Ex 10.1
EXECUTION VERSION
ASSET PURCHASE AGREEMENT
BETWEEN
SILVERLEAF RESORTS, INC.
AS SELLER,
AND
ALGONQUIN WATER RESOURCES OF TEXAS, INC.
AND
ALGONQUIN WATER RESOURCES OF MISSOURI, INC.
AND
ALGONQUIN WATER RESOURCES OF ILLINOIS, INC.
AND
ALGONQUIN WATER RESOURCES OF AMERICA, INC.
AND
ALGONQUIN POWER INCOME FUND
COLLECTIVELY AS PURCHASERS
DATED AS OF AUGUST 29, 2004
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") dated effective as of the
29 day of August, 2004 (the "Effective Date"), is by and between SILVERLEAF
RESORTS, INC., a Texas corporation (the "Seller"), and ALGONQUIN WATER RESOURCES
OF TEXAS, INC., a Delaware corporation ("Texas Purchaser"); ALGONQUIN WATER
RESOURCES OF MISSOURI, INC., a Delaware corporation ("Missouri Purchaser"),
ALGONQUIN WATER RESOURCES OF ILLINOIS, INC., a Delaware corporation (Illinois
Purchaser") and ALGONQUIN WATER RESOURCES OF AMERICA, INC., a Delaware
corporation and ALGONQUIN POWER INCOME FUND, a Canadian income trust
(collectively, the "Parent Purchaser", the Texas Purchaser, Missouri Purchaser,
Illinois Purchaser and Parent Purchaser collectively referred to as the
"Purchasers").
BACKGROUND
WHEREAS Seller owns water treatment plants, water wells, lines, wastewater
collection systems, wastewater treatment plants and certain other related assets
located at certain resorts ("Resorts") in Texas, Illinois and Missouri as
follows:
STATE RESORT LOCATION
- ----- ------ --------
Texas Holly Lake Wood County, TX
Hill Country Resort Comal County, TX
Piney Shores Resort Montgomery County, TX
The Villages Smith County, TX
Illinois Fox River Resort LaSalle County, IL
Missouri Holiday Hills Resort Taney County, MO
Ozark Mountain Resort Stone County, MO
Timbercreek Resort Jefferson County, MO
WHEREAS such water supply and distribution and wastewater collection and
treatment and all other related assets are utilized and necessary for the
provision of water supply and wastewater treatment services to the resort
communities and other customers at the locations indicated above (hereinafter
collectively called the "Facilities").
WHEREAS Seller desires to sell and Purchasers desire to purchase all assets
owned by Seller and used in the operation of the Facilities on the terms and
conditions set forth in this Agreement.
WHEREAS Seller also desires to sell and Purchasers desire to purchase all
real property owned and utilized by Seller which is necessary and utilized in
the operation of the Facilities, said real property being more particularly
described in Exhibit "A" attached hereto and incorporated herein by reference
(the foregoing real property being hereinafter collectively called the "Real
Property").
WHEREAS Purchaser intends to continue to conduct water supply and
wastewater treatment utility operations at each of the Facilities and desires
also to acquire the goodwill and
other intangible assets associated with or necessary for the conduct of such
operations at such Facilities (said operations conducted at the Facilities being
collectively called the "Utilities").
IN CONSIDERATION of the mutual promises of the parties; in reliance on the
representations, warranties, covenants, and conditions contained in this
Agreement; and for other good and valuable consideration, the parties agree as
follows:
AGREEMENT
ARTICLE 1
DEFINITIONS
1.01. SPECIFIC DEFINITIONS. Unless otherwise stated in this Agreement, the
following terms shall have the following meanings:
"Affiliate": Any Person that, directly or indirectly, controls, or is
controlled by, or under common control with, another Person. For the purposes of
this definition, "control" (including the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or by
contract or otherwise.
"Applicable Law": All applicable provisions (domestic or foreign) of all
(i) constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes and Orders of or with any Governmental Body, and
(ii) Governmental Approvals.
"Assets": As defined in Section 2.01 hereof.
"Assignment and Assumption": As defined in Section 9.01(c) hereof.
"Bill of Sale": As defined in Section 9.01(b) hereof.
"Claims": As defined in Section 2.01(f) hereof.
"CCN": means the certificate of convenience and necessity issued in respect
of the operation of the Utilities by the regulatory agency governing the
operation of such utilities in the state in which the utility is located.
"Closing": As defined in Section 2.07(c) hereof.
"Closing Date": As defined in Section 2.07(c) hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Consent": Any consent, approval, authorization, action, waiver, permit,
grant, franchise, concession, agreement, license, exemption or Order of,
registration, certificate, declaration or
filing with, or report or notice to, any Person (including foreign Persons),
including any Governmental Body.
"Cure Notice": As defined in Section 3.03 hereof.
"Damages": Any and all damages, claims, obligations, demands, assessments,
penalties, fines, liabilities (joint or several), costs (including compliance
costs), punitive damages, losses, diminution in value, defenses, judgments,
suits, proceedings, disbursements and expenses (including disbursements,
expenses and reasonable fees of attorneys, accountants, consultants and other
professional advisors and of expert witnesses, costs of investigation and
preparation, litigation and costs of settlement) of any kind whatsoever, whether
fixed or contingent, suffered or incurred by a Person.
"Deed": As defined in Section 9.01(a) hereof.
"Effective Date": As defined in the opening paragraph hereof.
"Environmental Law": Any and all federal, state, local, and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of Hazardous Materials or wastes
into surface water, ground water or land, or (iv) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials or wastes or the cleanup or other remediation thereof.
"Fixed Assets": As defined in Section 2.01(c) hereof.
"GAAP": Generally accepted accounting principles for financial reporting in
the United States, applied on a basis consistent with the basis on which the
balance sheet and any other financial statements were prepared.
"Governmental Approval": Any Consent of, from or with any Governmental
Body.
"Governmental Body": Any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency, authority or
instrumentality, domestic or foreign.
"Hazardous Material": Any waste, substance, material, smoke, gas or
particulate matter that: (i) is or contains asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum or petroleum-derived substances
or wastes, radon gas or related materials, (ii) requires investigation, removal,
regulation or remediation under any Environmental Law, or is defined, listed or
identified as a "hazardous material", "hazardous waste" "hazardous substance"
"toxic substance", "contaminant", or "pollutant" thereunder, or (iii) is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous or dangerous or is regulated by any
Governmental Body or Environmental Law.
"Illinois Assets": Means that portion of the Assets, Facilities and
Utilities which is located in the State of Illinois.
"Including" or "Includes": Means including without limitation or includes
without limitation.
"Inspection Period": As defined in Section 6.03 hereof.
"Knowledge": The terms "knowledge," "awareness," and "belief" and any
similar term or words of like import shall mean the current actual knowledge,
awareness or belief of a Seller following inquiry with respect to the subject
matter of the representation and/or warranty being given.
"Liability or Liabilities": Any commitments, debts, liabilities,
obligations (including contract and capitalization lease obligations),
indebtedness, accounts payable and accrued expenses of any nature whatsoever
(whether any of the foregoing are known or unknown, secured or unsecured,
asserted or unasserted, absolute or contingent, direct or indirect, accrued or
unaccrued, liquidated or unliquidated and/or due or to become due), including
any liability or obligation for Taxes.
"Lien": All mortgages, deeds of trust, claims, liens, security interests,
pledges, leases, conditional sale contracts, rights of first refusal, options,
charges, liabilities, obligations, agreements, easements, rights-of-way,
limitation, encroachment, powers of attorney, limitations, reservations,
restrictions, and other encumbrances of any kind.
"Missouri Assets": Means that portion of the Assets, Facilities and
Utilities which is located in the State of Missouri.
"Notices": As defined in Section 10.02 hereof.
"Objections": As defined in Section 3.03 hereof.
"Operating Agreements": As defined in Section 2.01(d) hereof.
