EXECUTION COPY

 

Partnership Interests Purchase Agreement

by and among

Aquila, Inc.,

Aquila Colorado, LLC,

Black Hills Corporation,

Great Plains Energy Incorporated

and

Gregory Acquisition Corp.

 

 

Dated: February 6, 2007

 

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TABLE OF CONTENTS

 

Page

 

 

 

ARTICLE I

DEFINITIONS

1

 

1.1

Definitions

1

 

1.2

Other Definitional and Interpretive Matters

15

 

1.3

Joint Negotiation and Preparation of Agreement

16

ARTICLE II

PURCHASE AND SALE

16

 

2.1

The Sale

16

 

2.2

Excluded Assets

18

 

2.3

Assumed Obligations

19

 

2.4

Excluded Liabilities

20

 

2.5

Allocation of the Purchased Assets and the Assumed Obligations

21

 

2.6

Post-Closing Liabilities

21

ARTICLE III

PURCHASE PRICE

21

 

3.1

Purchase Price

21

 

3.2

Determination of Adjustment Amount and Purchase Price

23

 

3.3

Allocation of Purchase Price

24

 

3.4

Proration

24

ARTICLE IV

THE CLOSING

25

 

4.1

Time and Place of Closing

25

 

4.2

Payment of Closing Payment Amount

25

 

4.3

Deliveries by Parent, the Companies and Seller

26

 

4.4

Deliveries by Buyer

27

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

28

 

5.1

Organization; Qualification

28

 

5.2

Authority Relative to this Agreement

28

 

5.3

Consents and Approvals; No Violation

29

 

5.4

Governmental Filings

30

 

5.5

Financial Information

30

 

5.6

No Material Adverse Effect

31

 

5.7

Operation in the Ordinary Course

31

 

5.8

Title and Company Interests

31

 

5.9

Leases

32

 

5.10

Environmental

32

 

5.11

Labor Matters

33

 

5.12

ERISA; Benefit Plans

33

 

5.13

Certain Contracts and Arrangements

35

 

5.14

Legal Proceedings and Orders

36

 

5.15

Permits

36

 

5.16

Compliance with Laws

36

 

5.17

Insurance

37

 

 

 

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TABLE OF CONTENTS

(continued)

Page

 

 

 

 

5.18

Taxes

37

 

5.19

Fees and Commissions

37

 

5.20

Sufficiency of Assets

37

 

5.21

Related-Party Agreements

37

 

5.22

Financial Hedges

38

 

5.23

No Other Representations and Warranties

38

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

38

 

6.1

Organization

38

 

6.2

Authority Relative to this Agreement

38

 

6.3

Consents and Approvals; No Violation

38

 

6.4

Fees and Commissions

39

 

6.5

Financing

39

 

6.6

No Other Agreements

40

 

6.7

No Other Representations and Warranties

40

 

ARTICLE VII

    REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

     40

 

7.1

Organization

40

 

7.2

Authority Relative to this Agreement

40

 

7.3

Consents and Approvals; No Violation

41

 

7.4

Merger Agreement

41

 

7.5

No Other Representations and Warranties

42

 

7.6

Fees and Commissions

42

 

7.7

No Other Agreements

42

ARTICLE VIII

COVENANTS OF THE PARTIES

42

 

8.1

Conduct of Business

42

 

8.2

Access to Information

46

 

8.3

Expenses

49

 

8.4

Further Assurances; Regulatory Filings; Consents and Approvals

49

 

8.5

Procedures with Respect to Certain Agreements and Other Assets

52

 

8.6

Public Statements

55

 

8.7

Tax Matters

55

 

8.8

Employees and Employee Benefits

56

 

8.9

Eminent Domain; Casualty Loss

63

8.10

Transitional Use of Signage and Other Materials Incorporating Seller’s Name or
other Logos

64

8.11

Litigation Support

64

8.12

Audit Assistance

64

8.13

Notification of Customers

65

8.14

Financing

65

8.15

Document Delivery

65

 

 

 

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TABLE OF CONTENTS

(continued)

Page

 

 

 

8.16

Surveys’ Title Insurance, Estoppel Certificates, and Non-Disturbance Agreements

66

 

8.17

Post-Closing Release of Encumbrances and Transfer of Purchased Assets

66

 

8.18

Shared Code Licenses

67

 

8.19

Performance of the Obligations of the Companies Post-Closing

67

ARTICLE IX

CONDITIONS TO CLOSING

67

 

9.1

Conditions to Each Party’s Obligations to Effect the Closing

67

 

9.2

Conditions to Obligations of Buyer

68

 

9.3

Conditions to Obligations of Seller

69

 

9.4

Invoking Certain Provisions

69

ARTICLE X

TERMINATION AND OTHER REMEDIES

70

 

10.1

Termination

70

 

10.2

Procedure and Effect of Termination

71

 

10.3

Payment of Termination Fee

71

 

10.4

Remedies upon Termination

72

ARTICLE XI

MISCELLANEOUS PROVISIONS

72

 

11.1

Survival

72

 

11.2

Amendment and Modification

73

 

11.3

Waiver of Compliance

73

 

11.4

Notices

73

 

11.5

Assignment

74

 

11.6

No Third Party Beneficiaries

74

 

11.7

GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL

75

 

11.8

Severability

75

 

11.9

Specific Performance

76

 

11.10

Entire Agreement

76

 

11.11

Bulk Sales or Transfer Laws

76

 

11.12

No Consequential Damages

76

 

11.13

Counterparts

76

 

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EXHIBITS AND SCHEDULES

Exhibit 1.1-A

Form of Assignment and Assumption Agreement

Exhibit 1.1-B

Form of Assignment of Company Interests

 

Exhibit 1.1-C

Form of Assignment of Easements

 

Exhibit 1.1-D

Form of Bill of Sale

 

Exhibit 8.8(d)(ii)(C)

Pension Matters

 

 

Schedule 1.1-A

Business Activities

 

Schedule 1.1-B

Business Employees

 

Schedule 1.1-C

Buyer Required Regulatory Approvals

 

Schedule 1.1-D

Central or Shared Functions

 

Schedule 1.1-E

Seller Required Regulatory Approvals

 

Schedule 1.1-F

Seller’s Knowledge

 

Schedule 1.1-G

Material Adverse Effect Events or Conditions

 

Schedule 2.1(a)

Real Property

 

Schedule 2.1(d)

Tangible Personal Property

 

Schedule 2.1(n)

Other Assets

 

Schedule 2.2(l)

Retained Agreements

 

Schedule 3.1(a)

Capital Expenditures Budget

 

Schedule 3.1(b)

Reference Balance Sheet

 

Schedule 3.1(c)

Reference Working Capital

 

Schedule 5.3

Seller’s Consents and Approvals

 

Schedule 5.5(a)-1

Selected Balance Sheet Information (Electric Business)

 

Schedule 5.5(a)-2

Selected Balance Sheet Information (Gas Business)

 

Schedule 5.5(b)-1

Division Income Statement Information (Electric Business)

Schedule 5.5(b)-2

Division Income Statement Information (Gas Business)

 

Schedule 5.6

Material Adverse Effect

 

Schedule 5.7

Transactions Outside the Ordinary Course of Business

 

Schedule 5.8

Title

 

Schedule 5.9

Real Property Leases

 

Schedule 5.10(a)-1

Sufficiency of Environmental Permits

 

Schedule 5.10(a)-2

Environmental Permits

 

Schedule 5.10(b)

Environmental Notices

 

Schedule 5.10(c)

Hazardous Material Releases

 

Schedule 5.11

Labor Matters

 

Schedule 5.12(a)

Employee Benefit Plans

 

Schedule 5.12(d)

Administrator or Fiduciary Non-Compliance

 

Schedule 5.12(g)

Retiree Health and Welfare Benefits

 

Schedule 5.13(a)

Certain Contracts and Arrangements

 

Schedule 5.13(b)

Franchises

 

Schedule 5.14

Legal Proceedings and Orders

 

Schedule 5.21

Related Party Agreements

 

Schedule 5.22

Financial Hedges

 

Schedule 6.3

Buyer’s Consents and Approvals

 

Schedule 7.3

Consents

 

Schedule 8.1

Conduct of Business

 

 

 

iv

 

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Schedule 8.5(d)

Shared Agreements

 

Schedule 8.8(d)(ii)(D)

Covered Individuals

Schedule 8.8(d)(ii)-A                                              Other Plan
Participants

 

v

 

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PARTNERSHIP INTERESTS PURCHASE AGREEMENT

This Partnership Interests Purchase Agreement (this “Agreement”), is made as of
February 6, 2007 by and among Aquila, Inc., a Delaware corporation (“Seller”),
Aquila Colorado, LLC, a Delaware limited liability company (“Limited Partner”)
and a wholly-owned subsidiary of Seller, Black Hills Corporation, a South Dakota
corporation (“Buyer”), Great Plains Energy Incorporated, a Missouri corporation
(“Parent”), and Gregory Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent (“Merger Sub”).

RECITALS

WHEREAS, Seller has entered into an Agreement and Plan of Merger dated
February 6, 2007 (the “Merger Agreement”) with Buyer, Parent, and Merger Sub
which, among other things, provides for the merger of Merger Sub with and into
Seller (the “Merger”) immediately after the Closing.

WHEREAS, prior to the Closing, Seller and Limited Partner will form (i) a
Delaware limited partnership (“Electric Opco”) to hold the Electric Business and
the Electric Business Purchased Assets, and assume the Electric Business Assumed
Obligations, with Seller serving as the general partner and Limited Partner
serving as the limited partner, and (ii) a Delaware limited partnership (“Gas
Opco”) to hold the Gas Business and the Gas Business Purchased Assets, and
assume the Gas Business Assumed Obligations, with Seller serving as the general
partner and Limited Partner serving as the limited partner.

WHEREAS, Seller, Buyer, Parent and Merger Sub have entered into an Asset
Purchase Agreement (the “Asset Purchase Agreement”) of even date herewith
whereby Seller has agreed to sell and Buyer has agreed to purchase the assets of
Seller’s Iowa, Kansas and Nebraska gas utility businesses.

WHEREAS, Buyer desires to purchase, and Seller desires to sell, the Company
Interests, upon the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the Parties’ respective covenants,
representations, warranties, and agreements hereinafter set forth, and intending
to be legally bound hereby, the Parties agree as follows:

ARTICLE I

 

DEFINITIONS

1.1

Definitions.

(a)    As used in this Agreement, the following terms have the meanings
specified in this Section 1.1(a):

“Affiliate” has the meaning set forth in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.

 

 

1

 

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“Affiliated Group” means any affiliated group within the meaning of Code section
1504(a) or any similar group defined under a similar provision of Law.

“Assignment and Assumption Agreement” means the Assignment and Assumption
Agreement to be executed by Seller and delivered to each of the Companies before
the Closing, in the form of Exhibit 1.1-A.

“Assignment of Company Interests” means the Assignment and Assumption of
Partnership Interests with respect to each of the Companies to be executed by
Seller, Limited Partner, Buyer and Buyer’s designee at the Closing, in the form
of Exhibit 1.1-B.

“Assignment of Easements” means the Assignment of Easements to be executed and
delivered by Seller to each of the Companies before the Closing, in the form of
Exhibit 1.1-C.

“Bill of Sale” means the bill of sale to be executed and delivered by Seller to
each of the Companies before the Closing, in the form of Exhibit 1.1-D.

“Business” means, collectively, (i) the Electric Business, (ii) the Gas
Business, and (iii) the activities described on Schedule 1.1-A.

“Business Agreements” means any contract, agreement, real or personal property
lease, commitment, understanding, or instrument (other than the Retained
Agreements and the Shared Agreements) to which Seller is a party or by which it
is bound that either (i) is listed or described on Schedule 5.9, Schedule 5.11,
Schedule 5.13(a), or Schedule 5.13(b), or (ii) relates principally to the
Business or the Purchased Assets, and if entered into after the date hereof (and
is not a renewal, extension or amendment of an agreement in effect on the date
hereof), is entered into in accordance with the terms of this Agreement.

“Business Day” means any day other than Saturday, Sunday, and any day which is a
legal holiday or a day on which banking institutions in New York, New York are
authorized by Law to close.

“Business Employees” means (i) the employees of Seller set forth on
Schedule 1.1-B, which shall include all of Seller’s employees whose place of
employment is at Seller’s locations in Colorado, (ii) any persons who are hired
by Seller after the date hereof for the Business, other than persons hired after
the date hereof to perform Central or Shared Functions, and (iii) other than for
purposes of ARTICLE V and Section 8.1, those Central or Shared Function
Employees that Buyer and Parent agree Buyer may offer employment to prior to the
Closing and that accept employment with one of the Companies.

“Buyer Pension Plan” means one or more defined benefit plans within the meaning
of section 3(35) of ERISA that are (i) maintained or to be established or
maintained by Buyer or the Companies, and (ii) qualified under section 401(a) of
the Code.

“Buyer Required Regulatory Approvals” means (i) the filings by Seller, Buyer and
Parent required by the HSR Act in connection with the transactions contemplated
by this Agreement, the Partnership Interests Purchase Agreement and the Merger
Agreement, and the expiration or

 

2

 

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earlier termination of all waiting periods under the HSR Act, and (ii) the
approvals set forth on Schedule 1.1-C.

“Buyer’s Representatives” means Buyer’s accountants, employees, counsel,
environmental consultants, surveyors, financial advisors, and other
representatives.

“Central or Shared Functions” means any of the business functions set forth on
Schedule 1.1-D.

“Central or Shared Function Employees” means any current or former employee of
Seller or its Subsidiaries whose employment is (or was immediately prior to
termination) principally related to Central or Shared Functions.

“Claims” means any and all civil, criminal, administrative, regulatory, or
judicial actions or causes of action, suits, petitions, proceedings (including
arbitration proceedings), investigations, hearings, demands, demand letters,
claims, or notices of noncompliance or violation delivered by any Governmental
Entity or other Person.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.

“COBRA Continuation Coverage” means the continuation of medical coverage
required under sections 601 through 608 of ERISA, and section 4980B of the Code.

“Code” means the Internal Revenue Code of 1986.

“Company” means either of Electric Opco or Gas Opco, as indicated by the
context, and “Companies” means Electric Opco and Gas Opco, collectively.

“Company Interests” means all of the general and limited partnership interests
of both Companies.

“Confidentiality Agreement” means the Confidentiality Agreement, dated July 11,
2006 between Seller and Buyer.

“Corporate Employees” means any current employee of Seller or its Subsidiaries
and any employee of Seller or its Subsidiaries hired after the date hereof and
before the Closing Date, including such employees who are Central or Shared
Function Employees, other than (i) Business Employees or Transferred Employees,
(ii) any current employee of Seller or its Subsidiaries, and any employee of
Seller or its Subsidiaries hired after the date hereof and before the Closing
Date, for Seller’s electric utility operations in Missouri and Kansas, and
(iii) any retirees of Seller or any of its Subsidiaries and any employee of
Seller or its Subsidiaries who retires between the date hereof and the Closing
Date.

“Documents” means all files, documents, instruments, papers, books, reports,
tapes, data, records, microfilms, photographs, letters, ledgers, journals, title
commitments and policies, title abstracts, surveys, customer lists and
information, regulatory filings, operating data and plans, technical
documentation (such as design specifications, functional requirements, and
operating

 

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instructions), user documentation (such as installation guides, user manuals,
and training materials), marketing documentation (such as sales brochures,
flyers, and pamphlets), Transferred Employee Records, and other similar
materials related principally to the Business, the Purchased Assets, or the
Assumed Obligations, in each case whether or not in electronic form; provided,
that “Documents” does not include: (i) information which, if provided to Buyer,
would violate any applicable Law or Order or the Governing Documents of Seller
or any of its Affiliates, (ii) bids, letters of intent, expressions of interest,
or other proposals received from others in connection with the transactions
contemplated by this Agreement or otherwise and information and analyses
relating to such communications, (iii) any information, the disclosure of which
would jeopardize any legal privilege available to Seller or any of its
Affiliates relating to such information or would cause Seller or any of its
Affiliates to breach a confidentiality obligation by which it is bound
(provided, that in the case of any items that would be Documents but for a
confidentiality obligation, Seller will use its reasonable best efforts at
Buyer’s request to obtain a waiver of such obligation), (iv) any valuations or
projections of or related to the Business, the Purchased Assets, the Company
Interests or the Assumed Obligations (other than any such valuations and
projections prepared in conjunction with any past, present or future regulatory
filings, whether or not the same was actually filed with the regulatory
authority, and customary studies, reports, and similar items prepared by or on
behalf of Seller for the purposes of completing, performing, or executing
unperformed service obligations, Easement relocation obligations, and
engineering and construction required to complete scheduled construction,
construction work in progress, and other capital expenditure projects, in each
case related principally to the Business and the Purchased Assets), (v) any
information management systems of Seller (but not including electronic data
principally related to the Business, the Purchased Assets or the Assumed
Obligations), and (vi) any rights, information, or other matters to the extent
used for or on the Internet, including any web pages or other similar items.

“Electric Business” means the electric utility business conducted by Seller
serving customers in the Territory.

“Electric Business Assumed Obligations” means the Assumed Obligations
principally related to the Electric Business rather than the Gas Business.

“Electric Business Purchased Assets” means the Purchased Assets principally
related to the Electric Business rather than the Gas Business.

“Encumbrances” means any mortgages, pledges, liens, claims, charges, security
interests, conditional and installment sale agreements, Preferential Purchase
Rights, activity and use limitations, easements, covenants, encumbrances,
obligations, limitations, title defects, deed restrictions, and any other
restrictions of any kind, including restrictions on use, transfer, receipt of
income, or exercise of any other attribute of ownership.

“Environment” means all or any of the following media: soil, land surface and
subsurface strata, surface waters (including navigable waters, streams, ponds,
drainage basins, and wetlands), groundwater, drinking water supply, stream
sediments, ambient air (including the air within buildings and the air within
other natural or man-made structures above or below ground), plant and animal
life, and any other natural resource.

 

 

4

 

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“Environmental Claims” means any and all Claims (including any such Claims
involving toxic torts or similar liabilities in tort, whether based on
negligence or other fault, strict or absolute liability, or any other basis)
relating in any way to any Environmental Laws or Environmental Permits, or
arising from the presence, Release, or threatened Release (or alleged presence,
Release, or threatened Release) into the Environment of any Hazardous Materials,
including any and all Claims by any Governmental Entity or by any Person for
enforcement, cleanup, remediation, removal, response, remedial or other actions
or damages, contribution, indemnification, cost recovery, compensation, or
injunctive relief pursuant to any Environmental Law or for any property damage
or personal or bodily injury (including death) or threat of injury to health,
safety, natural resources, or the Environment.

“Environmental Laws” means all Laws relating to pollution or the protection of
human health, safety, the Environment, or damage to natural resources, including
Laws relating to Releases and threatened Releases or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Materials. Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
§ 9601 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
§ 136 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et
seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air
Act, 42 U.S.C. § 7401 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. § 1251 et seq.; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the
Endangered Species Act, 16 U.S.C. § 1531 et seq.; the National Environmental
Policy Act, 42 U.S.C. § 4321, et seq.; the Occupational Safety and Health Act,
29 U.S.C. § 651 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.;
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.;
Atomic Energy Act, 42 U.S.C. § 2014 et seq.; Nuclear Waste Policy Act, 42 U.S.C.
§ 10101 et seq.; and their state and local counterparts or equivalents, all as
amended from time to time, and regulations issued pursuant to any of those
statutes.

“Environmental Permits” means all permits, certifications, licenses, franchises,
approvals, consents, waivers or other authorizations of Governmental Entities
issued under or with respect to applicable Environmental Laws and used or held
by Seller for the operation of the Business.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any Person that, together with Seller, would be
considered a single employer under section 414(b), (c), or (m) of the Code.

“ERISA Case” means the litigation captioned In re Aquila, Inc. ERISA Litigation,
Case No. 04-cv-00865 (DW), filed in the United States District Court for the
Western District of Missouri and any similar Claims relating to the causes of
action in such litigation.

“Exchange Act” means the Securities Exchange Act of 1934.

“Exchange Agent” means any exchange agent appointed in connection with the
transactions contemplated by the Merger Agreement.

“FERC” means the Federal Energy Regulatory Commission.

 

 

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“FERC Accounting Rules” means the requirements of FERC with respect to and in
accordance with the Uniform System of Accounts established by FERC.

“Final Regulatory Order” means, with respect to a Required Regulatory Approval,
an Order granting such Required Regulatory Approval that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
any waiting period prescribed by applicable Law before the transactions
contemplated by this Agreement may be consummated has expired (but without the
requirement for expiration of any applicable rehearing or appeal period).

“Gas Business” means the gas utility business conducted by Seller serving
customers in the Territory.

“Gas Business Assumed Obligations” means the Assumed Obligations principally
related to the Gas Business rather than the Electric Business.

“Gas Business Purchased Assets” means the Purchased Assets principally related
to the Gas Business rather than the Electric Business.

“GAAP” means United States generally accepted accounting principles as of the
date hereof.

“Good Utility Practice” means any practices, methods, standards, guides, or
acts, as applicable, that (i) are generally accepted in the region during the
relevant time period in the natural gas or electric utility industry, as
applicable, (ii) are commonly used in prudent utility engineering, construction,
project management, and operations, or (iii) would be expected if the Business
was conducted in a manner consistent with Laws and Orders applicable to the
Business, and the objectives of reliability, safety, environmental protection,
economy and expediency. Good Utility Practice includes acceptable practices,
methods, or acts generally accepted in the region, and is not limited to the
optimum practices, methods, or acts to the exclusion of all others.

“Governing Documents” of a Person means the articles or certificate of
incorporation and bylaws, or comparable governing documents, of such Person.

“Governmental Entity” means the United States of America and any other federal,
state, local, or foreign governmental or regulatory authority, department,
agency, commission, body, court, or other governmental entity.

“Hazardous Material” means (i) any chemicals, materials, substances, or wastes
which are now or hereafter defined as or included in the definition of
“hazardous substance,” “hazardous material,” “hazardous waste,” “solid waste,”
“toxic substance,” “extremely hazardous substance,” “pollutant,” “contaminant,”
or words of similar import under any applicable Environmental Laws; (ii) any
petroleum, petroleum products (including crude oil or any fraction thereof),
natural gas, natural gas liquids, liquefied natural gas or synthetic gas useable
for fuel (or mixtures of natural gas and such synthetic gas), or oil and gas
exploration or production waste, polychlorinated biphenyls, asbestos-containing
materials, mercury, and lead-

 

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based paints; and (iii) any other chemical, material, substances, waste, or
mixture thereof which is prohibited, limited, or regulated by Environmental
Laws.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“Income Tax” means any Tax based upon, measured by, or calculated with respect
to (i) net income, profits, or receipts (including capital gains Taxes and
minimum Taxes) or (ii) multiple bases (including corporate franchise and
business license Taxes) if one or more of the bases on which such Tax may be
based, measured by, or calculated with respect to is described in clause (i), in
each case together with any interest, penalties, or additions to such Tax.

“Independent Accounting Firm” means any independent accounting firm of national
reputation mutually appointed by Buyer and Parent.

“Law” means any statutes, regulations, rules, ordinances, codes, and similar
acts or promulgations of any Governmental Entity.

“Loss” or “Losses” means losses, liabilities, damages, obligations, payments,
costs, and expenses (including the costs and expenses of any and all actions,
suits, proceedings, assessments, judgments, settlements, and compromises
relating thereto and reasonable attorneys’ fees and reasonable disbursements in
connection therewith).

“Material Adverse Effect” means any event, effect, change or development that,
individually or in the aggregate, (i) other than for purposes of Section 9.2(e),
prevents or materially delays or impairs the ability of Seller to consummate the
transactions contemplated herein; or (ii) is materially adverse to the financial
condition, properties, assets, liabilities (contingent or otherwise), business,
or results of operation of the Business and the Purchased Assets, together with
the Natural Gas Businesses and the Natural Gas Assets, taken as a whole, in each
case excluding any effect on, change in, or development caused by, or event,
effect or development resulting from, or arising out of, (A) factors generally
affecting the economy, financial markets, capital markets, or commodities
markets, except to the extent the Business and the Purchased Assets, together
with the Natural Gas Businesses and the Natural Gas Assets, taken as a whole,
are adversely affected in a substantially disproportionate manner as compared to
similarly situated companies; (B) factors, including changes in Law, generally
affecting any industry or any segment of any industry in which the Business
operates, except to the extent the Business and the Purchased Assets, together
with the Natural Gas Businesses and the Natural Gas Assets, taken as a whole,
are adversely affected in a substantially disproportionate manner as compared to
similarly situated participants in such industry or such segment of such
industry; (C) the execution, announcement or performance of this Agreement, the
Asset Purchase Agreement or the Merger Agreement, including, in each case, the
impact thereof on relationships, contractual or otherwise, with Governmental
Entities, customers, suppliers, licensors, distributors, partners or employees;
(D) the commencement, occurrence, continuation or intensification of any war,
sabotage, armed hostility or terrorism, other than any matter or event occurring
in the geographic region served by the Business and the Purchased Assets,
together with the Natural Gas Businesses and the Natural Gas Assets, taken as a
whole; (E) any event,

 

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circumstance or condition disclosed in Schedule 1.1-G; and (F) any action taken
by Seller or any of its Subsidiaries with Buyer’s written consent referring to
this subsection (F).

“Natural Gas Assets” means the assets of Seller used in the operation of the
Natural Gas Businesses to be purchased or acquired by Buyer pursuant to the
Asset Purchase Agreement.

“Natural Gas Businesses” means the natural gas utility businesses conducted by
Seller serving customers in Iowa, Kansas and Nebraska.

“Non-Permitted Encumbrances” means (i) Encumbrances securing or created by or in
respect of any of the Excluded Liabilities (other than Excluded Liabilities that
are included in the “Assumed Obligations” under the Asset Purchase Agreement);
(ii) statutory liens for material delinquent Taxes, or material delinquent
assessments, other than such Taxes or assessments that will become an Assumed
Obligation pursuant to Section 2.3 (or will become an “Assumed Obligation”
pursuant to the Asset Purchase Agreement); and (iii) Encumbrances that
individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect; provided that, in determining if any Encumbrances would
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect for purposes of clause (iii) of this definition, the following
Encumbrances will be excluded: (A) mechanics’, carriers’, workers’, repairers’,
landlords’, and other similar liens arising or incurred in the ordinary course
of business relating to obligations to which there is no default on the part of
Seller, (B) pledges, deposits or other liens securing the performance of bids,
trade contracts, leases or statutory obligations (including workers’
compensation, unemployment insurance, or other social security legislation),
(C) zoning, entitlement, restriction, and other land use and environmental
regulations by Governmental Entities that do not materially interfere with the
present use of the Purchased Assets, (D) any Encumbrance set forth in any state,
local, or municipal franchise or governing ordinance, or any franchise or other
agreement entered into by Seller in connection with any such ordinance, under
which any portion of the Business is conducted, (E) all rights of condemnation,
eminent domain, or other similar rights of any Person, or (F) such other
Encumbrances (including requirements for consent or notice in respect of
assignment of any rights) that do not materially interfere with the Companies’
use of the Purchased Assets for the Business, and do not secure indebtedness or
the payment of the deferred purchase price of property (except for Assumed
Obligations hereunder or that are included in the “Assumed Obligations” under
the Asset Purchase Agreement).

“Order” means any order, judgment, writ, injunction, decree, directive, or award
of a court, administrative judge, or other Governmental Entity acting in an
adjudicative or regulatory capacity, or of an arbitrator with applicable
jurisdiction over the subject matter.

“Party” means Buyer or Seller, or Buyer, Seller, Limited Partner, Parent or
Merger Sub, as indicated by the context, and “Parties” means Buyer and Seller,
or Buyer, Seller, Limited Partner, Parent and Merger Sub, as indicated by the
context.

“Permits” means all permits, certifications, licenses, franchises, approvals,
consents, waivers or other authorizations of Governmental Entities issued under
or with respect to applicable Laws or Orders and used or held by Seller for the
operation of the Business, other than Environmental Permits.

 

 

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“Person” means any individual, partnership, limited liability company, joint
venture, corporation, trust, unincorporated organization, or Governmental
Entity.

“Preferential Purchase Rights” means rights of any Person (other than rights of
condemnation, eminent domain, or other similar rights of any Person) to purchase
or acquire any interest in any of the Purchased Assets, including rights that
are conditional upon a sale of any Purchased Assets or any other event or
condition.

“Prime Rate” means, for any day, the per annum rate of interest quoted by
Citibank, N.A. as its prime rate.

“PUC” means the Public Utilities Commission of the State of Colorado.

“Regulatory Order” means an Order issued by the PUC or FERC that affects or
governs the rates, services, or other utility operations of the Business.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing of Hazardous
Materials into the Environment.

“Required Regulatory Approvals” means the Seller Required Regulatory Approvals
and the Buyer Required Regulatory Approvals.

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933.

“Seller Disclosure Schedule” means, collectively, all Schedules other than
Schedule 1.1-C and Schedule 6.3.

“Seller Marks” means the names “Aquila,” “Aquila Networks,” “Energy One,”
“Service Guard,” “UtiliCorp,” “Peoples Natural Gas,” “West Plains Energy,”
“Kansas Public Service,” and any derivative of any of the foregoing, and any
related, similar, and other trade names, trademarks, service marks, and logos of
Seller, and any domain names incorporating any of the foregoing.

“Seller Pension Plan” means the Aquila, Inc. Retirement Income Plan, as amended
from time to time.

“Seller Required Regulatory Approvals” means (i) the filings by Parent, Seller
and Buyer required by the HSR Act in connection with the transactions
contemplated by this Agreement, the Asset Purchase Agreement and the Merger
Agreement, and the expiration or earlier termination of all waiting periods
under the HSR Act, and (ii) the approvals set forth on Schedule 1.1-E.

 

 

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“Seller SEC Filings” means forms, statements, reports, schedules and other
documents required to be filed or furnished by Seller with or to the SEC
pursuant to applicable Laws and policies since January 1, 2005.

“Seller’s Knowledge,” or words to similar effect, means the actual knowledge of
the persons set forth in Schedule 1.1-F.

“Seller’s Representatives” means Seller’s accountants, employees, counsel,
environmental consultants, financial advisors, and other representatives.

“Shared Code” means all computer software applications, programs and interfaces,
including source and object code therefor, owned by Seller immediately prior to
the Closing. “Shared Code” shall not include any computer software applications,
programs or interfaces, or any part thereof, owned by any third party.

