellers shall pay to
Transferred Employees all accrued vacation owing to such Transferred Employees
as of the Last Seller Payment Date as well as bonuses, profit sharing, incentive
commissions or other compensation of any kind for periods prior to the Last
Seller Payment Date. Buyer shall not assume any vacation or sick time
Liabilities with respect to the Transferred Employees, nor shall Buyer assume
any Liabilities for bonuses, profit sharing, incentive commissions or other
compensation of any kind under any Seller plan or arrangement.
(e) Sellers' Retention of Employment Related Liabilities. Buyer is
not assuming any Liability of Parent or any of its Subsidiaries to their
employees or former employees (i) for benefits (including health and welfare
benefits), compensation (including vacation, holiday and overtime pay), worker's
compensation, contributions, insurance premiums and administrative expenses
incurred or accrued before the Closing Date, (ii) arising under the continuation
coverage requirements of Section 4980B(f) of the Code and Section 601 et seq. of
ERISA with respect to all United States employees of the Retail Energy Business
(or any beneficiary or dependent of such employees) who, on or before the Last
Seller Payment Date or otherwise, in connection with the transactions
contemplated by this Agreement, have exercised or are eligible to exercise their
right to such continuation coverage, (iii) to provide post-retirement health and
life insurance benefits to employees (or any beneficiary or dependent of such
employee) of the Retail Energy Business, or (iv) for any claims made by the
employees of the Retail Energy Business, and any liability resulting from same,
for events occurring on or before the Last Seller Payment Date.
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(f) Payroll. Sellers shall continue to process payroll and to pay
the Transferred Employees up to and including the Last Seller Pay Date. Buyer
shall assume payroll processing responsibilities thereafter. Such payroll
amounts (including taxes and benefits) as are paid by Sellers to such
Transferred Employees allocable to the period after Closing shall be reimbursed
by Buyer within 10 calendar days following receipt by Buyer of definitive
records of payment of such amounts.
(g) WARN Act. To the extent applicable, Sellers shall be
responsible for all obligations under the Federal Worker Adjustment Retraining
and Notification Act ("WARN") and/or analogous state and local laws, including,
without limitation, the obligation to provide WARN notices, in connection with
the transactions contemplated by this Agreement.
(h) Mutual Cooperation. Each of the parties hereto shall cooperate
with the other parties and provide the other parties with such records,
information, documentation and assistance as such parties reasonably request in
order to carry out the parties' respective obligations under this agreement.
6.7 Notification. Upon becoming aware of same, until the final
transfer of the Acquired Assets, a party shall give prompt written notice to the
other of (i) the existence of any fact or the occurrence of any event which
constitutes, or with the giving of notice or the passage of time or both would
constitute, a breach or default under any Contract within the definitions of
Acquired Assets or Option Assets. The giving of any such notice shall not
affect, modify or limit in any way any representation, warranty, agreement or
covenant of a party made herein or pursuant hereto or the other party's right to
rely thereon.
6.8 Transfer Documents. Sellers shall execute and deliver to Buyer
and/or the Buyer Designees, on the Closing Date or thereafter as and when Buyer
acquires any of the Acquired Assets not transferred as of the Closing or
exercises its option to acquire Option Assets, all further instruments as may be
reasonably necessary, expedient or proper in order to complete any and all
conveyances, transfers, and assignments provided for herein and to convey to
Buyer and the Buyer Designees such title to the Acquired Assets as Sellers are
obligated hereunder to convey, all in form and substance reasonably satisfactory
to Buyer.
6.9 Covenant to Satisfy Conditions. The Parties shall use
commercially reasonable efforts to ensure that the conditions set forth herein
are satisfied, and that all the Acquired Assets are transferred to Buyer,
insofar as such matters are within their control.
6.10 Schedules. As of the date hereof, this Agreement does not have
attached any Schedules other than Schedules A-D. Seller agrees to furnish all
other contemplated Schedules not later than close of business, Pacific time, on
February 2, 2005 ("Seller Disclosure Schedules").
6.11 Schedule 4.2(A) Assets. With respect to any Acquired Assets or
Option Assets which are listed on Schedule 4.2(A), Parent agrees to cause the
applicable owner of such assets to (x) transfer same to Buyer as and when
required under this Agreement as if such asset was owned by a Seller hereunder
and under the same representations, warranties, terms and
29
conditions and (y) otherwise perform all obligations of a Seller hereunder with
respect to such asset as if it were a party hereto.
