ELECTRIC UTILITY ASS ET PURCHASE AND SALE · PDF file1.1.11 Easements. All of Sellers’...

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ELECTRIC UTILITY ASSET PURCHASE AND SALE AGREEMENT DRAFT 8 (SELLERS) 2-29-16

This ELECTRIC UTILITY ASSET PURCHASE AND SALE AGREEMENT (the “Agreement”), entered into as of the date of the last signature below, is among Alaska Village Electric Cooperative, Inc. (hereinafter “AVEC” or “Purchaser”), an Alaska Statute 10.25 cooperative corporation organized and existing under the laws of the State of Alaska with offices in Anchorage, Alaska, and the City and Borough of Yakutat (“Borough”), a home rule borough under the laws of Alaska, and Yakutat Power, Inc. (“YPI”), an Alaska corporation, (and with the Borough, collectively referred to in this Agreement as the “Sellers”). AVEC, Borough and YPI are referred to in this Agreement collectively as “the Parties” or individually as “Party.”

RECITALS

WHEREAS, Purchaser is a non-profit electric cooperative corporation providing electric service to numerous communities throughout western Alaska; and WHEREAS, Borough is a municipal corporation engaged in, among other things, the function of providing public electric utility service in and around the vicinity of Yakutat, Alaska, and is the holder of Certificate of Public Convenience and Necessity (CPCN”) No. 53 from the Regulatory Commission of Alaska (“RCA”) authorizing Borough to provide such service, and YPI is a corporation whose shares are 100% owned by Borough and who leases certain assets to Borough for the provision of public electric utility service; and WHEREAS, Purchaser desires to acquire, and Sellers desire to sell, substantially all the tangible and intangible Assets (as defined below in Section 1.1) owned or held in connection with the public electric utility business operations in and around the vicinity of Yakutat, commonly known as “Yakutat Power” and referenced in this Agreement as the “Public Electric Utility,” upon the terms and conditions set forth herein, and Purchaser intends to operate such Public Electric Utility in the normal course of business within Yakutat indefinitely, and for no less than ten (10) years prior to considering sale of the Assets or the Public Electric Utility; NOW, THEREFORE, in consideration of the respective representations, warranties, covenants and agreements contained herein, the Parties agree as follows:

A G R E E M E N T

ARTICLE I PURCHASE AND SALE OF ASSETS

Section 1.1. Purchase and Sale of Assets/Purchase is “As Is.” On and subject to the terms and conditions set forth in this Agreement, at the Closing, Sellers shall sell, assign, transfer, convey, set over and deliver to Purchaser free and clear of all liens and encumbrances except those set forth in Schedule 2.1.5, and Purchaser shall purchase, acquire and accept from Sellers all of the following assets, properties, and rights of Sellers that it holds as of the Closing

ELECTRIC UTILITY PURCHASE AND SALE AGREEMENT Page 2 fs\AVEC\Yakutat\2-29-16 D-8 (CBY)

(collectively, the “Assets”).

Purchaser understands that, except for the limited representations and warranties set forth in Article II of this Agreement, it is purchasing the Assets “AS IS/WHERE IS in its present condition and with all faults,” and is not relying upon any representations of Seller regarding the condition of any of the Assets but rather is relying on its own inspection of the Assets, of the Public Electric Utility, and of the review of related records. Purchaser shall have the opportunity to inspect all of the Assets, the Public Electric Utility and related records before the Closing, as set out in Article V below:

1.1.1 Right to Provide Public Electric Service. All of Sellers’ interest in and rights pursuant to CPCN No. 53, subject to approval by the RCA; 1.1.2 Customer Contracts, Deposits and Accounts Receivable. All of Sellers’ rights under request for service contracts and line extension agreements with electric utility customers (“Customer Contracts”), including customer deposits, and accounts receivable, as described in Schedule 1.1.2. This includes the 2008 Utility Service Application between the Public Electric Utility and the US Department of Transportation, Federal Aviation Administration (“FAA”), and the related funds remaining on deposit in Key Bank in the amount of $288,637.40; provided that 1) the FAA does not demand and receive a refund or partial refund of those funds prior to the Closing, and 2) the FAA agrees to assignment of the Application and those funds to Purchaser. Accounts Receivable includes amounts receivable for sales of electricity, service work, pro-rated amounts due under annual pole rental agreements, contributions-in-aid-of-construction, any deferred payment arrangements, any amounts receivable from the State of Alaska Power Cost Equalization program but only for the month during which Closing occurs and for the immediately preceding month, and amounts receivable from employees and vendors, including deposits held by vendors for the benefit of Sellers. Accounts receivable does not include delinquent sums due that have already been reduced to a judgment in favor of Sellers; 1.1.3 Electric Generation and Distribution Systems. All of Sellers’ electric generation and distribution systems, including all generators, poles, conductors, transformers, associated spare parts and inventory, all system mapping documents, including supporting material, not otherwise included in Assets, and all other power plant plans and drawings, and including but not limited to the items described in Schedule 1.1.3 as well as any other supporting documentation not specifically listed or known at this time; 1.1.4 Fuel Storage Facilities. All of Sellers’ interests in the fuel storage tanks located in Yakutat, Alaska on the power plant parcel described in Section 1.1.12 below (“the fuel tanks”), and including all associated spare parts, inventory, pipelines and fuel transport equipment used in connection with the operation of the Public Electric Utility, including but not limited to the items described in Schedule 1.1.4. The Purchaser recognizes and agrees that Sellers are not representing that all of the fuel tanks located on the parcel are usable or approved for use by appropriate governmental authorities, subject to Purchaser’s rights to decline to purchase certain assets, or request remediation or removal by Sellers under subsection 5.3.1.1;


1.1.5 Equipment. Sellers’ equipment owned and held for use in

conducting the Public Electric Utility, including without limitation all machinery, equipment, tools, motor vehicles and rolling stock, supplies, furnishings, and fixtures of every kind associated with the Public Electric Utility, including but not limited to the items described in Schedule 1.1.5;

1.1.6 Intangibles. All intangible assets, rights and claims of Sellers of every kind and nature, all to the extent that they are used or held by Sellers in connection with the operation of the Public Electric Utility and are assignable by Sellers, including without limitation, goodwill, trade names, trademarks, copyrights, licenses, customer lists, advertising and marketing programs and plans, referral relationships, and business information used by Sellers in connection with the operation of the Public Electric Utility; causes of action (but not including judgments already entered in favor of Sellers for past delinquent service charges), claims, and demands of whatever nature, memberships, agencies and permits, claims for refunds and rights of offsets and credits, all to the extent that they are used or held by Sellers in connection with the operation of the Public Electric Utility and are assignable by Sellers; and, to the extent they are not included as Assets elsewhere and to the further extent that they are not specifically listed on Schedule 1.2 as Excluded Assets being used by the Borough for other municipal functions, all software associated with Sellers’ billing and customer accounting programs (Utility Star), computer hardware located on the Public Electric Utility premises, and general ledger accounting programs, including a hard copy and electronic copy of Seller’s continuing property records (“CPRs”), if any. To the extent any such program or records are specifically identified on Schedule 1.2 as used by the Borough for other municipal functions, Sellers shall take all actions necessary to provide copies to Purchasers to the fullest extent allowed by law;

1.1.7 Assigned Contracts. All of Sellers’ rights under contracts, leases, and other agreements, as listed and described on the Schedule 1.1.7, and further including, without limitation, all Special Contracts, all rights, claims and privileges of Sellers arising under all unexpired warranties, representations and guarantees (express, implied or otherwise) made by manufacturers, suppliers or others in connection with the Assets or the Public Electric Utility (collectively the “Assigned Contracts”). If consent to such assignment signed by the other parties to the Assigned Contract is required, Sellers shall use its best efforts to obtain such consent. The parties agree that if despite using its best efforts, Sellers are unable to obtain the consent necessary to assign the Delta Western contract described in Schedule 1.1.7 to Purchaser three (3) days prior to the Closing Date, such failure will not constitute a breach or default by Sellers of this Agreement; however, Purchaser shall then be entitled, at its sole discretion, to terminate the Agreement and such action will not constitute a breach or default by Purchasers of this Agreement. In the event Purchaser terminates the Agreement per this subsection, the return of Purchaser’s deposit and the parties’ rights to any other damages will be the same as set forth in subsections 7.2.6 and 7.2.7 for an automatic termination. Nothing in this subsection is intended to limit the Parties in anyway from discussing or agreeing to any other resolution;

1.1.8 Books and Records. Copies of all books and records relating to


the Assets and the operation of the Public Electric Utility;