"Order": Any order, writ, injunction, directive, decree, judgment, award,
restriction, decision or determination of, or agreement with, any Governmental
Body.
"Outside Date": Means the date which is one hundred fifty (150) days
following the Effective Date.
"Permits": All permits, authorizations, qualifications, certificates,
consents, approvals, registrations, variances, exemptions, rights-of-way,
franchises, privileges, immunities, grants, ordinances, licenses, waivers and
other rights of every kind and character (a) under any (i) Applicable Law, (ii)
Order or (iii) contract with any Governmental Body, or (b) granted by any
Governmental Body.
"Permitted Encumbrances": (i) Liens for Taxes and assessments not yet due
and payable or which are being challenged in good faith and with respect to
which adequate reserves have
been established in the Financial Statements and the amounts being challenged is
included in the adjustment to Working Capital pursuant to Section 2.05 hereof;
(ii) informational filings made by equipment lessors under the Uniform
Commercial Code; and (iii) landlord's liens created by statute and not by
affirmative action of any landlord.
"Permitted Exceptions": As defined in Section 3.03 hereof.
"Person": An individual, partnership, joint venture, corporation, company,
limited liability company, bank, trust, unincorporated organization,
Governmental Body or other entity or group.
"Proceeding": Any action, claim, suit, proceeding, litigation, arbitration,
mediation, investigation, inquiry, complaint, grievance, review or notice or
other process.
"Purchase Price": As defined in Section 2.04 hereof.
"Purchasers": As defined in the opening paragraph hereof and Purchaser
means any one of them.
"Real Property": As defined in the Recitals hereof.
"Release": Any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing of Hazardous
Material into the indoor or outdoor environment, including, without limitation,
the abandonment or discarding of barrels, drums, containers, tanks, and other
receptacles containing or previously containing any Hazardous Material.
"Seller": As provided in the opening paragraph hereof.
"Services Agreement(s)" shall mean those agreements between the Seller and
the respective Purchaser, and guaranteed by the Parent Purchaser, setting out
terms, conditions and incorporating the principles set out in Schedule 7.06
hereof and governing the exclusive provision of water and/or wastewater services
by the Purchaser at the resorts operated by the Seller.
"Survey": As defined in Section 3.01 hereof.
"Taxes": Any federal, state, local or foreign income, franchise, sales,
excise, real or personal property, ad valorem or other Taxes, assessments, fees,
levies, imposts, duties, deductions or other charges of any nature whatsoever
(including interest and penalties) imposed by any Applicable Law.
"Texas Assets": Means that portion of the Assets, Facilities and Utilities
which is located in the State of Texas.
"Threatened": Any matter or thing will be deemed to have been Threatened
when used herein with respect to any party if that party has received notice
from the Person to whom the threat is attributable or such Person's agents,
which notice makes reference to and identifies the
matter or thing being threatened or that party observes an action by the Person
to whom the threat is attributable or such Person's agents that in the exercise
of reasonable and prudent business judgment would cause such party to believe
that the matter or thing is being threatened.
"Title and Survey": As defined in Section 3.03 hereof.
"Title and Survey Review Period": As defined in Section 3.03 hereof.
"Title Commitment": As defined in Section 3.02 hereof.
"Title Company": As defined in Section 3.02 hereof.
"Title Policy": As defined in Section 3.04 hereof.
"Transaction" or "Transactions": The acquisition of the Assets and the
performance of the other covenants and the consummation of the transactions
described in this Agreement.
"Transaction Expenses": The expenses incurred in connection with the
preparation, negotiation, execution and performance of this Agreement and the
consummation of the Transactions, including all fees and expenses of counsel and
representatives.
"Working Capital": Means the consolidated assets of the Facilities as of
12:01 a.m. on the Closing Date that are treated under GAAP as current assets
(including restricted cash) to which the Purchasers become entitled less
consolidated liabilities of the Facilities as of 12:01 a.m. on the Closing Date
that are treated under GAAP as liabilities for which the Purchasers become
liable. Notwithstanding anything contained in the preceding sentence, the
calculation of Working Capital shall include (i) as a current asset, any third
party account receivable for services rendered by the Utilities before the
Closing Date and (ii) as a current liability, any amount payable by the
Purchasers on or after the Closing Date in respect of goods or services supplied
to the Facilities before the Closing Date where no invoice for such amount has
been received in respect thereof before the Closing Date.
"Working Capital Threshold": Means an amount equal to ONE HUNDRED THOUSAND
DOLLARS ($100,000.00).
1.02. OTHER DEFINITIONS. Other terms shall have the meanings ascribed to
them elsewhere herein.
ARTICLE 2
SALE AND PAYMENT OF PURCHASE PRICE
2.01. SALE OF ASSETS. Subject to the terms and conditions of this
Agreement, on the Closing Date, Seller agrees to sell, convey, transfer, assign,
and deliver to Purchasers, and Purchasers agree to purchase and accept from
Seller all of the following assets, properties, rights, licenses and business of
Seller (the "Assets"), being all the assets that are used by Seller in
connection with the operation of the Utilities, free and clear of all Liens,
except Permitted Encumbrances:
(a) The Facilities, including the Real Property and (i) all of the
buildings, structures and improvements in, upon and under the Real Property
used by Seller in the operation of the Facilities, together with (ii) any
and all collection or disbursement pipe lines, valves, manholes, lift
stations (collectively, the "Lines") which are a part of, connected to, or
serve the Facilities and are not located on or under the Real Property.
(b) (i) Perpetual nonexclusive easements for all Lines which are not
located on or under the Real Property and (ii) temporary easements, over,
under and across any real property which is owned by Seller or its
Affiliates but is not part of the Real Property, which are necessary to
enable Purchaser to repair, maintain and replace the Lines.
(c) All of the personal property and fixed assets of Seller that are
located at the Facilities or used in connection with the operation of the
Utilities including, without limitation, the personal property and fixed
assets of Seller described on Exhibit "B" attached hereto (the "Personal
Property and Fixed Assets"), together with all transferable warranties in
connection therewith.
(d) All of Seller's right, title and interest in and to all assignable
contracts and agreements relating to the operation of the Utilities and to
the upkeep, repair, maintenance or operation of the Facilities, the
Personal Property and the Fixed Assets (the "Operating Agreements") which
Purchaser gives notice, in writing, of its agreement to assume during the
Inspection Period.
(e) All of Seller's transferable Permits owned or used by Seller in
the operation of the Facilities or Utilities, whether issued by any
Governmental Body or any other Person (collectively, "Seller's Permits").
(f) All of Seller's rights, claims and causes of action relating to
the Assets (the "Claims").
(g) All lists and records pertaining to the use and operation of the
Assets, the Facilities and Utilities, including without limitation,
information pertaining to customers, rates, billings, personnel and agents
and all other drawings, books, ledgers, files, documents, and business
records of every kind and nature of Seller relating to the Assets,
Utilities or the Facilities (collectively, the "Seller's Records").
(h) All of Seller's stock, membership interests, partnership interests
or other ownership interests in and to any Affiliates of Seller which own
or operate any of the Assets.
2.02. ALLOCATION TO VARIOUS PURCHASERS. In respect of the transaction of
purchase and sale contemplated herein, Texas Purchaser shall purchase from
Seller the Texas Assets, Missouri Purchaser shall purchase from Seller the
Missouri Assets and Illinois Purchaser shall purchase the Illinois Assets. The
Purchase Price shall be allocated among the assets in accordance with the
allocation set out in Schedule 2.02 hereto (providing that the Parties
acknowledge that Schedule 2.02 shall not be prepared until prior to Closing).
2.03. LIABILITIES. Seller covenant to retain and Purchasers shall not
assume any of the Liabilities of Seller or relating to the Assets, except for
(i) those Liabilities arising and relating to events that occur on or after the
Closing Date either under the Operating Agreements assumed by Purchasers
pursuant to this Agreement or with respect to the Assets that Purchasers have
agreed to purchase pursuant to this Agreement; or (ii) those Liabilities in
respect of which adjustments have been made in the Working Capital.