SECTION 7. Conditions of Buyer's Obligations to Close. The
obligations of Buyer under this Agreement are subject to the satisfaction of the
conditions set forth below, which conditions may be waived by Buyer without
releasing or waiving any of its rights hereunder.
7.1 Agreement and Conditions. On or before the Closing Date,
Sellers shall have complied with and duly performed all agreements and
conditions on their part required to be complied with and performed pursuant to
or in connection with this Agreement.
7.2 Representations and Warranties. The representations and
warranties of Sellers contained in this Agreement, or otherwise made in writing
in connection with the transactions contemplated hereby (including, without
limitation, any representations and warranties in the Transaction Documents),
shall be true and correct on and as of the date hereof and the Closing Date with
the same force and effect as though such representations and warranties had been
made on and as of the Closing Date.
7.3 No Legal Proceeding. No Action shall have been instituted or
threatened before any court or Governmental Authority seeking to restrain or
prohibit the acquisition by Buyer, or the conveyance by Parent and its
Subsidiaries, of the Acquired Assets.
7.4 Certificate. Buyer shall have received a certificate dated the
Closing Date and executed by a senior officer of each Seller on behalf of such
Seller to the effect that the conditions expressed in Sections 7.1 and 7.2 have
been fulfilled.
7.5 Lien Releases. US Bank shall have executed documentation
terminating all security agreements and security interests, including related
UCC filings, with respect to the Acquired Assets and the Option Assets, in form
and substance reasonably acceptable to Buyer and the Acquired Assets and Option
Assets shall be subject to no Liens other than in favor of Tenaska Power
Services, Inc., pursuant to that certain Security Agreement dated March 17, 2003
and Buyer hereunder.
7.6 Deliveries. Buyer shall have received the deliveries to be
made by Sellers pursuant to Section 9.
7.7 Schedules. Buyer shall have received Seller's Disclosure
Schedules which shall be acceptable to Buyer in its sole discretion (it being
understood that Buyer's acceptance thereof shall not be deemed a waiver of any
right under Section 13.1 hereof).
SECTION 8. Conditions of the Sellers' Obligations to Close. The
obligations of Sellers under this Agreement are subject to the satisfaction of
the conditions set forth below, which conditions may be waived by Sellers
without releasing or waiving any of their rights hereunder.
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8.1 Agreement and Conditions. On or before the Closing Date, Buyer
shall have complied with and duly performed all agreements and conditions on its
part required to be complied with and performed pursuant to or in connection
with this Agreement on or before the Closing Date.
8.2 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement, or otherwise made in writing in
connection with the transactions contemplated hereby (including, without
limitation, any representations and warranties in the Transaction Documents),
shall be true and correct on and as of the date hereof and the Closing Date with
the same force and effect as though such representations and warranties had been
made on and as of the Closing Date.
8.3 Deliveries. Sellers shall have received the deliveries to be
made by Buyer pursuant to Section 10.
8.4 Certificate. Sellers shall have received a certificate dated
the Closing Date and executed by a senior officer of Buyer on behalf of Buyer to
the effect that the conditions expressed in Section 8.1 and 8.2 have been
fulfilled.
SECTION 9. Deliveries of Sellers on the Closing Date. Sellers agree
on the Closing Date to deliver to Buyer the following:
9.1 Title to Acquired Assets. Seller Ancillary Documents as
are necessary to transfer the Acquired Assets to Buyer hereunder which are
being transferred at the Closing.
9.2 Certificates. The certificates of Sellers referred to in
Section 7.4 hereof.
9.3 Secretary's Certificate. A certificate of the Secretary or an
Assistant Secretary of each Seller setting forth a copy of the resolutions
adopted by the Board of Directors of each Seller authorizing and approving the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
9.4 Authorization. Appropriate instruments authorizing Buyer to
endorse in the name of Sellers all checks, drafts, notes and other instruments
for the payment of money and to receive for the account of Buyer all proceeds
thereof to which the Buyer is entitled under this Agreement.
9.5 Escrow Agreement. A copy of the Escrow Agreement duly executed
by Sellers.
9.6 Sales Agency Agreement. A copy of the Sales Agency Agreement
duly executed by Sellers.
9.7 Transition Agreement. A copy of the Transition Agreement duly
executed by Sellers.
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9.8 Security Agreement. A copy of the Security Agreement duly
executed by Sellers.