1.1.9 Fuel Inventory. All fuel contained in Sellers’ fuel tanks on the Closing Date (the “Fuel Inventory”); 1.1.10 Prepaid Expenses. Prepaid taxes, expenses, premiums, advances, lease or rental payments, dividends or other payments in lieu of taxes and any tax refunds arising from taxes that accrued during any period prior to Closing; 1.1.11 Easements. All of Sellers’ easements, rights-of-way, permits, licenses, operating rights and franchises, whether such rights arise by agreement or operation of law, permitting Public Electric Utility facilities on property not owned by Sellers to be maintained in their current locations, including those more specifically described in Schedule 1.1.11. ,If consent to such assignment signed by the other parties is required, Sellers shall use its best efforts to obtain such consent. The Parties agree that if despite using its best efforts, Sellers are unable to obtain the required consent to the assignment of any easement, right-of-way, permit, license, operating right, and/or franchise including those described in Schedule 1.1.11 to Purchaser three (3) days prior to the Closing Date, such failure will not constitute a breach or default by Sellers under this Agreement; provided however, that Purchaser shall then be entitled, at its sole discretion, to terminate the Agreement and such action will not constitute a breach or default by Purchaser under this Agreement. In the event Purchaser terminates the Agreement per this subsection, the return of Purchaser’s deposit and the parties’ rights to any other damages will be the same as set forth in subsections 7.2.6 and 7.2.7 for an automatic termination. Nothing in this subsection is intended to limit the Parties in anyway from discussing or agreeing to any other resolution. If said easement, right-of-way, permit, license, operating right or franchise grants rights to the Borough in addition to those relating to the Public Electric Utility, Sellers will take all actions necessary to have Purchaser included on said easement, right-of-way, permit, license, operating right or franchise for purposes of operating the Public Electric Utility;

1.1.12 Real Property. All of Sellers’ interests in the real property upon which the Sellers’ Public Electric Utility power plant is located, including buildings, structures, and fixtures located thereon and therein, and any leaseholds, and leasehold improvements, as more specifically described in Schedule 1.1.12. The parties have agreed, in writing, to waive completion of any required residential real property disclosure statement. 1.1.13 ARECA Insurance Balances. All of Sellers’ interests in the ARECA Subscriber Equity Balance Accounts and ARECA Subscriber Capital Accounts, with the approval of the ARECA Insurance Exchange. Section 1.2 Excluded Assets. Excluded Assets are those Assets identified with specificity by Sellers in Schedule 1.2 as assets used in connection with the Public Electric Utility that are also used or needed for other non-electric utility Borough functions (the “Excluded Assets”). Despite any language to the contrary in the preceding paragraphs 1.1.1-1.1.13, Excluded Assets are not included in the Assets being sold by Sellers and purchased by Purchaser under this Agreement.


Section 1.3 Assumption of Liabilities.

1.3.1 Liabilities Assumed. Contemporaneously with the purchase of the Assets, Purchaser shall assume the liabilities and thereafter perform the obligations of Sellers arising under the following, which will be collectively referenced as the “Assumed Liabilities:”

1.3.1.1 CPCN No. 53;

1.3.1.2 Any Customer Contract, Deposit or Account Receivable (Section 1.1.2);

1.3.1.3 Any Assigned Contract (Section 1.1.7);

1.3.1.4 Any easement, right-of-way, permit, license, or operating right or franchises, (Section 1.1.11);

1.3.1.5 Any lease or leasehold interest (Section 1.1.12);

1.3.1.6 The indebtedness remaining due, as of the Closing Date, under two promissory notes executed by Sellers to lender agencies of the State of Alaska as follows: 1) Loan Agreement No. 40901062 (Department of Community & Regional Affairs) and 2) Loan Agreement No. 40901094 (Alaska Energy Authority). The parties shall execute an assignment and assumption agreement in the form required by the lenders;

1.3.1.7 Any condition imposed under an approval or consent obtained under Sections 2.1.4 and 6.2.4.

1.3.1.8 Payment of any insurance claims incurred, but not yet billed or submitted by, or paid to, providers or subscribers (also referred to as ‘run-out claims’) and administrative fees, which the Public Electric Utility would be required to contribute to the Alaska Public Utility Insurance Trust (APUIT) as a result of the Public Electric Utility’s voluntary termination of group health insurance coverage provided through APUIT.

1.3.1.9 Any debt, liability or obligation relating to or arising from Sellers’ termination of participation in the National Rural Electric Cooperative Association (“NRECA”) retirement plan.

1.3.2 Liabilities Not Assumed. Purchaser does not assume any liabilities of Sellers unless Purchaser’s responsibility for such liability is expressly specified in this Agreement. Without limiting the generality of the foregoing, Purchaser does not assume the following obligations or liabilities of Sellers: 1.3.2.1 Any cost, expense, or tax liabilities of Sellers arising from or growing out of the sale provided for by the Agreement;


1.3.2.2 Any debt, obligation, or liabilities of Sellers arising from the operations prior to the Closing, to any employee, agent, officer, or director of Sellers or any entity owned or controlled in whole or in part by Sellers under any employment, representation or similar agreement not identified as an Assigned Contract, or under any employee stock option plan, stock purchase plan, bonus plan or arrangement, pension plan or other benefit plan, health plan, or other employee welfare plan or arrangement; 1.3.2.3 Any debt, liability or obligation of Sellers (or costs, and expenses in connection therewith) that is covered by an insurance policy or policies issued to Sellers: 1.3.2.4 Any federal, state, or local income tax or other tax liabilities of Sellers, known or unknown, existing or arising from the operations prior to Closing; and 1.3.2.5 Any accounts payable existing as of Closing. 1.3.3 Schedules. The Parties recognize that the schedules listing assets and excluded assets referenced in Sections 1.1 and 1.2 will need to be updated after the date of execution of this Agreement. Except as stated otherwise, these schedules shall be completed and agreed to between the Parties, in good faith and in accordance with the intent of this Agreement to transfer all Assets, no later than three (3) days prior to Closing. The Parties recognize that the schedules listed in Section 1.1 are not exclusive lists of property transferred in accordance with this Agreement, except as otherwise noted. Section 1.4 Purchase Price. 1.4.1 Purchase Price. In consideration for the sale, conveyance, transfer, and delivery of the Assets and upon the terms and subject to the condition set forth in this Agreement, Purchaser shall assume the Assumed Liabilities and shall pay to the Sellers the Purchase Price, which shall be:

1.4.1.1 The value of Public Electric Utility’s Accounts

Receivable, less any amounts more than sixty (60) days past due, as of the Closing Date, plus

1.4.1.2 The sum of Three Hundred Thousand US Dollars ($300,000); plus

1.4.1.3 The original book cost of the Fuel Inventory that is

transferred from Sellers to Purchaser at Closing, plus 1.4.1.4 Purchaser’s assumption of Sellers’ remaining indebtedness

due, as of the Closing Date, under the two promissory notes executed by Sellers to lender agencies of the State of Alaska as follows: 1) Loan Agreement No. 40901062 (Department of Community & Regional Affairs) and 2) Loan Agreement No. 40901094 (Alaska Energy Authority).


1.4.2 Payment Terms. At Closing, Purchaser shall pay to Sellers the

full amount of the purchase price, and assume Seller’s remaining indebtedness under the two promissory notes identified above, with the respective amounts calculated in accordance with Section 1.4.1 above. 1.4.3 Recovered Heat. The parties further agree that as additional consideration for the Purchase and Sale hereunder, as long as Purchaser owns the Public Electric Utility Assets, Purchaser shall, in perpetuity, use its best efforts to provide recovered heat to the following municipal buildings at no charge: School Building, 596 Forest Highway 10: School Building, 620 Forest Highway 10: and Public Safety Building, 609 Forest Highway 10. Purchaser reserves the right to charge the building owner(s), at the standard commercial rate or less, for any substantial increase in the amount of recovered heat provided to any of the above-listed buildings, as compared to the amount of recovered heat provided to the respective building as of the Effective Date of this Agreement, when the increase is caused by a change in the square footage of the building. Purchaser shall be responsible for measuring any such change and for informing the building owner(s) when a substantial change has occurred. Sellers or building owners may elect, at their own expense or pursuant to a separately negotiated reimbursement agreement with Purchaser, to meter the heat usage at each building to determine any relevant utilization rates. Any subsequent sale agreement regarding the Assets entered into by Purchaser (see, Section 3.2.1.4) shall contain a provision requiring the buyer to use its best efforts to provide recovered heat to Sellers, at no cost, in accordance with the provisions of this subsection. 1.4.4 Payment of Deposit. Within ten (10) days after the Effective Date of this Agreement, Purchaser shall deliver to a mutually agreed upon Escrow Agent or other third party a Deposit of Thirty Thousand Dollars ($30,000) (“the Deposit”). At Closing, the Deposit shall be paid to Sellers and credited against the Purchase Price. In the event this transaction does not proceed to Closing, disposition of the Deposit is governed by the provisions of Article 7 below. 1.4.5 Future Property Transfer or Use. The Borough agrees to consider transferring, selling or otherwise making available to the Purchaser municipal property for purposes of construction of a bulk fuel tank farm, on the terms and conditions as agreed to between the Parties at the time of said transfer, sale or use.

Section 1.5 Pro-rations and Other Payment Obligations. Sellers shall pay personal property sales or use taxes arising from the transaction contemplated by this Agreement, if any, and Sellers shall pay all other taxes incurred by Sellers arising from or related to such


transaction.

Section 1.6 Employee Matters. Sellers’ and Purchaser’s obligations regarding Sellers’ employees are as set forth in this section.