“Subsidiary,” when used in reference to a Person, means any Person of which
outstanding securities or other equity interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions of such Person are owned or controlled directly or indirectly by such
first Person.

“Tax” and “Taxes” means all taxes, charges, fees, levies, penalties, or other
assessments imposed by any foreign or United States federal, state, or local
taxing authority, including income, excise, property, sales, transfer,
franchise, license, payroll, withholding, social security, or other taxes
(including any escheat or unclaimed property obligations), including any
interest, penalties, or additions attributable thereto.

“Tax Affiliate” of a Person means a member of that Person’s Affiliated Group and
any other Subsidiary of that Person which is a partnership or is disregarded as
an entity separate from that Person for Tax purposes.

“Tax Return” means any return, report, information return, or other document
(including any related or supporting information) required to be supplied to any
Governmental Entity with respect to Taxes.

“Termination Fee” means the “Termination Fee,” if any, required to be paid by
Parent to Buyer under Section 10.2 of the Asset Purchase Agreement.

“Territory” means the service territories of Seller’s gas and electric utility
businesses in Colorado.

“Transferred Employee Records” means the following records relating to
Transferred Employees: (i) skill and development training records and resumes,
(ii) seniority histories, (iii) salary and benefit information,
(iv) Occupational, Safety and Health Administration medical reports, (v) active
medical restriction forms, and (vi) job performance reviews and applications;
provided that such records will not be deemed to include any record which Seller
is restricted by Law, Order, or agreement from providing to Buyer.

 

 

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“Transition Services Agreement” means the Transition Services Agreement, dated
the date hereof, among Buyer, Parent and Merger Sub.

“WARN Act” means the Worker Adjustment Retraining and Notification Act of 1988,
as amended.

“Water Rights” means the real and personal property rights and interests
(including easement rights) associated with Seller’s water, well, and mutual
ditch company interests principally used for the Business.

(b)   In addition, each of the following terms has the meaning specified in the
Exhibit or Section set forth opposite such term:

Term

Reference

Accounts Payable

Section 2.3(f)

Actual Capital Expenditures

Section 3.1(b)

Actual Working Capital

Section 3.1(b)

Adjusted Section 4044 Amount

Exhibit 8.8(d)(ii)(C)

Adjustment Amount

Section 3.1(b)

Adjustment Dispute Notice

Section 3.2(c)

Agreement

Preamble

Allocated Rights and Obligations

Section 8.5(d)

Applicable Period

Section 8.8(d)(ii)(E)

Applicable Preferential Purchase Right

Section 8.9(c)

Asset Purchase Agreement

Recitals

Assumed Environmental Liabilities

Section 2.3(g)

Assumed Obligations

Section 2.3

Base Price

Section 3.1(a)

Benefit Plan

Section 5.12(a)

Buyer

Preamble

Buyer Financing

Section 6.5(a)

 

 

 

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Buyer Financing Commitments

Section 6.5(b)

Buyer Pension Plan Trust

Exhibit 8.8(d)(ii)(C)

CB Transferred Employees

Section 8.8(a)

Capital Expenditures

Section 3.1(b)

Capital Expenditures Budget

Section 3.1(b)

Closing

Section 4.1

Closing Date

Section 4.1

Closing Payment Amount

Section 3.2(a)

Collective Bargaining Agreement

Section 5.11

Confidential Business Information

Section 8.2(c)

Confidential Information

Section 8.2(b)

Contingent Purchased Assets

Section 8.5(f)(ii)

Correct Purchase Price

Section 3.2(d)

Covered Individuals

Section 8.8(d)(ii)(D)

Current Retirees

Section 8.8(d)(ii)(D)

Customer Notification

Section 8.13

Division Income Statement Information

Section 5.5(b)

Easements

Section 8.5(a)

Electric Opco

Recitals

Excluded Assets

Section 2.2

Excluded Liabilities

Section 2.4

Final Purchase Price

Section 3.2(e)

Financial Hedge

Section 8.5(c)

Franchises

Section 5.13(b)

 

 

 

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Gas Opco

Recitals

Initial Transfer Amount

Exhibit 8.8(d)(ii)(C)

Initial Transfer Date

Exhibit 8.8(d)(ii)(C)

Interests Transfer

Section 2.1

Interim Period

Section 8.5(f)(ii)

Lease Buy-Out Amount

Section 3.1(b)

Limited Partner

Preamble

Locals

Section 8.8(c)

Merger

Recitals

Merger Agreement

Recitals

Methodologies

Section 3.1(b)

New CBA

Section 8.8(c)

Non-CB Transferred Employees

Section 8.8(a)

Other Arrangements

Section 8.5(d)

Other Plan Participants

Exhibit 8.8(d)(ii)(C)

Parent

Preamble

Post-Retirement Welfare Benefits

Section 8.8(d)(ii)(D)

Proposed Adjustment Amount

Section 3.2(b)

Proposed Adjustment Statement

Section 3.2(b)

Proposed Purchase Price

Section 3.2(b)

Purchase Price

Section 3.1(a)

Purchased Assets

Section 2.1

Qualifying Offer

Section 8.8(a)

Real Property

Section 2.1(a)

Reduction Amount

Exhibit 8.8(d)(ii)(C)

 

 

 

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Reference Balance Sheet

Section 3.1(b)

Reference Capital Expenditures

Section 3.1(b)

Reference Working Capital

Section 3.1(b)

Regulatory Material Adverse Effect

Section 8.4(e)

Retained Agreements

Section 2.2(l)

Savings Plan

Section 8.8(d)(ii)(E)

Section 4044 Amount

Exhibit 8.8(d)(ii)(C)

Selected Balance Sheet Information

Section 5.5(a)

Seller

Preamble

Seller Pension Plan Trust

Exhibit 8.8(d)(ii)(C)

Severance Compensation Agreements

Section 2.1(h)

Shared Agreements

Section 8.5(d)

Straddle Period Taxes

Section 8.7(b)

Substitute Arrangements

Section 8.5(d)

Successor Collective Bargaining Agreement

Section 5.11

Termination Date

Section 10.1(b)

Transfer Taxes

Section 8.7(a)

Transferable Environmental Permits

Section 2.1(i)

Transferable Permits

Section 2.1(g)

Transferred Employee

Section 8.8(a)

Transition Committee

Section 8.1(b)

True-Up Amount

Exhibit 8.8(d)(ii)(C)

True-Up Date

Exhibit 8.8(d)(ii)(C)

Unrecovered Fuel Adjustment

Section 3.1(b)

 

 

 

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Unrecovered Purchased Gas Adjustment

Section 3.1(b)

Working Capital

Section 3.1(b)

1.2    Other Definitional and Interpretive Matters. Unless otherwise expressly
provided, for purposes of this Agreement, the following rules of interpretation
apply:

(a)    Calculation of Time Period. When calculating the period of time before
which, within which, or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period will be excluded. If the last day of such period is a non-Business
Day, the period in question will end on the next succeeding Business Day.

(b)   Dollars. Any reference in this Agreement to “dollars” or “$” means U.S.
dollars.

(c)   Exhibits and Schedules. Unless otherwise expressly indicated, any
reference in this Agreement to an “Exhibit” or a “Schedule” refers to an Exhibit
or Schedule to this Agreement. The Exhibits and Schedules to this Agreement are
hereby incorporated and made a part hereof as if set forth in full herein and
are an integral part of this Agreement. Any capitalized terms used in any
Schedule or Exhibit but not otherwise defined therein are defined as set forth
in this Agreement.

(d)   Gender and Number. Any reference in this Agreement to gender includes all
genders, and the meaning of defined terms applies to both the singular and the
plural of those terms.

(e)    Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections, and other subdivisions, and the insertion of
headings are for convenience of reference only and do not affect, and will not
be utilized in construing or interpreting, this Agreement. All references in
this Agreement to any “Section” are to the corresponding Section of this
Agreement unless otherwise specified.

(f)    References. References to any agreement, instrument or other document
means that agreement, instrument or other document as amended, modified or
supplemented from time to time, including by waiver or consent, and all
attachments thereto and instruments incorporated therein.

(g)   “Herein.” The words such as “herein,” “hereinafter,” “hereof,” and
“hereunder” refer to this Agreement (including the Schedules and Exhibits to
this Agreement) as a whole and not merely to a subdivision in which such words
appear unless the context otherwise requires.

(h)   “Including.” The word “including” or any variation thereof means
“including, without limitation” and does not limit any general statement that it
follows to the specific or similar items or matters immediately following it.

 

 

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(i)    “To the extent.” The words “to the extent” when used in reference to a
liability or other matter, means that the liability or other matter referred to
is included in part or excluded in part, with the portion included or excluded
determined based on the portion of such liability or other matter exclusively
related to the subject.

(j)    “Principally in the Business.” With reference to assets owned by Seller,
and liabilities of Seller, which are used by, in, or for, or relate to, the
Business, the phrases “principally in the Business,” “principally for the
Business,” and other statements of similar import will be construed to refer to
assets or liabilities that are: (A) specifically listed in a Schedule setting
forth Purchased Assets or Assumed Obligations; or (B) otherwise are devoted
principally to (or in the case of liabilities, are related principally to) the
Business other than Excluded Assets and Excluded Liabilities.

1.3    Joint Negotiation and Preparation of Agreement. The Parties have
participated jointly in the negotiation and drafting of this Agreement and, in
the event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as jointly drafted by the Parties hereto and no
presumption or burden of proof favoring or disfavoring any Party will exist or
arise by virtue of the authorship of any provision of this Agreement.

ARTICLE II

 

PURCHASE AND SALE

2.1    The Sale. Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, at the Closing, Seller and Limited
Partner will sell, assign, convey, transfer, and deliver to Buyer and to Buyer’s
designated limited partner, and Buyer and Buyer’s designee will purchase and
acquire the Company Interests from Seller as the general partner of Electric
Opco and Gas Opco, and from Limited Partner as the limited partner of Electric
Opco and Gas Opco (the “Interests Transfer”). Immediately prior to the Interests
Transfer and the Closing, Seller will transfer and cause the Companies to
acquire from Seller, subject to all Encumbrances except for Non-Permitted
Encumbrances, all of Seller’s right, title, and interest in, to, and under the
real and personal property, tangible or intangible, principally related to the
Business, including as described below, as the same exists at the Closing (and,
as applicable and as permitted or contemplated hereby, or as Buyer and Parent
agree, with such additions and eliminations of assets as shall occur from the
date hereof through the Closing), except to the extent that such assets are
Excluded Assets (collectively, the “Purchased Assets”):

(a)    Seller’s real property and real property interests located in Colorado,
including (i) as described on Schedule 2.1(a), (ii) buildings, structures, other
improvements, and fixtures located thereon, (iii) all rights, privileges,
easements and appurtenances thereto, the leasehold and subleasehold interests
under the leases described on Schedule 5.9, (iv) the Easements to be conveyed at
the Closing pursuant to Section 8.5(a), and (v) any installation, facility,
plant (including any manufactured gas plant), or site (including any
manufactured gas plant site) described on Schedule 2.1(a) that (A) at the
Closing is operated, owned, leased, or otherwise under the control of or
attributed to Seller or the Business, and (B) is located in the Territory
(collectively, the “Real Property”);

 

 

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(b)   the accounts receivable and inventories owned by Seller and principally
related to the Business, and other similar or related items principally related
to the Business;

(c)

the Documents;

(d)   the machinery, equipment, vehicles, furniture, pipeline system, natural
gas, distribution assets, electrical distribution assets, and other tangible
personal property owned by Seller and used principally in the Business,
including the vehicles and equipment listed on Schedule 2.1(d) to be attached to
the Agreement prior to July 1, 2007, and all warranties against manufacturers or
vendors relating thereto;

(e)

the Business Agreements and the Franchises;

(f)    the Allocated Rights and Obligations to the extent transferred to the
Companies pursuant to Section 8.5(d);

(g)   the Permits, in each case to the extent the same are assignable (the
“Transferable Permits”);

(h)   the severance compensation agreements, if any, between Seller and the
Business Employees, as applicable (the “Severance Compensation Agreements”);

(i)    the Environmental Permits, including those listed on Schedule 5.10(a)-2,
in each case to the extent the same are assignable (the “Transferable
Environmental Permits”);

(j)    in addition to the claims, rights and proceeds described in
Section 2.1(r), to the extent (i) Seller has received any insurance proceeds
from settlements with insurance providers prior to the date hereof relating to
costs to clean-up any Real Property as required under any Environmental Laws,
including any manufactured gas plant sites acquired by Buyer pursuant to this
Agreement, and (ii) such clean-up costs have not been incurred prior to the
Closing Date, a pro-rata share of such proceeds to be allocated to the Real
Property based upon the estimated clean-up costs of all similar sites of Seller
covered by such proceeds;

(k)   any refund or credit related to Taxes paid by or on behalf of Seller for
which Buyer is liable pursuant to Section 8.7, whether such refund is received
as a payment or as a credit against future Taxes payable;

(l)    Claims and defenses of Seller to the extent such Claims or defenses arise
principally with respect to the Purchased Assets or the Assumed Obligations,
provided that any such Claims and defenses will be assigned to the Companies
without warranty or recourse;

(m)

assets transferred pursuant to Section 8.8;

 

(n)

any other assets owned by Seller and set forth on Schedule 2.1(n);

(o)   assets included in the FERC Accounts upon which the Selected Balance Sheet
Information was prepared;

 

 

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(p)   any credits, benefits, emissions reductions, offsets and allowances with
respect to any Environmental Laws purchased by or granted or issued to Seller
for use by or with respect to the Business or the Purchased Assets;

(q)

any other assets of Seller used principally in the Business; and

(r)    any claims or rights under or proceeds of Seller’s insurance policies to
the extent related to the Business, the Purchased Assets or the Assumed
Obligations, including claims, rights or proceeds contemplated by
Section 8.9(b).

2.2    Excluded Assets. The Purchased Assets do not include any property or
assets of Seller not described in Section 2.1 and, notwithstanding any provision
to the contrary in Section 2.1 or elsewhere in this Agreement, the Purchased
Assets do not include the following property or assets of Seller (all assets
excluded pursuant to this Section 2.2, the “Excluded Assets”):

(a)

cash, cash equivalents, and bank deposits;

(b)   certificates of deposit, shares of stock, securities, bonds, debentures,
evidences of indebtedness, and any other debt or equity interest in any Person;

(c)   properties and assets principally used in or for the conduct of the
electric utility business conducted by Seller in the States of Kansas or
Missouri, or the Natural Gas Businesses;

(d)   except as set forth in Section 2.1(k), any refund or credit related to
Taxes paid by or on behalf of Seller, whether such refund is received as a
payment or as a credit against future Taxes payable;

(e)    funds, letters of credit and other forms of credit support that have been
deposited by Seller as collateral to secure Seller’s obligations;

(f)

all books, records, or the like other than the Documents;

(g)   any assets that have been disposed of in the ordinary course of business
or otherwise in compliance with this Agreement prior to Closing;

(h)   except as expressly provided in Section 2.1(d) and Section 2.1(l), all of
the Claims or causes of action of Seller against any Person;

(i)    except as included on Schedule 2.1(n), assets used for performance of the
Central or Shared Functions;

(j)    except as provided in Section 2.1(j), Section 2.1(l) and Section 2.1(r),
all insurance policies, and rights thereunder, including any such policies and
rights in respect of the Purchased Assets or the Business;

 

 

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(k)   the rights of Seller arising under or in connection with this Agreement,
any certificate or other document delivered in connection herewith, and any of
the transactions contemplated hereby and thereby;

(l)    all (i) agreements and contracts set forth on Schedule 2.2(l) to be
attached to the Agreement prior to July 1, 2007 (the “Retained Agreements”),
(ii) Shared Agreements (except to the extent provided by Section 8.5(d)), and
(iii) other agreements and contracts not included in the Business Agreements and
Franchises;

(m)   all software, software licenses, information systems, management systems,
and any items set forth in or generally described in subparts (i) through
(vi) of the definition of “Documents” in Section 1.1(a) other than the software
and related assets set forth on Schedule 2.1(n); and

(n)

any assets of any Benefit Plan, except as otherwise provided in Section 8.8.

2.3    Assumed Obligations. On the Closing Date, each of the Companies will
deliver to Seller the Assignment and Assumption Agreement pursuant to which each
of the Companies will assume and agree to discharge all of the debts,
liabilities, obligations, duties, and responsibilities of Seller of any kind and
description, whether absolute or contingent, monetary or non-monetary, direct or
indirect, known or unknown, or matured or unmatured, or of any other nature, to
the extent incurred either prior to or after the Closing, and principally
related to the Purchased Assets or the Business, including those obligations and
liabilities set forth in the Selected Balance Sheet Information, other than
Excluded Liabilities (the “Assumed Obligations”), in accordance with the
respective terms and subject to the respective conditions thereof, including the
following liabilities and obligations:

(a)    all liabilities and obligations of Seller under the Business Agreements,
the Severance Compensation Agreements, the Transferable Permits, the
Transferable Environmental Permits, the Preferential Purchase Rights assigned to
the Companies pursuant to Section 8.9(c), the Allocated Rights and Obligations
transferred to the Companies pursuant to Section 8.5(d), and any other
agreements or contractual rights assigned to the Companies pursuant to the terms
of this Agreement;

(b)   all liabilities and obligations of Seller with respect to customer
deposits, customer advances for construction and other similar items related
principally to the Business or the Purchased Assets;

(c)   all liabilities and obligations relating to unperformed service
obligations, Easement relocation obligations, and engineering and construction
required to complete scheduled construction, construction work in progress, and
other capital expenditure projects, in each case related principally to the
Business and outstanding on or arising after the Closing;

(d)   all liabilities and obligations associated with the Purchased Assets or
the Business in respect of Taxes for which Buyer or the Companies are liable
pursuant to Section 8.7;

(e)    all liabilities and obligations for which Buyer or the Companies are
responsible pursuant to Section 8.8;

 

 

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(f)    all trade accounts payable and other accrued and unpaid current expenses
in respect of goods and services incurred by or for the Business to the extent
attributable to the period prior to the Closing (the “Accounts Payable”);

(g)   (i) all Environmental Claims, and (ii) all liabilities, obligations and
demands arising under, in respect of, or relating to past, present, and future
Environmental Laws, existing, arising, or asserted with respect to the Business
or the Purchased Assets, whether before, on, or after the Closing Date (the
“Assumed Environmental Liabilities”). For avoidance of doubt, the Assumed
Environmental Liabilities include all liabilities and obligations (including
liabilities and obligations based upon the presence, Release, or threatened
Release of Hazardous Materials) of Seller directly or indirectly relating to,
caused by, or arising in connection with the operation, ownership, use, or other
control of or activity at or relating to any installation, facility, plant
(including any manufactured gas plant), or site (including any manufactured gas
plant site) that at the Closing is, or at any time prior to the Closing was,
(i) operated, owned, leased, or otherwise under the control of or attributed to
any of Seller, the Business, or any predecessor in interest of Seller or the
Business, and (ii) located in the Territory or any areas previously served by
the Business or any predecessor of the Business; provided, however, that the
Assumed Environmental Liabilities do not include any such liabilities,
obligations, Environmental Claims, or demands in respect of real property that
is both (A) owned or leased by Seller as of the date of this Agreement, and
(B) not included in the Purchased Assets; and

(h)   all liabilities and obligations of Seller, the Companies or Buyer arising
before, on or after the Closing Date (i) under any Regulatory Orders applicable
to the Business or the Purchased Assets, or (ii) imposed on Buyer, the Companies
or the Purchased Assets or Business in connection with any Required Regulatory
Approval.

2.4    Excluded Liabilities. Neither Buyer nor the Companies will assume or will
be obligated to pay, perform, or otherwise discharge any of the following
liabilities or obligations (collectively, the “Excluded Liabilities”):

(a)    any liabilities or obligations of Seller to the extent related to any
Excluded Assets;

(b)   any liabilities or obligations of Seller in respect of indebtedness for
borrowed money or the deferred purchase price of property;

(c)   any liabilities or obligations in respect of Taxes of Seller or any Tax
Affiliate of Seller, or any liability of Seller for unpaid Taxes of any Person
under Treasury regulation section 1.1502-6 (or similar provision of state,
local, or foreign law) as a transferee or successor, by contract or otherwise,
except for Taxes for which Buyer or the Companies are liable pursuant to
Section 8.7;

(d)   any and all liabilities arising in connection with the ERISA Case and,
except as otherwise provided in Section 2.6 or Section 8.8, any other liability
or obligation of Seller or an ERISA Affiliate of Seller to any employee of
Seller under or in connection with any of the Benefit Plans, including under any
deferred compensation arrangement or severance policy

 

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or any obligation to make any parachute or retention payment, including any
liability related to the matters set forth on Schedule 5.12(d); and

(e)    except as set forth in Section 2.6, any other liability, obligation, duty
or responsibility of Seller not principally related to the Purchased Assets or
the Business.

2.5    Allocation of the Purchased Assets and the Assumed Obligations. Electric
Opco will acquire and assume the Purchased Assets and the Assumed Obligations
principally related to the Electric Business and Gas Opco will acquire and
assume the Purchased Assets and the Assumed Obligations principally related to
the Gas Business. Prior to the Closing Date, Buyer and Seller will work together
in good faith to agree upon the allocation of the Purchased Assets and the
Assumed Obligations between Electric Opco and Gas Opco.

2.6

Post-Closing Liabilities. As of the Closing Date:

(a)    With respect to the Corporate Employees, Buyer will reimburse Seller or
Seller’s successor for 40% of all costs of short-term severance-related
benefits, including outplacement benefits, gross-ups for taxes, and severance
payments made or provided by Seller or Seller’s successor to such employees in
connection with the termination of such employees prior to or at the Closing as
a result of the transactions contemplated by this Agreement, the Partnership
Interests Purchase Agreement and the Merger Agreement.

(b)   Parent and Seller will, and Parent will cause Seller’s successor to,
reimburse Buyer for any Losses, costs or expenses incurred by Buyer with respect
to any Excluded Liabilities (other than any Excluded Liabilities that are
assumed by Buyer or an Affiliate of Buyer pursuant to the Asset Purchase
Agreement).

(c)   Buyer will reimburse Seller, or Seller’s successor, as applicable, for any
Losses, costs or expenses incurred by Parent, Seller or Seller’s successor with
respect to any Assumed Obligations.

ARTICLE III

 

PURCHASE PRICE

3.1

Purchase Price.

(a)    The purchase price for the Company Interests (the “Purchase Price”) will
be an amount equal to $340,000,000 (the “Base Price”), adjusted as follows:
(i) the Base Price will be increased by the Adjustment Amount if the Adjustment
Amount is a positive number; and (ii) the Base Price will be reduced by the
Adjustment Amount if the Adjustment Amount is a negative number.

(b)

The following definitions shall be used to compute the Purchase Price:

“Actual Capital Expenditures” means the actual Capital Expenditures for the
period between the date hereof and the Closing Date.

 

 

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“Actual Working Capital” means Working Capital as of the Closing Date.

“Adjustment Amount” means (i) Actual Working Capital minus Reference Working
Capital, plus (ii)  Actual Capital Expenditures minus Reference Capital
Expenditures, plus (iii) an amount equal to the aggregate under-billed amount,
or minus an amount equal to the aggregate over-billed amount, of the Unrecovered
Purchased Gas Adjustment as of the Closing Date for the Gas Business and the
Unrecovered Fuel Adjustment as of the Closing Date for the Electric Business,
plus (iv) an amount equal to the Lease Buy-Out Amount.

“Capital Expenditures” for any period means the amount of expenditures of the
Business for such period which must be capitalized in accordance with the
Methodologies.

“Capital Expenditures Budget” means the budget attached hereto as
Schedule 3.1(a).

“Lease Buy-Out Amount” means an amount equal to the aggregate purchase price to
purchase the vehicles included in the Purchased Assets that are subject to the
Master Lease Agreement as described in Schedule 5.8 and are purchased by Seller
prior to the Closing pursuant to Section 8.5(h).

“Methodologies” means (i) the methods used in the preparation of the Reference
Balance Sheet and the Capital Expenditures Budget; (ii) to the extent consistent
with the foregoing, the past practices of the Business; and (iii) to the extent
consistent with all of the foregoing, GAAP, in each case of clauses (i), (ii)
and (iii), applied on a consistent basis.

“Reference Balance Sheet” means the projected balance sheet of the Business as
of December 31, 2007 attached hereto as Schedule 3.1(b).

“Reference Capital Expenditures” means the amount of the Capital Expenditures as
set forth in the Capital Expenditures Budget.

“Reference Working Capital” means the Working Capital of the Business estimated
as of December 31, 2007, as set forth in Schedule 3.1(c).

“Unrecovered Fuel Adjustments” means the amount of fuel cost adjustment
otherwise permitted under Seller’s tariff for the Electric Business, not yet
paid by the customers of the Electric Business, or that the Electric Business
has not yet reimbursed to its customers.

“Unrecovered Purchased Gas Adjustment” means the amount of purchased gas
adjustment otherwise permitted under Seller’s tariff for the Gas Business, not
yet paid by the customers of the Gas Business, or that the Gas Business has not
yet reimbursed to its customers.

“Working Capital” as of any date means the “current assets” of the Business as
of such date minus the “current liabilities” of the Business as of such date
(which may be a positive or negative amount), determined in each case in
accordance with the Methodologies.

 

 

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3.2

Determination of Adjustment Amount and Purchase Price.

(a)    No later than fifteen (15) days prior to the Closing Date, Seller, in
consultation with Parent and Buyer, will prepare and deliver to Buyer and
Parent, Seller’s best estimate of the Actual Working Capital, the Actual Capital
Expenditures, the Unrecovered Fuel Adjustment, the Unrecovered Purchased Gas
Adjustment, the Lease Buy-Out Amount, the Adjustment Amount and the Purchase
Price to be paid at the Closing, based on Seller’s best estimates of the
Adjustment Amount (such estimated Purchase Price being referred to herein as the
“Closing Payment Amount”).

(b)   Within ninety (90) days after the Closing Date, Buyer will prepare and
deliver to Parent a statement (the “Proposed Adjustment Statement”) that
reflects Buyer’s determination of (i) the Actual Working Capital, the Actual
Capital Expenditures, the Unrecovered Fuel Adjustment, the Unrecovered Purchased
Gas Adjustment, the Lease Buy-Out Amount and the Adjustment Amount (the
“Proposed Adjustment Amount”), and (ii) the Purchase Price based on the Proposed
Adjustment Amount (the “Proposed Purchase Price”). In addition, Buyer will
provide Parent with supporting assumptions and calculations, in reasonable
detail, for such determinations at the time it delivers the Proposed Adjustment
Statement. Parent and Seller agree to, and Parent agrees to cause Seller’s
successor to, cooperate with Buyer after the Closing in connection with the
preparation of the Proposed Adjustment Statement and related information, and
will provide Buyer with access to Seller’s books, records, information, and
employees that are primarily related to the Business and the Purchased Assets
that are in Seller’s or its successor’s possession or control as Buyer may
reasonably request.

(c)   The amounts determined by Buyer as set forth in the Proposed Adjustment
Statement will be final, binding, and conclusive for all purposes unless, and
only to the extent, that within thirty (30) days after Buyer has delivered the
Proposed Adjustment Statement, Parent notifies Buyer of any dispute with matters
set forth in the Proposed Adjustment Statement. Any such notice of dispute
delivered by Parent (an “Adjustment Dispute Notice”) will identify with
reasonable specificity each item in the Proposed Adjustment Statement with
respect to which Parent disagrees, the reason for such disagreement, and
Parent’s position with respect to such disputed item, and will include Parent’s
recalculation of the Adjustment Amount and the Purchase Price. Parent shall be
conclusively deemed to have accepted any item in the Proposed Adjustment
Statement not addressed by the Adjustment Dispute Notice.

(d)   If Parent delivers an Adjustment Dispute Notice in compliance with
Section 3.2(c), Buyer and Parent will attempt to reconcile their differences and
any resolution by them as to any disputed amounts will be final, binding, and
conclusive for all purposes on the Parties. If Buyer and Parent are unable to
reach a resolution with respect to all disputed items within forty five (45)
days of delivery of the Adjustment Dispute Notice, Buyer and Parent will submit
any items remaining in dispute for determination and resolution to the
Independent Accounting Firm, which will be instructed to determine and report to
the Parties, within thirty (30) days after such submission, upon such remaining
disputed items. The determination of the Independent Accounting Firm on each
issue shall be neither more favorable to Buyer than shown in the Proposed
Adjustment Statement nor more favorable to Parent than shown in the Adjustment
Dispute Notice. The report of the Independent Accounting Firm will identify the
correct Actual Working Capital, Actual Capital Expenditures, Unrecovered Fuel
Adjustment, Unrecovered

 

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Purchased Gas Adjustment, Lease Buy-Out Amount, Adjustment Amount and Purchase
Price (the “Correct Purchase Price”) and such report will be final, binding, and
conclusive on the Parties for all purposes. The fees and disbursements of the
Independent Accounting Firm will be allocated between Buyer and Parent so that
Parent’s share of such fees and disbursements will be in the same proportion
that the aggregate amount of such remaining disputed items so submitted to the
Independent Accounting Firm that is unsuccessfully disputed by Parent (as
finally determined by the Independent Accounting Firm) bears to the total amount
of the disputed amounts so submitted to the Independent Accounting Firm, with
the remaining amount allocated to Buyer.

(e)    “Final Purchase Price” shall mean (i) the Proposed Purchase Price, if
Parent does not deliver an Adjustment Dispute Notice; (ii) the amount agreed
between Parent and Purchaser, if any; or (iii) the Correct Purchase Price, if
determined by the Independent Accounting Firm. Within five (5) days following
the final determination of the Final Purchase Price pursuant to Sections 3.2(b),
(c) and (d), (x) if the Final Purchase Price is greater than the Closing Payment
Amount, Buyer will pay the difference to Seller or its successor; or (y) if the
Final Purchase Price is less than the Closing Payment Amount, Parent will cause
Seller, or its successor, to pay the difference to Buyer. Any amount paid under
this Section 3.2(e) will be paid with interest for the period commencing on the
Closing Date through the date of payment, calculated at the Prime Rate in effect
on the Closing Date, in cash by wire transfer of same day funds to the account
specified by the Party receiving payment.