9.9 Energy Agreements. Copies of the NAESB, EEI and ISDA duly
executed by the ACN Energy Entities.
9.10 Operating Agency Agreement. Copies of the Operating
Agency Agreements duly executed by each of the ACN Energy Entities.
9.11 Netting Letter. A copy of the Netting Letter duly executed by
ACN Utility Services.
9.12 Other Deliveries. Such other documents or instruments as Buyer
or its counsel may reasonably request.
SECTION 10. Deliveries of Buyer on the Closing Date. Buyer agrees on
the Closing Date to deliver to Seller the following:
10.1 Purchase Price. The cash portion of the Purchase Price to be
delivered pursuant to Section 3.1 hereof.
10.2 Secretary's Certificate. A certificate of the Secretary or an
Assistant Secretary of Buyer setting forth a copy of the resolutions adopted by
the Board of Directors of Buyer authorizing and approving the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
10.3 Escrow Agreement. A copy of the Escrow Agreement duly executed
by Buyer.
10.4 Sales Agency Agreement. A copy of the Sales Agency Agreement
duly executed by Buyer.
10.5 Transition Agreement. A copy of the Transition Agreement duly
executed by Buyer.
10.6 Security Agreement. A copy of the Security Agreement duly
executed by Buyer.
10.7 Energy Agreements. Copies of the NAESB, EEI and ISDA duly
executed by Buyer.
10.8 Operating Agency Agreement. Copies of each of the Operating
Agency Agreements delivered by the ACN Energy Entities pursuant to Section 9.10
duly executed by Buyer.
10.9 Netting Letter. A copy of the Netting Letter duly executed by
Buyer.
SECTION 11. Additional Covenants.
32
11.1 Mail. Sellers authorize and empower Buyer from and after the
date hereof (i) to receive and open mail addressed to Parent or any of its
Subsidiaries and (ii) to deal with the contents thereof in a manner consistent
with the purpose of this Agreement and the other agreements described herein and
contemplated hereby, provided such mail and the contents thereof relate to the
Acquired Assets or otherwise to the business of the Retail Energy Business, as
conducted by Buyer or to any of the Assumed Liabilities. Sellers agree to
deliver to Buyer promptly upon receipt any mail, checks or other documents
received by it pertaining to the Acquired Assets or otherwise to the business of
the Retail Energy Business, as conducted by Buyer, or any of the Assumed
Liabilities. Buyer agrees to deliver to Sellers promptly any mail which it
receives to which it is not entitled by reason of this Agreement or otherwise
and to which Sellers are entitled.
11.2 Further Assurances. Sellers agree at any time and from time to
time after the Closing Date, upon the request of Buyer, to do, execute,
acknowledge and deliver, or to cause to be done, executed, acknowledged and
delivered, all such further acts, assignments, transfers, powers of attorney and
assurances as may be reasonably required for the better assigning, transferring,
conveying, and confirming to Buyer, or to its successors and assigns, of any or
all of the Acquired Assets and to carry out the terms and conditions of this
Agreement.
11.3 Notification to Customers. As soon as practicable following
the Closing, and only to the extent required by applicable laws, regulations and
tariffs, Sellers and Buyer will cause to be sent to Sellers' active customers a
notice of the proposed transfer of the active customer from Sellers to Buyer,
which notice will comply with all applicable requirements of the Public
Utilities Commission(s) (the "PUC(s)"), the Local Utility Distribution
Company(ies) ("UDC(s)") and all other relevant governmental agencies related to
the transfer of electric and/or natural gas customers (the "Customer
Notification"). The Customer Notification will contain such information
concerning Buyer and Sellers as is required by law and approved by Buyer and
Sellers, which approval will not be unreasonably withheld or delayed.
11.4 Non-Transferred Assets. Upon the expiration of the Phase-Out
Period, the remaining Acquired Assets not transferred to Buyer shall be disposed
of in a manner mutually agreed to by the Parties and if the Parties shall be
unable to agree, such assets shall, to the extent applicable, be terminated or,
if termination of any such asset is not possible, remain with the applicable
Seller. In the event that the transfer of any asset listed on Schedule 4.15(b)
remains pending in any particular jursidiction at the expiration of the
Phase-Out Period, and the parties reasonably believe that permission for the
transfer of such asset is likely to be granted, the Buyer may request in writing
a 60-day extension of the Phase-Out Period from the Seller, which will not be
unreasonably witheld or delayed.