1.6.1 Sellers’ Obligations. Sellers will perform all obligations in connection with its employees arising from the operations of the Public Electric Utility by Sellers prior to Closing. Sellers shall terminate, as of Closing, all employees whose employment by Sellers is exclusively for the Public Electric Utility. Except as provided in subsection 1.6.3.2, Sellers shall be responsible for all obligations to such employees in connection with such termination, including without limitation giving any required notices; paying all compensation due such employees, including compensation for accrued vacation and benefits; satisfying all Sellers’ obligations to such employees on account of their employment by Sellers; and performing any obligations required by the Worker Adjustment and Retraining Notification Act, the Fair Labor Standards Act of 1938, the Equal Pay Act, applicable wage and hour laws, or any other applicable laws, amendments, and regulations. Following the Effective Date of this Agreement, Sellers will timely provide Purchaser information regarding Sellers’ employees who work for the Public Electric Utility, including: name, position, pay rate, date of hire, and a description of the duties and responsibilities of each employee, and will update this information at least three (3) days prior to Closing (Schedule 1.6.1).

1.6.2 Sellers’ Liabilities. Sellers shall retain all liability and Purchaser shall have no liability for: accrued wages (including salaries and commissions), severance benefits, vacation pay, pension and profit sharing contributions, seniority rights, other forms of benefits of any type or nature on account of such employees’ employment by Sellers, any COBRA health plan continuation coverage to such employees, or their dependents, and any obligations to former employees arising from their employment and termination with Sellers.

1.6.3 Purchaser’s Obligations and Exceptions.

1.6.3.1 Hiring of Employees. Subject to the conditions below, Purchaser will offer employment for at least six (6) months (the “Initial Hire Period”) to the employees of Sellers who work at the Public Electric Utility in the following full-time regular positions as of the Closing Date, for the number of positions specified: manager (1 position), operator (2 positions), lead lineman (1 position), and lineman (1 position). These positions are referenced hereinafter as “designated position(s).” Purchaser’s obligations to offer employment to any of Sellers’ employees for one of these designated positions is subject to the following conditions and exceptions:

1.6.3.1.1 Purchaser is not obligated to offer employment to any of Sellers’ employees who are not employed in a designated position, or to any of Sellers’ employees who have been in a designated position for less than 1 year (365 days) before the Closing Date, or to hire for or fill any designated position that is vacant as of the Closing Date.

1.6.3.1.2 Purchaser will follow its regular procedures


for pre-hire drug and alcohol testing and pre-hire paperwork requirements for those employees who accept Purchaser’s conditional offer of employment. Purchaser is not obligated to hire any employee in a designated position who does not successfully complete and pass drug and alcohol testing, or who does not comply with pre-hire paperwork requirements. Sellers’ employees who are eligible for hire by Purchaser after meeting the conditions in Section 1.6.3.1 and in this paragraph are referenced hereinafter as “designated employees.” Any standard fitness for duty examination or background check shall be completed at the conclusion of the Initial Hire Period.

1.6.3.1.3 Purchaser’s employment of the designated employees that Purchaser hires commences at 12:00 o’clock a.m. on the day following the Closing Date.

1.6.3.1.4 Upon commencement of Purchaser’s hiring of designated employees, such employees shall receive a salary or wage rate similar to that currently paid by Sellers as identified for each designated position in Schedule 1.6.1. This salary or wage rate shall be evaluated at the conclusion of the Initial Hire Period. Benefits, including paid time off and paid holidays, health insurance, and a retirement plan will be in accordance with the policies and practices of Purchaser that apply to Purchaser’s other employees, except that designated employees shall not be required to make a health care premium cost share contribution during the Initial Hire Period.

1.6.3.1.5 During the Initial Hire Period, Purchaser will not terminate any designated employee except “for cause,” as determined in accordance with the personnel policies and practices of Purchaser that apply to Purchaser’s other employees. At the expiration of the Initial Hire Period, the employment status of the designated employees is “at-will” in accordance with the personnel policies and practices of Purchaser that apply to Purchaser’s other employees.

1.6.3.1.6 Any of the designated employees may freely decline employment with the Purchaser.

1.6.3.2 COBRA Insurance Coverage. Purchaser agrees to offer group health insurance continuation coverage as required by the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) to a) any qualified full-time employee of the Public Electric Utility who, following the Closing Date, is not to be employed by Purchaser under the provisions of Section 1.6.3.1 and b) any former Public Electric Utility employee who, at the Closing Date, is already obtaining extended coverage under COBRA that would otherwise terminate due to Sellers’ voluntary termination of participation in APUIT. The coverage to be offered these employees shall be available to any qualifying spouse and/or qualifying dependent children of such employees, shall be substantially similar to the coverage available to Purchaser’s employees, and the premium cost and due date (including for any disability extension of coverage) shall be as provided for COBRA coverage generally under federal law.

Section 1.7 Closing.

1.7.1 Closing. Unless otherwise agreed to by the Parties, the closing of


the asset purchase and sale contemplated by this Agreement (the “Closing”) shall take place on a date selected by Purchaser (the “Closing Date”), at a location selected and agreed upon by the Parties, which may include the offices of an Escrow Agent, with such Closing Date occurring no later than forty-five (45) days after the issuance of a final non-appealable order by the RCA approving the transfer of CPCN No. 53 from the Borough to Purchaser.

1.7.2 Closing Deliveries by Sellers. At the Closing, Sellers shall take the following actions and completion of each action shall be a further Condition to Closing:

1.7.2.1 Sellers shall deliver to Purchaser duly executed Bills of Sale substantially in the form of Exhibit 1.7.2.1 for all personal property conveyed under this Agreement, including fuel inventory;

1.7.2.2 Sellers shall deliver to Purchaser a duly executed assignment and assumption agreement in a recordable format substantially in the form of Exhibit 1.7.2.2 for the assignment of the Assigned Contracts listed in Schedule 1.1.7, and for the assignment of operating rights, permits, licenses, and franchises listed in Schedule 1.1.11, and, if required under the contract or the document evidencing the operating right, license, permit, or franchise, a consent to such assignment signed by the other parties to the Assigned Contract or by the parties who grant the license, permit, operating right, or franchise to Sellers;

1.7.2.3 Sellers shall deliver to Purchaser a duly executed standard form statutory warranty deed conveying the fee interest in the Real Property to Purchaser in recordable form for the real property conveyed under this Agreement;

1.7.2.4 Sellers shall deliver to Purchaser a duly executed assignment of lease in recordable form for all real property leasehold interests conveyed under this Agreement and, if required under the lease, a consent to such assignment signed by the other parties to the lease;

1.7.2.5 Sellers shall deliver to Purchaser a duly executed assignment and assumption agreement in a recordable format substantially in the form of Exhibit 1.7.2.5 for the assignment of the easements and other land use rights included in the Assets and, if required under the easement or specific land use right, a consent to such assignment signed by the other parties to the easement or land use right;

1.7.2.6 Sellers shall deliver to Purchaser a duly executed assignment and assumption agreement in a recordable format substantially in the form of Exhibit 1.7.2.6 for the assignment of Sellers’ Accounts Receivables and Seller’s Customer Contracts and deposits; and, if required, a consent to such assignment signed by the other parties to the account receivable;


1.7.2.7 Sellers shall deliver to Purchaser such other endorsements, contracts, leases, vehicle title transfer and registration documents, receipts, and other instruments, as shall be sufficient to vest in Purchaser all right, title and interest of Sellers in and to the Assets, free and clear of all liens and encumbrances, except for the exceptions set forth in Schedule 2.1.5;

1.7.2.8 Sellers shall deliver Sellers’ payment for their share of the obligations described in Section 1.5, if any.

1.7.3 Closing Deliveries by Purchaser. At the Closing, Purchaser shall take the following actions and completion of each action shall be a further Condition to Closing:

1.7.3.1 Payment of the Purchase Price. At the Closing, Purchaser shall deliver to Sellers the Closing Payment established by Section 1.4.2 with a certified check payable jointly to Sellers, unless payment is directed by Sellers to be made wholly to either the Borough or YPI.

1.7.3.2 Purchaser shall execute the Bills of Sale delivered to Purchaser by Sellers under Section 1.7.2.1;

1.7.3.3 Purchaser shall execute the assignment and assumption agreements delivered to Purchaser by Sellers under Sections 1.7.2.2 and 1.7.2.6;

1.7.3.4 Purchaser shall execute the assignment and assumption documents relating to any lease, easement or other land use right document delivered to Purchaser by Sellers under Sections 1.7.2.4 and 1.7.2.5;

1.7.3.5 Purchaser shall execute assignment and assumption documents relating to Loan Agreement No. 40901062 (Department of Community & Regional Affairs) and Loan Agreement No. 40901094 (Alaska Energy Authority), as contemplated under Section 1.3.1.6; and

1.7.3.6 Purchaser shall execute such documents as are required by the entities listed in Sections 2.1.4 and 6.2.4 in connection with consents/approvals.

Section 1.8 Further Documents or Necessary Action. Sellers and Purchaser, respectively, shall take all such action as may be necessary or appropriate in order to effectuate the transactions contemplated hereby. On or after the Closing Date, if any further action is necessary to vest Purchaser with full title to the Assets, the Sellers shall take all such necessary or appropriate action; each Party shall bear its own costs and expenses in connection with any such further necessary actions.

ARTICLE II REPRESENTATIONS AND WARRANTIES

Section 2.1 Representations and Warranties of Sellers. Sellers hereby represent


and warrant to Purchaser that the following statements are true and correct on the date hereof and will be true and correct on the Closing Date as though made on such date.