3.3    Allocation of Purchase Price. The sum of the Purchase Price and the
Assumed Obligations will be allocated among the Purchased Assets on a basis
consistent with section 1060 of the Code and the Treasury regulations
promulgated thereunder. Within one hundred eighty (180) days following the
Closing Date, the Parties will work together in good faith to agree upon such
allocation; provided that in the event that such agreement has not been reached
within such 180-day period, the allocation will be determined by the Independent
Accounting Firm, and such determination will be binding on the Parties. Parent
and Buyer will each pay one-half of the fees and expenses of the Independent
Accounting Firm in connection with such determination. Each Party will, and
Parent will cause Seller’s successor to, report the transactions contemplated by
the Agreement for federal Income Tax and all other Tax purposes in a manner
consistent with such allocation. Each Party will provide the other promptly with
any other information required to complete Form 8594 under the Code. Each Party
will notify the other, and will provide the other with reasonably requested
cooperation, in the event of an examination, audit, or other proceeding
regarding the allocations provided for in this Section 3.3.

3.4

Proration.

(a)    Solely for purposes of determining the Proposed Purchase Price and the
Final Purchase Price under Section 3.2, property Taxes, utility charges, and
similar items customarily prorated, including those listed below, to the extent
relating to the Business or the Purchased Assets and which are not due or
assessed until after the Closing Date but which are attributable to any period
(or portion thereof) ending on or prior to the Closing Date, will be prorated as
of the Closing Date. Such items to be prorated will include:

 

 

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(i)     personal property and real property Taxes, assessments, franchise Taxes,
and other similar periodic charges, including charges for water, telephone,
electricity, and other utilities;

(ii)     any permit, license, registration, compliance assurance fees or other
fees with respect to any Transferable Permits and Transferable Environmental
Permits; and

(iii)

rents under any leases of real or personal property.

(b)   In connection with any real property Tax prorations pursuant to
Section 3.4(a), including installments of special assessments, the amount
allocated to Buyer shall equal the amount of the current real property Tax or
installment of special assessments, as the case may be, multiplied by a
fraction, (i) the numerator of which is the number of days from the date of the
immediately preceding installment to the day before the Closing Date, and
(ii) the denominator of which is the total number of days in the assessment
period in which the Closing Date occurs. In connection with any other
prorations, in the event that actual amounts are not available at the Closing
Date, the proration will be based upon the Taxes, assessments, charges, fees, or
rents for the most recent period completed prior to the Closing Date for which
actual Taxes, assessments, charges, fees, or rents are available. All prorations
will be based upon the most recent available Tax rates, assessments, and
valuations.

(c)   Parent agrees to cause Seller or its successor to furnish Buyer, and Buyer
agrees to cause the Companies to furnish Parent, with such documents and other
records as may be reasonably requested in order to confirm all proration
calculations made pursuant to this Section 3.4.

ARTICLE IV

 

THE CLOSING

4.1    Time and Place of Closing. Upon the terms and subject to the satisfaction
of the conditions contained in ARTICLE IX of this Agreement, the closing of the
transfer of the Purchased Assets and assumption of the Assumed Obligations to
and by the Companies and the Interests Transfer (the “Closing”) will take place
at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP, One New York
Plaza, New York, New York 10004, beginning at 10:00 A.M. (New York time) on the
first Business Day on which the conditions set forth in ARTICLE IX have been
satisfied or waived in accordance with this Agreement (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of the conditions), or at such other place or time
as the Parties may agree. The date on which the Closing occurs is referred to
herein as the “Closing Date.” The transfer of the Purchased Assets to the
Companies and assumption by the Companies of the Assumed Obligations will be
effective on the Closing Date immediately before the Closing. The purchase and
sale of the Company Interests will be effective on the Closing Date immediately
before the effective time of the Merger.

4.2    Payment of Closing Payment Amount. At the Closing, Buyer will pay or
cause to be paid to Seller, or at Parent’s direction, to the Exchange Agent or
to Merger Sub, the Closing

 

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Payment Amount, by wire transfers of same day funds or by such other means as
may be agreed upon by Parent and Buyer.

4.3    Deliveries by Parent, the Companies and Seller. At or prior to the
Closing, Seller, the Companies and Parent, as the Parties determine to be
applicable, will deliver the following to Buyer:

(a)    the Bills of Sale, duly executed by Seller and Gas Opco or Electric Opco,
as applicable;

(b)   the Assignment and Assumption Agreement, duly executed by Seller and Gas
Opco or Electric Opco, as applicable;

(c)   all consents, waivers or approvals obtained by Seller from third parties
in connection with this Agreement;

(d)

the certificate contemplated by Section 9.2(d);

(e)    one or more deeds of conveyance of the parcels of Real Property with
respect to which Seller holds fee interests, in forms reasonably acceptable to
the Parties, duly executed and acknowledged by Seller and in recordable form, as
necessary to convey the Real Property to the Companies;

(f)    one or more instruments of assignment or conveyance, substantially in the
form of the Assignment of Easements, as are necessary to transfer the Easements
to the Companies pursuant to Section 8.5(a);

(g)   all such other instruments of assignment or conveyance as are reasonably
requested by Buyer in connection with the transfer of the Purchased Assets to
the Companies, each in accordance with this Agreement;

(h)   certificates of title for certificated motor vehicles or other titled
Purchased Assets, duly executed by Seller as may be required for transfer of
such titles to the Companies pursuant to this Agreement;

(i)    terminations or releases of Non-Permitted Encumbrances on the Purchased
Assets;

(j)    the Assignments of Company Interests, each duly executed by Seller and
Limited Partner;

(k)   a certificate of good standing with respect to each of Parent, Seller, and
the Companies (dated as of a recent date prior to the Closing Date but in no
event more than fifteen (15) Business Days before the Closing Date), issued by
the Secretary of State (or other duly authorized official) of the state of
incorporation or formation of each such Person and, with respect to Seller and
the Companies, of the State of Colorado;

 

 

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(l)    a copy, certified by an authorized officer of each of Parent, Seller and
the Companies, of respective resolutions authorizing the execution and delivery
of this Agreement and instruments attached as exhibits hereto and thereto, and
the consummation of the transactions contemplated hereby and thereby, together
with a certificate by the Secretary of each of Parent, Seller and the Companies
as to the incumbency of those officers authorized to execute and deliver this
Agreement and the instruments attached as exhibits hereto and thereto;

(m)   an affidavit that Seller is not a foreign person under section 1445(b)(2)
of the Code; and

(n)   such other agreements, documents, instruments, and writings as are
required to be delivered by Parent, Seller or the Companies at or prior to the
Closing Date pursuant to this Agreement.

4.4    Deliveries by Buyer. At or prior to the Closing, Buyer will deliver the
following to Seller:

(a)

the Assignment and Assumption Agreement, duly executed by Buyer;

(b)

the certificate contemplated by Section 9.3(c);

 

(c)   all consents, waivers, or approvals obtained by Buyer from third parties
in connection with this Agreement;

(d)   a certificate of good standing with respect to Buyer, to the extent
applicable (dated as of a recent date prior to the Closing Date but in no event
more than fifteen (15) Business Days before the Closing Date), issued by the
Secretary of State (or other duly authorized official) of the States of South
Dakota and Colorado, as applicable;

(e)    a copy, certified by an authorized officer of Buyer, of resolutions
authorizing the execution and delivery of this Agreement and instruments
attached as exhibits hereto and thereto, and the consummation of the
transactions contemplated hereby and thereby, together with a certificate by the
Secretary of Buyer as to the incumbency of those officers authorized to execute
and deliver this Agreement and the instruments attached as exhibits hereto and
thereto;

(f)    all such other documents, instruments, and undertakings as are reasonably
requested by Seller in connection with the assumption by the Companies of the
Assumed Obligations, and by Buyer in connection with the transfer of the Company
Interests, in accordance with this Agreement; and

(g)   such other agreements, documents, instruments and writings as are required
to be delivered by Buyer at or prior to the Closing Date pursuant to this
Agreement.

 

 

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ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the Seller Disclosure Schedule or, to the extent the
relevance of such disclosure is readily apparent therefrom, as disclosed in the
Seller SEC Filings filed prior to the date of this Agreement, Seller represents
and warrants to Buyer that:

5.1

Organization; Qualification.

(a)    Seller is a corporation duly organized, validly existing, and in good
standing under the laws of Delaware and has all requisite corporate power and
authority to own, lease, and operate the Purchased Assets and to carry on the
Business as presently conducted. Seller is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the conduct of the Business, or the ownership or operation of any
Purchased Assets, by Seller makes such qualification necessary, except for
failures to be qualified or licensed that, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect.

(b)   Limited Partner is a limited liability company existing in good standing
under the laws of Delaware. Limited Partner is duly qualified or licensed to do
business as a foreign limited liability company and is in good standing in each
jurisdiction in which the activity of Limited Partner in such jurisdiction
thereby makes such qualification necessary. Limited Partner has not, and at the
Closing will not have, any assets or liabilities other than, the limited
partnership interests in the Companies.

(c)   When formed, the Companies will be limited partnerships existing in good
standing under the laws of Delaware. At the Closing, each of the Companies will
be duly qualified or licensed to do business as a foreign limited partnership
and in good standing in each jurisdiction in which the activity of such Company
in such jurisdiction thereby makes such qualification necessary. At the Closing,
neither of the Companies will have operated a business prior to the transfer and
assumption hereunder of, and neither will have any assets or liabilities other
than, the Purchased Assets and the Assumed Obligations.

5.2

Authority Relative to this Agreement.

(a)    Seller has all corporate power and authority necessary to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
board of directors of Seller and no other corporate proceedings on the part of
Seller are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller, and constitutes a valid and binding agreement
of Seller, enforceable against Seller in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, or other similar laws affecting or relating to enforcement of
creditors’ rights generally or general principles of equity.

 

 

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(b)   Limited Partner has all limited liability company power and authority
necessary to execute and deliver this Agreement to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the governing body of Limited Partner and no other limited
liability company proceedings on the part of Limited Partner or its members are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Limited Partner, and constitutes a valid and binding agreement of
Limited Partner, enforceable against Limited Partner in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting or relating to
enforcement of creditors’ rights generally or general principles of equity.

(c)   When formed, each of the Companies will have all limited partnership power
and authority necessary to execute and deliver the instruments and agreements
attached hereto which such Company is a party and to consummate the transactions
contemplated thereby. At the Closing, the execution and delivery of such
instruments and agreements and the consummation of the transactions contemplated
thereby will be duly and validly authorized by the partners of each Company and
no other limited partnership proceedings on the part of either Company or its
partners will be necessary to authorize such instruments and agreements or to
consummate the transactions contemplated thereby. At the Closing, such
instruments and agreements will have been duly and validly executed and
delivered by such Company, and will constitute a valid and binding agreement of
each Company, enforceable against such Company in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting or relating to
enforcement of creditors’ rights generally or general principles of equity.

5.3    Consents and Approvals; No Violation. Except as set forth in
Schedule 5.3, the execution and delivery of this Agreement by Seller and Limited
Partner, and the consummation by Seller and Limited Partner of the transactions
contemplated hereby, do not, and at the Closing the consummation by the
Companies of the transactions contemplated hereby will not:

(a)    conflict with or result in any breach of Seller’s, Limited Partner’s or
the Companies’ respective Governing Documents;

(b)   result in a default (including with notice, lapse of time, or both), or
give rise to any right of termination, cancellation, or acceleration, under any
of the terms, conditions, or provisions of any note, bond, mortgage, indenture,
agreement, lease, or other instrument or obligation to which Seller, Limited
Partner, the Companies or any of their respective Affiliates is a party or by
which Seller, Limited Partner, the Companies or any of their respective
Affiliates, the Business, or any of the Purchased Assets may be bound, except
for such defaults (or rights of termination, cancellation, or acceleration) as
to which requisite waivers or consents have been, or will prior to the Closing
be, obtained or which if not obtained or made would not, individually or in the
aggregate, prevent or materially delay the consummation of the transactions
contemplated by this Agreement;

(c)   violate any Law or Order applicable to Seller, Limited Partner, the
Companies, any of their respective Affiliates, or any of the Purchased Assets,
except for violations

 

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that, individually or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect;

(d)   require any declaration, filing, or registration with, or notice to, or
authorization, consent, or approval of any Governmental Entity, other than
(i) the Seller Required Regulatory Approvals, (ii) such declarations, filings,
registrations, notices, authorizations, consents, or approvals which, if not
obtained or made, would not, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated by this
Agreement, or (iii) any requirements which become applicable to Seller, Limited
Partner or the Companies, as a result of the specific regulatory status of Buyer
(or any of its Affiliates) or as a result of any other facts that specifically
relate to any business or activities in which Buyer (or any of its Affiliates)
is or proposes to be engaged; and

(e)    as of the date of this Agreement, to Seller’s Knowledge, there are no
facts or circumstances relating to Seller or any of its Subsidiaries that, in
Seller’s reasonable judgment, would be reasonably likely to prevent or
materially delay the receipt of the Seller Required Regulatory Approvals.

5.4

Governmental Filings.

(a)    Since December 31, 2005, Seller has filed or caused to be filed with the
PUC and FERC all material forms, statements, reports, and documents (including
all exhibits, amendments, and supplements thereto) required by Law or Order to
be filed by Seller with the PUC or FERC with respect to the Business and the
Purchased Assets except for such forms, statements, reports, and documents the
failure of which to file, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. As of the respective dates on
which such forms, statements, reports, and documents were filed, each (to the
extent prepared by Seller and excluding information prepared or provided by
third parties) complied in all material respects with all requirements of any
Law or Order applicable to such form, statement, report, or document in effect
on such date except for such forms, statements, reports and documents the
failure of which to file in compliance with all requirements of any law or
Order, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.

(b)   Seller has filed or furnished with the SEC all Seller SEC Filings required
to be filed or furnished. Each Seller SEC Filing, when and as filed or furnished
with the SEC, complied in all material respects with the applicable requirements
of the Securities Act, the Exchange Act and Sarbanes-Oxley. As of their
respective dates (and, if amended or supplemented, as of the date of any such
amendment or supplement) and as filed, the Seller SEC Filings did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading.

5.5

Financial Information.

(a)    Schedule 5.5(a)-1 sets forth selected balance sheet information as of
December 31, 2005 and September 30, 2006, respectively, with respect to the
Electric Business. Schedule 5.5(a)-2 sets forth selected balance sheet
information as of December 31, 2005 and

 

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September 30, 2006, respectively, with respect to the Gas Business. The
information set forth in Schedule 5.5(a)-1 and Schedule 5.5(a)-2 is collectively
referred to herein as the “Selected Balance Sheet Information.”

(b)   Schedule 5.5(b)-1 sets forth the division income statements for the
Electric Business for the 12-month period ended December 31, 2005, and the
nine-month period ended September 30, 2006. Schedule 5.5(b)-2 sets forth the
division income statements for the Gas Business for the 12-month period ended
December 31, 2005, and the nine-month period ended September 30, 2006. The
information set forth in Schedule 5.5(b)-1 and Schedule 5.5(b)-2 is collectively
referred to herein as the “Division Income Statement Information.”

(c)   Except as set forth in the notes thereto, the Selected Balance Sheet
Information and the Division Income Statement Information fairly present as of
the dates thereof or for the periods covered thereby, in all material respects,
the items reflected therein, all in accordance with FERC Accounting Rules and
any applicable PUC accounting rules applied in accordance with Seller’s normal
accounting practices. The individual accounts in the Selected Balance Sheet
Information are recorded in accordance with GAAP, as modified by applicable FERC
Accounting Rules and applicable regulatory accounting rules.

5.6    No Material Adverse Effect. Except as set forth in Schedule 5.6, or as
otherwise contemplated by this Agreement, since September 30, 2006 no event,
change or development has occurred which, individually or in the aggregate, has
had, or would reasonably be expected to result in, a Material Adverse Effect.

5.7    Operation in the Ordinary Course. Except as otherwise disclosed herein or
set forth in Schedule 5.7, or otherwise contemplated or permitted pursuant to
the terms hereof, since September 30, 2006 and until the date hereof, the
Business has been operated in the ordinary course of business consistent with
Good Utility Practice.

5.8

Title and Company Interests.

(a)    Except as set forth on Schedule 5.8 or as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect: (i)
 Seller owns good and marketable title to (or in the case of leased property,
has a valid and enforceable leaseholder interest in), the Real Property and the
Easements; and (ii) Seller has good title to the other Purchased Assets, in each
case free and clear of all Non-Permitted Encumbrances. Except as described in
Schedule 5.8 or as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, the Purchased Assets are not subject
to any Preferential Purchase Rights. The Purchased Assets have been maintained
consistent with Good Utility Practice, except to the extent that the failure to
so maintain the Purchased Assets, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The Easements are all
of the easements, railroad crossing rights and rights-of-way, and similar rights
(other than public rights-of-way) necessary, in all material respects, for the
operation of the Business as currently conducted.

(b)   (i) From the date of formation of the Companies until the transfer of the
Company Interests to Buyer, Seller will be, and thereafter Buyer will be, the
legal and beneficial

 

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owner of all of the Company Interests, and will hold such Company Interests free
and clear of any and all Encumbrances; and (ii) the Company Interests have not
been issued in violation of any federal or state securities laws

5.9    Leases. Schedule 5.9 describes to Seller’s Knowledge as of the date
hereof, all real property leases under which Seller is a lessee or lessor
that relate principally to the Business or the Purchased Assets.

5.10   Environmental. The only representations and warranties given in respect
to Environmental Laws, Environmental Permits, Environmental Claims, or other
environmental matters are those contained in this Section 5.10, and none of the
other representations and warranties contained in this Agreement will be deemed
to constitute, directly or indirectly, a representation and warranty with
respect to Environmental Laws, Environmental Permits, Environmental Claims,
other environmental matters, or matters incident to or arising out of or in
connection with any of the foregoing. All such matters are governed exclusively
by this Section 5.10.

(a)    Except as set forth on Schedule 5.10(a)-1, (i) Seller presently possesses
all Environmental Permits necessary to own, maintain, and operate the Purchased
Assets as they are currently being owned, maintained and operated, and to
conduct the Business as it is currently being operated and conducted, except
with respect to the failure to possess any Environmental Permits that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, (ii) with respect to the Purchased Assets and the
Business, Seller is in compliance in all material respects with the requirements
of such material Environmental Permits and Environmental Laws, and (iii) Seller
has received no written notice or information of an intent by an applicable
Governmental Entity to suspend, revoke, or withdraw any such Environmental
Permits, except with respect to any Environmental Permit that, if suspended,
revoked or withdrawn, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. To Seller’s Knowledge as of the date
hereof, Schedule 5.10(a)-2 sets forth a list of all material Environmental
Permits held by Seller for the operation of the Business.

(b)   Except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect or as set forth on Schedule 5.10(b),
neither Seller nor any Affiliate of Seller has received within the last three
(3) years any written notice, report, or other information regarding any actual
or alleged violation of Environmental Laws, Environmental Permits, or any
liabilities or potential liabilities, including any investigatory, remedial, or
corrective obligations, relating to the operation of the Business or the
Purchased Assets arising under Environmental Laws. To Seller’s Knowledge as of
the date hereof, Schedule 5.10(b) sets forth a list of the written notices,
reports or information that Seller or any Affiliate of Seller has received
within the last three (3) years regarding any such actual or alleged violations
of Environmental Laws or Environmental Permits.

(c)   Except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect or as set forth on Schedule 5.10(c),
(i) there is and has been no Release from, in, on, or beneath the Real Property
that could form a basis for an Environmental Claim, and (ii) there are no
Environmental Claims related to the Purchased Assets or the Business, which are
pending or, to Seller’s Knowledge, threatened against Seller. To

 

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Seller’s Knowledge as of the date hereof, Schedule 5.10(c) sets forth a list of
all Releases from, in, on or beneath the Real Property that could form the basis
for an Environmental Claim, and of all Environmental Claims pending or
threatened against Seller that are principally related to the Purchased Assets
or the Business.

5.11   Labor Matters. Schedule 5.11 lists each collective bargaining agreement
covering any of the Business Employees to which Seller is a party or is subject
(each, a “Collective Bargaining Agreement”) as of the date hereof. Except to the
extent set forth in Schedule 5.11 or as individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect, (i) Seller is in
material compliance with all Laws applicable to the Business Employees
respecting employment and employment practices, terms and conditions of
employment, and wages and hours; (ii) Seller has not received written notice of
any unfair labor practice complaint against Seller pending before the National
Labor Relations Board with respect to any of the Business Employees;
(iii) Seller has not received notice that any representation petition respecting
the Business Employees has been filed with the National Labor Relations Board;
(iv) Seller is in material compliance with the terms of and its obligations
under the Collective Bargaining Agreements, and has administered each Collective
Bargaining Agreement in manner consistent in all material respects with the
terms and conditions of such Collective Bargaining Agreements; (v) no material
grievance or material arbitration proceeding arising out of or under the
Collective Bargaining Agreements is pending against Seller; and (vi) there is no
labor strike, slowdown, work stoppage, or lockout actually pending or, to
Seller’s Knowledge, threatened against Seller in respect of the Purchased Assets
or the Business. Except for the Severance Compensation Agreements set forth on
Schedule 5.11 with respect to the Business Employees identified on
Schedule 1.1-B, obligations to be assumed or undertaken by Buyer or the
Companies pursuant to Sections 2.6(a) or 8.8, and severance compensation
agreements existing as of the date hereof, if any, with respect to additional
employees that may be added to the Business Employees after the date hereof by
Buyer and Parent pursuant to clause (iii) of the definition thereof, there are
no employment, severance, or change in control agreements or contracts between
Seller and any Business Employee under which Buyer or either of the Companies
would have any liability. A true, correct, and complete copy of each Collective
Bargaining Agreement, any renewal or replacement of any Collective Bargaining
Agreement that will expire prior to the Closing Date, and any new collective
bargaining agreement covering any of the Business Employees entered into by
Seller between the date hereof and the Closing (each a “Successor Collective
Bargaining Agreement”), has been made available to Buyer prior to the date
hereof or will be made available to Buyer prior to the Closing Date,
respectively.

5.12

ERISA; Benefit Plans.

(a)    Schedule 5.12(a) lists each employee benefit plan (as such term is
defined in section 3(3) of ERISA) and each other plan, program, or arrangement
providing benefits to employees that is maintained by, contributed to, or
required to be contributed to by Seller (or any ERISA Affiliate of Seller) as of
the date hereof on account of current Business Employees or persons who have
retired from the Business (each, a “Benefit Plan”). Copies of such plans and all
amendments and direct agreements pertaining thereto, together with the most
recent annual report and actuarial report with respect thereto, if any, have
been made available to Buyer prior to the date hereof.

 

 

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(b)   Each Benefit Plan that is intended to be qualified under section 401(a) of
the Code has received a determination from the Internal Revenue Service that
such Benefit Plan is so qualified, and each trust that is intended to be exempt
under section 501(a) of the Code has received a determination letter that such
trust is so exempt. Nothing has occurred since the date of such determination
that would materially adversely affect the qualified or exempt status of such
Benefit Plan or trust, nor will the consummation of the transactions provided
for by this Agreement have any such effect. Copies of the most recent
determination letter of the IRS with respect to each such Benefit Plan or trust
have been made available to Buyer prior to the date hereof.

(c)   (i) Each Benefit Plan has been maintained, funded, and administered in
compliance with its terms, the terms of any applicable Collective Bargaining
Agreements, and all applicable Laws, including ERISA and the Code, (ii) there is
no “accumulated funding deficiency” within the meaning of section 412 of the
Code with respect to any Benefit Plan which is an “employee pension benefit
plan” as defined in section 3(2) of ERISA, and (iii) no reportable event (within
the meaning of section 4043 of ERISA) and no event described in sections 4041,
4042, 4062 or 4063 of ERISA has occurred or exists in connection with any
Benefit Plan, except in the case of (i), (ii) and (iii) as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. As of the date of this Agreement, no proceeding has been
initiated to terminate the Seller Pension Plan nor has the Pension Benefit
Guaranty Corporation threatened to terminate the Seller Pension Plan. Neither
Seller nor any ERISA Affiliate has any obligation to contribute to or any other
liability under or with respect to any multiemployer plan (as such term is
defined in section 3(37) of ERISA), except as individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect. No liability
under Title IV or section 302 of ERISA has been incurred by Seller or any ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to Seller or any ERISA Affiliate of incurring any such
liability, other than liability for premiums due to the Pension Benefit Guaranty
Corporation, except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect. No Person has provided or is
required to provide security to the Seller Pension Plan under section 401(a)(29)
of the Code due to a plan amendment that results in an increase in current
liability, except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.

(d)   Except for the ERISA Case, as set forth on Schedule 5.12(d) or as
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect, (i) there is no litigation or governmental
administrative proceeding or, to Seller’s Knowledge, investigation involving any
Benefit Plan, and (ii) the administrator and the fiduciaries of each Benefit
Plan have in all material respects complied with the applicable requirements of
ERISA, the Code, and any other requirements of applicable Laws, including the
fiduciary responsibilities imposed by Part 4 of Title I, Subtitle B of ERISA.
Except as set forth on Schedule 5.12(d) or as individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect, there have
been no non-exempt “prohibited transactions” as described in section 4975 of the
Code or Title I, Part 4 of ERISA involving any Benefit Plan, and, to Seller’s
Knowledge, there are no facts or circumstances which could give rise to any tax
imposed by section 4975 of the Code or Section 502 of ERISA with respect to any
Benefit Plan.

 

 

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(e)    Except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect, all contributions (including all
employer matching and other contributions and all employee salary reduction
contributions) for all periods ending prior to the Closing Date (including
periods from the first day of the current plan year to the Closing Date) have
been paid to the Benefit Plans within the time required by Law or will be paid
to the Benefit Plans prior to or as of the Closing, notwithstanding any
provision of any Benefit Plan to the contrary. All returns, reports, and
disclosure statements required to be made under ERISA and the Code with respect
to the Benefit Plans have been timely filed or delivered except to the extent
the failure to file such returns, reports and disclosure statements would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(f)    Except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect, each Benefit Plan that is a group
health plan (within the meaning of Code section 5000(b)(1)) in all material
respects complies with and has been maintained and operated in material
compliance with each of the health care continuation requirements of section
4980B of the Code and Part 6 of Title I, Subtitle B of ERISA (or the applicable
requirements of State insurance continuation law) and the requirements of the
Health Insurance Protection Portability and Accountability Act of 1996.

(g)   Schedule 5.12(g) sets forth the medical and life insurance benefits
provided as of the date of this Agreement by Seller to any currently retired or
former employees of the Business other than pursuant to Part 6 of Subtitle B of
Title I of ERISA, section 4980B of the Code, or similar provisions of state law.

(h)   Except for obligations assumed by Buyer as provided in Section 8.8, no
provision of any Benefit Plan would require the payment by Buyer, the Companies
or such Benefit Plan of any money or other property, or the provision by Buyer,
the Companies or such Benefit Plan of any other rights or benefits, to or on
behalf of any Business Employee or any other employee or former employee of
Seller solely as a result of the transactions contemplated by this Agreement,
whether or not such payment would constitute a parachute payment within the
meaning of section 280G of the Code.

(i)    During the past seven (7) years, neither Seller nor any ERISA Affiliate
(including either of the Companies or the Business) has contributed to any
“multiemployer plan” within the meaning of section 3(37) of ERISA.

5.13

Certain Contracts and Arrangements.

(a)    To Seller’s Knowledge as of the date hereof, except for any contract,
agreement, lease, commitment, understanding, or instrument which (i) is
disclosed or described on Schedule 5.9, Schedule 5.11, Schedule 5.12(a),
Schedule 5.12(g) or Schedule 5.13(a), or (ii) has been entered into in the
ordinary course of business and is not material to the conduct of the Business
as currently conducted by Seller, as of the date of this Agreement, Seller is
not a party to any contract, agreement, lease, commitment, understanding, or
instrument which is principally related to the Business or the Purchased Assets
other than agreements that relate to both the Business and the other businesses
of Seller, and any other contracts, agreements, personal property leases,
commitments, understandings, or instruments which are Excluded Assets or

 

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Excluded Liabilities. Except as disclosed or described in Schedule 5.13(a) or
as, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, (A) each material Business Agreement constitutes a
valid and binding obligation of Seller and, to Seller’s Knowledge, constitutes a
valid and binding obligation of the other parties thereto and is in full force
and effect; (B) Seller is not in breach or default (nor has any event occurred
which, with notice or the passage of time, or both, would constitute such a
breach or default) under, and has not received written notice that it is in
breach or default under, any material Business Agreement, except for such
breaches or defaults as to which requisite waivers or consents have been
obtained; (C) to Seller’s Knowledge, no other party to any material Business
Agreement is in breach or default (nor has any event occurred which, with notice
or the passage of time, or both, would constitute such a breach or default)
under any material Business Agreement; and (D) Seller has not received written
notice of cancellation or termination of any material Business Agreement.

(b)   Schedule 5.13(b) sets forth a list of each municipal franchise agreement
relating to the Business to which Seller is a party (the “Franchises”) as of the
date hereof. Except as disclosed in Schedule 5.13(b) or, individually or in the
aggregate, as would not reasonably be expected to have a Material Adverse
Effect, Seller is not in default under such agreements and, to Seller’s
Knowledge, each such agreement is in full force and effect. Except as set forth
in Schedule 5.13(b) or, individually or in the aggregate, as would not
reasonably be expected to have a Material Adverse Effect, Seller has all
franchises necessary for the operation of the Business as presently conducted.

5.14   Legal Proceedings and Orders. Except as set forth in Schedule 5.14 or,
individually or in the aggregate, as would not reasonably be expected to have a
Material Adverse Effect, there are no Claims relating to the Purchased Assets or
the Business, which are pending or, to Seller’s Knowledge, threatened against
Seller. Except for any Regulatory Orders, as set forth in Schedule 5.14 or as
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect, Seller is not subject to any outstanding Orders that
would reasonably be expected to apply to the Purchased Assets or the Business
following Closing.

5.15   Permits. Except as individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect, Seller has all Permits required
by Law for the operation of the Business as presently conducted. Except as
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect, (i) Seller has not received any written notification
that it is in violation of any such Permits, and (ii) Seller is in compliance in
all respects with all such Permits.