11.5 Trading Restrictions. Sellers agree that neither they nor
their Affiliates will in any manner, directly or indirectly, purchase or sell
securities of CEG during any period or on any day for which the market value of
the Shares is or will be determined for purposes of this Agreement, any
attachment hereto or any Transaction Agreement.
SECTION 12. Confidentiality.
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12.1 Sellers agree not to, and to cause their officers, directors,
employees, stockholders and Affiliates not to, directly or indirectly, without
the prior written consent of Buyer, use or disclose to any person, firm or
corporation, any information, trade secrets, confidential customer information,
technical data or know-how relating to the products, processes, methods,
equipment or business practices of the Retail Energy Business.
12.2 Buyer agrees not to, and to cause its officers, directors,
employees, stockholders and Affiliates not to, directly or indirectly, without
the prior written consent of Parent, use or disclose to any person, firm or
corporation, any information, trade secrets, confidential customer information,
technical data or know-how relating solely to any Acquired Assets or Option
Assets which are not ultimately acquired by Buyer for any reason.
12.3 Each of the Parties acknowledges and agrees that any breach of
this Section 12 is likely to result in irreparable injury to the other Party,
that monetary damages will be an inadequate remedy of such breach and that,
accordingly, in addition to any other remedy that such other Party may have,
such other Party shall be entitled to enforce the specific performance of this
Section 12 and to seek both permanent and temporary relief in the event of any
breach hereof.
12.4 The foregoing shall not prevent any person from disclosing
such information if already in the public domain, or if required by applicable
law or stock exchange rule or if requested by a regulator.
SECTION 13. Indemnification.
13.1 Indemnification by Sellers. Parent and Sellers shall jointly
and severally indemnify, defend and hold harmless Buyer and its Affiliates from
and against, and pay or reimburse Buyer and its Affiliates for, any and all
Damages as incurred, relating to or arising from (i) noncompliance with any
applicable bulk sales or transfer law, (ii) the Excluded Liabilities, (iii) any
Liability or claim arising in any way from any action taken by, or relating to
the operations or employees, including former employees of, Parent or any of its
Subsidiaries prior to the Closing Date, or (iv) the breach or inaccuracy of or
failure to comply with any of the warranties, representations, conditions,
covenants or agreements of Sellers or Parent contained in this Agreement or in
any agreement or document delivered pursuant hereto or in connection herewith
(including, without limitation, the Transaction Documents), or arising out of
the consummation of the transactions contemplated hereby.
13.2 Indemnification by Buyer. Buyer shall indemnify, defend and
hold harmless Sellers from and against, and pay or reimburse Sellers for, any
and all Damages as incurred, relating to or arising from (i) any Assumed
Liability or (ii) the breach or inaccuracy of or failure to comply with any
warranties, representations, conditions, covenants or agreements of Buyer
contained in this Agreement or in any agreement, certificate or document
delivered pursuant to or in connection with this Agreement or arising out of the
closing of the transactions contemplated hereby.
13.3 Procedures for Indemnification.
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(a) In the event that any claim is asserted against any party
hereto, or any party hereto is made a party defendant in any action or
proceeding, and such claim, action or proceeding involves a matter which is the
subject of this indemnification, then such party (an "Indemnified Party") shall
give written notice to the other party hereto (the "Indemnifying Party") of such
claim, action or proceeding, and such Indemnifying Party shall have the right to
join in the defense of said claim, action or proceeding at such Indemnifying
Party's own cost and expense and, if the Indemnifying Party agrees in writing to
be bound by and to promptly pay the full amount of any final judgment from which
no further appeal may be taken and if the Indemnified Party is reasonably
assured of the Indemnifying Party's ability to satisfy such agreement, then at
the option of the Indemnifying Party, such Indemnifying Party may take over the
defense of such claim, action or proceeding with counsel reasonably satisfactory
to the Indemnified Party, except that, in such case, the Indemnified Party shall
have the right to join in the defense of said claim, action or proceeding at its
own cost and expense. The Indemnified Party may not settle any proceeding
without the consent of the Indemnifying Party, not to be unreasonably withheld.
(b) At Sellers' or Buyers' option, any indemnity payment shall be
deemed to be an adjustment to the Purchase Price.
SECTION 14. Survival of Representations; Effect of Certificates.