2.1.1 Corporate Organization and Standing of Sellers; Power and Authority.

2.1.1.1 Borough is a home rule Borough duly organized, validly existing and in good standing under the laws of the State of Alaska. YPI is an Alaska corporation in good standing under the laws of the State of Alaska and whose shares are 100% owned by Borough. Sellers have the corporate and individual power and authority to own and convey to Purchaser the Assets;

2.1.1.2 Sellers shall make available to Purchaser true, correct and complete copies of the following documents: (1) YPI’s Articles of Incorporation and By-Laws, with all amendments through the Effective Date of this Agreement; (2) any shareholder agreements or other agreements by or between YPI’s shareholders; and (3) any resolutions by YPI’s shareholders or board of directors that address transfers of YPI’s assets; (4) any resolutions or ordinances by the City and Borough of Yakutat Assembly addressing the transfer of any of Sellers’ Assets.

2.1.2 Corporate Authorization. All corporate action on the part of Sellers necessary for the authorization, execution, delivery, and performance by Sellers of this Agreement and the consummation of the transactions contemplated hereby have been taken or, prior to Closing, will be taken. This Agreement has been duly executed and delivered by Sellers and is a valid and binding obligation enforceable against each Party in accordance with its terms;

2.1.3 No Conflict. Neither the execution and delivery of this Agreement by Sellers nor the consummation of the transactions contemplated hereby will (a) conflict with or result in a breach of any provision of Sellers’ charter or ordinances; (b) conflict with any existing provision of applicable law or any existing order, rule, regulation, judgment or decree of any court, arbitrator or agency of government, (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Sellers or to any of the Assets, (d) violate, be in conflict with, result in a breach of, or constitute (with or without notice or lapse of time or both) a default under (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, license, agreement or other instrument or obligation to which Sellers are a party, or by which Sellers may be bound, except for such default (or right of termination, cancellation or acceleration) as to which requisite waivers or consents shall either have been obtained by Sellers prior to Closing or the obtaining of which shall have been waived by Purchaser;

2.1.4 Consents. Except for the approval of the RCA, the approvals/consents of the Alaska Energy Authority and/or the Denali Commission and/or the USDA, the agreement of the Rural Utilities Service that the Sellers’ system is eligible for financing by the Rural Utilities Service, the City and Borough of Yakutat Assembly’s enactment of a resolution or ordinance authorizing the transfer of the Assets identified in this Agreement, no consent, approval or authorization of, or declaration, filing or registration with, any


governmental authority is required in connection with the execution and delivery by Sellers of this Agreement or the consummation by Sellers of the transactions contemplated hereby except as to any waivers or consents contemplated under Sections 1.7.2.2, 1.7.2.4, and 1.7.2.5;

2.1.5 Title to Assets. Sellers have, or will have prior to Closing, good and marketable title to the Real Property conveyed herein and good and marketable title to the other Assets, free and clear of all mortgages, liens, pledges, charges, encumbrances, equities or claims, except as has been disclosed to Purchaser on Schedule 2.1.5. All Persons supplying labor, materials and equipment to the Real Property at the request of Sellers have been paid and there are no claims, liens, or potential liens against the Real Property;

2.1.6 Compliance with Laws. To the best of Sellers’ knowledge, the use of the Real Property and operation of the Public Electric Utility thereon are (a) in compliance with applicable laws, statutes, ordinances, rules, regulations and requirements of any governmental authorities, including without limitation zoning and land use laws, building and fire codes, and other laws and regulations over the Assets, Public Electric Utility or Real Property, and (b) are not subject to any leases, tenancies or rights of persons in possession;

2.1.7 Litigation and Claims. There is no action, suit, investigation, or litigation pending or, to the knowledge of Sellers, threatened, against Sellers that will have a Material Adverse Effect on the Purchaser’s ownership, use or operation of any of the Assets as used in the operation of the Public Electric Utility or the ability of Sellers to perform its obligations under this Agreement;

2.1.8 Contracts. Accurate and complete copies of all Assigned Contracts have been delivered or made available to Purchaser. Each Assigned Contract is valid and in full force and effect, is enforceable in accordance with its terms, and constitutes the legal, valid and binding obligation of Sellers and the other party or parties to such contracts. To the best of Sellers’ knowledge, Sellers have complied in all material respects with the terms of each such Assigned Contract;

2.1.9 Employees. To the best of Sellers’ knowledge, Sellers have complied with all applicable federal and state laws relating to the employment of labor, including but not limited to, the provisions of such laws relating to equal employment opportunity, wages, hours and the payment of social security taxes, and are not liable for any arrears of wages or any tax or penalties for failure to comply with any of the foregoing;

2.1.10 Labor Matters. Sellers have no union contracts or collective bargaining agreements with, or any other obligations to, employee organizations or groups with respect to its ownership and operation of the Public Electric Utility, nor are Sellers currently engaged in any labor negotiations, nor are Sellers the subject of any union organization effort. There is no pending or threatened labor dispute, strike or work stoppage affecting the Public Electric Utility;

2.1.11 Environmental Matters. Except as disclosed on Schedule 2.1.11:


2.1.11.1 To the best of Sellers’ knowledge, Sellers are currently in compliance with all federal, state and local environmental or health or safety laws, regulations and ordinances as such laws may be amended or modified through the Closing Date (“Environmental Laws”) relating to its ownership and/or operation of the Assets, the Public Electric Utility and the Real Property;

2.1.11.2 To the best of Sellers’ knowledge, there have been no material releases of any substance or material defined or designated as (a) hazardous, dangerous or toxic waste, (b) hazardous or toxic material, (c) a hazardous, toxic or radioactive substance, or (d) a hazardous or toxic chemical, by any federal, state or local statute, regulation or ordinance in effect and applicable to the Real Property as of the Closing Date (“Hazardous Substances”) on the Real Property except as listed on Schedule 2.1.11;

2.1.11.3 All releases listed on Schedule 2.1.11 have been properly reported to the appropriate regulating agency, if required, and cleaned up to its satisfaction;

2.1.11.4 With respect to all known potential environmental hazards and releases of Hazardous Substances, to the best of Sellers’ knowledge Sellers have made all notifications required under Environmental Laws, including but not limited to underground tank registration, and notification of the burning of any hazardous waste fuel or used oil;

2.1.11.5 To the best of Sellers’ knowledge and except for fuel storage facilities, there are no on-site locations installed by Sellers or its predecessors where Hazardous Substances have been stored, treated, recycled, or disposed of;

2.1.11.6 To the best of Sellers’ knowledge, Sellers have not disposed of any Hazardous Substances off-site;

2.1.11.7 There is no ongoing or threatened litigation with any persons relating to Sellers’ failure to comply with any Environmental Laws;

2.1.11.8 Sellers have not received any notice that either Seller or the Real Property is the subject of any current investigation pertaining to the release of any Hazardous Substances; and

2.1.11.9 Except as referenced on Schedule 2.1.11, to the best of Sellers’ knowledge, there have been no environmental investigations, studies, audits, tests, reviews or other analyses (“Environmental Investigations”), the purpose of which was to discover, identify or otherwise characterize the condition of the soil, groundwater, air, or presence of asbestos on the Real Property, and, to the best of Sellers’ knowledge, there were no such Environmental Investigations prior to the execution of this Agreement;

2.1.12 Absence of Certain Changes. Since November 30, 2015, the Public Electric Utility has been operated only in the ordinary course and Sellers has not, with respect to it, had any Material Adverse Effect in its condition (financial or otherwise), assets,


properties or liabilities;

2.1.13 Assets of Public Electric Utility. Except for the Excluded Assets, the Assets constitute all of the assets owned by Sellers and used in connection with the Public Electric Utility;

2.1.14 No Broker’s or Finder’s Fees. No agent, broker, investment banker, Person or firm has acted directly or indirectly on behalf of Sellers in connection with this Agreement or the transaction contemplated herein, and no such Person or Entity is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee or expense, directly or indirectly, in connection with this Agreement or the transaction contemplated herein.

2.1.15 Special Contracts. Except as disclosed on Schedule 1.1.7, there are no Special Contracts in force with customers of Sellers.

2.1.16 Disclosure of Information. To the best of Sellers’ knowledge, all materials and information made available by Sellers to Purchaser in the course of Purchaser’s due diligence and the Schedules attached hereto are complete and accurate in all material respects.

2.1.17 Undisclosed Liabilities. Except as set forth in Schedule 2.1.5, to the best of Sellers’ knowledge, Sellers do not have any liability that would be required to be reflected in its most recent balance sheet in accordance with GAAP or standard utility accounting requirements, if any, (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against or involving the Assets giving rise to any such liability), except for (a) liabilities set forth on the face of the most recent balance sheet; (b) liabilities which have arisen after the most recent fiscal month end in the ordinary course of business (none of which relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law); and (c) liabilities disclosed in this Agreement or in schedules or exhibits hereto.

2.1.18 Condemnation. No governmental body having the power of eminent domain over Sellers’ property has commenced or, to the knowledge of Sellers, threatened, or taken publicly disclosed steps to exercise the power of eminent domain or a similar power with respect to all or any part of Sellers’ property.

2.1.19 Reclassification of Assets. No items of property or other assets reflected in Sellers’ records as of January 31, 2016, has been reclassified from utility plant to non-utility plant or otherwise been reclassified in a manner that would change such item of property from an Asset that is to be sold to Purchaser to an Excluded Asset that is not to be sold to Purchaser, other than the items listed on Schedule 1.2.