5.16   Compliance with Laws. Except as individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect, Seller is in
compliance with all Laws, Orders and Regulatory Orders applicable to the
Purchased Assets or the Business. No investigation or review by any Governmental
Entity with respect to Seller or any of its Subsidiaries is pending or, to
Seller’s Knowledge, threatened, except as individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect. This Section 5.16
does not relate to matters with respect to ERISA and the Benefit Plans, which
are the subject of Section 5.12, environmental matters, which are the subject of
Section 5.10, Taxes, which are the subject of Section 5.18, or labor matters,
which are the subject of Section 5.11.

 

 

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5.17   Insurance. Except as individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect, since December 31,
2005, the Purchased Assets have been continuously insured with financially sound
insurers in such amounts and against such risks and losses as are customary in
the natural gas or electric utility industry, and Seller has not received any
written notice of cancellation or termination with respect to any material
insurance policy of Seller providing coverage in respect of the Purchased
Assets. Except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect, all insurance policies of Seller
covering the Purchased Assets are in full force and effect; however, coverage of
the Purchased Assets under Seller’s insurance policies will terminate as of the
Closing.

5.18

Taxes.

(a)    Except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect, all Tax Returns relating to the
Business or the Purchased Assets, including all property, activities, income,
employees, sales, purchases, capital or gross receipts of Seller relating
thereto, required to be filed by or on behalf of Seller on or prior to the
Closing Date have been or will be filed in a timely manner, and all Taxes
required to be shown on such Tax Returns (whether or not shown on any Tax
Return) have been or will be paid in full, except to the extent being contested
in good faith by appropriate proceedings. Except as would not reasonably be
expected to have a Material Adverse Effect, all such Tax Returns were or will be
correct and complete in all respects, and were or will be prepared in compliance
with all applicable Laws and regulations.

(b)   Except as individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect, Seller has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee or independent contractor, service provider, credit,
member, stockholder or other third party in connection with the Business or the
Purchased Assets.

(c)   Seller is not a party directly or indirectly to any Tax allocation or
sharing agreement relating to the Business or the Purchased Assets.

5.19   Fees and Commissions. No broker, finder, or other Person is entitled to
any brokerage fees, commissions, or finder’s fees for which Buyer could become
liable or obligated in connection with the transactions contemplated hereby by
reason of any action taken by Seller.

5.20   Sufficiency of Assets. Except as individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect, the Purchased
Assets, together with the assets identified in Sections 2.2(i), 2.2(l) and
2.2(m), and the rights of Buyer under the Transition Services Agreement,
constitute all of the assets necessary for Buyer to conduct the Business in
substantially the same manner as Seller conducted the Business prior to the
Closing.

5.21   Related-Party Agreements. As of the date of this Agreement, except as set
forth on Schedule 5.21, Seller is not a party with any of its Affiliates to any
material agreement, contract, commitment, transaction, or proposed transaction
related to the Business. As of the date of this Agreement, except as set forth
on Schedule 5.21, no material contract, agreement, or

 

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commitment included in the Purchased Assets has, as a counterparty thereto, an
Affiliate of Seller.

5.22   Financial Hedges. Except in accordance with the hedging practices as
described in Schedule 5.22, Seller is not currently a party to any financial
hedges, futures contracts, options contracts, or other derivatives transactions
in respect of Seller’s gas supply portfolios for the Business. Schedule 5.22(a),
to be attached to this Agreement fifteen (15) days prior to the Closing, will
set forth a list of all financial hedges, future contracts, options or other
derivative transactions in respect of Seller’s gas supply portfolio for the
Business to which Seller is a party as of the date thereof.

5.23   No Other Representations and Warranties. Except for the representations
and warranties of Seller contained in this Agreement, the Asset Purchase
Agreement, the Merger Agreement, or any of the exhibits, schedules or other
documents attached hereto or delivered pursuant to any of the foregoing, Seller
is not making and has not made, and no other Person is making or has made on
behalf of Seller, any express or implied representation or warranty in
connection with this Agreement or the transactions contemplated hereby, and no
Person is authorized to make any representations and warranties on behalf of
Seller.

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as set forth in, or qualified by any matter set forth in, Schedule 6.3,
Buyer represents and warrants to Seller as follows:

6.1    Organization. Buyer is a corporation duly organized, validly existing,
and in good standing under the laws of South Dakota and has all requisite
corporate power and authority to own, lease, and operate its properties and to
carry on its business as is now being conducted.

6.2    Authority Relative to this Agreement. Buyer has the requisite corporate
power and authority to, and it has taken all corporate action necessary to,
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the board of directors of Buyer and no other corporate proceedings
on the part of Buyer are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Buyer, and constitutes a valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
or other similar laws affecting or relating to enforcement of creditors’ rights
generally or general principles of equity.

6.3    Consents and Approvals; No Violation. Except as set forth in
Schedule 6.3, the execution and delivery of this Agreement by Buyer, and the
consummation by Buyer of the transactions contemplated hereby, do not:

(a)

conflict with or result in any breach of Buyer’s Governing Documents;

 

 

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(b)   result in a default (including with notice, lapse of time, or both), or
give rise to any right of termination, cancellation, or acceleration, under any
of the terms, conditions, or provisions of any note, bond, mortgage, indenture,
agreement, lease, or other instrument or obligation to which Buyer or any of its
Affiliates is a party or by which Buyer or any of its Affiliates or any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation, or acceleration) as to which requisite waivers or
consents have been, or will prior to the Closing be, obtained or which if not
obtained or made would not, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or the Asset Purchase Agreement;

(c)   violate any Law or Order applicable to Buyer, any of its Affiliates, or
any of their respective assets, except for violations that, individually or in
the aggregate, would not reasonably be expected to prevent, materially delay or
impair the ability of Buyer to consummate the transactions contemplated by this
Agreement or the Asset Purchase Agreement;

(d)   require any declaration, filing, or registration with, or notice to, or
authorization, consent, or approval of any Governmental Entity, other than
(i) the Buyer Required Regulatory Approvals, or (ii) such declarations, filings,
registrations, notices, authorizations, consents, or approvals which, if not
obtained or made, would not, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or the Asset Purchase Agreement; and

(e)    as of the date of this Agreement, Buyer does not know of any facts or
circumstances relating to Buyer or any of its Subsidiaries that, in Buyer’s
reasonable judgment, would be reasonably likely to prevent or materially delay
the receipt of the Buyer Required Regulatory Approvals.

6.4    Fees and Commissions. No broker, finder, or other Person is entitled to
any brokerage fees, commissions, or finder’s fees for which Seller could become
liable or obligated in connection with the transactions contemplated hereby by
reason of any action taken by Buyer.

6.5

Financing.

(a)    At the Closing, Buyer will have sufficient funds available to pay the
aggregate amount of consideration payable to Seller, or at Parent’s direction,
to Merger Sub or the Exchange Agent, pursuant to this Agreement and the Asset
Purchase Agreement (the “Buyer Financing”).

(b)   Buyer has delivered to Seller and Parent true and complete copies of all
commitment letters (as the same may be amended or replaced, the “Buyer Financing
Commitments”), pursuant to which the lender parties thereto have agreed, subject
to the terms and conditions thereof, to provide or cause to be provided to Buyer
the Buyer Financing. As of the date of this Agreement, (i) none of the Buyer
Financing Commitments has been amended or modified, (ii) the commitments
contained in the Buyer Financing Commitments have not been withdrawn or
rescinded in any material respect, (iii) the Buyer Financing Commitments are in
full force and effect, and (iv) there are no conditions precedent or other
contingencies related to the funding of the full amount of Buyer Financing other
than as set forth in the Buyer Financing

 

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Commitments. As of the date of this Agreement, no event has occurred which, with
or without notice, lapse of time or both, would constitute a default or breach
on the part of the Buyer under any term or condition of the Buyer Financing
Commitments. As of the date of this Agreement, Buyer has no reason to believe
that it or any of its Subsidiaries will not be able to satisfy on a timely basis
any term or condition contained in the Buyer Financing Commitments or that the
full amount of the Buyer Financing Commitments will not be available to Buyer as
of the closing of the transactions contemplated by this Agreement and the Asset
Purchase Agreement. Buyer has fully paid any and all commitment fees that have
been incurred and are due and payable as of the date hereof in connection with
the Buyer Financing Commitments.

(c)   As of the date of this Agreement, Buyer has no reason to believe that it
or any of its Subsidiaries will not be able to satisfy on a timely basis any
term or condition contained in this Agreement or the Asset Purchase Agreement,
or that the full amount of the consideration payable by Buyer to Seller, or to
Merger Sub or the Exchange Agent as directed by Parent, pursuant to this
Agreement or the Asset Purchase Agreement, will not be available to Buyer as of
the closing of the transactions contemplated by this Agreement or the Asset
Purchase Agreement.

6.6    No Other Agreements. This Agreement, the Merger Agreement, the Asset
Purchase Agreement, the letter of intent dated November 21, 2006 between Buyer
and Parent, and the Transition Services Agreement are the sole agreements and
arrangements between or among Buyer and Parent and their respective Affiliates
with respect to the transactions contemplated herein and therein.

6.7    No Other Representations and Warranties. Except for the representations
and warranties of Buyer contained in this Agreement, the Asset Purchase
Agreement, the Merger Agreement, or any of the exhibits, schedules or other
documents attached hereto or delivered pursuant to any of the foregoing, Buyer
is not making and has not made, and no other Person is making or has made on
behalf of Buyer, any express or implied representation or warranty in connection
with this Agreement or the transactions contemplated hereby, and no Person is
authorized to make any representations and warranties on behalf of Buyer.

ARTICLE VII

 

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub hereby represent and warrant to Buyer and Seller that:

7.1    Organization. Each of Parent and Merger Sub is a legal entity duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization and has all requisite corporate or similar power
and authority to own, lease and operate its properties and assets and to carry
on its business as presently conducted.

7.2    Authority Relative to this Agreement. Except as set forth on
Schedule 7.2, Parent and Merger Sub each have the requisite corporate or similar
power and authority to, and each of them have taken all corporate or similar
action necessary to, execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly executed and delivered by each of Parent
and Merger Sub and is a valid and binding agreement of Parent and Merger Sub,

 

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respectively, enforceable against each of them in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting or relating to
enforcement of creditors’ rights generally or general principles of equity. No
vote or approval of the stockholders of Parent is required in connection with
the execution, delivery or performance by Parent of its obligations under this
Agreement.

7.3    Consents and Approvals; No Violation. Except as set forth in
Schedule 7.3, the execution and delivery of this Agreement by Parent and Merger
Sub, and the performance by Parent or Merger Sub of their respective obligations
hereunder, do not:

(a)    conflict with or result in any breach of Parent’s or Merger Sub’s
Governing Documents;

(b)   result in a default (including with notice, lapse of time, or both), or
give rise to any right of termination, cancellation, or acceleration, under any
of the terms, conditions, or provisions of any note, bond, mortgage, indenture,
agreement, lease, or other instrument or obligation to which Parent, Merger Sub
or any of their respective Affiliates is a party or by which Parent, Merger Sub
or any of their respective Affiliates, business or assets may be bound, except
for such defaults (or rights of termination, cancellation, or acceleration) as
to which requisite waivers or consents have been, or will prior to the Closing
be, obtained or which if not obtained or made would not, individually or in the
aggregate, prevent or materially delay the consummation of the transactions
contemplated by this Agreement, the Asset Purchase Agreement or the Merger
Agreement;

(c)   violate any Law or Order applicable to Parent, Merger Sub, any of their
respective Affiliates, except for violations that, individually or in the
aggregate, would not be reasonably be expected to prevent or materially delay
the ability of Parent or Merger Sub to consummate the transactions contemplated
in this Agreement, the Asset Purchase Agreement or the Merger Agreement;

(d)   require any declaration, filing, or registration with, or notice to, or
authorization, consent, or approval of any Governmental Entity, other than
(i) the Required Regulatory Approvals, (ii) such declarations, filings,
registrations, notices, authorizations, consents, or approvals which, if not
obtained or made, would not, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated by this
Agreement, the Asset Purchase Agreement or the Merger Agreement, or (iii) any
requirements which become applicable to Parent or Merger Sub as a result of the
specific regulatory status of Buyer (or any of its Affiliates) or as a result of
any other facts that specifically relate to any business or activities in which
Buyer (or any of its Affiliates) is or proposes to be engaged; and

(e)    as of the date of this Agreement, Parent does not know of any facts or
circumstances relating to Parent or any of its Subsidiaries that, in Parent’s
reasonable judgment, would be reasonably likely to prevent or materially delay
the receipt of the Material Parent Regulatory Consents (as defined in the Merger
Agreement).

7.4    Merger Agreement. Parent has delivered to Buyer a true and complete copy
of the Merger Agreement. As of the date of this Agreement, (a) the Merger
Agreement has not

 

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been amended or modified, (b) the Merger Agreement is in full force and effect,
and (c) there are no conditions precedent or other contingencies related to the
obligations of the Parties under the Merger Agreement other than as set forth in
the Merger Agreement. As of the date of this Agreement, Parent has no reason to
believe that it or any of its Subsidiaries will not be able to satisfy on a
timely basis any term or condition contained in the Merger Agreement.

7.5    No Other Representations and Warranties. Except for the representations
and warranties of Parent and Merger Sub contained in this Agreement, the Asset
Purchase Agreement, the Merger Agreement, or any of the exhibits, schedules or
other documents attached hereto or delivered pursuant to any of the foregoing,
neither Parent nor Merger Sub is making and neither has made, and no other
Person is making or has made on behalf of Parent or Merger Sub, any express or
implied representation or warranty in connection with this Agreement or the
transactions contemplated hereby, and no Person is authorized to make any
representations and warranties on behalf of Parent or Merger Sub.

7.6    Fees and Commissions. No broker, finder, or other Person is entitled to
any brokerage fees, commissions, or finder’s fees for which Seller or Buyer
could become liable or obligated in connection with the transactions
contemplated hereby by reason of any action taken by Parent or Merger Sub.

7.7    No Other Agreements. This Agreement, the Merger Agreement, the Asset
Purchase Agreement, the letter of intent dated November 21, 2006 between Parent
and Buyer, and the Transition Services Agreement, are the sole agreements and
arrangements between or among Parent and Buyer and their Affiliates with respect
to the transactions contemplated herein and therein.

ARTICLE VIII

 

COVENANTS OF THE PARTIES

8.1

Conduct of Business.

(a)    Except as contemplated in this Agreement, required by any Business
Agreement, Law, or Order, or otherwise described in Schedule 8.1, during the
period from the date of this Agreement to the Closing Date, Seller will operate
the Purchased Assets and the Business in the ordinary course and in all material
respects consistent with Good Utility Practice and will use reasonable best
efforts to preserve intact the Business, and to preserve the goodwill and
relationships with customers, suppliers, Governmental Entities, and others
having business dealings with the Business. Without limiting the generality of
the foregoing, except as required by applicable Law, or Order, or as otherwise
described in Schedule 8.1, prior to the Closing Date, without the prior written
consent of Buyer and Parent, which will not be unreasonably withheld, delayed or
conditioned, Seller will not:

(i)     create, incur or assume any Non-Permitted Encumbrance upon the Purchased
Assets, except for any such Encumbrance that will be released at or prior to the
Closing;

 

 

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(ii)     make any material change in the level of inventories customarily
maintained by Seller with respect to the Business, other than in the ordinary
course of business or consistent with Good Utility Practice;

(iii)    other than any such sales, leases, transfers, or dispositions involving
any Purchased Assets involving less than $350,000 on an individual basis, or
$1,750,000 in the aggregate, sell, lease, transfer, or otherwise dispose of any
of the Purchased Assets, other than (A) in the ordinary course of business, or
(B) consistent with Good Utility Practice;

(iv)    make or commit to any capital expenditures relating to the Business or
the Purchased Assets in excess of the amount reflected for such expenditures in
the Capital Expenditure Budget for the year in which those capital expenditures
are made, or up to 10% in excess of such amount if necessary as a result of
increases in the costs of labor, commodities materials, services, supplies,
equipment or parts after the date hereof, except for capital expenditures
(A) required under any Business Agreement to which Seller or any of its
Subsidiaries is a party as of the date of this Agreement, a copy of which has
been made available to Buyer; (B) incurred in connection with the repair or
replacement of facilities destroyed or damaged due to casualty or accident
(whether or not covered by insurance) necessary to provide or maintain safe and
adequate natural gas service or electric service, as applicable, to the utility
customers of the Business; provided that, Seller shall, if reasonably possible,
consult with Buyer prior to making or agreeing to make any such expenditure; and
(C) other capital expenditures relating to the Business or the Purchased Assets
of up to $350,000 individually or $1,750,000 in the aggregate for each twelve
(12) month budget cycle;

(v)     spend in excess of $1,000,000 individually or in the aggregate to
acquire any business that would be included in the Business or the Purchased
Assets, whether by merger, consolidation, purchase of property or otherwise
(valuing any non-cash consideration at its fair market value as of the date of
the execution of a binding agreement for the acquisition);

(vi)    other than (A) in the ordinary course of business, (B) upon terms not
materially adverse to the Business, the Purchased Assets, the Colorado Business
and the Colorado Assets, taken together, or (C) as otherwise permitted under
this Section 8.1(a), (1) enter into, amend, extend, renew, modify or breach in
any material respect, terminate or allow to lapse (other than in accordance with
its terms), any material Business Agreement, or any contract that would have
been a material Business Agreement if in effect prior to the date hereof;

(vii)    grant severance or termination pay to any Business Employee or former
employee of the Business that would be the responsibility of Buyer;

(viii)   terminate, establish, adopt, enter into, make any new, or accelerate
any existing benefits under, amend or otherwise modify, or grant any rights to
severance, termination or retention benefits under, any Benefit Plans (including
amendments or modifications to any medical or life insurance benefits provided
by Seller or Seller’s adoption or grant of any new medical or life insurance
benefits to any currently retired or former employees of the Business), or
increase the salary, wage, bonus or other compensation of any Business Employees
who will become Transferred Employees, except for (A) grants of equity or equity

 

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based awards in the ordinary course of business, (B) increases in salary or
grants of annual bonuses in the ordinary course of business in connection with
normal periodic performance reviews (including promotions) and the provision of
individual compensation and benefits to new and existing directors, officers and
employees of Seller consistent with past practice (which shall not provide for
benefits or compensation payable solely as a result of the consummation of the
transactions contemplated hereunder, in the Asset Purchase Agreement or the
Merger Agreement), (C) actions necessary to satisfy existing contractual
obligations under Benefit Plans existing as of the date of this Agreement, or
(D) bonus payments, together with any such bonus payments permitted under the
Partnership Interests Purchase Agreement and the Merger Agreement, not to exceed
an aggregate of $500,000 to executives in Seller’s compensation bands E through
G;

(ix)    negotiate the renewal or extension of any Collective Bargaining
Agreement or enter into any new collective bargaining agreement, without
providing Buyer with access to all information relating to such new collective
bargaining agreement, or the renewal or extension of any such Collective
Bargaining Agreement, and permitting Buyer to consult from time to time with
Seller and its counsel on the progress thereof; provided that the negotiation of
such renewal or extension will be conducted in a manner consistent with past
practice, and Seller will not be obligated to follow any advice that may be
provided by Buyer during any such consultation;

(x)     agree or consent to any material agreements or material modifications of
material existing agreements or material courses of dealing with the FERC, the
PUC or any other state public utility or service commission, in each case in
respect of the operations of the Business or the Purchased Assets, except as
required by Law to obtain or renew Permits or agreements in the ordinary course
of business consistent with past practice;

(xi)    modify, amend or terminate, or waive, release or assign any material
rights or claims with respect to any confidentiality or standstill agreement
relating to the Business or the Purchased Assets to which Seller or any of its
Subsidiaries is a party (it being agreed and acknowledged that Seller may grant
waivers under any such standstill agreement to allow a third party to submit an
Acquisition Proposal (as defined in the Merger Agreement) for Seller to the
extent that the Board of Directors of Seller determines in good faith (after
consulting with outside legal counsel) that the failure to grant such waiver
would be inconsistent with its fiduciary duties under applicable Law);

(xii)    fail to maintain insurance on the Purchased Assets with financially
responsible insurance companies (or if applicable, self insure), insurance in
such amounts and against such risks and losses as are consistent with Good
Utility Practice and customary for companies of the size and financial condition
of Seller that are engaged in businesses similar to the Business;

(xiii)   enter into, amend in any material respect, make any material waivers
under, or otherwise modify in any material respect any property Tax agreement,
treaty, or settlement related to the Business;

 

 

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(xiv)   enter into any line of business in the Territory or the State of
Colorado other than the current Business; provided that the restrictions in this
Section 8.1(a)(xiv) will not apply to activities that are not part of the
current Business or are not related to the Purchased Assets, including Seller’s
electric utility businesses in Kansas and Missouri;

(xv)   other than in the ordinary course of business, amend in any material
respect, breach in any material respect, terminate or allow to lapse or become
subject to default in any material respect or subject to termination any Permit
material to the Business, the Purchased Assets, the Colorado Business and the
Colorado Assets, taken as a whole, other than (A) as required by applicable Law,
and (B) approvals by Governmental Entities of, or the entry with Governmental
Entities into, compromises or settlements of litigation, actions, suits, claims,
proceedings or investigations entered into in accordance with
Section 8.1(a)(xvi);

(xvi)   enter into any compromise or settlement of any litigation, action, suit,
claim, proceeding or investigation relating to the Business or the Purchased
Assets (excluding tax controversies and tax closing agreements that relate to
Taxes that are not Assumed Obligations under this Agreement) in which the
damages or fines to be paid by Seller (and not reimbursed by insurance) are in
excess of $5,000,000 individually or in the aggregate, or in which the
non-monetary relief to be provided could reasonably be expected to materially
restrict the prospective operation of the Business;

(xvii)  enter into any agreements that would limit or otherwise restrict in any
material respect the Business or any successor thereto, or that, after the
Closing, would limit or restrict in any material respect Buyer, the Business or
any successor thereto, from engaging or competing in any line of business or
product line or in any of the Territories (in each case other than limitations
on franchises, certificates of convenience or necessity, or other rights granted
under the same documents);

(xviii)  except as permitted under Section 7.2 and ARTICLE IX of the Merger
Agreement, take any action that is intended or would reasonably be expected to
result in any of the conditions to the obligations of any of the Parties to
effect the transactions contemplated hereby not being satisfied;

(xix)   except for non-material filings in the ordinary course of business
consistent with past practice, (A) implement any changes in Seller’s rates or
charges (other than automatic cost pass-through rate adjustment clauses),
standards of service or accounting, in any such case, as relates to the Business
or execute any agreement with respect thereto (other than as otherwise permitted
under this Agreement), without consulting with Buyer prior to implementing any
such changes or executing any such agreement, and (B) agree to any settlement of
any rate proceeding that would provide for a reduction in annual revenues or
would establish a rate moratorium or phased-in rate increases (other than
automatic cost pass-through rate adjustment clauses) for a duration of more than
one (1) year (it being agreed and acknowledged that, notwithstanding anything to
the contrary herein, rate matters relating to the Business shall be restricted
between the date of this Agreement and the Closing solely to the extent set
forth in this Section 8.1(a)(xix) and not by any other provision hereof);

 

 

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(xx)   with respect to the Business, change, in any material respect, its
accounting methods or practices (except in accordance with changes in GAAP),
credit practices, collection policies, or investment, financial reporting, or
inventory practices or policies or the manner in which the books and records of
the Business are maintained;

(xxi)   hire any employee for the Business other than (A) persons who are hired
by Seller to replace employees who have retired, been terminated, died, or
become disabled, (B) persons who are hired by Seller in the ordinary course of
business consistent with past practice, or (C) persons hired by Seller to
perform Central or Shared Functions; or

(xxii)  agree or commit to take any action which would be a violation of the
restrictions set forth in Sections 8.1(a)(i) through 8.1(a)(xxi).

(b)   Within fifteen (15) Business Days after the date hereof, a committee of
three Persons comprised of one Person designated by Parent, one Person
designated by Seller and one Person designated by Buyer, and such additional
Persons as may be appointed by the Persons originally appointed to such
committee (the “Transition Committee”) will be established to examine transition
issues relating to or arising in connection with the transactions contemplated
hereby, except for issues to be examined by the Transition Services Committee
pursuant to the Transition Services Agreement. From time to time, the Transition
Committee will report its findings to the senior management of each of Parent,
Seller and Buyer. The Transition Committee shall have no authority to bind or
make agreements on behalf of the Parties or to issue instructions to or direct
or exercise authority over the Parties. Seller shall provide to Buyer, at no
cost, interim furnished office space, utilities, and telecommunications at
mutually agreed locations as reasonably necessary to allow Buyer to conduct its
transition efforts.

(c)   In the event that the Transition Committee, or Buyer and Parent, agree to
engage a consultant to provide advice to the Transition Committee, or Parent and
Buyer, respectively, in connection with transition issues relating to or arising
in connection with the transactions contemplated hereby, (i) such engagement
shall occur pursuant to a written agreement with such consultant that shall be
subject to the prior written approval of each of Buyer and Parent, and (ii) all
out-of-pocket costs incurred by Parent and Buyer pursuant to such consulting
agreement will be split between Buyer and Parent, with each of Buyer and Parent
bearing 50% of such costs.

8.2

Access to Information.

(a)    To the extent permitted by Law, between the date of this Agreement and
the Closing Date, Seller will, during ordinary business hours and upon
reasonable notice, (i) give Buyer and Buyer’s Representatives reasonable access
to the Purchased Assets and those of its properties, contracts and records used
principally in the Business or principally related to the Purchased Assets, to
which Seller has the right to grant access without the consent of any other
Person (and in the case where consent of another Person is required, only on
such terms and conditions as may be imposed by such other Person); (ii) permit
Buyer to make such reasonable inspections thereof (including but not limited to
surveys thereof) as Buyer may reasonably request; (iii) furnish Buyer with such
financial and operating data and other information with respect to the Business
as Buyer may from time to time reasonably request; (iv)  grant Buyer

 

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access to such officers and employees of Seller as Buyer may reasonably request
in connection with obtaining information regarding the Business or the Purchased
Assets, including with respect to any environmental matters, regulatory matters
and financial information; (v) furnish Buyer with copies of surveys, legal
descriptions of real property and easements, contracts, leases and other
documents with respect to the Purchased Assets in Seller’s possession and
reasonable control; (vi) furnish Buyer with a copy of each material report,
schedule, or other document principally relating to the Business filed by
Seller, Limited Partner or the Companies with, or received by Seller, Limited
Partner or the Companies from, any Governmental Entity; and (vii) furnish Buyer
all information concerning the Business Employees or Covered Individuals as
reasonably requested; provided, however, that (A) any such investigation will be
conducted, and any such access to officers and employees of Seller will be
exercised, in such a manner as not to interfere unreasonably with the operation
of the Business or any other Person, (B) Buyer will indemnify and hold harmless
Seller from and against any Losses caused to Seller by any action of Buyer or
Buyer’s Representatives while present on any of the Purchased Assets or other
premises to which Buyer is granted access hereunder (including restoring any of
the Real Property to the condition substantially equivalent to the condition
such Real Property was in prior to any investigation of environmental matters),
(C) Seller will not be required to take any action which would constitute a
waiver of the attorney-client privilege, and (D) Seller need not supply Buyer
with any information which Seller is under a contractual or other legal
obligation not to supply; provided, however, if Seller relies upon clauses
(C) or (D) as a basis for withholding information from disclosure to Buyer, to
the fullest extent possible without causing a waiver of the attorney-client
privilege, or a violation of a contractual or legal obligation, as the case may
be, Seller will provide Buyer with a description of the information withheld and
the basis for withholding such information. Notwithstanding anything in this
Section 8.2 to the contrary, (x) Buyer will not have access to personnel and
medical records if such access could, in Seller’s good faith judgment, subject
Seller to risk of liability or otherwise violate the Health Insurance
Portability and Accountability Act of 1996, and (y) any investigation of
environmental matters by or on behalf of Buyer will be limited to visual
inspections and site visits commonly included in the scope of “Phase 1” level
environmental inspections, and Buyer will not have the right to perform or
conduct any other sampling or testing at, in, on, or underneath any of the
Purchased Assets. Seller acknowledges and agrees that except for the information
disclosed in Schedules 1.1-B, 3.1(a), 5.3(b), 5.5(a)-1, 5.5(a)-2, 5.5(b)-1,
5.5(b)-2, 5.8, 5.10(b), 5.10(c), 5.11, 5.14, 8.8(d)(ii)(D) and 8.8(d)(ii)-A to
this Agreement, Buyer may include such information relating to the Business and
the Purchased Assets as reasonably necessary in filings with the SEC, including
in one or more registration statements filed by Buyer in connection with
obtaining the Buyer Financing.

(b)   Unless and until the transactions contemplated hereby have been
consummated, Buyer will, and will cause its Affiliates and Buyer’s
Representatives to, hold in strict confidence and not use or disclose to any
other Person all Confidential Information. “Confidential Information” means all
information in any form heretofore or hereafter obtained from Seller in
connection with Buyer’s evaluation of the Business or the negotiation of this
Agreement, whether pertaining to financial condition, results of operations,
methods of operation or otherwise, other than information which is in the public
domain through no violation of this Agreement or the Confidentiality Agreement
by Buyer, its Affiliates, or Buyer’s Representatives. Notwithstanding the
foregoing, Buyer may disclose Confidential Information to the extent that such
information is required to be disclosed by Buyer by Law or in connection with
any proceeding by or before a Governmental Entity, including any disclosure,
financial or otherwise,

 

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required to comply with any SEC rules. In the event that Buyer believes any such
disclosure is required, Buyer will give Seller notice thereof as promptly as
possible and will cooperate with Seller in seeking any protective orders or
other relief as Seller may determine to be necessary or desirable. In no event
will Buyer make or permit to be made any disclosure of Confidential Information
other than to the extent Buyer’s legal counsel has advised in writing is
required by Law, and Buyer will use its reasonable best efforts to assure that
any Confidential Information so disclosed is protected from further disclosure
to the maximum extent permitted by Law. If the transactions contemplated hereby
are not consummated, Buyer will promptly upon Seller’s request, destroy or
return to Seller all copies of any Confidential Information, including any
materials prepared by Buyer or Buyer’s Representatives incorporating or
reflecting Confidential Information, and an officer of Buyer shall certify in
writing compliance by Buyer with the foregoing. Seller acknowledges and agrees
that this Agreement (other than the information disclosed in Schedules 1.1-B,
3.1(a), 5.3(b), 5.5(a)-1, 5.5(a)-2, 5.5(b)-1, 5.5(b)-2, 5.8, 5.10(b), 5.10(c),
5.11, 5.14, 8.8(d)(ii)(D) and 8.8(d)(ii)-A to this Agreement) shall not be
considered Confidential Information for purposes of this Section 8.2(b).