14.1 All representations, warranties, covenants and obligations in
this Agreement or in any agreement, instrument or other document delivered in
connection herewith shall survive the execution and delivery hereof and the
Closing Date. Notwithstanding the preceding sentence, neither party may make or
assert any claim under any representation or warranty of the other party
contained herein later than one year after the Closing Date, except that the
representations in Sections 4.6, 4.19 and 5.4 shall survive until 6 months after
the statute of limitations with respect to the matters addressed therein has
expired (including all waivers or extensions thereof); and provided that any
claims made or asserted by a party within the applicable time period prescribed
above shall survive such expiration until such claim is finally resolved and all
obligations with respect thereto are fully satisfied. All statements contained
in any officer's certificate delivered by or on behalf of any party hereto
pursuant to this Agreement shall constitute and have the same force and effect
as the representations and warranties of such party set forth herein.
14.2 Each statement contained in any certificate delivered in
connection with this Agreement or the consummation of the transactions
contemplated hereby shall constitute the representation, warranty and agreement
of the party delivering such certificate and shall have the same force and
effect as if it had been incorporated into this Agreement as a representation,
warranty and agreement by such party.
SECTION 15. Fees and Disbursements. Except as otherwise provided
herein, each party will pay its own fees and expenses in connection with this
Agreement and the completion of the transactions contemplated by this Agreement.
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SECTION 16. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
deemed to have been given when hand delivered, when received if sent by
telecopier or by same day or overnight recognized commercial courier service or
three business days after being mailed in any general or branch office of the
United States Postal Service, enclosed in a registered or certified postpaid
envelope, addressed to the address of the parties stated below or to such
changed address as such party may have fixed by notice:
To Sellers: American Communications Network, Inc.
32991 Hamilton Court
Farmington Hills, Michigan 48334
Attention: Chief Financial Officer
Telecopier: (248) 489-8901
- copy to -
Jaffe, Raitt, Heuer & Weiss, P.C.
27777 Franklin Road, Suite 2500
Southfield, Michigan 48034
Attention: Ralph R. Margulis
Telecopier: (248) 351-3082
To Buyer: Commonwealth Energy Corporation
c/o Commerce Energy Group
600 Anton Blvd., Suite 2000
Costa Mesa, CA 92626
Attention: General Counsel
Telecopier: (714) 259-2575
- copy to -
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: Michael S. Shenberg, Esq.
Telecopier: 212-806-6006
provided that any notice of change of address shall be effective only upon
receipt.
SECTION 17. Termination.
17.1 This Agreement may be terminated at any time prior to the
Closing by any of the following:
(a) By mutual written agreement of Buyer and Sellers; or
36
(b) By either Buyer or Sellers, if the Closing has not occurred on
or before the 10th day following the date hereof upon written notice by such
terminating party, provided that at the time such notice is given a material
breach of this Agreement by such terminating party shall not be the reason for
the Closing's failure to occur.
17.2 If this Agreement is terminated as provided in Section 17.1,
then this Agreement shall forthwith become void and there shall be no liability
or obligation on the part of any party hereto (or any of their respective
officers, directors or employees), except based upon the obligations set forth
in Sections 12, 15, and 17.2, or for any breach thereof occuring prior to
termination.
SECTION 18. Miscellaneous.
18.1 Entire Agreement. This Agreement and the other Transaction
Documents, including the Exhibits and Schedules hereto and thereto, sets forth
the entire agreement and understanding between the parties and merges and
supersedes all prior discussions, agreements and understandings of every kind
and nature among them as to the subject matter hereof, and no party shall be
bound by any condition, definition, warranty or representation other than as
expressly provided for in this Agreement or as may be on a date on or subsequent
to the date hereof duly set forth in writing signed by each party which is to be
bound thereby. Unless otherwise expressly defined, terms defined in this
Agreement shall have the same meanings when used in any Exhibit or Schedule and
terms defined in any Exhibit or Schedule shall have the same meanings when used
in this Agreement or in any other Exhibit or Schedule. This Agreement (including
the Exhibits and Schedules hereto) shall not be changed, modified or amended
except by a writing signed by each party to be charged and this Agreement may
not be discharged except by performance in accordance with its terms or by a
writing signed by each party to be charged.
18.2 Taxes. Any Taxes in the nature of a sales or transfer tax
(including any realty transfer tax or realty gains transfer tax), and any stock
transfer tax, payable on the sale or transfer of all or any portion of the
Acquired Assets or Shares or the consummation of any other transaction
contemplated hereby shall be paid by Sellers.