2.04. CONSIDERATION FOR THE SALE. In consideration of the sale and transfer
of the Assets of Seller to the Purchasers and the representations, warranties,
and covenants of Seller set forth in this Agreement, on the Closing Date
Purchasers shall pay to Seller the amount of THIRTEEN MIILLION TWO HUNDRED
THOUSAND ($13,200,000.00) DOLLARS, as may be adjusted in accordance herewith
(the "Purchase Price"), which Purchase Price shall be paid by the Purchasers to
the Seller as follows:
(a) By release from the escrow account by the Title Company to the
account of Seller, an amount equal to the Earnest Money; and
(b) By way of immediately available funds, an amount equal to the
Purchase Price less amounts paid to Seller in Section 2.04(a) above.
2.05. WORKING CAPITAL ADJUSTMENT. On the date which is three (3) business
days prior to the Closing Date, Seller shall deliver to Purchasers an estimate
of the Working Capital together with additional backup information as may be
required by Purchasers, acting reasonably, to confirm such calculation.
(a) In the event that the Working Capital exceeds the Working Capital
Threshold, the Purchase Price shall be increased by the amount by which the
Working Capital exceeds the Working Capital Threshold.
(b) In the event the Working Capital is less than the Working Capital
Threshold, the Purchase Price shall be decreased by the amount by which the
Working Capital Threshold exceeds the Working Capital.
Within sixty (60) days after the Closing, the Purchasers shall prepare and
deliver to the Seller a revised calculation of the Working Capital together with
reasonable backup information as may be requested by Seller to confirm such
calculation. In the event the revised Working Capital delivered by Purchasers
differs from the Working Capital estimate delivered by Seller on or before the
Closing Date, within fifteen (15) days following the date of receipt of the
revised Working Capital calculation by Seller, Seller and Purchaser shall, as an
adjustment to the Purchase Price, pay or refund, as the case may be, such amount
so that the Purchase Price adjustment contemplated in Section 2.05(a) and
2.05(b) is correctly performed.
2.06. DEPOSIT OF EARNEST MONEY. The Parent Purchaser shall make deposits of
immediately available funds with the Title Company in accordance with the
following:
(a) Within three (3) business days after the mutual execution of this
Agreement by Seller and Purchasers, Parent Purchaser will deposit with the
Title Company the amount of ONE HUNDRED THOUSAND DOLLARS ($100,000.00);.
(b) Not later than 5:00 p.m. (Dallas, Texas time) on the last day of
the Inspection Period and subject to the earlier termination of this
Agreement by Parent Purchaser as provided for in Section 6.03 herein,
Parent Purchaser shall deposit with the Title Company an additional amount
equal to NINE HUNDRED THOUSAND DOLLARS ($900,000).
The Title Company shall hold the funds deposited by Parent Purchaser hereunder
(such funds together with accrued interest referred to as "Earnest Money") in an
interest-bearing account satisfactory to Seller and Parent Purchasers, both
acting reasonably. All interest earned on the funds held by Title Company shall
constitute a portion of the Earnest Money and shall be disbursed with the funds
deposited by Parent Purchaser as provided elsewhere herein.
2.07. RELEASE OF EARNEST MONEY. The Purchasers and Seller shall jointly
instruct Title Company to release the Earnest Money in accordance with the
following:
(a) To Seller, at the Closing, as a payment by the Purchasers of a
portion of the Purchase Price;
(b) upon termination of this Agreement pursuant to Section 10.11,
other than termination pursuant to Section 10.11(h); an amount equal to ONE
HUNDRED DOLLARS ($100.00) to Seller as valuable consideration for the
execution of this Agreement by Seller, and the balance to the Parent
Purchaser,
(c) as liquidated damages, to Seller, in the event of termination of
this Agreement pursuant to Section 10.11(h).
2.08. CLOSING. The Closing of the sale and the transfer of the Assets (the
"Closing") shall take place at the offices of the First Land Title, 5068 W.
Plano Parkway, Suite 300, Plano, Texas 75093, tel: (972) 447-8366, fax: (972)
738-8513 (Attn: Lois McGrew) (the "Title Company"). The Closing shall occur on
or before the date which is sixty (60) days after the expiration of the
Inspection Period provided for in Section 6.03 below or at some earlier or later
time as may be mutually agreed to by the Purchasers and Seller (the "Closing
Date").
ARTICLE 3
SURVEYS, TITLE COMMITMENTS, TITLE DOCUMENTS AND DUE DILIGENCE ITEMS
3.01. SURVEY. Within twenty (20) days after the Effective Date, Seller
shall cause to be delivered to Purchasers Seller's most current as-built land
title surveys of the Real Property (the "Survey"). Purchasers may, at
Purchasers' sole cost and expense, cause the Surveys to be updated and certified
to Purchasers and the Title Company. The Survey shall form the basis for the
legal description of the Real Property.
3.02. TITLE COMMITMENT. Within twenty (20) days after the Effective Date,
Seller, at Seller's sole cost and expense, shall furnish to Purchasers current
commitments (the "Title Commitment") for the issuance of an Owner's Policy of
Title Insurance for the Real Property to Purchaser through First Land Title,
5068 W. Plano Parkway, Suite 300, Plano, Texas 75093, tel: (972) 447-8366, fax:
(972) 738-8513 (Attn: Lois McGrew) (the Title Company), together with legible
copies of all documents (the "Title Documents") constituting exceptions to
Seller's title as reflected in the Title Commitment, including legible copies of
the current plats, if any, filed in the map and plat records.
3.03. TITLE AND SURVEY REVIEW. Purchasers shall have a period of forty-five
(45) days (the "Title and Survey Review Period") from the Effective Date to
review the Title and Survey and to provide notice in writing to Seller as to any
matters therein to which Purchasers object (the "Objections"). If Purchasers
fail to provide such notice prior to the expiration of the Title and Survey
Review Period, Purchasers shall be deemed to have approved and accepted Title
and Survey and all matters set forth on Schedule B of the Title Commitment shall
be deemed permitted exceptions (referred to as "Permitted Exceptions"), and
Purchasers shall accept title to the Real Property subject to such Permitted
Exceptions.
If Purchasers notify Seller in writing of any Objections prior to the expiration
of the Title and Survey Review Period, Seller shall then have a period of ten
(10) days after its receipt of such notice to (i) use its reasonable efforts to
cure the Objections (provided Seller shall have no obligation to cure any of the
Objections), or (ii) to notify Purchasers in writing of any Objections Seller
cannot or will not cure (the "Cure Notice"). If Seller fails to deliver a Cure
Notice in accordance herewith, Seller shall be deemed to accept the obligation
to cure the Objections prior to Closing.
Upon Purchasers' receipt of the Cure Notice, Purchasers shall have until the
expiration of the Inspection Period (as hereinafter defined) to either (i)
terminate this Agreement by written notice to Seller, with neither party hereto
being thereafter obligated to the other, except as to those provisions that
expressly survive hereunder, or (ii) waive the Objections by written notice to
Seller and proceed to Closing with all uncured Objections constituting Permitted
Exceptions.
Notwithstanding anything contained herein to the contrary, Seller may not, at
any time after the Effective Date, place any encumbrances and/or restrictions on
the Real Property without the prior written consent of Purchasers.
3.04. TITLE POLICY. On or before the Closing Date, Seller shall furnish
Purchasers in the name of the Purchaser which is purchasing the respective real
property, at Seller's cost and expense (excluding any additional premium for the
survey exception deletion), with an Owner's Policy of Title Insurance (the
"Title Policy") issued through the Title Company on the standard form in use in
the States of Texas, Illinois and Missouri, from a title insurance underwriter
reasonably acceptable to Purchasers, insuring good marketable and indefeasible
title to the Real Property in the appropriate Purchaser, subject only to the
Permitted Exceptions.