(c)   Seller agrees that for the two-year period immediately following the
Closing Date, Seller will, and will cause its Affiliates and Seller’s
Representatives to, hold in strict confidence and not disclose to any other
Person all Confidential Business Information. “Confidential Business
Information” means all commercially sensitive information in any form heretofore
or hereafter obtained by Seller to the extent relating to the Business or the
Purchased Assets, whether pertaining to financial condition, results of
operations, methods of operation or otherwise, other than information which is
in the public domain through no violation of this Agreement. Notwithstanding the
foregoing, Seller may disclose Confidential Business Information to the extent
that such information is required to be disclosed under contracts existing as of
the Closing Date, by Law, or in connection with any proceeding by or before a
Governmental Entity, including any disclosure, financial or otherwise, required
to comply with any SEC rules or Required Regulatory Approvals. In the event that
Seller believes any such disclosure is required by Law or in connection with any
proceeding by or before a Governmental Entity, Seller will give Buyer notice
thereof as promptly as possible and will cooperate with Buyer in seeking any
protective orders or other relief as Buyer may determine to be necessary or
desirable. In no event will Seller make or permit to be made any disclosure of
Confidential Business Information other than to the extent Seller determines in
good faith to be required pursuant to SEC rules, or rules governing required
disclosure in other regulatory proceedings, or its legal counsel has advised is
required to comply with the terms of a contract existing as of the Closing Date
or required by Law, or is required in connection with any proceeding by or
before a Governmental Entity, and Seller will use its reasonable best efforts to
assure that any Confidential Business Information so disclosed is protected from
further disclosure.

(d)   The provisions of Section 8.2(b) supersede the provisions of the
Confidentiality Agreement relating to Proprietary Information (as defined
therein), and will survive for a period of two (2) years following the earlier
of the Closing or the termination of this Agreement, except that if the Closing
occurs, the provisions of Section 8.2(b) will expire with respect to any
information principally related to the Purchased Assets and the Business.

(e)    For a period of seven (7) years after the Closing Date, each Party and
its representatives will have reasonable access to all of the books and records
relating to the Business

 

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or the Purchased Assets, including all Transferred Employee Records, in the
possession of the other Parties or the Companies to the extent that such access
may reasonably be required by such Party in connection with the Assumed
Obligations or the Excluded Liabilities, or other matters relating to or
affected by the operation of the Business and the Purchased Assets. Such access
will be afforded by the Person in possession of such books and records upon
receipt of reasonable advance notice and during normal business hours; provided,
however, that (i) any review of books and records will be conducted in such a
manner as not to interfere unreasonably with the operation of the business of
any Party or its Affiliates, (ii) no Party will be required to, and Seller will
not be required to cause the Companies to, take any action which would
constitute a waiver of the attorney-client privilege, and (iii) no Party need
supply any other Party with any information which such Party is under a
contractual or other legal obligation not to supply. The Party exercising the
right of access hereunder will be solely responsible for any costs or expenses
incurred by it pursuant to this Section 8.2(e) and will reimburse the other
Party for any costs or expenses incurred by such other Party in connection with
complying with such request. If the Party in possession of such books and
records desires to dispose of any such books and records prior to the expiration
of such seven-year period, such Party will, prior to such disposition, give the
other Parties and the Companies, as applicable, a reasonable opportunity at such
other Party’s expense to segregate and take possession of such books and records
as such other Party may select.

8.3    Expenses. Except to the extent specifically provided herein, in the
Merger Agreement or in the Asset Purchase Agreement, and irrespective of whether
the transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby will be borne by the Party incurring such costs and expenses.

8.4

Further Assurances; Regulatory Filings; Consents and Approvals.

(a)    Subject to the terms and conditions of this Agreement, each of the
Parties will use reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective the
transactions contemplated hereby, by the Merger Agreement and by the Asset
Purchase Agreement as promptly as practicable after the date of this Agreement,
including using reasonable best efforts to obtain satisfaction of the conditions
precedent to each Party’s obligations hereunder, under the Merger Agreement and
the Asset Purchase Agreement. Except for actions permitted under Section 7.2 and
ARTICLE IX of the Merger Agreement, neither Buyer nor Seller will take or permit
any of its Subsidiaries to take any action that would reasonably be expected to
prevent or materially delay or impair the consummation of the transactions
contemplated hereby.

(b)   Seller, Parent and Buyer will each file or cause to be filed with the
Federal Trade Commission and the United States Department of Justice, Antitrust
Division any notifications required to be filed by it under the HSR Act and the
rules and regulations promulgated thereunder with respect to the transactions
contemplated hereby. The Parties will consult and cooperate with each other as
to the appropriate time of filing such notifications and will (i) make such
filings at the agreed upon time, (ii) respond promptly to any requests for
additional information made by either of such agencies, and (iii) use their
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to cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of such filings.

(c)   Without limiting the foregoing, the Parties will cooperate with each other
and use reasonable best efforts to (i) promptly prepare and file all necessary
applications, notices, petitions, and filings, and execute all agreements and
documents to the extent required by Law or Order for consummation of the
transactions contemplated by this Agreement (including the Required Regulatory
Approvals), (ii) obtain the consents, approvals and authorizations necessary to
transfer to Buyer all Transferable Permits and Transferable Environmental
Permits, and the reissuance to Buyer of all Permits that are not Transferable
Permits and all Environmental Permits that are not Transferable Environmental
Permits, in each case, effective as of the Closing, (iii) obtain the consents,
approvals, and authorizations of all Governmental Entities to the extent
required by Law or Order for consummation of the transactions contemplated by
this Agreement (including the Required Regulatory Approvals), including by
taking all structural corporate actions necessary to consummate the transactions
contemplated hereby in a timely manner, provided, however, no Party will be
required to take any action that would result in a Regulatory Material Adverse
Effect, and (iv) obtain all consents, approvals, releases and authorizations of
all other Persons to the extent necessary or appropriate to consummate the
transactions contemplated by this Agreement as required by the terms of any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease, Business Agreement, Easement, or other instrument
to which Seller or Buyer is a party or by which either of them is bound. Buyer
and Seller will each have the right to review in advance all characterizations
of the information related to it or the transactions contemplated hereby which
appear in any filing made by the other in connection with the transactions
contemplated by this Agreement. Buyer will be solely responsible for payment of
all filing fees required in connection with any Required Regulatory Approvals or
such other applications, notices, petitions and filings made with any
Governmental Entity.

(d)   To the extent permitted by Law, Buyer and Seller will have the right to
review in advance, and each will consult the other on, the form, substance and
content of any filing to be made by Buyer or Seller or any of their respective
Subsidiaries with, or any other written materials submitted by any of them to,
any third party or any Governmental Entity (other than the SEC) in connection
with the transactions contemplated by this Agreement, the Merger and the Asset
Purchase Agreement. To the extent permitted by Law, each of Buyer and Seller
will (i) provide the other with copies of all correspondence between it or any
of its Subsidiaries (or its or their Representatives) and any Governmental
Entity (other than the SEC) relating to the transactions contemplated by this
Agreement, the Merger Agreement and the transactions contemplated by the Asset
Purchase Agreement, (ii) consult and cooperate with the other Party, and to take
into account the comments of such other Party in connection with any such
filings, and (iii) inform the other Party in advance of any communication,
meeting, or other contact which such Party proposes or intends to make with
respect to such filings, including the subject matter, contents, intended
agenda, and other aspects of any of the foregoing and to use reasonable best
efforts to ensure that all telephone calls and meetings with a Governmental
Entity regarding the transactions contemplated by this Agreement will include
representatives of Buyer and Seller; provided that nothing in the foregoing will
apply to or restrict communications or other actions by Seller with or with
regard to Governmental Entities in connection with the Purchased Assets or the
Business in the ordinary course of business. To the extent permitted by Law,
Buyer, Seller

 

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and Parent each agree to (1) provide one another with copies of any registration
statements filed with the SEC, in the case of Buyer, in connection with
obtaining financing, or by Seller and Parent in connection with the transactions
contemplated under the Merger Agreement, (2) provide the other Parties the
opportunity to review in advance and consult with one another as to the content
of such registration statements regarding such Parties and, (3) provide the
other Parties with copies of all correspondence between it or any of its
Subsidiaries (or its or their respective Representatives) and the SEC with
respect to such registration statements regarding such Parties.

(e)    Nothing in this Section 8.4(e) will require, or be construed to require,
(i) Seller to take or refrain from taking, or to cause any of its Subsidiaries
to take or refrain from taking, any action or to engage in any conduct, or to
agree or consent to Seller or any of its Subsidiaries taking any action or
engaging in any conduct, or agreeing to any restriction, condition or conduct,
with respect to any of the businesses, assets or operations of Seller or any of
its Subsidiaries, if this action, restriction, condition or conduct would take
effect prior to the Closing or is not conditioned on the Closing occurring, or
(ii) Buyer to take or refrain from taking, or to cause any of its Subsidiaries
to take or refrain from taking, any action or to engage in any conduct, or to
agree or consent to Seller or any of its Subsidiaries taking any action, or
agreeing to any restriction, condition or conduct, with respect to any of the
businesses, assets or operations of Seller or any of its Subsidiaries, if the
cumulative impact of these actions, restrictions, conditions and conduct would
reasonably be expected to have a material adverse effect on the financial
condition, properties, assets, liabilities (contingent or otherwise) business or
results of operations of the Business and the Purchased Assets, together with
the Natural Gas Businesses and the Natural Gas Assets, taken as a whole (a
“Regulatory Material Adverse Effect”), it being understood that, for purposes of
determining whether a Regulatory Material Adverse Effect would reasonably be
expected to occur both the positive and negative effects of any actions,
conduct, restrictions and conditions, including any sale, divestiture,
licensing, lease, disposition or change or proposed change in rates, will be
taken into account. Notwithstanding the foregoing, Seller shall not take,
consent to or agree to take any action with respect to the Business or the
Purchased Assets that would reasonably be expected to have a material adverse
effect on the financial condition, properties, assets, liabilities (contingent
or otherwise), business or results of operations of the Post-Sale Company (as
defined in the Merger Agreement) and its Subsidiaries, without Parent’s written
consent.

(f)    Seller and Buyer will cooperate with each other and promptly prepare and
file notifications with, and request Tax clearances from, state and local taxing
authorities in jurisdictions in which a portion of the Purchase Price may be
required to be withheld or in which Buyer would otherwise be liable for any Tax
liabilities of Seller pursuant to such state and local Tax Law.

(g)   Each of Buyer, Seller and Parent will keep the other apprised of the
status of matters relating to completion of the transactions contemplated by
this Agreement, the Merger Agreement and the Asset Purchase Agreement. Without
limiting the foregoing, each of Buyer, Seller and Parent will promptly furnish
the other with copies of any notice or other communication received by it or its
Subsidiaries from any Person with respect to the transactions contemplated by
this Agreement, the Merger Agreement or the Asset Purchase Agreement regarding
(i) the occurrence or existence of (A) the breach in any material respect of a
representation, warranty or covenant made by the other in this Agreement, or (B)
any fact,

 

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circumstance or event that has had, or individually or in the aggregate would
reasonably be expected to have a Material Adverse Effect; (ii) any notice or
other communication from any Person alleging that the consent of such Person is
or may be required in connection with the transactions contemplated hereby; and
(iii) (A) the commencement or, to a Party’s knowledge, threatened commencement
of any material Claims against such Party, (B) the commencement of any material
internal investigations or the receipt of any material and reasonably credible
whistleblower complaints relating to a Party or any of its Subsidiaries, or (C)
the entry of any material Order relating to a Party.

(h)   Seller agrees that none of the information supplied or to be supplied by
Seller or its Subsidiaries in writing specifically for Buyer’s use in preparing,
or incorporation by reference, in any registration statement to be filed by
Buyer in connection with obtaining Buyer’s financing will, at the time such
registration statement is filed with the SEC, is amended or supplemented, or
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading.

(i)    Buyer agrees that none of the information supplied or to be supplied by
Buyer or its Subsidiaries in writing specifically for Seller’s and Parent’s use
in preparing, or incorporation by reference, in any registration statement to be
filed by Seller and Parent in connection with the transactions contemplated by
the Merger Agreement will, at the time such registration statement is filed with
the SEC, is amended or supplemented, or becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, not misleading.

(j)    Each of Seller, Parent and Buyer will, and will cause its Subsidiaries,
including in the case of Parent, Seller’s successor, to cooperate with the
others and use reasonable best efforts to take or cause to be taken all actions
and do or cause to be done all things necessary, proper or advisable on its part
to enable Buyer, Parent, Seller and Seller’s successor to perform their
respective obligations under the Transition Services Agreement, including
participation in the Transition Services Committee to be established pursuant to
the Transition Services Agreement, and implementation of the Transition Plan in
accordance therewith.

8.5

Procedures with Respect to Certain Agreements and Other Assets.

(a)    Seller has easements, real property license agreements (including
railroad crossing rights), rights-of-way, and leases for rights-of-way, which
relate solely to the Business and Purchased Assets (the “Easements”). At the
Closing, Seller will convey and assign to the Companies, as applicable, subject
to the obtaining of any necessary consents, (i) by the Assignment of Easements,
all Easements, and (ii) to the extent practicable, by separate, recordable
Assignment of Easement as to all Easements in each separate County. Buyer and
Seller agree that if Buyer and Seller determine any of Seller’s operations other
than those of the Business “share” Easements with Seller’s Electric Business or
Gas Business operations, Buyer and Seller will take all actions reasonably
necessary (such as executing sub-easements or other documents) to ensure Buyer
is permitted to use the same on a non-exclusive basis, as presently used by
Seller with respect to the Business.

 

 

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(b)   To the extent that any of the Purchased Assets or Seller’s rights under
any Business Agreement may not be assigned to the Companies, as applicable,
without the consent of another Person which consent has not been obtained, this
Agreement will not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful. Seller will use its
reasonable best efforts (without being required to make any payment to any third
party or incur any economic burden, except as may be specifically required under
any Business Agreement in connection with the grant of such consent) to obtain
any such required consent as promptly as possible. Buyer agrees to cooperate
with Seller in its efforts to obtain any such consent (including the submission
of such financial or other information concerning Buyer and the execution of any
assumption agreements or similar documents reasonably requested by a third
party) without being required to make any payment to any third party or to incur
any economic burden (other than the assumption of Seller’s obligations under the
applicable Business Agreement). Seller and Buyer agree that if any consent to an
assignment of a Purchased Asset, including any Business Agreement is not
obtained or if any attempted assignment would be ineffective or would impair the
respective Company’s rights to such Purchased Assets or such rights and
obligations under the Business Agreement in question so that the applicable
Company would not acquire the benefit of all such rights and obligations, at the
Closing the Parties will, to the maximum extent permitted by Law and such
Business Agreement, enter into such arrangements with each other as are
reasonably necessary to effect the transfer or assignment of such Purchased
Asset or to provide the Company with the benefits and obligations of such
Business Agreement from and after the Closing.

(c)   To the extent that any Business Agreement consisting of a futures
contract, options contract, or other derivatives transaction (but not including
contracts for physical delivery) (each, a “Financial Hedge”) is not assignable
due to the rules and regulations of the Commodities Futures Trading Commission,
the New York Mercantile Exchange or other futures or options exchange on which
the Financial Hedge was entered into, or the relevant clearinghouse, Buyer and
Seller agree that the Financial Hedge will be liquidated at or promptly after
the Closing. Liquidation proceeds will be paid as follows: (i) in the event
Seller’s aggregate mark-to-market value of the Financial Hedges is positive,
Seller will pay Buyer the mark-to-market value of the Financial Hedges; or
(ii) in the event Seller’s aggregate mark-to-market value of the Financial
Hedges is negative, Buyer will pay Seller the mark-to-market value of the
Financial Hedges. On or before the Closing, the Parties will agree on a specific
procedure to liquidate the non-assignable Financial Hedges, and any payment due
as a result of such liquidation under this Section 8.5(c) will be made at or
promptly after the Closing. Seller will calculate the mark-to-market value of
the Financial Hedges in accordance with its usual and customary practice.

(d)   Buyer and Parent agree that the agreements, if any, described on
Schedule 8.5(d) (the “Shared Agreements”), which will be attached to this
Agreement prior to July 1, 2007 by the mutual agreement of Buyer and Parent,
will be governed by this Section 8.5(d) and will not be Business Agreements for
purposes of this Agreement. Seller’s rights and obligations under the Shared
Agreements, to the extent such rights and obligations relate to the Business,
are described on Schedule 8.5(d), and are referred to herein as the “Allocated
Rights and Obligations.” Unless Parent elects for Seller or its successor to
enter into Other Arrangements, Seller shall, or Parent shall cause Seller’s
successor to, cooperate with Buyer and the Companies and use their reasonable
best efforts to enter into agreements (effective from and after the Closing
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(i) assignment to and assumption by the Companies, effective from and after the
Closing, of the Allocated Rights and Obligations, and (ii) retention by Seller
or its successor of all rights and obligations of Seller under the Shared
Agreements other than the Allocated Rights and Obligations (such agreements set
forth in (i) and (ii) being referred to as “Substitute Arrangements”); provided,
that neither Seller or its successor nor the Companies will be obligated to
enter into or agree to any such Substitute Arrangements unless such Substitute
Arrangements have the effect of transferring to the Companies the Allocated
Rights and Obligations (and reserving to Seller or its successor the rights and
obligations which are not Allocated Rights and Obligations) on a fair and
equitable basis, as determined in the reasonable discretion of Parent and Buyer.
In connection with the foregoing, Parent and Seller will, Parent will cause
Seller’s successor to, and Buyer will cause the Companies to, as reasonably
requested, to submit such financial or other information concerning themselves
or Seller, and to execute such assumption agreements or similar documents
reasonably requested by a third party; provided that no Party will be, and
Seller’s successor will not be, required to make any payment to any third party
or to incur any economic burden (other than the assumption of the Allocated
Rights and Obligations by the Companies, and the retention of the other rights
and obligations under the Shared Agreements by Seller, or its successor). In the
event that (x) Seller or its successor and the applicable Company are unable to
enter into Substitute Arrangements with respect to a Shared Agreement in
accordance with the foregoing, or (y) Seller notifies Buyer that it elects not
to pursue Substitute Arrangements with respect to such Shared Agreement, then in
either case at or promptly after the Closing such applicable Company and Seller,
or Parent will cause Seller’s successor to, to the maximum extent permitted by
Law and such Shared Agreement, will enter into such arrangements with each other
as are necessary to provide such Company with the benefits and obligations of
the Allocated Rights and Obligations under such Shared Agreement, with Seller or
its successor retaining the other benefits and obligations under such Shared
Agreements from and after the Closing (the “Other Arrangements”).

(e)    Seller from time to time provides collateral or other security to certain
other Persons in connection with certain Business Agreements, Financial Hedges
and Shared Agreements. Seller and Buyer agree to use their reasonable best
efforts to cause such collateral or other security to be returned to Seller
(including in the case of a letter of credit a return of the letter of credit to
Seller), or released (in the case of other credit support previously provided by
Seller) at or promptly after the Closing. In the event that such collateral or
other security is not returned to Seller or otherwise released at or promptly
after the Closing, Buyer will (i) pay to Seller, or its successor, an amount
equal to any cash collateral posted by Seller; and (ii) in the case of a letter
of credit provided in connection with a Business Agreement, replace such letter
of credit as soon as practicable, or if such letter of credit is provided in
connection with a Shared Agreement, provide to Seller, or its successor, a
back-up letter of credit in the same amount and for a period expiring no earlier
than ten (10) days following the expiration of the letter of credit previously
provided by Seller. The provisions of this Section 8.5(e) will apply to
collateral or other security provided in connection with Shared Agreements to
the extent such collateral or other security is related to the Allocated Rights
and Obligations under such Shared Agreements.

(f)    In the event that any approval for the transfer of any of the Purchased
Assets to the Companies, is required from the Federal Communications Commission
or any Franchise authority, and such approval is necessary to obtain in order to
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Law, but is not a Required Regulatory Approval, the Parties agree that if such
approval is not obtained prior to the Closing:

(i)     they will each continue to use, and Parent and Seller will, and Parent
will cause Seller’s successor to use, reasonable best efforts to obtain, and
with respect to Parent, to cause Seller’s successor to obtain, such approvals as
promptly as possible;

(ii)     any of the Purchased Assets, the transfer of which to the Companies, in
the absence of such an approval would cause or lead to a violation of any Law
(the “Contingent Purchased Assets”), shall not be transferred to the Companies
at the Closing, but Seller will, or Parent will cause Seller’s successor to,
transfer such assets immediately upon receipt of the requisite approvals, with
the time between the Closing and the receipt of such approval being referred to
as the “Interim Period”

(iii)    during the Interim Period, Seller or its successor shall continue to
have all title, rights, and obligations in the Contingent Purchased Assets to
the extent necessary to avoid any violation of Law; and

(iv)    Buyer will, and Seller will, or Parent will cause Seller’s successor to,
enter into such arrangements with each other prior to Closing as are permissible
under Law and reasonably necessary to provide Buyer with the benefits and
obligations in respect of the Contingent Purchased Assets from and after the
Closing, and otherwise on terms and conditions reasonably acceptable to Buyer
and Seller or its successor.

(g)     Following the Closing, Buyer will cause the Companies and Seller will,
or Parent will cause Seller’s successor to, promptly remit to the other any
payments the Companies or Seller or its successor receives that are in
satisfaction of any rights or assets belonging to the other.

(h)     With respect to the vehicles that are included in the Purchased Assets
and that are subject to the Master Lease Agreement described in Schedule 5.8,
Seller shall, upon written notice from Buyer, purchase such vehicles prior to
the Closing and obtain the release of the liens on such vehicles as indicated in
Schedule 5.8.

8.6    Public Statements. Each Party will consult with the other prior to
issuing any press releases or otherwise making public announcements with respect
to the transactions contemplated by this Agreement, except (i) as may be
required by Law or by obligations pursuant to any listing agreement with or
rules of any national securities exchange or any self-regulatory organization,
and (ii) for any consultation that would not be reasonably practicable as a
result of requirements of Law.

8.7

Tax Matters.

(a)    All transfer, documentary, stamp, registration, sales and use Taxes,
including real property conveyance Taxes (“Transfer Taxes”), incurred in
connection with this Agreement and the transactions contemplated hereby shall be
shared equally between Seller or its successor, on the one hand, and Buyer, on
the other hand. To the extent required by applicable Law, Seller shall, or
Parent shall cause Seller’s successor to, at its own expense, file all necessary

 

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Tax Returns and other documentation with respect to all such Transfer Taxes,
and, if required by applicable Law, Buyer shall join in the execution of any
such Tax Returns or other documentation. Buyer shall remit to Seller, within 20
days after receipt of notice as to the amount of such Transfer Taxes that are
payable on or after the Closing or have been paid, 50 percent of the total
amount of such Transfer Taxes. In the event there is an additional assessment of
such Transfer Taxes or an amount of such Transfer Taxes is refunded, (i) Buyer
and Seller shall share equally the amount of any such additional assessment,
with the Party that is not required to pay such Transfer Tax under applicable
Law remitting to the other 50 percent of such additional assessment within 20
days after receiving notice of a final determination, and (ii) Buyer and Seller
shall share equally the amount of any such refund, with the Party receiving such
refund paying 50 percent of such refund to the other within 20 days after
receiving such refund (or claiming an offset against Taxes relating to such
refund).

(b)   Buyer will be responsible for the preparation and timely filing of, and
will cause the Companies to, to the extent applicable, prepare and timely file,
all Tax Returns associated with the Business, the Purchased Assets and the
Business Employees for (i) in the case of property Taxes and payroll Taxes, all
periods that begin before and end after the Closing Date (the “Straddle Period
Taxes”), and (ii) in the case of all Taxes, all periods that begin after the
Closing Date, and for the timely payment of all Taxes described in clauses (i)
and (ii) of this Section 8.7(b).

(c)   Any Tax Return that reflects Transfer Taxes or that reflects Taxes to be
prorated in accordance with Section 3.4 will be subject to the approval of the
Party not preparing such return, which approval will not be unreasonably
withheld or delayed. Each Party will make any such Tax Return prepared by it
available for the other Party’s review and approval no later than twenty (20)
Business Days prior to the due date for filing such Tax Return.

(d)   Buyer, Parent and Seller will, Buyer will cause the Companies to, and
Parent will cause Seller’s successor to, provide one another with such
assistance as may reasonably be requested by such other Persons in connection
with the preparation of any Tax Return, any audit or other examination by any
Governmental Entity, or any judicial or administrative proceedings relating to
liability for Taxes, and each of Buyer, Parent and Seller will, Buyer will cause
the Companies to, and Parent will cause Seller’s successor to, retain and
provide the other with any records or information which may be relevant to such
return, audit or examination or proceedings. Any information obtained pursuant
to this Section 8.7(d) or pursuant to any other Section hereof providing for the
sharing of information in connection with the preparation of, or the review of,
any Tax Return or other schedule relating to Taxes will be kept confidential by
the Persons referenced herein in accordance with Section 8.2(b).

8.8

Employees and Employee Benefits.

(a)    No later than twenty (20) Business Days prior to the Closing Date, Buyer
will give Qualifying Offers of employment to commence with the applicable
Company as of the Closing Date to each of the Business Employees, including any
such employees who are on a leave of absence under the Family and Medical Leave
Act, the Uniformed Services Employment and Reemployment Rights Act or other
applicable Law, or authorized under Seller’s established leave policy, including
short-term or long-term disability. For this purpose, a “Qualifying Offer”

 

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means employment at a level of base pay at least equal to the Business
Employee’s base pay in effect immediately prior to the Closing Date, and with a
primary work location no more than fifty (50) miles from the Business Employee’s
primary work location immediately prior to the Closing Date; provided, however,
that with respect to any Business Employee who is covered by a Collective
Bargaining Agreement or Successor Collective Bargaining Agreement, the
Qualifying Offer shall be on terms and conditions set forth in the Collective
Bargaining Agreement, Successor Collective Bargaining Agreement or, if
applicable, a new collective bargaining agreement negotiated by Buyer or the
Companies covering such employee. Each Business Employee who becomes employed by
either of the Companies pursuant to this Section 8.8(a) is referred to herein as
a “Transferred Employee.” Each Transferred Employee who is covered by a
Collective Bargaining Agreement or a Successor Collective Bargaining Agreement
shall be referred to herein as a “CB Transferred Employee,” and each Transferred
Employee who is not covered by a Collective Bargaining Agreement or a Successor
Collective Bargaining Agreement shall be referred to herein as a “Non-CB
Transferred Employee.”

(b)   All offers of employment made by Buyer with respect to employment by
either of the Companies pursuant to Section 8.8(a) will be made in accordance
with all applicable Laws, will be conditioned only on the occurrence of the
Closing, and will remain open until the Closing Date. Any such offer which is
accepted before it expires will thereafter be irrevocable, except for good
cause. Following acceptance of such offers, Buyer will provide written notice
thereof to Seller and Seller will, or Parent will cause Seller’s successor to,
provide Buyer and the Companies with access to the Transferred Employee Records
consistent with applicable Law. Buyer will, and will cause the Companies to, be
responsible for all liabilities and obligations for and with respect to any
Business Employees who do not become Transferred Employees including
(i) pursuant to Exhibit 8.8(d)(ii)(C), (ii) due to retirement by such employee
after the date hereof and prior to Closing, (iii) severance benefits which
become payable to such Business Employee upon any termination of such Business
Employee’s employment on or following the Closing Date, and (iv) the benefits
described in Section 8.8(d)(ii)(D), but not including liabilities and
obligations with respect to insured welfare benefits provided to such Business
Employee for periods prior to the Closing Date. Without limiting the obligations
of Buyer or the Companies hereunder, the employment of each Business Employee
who does not become a Transferred Employee as of the Closing shall be terminated
immediately following the Closing by Seller or the applicable Affiliate of
Seller.

(c)   From and after the Closing Date, Buyer will cause the Companies to
recognize the union locals that are the counterparties to Seller under the
Collective Bargaining Agreements or any Successor Collective Bargaining
Agreements entered into in compliance with Section 8.1(a) (the “Locals”) as the
exclusive bargaining representatives of the bargaining units that include CB
Transferred Employees. No later than twenty (20) Business Days prior to the
Closing Date, Buyer will negotiate and reach agreement with each Local on the
terms and conditions of a new collective bargaining agreement to be effective
from and after the Closing Date with respect to the applicable bargaining unit
represented by such Local (each such agreement being referred to as a “New
CBA”). Should Buyer fail to successfully negotiate a New CBA with a Local at
least twenty (20) Business Days prior to the Closing Date, then at the Closing,
Seller will cause the Companies to assume the existing Collective Bargaining
Agreement or, as applicable, Successor Collective Bargaining Agreement entered
into in compliance with Section 8.1(a), to the extent applicable to the
bargaining unit represented by such Local and to the

 

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extent consistent with applicable Law; provided that the Companies shall not
assume any of the Benefit Plans (but may receive assets to be transferred from
such plans pursuant to Exhibit 8.8(d)(ii)(C)), and Buyer will, or will cause the
Companies to, instead provide benefits of the type and amount described in the
existing Collective Bargaining Agreements or Successor Collective Bargaining
Agreements entered into in compliance with Section 8.1(a), as applicable,
through Buyer’s or the Company’s own benefit plans and arrangements. Buyer
agrees that (i) upon request by Seller, Buyer will notify Seller of the status
of negotiations with each Local, and (ii) no later than nineteen (19) Business
Days prior to the Closing Date, Buyer will notify Seller whether a New CBA has
been successfully negotiated with such Local.

(d)   The following will be applicable with respect to the Transferred
Employees, Business Employees, Current Retirees, and Other Plan Participants as
appropriate. For all purposes of this Section 8.8, determinations as to whether
any individuals are “similarly situated” shall be made by Buyer in its
reasonable discretion.

(i)     From and after the Closing, the Transferred Employees will accrue no
additional benefits under any Benefit Plan or any other employee benefit plan,
policy, program, or arrangement of Seller, Parent or their respective
Affiliates.