2.1.20 Accuracy and Completeness of Representations and Warranties. To the best of Sellers’ knowledge, no representation or warranty made by Sellers in this Agreement or any schedules attached hereto contains or will contain any untrue statement of a material fact, or omits or will omit a material fact necessary to make the statements


contained herein or therein not misleading.

2.1.21 No Other Representations. Sellers are not making any representations or warranties, expressed or implied, of any nature whatsoever except as specifically set forth in this Agreement.

Section 2.2. Representations and Warranties of Purchaser. Purchaser represents and warrants to Sellers that the following statements are true and correct on the date hereof and will be true and correct on the Closing Date as though made on such date.

2.2.1 Organization and Standing. Purchaser is a cooperative corporation duly organized, validly existing and in good standing under the laws of the State of Alaska.

2.2.2 Power and Authority. Purchaser has the corporate power and authority to enter into, execute, and deliver this Agreement and to consummate the transactions contemplated by this Agreement.

2.2.3 Corporate Authorization. All corporate action on the part of Purchaser and its directors necessary for the authorization, execution, delivery and performance by Purchaser of this Agreement and the consummation of the transactions contemplated by this Agreement has been taken or will be taken prior to Closing.

2.2.4 Binding and Enforceable Agreement. Subject to the approval of Purchaser’s Board of Directors, this Agreement has been duly executed and delivered by Purchaser and is a valid and binding agreement of Purchaser, enforceable in accordance with its terms.

2.2.5 Consents. All consents, approvals, qualifications, licenses, orders or authorizations of, or filings with, any governmental authority required in connection with Purchaser’s valid execution, delivery or performance of this Agreement have been obtained, given or made or will, as of the Closing Date, have been obtained, given, or made. No consent, approval or authorization of any party to any agreement or other instrument to which Purchaser is a party is required for the execution, delivery, and performance of this Agreement by Purchaser and the consummation of the transactions contemplated by this Agreement.

2.2.6 No Conflict. Neither the execution and delivery of this Agreement by Purchaser nor the consummation of the transactions contemplated by this Agreement will (a) conflict with or result in a breach of any provision of Purchaser’s articles of incorporation or bylaws, (b) conflict with any existing provision of applicable law or any existing order, rule, regulation, judgment or decree of any court, arbitrator or agency of government, (c) violate, be in conflict with, result in a breach of, or constitute (with or without notice or lapse of time or both) a default under (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, license, agreement or other instrument or obligation to which Purchaser is a party, or by which Purchaser may be bound, except for such default (or right of termination, cancellation or acceleration) as to which


requisite waivers or consents shall either have been obtained by Purchaser prior to Closing or the obtaining of which shall have been waived by Sellers, or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Purchaser.

2.2.7 Litigation and Claims. There is no action, suit, investigation, or litigation pending or, to the knowledge of Purchaser, threatened against Purchaser, that may have a material impact on Purchaser’s authority, power, or ability to execute and deliver this Agreement or to consummate the transactions contemplated by this Agreement.

2.2.8 Accuracy and Completeness of Representations and Warranties. No representation or warranty made by Purchaser in this Agreement contains or will contain any untrue statement of material fact, or omits or will omit a material fact necessary to make the statements contained herein not misleading.

2.2.9 No Broker’s or Finder’s Fees. No agent, broker, investment banker, Person or firm has acted directly or indirectly on behalf of Sellers in connection with this Agreement or the transaction contemplated herein, and no such Person or Entity is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee or expense, directly or indirectly, in connection with this Agreement or the transaction contemplated herein.

2.2.10 Financial Status of Purchaser. Purchaser has the financial capability to purchase and operate the Public Electric Utility in the fashion contemplated by this Agreement, and to provide safe and reliable electric service to the community of Yakutat, Alaska.

2.2.11 No Other Representations. Purchaser is not making any representations or warranties, expressed or implied, of any nature whatsoever except as specifically set forth in this Agreement.

Section 2.3 Survival of Warranties. The terms, covenants, representations and warranties in this Agreement shall survive Closing.

ARTICLE III COVENANTS

Section 3.1 Conduct of Sellers. 3.1.1 Preservation of Public Electric Utility. Sellers shall, until Closing:

3.1.1.1 Maintain the Assets and the Real Property in their present state of repair, order and condition, reasonable wear and tear excepted;


3.1.1.2 Preserve and protect the goodwill and advantageous relationships of Sellers with its customers, suppliers and all other persons having business dealings with Sellers in connection with the Public Electric Utility; 3.1.1.3 Maintain Sellers’ books, accounts and records of the Public Electric Utility in the usual and regular manner, in accordance with Sellers’ past accounting practices, consistently applied and in compliance with GAAP; 3.1.1.4 Preserve and maintain in force all of Sellers’ licenses, permits, registrations, franchises, and bonds used in connection with the Public Electric Utility; and 3.1.1.5 Comply with all laws applicable to the conduct of the Public Electric Utility.

3.1.2 Ordinary Course. Sellers shall conduct the Public Electric Utility business only in the usual, regular and ordinary course, in substantially the same manner as previously conducted, and shall not make any substantial change to its methods of management, purchase, sale, accounting or operation in respect of the Public Electric Utility, or engage in any transaction or activity, enter into or amend any agreement or make any commitment except in the ordinary course of business and consistent with past practice. Without limiting the foregoing and without the prior written consent of Purchaser, Sellers shall not:

3.1.2.1 Become a party to any plan, contract, guaranty, or agreement affecting the Public Electric Utility except as conducted in the ordinary course of business;

3.1.2.2 Sell, mortgage, pledge or encumber or agree to sell, mortgage, pledge or encumber any of the Assets, except as required by the Rural Utility Service;

3.1.2.3 Incur any obligation (contingent or otherwise) or purchase, acquire, transfer, or convey, any material assets or property or enter into any transaction or make or enter into any contract or commitment except in the ordinary course of business; or

3.1.2.4 Do any act or omit to do any act, or permit any act or omission to occur, which will cause a breach of any contract or commitment of Sellers, or modify or amend any Assigned Contract.

3.1.3 Access to Information. Sellers shall give to Purchaser and its accountants, counsel and other representatives reasonable access during normal business hours to the properties, books, records, officers, directors, employees and agents of Sellers relating to the Assets, including Sellers’ accounting firms, and shall furnish promptly to Purchaser, upon written request, (a) a copy of each report, notice, return or other document filed or received by, or on behalf of, Sellers relating to the Assets or the Public Electric Utility and, (b) all other information pertaining to the Assets or the Public Electric Utility.


3.1.4 Sellers agree that from and after Closing, Purchaser will be entitled to possession of copies of all documents, books, records (including Tax records), agreements and financial data relating to the Assets.

3.1.5 Sellers will not take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of Sellers from maintaining the same business relationships with Purchaser after Closing as it maintained with Sellers prior to Closing.

Section 3.2 Conduct of Purchasers. 3.2.1 Preservation of Public Electric Utility. Purchaser shall, from and after Closing:

3.2.1.1 Maintain the Assets in a good state of repair, order and condition, reasonable wear and tear excepted; 3.2.1.2 Not increase the customer, demand and energy rates charged to customers within the Yakutat Borough from that submitted to the RCA in connection with the transfer of CPCN No. 53, for a period of five (5) years from the Closing Date; 3.2.1.3 Each calendar year for the next five (5) calendar years following Closing, expend no less than Two Hundred Fifty Thousand Dollars ($250,000), or five cents (5¢) per kWh sold during that year within the Yakutat Borough, whichever is less, on improving the electric distribution grid system within the Yakutat Borough, including poles, conductors, transformers and the like. The funds expended by the Purchaser under this paragraph will not be included in consideration of any subsequent rate increase; and 3.2.1.4 Operate the Utility, and not sell any of the Assets to a third party, except in the ordinary course of business, for a period of ten (10) years from the Closing Date, except with the express written approval of the Borough, which shall be given at its sole discretion. Any sale occurring after the ten year period shall be subject to the provisions of section 1.4.3, requiring the provision of recovered heat to the specified municipal buildings.

Section 3.3 Agreement to Cooperate. Between the date of this Agreement and the Closing Date, Purchaser and Sellers will (a) cooperate with one another and take all reasonable steps to obtain, as promptly as practicable, all consents, approvals, authorizations, waivers and permits specified in this Agreement, including those from third parties, (b) provide such other reasonably available information and communications to the RCA, the Rural Utilities Service, or any other governmental authority as may be reasonably requested, (c) support and defend the application for transfer of CPCN No. 53 before the RCA, and take no action to negatively affect RCA approval of the transfer, and (d) promptly take or cause to be taken all actions as reasonably appropriate in order to avoid the commencement of a proceeding by any governmental authority or third party to restrain, enjoin or to otherwise prohibit consummation


of the transactions contemplated by this Agreement or to delay the transactions beyond the timeframes set forth in this Agreement or as otherwise agreed to by the Parties.