18.3 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, applicable to agreements made
and to be performed entirely within such State, without regard to the conflict
of laws principles thereof.
(b) Any disputes or claims arising out of or in connection with
this Agreement and the transactions contemplated or documents required hereby
shall be submitted to the exclusive jurisdiction of the courts of the State of
New York and the federal courts of the United States of America located in New
York, New York, and appropriate appellate courts therefrom. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable Law, any
objection which they may now or hereafter have to the laying of venue of any
dispute arising out of or relating to this Agreement or any of the transactions
contemplated hereby brought in such court or any defense of inconvenient forum
for the maintenance of such dispute. Each of the
37
parties hereto agrees that a judgment in any such dispute may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
Law. This consent to jurisdiction is being given solely for purposes of this
Agreement and is not intended to, and shall not, confer consent to jurisdiction
with respect to any other dispute in which a party to this Agreement may become
involved. Each of the parties hereto hereby consents to process being served by
any party to this Agreement in any suit, action, or proceeding of the nature
specified in this Section 18.3(b) by the mailing of a copy thereof in the manner
specified by the provisions of Section 18.3.
18.4 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
fullest extent possible. In any event, all other provisions of this Agreement
shall be deemed valid and enforceable to the fullest extent possible.
18.5 Waiver. Waiver of any term or condition of this Agreement by
any party hereto shall only be effective if in writing and shall not be
construed as a waiver of any subsequent breach or failure of the same term or
condition or any other term or condition of this Agreement.
18.6 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (whether voluntarily, involuntarily, by operation of law or otherwise)
by any of the parties hereto without the prior written consent of the other
parties; provided, however, that the Buyer may assign this Agreement, in whole
or in any part, and from time to time, to a wholly owned, direct or indirect,
Subsidiary of the Buyer or an Affiliate of the Buyer.
18.7 No Third-Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity that is not a party to this
Agreement except as expressly provided hereunder.
18.8 Expenses Related to Audit Rights. Wherever either party has an
audit right, the party exercising its audit right shall be entitled to
reimbursement of its reasonable and customary expenses associated with such
audit from the other party in the event such audit results in a determination
that there was a material inaccuracy adverse to the party conducting the audit.
Further, the party being audited shall be entitled to reimbursement of its
reasonable and customary expenses associated with supporting such audit from the
party conducting the audit in the event such audit results in a determination
that the subject matter audited was materially accurate. Any inaccuracies
determined by any such audit shall be corrected in the favor of the party to
whom the inaccuracy was adverse.
18.9 Pronouns. Whenever the context requires, the use in this
Agreement of a pronoun of any gender shall be deemed to refer also to any other
gender, and the use of the singular shall be deemed to refer also to the plural.
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18.10 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument, and all such counterparts together shall be deemed an
original of this Agreement.
18.11 Headings. The headings in the sections, paragraphs, Schedules
and Exhibits of this Agreement are inserted for convenience of reference only
and shall not constitute a part hereof. The words "herein," "hereof," "hereto"
and "hereunder," as well as other words of similar import, refer to this
Agreement as a whole and not to any particular provision of this Agreement.
39
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed on the day and year first above written.
COMMONWEALTH ENERGY CORPORATION
By: /S/ PETER WEIGAND
---------------------------
Name: Peter Weigand
Title: President
ACN UTILITY SERVICES, INC.
By: /S/ JAMES F. MULCAHY
----------------------------
Name: James F. Mulcahy
Title: Secretary/Treasurer
ACN ENERGY, INC.
By: /S/ JAMES F. MULCAHY
----------------------------
Name: James F. Mulcahy
Title: Secretary/Treasurer
ACN POWER, INC.
By: /S/ JAMES F. MULCAHY
----------------------------
Name: James F. Mulcahy
Title: Secretary/Treasurer
As to Section 4.22, 6.11 and Article 13 only:
AMERICAN COMMUNICATIONS NETWORK, INC.
By: /S/ JAMES F. MULCAHY
-----------------------------
Name: James F. Mulcahy
Title: Secretary/Treasurer
[Signature page to Asset Purchase Agreement]
As to Sections 3.1(b) and 4.22 only:
COMMERCE ENERGY GROUP, INC.
By: /S/ PETER WEIGAND
-------------------------
Name: Peter Weigand
Title: President
[Signature page to Asset Purchase Agreement]