(ii)     As of the Closing, with respect to the CB Transferred Employees, Buyer
will, or will cause the Companies to, provide benefits of the type and amount
described in the relevant collective bargaining agreements through Buyer’s or
the Companies’ own benefit plans and arrangements. As of the Closing and
extending through December 31 of the calendar year following the calendar year
in which the Closing occurs, Buyer will cause the Non-CB Transferred Employees
to be covered by Buyer or Company benefit plans that provide compensation and
employee benefits (excluding (i) equity or equity based compensation, and
(ii) change in control, severance or retention payments) that are no less
favorable in the aggregate than provided to the Non-CB Transferred Employees
immediately before the Closing; provided, that in determining the timing, amount
and terms and conditions of equity compensation and other incentive awards to be
granted to Non-CB Transferred Employees, Buyer will treat in a substantially
similar manner Non-CB Transferred Employees and similarly situated other
employees of Buyer (including by reason of job duties and years of service). The
commitments under this Section 8.8(d)(ii) require the following with respect to
the Non-CB Transferred Employees and, to the extent not addressed in the
relevant collective bargaining agreement, the CB Transferred Employees:

(A)    With respect to welfare benefit plans, Buyer agrees to waive or to cause
the waiver of all restrictions, limitations or exclusionary periods as to
pre-existing conditions, actively-at-work exclusions, waiting periods and proof
of insurability requirements (to the extent allowable under Buyer’s welfare
benefit plans and insurance policies) for the Transferred Employees to the same
extent waived or satisfied under the corresponding Benefit Plans. With respect
to the calendar year in which the Closing Date occurs, all eligible expenses
incurred by any such employees or any eligible dependent thereof, including any
alternate recipient pursuant to qualified medical child support orders, in the
portion of the calendar year preceding the Closing Date that were qualified to
be taken into account for purposes of satisfying any deductible, co-insurance or
out-of-pocket limit under any Seller Benefit Plan will be taken into account for
purposes of satisfying any deductible, co-insurance or

 

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out-of-pocket limit under similar plans of Buyer or the Companies for such
calendar year. As soon as practicable, but in no event later than sixty (60)
days after the Closing Date, Seller will, or Parent will cause Seller’s
successor to, provide Buyer and the Companies with all relevant information
necessary or reasonably requested by Buyer or the Companies for purposes of
administering this provision, consistent with applicable Law.

(B)    With respect to service and seniority, Buyer and the Companies will
recognize the service and seniority of each of the Transferred Employees
recognized by Seller for all material purposes, including the determination of
eligibility and vesting, the extent of service or seniority-related welfare
benefits, and eligibility for and level of retiree health benefits, but in any
event not for purposes of determining the accrual of pension benefits and levels
of pension or other retirement income benefits.

(C)    The Parties will comply with the provisions set forth on
Exhibit 8.8(d)(ii)(C).

(D)    Buyer will or will cause the Companies to assume all liabilities,
obligations, and responsibilities with respect to providing post-retirement
health and life insurance benefits arising under or pursuant to existing plans
and agreements of Seller (“Post-Retirement Welfare Benefits”) to (i) the persons
listed on Schedule 8.8(d)(ii)(D) and any Business Employee who retires between
the date hereof and the Closing Date (such listed persons and such Business
Employees, the “Current Retirees”), and their spouses and eligible dependents,
and (ii) the Business Employees (together with the Current Retirees, the
“Covered Individuals”) and their spouses and eligible dependents. From and after
the Closing, Buyer will or will cause the Companies to continue to provide to
the Covered Individuals Post-Retirement Welfare Benefits that, in material
respects, are comparable to in the aggregate those Post-Retirement Welfare
Benefits provided to such Covered Individuals immediately prior to the Closing
Date, under cost-sharing structures that either are at least as favorable as the
cost-sharing structures in effect for and available to the Covered Individuals
immediately prior to the Closing Date (as adjusted for inflation); provided that
if Buyer or any of the Companies reduces or eliminates any Post-Retirement
Welfare Benefits provided to Covered Individuals from such benefits that are
available to such individuals under the terms and conditions of the existing
plans and agreements of Seller applicable to such individuals as in effect on
the date hereof, any liabilities arising in connection with such reduction or
elimination shall be deemed an Assumed Obligation and Buyer will or will cause
the Companies to be responsible therefor.

(E)    With respect to the Aquila, Inc. Retirement Investment Plan (the “Savings
Plan”), Seller will vest Transferred Employees in their Savings Plan account
balances as of the Closing Date. Buyer will take all actions necessary to
establish or designate a defined contribution plan and trust intended to qualify
under Section 401(a) and Section 501(a) of the Code in which Transferred
Employees are eligible to participate (x) to recognize the service that the
Transferred Employees had in the Savings Plan for purposes of determining such
Transferred Employees’ eligibility to participate, vesting, attainment of
retirement dates, contribution levels, and, if applicable, eligibility for
optional forms of benefit payments, and (y) to accept direct rollovers of
Transferred Employees’ account balances in the Savings Plan, including transfers
of loan balances and related promissory notes, provided that such loans would
not be treated as taxable distributions at any time prior to such transfer.

 

 

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(F)    Within sixty (60) days after the Closing Date, Seller will, or Parent
will cause Seller’s successor to, transfer to a flexible spending plan
maintained by the applicable Company, the Companies or Buyer any balances
standing to the credit of Transferred Employees under Seller’s flexible spending
plan as of the day immediately preceding the Closing Date, net of any negative
balances in the applicable accounts at such time. As soon as practicable after
the Closing Date, Seller will, or Parent will cause Seller’s successor to,
provide to Buyer and the Companies a list of those Transferred Employees that
have participated in the health or dependent care reimbursement accounts of
Seller, together with (x) their elections made prior to the Closing Date with
respect to such account and (y) balances standing to their credit as of the day
immediately preceding the Closing Date. As of the transfer described in the
first sentence hereof, the flexible spending plan maintained by the Companies or
Buyer shall assume the rights and obligations of Seller’s flexible spending plan
with respect to the Transferred Employees for the remainder of the year in which
such transfer occurs. For the avoidance of doubt, this paragraph shall not be
construed to require a transfer with respect to any Transferred Employee of an
amount in excess of such employee’s unreimbursed contributions to the flexible
spending plan as of the date of transfer.

(iii)    With respect to severance benefits, Buyer will or will cause the
Companies to provide to any Non-CB Transferred Employee who is terminated by
Buyer or the Companies, as applicable (other than for cause), prior to the date
which is one (1) year following the Closing Date, severance benefits comparable
to those provided by Seller under Seller’s severance plans and policies (other
than any plans or policies with respect to stock options or other types of
equity compensation) in effect immediately prior to the Closing Date. Any
employee who is provided severance benefits under this Section 8.8(d)(iii) may
be required to execute a release of claims against Buyer, Seller and their
respective Affiliates and successors, in such form as Buyer or the applicable
Company, reasonably prescribes, as a condition for the receipt of such benefits.

(iv)    Parent will, or will cause Seller or its successor to, provide COBRA
Continuation Coverage to any current and former Business Employees, or to any
qualified beneficiaries of such Business Employees, who become or became
entitled to COBRA Continuation Coverage on or before the Closing, including
those for whom the Closing occurs during their COBRA election period. Buyer will
and will cause the Companies to be responsible for extending and continuing to
extend COBRA Continuation Coverage to all Transferred Employees (and their
qualified beneficiaries) who incur a COBRA qualifying event and thus become
entitled to such COBRA Continuation Coverage following the Closing.

(v)     Without limiting the obligations of the Parties under
Sections 8.8(d)(ii)(C) and 8.8(d)(ii)(D), Seller or its Affiliates will pay or
cause to be paid to all Transferred Employees, all compensation (including any
accrued vacation carried over to the calendar year of the Closing from a
previous calendar year), workers’ compensation or other employment benefits to
which they are entitled or that have accrued under the terms of the applicable
compensation or Seller Benefit Plans or programs with respect to employment or
events occurring prior to the Closing Date; provided that if any of the CB
Transferred Employees elect to retain or carryover accrued and unused vacation
days rather than receive such payments, Seller or its Affiliates will pay or
cause to be paid to Buyer an amount equal to the aggregate amount that would
otherwise have been paid to such CB Transferred Employees with respect to

 

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such vacation days, and Buyer will honor all such accrued and unused vacation
days of such CB Transferred Employees as of the Closing. Buyer will, or cause
the Companies to, pay to each Transferred Employee all unpaid salary or other
compensation or employment benefits (but not including any compensation
attributable to stock options or other types of equity compensation granted by
Seller) which accrue to such employee from and after the Closing Date, at such
times as provided under the terms of the applicable compensation or benefit
programs.

(vi)    Without limiting the obligations of the Parties under
Sections 8.8(d)(ii)(C) and 8.8(d)(ii)(D), Business Employees who on the Closing
Date are not actively at work due to a leave of absence covered by the Family
and Medical Leave Act, the Uniformed Service Employment and Reemployment Rights
Act or other applicable Law, or other authorized leave of absence under Seller’s
established leave policy, including short-term or long-term disability, will be
provided by Buyer with, or Buyer will cause the Companies to provide, benefits
and compensation during such leave that is substantially similar to the benefits
and compensation provided to such employees by Seller prior to the Closing Date,
and Buyer will or will cause the Companies to treat such Business Employees as
Transferred Employees on the date that they are able to return to work (provided
that such return to work occurs within the authorized period of their leaves
following the Closing Date) and are able to perform the essential functions of
their jobs with or without reasonable accommodation. Seller shall provide Buyer
with a list of such individuals as of the Closing Date with the scheduled dates
for expiration of their leaves.

(vii)    Buyer will or will cause the Companies to assume Seller’s obligations
as of the Closing Date to pay nonqualified deferred compensation to the
applicable Business Employees and former Business Employees.

(e)    On or before the Closing Date, Seller shall provide Buyer a list of the
names and sites of employment of any and all Business Employees who have
experienced, or will experience, an employment loss or layoff as defined by WARN
Act or any similar applicable state or local Law requiring notice to employees
in the event of a closing or layoff within ninety (90) days prior to the Closing
Date. Seller shall update this list up to and including the Closing Date. For a
period of ninety (90) days after the Closing Date, Buyer shall not allow the
Companies to engage in any conduct which would result in an employment loss or
layoff for a sufficient number of employees of the Companies or either of them
which, if aggregated with any such conduct on the part of Seller prior to the
Closing Date, would trigger the WARN Act or any similar applicable Law. Without
limiting the foregoing, Buyer will be and will cause the Companies to be
responsible, with respect to the Business, for performing and discharging all
requirements under the WARN Act and under applicable state and local laws and
regulations for the notification to Transferred Employees of any “employment
loss” within the meaning of the WARN Act which occurs at or following the
Closing Date.

(f)    From and after the Closing Date, with respect to worker’s compensation,
Buyer shall or shall cause the Companies to assume, discharge, pay and be solely
liable for all Losses in respect of any Claims pending as of or commenced after
the Closing Date resulting from actual or alleged harm or injury to any Business
Employee regardless of when the incident or accident giving rise to such
liability occurred or occurs. Buyer shall or shall cause the Companies to make
all necessary arrangements to assume all such worker’s compensation claim files,

 

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whether opened or closed, as of the Closing Date, and will make the necessary
arrangements for assuming the continued management of such liabilities.

(g)   From and after the Closing Date, except to the extent any such Losses are
covered under Seller’s or an Affiliates’ third party insurance plans or
policies, reinsurance policies or arrangements, or trusts or other funding
vehicles, Buyer shall or shall cause the Companies to assume, discharge, pay and
be solely liable for health, accidental death and dismemberment, short term
disability or life insurance coverage and any medical or dental benefits to the
Business Employees and their eligible dependents.

(h)   Buyer agrees that from and after the Closing Date, if a Business Employee
commences an action, suit or proceeding relating to an employment-related claim
(but excluding, in any event the ERISA Case), any resulting Liability shall be
the responsibility of the Companies. Parent shall reasonably cooperate with
Buyer and the Companies in the defense of any such claim to the extent that the
applicable actions or events transpired preceding the Closing Date.

(i)    For purposes of Sections 8.8(f), 8.8(g) and 8.8(h), the term “Business
Employees” shall also include any individuals who (A) were employed principally
for the Business at the time the incident or circumstances giving rise to such
suit, claim, action, proceeding or Loss occurred, and (B) who are not employed
by Seller either as of the date hereof or as of the Closing Date.

(j)    No provision in this Agreement shall modify or amend any other agreement,
plan, program or document, including any of Buyer’s benefit plans or
arrangements, unless this Agreement explicitly states that the provision
“amends” that other agreement, plan, program or document. This shall not prevent
the parties entitled to enforce this Agreement from enforcing any provision in
this Agreement, but no other party shall be entitled to enforce any provision in
this Agreement on the grounds that it is an amendment to another agreement,
plan, program or document, unless a provision is explicitly designated as such
in this Agreement, and the person is otherwise entitled to enforce such other
agreement, plan, program or document. If a party not entitled to enforce this
Agreement brings a lawsuit or other action to enforce any provision in this
Agreement as an amendment to another agreement, plan, program or document, and
such provision is construed to be such an amendment despite not being explicitly
designated as an amendment in this Agreement, such provision shall lapse
retroactively, thereby precluding it from having any amendatory effect. The
provisions of this Section 8.8 are not, and will not be construed as being, for
the benefit of any Person other than the Parties, and are not enforceable by any
Persons (including Transferred Employees, Current Retirees, and Other Plan
Participants) other than such Parties.

(k)   Following the Closing, if Buyer, either of the Companies or Seller or its
successor identifies any individual that was incorrectly classified by Seller
(including employees not listed in Schedule 1.1–B) with respect to whether such
individual was a Business Employee, a former employee of the Business or a
Current Retiree, as applicable, Buyer and Seller agree to, Buyer shall cause the
Companies to and Parent shall cause Seller’s successor to, notify the other
Party or the Companies, as applicable, and, acting in good faith, to take, or
cause to be taken, all action, and to do, or cause to be done, all things
reasonably necessary, proper or advisable to cause such individual to be
appropriately classified for purposes of this Agreement, and to allocate

 

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the liabilities and obligations related to such re-classified individual in
accordance with the terms hereof.

8.9

Eminent Domain; Casualty Loss.

(a)    If, before the Closing Date, any of the Purchased Assets are taken by
eminent domain or condemnation, or are the subject of a pending or (to Seller’s
Knowledge) contemplated taking which has not been consummated, Seller will
(i) notify Buyer promptly in writing of such fact, and (ii) at the Closing
assign, or Seller shall, or Parent shall cause Seller’s successor to, assign to
the Companies all of Seller’s right, title, and interest in and to any proceeds
or payments received, or to be received, in compensation for such taking.

(b)   If, before the Closing Date, all or any material portion of the Purchased
Assets are damaged or destroyed by fire or other casualty, Seller will notify
Buyer promptly in writing of such fact and, at the Closing assign to the
Companies, or Seller shall, or Parent shall cause Seller’s successor to, assign
to the Companies all of Seller’s right, title, and interest in and to any
insurance recoveries received, or to be received, in compensation for such
damage or destruction less any such amounts received, or to be received, to
reimburse Seller for expenditures incurred by Seller to repair or replace such
Purchased Assets.

(c)   Seller and Buyer will use their reasonable best efforts (without being
required to make payment to any third party or to incur any economic burden) to
obtain from each holder of any Preferential Purchase Right a written waiver of
such Preferential Purchase Right if required with respect to the transactions
contemplated by this Agreement (an “Applicable Preferential Purchase Right”). If
the Parties cannot obtain a waiver of an Applicable Preferential Purchase Right,
the Parties will cooperate, using reasonable best efforts, to provide for
compliance with the terms of such Applicable Preferential Purchase Right. In the
event that any Purchased Asset remains subject to such Applicable Preferential
Purchase Right as of the Closing, in lieu of any adjustment to the Purchase
Price Seller will, or Parent will cause Seller’s successor to, at the Closing
assign to the applicable Company, as a Purchased Asset, all of Seller’s right,
title, and interest in and to all rights of Seller with respect to such
Applicable Preferential Purchase Right, including proceeds received or to be
received in respect to such Applicable Preferential Purchase Right, and will
assign to the applicable Company and Buyer shall cause such Company to assume,
as Assumed Obligations, all obligations of Seller with respect to such
Applicable Preferential Purchase Right. If any third party holding a
Preferential Purchase Right exercises such right prior to the Closing, Seller
shall promptly give Buyer written notice of such exercise. Buyer and Seller
hereby expressly acknowledge and agree that nothing in this Agreement
constitutes an offer or agreement to sell, transfer, dispose of, purchase,
assume, or acquire any asset subject to a Preferential Purchase Right except
upon the Closing following the satisfaction of all conditions to Closing
specified in this Agreement. Neither this Agreement nor anything herein or in
connection herewith shall be deemed to obligate Seller to sell, transfer, assign
or otherwise dispose of any Purchased Asset or Assumed Obligation, to Buyer or
any other Person, except upon the Closing following the satisfaction or waiver
of all conditions to Closing specified in this Agreement.

(d)   A condemnation or taking of, casualty or exercise of a Preferential
Purchase Right set forth in Schedule 5.8 with respect to, any Purchased Asset,
and any effects thereof (including any resulting termination of any Franchise or
other agreement principally related to

 

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such Purchased Asset), may be taken into account in determining whether a
Material Adverse Effect has occurred; provided that to the extent either of the
Companies is assigned the rights, title and interest to any payments or proceeds
received by Seller with respect to any such condemnation or taking, casualty or
exercise of a Preferential Purchase Right, such payments or proceeds may be
considered in determining whether any Material Adverse Effect has occurred;
provided further that assignment of such proceeds or payments to such Company
shall not necessarily mean a Material Adverse Effect did not occur.

8.10   Transitional Use of Signage and Other Materials Incorporating Seller’s
Name or other Logos. Parent acknowledges that it will have no ongoing claim or
rights in or to the Seller Marks. Within one hundred eighty (180) days following
the Closing Date, Parent will remove or cause the removal of the Seller Marks
from all signage or other items relating to or used in connection with the
Excluded Assets and, thereafter, Parent will not use or permit the use of any
Seller Marks.

8.11   Litigation Support. In the event and for so long as any of the Companies,
Buyer, Parent or Seller or its successor is actively contesting or defending
against any third-party Claim in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
Seller, Buyer, Parent and Seller will, Seller will cause the Companies to and
Parent will cause Seller’s successor to, cooperate with the contesting or
defending Person and its counsel in the contest or defense, make reasonably
available its personnel, and provide such testimony and access to its books and
records as is reasonably necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending Person.

8.12

Audit Assistance.

(a)    If, (i) during or for the period beginning on the date hereof and ending
on the Closing Date, Buyer is, in connection with any annual or quarterly report
filed with the SEC, required by the SEC to file audited or reviewed financial
statements of the Business in respect of any period occurring prior the Closing
Date, or (ii) during or for the period beginning on the date hereof and ending
on the last day of the calendar year of the Closing, Buyer is, in connection
with a registration statement or other voluntary filing to be filed by Buyer
with the SEC, required by the SEC to file audited or reviewed financial
statements of the Business in respect of any period occurring prior the Closing
Date, then in each case at Buyer’s request, as applicable, Seller will, or
Parent will cause Seller’s successor to, use its reasonable best efforts to
cause Seller’s auditor to, at Buyer’s sole cost and expense, (a) cooperate with
and provide Buyer access to such information, books and records as necessary for
Buyer to prepare audited and interim or reviewed financial statements of the
Business, and (b) agree to provide to Buyer an audit or review of the financial
statements of the Business, for the periods necessary to satisfy the SEC
requirements (and any consents, if any, to use such audited or reviewed
financial statements in Buyer’s SEC filings). Further, Seller will use
reasonable best efforts to assist Buyer in preparing pro forma financial
information that in Buyer’s reasonable judgment may be required to be included
in any such filing or prospectus, offering memorandum or other document or
materials that may be prepared in connection with the Buyer Financing or
otherwise on or prior to the Closing, and, whether or not Seller’s auditor is
retained by Buyer to conduct an audit or review of the Business,

 

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Seller will, or Parent will cause Seller’s successor to (x) use its reasonable
best efforts to cause Seller’s auditor to, at Buyer’s sole cost and expense,
make available to Buyer and its auditors the work papers and other documents and
records reasonably requested by Buyer that were created prior to the Closing and
relate principally to the Business, and (y) cooperate with Buyer, at Buyer’s
sole cost and expense, in obtaining an audit or review of the Business, in each
case, to the extent required by the SEC.

(b)   Seller acknowledges and agrees that any audited and interim or reviewed
financial statements and related information prepared in accordance with this
Section 8.12 will not be deemed Confidential Information for purposes of this
Agreement.

8.13   Notification of Customers. As soon as practicable following the Closing,
Seller will, or Parent will cause Seller’s successor to, cooperate with the
Companies and Buyer to cause to be sent to customers of the Business a notice of
the transfer of the customers from Seller to the applicable Company (the
“Customer Notification”). The Customer Notification will contain such
information as is required by Law and approved by Buyer and Seller, which
approval will not be unreasonably withheld or delayed.

8.14   Financing. Buyer will use reasonable best efforts to take or to cause to
be taken, all actions, and to do or cause to be done, all things necessary,
proper or advisable to close the Buyer Financing on the terms and conditions
described in the Buyer Financing Commitments by the date upon which the Closing
Date is contemplated to occur in accordance with Section 4.1 (provided and to
the extent that Buyer has not otherwise obtained funds sufficient to pay the
Purchase Price through other sources of funds and provided that Buyer may
replace or amend the Buyer Financing Commitments after consultation with Parent
and Seller but only if the terms of such replacement or amended Buyer Financing
Commitments, including with respect to conditionality, would not adversely
impact Buyer’s ability to consummate the transactions contemplated by this
Agreement or the Asset Purchase Agreement, or otherwise prevent, impact or delay
the consummation of the transactions contemplated by this Agreement or the Asset
Purchase Agreement), including paying the commitment fees arising under the
Buyer Financing Commitments as and when such fees become due and payable during
the period beginning on the date hereof and ending on the Closing Date, and
using reasonable best efforts to (i) negotiate definitive agreements with
respect thereto on the terms and conditions contained therein and (ii) to
satisfy on a timely basis all conditions applicable to obtain the Buyer
Financing. In the event any portion of the Buyer Financing becomes unavailable
on the terms and conditions contemplated in the Buyer Financing Commitments and
Buyer has not otherwise obtained other sources of funds, Buyer will use
reasonable best efforts to obtain alternative financing from alternative sources
by the date upon which the Closing Date is contemplated to occur in accordance
with Section 4.1. Buyer will give prompt notice to Seller and Parent of any
material breach of the Buyer Financing Commitments of which Buyer becomes aware
or any termination of the Buyer Financing Commitments or any Buyer Financing.
Buyer will keep Seller and Parent informed on a regularly current basis in
reasonable detail of the status of the Buyer Financing.

8.15   Document Delivery. The Parties will work cooperatively to make available
to Buyer prior to the Closing such Documents as are reasonably necessary to
transition the control and operation of the Business to the Companies and Buyer
at the Closing with minimal

 

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interruptions or disruptions in the conduct of the Business. At or within a
reasonably practicable period of time after the Closing Date, Seller will, or
Parent will cause Seller’s successor to, deliver to the Companies, at such
location mutually agreed upon by the Companies and Seller or its successor, any
remaining Documents. At the reasonable request of Buyer or the Companies, Seller
will, or Parent will cause Seller’s successor to, use reasonable best efforts to
make available in an electronic format compatible with Buyer’s electronic
systems any Documents and other books and records relating to the Purchased
Assets which are maintained by Seller in electronic form.

8.16   Surveys’ Title Insurance, Estoppel Certificates, and Non-Disturbance
Agreements. At Buyer’s option and at Buyer’s sole cost and expense, Buyer may
obtain (i) surveys desired by Buyer in respect of the Real Property, in form and
substance reasonably satisfactory to Buyer; (ii) title insurance policies in
current ALTA Form or equivalent covering the Real Property, insuring title to
the applicable Real Property as vested in the Companies, and in form, substance,
and amounts reasonably satisfactory to Buyer, and without limiting the
generality of the foregoing, with all requirements satisfied or waived, with all
exceptions deleted, and with all endorsement thereto to the extent desired by
Buyer; and (iii) all estoppel certificates and non-disturbance agreements
desired by Buyer in respect of any real property leases included in the
Purchased Assets, in form and substance reasonably satisfactory to Buyer and to
the parties providing such certificates and agreements. Seller and Limited
Partner agree, and Parent agrees to cause Seller’s successor, to cooperate as
reasonably requested by Buyer (at Buyer’s expense) in its efforts to obtain such
items, provided that (y) none of Limited Partner, the Companies, Parent, Seller
or Seller’s successor shall be required to make any payment to any third party
or incur any economic burden in connection therewith, and (z) Buyer’s obtaining
any such items shall not be a requirement of or a condition to the Closing. In
addition, with respect to Limited Partner’s, Seller’s and Seller’s successor’s
cooperation with Buyer’s reasonable requests to obtain title insurance under
clause (ii) above, none of Limited Partner, Seller and Seller’s successor,
except to the extent required to satisfy the Closing condition set forth in
Section 9.2(f), and except for such actions as may be necessary to enable
Buyer’s title insurance company to insure title to the applicable Real Property
as vested in the Companies, shall be required to cure any purported defects,
cause any exceptions to be deleted, or provide any affidavits, indemnities, or
representations or warranties to any title company issuing such title insurance.

8.17

Post-Closing Release of Encumbrances and Transfer of Purchased Assets.

(a)    Notwithstanding anything to the contrary herein, if any Non-Permitted
Encumbrances on the Company Interests, the Business or the Purchased Assets are
not released on or before the Closing, and such Non-Permitted Encumbrances
secure or are created by or in respect of the Excluded Liabilities, or are for
material delinquent Taxes or material delinquent assessments, Seller shall, and
Parent shall cause Seller’s successor to, promptly make such payments and take
such actions as necessary to obtain the release of such Non-Permitted
Encumbrances after the Closing.

(b)   Notwithstanding anything to the contrary herein, if Seller fails to
deliver any deeds of conveyance or assignments or other instruments,
certificates or documents as necessary to transfer any of the Purchased Assets
to the Companies at the Closing, Seller shall,

 

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and Parent shall cause Seller’s successor to, promptly execute and deliver such
deeds of conveyance, assignments or other instruments, certificates or documents
and take such actions as necessary to transfer such Purchased Assets to the
Companies as soon as practicable after the Closing.

8.18   Shared Code Licenses. Buyer hereby grants to Parent a worldwide,
non-exclusive, royalty-free, fully paid-up, sublicensable, transferable license
to use, reproduce, make derivative works of, distribute, display and perform the
Shared Code that is included in the Purchased Assets. Parent hereby grants to
Buyer a worldwide, non-exclusive, royalty-free, fully paid-up, sublicensable,
transferable license to use, reproduce, make derivative works of, distribute,
display and perform the Shared Code that is included in the Excluded Assets.
Except as set forth in the Transition Services Agreement, neither Buyer nor
Parent shall have any obligation to support, maintain, provide updates or
upgrades for, or otherwise provide any assistance to the other in connection
with, the Shared Code. The foregoing licenses shall be binding on the respective
successors and assigns of Buyer and Parent.

8.19   Performance of the Obligations of the Companies Post-Closing. From and
after the Closing, Buyer shall cause the Companies to perform all of the
obligations of the Companies that under the terms of this Agreement are to be
performed from and after the Closing Date.

ARTICLE IX

 

CONDITIONS TO CLOSING

9.1    Conditions to Each Party’s Obligations to Effect the Closing. The
respective obligations of each Party to effect the transactions contemplated
hereby are subject to the satisfaction or waiver by Buyer and Seller at or prior
to the Closing Date of each of the following conditions:

(a)    The waiting period under the HSR Act, including any extension thereof,
applicable to the consummation of the transactions contemplated hereby shall
have expired or been terminated;

(b)   No applicable Law prohibiting consummation of the transactions
contemplated in this Agreement shall be in effect, except where the violation of
Law resulting from the consummation of the transactions contemplated in this
Agreement would not, individually or in the aggregate, reasonably be expected to
have an impact (other than an insignificant impact) on the Business, the
Purchased Assets, the Colorado Business and the Colorado Assets, taken as a
whole, and no court of competent jurisdiction in the United States will have
issued any Order that is in effect and enjoins the consummation of the
transactions contemplated hereby (each Party agreeing to use its reasonable best
efforts to have any such Order lifted); and

(c)   Seller, Parent and Merger Sub will be in a position to consummate the
Merger immediately following the closing of the transactions contemplated by
this Agreement and the Asset Purchase Agreement.

 

 

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9.2    Conditions to Obligations of Buyer. The obligation of Buyer to effect the
transactions contemplated hereby is also subject to the satisfaction or waiver
by Buyer at or prior to the Closing Date of the following conditions:

(a)    Since the date of this Agreement, no Material Adverse Effect shall have
occurred and be continuing;

(b)   Seller, Limited Partner, Parent and Merger Sub shall have performed and
complied in all material respects with the covenants and agreements contained in
this Agreement which are required to be performed and complied with by such
Person on or prior to the Closing Date (other than Section 4.3, which is subject
to Section 9.2(f));

(c)   The representations and warranties of Seller set forth in ARTICLE V of
this Agreement, and the representations and warranties of Parent and Merger Sub
set forth in ARTICLE VII of this Agreement, shall be true and correct as of the
Closing Date, as if made at and as of the Closing Date (except to the extent
that any such representation or warranty is expressly made as of an earlier
date, in which case such representation and warranty will be true and correct
only as of such date), except where the failure or failures of such
representations and warranties to be so true and correct (without giving effect
to any limitations or exceptions as to materiality or Material Adverse Effect
set forth therein) would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect;

(d)   Buyer shall have received a certificate from the Chief Executive Officer
of each of Parent and Seller, dated the Closing Date stating that, to the best
of such officer’s knowledge, the conditions set forth in Sections 9.2(b) and
9.2(c) regarding Parent and Seller, respectively, have been satisfied;

(e)    The Required Regulatory Approvals shall have been obtained and become
Final Regulatory Orders, and no terms (excluding those proposed in the
applications for the Required Regulatory Approvals) shall have been imposed in
connection with such Final Regulatory Orders by any Governmental Entity which
terms, individually or in the aggregate, would reasonably be expected to result
in a Regulatory Material Adverse Effect;

(f)    Buyer shall have received the items to be delivered pursuant to
Section 4.3; provided that the failure to deliver the items required to be
delivered pursuant to Sections 4.3(e)-(i) shall not be construed as a failure to
satisfy the requirements of this Section 9.2(f) to the extent any deed,
assignment, instrument of conveyance or certificate of title, termination or
release (i) otherwise required pursuant to Sections 4.3(e)-(h) relates to
parcels of immaterial Real Property, immaterial Easements, or immaterial titled
or other Purchased Assets, each of which is subject to transfer subsequent to
the Closing pursuant to Section 8.17; or (ii) otherwise required pursuant to
Section 4.3(i) relates to terminations or releases of Non-Permitted Encumbrances
on the Purchased Assets requiring the payment of immaterial amounts of cash, or
the delivery of instruments, certificates or other documents or items required
to remove Non-Permitted Encumbrances on assets that are immaterial to the
Business, the Purchased Assets, the Colorado Business and the Colorado Assets,
taken as a whole, and are subject, in each case, to release subsequent to the
Closing pursuant to Section 8.17; and

 

 

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(g)   The consummation of the transactions contemplated by the Asset Purchase
Agreement shall have occurred or shall occur concurrently with the Closing.