3.05. DUE DILIGENCE ITEMS. Without in any way limiting the scope of the due
diligence review by Purchasers, Seller shall deliver to Purchasers the
following:
(a) Within fifteen (15) days after the Effective Date, at Seller's
sole cost and expense, the following:
(i) A Uniform Commercial Code search which reflects that any
portion of the Assets which constitutes personal property or fixtures
is free from any security interest other than security interests which
shall be removed at or prior to Closing which the Seller undertakes to
do and acceptable proof of such interests having been cleared will be
delivered to the Purchaser at or prior to the Closing;
(ii) A complete inventory of all tangible personal property owned
or leased by Seller and used in connection with the Facilities;
(iii) Copies of any reports or other correspondence related to
the condition of property utilized in respect of the business carried
on by the Facilities
(iv) To the extent that they are in Seller's possession, copies
of all certificates of occupancy and other governmental licenses or
approvals relating to any portion of the Facilities but in any case
Seller shall provide copies of all government licenses and approval
which are required for the operation of the Utilities including,
without limitation, the CCN, water use, well and discharge permits;
(v) Copies of any service records or bills for repairs to any
part of the Facilities for the prior three (3) years;
(vi) Copies of all warranties relating to the Facilities;
(vii) Unaudited operating financial statements for the Facilities
for 12 month calendar years ended December 31, 2002 and December
31,2003 and for the six month period ending June 30, 2004; and
(viii) Copies of the most recent rate cases submitted by each of
the respective Utilities, correspondence related thereto and
sufficient backup documentation to substantiate the rate base
purported therein and backup documentation in respect of any additions
or deletions to such rate base since the date thereof or in the case
of unregulated utilities, sufficient backup documentation to support
the book value amount represented as the value of the Assets used at
the respective Utility.
(b) Within twenty (20) days after the Effective Date, true, correct
and complete copies of all Operating Agreements pertaining to the Assets
and the Facilities.
(c) Within thirty (30) days after the Effective Date, draft Services
Agreements in respect of the Utilities for review and negotiation with the
Purchasers.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchasers that the following is
true, correct and complete as of the date of this Agreement and will be true,
correct and complete through and as of the Closing:
4.01. ORGANIZATION AND STANDING OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Seller has full corporate power and authority to own and lease all of the
properties and assets it now owns and leases and to carry on its business as now
being conducted. Seller is in substantial compliance with applicable laws.
4.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has full power and
authority (corporate and otherwise) to execute, deliver and perform this
Agreement (including execution, delivery and performance of the operative
documents to which Seller is a party) and to consummate the transactions
contemplated herein. The execution and delivery by Seller of this Agreement and
the operative documents, and the consummation of the transactions will not
violate Seller's organization documents or other obligations, have been or will
be duly and validly authorized by the Board of Directors of Seller and the
shareholders of Seller in accordance with applicable law, and no other corporate
proceedings on the part of Seller are necessary with respect thereto and no
additional consents or approvals other than those provided for herein are
required. This Agreement has been duly and validly executed and delivered by
Seller and constitutes the legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms. Seller will take, and
cause to be taken, all corporate or other action that is necessary for Seller to
complete the transactions to be completed by Seller pursuant to this Agreement.
4.03. LITIGATION MATTERS. Except as set forth on Schedule 4.03 there is no
action, claim, demand, special assessments, suit, proceeding, arbitration,
grievance, citation, summons, subpoena, inquiry, or investigation of any nature,
civil, criminal, regulatory, or otherwise, in law or in equity, pending or, to
the Knowledge of Seller, Threatened against the Assets, Facilities or Utilities
or against or relating to the transactions contemplated by this Agreement, the
Real Property and there is not, to the Knowledge of the Seller, any basis for
the same.
4.04. FINANCIAL STATEMENTS. The financial statements delivered by Seller to
Purchasers pursuant to Section 3.05(vii) hereof have been prepared in accordance
with GAAP and, to the Knowledge of Seller, properly and accurately reflect the
revenues earned and costs incurred in the operation of the Facilities in respect
of the periods covered by such financial statements.
4.05. ALL ASSETS AND REAL PROPERTY. The Assets and Real Property, when
considered together, include all assets, rights, properties, real property,
easements and contracts used in the conduct of the business of the Facilities
and Utilities in the manner it was conducted in the 60 day period prior to the
Effective Date (normal wear and tear and replacements in the normal course of
business excepted), including the service to all utility customers in
substantially the same manner and service levels as provided by the Facilities
and Utilities.
4.06. ENVIRONMENTAL MATTERS.
(a) Except as specifically disclosed to Purchasers by Seller in
Schedule 4.04 hereto, no citations, fines, or penalties have been asserted
against the Facilities under any Environmental Law or by the regulatory
authority or jurisdiction in which the Facilities operate.
(b) Other than as set out in Schedule 4.04, Seller has not received
notice (verbal or written) of nor is it aware of any person making
allegations that any of the Facilities are in violation of any applicable
Environmental Law relating to any of its properties and assets, including
the Real Property, or the use or ownership thereof, or to the operation of
the business of the Facilities.
4.07. DISCLAIMER. EXCEPT FOR THE REPRESENTATIONS OF SELLER SET FORTH
HEREIN, SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO THE TRUTH, ACCURACY OR
COMPLETENESS OF ANY MATERIALS, DATA OR INFORMATION DELIVERED BY SELLER TO
PURCHASER IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY. EXCEPT FOR THE
REPRESENTATIONS OF SELLER SET FORTH HEREIN PURCHASER ACKNOWLEDGES AND AGREES
THAT ALL MATERIALS, DATA AND INFORMATION DELIVERED BY SELLER TO PURCHASER IN
CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY ARE PROVIDED TO PURCHASER AS
A CONVENIENCE ONLY AND THAT ANY RELIANCE ON OR USE OF SUCH MATERIALS, DATA OR
INFORMATION BY PURCHASER SHALL BE AT THE SOLE RISK OF PURCHASER.
ARTICLE 5
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchasers, jointly and severally, represent and warrant to Seller that the
following is true, correct and complete as of the date of this Agreement and
will be true, correct and complete through and as of the Closing:
5.01. ORGANIZATION AND STANDING OF PURCHASER. Each of the Purchasers is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Delaware, with corporate power to own property and carry on
its business as it is now being conducted.
5.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Purchasers has full
power and authority to execute, deliver and perform this Agreement (including
execution, delivery and performance of the operative documents) and to
consummate the Transactions contemplated herein, subject to the conditions to
Closing set forth in this Agreement. The execution and delivery by each of the
Purchasers of this Agreement and the operative documents, and the consummation
of the transactions, have been duly and validly authorized by the Board of
Directors of such Purchaser and the shareholders of such Purchaser in accordance
with Applicable Law, and no other corporate proceedings on the part of such
Purchaser are necessary with respect thereto. This Agreement has been duly and
validly executed and delivered by each
of the Purchasers and constitutes the legal, valid and binding obligation of
such Purchaser enforceable against such Purchaser in accordance with its terms.
Each of the Purchasers will take, and cause to be taken, all corporate action
that is necessary for such Purchaser to complete the Transactions to be
completed by it pursuant to this Agreement.
ARTICLE 6
COVENANTS
6.01. PRE-CLOSING COVENANTS OF SELLER. Seller covenants with Purchasers
that from and after the date of this Agreement until the Closing Date, Seller
will:
(a) BUSINESS OPERATIONS. Operate the Utilities and conduct their
activities in substantial compliance with all applicable laws, and in the
normal course of business and not introduce any material new method of
management, operation, or accounting.
(b) MAINTENANCE OF ASSETS AND PROPERTIES. Maintain all Assets in a
similar or better operating condition and repair as at the date hereof,
except for ordinary depreciation, wear, and tear.
(c) ABSENCE OF LIENS. Not sell, pledge, lease, mortgage, encumber,
dispose of, or agree to do any of these acts regarding any of the Assets,
other than sale or disposition in the normal course of business.