ARTICLE IV

INDEMNIFICATION

Section 4.1 Indemnification by Sellers. Sellers shall be responsible to Purchaser for, and shall defend, indemnify, and hold Purchaser, including its former, present and future officers, directors, employees, agents, contractors, successors and assigns harmless from and against loss, damage, liability, cost or expense (including, without limitation, judgments, costs of investigation, penalties, fines, reasonable attorneys’ fees, legal expenses, consultants’ fees, consequential damages, indirect damages and lost profits), whether based on strict liability, tort, contract, implied or express warranty, statute, regulation or common law, or otherwise, that shall be suffered by Purchaser, resulting from or relating to:

4.1.1 Claims or demands made by third parties arising or allegedly arising as a result of Sellers’ ownership, management, or conduct of the Public Electric Utility or use of the Assets prior to and including the Closing Date, including without limitation any liabilities for personal injury, property damage, or breach of warranty or other harm relating to products of the Public Electric Utility sold or produced by Sellers prior to and including the Closing Date, or any other liability, obligation or commitment of Sellers (whether known or unknown, fixed or contingent, due or to become due) not expressly assumed by Purchaser under this Agreement, except specifically excluding claims or demands arising or allegedly arising from the existence, use, handling, storage, transportation, treatment, manufacture, release or disposal of any hazardous, toxic or dangerous waste, substance or material defined, listed or regulated under any environmental law, including polychlorinated biphenyls and petroleum products, in or on the Real Property or Assets;

4.1.2 Any breach or alleged breach of any of the representations or warranties of Sellers contained in this Agreement (including, without limitation, any schedule, certificate, exhibit, or other instrument delivered or to be delivered by Sellers pursuant to this Agreement) or failure of Sellers to perform or observe any term of or covenant in this Agreement; or

4.1.3 Claims or demands by those employees who had been employed by Sellers at the Public Electric Utility.

Section 4.2 Indemnification by Purchaser. Purchaser shall be responsible to Sellers for, and shall defend, indemnify, and hold Sellers, including its former, present and future officers, directors, employees, agents, contractors, successors and assigns harmless from and against loss, damage, liability, cost or expense (including, without limitation, judgments, costs of investigation, environmental cleanup or remediation costs, penalties, fines, reasonable attorneys’ fees, legal expenses, consultants’ fees, consequential damages, indirect damages and lost profits), whether based on strict liability, tort, contract, implied or express warranty, statute, regulation or common law, or otherwise, that shall be suffered by Sellers resulting from or relating to:


4.2.1 Claims or demands made by third parties arising or allegedly arising as a result of Purchaser’s ownership, management, or conduct of the Public Electric Utility or use of the Assets after the Closing Date, including without limitation any liabilities for personal injury, property damage, or breach of warranty or other harm relating to products of the Public Electric Utility sold or produced by Purchaser after the Closing Date or any other liability, obligation or commitment of Purchasers (whether known or unknown, fixed or contingent, due or to become due);

4.2.2 any breach or alleged breach of any of the representations or warranties of Purchaser contained in this Agreement (including, without limitation, any schedule, certificate, exhibit or other instrument delivered or to be delivered by Purchaser pursuant to this Agreement) or failure of Purchaser to perform or observe any term of or covenant in this Agreement;

4.2.3 Claims or demands by employees or former employees of Purchaser; or

4.2.4 Claims or demands arising or allegedly arising from the existence, use, handling, storage, transportation, treatment, manufacture, release or disposal of any hazardous, toxic or dangerous waste, substance or material defined, listed or regulated under any environmental law, including polychlorinated biphenyls and petroleum products, regardless of the source, time or occurrence or discovery, in or on the Real Property or Assets, to the extent that the loss, damage, liability, cost or expense allegedly arises from the release or disposal of hazardous materials first disposed or released into the environment after the Closing Date.

ARTICLE V

DUE DILIGENCE

Section 5.1 Due Diligence Review. Purchaser may, at Purchaser’s expense, conduct due diligence inquiries, reviews and investigations into the property, financial status and business operations of Sellers. These inquiries, reviews and investigations may, at the Purchaser’s discretion, include, but are not limited to, the following areas:

5.1.1 Sellers’ documents showing the procedures and authorizations required for Sellers to enter into and close this Agreement, including Sellers’ articles of incorporation, bylaws, shareholder agreements, and similar documents. Sellers shall provide a copy of the resolutions or similar documents authorizing Sellers to enter into this Agreement.

5.1.2 Complete copies of all available past and present financial statements, auditor reports, and auditor’s supplemental statements and notes regarding Sellers.

5.1.3 Sellers’ past, current and future plans for capital improvements and major maintenance for the Public Electric Utility.


5.1.4 Sellers’ interests in real property and personal property subject to this Agreement. Sellers shall provide and make available to Purchaser any existing lists of all such real and personal property known to Sellers and provide and make available for copying all deeds, leases, easements, authorizations, and any current title insurance documentation that Sellers have in their possession.

5.1.5 Sellers’ CPR, if any, mapping and related reports and data (to the extent that these are held by third parties, Sellers will request that they be made available to Purchaser).

5.1.6 Sellers’ real and personal property, facilities, and equipment, including on-sight inspection.

5.1.7 Sellers’ generator set maintenance and overhaul records.

5.1.8 Documents and information regarding current and pending insurance policies, claims, and related matters.

5.1.9 Current contracts and agreements of Sellers.

5.1.10 Environmental issues associated with Sellers’ assets and operations, including but not limited to physical inspection and testing. An environmental audit of Sellers’ assets to include an investigation into Sellers’ compliance with federal, state, and local environmental laws and regulations, including a Phase I and other baseline environmental assessments to determine the level of Hazardous Substances existing on the Real Property prior to the purchase and sale of Assets contemplated by this Agreement. Sellers shall make available all requested documents regarding the environmental compliance of Sellers’ assets and operations, and all communications with federal, state, or local agencies regarding environmental compliance or inspections. Sellers shall disclose any past-asserted violations of Environmental Laws or standards known to Sellers. Purchaser shall provide Sellers, upon receipt, with all reports, data, test results and other information associated with any environmental audit, assessment or investigation performed by or on behalf of Purchaser.

5.1.11 Past, pending, and potential litigation and assessments involving Sellers.

5.1.12 Sellers’ employee job descriptions, terms and conditions of compensation and benefits, and any related contracts, handbooks, or policies.

5.1.13 Any other facts or financial information deemed relevant and material by Purchaser. Section 5.2 Due Diligence Timelines. 5.2.1 Due Diligence Period Start. The due diligence period shall commence five (5) business days after the Effective Date of this Agreement.


5.2.2 Due Diligence Period End. The due diligence period shall end 180 days after the Effective Date of this Agreement.

5.2.3 Return of Documents. Any documents provided by Sellers to Purchaser under this Article,” and any copies thereof made by Purchaser, shall be promptly returned to Sellers or destroyed in the event that the transaction contemplated hereunder does not proceed to Closing, and Purchaser shall use its best efforts to ensure no information that was obtained from Sellers under this Agreement is retained, either in hard copy or electronic format.

Section 5.3 Adjustments.

5.3.1 Adjustments – General/Timelines.

5.3.1.1 Ten (10) business days after the Due Diligence Period ends, Purchaser shall provide to Sellers written notice of any requested adjustments to the price, terms, and conditions of this Agreement, including Purchaser’s right to decline to purchase specific Assets, or to request the removal or remediation of specific Assets. If Purchaser fails to provide a timely notice of requested adjustments to Sellers, Purchaser is bound to close this Agreement without adjustment except as otherwise provided in this Agreement, and Purchaser shall be deemed to have accepted the Assets ‘AS IS/WHERE IS,’ as set forth in Section 1.1. If Purchaser timely provides its notice of requested adjustments to Sellers, Purchaser and Sellers will work together in good faith to attempt to reach agreement regarding Purchaser’s requested adjustments.

5.3.1.2 Ten (10) business days after Purchaser’s notice of request for adjustments, this Agreement shall automatically terminate if the Parties have not (1) amended this Agreement to reflect agreed upon adjustments; or (2) agreed to proceed with this Agreement without adjustments. If this Agreement automatically terminates for this reason, the Deposit shall be returned to Purchaser with no further act required by either Party, and neither Party shall have any further obligation toward, or recourse against, the other.

ARTICLE VI ADDITIONAL CONDITIONS TO OBLIGATIONS OF PURCHASER AND SELLERS

Section 6.1 Conditions to Obligations of Purchaser. Notwithstanding any other provision of this Agreement, the obligation of Purchaser to purchase the Assets and consummate the transactions contemplated hereby is subject to the satisfactions or waiver in writing, on or before the Closing Date, of the following conditions:

6.1.1 Representations and Warranties; Covenants. Sellers shall have performed and complied with all material covenants, obligations and conditions required by this Agreement to be performed or complied with by Sellers prior to or on the Closing Date.


6.1.2 Consents. The parties identified in Section 2.1.4 shall have given their unconditional consent or approval to the extent required in order to transfer the Assets or consummate the transaction contemplated by this Agreement.

6.1.3 Title Insurance on the Real Property. Purchaser, at Purchaser’s sole expense, shall have obtained a policy of title insurance insuring title to the Real Property and demonstrating that Sellers can convey good and marketable title to Purchaser, as contemplated by Section 2.1.5.

6.1.4 Closing Deliveries. Sellers shall have delivered or caused to be delivered the instruments or documents identified in Section 1.7.2.