9.3    Conditions to Obligations of Seller. The obligations of Seller to effect
the transactions contemplated hereby is also subject to the satisfaction or
waiver at or prior to the Closing Date of the following conditions:

(a)    Buyer shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement which are required to be
performed and complied with by Buyer on or prior to the Closing Date;

(b)   The representations and warranties of Buyer which are set forth in
ARTICLE VI of this Agreement shall be true and correct as of the Closing Date as
if made at and as of the Closing Date (except to the extent that any such
representation or warranty is expressly made as of an earlier date, in which
case such representation and warranty will be true and correct only as of such
date), except where the failure or failures of such representations and
warranties to be so true and correct (without giving effect to any limitations
or exceptions as to materiality set forth therein) that do not, individually or
in the aggregate, cause such representations and warranties of Buyer to be
materially inaccurate taken as a whole;

(c)   Seller shall have received a certificate from the Chief Executive Officer
of Buyer dated the Closing Date stating that, to the best of such officer’s
knowledge, the conditions set forth in Sections 9.3(a) and 9.3(b) have been
satisfied;

(d)   The Required Regulatory Approvals shall have been obtained and become
Final Regulatory Orders; and no terms (excluding those proposed in the
applications for the Required Regulatory Approvals) shall have been imposed in
connection with such Final Regulatory Orders by any Governmental Entity which
terms, individually or in the aggregate, would reasonably be expected to result
in a Regulatory Material Adverse Effect affecting the Post-Sale Company (as
defined in the Merger Agreement);

(e)    Seller shall have received the other items to be delivered pursuant to
Section 4.4; and

(f)    The consummation of the transactions contemplated by the Asset Purchase
Agreement shall have occurred or shall occur concurrently with the Closing.

9.4    Invoking Certain Provisions. Any Party seeking to claim that a condition
to its obligation to effect the transactions contemplated hereby has not been
satisfied by reason of the fact that a Material Adverse Effect or a Regulatory
Material Adverse Effect has occurred or would reasonably be expected to occur or
result will have the burden of proof to establish that occurrence or
expectation.

 

 

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ARTICLE X

 

TERMINATION AND OTHER REMEDIES

10.1

Termination.

(a)    This Agreement may be terminated at any time prior to the Closing Date by
mutual written consent of Seller, Buyer and Parent.

(b)   This Agreement may be terminated by Seller or Buyer if the Closing has not
occurred on or before the first anniversary of the date of this Agreement (the
“Termination Date”); provided that, if Buyer or Seller determines that
additional time is necessary to obtain any of the Required Regulatory Approvals,
the Material Company Regulatory Consents or the Material Parent Regulatory
Consents (each as defined in the Merger Agreement), or the “Required Regulatory
Approvals” as defined in the Asset Purchase Agreement, or if all of the
conditions to Parent’s obligations to consummate the Merger shall have been
satisfied or shall be then capable of being satisfied and this Agreement fails
to be consummated by reason of a breach by Parent of its obligation to be in a
position to consummate the Merger after the Closing, the Termination Date may be
extended by Buyer or Seller from time to time by written notice to the other
Party and to Parent up to a date not beyond eighteen (18) months after the date
of this Agreement, any of which dates shall thereafter be deemed to be the
Termination Date; provided further that the right to terminate this Agreement
under this Section 10.1(b) will not be available to a Party that has breached in
any material respect its obligations under this Agreement in any manner that
will have proximately contributed to the failure of the Closing to occur on or
before the Termination Date.

(c)   This Agreement may be terminated by either Seller or Buyer if (i) any
Required Regulatory Approval has been denied by the applicable Governmental
Entity and all appeals of such denial have been taken and have been
unsuccessful, or (ii) one or more courts of competent jurisdiction in the United
States or any State has issued an Order permanently restraining, enjoining, or
otherwise prohibiting the Closing, and such Order has become final and
nonappealable.

(d)   This Agreement may be terminated by Buyer if there has been a material
breach of any representation, warranty, or covenant made by Seller in this
Agreement, or any representation or warranty of Seller shall have become untrue
after the date of this Agreement, so that Section 9.2(b) or 9.2(c) would not be
satisfied and this breach or failure to be true, is not curable, or if curable,
is not curable by the Termination Date (as the same may be extended).

(e)    This Agreement may be terminated by Seller if the Board of Directors of
Seller approves a Superior Proposal (as defined in the Merger Agreement) and
authorizes Seller to enter into a binding written agreement with respect to that
Superior Proposal and, in connection with the termination of the Merger
Agreement and entering into the agreement reflecting the Superior Proposal, pays
into a joint bank account in the names of Buyer and Parent by wire transfer of
same day funds the Company Termination Fee (as defined in the Merger Agreement)
required to be paid pursuant to Section 9.5(b) of the Merger Agreement.

 

 

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(f)    This Agreement may be terminated by Seller if there has been a material
breach of any representation, warranty, or covenant made by Buyer in this
Agreement, or any representation or warranty of Buyer shall have become untrue
after the date of this Agreement, so that Sections 9.3(a) and 9.3(b) would not
be satisfied and this breach or failure to be true is not curable, or if
curable, is not curable by the Termination Date (as the same may be extended).

(g)   This Agreement may be terminated by Buyer or Seller upon or following the
termination of the Merger Agreement in accordance with its terms.

10.2   Procedure and Effect of Termination. In the event of termination of this
Agreement pursuant to Section 10.1, written notice thereof will forthwith be
given by the terminating Party to the other Parties and this Agreement (other
than as set forth in this Section 10.2, Section 10.4 and Section 11.1) will
terminate and become void and of no effect, and the transactions contemplated
hereby will be abandoned without further action by any Party, whereupon the
liabilities of the Parties hereunder (and of any of their respective
Representatives) will terminate, except as otherwise expressly provided in this
Agreement; provided, that such termination will not relieve any Party from any
liability for damages to any other Party resulting from any prior breach of this
Agreement, the Asset Purchase Agreement or the Merger Agreement which is
(i) material, and (ii) willful or knowing. If this Agreement is terminated
pursuant to Section 10.1(e) or Section 10.1(g) upon or following termination of
the Merger Agreement under circumstances where Seller is required to pay Parent
the Company Termination Fee (as defined in the Merger Agreement) pursuant to the
provisions of Section 9.5(b) of the Merger Agreement, Seller will, following
such termination and at the time required under Section 9.5(b) of the Merger
Agreement, pay into a joint bank account in the names of Buyer and Parent the
termination fee required to be paid pursuant to the terms of the Merger
Agreement, by wire transfer of same day funds. If this Agreement is terminated
pursuant to Section 10.1(g) upon or following termination of the Merger
Agreement under circumstances where Parent is required to pay Seller the Parent
Termination Fee (as defined in the Merger Agreement) pursuant to the provisions
of Section 9.5(c) of the Merger Agreement, Parent will, following such
termination and at the time required for payment of the Parent Termination Fee
(as defined in the Merger Agreement), pay Buyer the Termination Fee. Seller,
Limited Partner and Parent acknowledge that the agreements contained in this
Section 10.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Buyer would not enter into this
Agreement; accordingly, if Seller or Parent fails to pay promptly the amount due
pursuant to this Section 10.2, and, in order to obtain such payment, Buyer
commences a suit which results in a judgment against Seller or Parent, as the
case may be, for the fee to be paid by such Party as set forth in this Section
10.2, Seller or Parent, as applicable, will pay to Buyer its costs and expenses
(including attorneys’ fees) in connection with this suit, together with interest
on the amount of the fee at the Prime Rate in effect on the date the payment
should have been made.

10.3   Payment of Termination Fee. As promptly as practicable after payment of
the Company Termination Fee (as defined in the Merger Agreement) to be paid
pursuant to the terms of the Merger Agreement to the joint bank account, Parent
and Buyer will reasonably agree upon the amount of the Termination Fee (subject
to the limitations thereon as set forth in the definition of Termination Fee set
forth herein) to be paid to Buyer, and upon such agreement

 

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Buyer and Parent shall jointly direct payment of the agreed-upon Termination Fee
to Buyer and disbursement of the remaining amount in such joint account to
Parent.

10.4

Remedies upon Termination. If this Agreement is terminated as provided herein:

(a)    ARTICLE XI (other than Section 11.2, Section 11.3 and Section 11.5) and
the agreements of the Parties contained in Section 8.2(b), Section 8.2(d),
Section 8.3, Section 10.2, Section 10.3 and Section 10.4 will survive the
termination of this Agreement.

(b)   Notwithstanding anything to the contrary herein, in view of the difficulty
of determining the amount of damages which may result from a termination of this
Agreement and the failure of the Parties to consummate the transactions
contemplated by this Agreement under circumstances in which a termination fee is
payable as contemplated by Section 10.2, Buyer, Parent, Merger Sub, Seller and
Limited Partner have mutually agreed that the payment of the termination fees as
set forth in Section 10.2 will be made as liquidated damages, and not as a
penalty. In the event of any such termination, the Parties have agreed that the
payment of the applicable termination fee as set forth in Section 10.2 will be
the sole and exclusive remedy for monetary damages of Buyer. ACCORDINGLY, THE
PARTIES HEREBY ACKNOWLEDGE THAT (i) THE EXTENT OF DAMAGES CAUSED BY THE FAILURE
OF THIS TRANSACTION TO BE CONSUMMATED WOULD BE IMPOSSIBLE OR EXTREMELY DIFFICULT
TO ASCERTAIN UNDER CIRCUMSTANCES IN WHICH A TERMINATION FEE IS PAYABLE AS
CONTEMPLATED BY SECTION 10.2, (ii) THE AMOUNT OF THE TERMINATION FEE
CONTEMPLATED IN SECTIONS 10.2 AND 10.3 IS A FAIR AND REASONABLE ESTIMATE OF SUCH
DAMAGES UNDER THE CIRCUMSTANCES, AND (iii) RECEIPT OF SUCH TERMINATION FEE BY
BUYER DOES NOT CONSTITUTE A PENALTY. THE PARTIES HEREBY FOREVER WAIVE AND AGREE
TO FOREGO TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW ANY AND ALL
RIGHTS THEY HAVE OR IN THE FUTURE MAY HAVE TO ASSERT ANY CLAIM DISPUTING OR
OTHERWISE OBJECTING TO ANY OR ALL OF THE FOREGOING PROVISIONS OF THIS
SECTION 10.4(b). Any payment under Section 10.2 will be made by wire transfer of
same day funds to a bank account in the United States of America designated in
writing by the Parties entitled to receive such payment not later than three (3)
Business Days following the date such Party delivers notice of such account
designation to the Party responsible to make such payment.

(c)   Upon any termination of this Agreement, all filings, applications and
other submissions made pursuant to this Agreement, to the extent practicable,
will be withdrawn from the Governmental Entity or other Person to which they
were made.

ARTICLE XI

 

MISCELLANEOUS PROVISIONS

11.1   Survival. None of the covenants or agreements of Seller, Buyer, Parent or
Merger Sub contained in this Agreement will survive the Closing, except for this
ARTICLE XI and those covenants and agreements contained herein that by their
terms apply or are to be performed in whole or in part after the Closing. Except
as specified in the foregoing sentence, all other

 

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representations, warranties, covenants and agreements in this Agreement will not
survive the Closing of this Agreement.

11.2   Amendment and Modification. This Agreement may be amended, modified, or
supplemented only by a written agreement executed and delivered by duly
authorized officers of Seller, Parent and Buyer.

11.3   Waiver of Compliance. Except as otherwise provided in this Agreement, any
failure of a Party to comply with any obligation, covenant, agreement, or
condition herein may be waived by the Party entitled to the benefits thereof
only by a written instrument signed by the Party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement, or condition will not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.

11.4   Notices. Notices, requests, instructions or other documents to be given
under this Agreement must be in writing and will be deemed given, (a) when sent
if sent by facsimile, provided that the fax is promptly confirmed by telephone
confirmation thereof, (b) when delivered, if delivered personally to the
intended recipient, and (c) one (1) Business Day later, if sent by overnight
delivery via a national courier service, and in each case, addressed to a Party
at the following address for such Party:

(a)

If to Parent or Merger Sub, or to Seller after the Closing, to:

Great Plains Energy Incorporated

1201 Walnut Street

P.O. Box 418679

Kansas City, MO 64106

Attention:

Mark G. English,

 

 

General Counsel and Assistant Secretary

Fax:

(816) 556-2418

 

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Attention:

Nancy A. Lieberman, Esq.

 

Morris J. Kramer, Esq.

 

Fax: (212) 735-2000

(b)

If to Buyer, or to Limited Partner after the Closing, to:

Black Hills Corporation

625 9th Street

Rapid City, South Dakota 57709

Attention: Steven J. Helmers, Esq.

Fax: (605) 721-2550

 

 

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with a copy to:

Morgan, Lewis & Bockius LLP

300 South Grand Avenue, Suite 2200

Los Angeles, California 90071

Attention: Richard A. Shortz, Esq.

Fax: (213) 612-2501

(c)

If to Seller or Limited Partner before the Closing, to:

Aquila, Inc.

20 West Ninth Street

Kansas City, MO 64105

Attention:

Christopher Reitz,

 

 

General Counsel and Corporate Secretary

Fax:

(816) 467-3486

 

with a copy to:

Fried, Frank, Harris, Shriver & Jacobson

One New York Plaza

New York, New York 10004

Attention:

Arthur Fleischer, Jr., Esq.

 

Stuart Katz, Esq.

 

 

Philip Richter, Esq.

 

Fax:

(212) 859-4000

 

or to those other persons or addresses as may be designated in writing by the
party to receive the notice as provided above.

11.5   Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests, or obligations hereunder may be assigned by any Party,
without the prior written consent of the other Parties, nor is this Agreement
intended to confer upon any other Person except the Parties any rights or
remedies hereunder. Notwithstanding the foregoing, Buyer, upon written notice to
but without the consent of Seller, Parent or Merger Sub, may assign this
Agreement or the rights, benefits and obligations described herein to one or
more wholly-owned Subsidiaries formed or to be formed to operate as a regulated
utility in Colorado; provided, however, that notwithstanding such assignment,
Buyer shall retain and remain responsible for all obligations and liabilities of
Buyer hereunder; provided, further, that Buyer shall consult with Seller
regarding the structure, financing and other attributes of such Subsidiaries to
reflect requirements of the PUC.

11.6   No Third Party Beneficiaries. This Agreement is not intended to, and does
not, confer upon any Person other than Buyer, Seller, Limited Partner, Parent
and Merger Sub, any rights or remedies hereunder. Without limiting the
generality of the foregoing, no provision of this Agreement creates any third
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Seller (including any beneficiary or dependent thereof) in respect of continued
employment or resumed employment, and no provision of this Agreement creates any
rights in any employee or former employee of Seller (including any beneficiary
or dependent thereof) in respect of any benefits that may be provided, directly
or indirectly, under any employee benefit plan or arrangement except as
expressly provided for under such plans or arrangements.

11.7

GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.

(a)    THIS AGREEMENT WILL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE CONFLICTS OF RULES THEREOF. The
Parties hereby irrevocably submit exclusively to the jurisdiction of the State
of Delaware and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof, that it is not subject
thereto or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate or
that this Agreement may not be enforced in or by such courts, and each of
Seller, Buyer, Parent and Merger Sub irrevocably agrees that all claims with
respect to such action or proceeding will be heard and determined in Delaware
state court. Each of Seller, Buyer, Parent and Merger Sub hereby consents to and
grants any such court jurisdiction over the Person of such Parties and over the
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
Section 11.4 or in such other manner as may be permitted by Law, will be valid
and sufficient service thereof.

(b)   EACH OF SELLER, LIMITED PARTNER, BUYER, PARENT AND MERGER SUB ACKNOWLEDGES
AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THE PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH OF SELLER, LIMITED PARTNER, BUYER, PARENT AND MERGER SUB
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.7(b).

11.8   Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction will not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.

 

 

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11.9   Specific Performance. Each of Seller, Limited Partner, Buyer, Parent and
Merger Sub acknowledges and agrees that any breach of this Agreement would give
rise to irreparable harm for which monetary damages would not be an adequate
remedy. Each of Seller, Limited Partner, Buyer, Parent and Merger Sub
accordingly agrees that, in addition to other remedies, the Parties will be
entitled to enforce the terms of this Agreement by decree of specific
performance without the necessity of providing the inadequacy of monetary
damages as a remedy and to obtain injunctive relief or other equitable remedy
against any breach or threatened breach hereof.

11.10  Entire Agreement. This Agreement will be a valid and binding agreement of
the Parties only if and when it is fully executed and delivered by the Parties,
and until such execution and delivery no legal obligation will be created by
virtue hereof. This Agreement, the Asset Purchase Agreement and the Merger
Agreement (in each case, together with the Schedules and Exhibits hereto or
thereto, and the certificates and instruments delivered pursuant hereto or
thereto), the Confidentiality Agreement, the confidentiality agreement dated
June 28, 2006 between Seller and Parent, as amended by the letter agreement
dated September 5, 2006 between Seller and Parent, the letter of intent dated
November 21, 2006 between Buyer and Parent, and the Transition Services
Agreement (together with the schedules thereto), embody the entire agreement and
understanding of the Parties hereto in respect of the transactions contemplated
by this Agreement, the Asset Purchase Agreement and the Merger Agreement, and
supersede all prior agreements, understandings, representations and warranties,
both written and oral, between or among the Parties or any of them with respect
to the transactions contemplated herein, in the Partnership Interests Purchase
Agreement and the Merger Agreement.

11.11  Bulk Sales or Transfer Laws. Buyer and Parent acknowledge that Seller
will not comply with the provisions of any bulk sales or transfer laws of any
jurisdiction in connection with the transactions contemplated by this Agreement.
Buyer hereby waives compliance by Seller with the provisions of the bulk sales
or transfer laws of all applicable jurisdictions

11.12  No Consequential Damages. Notwithstanding anything to the contrary
elsewhere in this Agreement or provided for under any applicable Law, no Party
will, in any event, be liable to any other Party, either in contract, in tort or
otherwise, for any consequential, incidental, indirect, special, or punitive
damages of such other Party or Persons represented by such other Party, whether
or not the possibility of such damages has been disclosed to such other Party or
Persons represented by such other Party in advance or could have been reasonably
foreseen by such other Party or Persons represented by such other Party. The
preceding sentence shall not limit the right of any Party to seek “benefit of
the bargain” damages for a breach of this Agreement or specific performance or
other equitable remedy as provided in Section 11.9; provided that the right of
any Party or Persons represented by such Party to seek any of such remedies is
not an admission by the other Parties that, under the circumstances, any such
remedies are proper remedies; provided, further, that the Party against whom any
such remedy is sought may not claim that the awarding of “benefit of the
bargain” damages is prohibited by virtue of the restriction against liability
for consequential, incidental, indirect, special or punitive damages contained
in this Section 11.12.

11.13  Counterparts. This Agreement, and any certificates and instruments
delivered under or in accordance herewith, may be executed in any number of
counterparts (including by facsimile or other electronic transmission), each
such counterpart being deemed to be an original

 

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instrument, and all such counterparts will together constitute the same
instrument, it being understood that all of the Parties need not sign the same
counterpart.

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the Parties have caused this Partnership Interests Purchase
Agreement to be signed by their respective duly authorized officers as of the
date first above written.

SELLER:

 

Aquila, Inc.

 

 

By:

/s/ Richard C. Green

 

Name:

Richard C. Green

 

Title:

President, Chief Executive Officer and

 

Chairman of the Board of Directors

 

 

 

LIMITED PARTNER:

 

Aquila Colorado, LLC

 

 

By:

/s/ Keith Stamm

Name:

Keith Stamm

 

Title:

President

 

 

 

BUYER:

 

Black Hills Corporation

 

 

By:

/s/ David R. Emery

 

Name:

David R. Emery

 

Title:

President, Chief Executive Officer

 

and Chairman of the Board

 

 

 

PARENT:

 

Great Plains Energy Incorporated

 

 

By:

/s/ Michael J. Chesser

Name:

Michael J. Chesser

 

 

 

78

 

--------------------------------------------------------------------------------

 

 

Title:

Chairman of the Board and Chief

 

Executive Officer

 

 

 

MERGER SUB:

 

Gregory Acquisition Corp.

 

 

By:

/s/ Terry Bassham

Name:

Terry Bassham

 

Title:

President

 

 

 

79

 

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Exhibit 1.1-A

Form of Assignment and Assumption Agreement

(for the Gas Business)

 

This Assignment and Assumption Agreement (“Agreement”), is made as of
________________, ____ by and between Aquila, Inc., a Delaware corporation
(“Seller”), and [Newco Gas LP], a Delaware limited partnership (the “Company”).
Unless otherwise indicated, capitalized terms used but not otherwise defined
herein have the meanings ascribed to such terms in the Partnership Interests
Purchase Agreement (as defined below).

WHEREAS, Seller has entered into an Agreement and Plan of Merger dated
February 6, 2007 (the “Merger Agreement”) among Seller, Great Plains Energy
Incorporated, a Missouri corporation (“Parent”), Gregory Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and
Black Hills Corporation, a South Dakota corporation (“Buyer”) which, among other
things, provides for the merger of Merger Sub with and into Seller immediately
after the Closing.

WHEREAS, Buyer, Seller, as the general partner of the Company and of [Newco
Electric, LP], a Delaware limited partnership (“Electric Opco”), Aquila
Colorado, LLC, a Delaware limited liability company (“Limited Partner”), as the
limited partner of the Company and of Electric Opco, Parent and Merger Sub,
entered into that certain Partnership Interests Purchase Agreement, dated
February 6, 2007 (the “Partnership Interests Purchase Agreement”), pursuant to
which, among other things, the Company agreed to assume from Seller the Gas
Business Assumed Obligations, and Seller agreed to assign to the Company all of
Seller’s rights to the Gas Business Purchased Assets.

NOW, THEREFORE, pursuant and subject to the terms of Partnership Interests
Purchase Agreement and in consideration of the mutual covenants set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and the Company agree as follows:

1.      Seller hereby assigns and transfers all of the Gas Business Assumed
Obligations and all of Seller’s rights to the Gas Business Purchased Assets to
the Company, and the Company hereby accepts such assignment and hereby assumes
and agrees to pay, perform, and discharge when due all of the Assumed
Obligations.

2.      Seller and the Company agree, on behalf of themselves and their
respective successors and assigns, to do, execute, acknowledge, and deliver, or
to cause to be done, executed, acknowledged, and delivered, all such further
acts, documents, and instruments that may reasonably be required to give full
effect to the intent of this Agreement.

3.      This Agreement is being delivered pursuant to the Partnership Interests
Purchase Agreement and will be construed consistently therewith. This Agreement
is not intended to, and does not, in any manner enhance, diminish, or otherwise
modify the rights and obligations of the Parties under the Partnership Interests
Purchase Agreement. To the extent that any provision of this Agreement conflicts
or is inconsistent with the terms of the Partnership Interests Purchase
Agreement, the terms of the Partnership Interests Purchase Agreement will
govern.

 

 

80

 

--------------------------------------------------------------------------------

 

 

4.      This Agreement may be executed in multiple counterparts (each of which
will be deemed an original, but all of which together will constitute one and
the same instrument), and may be delivered by facsimile transmission, with
originals to follow by overnight courier or certified mail (return receipt
requested).

5.      This Agreement and all of the provisions hereof will be binding upon and
inure to the benefit of Seller and the Company and their respective successors
and permitted assigns.

[Signature Page Follows]

 

81

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, Seller and the Company have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.

 

Aquila, Inc.

 

 

By:

 

Name:

Title:

 

 

 

 

[Newco Gas LP]

 

 

By:

 

Name:

Title:

 

 

82

 

--------------------------------------------------------------------------------

 

 

Form of Assignment and Assumption Agreement

(for the Electric Business)

 

This Assignment and Assumption Agreement (“Agreement”), is made as of
________________, ____ by and between Aquila, Inc., a Delaware corporation
(“Seller”), and [Newco Electric LP], a Delaware limited partnership (the
“Company”). Unless otherwise indicated, capitalized terms used but not otherwise
defined herein have the meanings ascribed to such terms in the Partnership
Interests Purchase Agreement (as defined below).

WHEREAS, Seller has entered into an Agreement and Plan of Merger dated
February 6, 2007 (the “Merger Agreement”) among Seller, Great Plains Energy
Incorporated, a Missouri corporation (“Parent”), Gregory Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and
Black Hills Corporation, a South Dakota corporation (“Buyer”) which, among other
things, provides for the merger of Merger Sub with and into Seller immediately
after the Closing.

WHEREAS, Buyer, Seller, as the general partner of the Company and of [Newco Gas,
LP], a Delaware limited partnership (“Gas Opco”), Aquila Colorado, LLC, a
Delaware limited liability company (“Limited Partner”), as the limited partner
of the Company, and of Gas Opco, Parent and Merger Sub, entered into that
certain Partnership Interests Purchase Agreement, dated February 6, 2007 (the
“Partnership Interests Purchase Agreement”), pursuant to which, among other
things, the Company agreed to assume from Seller the Electric Business Assumed
Obligations, and Seller agreed to assign to the Company all of Seller’s rights
to the Electric Business Purchased Assets.

NOW, THEREFORE, pursuant and subject to the terms of Partnership Interests
Purchase Agreement and in consideration of the mutual covenants set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and the Company agree as follows:

1.      Seller hereby assigns and transfers all of the Electric Business Assumed
Obligations and all of Seller’s rights to the Electric Business Purchased Assets
to the Company, and the Company hereby accepts such assignment and hereby
assumes and agrees to pay, perform, and discharge when due all of the Assumed
Obligations.

2.      Seller and the Company agree, on behalf of themselves and their
respective successors and assigns, to do, execute, acknowledge, and deliver, or
to cause to be done, executed, acknowledged, and delivered, all such further
acts, documents, and instruments that may reasonably be required to give full
effect to the intent of this Agreement.

3.      This Agreement is being delivered pursuant to the Partnership Interests
Purchase Agreement and will be construed consistently therewith. This Agreement
is not intended to, and does not, in any manner enhance, diminish, or otherwise
modify the rights and obligations of the Parties under the Partnership Interests
Purchase Agreement. To the extent that any provision of this Agreement conflicts
or is inconsistent with the terms of the Partnership Interests Purchase
Agreement, the terms of the Partnership Interests Purchase Agreement will
govern.

 

 

83

 

--------------------------------------------------------------------------------

 

 

4.      This Agreement may be executed in multiple counterparts (each of which
will be deemed an original, but all of which together will constitute one and
the same instrument), and may be delivered by facsimile transmission, with
originals to follow by overnight courier or certified mail (return receipt
requested).

5.      This Agreement and all of the provisions hereof will be binding upon and
inure to the benefit of Seller and the Company and their respective successors
and permitted assigns.

[Signature Page Follows]

 

84

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, Seller and the Company have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.

 

Aquila, Inc.

 

 

By:

 

Name:

Title:

 

 

 

 

[Newco Electric LP]

 

 

By:

 

Name:

Title:

 

85

 

--------------------------------------------------------------------------------

 

 

Exhibit 1.1-B

Form of Assignment of Company Interests

(for the Gas Business)

 

This Assignment of Company Interests (“Assignment”), is made as of
________________, 200___ by and among Aquila, Inc., a Delaware corporation
(“Seller”), Aquila Colorado, LLC, a Delaware limited liability company (“Limited
Partner”), as the limited partner of [Newco Gas LP], a Delaware limited
partnership (the “Company”), Black Hills Corporation, a South Dakota corporation
(“Buyer”), and [Buyer’s LP designee], a Delaware limited liability company
(“Buyer Limited Partner”). Unless otherwise indicated, capitalized terms used
but not otherwise defined herein have the meanings ascribed to such terms in the
Partnership Interests Purchase Agreement (as defined below).

WHEREAS, Seller has entered into an Agreement and Plan of Merger dated
February 6, 2007 (the “Merger Agreement”) among Seller, Great Plains Energy
Incorporated, a Missouri corporation (“Parent”), Gregory Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and
Buyer, which, among other things, provides for the merger of Merger Sub with and
into Seller immediately after the Closing.

WHEREAS, Buyer, Seller, as the general partner of the Company and of [Newco
Electric, LP], a Delaware limited partnership (“Electric Opco”), Limited
Partner, as the limited partner of the Company and of Electric Opco, Parent and
Merger Sub, entered into that certain Partnership Interests Purchase Agreement,
dated February 6, 2007 (the “Partnership Interests Purchase Agreement”),
pursuant to which, among other things, Seller and Limited Partner agreed to
assign to Buyer and its designee all of Seller’s and Limited Partner’s
respective rights, title and interest in and to the Company Interests.

NOW, THEREFORE, pursuant and subject to the terms of the Partnership Interests
Purchase Agreement and in consideration of the mutual covenants set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller, Limited Partner, Buyer and Buyer Limited
Partner agree as follows:

1.      Seller hereby assigns and transfers all of the Company Interests that it
holds in the Company to Buyer, and Buyer hereby accepts such assignment.

2.      Limited Partner hereby assigns and transfers all of the Company
Interests that it holds in the Company to Buyer Limited Partner, and Buyer
Limited Partner hereby accepts such assignment.