(d) MAINTAIN INSURANCE. Keep in force all existing policies of
insurance, or comparable replacement policies of insurance, covering the
Assets. It is agreed that Seller shall be entitled to cancel all such
insurance on the first business day following Closing.
(e) PERFORMANCE OF OBLIGATIONS. Perform all of Seller's obligations
and not make any material amendment to such obligations under all
agreements relating to or affecting the Assets.
(f) NOTIFICATION OF LITIGATION. Promptly notify Purchasers in writing
of any outstanding or Threatened claims, legal, administrative, or other
Proceeding, or Orders against or involving Seller that could adversely
affect the Transactions contemplated by this Agreement.
(g) COOPERATE IN PUBLICITY. Coordinate any publicity regarding the
Transactions with Purchasers. In this regard, it is agreed that the
announcement to the general public of the consummation of the Transactions
contemplated by this Agreement will be made at 8:00 a.m. on the next
business day following Closing at a meeting of Seller's officers and
employees and Purchasers' representatives.
(h) OPERATING AGREEMENTS. Not modify, amend, cancel, or terminate any
of the Operating Agreements for which Purchasers has notified Seller in
writing during the Inspection Period that Purchasers desire to assume
(provided that Seller shall not be obligated to renew any Operating
Agreements that expire in accordance with their terms).
Prior to the Closing, Seller shall cancel (or modify to exclude or
eliminate the Assets and Utilities therefrom) all Operating Agreements
which Purchasers have not agreed to assume.
(i) PRESERVATION OF BUSINESS. Use its best efforts to preserve the
Facilities intact, to keep available to Purchasers the services of the
present employees of Seller (provided that Purchasers are not obligated to
hire any employees of Seller), and to preserve for Purchasers the goodwill
of the suppliers, customers and others having business relations with
Seller.
(j) NEGOTIATION OF SERVICES AGREEMENTS. Use its best and good faith
efforts to negotiate the terms of services agreements with Purchasers in
accordance with the principles set out in Schedule 7.06 hereto on or before
the expiration of the Inspection Period (provided that the Inspection
Period may be extended by mutual consent of Purchasers and Seller to
provide sufficient time to complete such negotiations).
(k) SUBMISSION FOR APPROVALS. Submit the necessary applications and
supporting documents seeking regulatory approval of the transaction
contemplated herein and shall, both before and following the Closing,
supply any additional information which may be requested by the regulators
in regards thereto.
6.02. PRE-CLOSING COVENANTS OF PURCHASERS.
(a) PURCHASERS' DETERMINATION AS TO OPERATING AGREEMENTS. Purchasers
will notify Seller in writing prior to the expiration of the Inspection
Period of those Operating Agreements which Purchasers will accept and
assume at the Closing Date.
(b) NEGOTIATION OF SERVICES AGREEMENTS. Use its best and good faith
efforts to negotiate the terms of Services Agreements with Seller in
accordance with the principles set out in Schedule 7.06 hereto on or before
the expiration of the Inspection Period (provided that the Inspection
Period may be extended by mutual consent of Purchasers and Seller to
provide sufficient time to complete such negotiations).
(c) ASSIST SEEKING APPROVALS. Purchasers shall provide such assistance
and documentation as may be requested by the Seller, acting reasonably, to
assist in securing all requisite approvals.
6.03. PURCHASERS' INSPECTION. Purchaser shall have a period of sixty-five
(65) calendar days from the Effective Date, which period may be extended in
accordance with Sections 3.03, 6.01(j) and 6.02(b) hereof (the "Inspection
Period"), during which to obtain suitable financing and conduct such feasibility
studies, including Phase I environmental studies, as Purchasers deem appropriate
in an effort to determine whether or not to proceed with the Closing of the
Transactions contemplated by this Agreement. Purchasers shall indemnify and hold
Seller harmless from and against any and all claims, liabilities, and damages
arising as a direct result of Purchasers' presence on the Real Property or the
conduct of such studies and the foregoing indemnity shall expressly survive the
closing or earlier termination of this Agreement.
In the event Purchasers determine in their sole and absolute discretion
that they do not wish to proceed with Closing, Purchasers may terminate this
Agreement pursuant to Section 10.11(a) by giving written notice thereof to
Seller on or prior to the expiration of the Inspection Period, in which event
this Agreement shall automatically terminate, and the Earnest Money (less $100)
shall be returned to Parent Purchaser in accordance with Section 2.07(b). If
Purchasers terminate this Agreement prior to the expiration of the Inspection
Period, Purchasers shall have no liability under this Agreement as a result of
such termination except as herein provided. Purchasers agree that, having had
the opportunity to inspect the Assets for defects and having had the right to
terminate this Agreement in the event any defects are found, Purchasers will
accept at Closing the Assets in an "as is, where is" condition, and Purchasers
acknowledge that, other than as may be expressly set out herein, Seller is not
making any representations or warranties with respect to the physical condition
of the Assets.
6.04. INVESTIGATION OF UTILITIES AND PROPERTIES. Seller agrees to allow and
cooperate with Purchasers to make or cause to be made such investigation of the
Assets and of their financial and legal condition as appropriate or advisable to
familiarize itself therewith. Seller agrees to furnish Purchasers and
Purchasers' employees, officers, agents, investment bankers, accountants,
counsel and other representatives with all business records, financial records,
operating information, and other data and information concerning the Assets and
commitments of Seller with respect to the Assets as Purchasers shall from time
to time reasonably request and will afford Purchasers and Purchasers' employees,
officers, accountants, attorneys, agents, investment bankers and other
authorized representatives access to review such documents and their books and
records regarding the Assets and will be given opportunity to ask questions of,
and receive answers from, representatives of Seller with respect to such
matters.
6.05. ADDITIONAL AGREEMENTS; NO SOLICITATION. Seller covenants and agrees
that, until the sooner of the Closing or the termination of this Agreement,
Seller will deal exclusively with the Purchasers with respect to the sale of the
Assets, and Seller will not permit any of its respective Affiliates, agents or
representatives (including investment bankers, attorneys and accountants) to,
directly or indirectly (a) solicit, initiate, review, accept, engage in
discussions or encourage submission of proposals or offers by, or (b) furnish
any information with respect to, or otherwise cooperate in any way with, or
participate in any discussions or negotiations with, any Person (other than
Purchasers and their agents) with respect to any proposal regarding the
acquisition or purchase of all or a material portion of the Assets.
6.06. FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all commercially reasonable
efforts to do all things necessary, proper or advisable under Applicable Laws
and regulations to consummate and make effective the Transactions contemplated
by this Agreement, including the obtaining of all Consents and Orders by any
Governmental Body or other Person required in connection therewith and
initiating or defending any legal action that is necessary or appropriate to
permit the Transactions to be consummated. At any time after the Closing Date,
if any further action is necessary, proper or advisable to carry out the
purposes of this Agreement, then, as soon as is reasonably practicable, each
party to this Agreement shall take, or cause its proper officers to take, such
action. Each party hereto further agrees to cooperate fully with the other party
after the consummation of the Transactions for the purpose of providing
Purchasers with the information and access to information necessary to ensure
Purchasers with a reasonably smooth transition
into the ownership of the Assets. No party to this Agreement shall take or cause
to be taken any action that would cause the representations or warranties
expressed herein to be untrue or incorrect on the Closing Date.
6.07. AGREEMENT REGARDING BROKERS. Each party agrees that it will pay or
dispute, and hold the other party harmless from, any claims of brokers or others
for finder's or brokerage fees asserted as a result of representations by such
party to such brokers or others, regardless of whether the existence of such
brokers or others are disclosed herein.
6.08. NOTICE. Seller shall promptly give notice to Purchasers upon becoming
aware of the occurrence or failure to occur, or of any event that would cause or
constitute, any of its representations or warranties being or becoming untrue or
any of its covenants being breached or a materially adverse event likely to
effect the Utilities.