Section 6.2 Conditions to Obligations of Sellers. Notwithstanding any other provision of this Agreement, the obligation of Sellers to sell the Assets and consummate the transactions contemplated hereby is subject to the satisfaction or waiver in writing, on or before the Closing Date, of the following conditions:

6.2.1 Representations and Warranties; Covenants. Purchaser shall have performed and complied with all material covenants, obligations and conditions required by this Agreement to be performed or complied with by Purchaser prior to or on the Closing Date; and

6.2.2 Payment of Purchase Price. Purchaser shall have delivered to Sellers the full amount of the Purchase Price as set forth in Section 1.4. 6.2.3 Tax Matters. Sellers shall have received an opinion from their tax matter advisor(s) that the purchase and sale contemplated hereunder shall not cause Sellers to incur any federal, state or other tax liabilities. 6.2.4 Consents. The parties identified in Section 2.1.4 shall have given their unconditional consent or approval to the extent required in order to transfer the Assets or consummate the transaction contemplated by this Agreement, with no adverse financial consequences to Sellers.

ARTICLE VII

EFFECTIVE DATE; TERMINATION; WAIVER

Section 7.1 Effective Date. This Agreement shall become effective when it has been signed by authorized representatives of all Parties and has been ratified by Purchaser’s Board of Directors and YPI’s Board of Directors and the City and Borough of Yakutat Assembly (“Assembly”) has ratified the Agreement by resolution or ordinance (“Effective Date”). Once this Agreement becomes effective, it shall remain in effect unless and until it is terminated in accordance with the provisions of this Agreement. This Agreement shall not be deemed to expire or terminate for any reason other than a termination that is expressly provided for in this Agreement.


Section 7.2 Termination. This Agreement may be terminated at any time prior to Closing as set forth in this section: 7.2.1 By mutual written consent executed by the Parties. The refund or forfeiture of the Deposit shall be addressed in the written consent;

7.2.2 By Purchaser, if (1) any of Sellers’ representations or warranties is materially inaccurate or becomes materially inaccurate; (2) Sellers fail to take such actions necessary to render the representation or warranty accurate and correct (excluding revision of the representation or warranty) within thirty (30) days following receipt by Sellers of written notice of such inaccuracy; and (3) the inaccuracy can reasonably be anticipated to result in a Material Adverse Effect on the Assets or a Material Adverse Effect on the ability of Sellers or Purchaser to consummate the transaction contemplated herein. If this Agreement terminates pursuant to this subsection, the Deposit shall be returned to Purchaser, Sellers shall pay to Purchaser the amount of $30,000 as liquidated damages, and neither Purchaser nor Sellers will have any further obligation or liability toward or recourse against the other and Purchaser shall have no further interest in or right to the Assets;

7.2.3 By Sellers, if (1) any of Purchaser’s representations or warranties is materially inaccurate or becomes materially inaccurate; (2) Purchaser fails to take such actions necessary to render the representation or warranty accurate and correct (excluding revision of the representation or warranty) within thirty (30) days following receipt by Purchaser of written notice of such inaccuracy; and (3) the inaccuracy can reasonably be anticipated to result in a Material Adverse Effect on the Assets or a Material Adverse Effect on the ability of Sellers or Purchaser to consummate the transaction contemplated herein. If this Agreement terminates pursuant to this subsection, the Deposit shall be retained by Sellers as liquidated damages, and neither Purchaser nor Sellers will have any further obligation or liability to or recourse against the other, and Purchaser shall have no further interest in or right to the Assets;

7.2.4 By Purchaser, if (1) Sellers materially breach any covenant or obligation in this Agreement; and (2) Sellers fail to cure such breach within thirty (30) days following receipt by Sellers of written notice of such breach. If this Agreement terminates pursuant to this subsection, then the Deposit shall be returned to Purchaser, Sellers shall pay to Purchaser the amount of $30,000 as liquidated damages, and neither Purchaser nor Sellers will have any further obligation or liability toward or recourse against the other and Purchaser shall have no further interest in or right to the Assets;

7.2.5 By Sellers, if (1) Purchaser materially breaches any covenant or obligation in this Agreement; and (2) Purchaser fails to cure such breach within thirty (30) days following receipt by Purchaser of written notice of such breach. If this Agreement terminates pursuant to this subsection, then the Deposit shall be retained by Sellers as liquidated damages, neither Purchaser nor Sellers will have any further obligation or liability to or recourse against the other, and Purchaser shall have no further interest in or right to the Assets;


7.2.6 Automatically, if in accordance with Section 5.3, Purchaser timely requests adjustments to the price, terms, or conditions of this Agreement following Purchaser’s Due Diligence review and, within ten (10) business days after Purchaser’s request the Parties have not amended this Agreement to reflect agreed upon adjustments or agreed to proceed with this Agreement without adjustments. If this Agreement terminates pursuant this subsection, the Deposit shall be returned to Purchaser, neither Purchaser nor Sellers will have any further obligation or liability toward or recourse against the other, and Purchaser shall have no further interest in or right to the Assets;

7.2.7 Automatically, if the RCA issues a final order (prior to and not including any appeal to Superior Court) denying the transfer of CPCN No. 53 to Purchaser, or imposing conditions on the transfer that have a Material Adverse Effect on Purchaser or Sellers, and within ten (10) business days after issuance of the order the Parties have not agreed to appeal the order to Superior Court or agreed to proceed to Closing despite the RCA’s imposition of conditions on its approval, then this Agreement will terminate. If this Agreement terminates pursuant to this subsection, the Deposit shall be returned to Purchaser, neither Purchaser nor Sellers will have any further obligation or liability toward or recourse against the other, and Purchaser shall have no further interest in or right to the Assets;

7.2.8 By Purchaser or Sellers if any governmental authority (other than Sellers or Seller’s governing authorities) shall have enacted, issued, promulgated, enforced or entered any law, regulation or order (whether temporary, preliminary or permanent) that is in effect and has the effect of making the consummation of the transactions contemplated hereby illegal or otherwise prohibiting consummation of such transactions for any reason. If this Agreement terminates pursuant this subsection, the Deposit shall be returned to Purchaser, neither Purchaser nor Sellers will have any further obligation or liability toward or recourse against the other, and Purchaser shall have no further interest in or right to the Assets; and

7.2.9 Except as otherwise set out herein, if the purchase is not Closed: (a) by Purchaser within the specified time due to Purchaser’s default, the Deposit shall be retained by the Sellers as liquidated damages, and neither Purchaser nor Sellers will have any further obligation or liability to or recourse against the other, and Purchaser shall have no further interest in or right to the Assets; or (b) by Sellers within the specified time due to Sellers’ default, the Deposit shall be returned to Purchaser, Sellers shall pay to Purchaser the amount of $30,000 as liquidated damages, and neither Purchaser nor Sellers will have any further obligation or liability toward or recourse against the other and Purchaser shall have no further interest in or right to the Assets.

Section 7.3 Extension; Waiver. At any time prior to the Closing Date, the Parties may (a) extend the time for the performance of any of the obligations or other acts of any other Party; (b) waive any inaccuracies in the representations and warranties contained herein or in any document, certificate or writing delivered pursuant hereto; or (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of any Party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party.


ARTICLE VIII SPECIFIC PERFORMANCE/ATTORNEY FEES

Section 8.1 Specific Performance. In the event of any actual or threatened default in, or breach of, this Agreement, the Party who is, or is to be, thereby aggrieved shall have the right to specific performance under this Agreement in lieu of termination. Section 8.2 Attorney fees. In a suit, action or appeal therefrom to enforce this Agreement, or to interpret this Agreement, the prevailing Party or Parties shall be entitled to recover the costs incurred therein, including reasonable attorneys’ fees, as may be established by the appropriate judiciary at trial or on appeal.

ARTICLE IX

MISCELLANEOUS

Section 9.1 Further Assurances. Sellers and Purchaser shall execute and deliver to the other, at Closing or thereafter, any other instrument not otherwise inconsistent with this Agreement which may be requested by the other and which is reasonably appropriate to perfect or evidence any of the sales, assignments, transfers or conveyances contemplated by this Agreement or to obtain any consents or licenses necessary for Purchaser to operate the Assets in the manner operated by Sellers prior to Closing.

Section 9.2 Risk of Loss. This Section applies to losses arising from fire, storm, earthquake, act of God, or other casualty affecting the Assets (collectively, “Casualty Losses”). The risk of Casualty Losses shall remain with Sellers until Closing. In the event of a Casualty Loss that will have a Materially Adverse Effect on the Assets or the operability of the Public Electric Utility, Purchaser may terminate this Agreement upon written notice to the other Parties. If this Agreement terminates pursuant to this subsection, the Deposit shall be returned to Purchaser, neither Purchaser nor Sellers will have any further obligation or liability toward or recourse against the other, and Purchaser shall have no further interest in or right to the Assets.

Section 9.3 Amendment and Modification. Except as otherwise provided in this Agreement, this Agreement may be amended, modified or supplemented only by written agreement of the Parties.

Section 9.4 Written Waivers; Consents. Any failure of Purchaser or Sellers to comply with any obligation, covenant, agreement or condition herein may be waived by Sellers or Purchaser, respectively, 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 shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any Party hereto, such consent shall be given in writing.

Section 9.5 Notices. All notices and other communications hereunder shall be in writing and shall be effective when delivered in person, by electronic mail, by an overnight


express delivery service (e.g., Federal Express) or by registered or certified mail (postage prepaid, return receipt requested) to the other Party at the addresses listed below (or at such other address for a Party as shall be specified by like notice; provided that notices of a change of address shall be effective only upon receipt thereof):

If to Sellers, to: CITY AND BOROUGH OF YAKUTAT P.O. Box 160

Yakutat, AK 99689 ATTN: Jon Erickson, Borough Manager [email protected]

and YAKUTAT POWER, INC. P.O. Box 160 Yakutat, AK 99689 With a copy to: Brennan & Heideman

619 East Ship Avenue, Suite 310 Anchorage, Alaska 99501

Attention: Sara Heideman [email protected]

If to Purchaser, to: ALASKA VILLAGE ELECTRIC COOPERATIVE, INC.