3.      Seller, Limited Partner, Buyer and Buyer Limited Partner agree, on
behalf of themselves and their respective successors and assigns, to do,
execute, acknowledge, and deliver, or to cause to be done, executed,
acknowledged, and delivered, all such further acts, documents, and instruments
that may reasonably be required to give full effect to the intent of this
Assignment.

4.      This Assignment is being delivered pursuant to the Partnership Interests
Purchase Agreement and will be construed consistently therewith. This Assignment
is not intended to, and

 

86

 

--------------------------------------------------------------------------------

 

does not, in any manner enhance, diminish, or otherwise modify the rights and
obligations of the Parties under the Partnership Interests Purchase Agreement.
To the extent that any provision of this Assignment conflicts or is inconsistent
with the terms of the Partnership Interests Purchase Agreement, the terms of the
Partnership Interests Purchase Agreement will govern.

5.      This Assignment may be executed in multiple counterparts (each of which
will be deemed an original, but all of which together will constitute one and
the same instrument), and may be delivered by facsimile transmission, with
originals to follow by overnight courier or certified mail (return receipt
requested).

6.      This Assignment and all of the provisions hereof will be binding upon
and inure to the benefit of Seller, Limited Partner, Buyer, Buyer Limited
Partner and their respective successors and permitted assigns.

[Signature Page Follows]

 

87

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, Buyer, Buyer Limited Partner, Seller and Limited Partner
have caused this Assignment to be signed by their respective duly authorized
officers as of the date first above written.

 

Aquila, Inc.

 

 

By: _______________________________

Name:

Title:

 

 

 

Aquila Colorado, LLC

 

 

By: _______________________________

Name:

Title:

 

 

 

Black Hills Corporation

 

 

By: _______________________________

Name:

Title:

 

[Buyer Limited Partner]

 

 

By: _______________________________

Name:

Title:

 

88

 

--------------------------------------------------------------------------------

 

 

Form of Assignment of Company Interests

(for the Electric Business)

 

This Assignment of Company Interests (“Assignment”), is made as of
________________, 200___ by and among Aquila, Inc., a Delaware corporation
(“Seller”), Aquila Colorado, LLC, a Delaware limited liability company (“Limited
Partner”), as the limited partner of [Newco Electric LP], a Delaware limited
partnership (the “Company”), Black Hills Corporation, a South Dakota corporation
(“Buyer”), and [Buyer’s LP designee], a Delaware limited liability company
(“Buyer Limited Partner”). Unless otherwise indicated, capitalized terms used
but not otherwise defined herein have the meanings ascribed to such terms in the
Partnership Interests Purchase Agreement (as defined below).

WHEREAS, Seller has entered into an Agreement and Plan of Merger dated
February 6, 2007 (the “Merger Agreement”) among Seller, Great Plains Energy
Incorporated, a Missouri corporation (“Parent”), Gregory Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and
Buyer, which, among other things, provides for the merger of Merger Sub with and
into Seller immediately after the Closing.

WHEREAS, Buyer, Seller, as the general partner of the Company and of [Newco Gas,
LP], a Delaware limited partnership (“Gas Opco”), Limited Partner, as the
limited partner of the Company and of Gas Opco, Parent and Merger Sub, entered
into that certain Partnership Interests Purchase Agreement, dated February 6,
2007 (the “Partnership Interests Purchase Agreement”), pursuant to which, among
other things, Seller and Limited Partner agreed to assign to Buyer and its
designee all of Seller’s and Limited Partner’s respective rights, title and
interest in and to the Company Interests.

NOW, THEREFORE, pursuant and subject to the terms of the Partnership Interests
Purchase Agreement and in consideration of the mutual covenants set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller, Limited Partner, Buyer and Buyer Limited
Partner agree as follows:

1.      Seller hereby assigns and transfers all of the Company Interests that it
holds in the Company to Buyer, and Buyer hereby accepts such assignment.

2.      Limited Partner hereby assigns and transfers all of the Company
Interests that it holds in the Company to Buyer Limited Partner, and Buyer
Limited Partner hereby accepts such assignment.

3.      Seller, Limited Partner, Buyer and Buyer Limited Partner agree, on
behalf of themselves and their respective successors and assigns, to do,
execute, acknowledge, and deliver, or to cause to be done, executed,
acknowledged, and delivered, all such further acts, documents, and instruments
that may reasonably be required to give full effect to the intent of this
Assignment.

4.      This Assignment is being delivered pursuant to the Partnership Interests
Purchase Agreement and will be construed consistently therewith. This Assignment
is not intended to, and does not, in any manner enhance, diminish, or otherwise
modify the rights and obligations of the

 

89

 

--------------------------------------------------------------------------------

 

Parties under the Partnership Interests Purchase Agreement. To the extent that
any provision of this Assignment conflicts or is inconsistent with the terms of
the Partnership Interests Purchase Agreement, the terms of the Partnership
Interests Purchase Agreement will govern.

5.      This Assignment may be executed in multiple counterparts (each of which
will be deemed an original, but all of which together will constitute one and
the same instrument), and may be delivered by facsimile transmission, with
originals to follow by overnight courier or certified mail (return receipt
requested).

6.      This Assignment and all of the provisions hereof will be binding upon
and inure to the benefit of Seller, Limited Partner, Buyer, Buyer Limited
Partner and their respective successors and permitted assigns.

[Signature Page Follows]

 

90

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, Buyer, Buyer Limited Partner, Seller and Limited Partner
have caused this Assignment to be signed by their respective duly authorized
officers as of the date first above written.

 

Aquila, Inc.

 

 

By: _______________________________

Name:

Title:

 

 

 

Aquila Colorado, LLC

 

 

By: _______________________________

Name:

Title:

 

 

 

Black Hills Corporation

 

 

By: _______________________________

Name:

Title:

 

[Buyer Limited Partner]

 

 

By: _______________________________

Name:

Title:

 

 

91

 

--------------------------------------------------------------------------------

 

 

Exhibit 1.1-C

Form of Assignment of Easements

(for the Gas Business)

 

This Assignment of Easements (“Assignment”), is made as of ________________,
200__ by and between Aquila, Inc., a Delaware corporation (“Seller”), and [Newco
Gas LP], a Delaware limited partnership (the “Company”). Unless otherwise
indicated, capitalized terms used but not otherwise defined herein have the
meanings ascribed to such terms in the Partnership Interests Purchase Agreement
(as defined below).

WHEREAS, Seller has entered into an Agreement and Plan of Merger dated
February 6, 2007 (the “Merger Agreement”) among Seller, Great Plains Energy
Incorporated, a Missouri corporation (“Parent”), Gregory Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and
Black Hills Corporation, a South Dakota corporation (“Buyer”), which, among
other things, provides for the merger of Merger Sub with and into Seller
immediately after the Closing.

WHEREAS, Buyer, Seller, as the general partner of the Company and of [Newco
Electric, LP], a Delaware limited partnership (“Electric Opco”), Aquila
Colorado, LLC, a Delaware limited liability company (“Limited Partner”), as the
limited partner of the Company and of Electric Opco, Parent and Merger Sub,
entered into that certain Partnership Interests Purchase Agreement, dated
February 6, 2007 (the “Partnership Interests Purchase Agreement”), pursuant to
which, among other things, the Company agreed to assume from Seller the Gas
Business Assumed Obligations, and Seller agreed to assign to the Company all of
Seller’s rights to the Gas Business Purchased Assets, including the Easements.

NOW, THEREFORE, pursuant and subject to the terms of the Partnership Interests
Purchase Agreement and in consideration of the mutual covenants set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and the Company agree as follows:

1.      Seller hereby assigns and transfers all of the Easements to the Company,
and the Company hereby accepts such assignment.

2.      Seller and the Company agree, on behalf of themselves and their
respective successors and assigns, to do, execute, acknowledge, and deliver, or
to cause to be done, executed, acknowledged, and delivered, all such further
acts, documents, and instruments that may reasonably be required to give full
effect to the intent of this Assignment.

3.      This Assignment is being delivered pursuant to the Partnership Interests
Purchase Agreement and will be construed consistently therewith. This Assignment
is not intended to, and does not, in any manner enhance, diminish, or otherwise
modify the rights and obligations of the Parties under the Partnership Interests
Purchase Agreement. To the extent that any provision of this Assignment
conflicts or is inconsistent with the terms of the Partnership Interests
Purchase Agreement, the terms of the Partnership Interests Purchase Agreement
will govern.

 

 

1

 

--------------------------------------------------------------------------------

 

 

4.      This Assignment may be executed in multiple counterparts (each of which
will be deemed an original, but all of which together will constitute one and
the same instrument), and may be delivered by facsimile transmission, with
originals to follow by overnight courier or certified mail (return receipt
requested).

5.      This Assignment and all of the provisions hereof will be binding upon
and inure to the benefit of Seller and the Company and their respective
successors and permitted assigns.

[Signature Page Follows]

 

 

2

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the Company and Seller have caused this Assignment to be
signed by their respective duly authorized officers as of the date first above
written.

 

Aquila, Inc.

 

 

By:          

Name:

Title:

 

 

 

[Newco Gas LP]

 

 

By:          

Name:

Title:

 

3

 

--------------------------------------------------------------------------------

 

 

Form of Assignment of Easements

(for the Electric Business)

This Assignment of Easements (“Assignment”), is made as of ________________,
200__ by and between Aquila, Inc., a Delaware corporation (“Seller”), and [Newco
Electric LP], a Delaware limited partnership (“the Company”). Unless otherwise
indicated, capitalized terms used but not otherwise defined herein have the
meanings ascribed to such terms in the Partnership Interests Purchase Agreement
(as defined below).

WHEREAS, Seller has entered into an Agreement and Plan of Merger dated
February 6, 2007 (the “Merger Agreement”) among Seller, Great Plains Energy
Incorporated, a Missouri corporation (“Parent”), Gregory Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and
Black Hills Corporation, a South Dakota corporation (“Buyer”), which, among
other things, provides for the merger of Merger Sub with and into Seller
immediately after the Closing.

WHEREAS, Buyer, Seller, as the general partner of the Company and of [Newco Gas,
LP], a Delaware limited partnership (“Gas Opco”), Aquila Colorado, LLC, a
Delaware limited liability company (“Limited Partner”), as the limited partner
of the Company, and of Gas Opco, Parent and Merger Sub, entered into that
certain Partnership Interests Purchase Agreement, dated February 6, 2007 (the
“Partnership Interests Purchase Agreement”), pursuant to which, among other
things, the Company agreed to assume from Seller the Electric Business Assumed
Obligations, and Seller agreed to assign to the Company all of Seller’s rights
to the Electric Business Purchased Assets, including the Easements.

NOW, THEREFORE, pursuant and subject to the terms of the Partnership Interests
Purchase Agreement and in consideration of the mutual covenants set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and the Company agree as follows:

1.      Seller hereby assigns and transfers all of the Easements to the Company,
and the Company hereby accepts such assignment.

2.      Seller and the Company agree, on behalf of themselves and their
respective successors and assigns, to do, execute, acknowledge, and deliver, or
to cause to be done, executed, acknowledged, and delivered, all such further
acts, documents, and instruments that may reasonably be required to give full
effect to the intent of this Assignment.

3.      This Assignment is being delivered pursuant to the Partnership Interests
Purchase Agreement and will be construed consistently therewith. This Assignment
is not intended to, and does not, in any manner enhance, diminish, or otherwise
modify the rights and obligations of the Parties under the Partnership Interests
Purchase Agreement. To the extent that any provision of this Assignment
conflicts or is inconsistent with the terms of the Partnership Interests
Purchase Agreement, the terms of the Partnership Interests Purchase Agreement
will govern.

4.      This Assignment may be executed in multiple counterparts (each of which
will be deemed an original, but all of which together will constitute one and
the same instrument), and

 

1

 

--------------------------------------------------------------------------------

 

may be delivered by facsimile transmission, with originals to follow by
overnight courier or certified mail (return receipt requested).

5.      This Assignment and all of the provisions hereof will be binding upon
and inure to the benefit of Seller and the Company and their respective
successors and permitted assigns.

[Signature Page Follows]

 

 

2

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the Company and Seller have caused this Assignment to be
signed by their respective duly authorized officers as of the date first above
written.

 

Aquila, Inc.

 

 

By:          

Name:

Title:

 

 

 

[Newco Electric LP]

 

 

By:          

Name:

Title:

 

 

3

 

--------------------------------------------------------------------------------

 

 

Exhibit 1.1-D

Form of Bill of Sale

(for the Gas Business)

 

This Bill of Sale, is made as of ________________, ______ by and between Aquila,
Inc., a Delaware corporation (“Seller”), and [Newco Gas LP], a Delaware limited
partnership (the “Company”). Unless otherwise indicated, capitalized terms used
but not otherwise defined herein have the meanings ascribed to such terms in the
Partnership Interests Purchase Agreement (as defined below).

WHEREAS, Seller has entered into an Agreement and Plan of Merger dated
February 6, 2007 (the “Merger Agreement”) among Seller, Great Plains Energy
Incorporated, a Missouri corporation (“Parent”), Gregory Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and
Black Hills Corporation, a South Dakota corporation (“Buyer”) which among other
things, provides for the merger of Merger Sub with and into Seller immediately
after the Closing.

WHEREAS, Buyer, Seller, as the general partner of the Company and of [Newco
Electric, LP], a Delaware limited partnership (“Electric Opco”), Aquila
Colorado, LLC, a Delaware limited liability company (“Limited Partner”), as the
limited partner of the Company and of Electric Opco, Parent and Merger Sub,
entered into that certain Partnership Interests Purchase Agreement, dated
February 6, 2007 (the “Partnership Interests Purchase Agreement”), pursuant to
which, among other things, Seller agreed to transfer to the Company and the
Company agreed to take assignment of all of Seller’s rights, title and interests
in and to the Gas Business Purchased Assets.

NOW, THEREFORE, pursuant and subject to terms of the Partnership Interests
Purchase Agreement and in consideration of the mutual covenants set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and the Company agree as follows:

1.      Seller hereby sells, assigns, conveys, transfers, and delivers to the
Company all of Seller’s right, title, and interest in, to, and under the Gas
Business Purchased Assets, and the Company hereby purchases and accepts from
Seller, as of the date hereof, all right, title, and interest of Seller in, to,
and under the Gas Business Purchased Assets.

2.      Seller and the Company agree, on behalf of themselves and their
respective successors and assigns, to do, execute, acknowledge, and deliver, or
to cause to be done, executed, acknowledged, and delivered, all such further
acts, documents, and instruments that may reasonably be required to give full
effect to the intent of this Bill of Sale.

3.      This Bill of Sale is being delivered pursuant to the Partnership
Interests Purchase Agreement and will be construed consistently therewith. This
Bill of Sale is not intended to, and does not, in any manner enhance, diminish,
or otherwise modify the rights and obligations of the Parties under the
Partnership Interests Purchase Agreement. To the extent that any provision of

 

4

 

--------------------------------------------------------------------------------

 

this Bill of Sale conflicts or is inconsistent with the terms of the Partnership
Interests Purchase Agreement, the terms of the Partnership Interests Purchase
Agreement will govern.

4.      This Bill of Sale may be executed in multiple counterparts (each of
which will be deemed an original, but all of which together will constitute one
and the same instrument), and may be delivered by facsimile transmission, with
originals to follow by overnight courier or certified mail (return receipt
requested).

5.      This Bill of Sale and all of the provisions hereof will be binding upon
and inure to the benefit of Seller and the Company and their respective
successors and permitted assigns.

[Signature Page Follows]

 

5

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, Seller and the Company have caused this Bill of Sale to be
signed by their respective duly authorized officers as of the date first above
written.

 

SELLER:

 

Aquila, Inc.

 

 

By: _______________________________

Name:

Title:

 

 

 

 

COMPANY:

 

[Newco Gas LP]

 

 

By: _______________________________

Name:

Title:

 

 

6

 

--------------------------------------------------------------------------------

 

 

Form of Bill of Sale

(for the Electric Business)

 

This Bill of Sale, is made as of ________________, ______ by and between Aquila,
Inc., a Delaware corporation (“Seller”), and [Newco Electric LP], a Delaware
limited partnership (the “Company”). Unless otherwise indicated, capitalized
terms used but not otherwise defined herein have the meanings ascribed to such
terms in the Partnership Interests Purchase Agreement (as defined below).

WHEREAS, Seller has entered into an Agreement and Plan of Merger dated
February 6,2007 (the “Merger Agreement”) among Seller, Great Plains Energy
Incorporated, a Missouri corporation (“Parent”), Gregory Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and
Black Hills Corporation, a South Dakota corporation (“Buyer”), which among other
things, provides for the merger of Merger Sub with and into Seller immediately
after the Closing.

WHEREAS, Buyer, Seller, as the general partner of the Company and of [Newco Gas,
LP], a Delaware limited partnership (“Gas Opco”), Aquila Colorado, LLC, a
Delaware limited liability company (“Limited Partner”), as the limited partner
of the Company and of Gas Opco, Parent and Merger Sub, entered into that certain
Partnership Interests Purchase Agreement, dated February 6, 2007 (the
“Partnership Interests Purchase Agreement”), pursuant to which, among other
things, Seller agreed to transfer to the Company and the Company agreed to take
assignment of all of Seller’s rights, title and interests in and to the Electric
Business Purchased Assets.

NOW, THEREFORE, pursuant and subject to terms of the Partnership Interests
Purchase Agreement and in consideration of the mutual covenants set forth below
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and the Company agree as follows:

1.      Seller hereby sells, assigns, conveys, transfers, and delivers to the
Company all of Seller’s right, title, and interest in, to, and under the
Electric Business Purchased Assets, and the Company hereby purchases and accepts
from Seller, as of the date hereof, all right, title, and interest of Seller in,
to, and under the Electric Business Purchased Assets.

2.      Seller and the Company agree, on behalf of themselves and their
respective successors and assigns, to do, execute, acknowledge, and deliver, or
to cause to be done, executed, acknowledged, and delivered, all such further
acts, documents, and instruments that may reasonably be required to give full
effect to the intent of this Bill of Sale.

3.      This Bill of Sale is being delivered pursuant to the Partnership
Interests Purchase Agreement and will be construed consistently therewith. This
Bill of Sale is not intended to, and does not, in any manner enhance, diminish,
or otherwise modify the rights and obligations of the Parties under the
Partnership Interests Purchase Agreement. To the extent that any provision of
this Bill of Sale conflicts or is inconsistent with the terms of the Partnership
Interests Purchase Agreement, the terms of the Partnership Interests Purchase
Agreement will govern.

 

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4.      This Bill of Sale may be executed in multiple counterparts (each of
which will be deemed an original, but all of which together will constitute one
and the same instrument), and may be delivered by facsimile transmission, with
originals to follow by overnight courier or certified mail (return receipt
requested).

5.      This Bill of Sale and all of the provisions hereof will be binding upon
and inure to the benefit of Seller and the Company and their respective
successors and permitted assigns.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, Seller and the Company have caused this Bill of Sale to be
signed by their respective duly authorized officers as of the date first above
written.

 

SELLER:

 

Aquila, Inc.

 

 

By: _______________________________

Name:

Title:

 

 

 

 

COMPANY:

 

[Newco Electric LP]

 

 

By: _______________________________

Name:

Title

 

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Exhibit 8.8(d)(ii)(C)

Pension and Benefit Matters

 

The following terms will govern the Parties’ obligations under
Section 8.8(d)(ii)(C) of the Agreement (and any reference to Section 8.8 will be
deemed to include a reference to this Exhibit):

A.

Post-Closing Spin-Off to Buyer Plan.

(1)

Transfer of Liabilities.

 

(a)     As of the Closing Date, Buyer will cause a Buyer Pension Plan to accept
the liabilities for benefits under the Seller Pension Plan that would have been
paid or payable (but for the transfer of assets and liabilities pursuant to this
Paragraph A) to or with respect to the Transferred Employees and Other Plan
Participants (as defined below), and Buyer will become, with respect to each
Transferred Employee and Other Plan Participant, responsible for all benefits
due under the Seller Pension Plan. Buyer is assuming only the obligation to
provide benefits in the amount determined in accordance with the terms of the
Seller Pension Plan, and Buyer is not assuming any other liability or obligation
that Seller or an ERISA Affiliate of Seller might have or incur with respect to
the Seller Pension Plan, including liability (if any) for breaches of fiduciary
duty or other penalty or excise Tax amounts. Seller will not, and Parent will
not permit Seller’s successor to, take any action to fully vest the Business
Employees in their accrued benefits under the Seller Pension Plan; provided that
any vesting of Business Employees in such accrued benefits in the ordinary
course in accordance with the Seller Pension Plan as in effect on the date
hereof shall not be deemed a violation of this Paragraph A(1). Buyer will not
amend the Buyer Pension Plan, or permit the Buyer Pension Plan to be amended, to
eliminate any benefit accrued as of the Closing Date, whether or not vested,
with respect to which liabilities are transferred pursuant to this Paragraph A;
provided that Buyer may amend the Buyer Pension Plan or permit the Buyer Pension
Plan to be amended to eliminate an optional form of distribution to the extent
that such action is consistent with applicable Law, including the regulations
under section 411(d)(6) of the Code. Notwithstanding any other provision of this
Agreement, Seller will, or Parent will cause Seller’s successor to, cause the
Seller Pension Plan to continue to make all benefit payments to Transferred
Employees and Other Plan Participants due under the Seller Pension Plan until
both the Initial Transfer Amount and the True-Up Amount have been transferred to
the Buyer Pension Plan, following which transfer the Buyer Pension Plan shall
make all benefit payments to or in respect of Transferred Employees and Other
Plan Participants. “Other Plan Participants” means any individuals (x) who have
an accrued benefit under the Seller Pension Plan but who are not actively
employed by Seller on the Closing Date, or whose employment is terminated by
Seller on the Closing Date, and (y) whose employment was principally associated
with the Business, all of whom are listed on Schedule 8.8(d)(ii)-A, or will be
listed on such Schedule as the same is amended by Seller, with Buyer’s and
Parent’s consent, on the Closing Date.

(b)     As soon as practicable but in any event within thirty (30) days after
the Closing Date, Seller will, or Parent will cause Seller’s successor to,
deliver to Buyer a list reflecting each Transferred Employee’s service and
compensation under the Seller Pension Plan, each Transferred Employee’s and
Other Plan Participant’s accrued benefit thereunder as of the

 

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Closing Date, a copy of each pending or final domestic relations order affecting
the benefit of any Transferred Employee or Other Plan Participant, and such
other information as may be reasonably requested by Buyer consistent with
applicable Law to facilitate or assist with such transition or the establishment
of necessary records.

(2)

Transfer of Assets.

(a)     Not later than ten (10) days after the Closing, Seller will, or Parent
will cause Seller’s successor to, direct its actuary to determine the amount of
assets allocable to the benefits with respect to the Transferred Employees and
Other Plan Participants in the Seller Pension Plan based on section 4044 of
ERISA and the Pension Benefit Guaranty Corporation regulations promulgated
thereunder, and in compliance with section 414(l) of the Code using the safe
harbor assumptions thereunder (the “Section 4044 Amount”), measured as of the
Closing Date. The actuarial assumptions used in the Section 4044 Amount
determination shall be limited to the safe harbor assumptions specified under
Section 4.14(l) of the Code. Seller will, or Parent will cause Seller’s
successor to, provide the information used to compute the Section 4044 Amount
for review by Buyer’s actuary before such amount is transferred.

(b)     In accordance with the procedures set forth in this Paragraph A(2)(b),
Seller will, or Parent will cause Seller’s successor to, cause cash (or other
assets as Seller or its successor and Buyer mutually agree) equal to the Section
4044 Amount to be transferred to the trust established by Buyer as part of the
Buyer Pension Plan (the “Buyer Pension Plan Trust”). On the Initial Transfer
Date, Seller will, or Parent will cause Seller’s successor to, cause the trust
which is a part of the Seller Pension Plan (the “Seller Pension Plan Trust”) to
make a transfer of cash or other assets as Seller or its successor and Buyer
mutually agree equal to the Initial Transfer Amount to the Buyer Pension Plan
Trust. The “Initial Transfer Date” is the date that is twenty (20) Business Days
after the requirements of Paragraphs A(2)(d) and A(2)(e) have been met. The
“Initial Transfer Amount” means 75% of Seller’s or its successor’s good faith
estimate of the Section 4044 Amount. As soon as practicable after the Section
4044 Amount is determined in accordance with the requirements of Paragraph
A(2)(a), and in no event more than sixty (60) days after such final
determination, the True-Up Amount shall be transferred as provided below (the
“True-Up Date”). If the Section 4044 Amount adjusted for earnings and losses of
the assets of the Seller Pension Plan from the Closing Date through the True-Up
Date (the “Increased Section 4044 Amount”), is greater than the Reduction Amount
adjusted for earnings and losses of the assets of the Seller Pension Plan from
the Closing Date through the True-Up Date (the “Increased Reduction Amount”),
then Seller will, or Parent will cause Seller’s successor to, cause a transfer
in cash or other assets as Seller or its successor and Buyer mutually agree
equal to the True-Up Amount to be made from the Seller Pension Plan Trust to the
Buyer Pension Plan Trust. If the Increased Reduction Amount is greater than the
Increased Section 4044 Amount, then Buyer will cause a transfer in cash or other
assets as Seller or its successor and Buyer mutually agree equal to the True-Up
Amount to be made from the Buyer Pension Plan Trust to the Seller Pension Plan
Trust. The “True-Up Amount,” if any, means the difference between the Increased
Section 4044 Amount and the Increased Reduction Amount. The “Reduction Amount”
equals the sum of (x) the Initial Transfer Amount, plus (y) benefit payments
made to any Transferred Employees and Other Plan Participants by the Seller
Pension Plan after the Closing Date. For purposes of these calculations, the
earnings and losses of the assets of the Seller Pension Plan from the Closing
Date through the True-Up Date shall be the net investment

 

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returns reasonably calculated by the trustee of the Seller Pension Plan for each
month between the Closing Date and the True-Up Date. Seller will, or Parent will
cause Seller’s successor to, provide the information used to make such
calculations and compute the True-Up Amount for review by Buyer’s actuary before
any such amounts are transferred.

(c)     To the extent that under Section 8.8 Buyer has agreed to accept a
liability of Seller under any of Seller’s Benefit Plans (other than the Seller
Pension Plan) with respect to employees of Seller that are Business Employees,
Transferred Employees, Current Retirees or Covered Individuals, and such Benefit
Plans, including any non-qualified deferred compensation plan or agreement, is
funded through or maintained in connection with a grantor trust, secular trust,
Voluntary Employees’ Beneficiary Association or other trusts or arrangements
used to provide benefits payable under any such plan or agreement, as promptly
as practicable after the Closing, Buyer and Seller will, or Parent will cause
Seller’s successor to, determine the amount of assets in such trusts or other
arrangements historically allocated to the Business, the Business Employees,
Transferred Employees, or other Covered Individuals with respect to liabilities
assumed by Buyer, and such assets shall be transferred, to the extent consistent
with the terms of any such trust as in effect on the date hereof and not
contrary to applicable Law, to a similar trust or arrangement established and
maintained by Buyer to fund such benefits. Seller shall use reasonable best
efforts to make or cause to be made any required amendments to such trusts and
agreements to provide for the transfers described in this Paragraph A(2)(c).

(d)     In connection with the transfer of assets and liabilities pursuant to
this Section, Seller will, or Parent will cause Seller’s successor to, provide
to Buyer, and Buyer will provide to Seller or its successor, evidence reasonably
satisfactory to the other Party that the other Party’s Pension Plan is or
continues to be qualified under section 401(a) of the Code and is in compliance
with the funding requirements of section 302 of ERISA and section 412 of the
Code.

(e)     In connection with the transfer of assets and liabilities pursuant to
Paragraph A, the Companies, Buyer and Seller will, or Parent will cause Seller’s
successor to, cooperate with each other in making all appropriate filings
required by the Code or ERISA in a timely manner, but not later than within
thirty (30) days after the Closing Date, and the transfer of assets and
liabilities from the Seller Pension Plan pursuant to this Exhibit 8.8(d)(ii)(C)
will not take place until after the expiration of the thirty (30) day period
following the filing of any required notices with the Internal Revenue Service
pursuant to section 6058(b) of the Code.

(3)     Benefits. The benefit provided by the Buyer Pension Plan to each
Transferred Employee and Other Plan Participant who becomes a participant in the
Buyer Pension Plan will be at least equal to the benefits accrued by such
Transferred Employee or Other Plan Participant under the Seller Pension Plan on
the Closing Date, computed by taking into account the service credited to such
Transferred Employee and Other Plan Participant with Seller and Buyer (in the
case of service of Transferred Employees with Buyer, such service will be
required to be taken into account only for the purpose of vesting and early
retirement subsidies or as otherwise required by applicable Law).

 

 

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B.

Further Purchase Price Adjustment.

(1)     Adjusted Section 4044 Amount. Seller will, or Parent will cause Seller’s
successor to, also calculate the Section 4044 Amount using the same assumptions
and methodologies as used to calculate the Section 4044 Amount pursuant to
Paragraph A(2)(a), but adjusted to remove from the assets of the Seller Pension
Plan an amount equal to Seller’s contributions to the Seller Pension Plan made
between the date hereof and the Closing Date (the Section 4044 Amount so
adjusted, the “Adjusted Section 4044 Amount”). Seller shall, or Parent shall
cause Seller’s successor to, provide the information used to compute the
Adjusted Section 4044 Amount for review by Buyer’s actuary. Buyer and Seller, or
Parent will cause Seller’s successor to, cooperate in good faith and resolve and
reconcile any differences or disputes with respect to the calculation of the
Adjusted Section 4044 Amount as soon as practicable.

(2)     Notwithstanding anything to the contrary herein, the Purchase Price
(i) shall be decreased by the amount, if any, by which the Adjusted Section 4044
Amount exceeds the Section 4044 Amount, and (ii) shall be increased by the
amount, if any, by which the Adjusted Section 4044 Amount is less than the
Section 4044 Amount. On the earlier of the date that the True-Up Amount is
transferred, or within five (5) Business Days of the date the True-Up Amount is
determined, Buyer shall pay an amount equal to the amount of the increase in the
Purchase Price, if any, determined pursuant to this Paragraph B, to Seller or
its successor, or Seller shall, or Parent shall cause Seller’s successor to, pay
an amount equal to the amount of the decrease, if any, in the Purchase Price
determined pursuant to this Paragraph B, as applicable, by wire transfer of same
day funds.

 

 

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