6.09. PAYMENT OF LIABILITIES. Following the Closing, Seller shall promptly
pay or otherwise satisfy all valid claims, Liabilities and obligations relating
to the Assets or the Utilities incurred through to or arising out of events
preceding the Closing Date other than those Liabilities in respect of which an
adjustment is made to the Purchase Price in the calculation of Working Capital
pursuant to Section 2.05 hereof. Purchasers agree to indemnify and hold Seller
harmless of and from any and all claims, Liabilities, and obligations relating
to the Assets or the Utilities based on events occurring subsequent to the date
of Closing.
ARTICLE 7
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchasers to Close under this Agreement is subject to
each of the following conditions (any one of which may, at the option of
Purchasers, be waived by Purchasers) being satisfied on the Closing Date, or
such earlier date as the context may require.
7.01. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Seller in this Agreement, the disclosures contained in the
exhibits to this Agreement, and all other information delivered under this
Agreement shall be true in all material respects at and as of the Closing Date
as though each representation, warranty, and disclosure were made and delivered
at and as of the Closing Date.
7.02. COMPLIANCE WITH CONDITIONS. Seller shall comply with and perform all
agreements, covenants, and conditions in this Agreement that are required to be
performed and complied with by Seller before or coincident with the Closing.
7.03. NO PROCEEDINGS OR VIOLATIONS. No Proceeding, legal or administrative,
by any Governmental Body or Person relating to any of the Transactions
contemplated by this Agreement shall be Threatened or commenced and no violation
of Applicable Law shall have occurred with respect to the Utilities, the Assets
or the Facilities that, in the discretion of Purchasers and their counsel, both
acting reasonably, would prohibit or materially impair Purchasers from Closing
this Transaction.
7.04. CHANGE OF COMMITMENT. There shall be no change in the matters
reflected in the Title Commitment, and there shall not exist any encumbrance or
title defect affecting the Subject Property not described in the Title
Commitment except for the Permitted Exceptions.
7.05. CHANGE OF SURVEY MATTERS. There shall be no changes in the matters
reflected in the Survey, and there shall not exist any easement, right-of-way,
encroachment, waterway, pond, flood plain, conflict or protrusion with respect
to any of the Real Property not shown on the Survey.
7.06. SERVICES AGREEMENT. Seller shall have executed and delivered the
Services Agreement(s).
ARTICLE 8
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
The obligation of Seller to Close under this Agreement is subject to each
of the following conditions (any one of which, at the option of Seller, may be
waived in writing by Seller) being satisfied on the Closing Date.
8.01. CORPORATE ACTION. All corporate and stockholder action necessary to
consummate the transactions contemplated in this Agreement shall be properly
taken by Purchasers.
8.02. COMPLIANCE WITH CONDITIONS. Purchasers shall comply with and perform
all agreements, covenants, and conditions in this Agreement that are required to
be performed and complied with by Purchasers before or coincident with the
Closing.
8.03. NO PROCEEDINGS OR VIOLATIONS. No Proceeding, legal or administrative,
by any Governmental Body or Person relating to any of the Transactions
contemplated by this Agreement shall be Threatened or commended and no violation
of Applicable Law shall have occurred with respect to the Utilities, the Assets
or the Facilities that, in the discretion of Seller and its counsel, both acting
reasonably, would prohibit or materially impair Seller from Closing the
Transactions.
8.04. APPROVAL OF SELLER'S LENDERS. Seller shall have obtained written
approval and consent to the transactions necessary to close under this Agreement
as required under the terms and conditions of any debt instruments, agreements
or other obligations binding Seller, Seller's Affiliates or the Assets upon
terms and conditions acceptable to Seller in its sole discretion. If Seller's
Lenders fail to approve the Closing of the transaction contemplated under this
Agreement, Seller shall pay to the Purchasers an amount equal to FIFTY THOUSAND
($50,000) DOLLARS as compensation for the time and expenses incurred by the
Purchasers in conducting due diligence inspections and contract negotiations.
8.05. SERVICES AGREEMENT. Purchasers shall have executed and delivered the
Services Agreement(s).
ARTICLE 9
PARTIES' OBLIGATIONS AT THE CLOSING
9.01. SELLER'S OBLIGATIONS AT THE CLOSING. At the Closing, Seller shall
execute, if appropriate, and shall deliver to Purchaser:
(a) Special Warranty Deeds in a form acceptable to Purchasers
sufficient to convey to Purchasers the Real Property (the "Deed");
(b) Bills of Sale and Assignments in a form acceptable to Purchasers
sufficient to convey to Purchasers all rights, title, and interest in and
to all of the Assets being sold to Purchasers under the terms of this
Agreement (the "Bill of Sale");
(c) An Assignment and Assumption Agreement in form acceptable to
Purchasers, assigning only the Operating Agreements which Purchasers have
agreed to assume at Closing (the "Assignment and Assumption");
(d) The Title Policies, in the form specified in Section 3.04 hereof;
(e) The Easements in a form acceptable to Purchasers sufficient to
enable Purchasers to use all Lines as described in Section 2.01(b) (the
"Easements");
(f) A certification signed by Seller containing the following: (i)
Seller's U.S. Taxpayer Identification Number; (ii) the address of Seller;
and (iii) a statement that Seller is not a foreign person within the
meaning of Sections 1445 and 7701 of the IRC (i.e., Seller is not a
nonresident alien, foreign corporation, foreign partnership, foreign trust
or foreign estate, as those terms are defined in the Code and applicable
regulations);
(g) All of Seller's Records and other documentation in the possession
of Seller necessary to operate and to use all Assets being sold to
Purchasers in this Agreement;
(h) Evidence of Seller's authorization to consummate the transactions
contemplated hereby;
(i) Possession of the Real Property, subject only to the Permitted
Exceptions;
(j) Executed Services Agreement(s) as contemplated in Section 7.06
hereof;
(k) Such documentation and approvals as may be required by Purchasers,
acting reasonably, to permit continued operation of the Utilities under the
business names under which the Utilities currently operate. Purchasers
shall cause the Utilities to change such operating names as soon as is
practically possible following Closing and shall indemnify Seller for any
claims, damages or other costs incurred or suffered by Seller arising from
operation of the Utilities by the Purchasers under their current business
names following Closing; and
(l) Such other documents as are reasonably required to consummate the
transactions contemplated hereby.
9.02. PURCHASERS' OBLIGATIONS AT CLOSING. At the Closing, Purchasers shall:
(a) deliver the Purchase Price in immediately available funds to the Title
Company; and (b) execute and/or deliver, as appropriate, to Seller against
delivery of the items specified in Section 9.01, above:
(a) the Bill of Sale;
(b) the Assignment and Assumption;
(c) Evidence of each of the Purchasers authorization to consummate the
transactions contemplated hereby;
(d) Executed Services Agreement(s) as contemplated in Section 8.05
hereof; and
(e) Such other documents as are reasonably required to consummate the
transactions contemplated hereby.
9.03. PAYMENT OF EXPENSES. Seller shall pay at or prior to Closing all sums
owed to suppliers, vendors, contractors and any other third parties pertaining
to the Utilities and the Assets incurred prior to the Closing, including all
amounts owing under the Operating Agreements other than amounts in respect of
which adjustments have been made to the Working Capital in accordance with
Section 2.05 hereof. Liability between Seller and Purchasers for real estate ad
valorem taxes, charges and assessments, utility charges and other operating
expenses pertaining to the Facilities shall be prorated at the Closing,
effective as of the Closing Date, based upon actual days involved. All other
income and ordinary operating expenses for or pertaining to the Facilities,
including, but not limited to, public utility charges, and all other normal
operating charges of the Facilities, shall be prorated at Closing effective as
of the Closing Date. All maintenance and service contract expenses (whether or
not service is continued by Purchasers) and utility charges shall be determined
to the date of the Closing and shall be the liability of Seller. In connection
with the proration of real property taxes and assessments, in the event that
actual figures for the year of Closing are unavailable on the Closing Date, an
estimated proration shall be made utilizing figures from the preceding year,
with said proration to be adjusted in immediately available funds between the
parties, based on actual taxes and assessments for the year of Closing, at the
time such actual taxes and assessments are determined and available.
9.04. TRANSACTION EXPENSES. Seller shall be responsible for the payment of
all items herein agreed to be paid by Seller, including, without limitation, the
payment of (i) the title insurance premiums with regard to the Title Policy, and
(ii) fifty percent (50%) of all escrow fees. Purchasers shall be responsible for
the payment of all items herein agreed to be paid by Purchasers, including
without limitation, the payment of (i) all costs and expenses related to
Purchasers' due diligence, inspections and investigations pursuant hereto, (ii)
all recording fees, and (iii) fifty percent (50%) of all escrow fees. Each party
shall pay its own Transaction
Expenses. The obligation of each party to pay its own Transaction Expenses will
be subject to any rights of such party arising from a breach of this Agreement
by another party.
ARTICLE 10
GENERAL PROVISIONS
10.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. The
representations, warranties, covenants, and agreements of the parties contained
in this Agreement or contained in any writing delivered pursuant to this
Agreement shall survive the Closing for a period of twelve (12) months.
10.02. NOTICES. All notices, demands, or other communications of any type
(herein collectively referred to as "Notices") given by the Seller to the
Purchasers or by the Purchasers to the Seller, whether required by this
Agreement or in any way related to the transaction contracted for herein, shall
be void and of no effect unless given in accordance with the provisions of this
Section 10.02. All Notices shall be in writing and delivered to the person to
whom the notice is directed, either (a) by telephonic facsimile communication,
(b) by United States Mail, as a registered or certified item, return receipt
requested or (c) nationally recognized overnight or local courier service. Any
of the Notices may be delivered by the parties hereto or by their respective
attorneys. Any notice delivered by telephonic facsimile communication shall be
deemed effective after being transmitted to the applicable telephone facsimile
numbers set forth below. Notices delivered by overnight or local courier shall
be effective upon receipt. Notices delivered by registered or certified mail
shall be deemed effective two (2) days after being deposited in a post office or
other depository under the care or custody of the United States Postal Service,
enclosed in a wrapper with proper postage affixed, with return receipt
requested, or on the date of refusal to accept delivery of the notice, and
addressed as follows:
If to Seller: Silverleaf Resorts, Inc.
Attn: Robert E. Mead
1221 River Bend Drive, Suite 120
Dallas, Texas 75247
Telephone: (214) 631-2266
Facsimile: (214) 905-0514
With copy to: George R. Bedell, Esq.
Meadows Owens Collier Reed Cousins & Blau, L.L.P.
901 Main St., Suite 3700
Dallas, TX 75202
Telephone: (214) 744-3700
Facsimile: (214) 747-3732
If to Purchasers: c/o Algonquin Water Resources of America, Inc.
Attn: Ian Robertson
2845 Bristol Circle
Oakville, Ontario L6H 7H7
Telephone: (905) 465 4500
Facsimile: (905) 465 4540
With copy to: Snell & Wilmer L.L.P.
One Arizona Center
400 E. Van Buren
Phoenix, Arizona 85004-2202
Phone: (602) 382-6381
Facsimile: (602) 382-6070
Attn: Michael M. Donahey
Either party hereto may change the address for notice specified above by giving
the other party five (5) days advance written notice of such change of address.
10.03. ASSIGNMENT OF AGREEMENT. This Agreement shall be binding on and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. This Agreement may be assigned by the
Purchasers to one or more of their respective subsidiaries however any such
assignment shall in no way diminish the continuing obligation of the Purchasers
in respect of all obligations and undertakings set out in this Agreement.
10.04. GOVERNING LAW. This Agreement shall be construed and governed by the
laws of the State of Texas.
10.05. AMENDMENTS; WAIVER. This Agreement may be amended only in writing by
the mutual consent of all of the parties, evidenced by all necessary and proper
corporate authority. No waiver of any provision of this Agreement shall arise
from any action or inaction of any party, except an instrument in writing
expressly waiving the provision executed by the party entitled to the benefit of
the provision.
10.06. ENTIRE AGREEMENT. This Agreement, together with any documents and
exhibits given or delivered pursuant to this Agreement, constitutes the entire
agreement between the parties to this Agreement. No party shall be bound by any
communications between them on the subject matter of this Agreement unless the
communication is (a) in writing, (b) bears a date contemporaneous with or
subsequent to the date of this Agreement, and (c) is agreed to by all parties to
this Agreement.
10.07. SALES AND TRANSFER TAXES. Purchasers shall be responsible for and
pay all sales, transfer, deed, duties, stamp and other similar taxes and
transfer and recording fees applicable to the Transactions contemplated by this
Agreement.
10.08. CONFIDENTIALITY. Purchasers and Seller agree that they will not
disclose or in any way furnish any information relating to the amount of the
Purchase Price and the terms and
conditions of payment thereof to any other person or entity, nor shall they
authorize, permit or in any way aid in such disclosure, except (i) in response
to legal process not initiated by, on behalf of, or on advice of the party from
which the information is sought or persons or attorneys acting on behalf of said
party, or (ii) to the extent disclosure is required for tax purposes, or (iii)
to the extent disclosure is required to be made in financial statements or to a
court or other governmental entity or stock exchange, or (iv) to individuals or
entities providing legal, accounting, tax or financial advice to a party, or (v)
to financing sources, potential or otherwise, or (vi) to the extent reasonably
necessary to (a) enforce any of the agreements and covenants contained in this
Agreement or (b) enforce or enjoy any other rights or remedies.
10.09. RISK OF LOSS. Risk of all loss, destruction, or damage to the
Assets, or any portion thereof, from any and all causes whatsoever until the
Closing shall be borne by Seller. In the event that any portion of the Assets
are damaged by fire or other casualty, or all or any portion of the Assets is
condemned or taken by eminent domain by any competent authority for any public
or quasi-public use or purpose, or preliminary steps in such condemnation for
eminent domain proceedings shall have been taken before the Closing Date, Seller
shall give immediate notice thereof to Purchasers. In such event, Purchasers, at
their option, may either (i) terminate this Agreement by written notice to
Seller within ten (10) days after Purchasers has received the notice referred to
above or at the Closing, whichever occurs first; or (ii) proceed to complete
Closing as provided herein with abatement of the Purchase Price only to the
extent that any insurance proceeds are paid or payable to any third parties
other than Seller or Purchasers, and Seller shall assign to Purchasers at
Closing all of the rights and interests of Seller in and to any insurance
proceeds or condemnation awards which may be paid or payable to Seller on
account of any such occurrence; provided, however, that Seller shall pay to
Purchasers in cash at Closing a sum equal to any amounts which are deductible
under any existing insurance policies applicable to such occurrence.
10.10. EMPLOYEES OF SELLER. Seller acknowledges that Purchasers are under
no legal obligation to employ any personnel presently employed by Seller at the
Facilities and that Purchasers shall not assume any obligation of Seller to such
employees, including, without limitation, any COBRA obligations. With the
exception of Seller's Vice President of Resort Operations, Purchasers may offer
employment to such persons currently employed by Seller with respect to the
Utilities as Purchasers in their sole discretion shall determine. Purchasers
shall have the absolute right to establish all terms and conditions of
employment, including wages, benefits and benefit plans, for any employees of
Seller to whom it chooses to make an offer of employment to be employed by
Purchasers. All such offers of employment shall be on the terms and conditions
established by Purchasers and shall be contingent upon employment commencing
with Purchasers. Seller agrees not to discourage any such individuals who are
offered employment by Purchasers from accepting employment with Purchasers.
10.11. TERMINATION. This Agreement may be terminated:
(a) By notice given prior to or at the Closing, by Purchasers if any
of the conditions in Article 7 have not been satisfied as of the Outside
Date or if satisfaction of such a condition is or becomes impossible (other
than through the failure of Purchasers to comply with its obligations under
this Agreement) and Purchasers have not waived such condition on or before
the Outside Date;
(b) By notice given prior to or at the Closing, by Seller, if any of
the conditions in Article 8 has not been satisfied as of the Outside Date
or if satisfaction of such a condition is or becomes impossible (other than
through the failure of Seller to comply with Seller's obligations under
this Agreement) and Seller has not waived such condition on or before the
Outside Date;
(c) By mutual consent of Purchasers and Seller;
(d) By Purchasers in their sole and absolute discretion by notice to
Seller given before the close of the Inspection Period;
(e) By any of Purchasers or Seller, if prior to the expiration of the
Inspection Period the parties fail to agree on the terms of a Services
Agreement(s) pursuant to Schedule 7.06 hereof.;
(f) By Seller if Purchasers fail to deposit funds with the Title
Company as contemplated under Section 2.06(b) hereof;
(g) By Purchaser if a material breach of any provision of this
Agreement has been committed by Seller and such breach has not been waived
or cured within ten (10) days after written notice of such breach has been
provided to Seller by Purchasers; and
(h) By Seller, if all of the conditions in Article 7 have been
satisfied and all of the conditions in Article 8 have been satisfied (or
waived) and Purchasers fail to close the transaction contemplated herein or
if a material breach of any provision of this Agreement has been committed
by Purchasers, or any of them, and such breach has not been waived or cured
within ten (10) days after written notice of such breach has been provided
to Purchasers by Seller.
Each party's right of termination under this Section 10.11 is in addition
to any other rights it may have under this Agreement or otherwise, and the
exercise of a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 10.11(a) or Section 10.11(b), all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 6.03 and 9.04 hereof will survive; provided,
however, that if this Agreement is terminated by a party because of the breach
of the Agreement by the other party or because one or more of the conditions to
the terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10.12. REMEDIES. In the event that Seller fails to timely comply with all
conditions, covenants and obligations of Seller hereunder, such failure shall be
an event of default and Purchasers shall have the option (i) to terminate this
Agreement by providing written notice thereof to Seller, in which event the
earnest money (less $100.00) shall be returned immediately to Parent Purchaser
by the Title Company and the parties hereto shall have no further liabilities or
obligations one unto the other; (ii) to waive any defect or requirement and
close this Agreement; or (iii) to sue Seller for specific performance or for
actual damages; provided, however, that, in the event that Seller violates its
obligations pursuant to this Agreement and the
closing does not occur as a result thereof, Purchasers' right to obtain any
damages hereunder shall be limited to the recovery of Purchasers' out-of-pocket
expenses, and in no event shall Purchaser have the right to sue for any other
damages, including consequential damages, lost profits or punitive damages.
In the event that Purchasers fail to timely comply with all conditions,
covenants, and obligations Purchasers have hereunder, such failure shall be an
event of default, and Seller's sole remedy shall be to terminate this Agreement
pursuant to Section 10.11(h) and receive the Earnest Money. The Earnest Money is
agreed upon by and between the Seller and Purchasers as liquidated damages due
to the difficulty and inconvenience of ascertaining and measuring actual
damages, and the uncertainty thereof, and no other damages, rights, or remedies
shall in any case be collectible, enforceable, or available to the Seller other
than in this paragraph defined, and Seller shall accept the earnest money as
Seller's total damages and relief.
ARTICLE 11
POST CLOSING OBLIGATIONS
11.01. PERMIT TRANSFERS. To the extent, any Permits are non-transferable to
Purchasers or can not be transferred in a timely manner prior to Closing, Seller
shall, at the option of Purchasers, either (i) request cancellation of such
Permit or (ii) continue to hold such Permit in trust on behalf of Purchasers,
subject to the indemnification of Seller by Purchasers in respect thereof and
Purchasers and Seller agree to cooperate and use commercially reasonable efforts
to promptly effect the transfer of such Permits to the Purchasers.
11.02. INDEMNIFICATION OF PURCHASERS. Seller shall indemnify, defend and
hold harmless the Purchaser and its representative officers, directors,
successors and assigns from and against any and all costs, expenses, losses,
damages, fines, penalties or liabilities (including without limitation interest
that may be imposed in respect thereof, court costs, reasonable attorneys' fees
and accounting fees) actually incurred or arising out of, in respect to, in
connection with, or arising from (i) any breach of any representation or
warranty made by Seller and contained in this Agreement; or (ii) a breach by
Seller of any covenant, restriction or agreement made by or applicable to Seller
and contained in this Agreement. Notwithstanding the foregoing or anything to
the contrary contained herein, it is understood and agreed that the
representations and warranties set forth herein shall survive the Closing of
this Agreement only for a period of one (1) year following the date of Closing,
but not thereafter, and Seller shall have no liability of any kind whatsoever
for any breach thereof except to the extent a claim is asserted against Seller
within such one (1) year period. If any of the representations and warranties
set forth herein are determined at anytime on or before the date of Closing to
be untrue or unfulfilled, then Purchasers, as Purchasers' sole and exclusive
remedy, may terminate this Agreement by providing written notice of such
termination to Seller, in which event the Earnest Money (less $100.00) shall be
returned to Purchasers and thereafter neither Seller nor Purchasers shall have
any further liabilities or obligations one unto the other.
11.03. DELAYED APPROVALS. To the extent that it is not possible to secure
the required approvals of all the Governmental Body(s) who may have jurisdiction
over matters relating to the transfer of the Assets or to the transfer of the
respective Utilities' CCN or such other approvals or transfers as may be
required, Purchasers and Seller agree to cooperate and to do all
commercially reasonable things following the Closing to secure such approvals
for the transfers in the shortest time possible. It is acknowledged by the
parties hereto that, given the current delays inherent in the process, there is
a likelihood that definitive regulatory approvals will only be secured following
the Closing and that, notwithstanding the completion of Closing, the
transactions contemplated herein remain contingent on the granting by the
respective regulator or Governmental Body having jurisdiction thereover of such
approval and that the Closing shall remain subject to rescission if the required
approvals are not granted. The parties hereto may enter into additional
undertakings at or prior to the Closing when a clearer understanding of the
process and the timelines for securing such approvals are more certain. In the
event of a rescission, the entire Transaction must be rescinded, and, in such
event, Seller will be required to refund to Purchasers the entire purchase price
payable hereunder, and Purchasers shall return to Seller all Assets having been
purchased hereunder in the same or better condition as such Assets were in when
transferred to Purchasers.
Signed on August 29, 2004.
SELLER: PURCHASER:
SILVERLEAF RESORTS, INC. ALGONQUIN WATER RESOURCES OF AMERICA,
INC.
By: /S/ HARRY J. WHITE, JR. By: /S/ IAN ROBERTSON
--------------------------------- ------------------------------------
Name: Harry J. White, Jr. Name: Ian Robertson
Title: CFO Title: Authorized Signing Officer
ALGONQUIN POWER INCOME FUND
By: /S/ IAN ROBERTSON
------------------------------------
Name: Ian Robertson
Title:
---------------------------------
ALGONQUIN WATER RESOURCES OF TEXAS, INC.
By: /S/ EDMUND PAMATAT
------------------------------------
Name: Edmund Pamatat
Title: VP Corp Dev
ALGONQUIN WATER RESOURCES OF MISSOURI,
INC.
By: /S/ EDMUND PAMATAT
------------------------------------
Name: Edmund Pamatat
Title: VP Corp Dev
ALGONQUIN WATER RESOURCES OF ILLINOIS,
INC.
By: /S/ EDMUND PAMATAT
------------------------------------
Name: Edmund Pamatat
Title: VP Corp Dev
List of Exhibits and Schedules to Agreement, not filed herewith:
Exhibit A: REAL PROPERTY
Exhibit B: Fixed Assets
Schedule 2.02: Allocation of Purchase Price
Schedule 4.03: Litigation
Schedule 4.04: Environmental Matters
Schedule 7.06: Terms of Services Agreements
Schedule 7.06(B): Rate Base for Rate Making Purposes at Non-Regulated Utilities