4831 Eagle Street Anchorage, Alaska 99503 Attention: Meera Kohler, Chief Executive Officer [email protected]

With a copy to: Kemppel, Huffman and Ellis, P.C. 255 Fireweed Lane, Suite 200 Anchorage, Alaska 99503

Attention: Dean Thompson [email protected]

Section 9.6 Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Except as is otherwise provided herein, neither this Agreement nor any of the rights, interests, or obligations hereunder shall be assigned by either of the Parties without the prior written consent of the other Party.

mailto:[email protected]

mailto:[email protected]


Section 9.7 Choice of Law, Jurisdiction, and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Alaska, without giving effect to conflict of law provisions. Jurisdiction and venue for filing any lawsuits concerning this Agreement shall be in the Superior Court for the State of Alaska, Third Judicial District, at Anchorage, and all Parties hereby consent to such jurisdiction and venue.

Section 9.8 There is no Section 9.8.

Section 9.9 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall together constitute one and the same Agreement, binding the Parties hereto, notwithstanding that the Parties are not signatory to the original or to the same counterpart. Delivery of a photocopy, facsimile copy, or scanned copy of a signed original of this Agreement or any other documents referred to herein shall be treated the same as delivery of the original.

Section 9.10 Interpretation. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties, and shall not in any way affect the meaning or interpretation of this Agreement.

Section 9.11 Entire Agreement. This Agreement, including the exhibits and schedules hereto, and the instruments and schedules referred to herein, embody the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the Parties with respect to such subject matter hereof.

Section 9.12 Transaction Expenses. Except as otherwise provided in this Agreement, each Party agrees to pay its own attorney’s and consultant’s fees and costs associated with documenting, securing all required approvals and Closing the transaction described in this agreement.

Section 9.13 No Third Party Beneficiaries. No Person or Entity other than Sellers and Purchaser and their respective successors and permitted assigns shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of any provision of this Agreement or in reliance hereon.

Section 9.14 Severability. In the event that this Agreement, or any of its provisions, or the performance of any provision, is found to be illegal or unenforceable under applicable law now or hereafter in effect, the Parties shall be excused from performance of such portions of this Agreement as shall be found to be illegal or unenforceable under the applicable laws or regulations without affecting the validity of the remaining provisions of the Agreement; provided that the remaining provisions of the Agreement shall in their totality constitute a commercially reasonable agreement. Nothing herein shall be construed as a waiver of any Party’s right to challenge the validity of such law.


Section 9.15 Time is of the Essence. With regard to all time periods set forth or referred to in this Agreement, time is of the essence.

Section 9.16 Independent Counsel. Each Party has had the opportunity to consult with its own attorney with respect to this Agreement, and in the event that any language contained herein is construed to be vague or ambiguous, this Agreement shall not be strictly construed against any Party.


Section 9.17 Attachments, Schedules, and Exhibits. The following attachments, schedules, and exhibits are attached to and form an integral part of this Agreement and as set forth in this Agreement are to be completed prior to or on the Closing Date:

Attachment A Definitions

Schedule 1.1.2 Customer Contracts, Deposits and Accounts Receivables

Schedule 1.1.3 Electric Generation and Distribution Systems

Schedule 1.1.4 Fuel Storage Facilities

Schedule 1.1.5 Equipment, Machinery, Tools, Motor Vehicles and Rolling Stock, Materials, Supplies, Furnishings, Fixtures, Etc.

Schedule 1.1.7 Assigned Contracts

Schedule 1.1.11 Easements, Licenses, Rights-Of-Way, Permits, Operating Rights And Franchises

Schedule 1.1.12 Real Property

Schedule 1.2 Excluded Assets*

Schedule 1.6.1 Employee Salary and Wage Rates

Exhibit 1.7.2.1 Bill of Sale

Exhibit 1.7.2.2 Assignment and Assumption Agreement of Assigned Contracts and Operating Rights

Exhibit 1.7.2.5 Assignment and Assumption Agreement of Assigned Land Use Rights

Exhibit 1.7.2.6 Assignment and Assumption Agreement Regarding Customer Contracts, Deposits and Accounts Receivable

Schedule 2.1.5 Mortgages, Liens, Pledges, Charges, Encumbrances, Equities, and Claims Against Assets

Schedule 2.1.11 Disclosures related to Hazardous Substances on the Real Property and Environmental Investigations Regarding the Real Property

* To be Completed by Sellers prior to the Parties’ Execution of this Agreement, and updated prior to Closing, as set out in previous paragraphs.

The Parties hereto have executed this Agreement as of the dates set forth below.


ALASKA VILLAGE ELECTRIC COOPERATIVE, INC. By: ________________________________ Meera Kohler Its: President and Chief Executive Officer Date: _______________________________ CITY AND BOROUGH OF YAKUTAT By: Its: Date: _______________________________ YAKUTAT POWER, INC. By: Its: Date: _______________________________


ATTACHMENT A

DEFINITIONS

For the purposes of this Agreement, the following terms shall have the meanings

specified or referred to below when capitalized (or if not capitalized, unless the context clearly requires otherwise) when used in this Agreement.

“Accounts Receivable” is defined in Section 1.1.2. “Assets” is defined in Section 1.1. “Assigned Contracts” is defined in Section 1.1.7. “Casualty Losses” is defined in Section 9.2. “Closing” means, unless otherwise stated, upon the prior completion of the required

information exchange between the Parties, including the completion and acceptance of the Schedules attached hereto; the execution of all documents including those substantially similar to the Exhibits attached hereto, together with the payment of the stated purchase price, as is necessary to effect the transfer and sale of the Assets as contemplated in this Agreement.

“Closing Date” means the date provided for in Section 1.7.1. “CPCN” means a certificate of public convenience and necessity issued by the RCA. “CPRs” means continuing property records. “Customer Contracts” is defined in Section 1.1.2. “Due Diligence Period” is the period during which Purchaser may conduct its due

diligence review, as described in Section 5. “Effective Date” is defined in Section 7.1. “Entity” means any corporation (including any non-profit corporation), limited liability

company, general partnership, limited partnership, joint venture, joint stock association, estate, trust, cooperative, foundation, union, syndicate, league, consortium, coalition, committee, society, firm, company or other enterprise, association, organization or Entity of any nature, other than a governmental authority.

“Environmental Laws” means any and all applicable laws, rules, or regulations, in effect

as of the Closing Date of any applicable governmental authority that relate to health, the environment or a community’s right to know.


“Environmental Investigations” are defined in Section 2.1.11.9. “Excluded Assets” are defined in Section 1.2. “Fuel Inventory” is defined in Section 1.1.9. “GAAP” means generally accepted accounting principles as in effect in the United

States of America, consistently applied. As applied to Sellers, GAAP means those accounting principles and practices (a) which are recognized as such by the Financial Accounting Standards Board, (b) which are applied for all periods in a manner consistent with the manner in which such principles and practices were applied to the most recent audited financial statements of Sellers furnished to Purchaser, and (c) which are consistently applied for all periods.

“Hazardous Substances” are defined in Section 2.1.11.2. “Initial Hire Period” is defined in Section 1.6.3.1. “Material Adverse Effect” means: any adverse effect that, as applicable: (1) exceeds

$25,000 individually, or $50,000 in the aggregate; (2) makes it legally impossible for the indicated Party to transfer or receive the Assets at issue or consummate any transactions contemplated in this Agreement, the net book value of which Assets or transactions exceeds $10,000 individually, or $30,000 in the aggregate; or (3) requires the indicated Party to expend more than what is reasonably expected to be $10,000 individually, or $30,000 in the aggregate, to make it legally possible to transfer or receive the Assets at issue or consummate the transactions contemplated in this Agreement.

“PCE” means State of Alaska Power Cost Equalization. See Section 1.1.2. “Person” means any individual, Entity or governmental authority. “Public Electric Utility” is defined in the Recitals. “RCA” means the Regulatory Commission of Alaska. “Real Property” is defined in Section 1.1.12. “Special Contract” means a contract for public utility service between Sellers and one of

Sellers’ customer that satisfies the definitions set forth in 3 AAC 48.820(36)(A) and (B).


Schedule 1.1.2

Customer Contracts, Deposits and Accounts Receivable

1. Attached FAA Utility Service Application and pre-payment deposit of $288,637.40

2. Attached listing of Customer Deposits, as of January 31, 2016

3. Attached listing of Accounts Receivable, as of January 31, 2016


Schedule 1.1.3

Electric Generation and Distribution Systems


Schedule 1.1.4 Fuel Storage Facilities


Schedule 1.1.5

Equipment, Machinery, Tools, Motor Vehicles and Rolling Stock, Supplies, Furnishings, Fixtures, etc.

See Attached.


Schedule 1.1.7

Assigned Contracts

1995 Agreement for Joint Use of Electric System Poles

October 6, 2015 CBY/Delta Western Agreement

September 27, 1990 Lease between Yakutat Power, Inc. and the City of Yakutat


Schedule 1.1.11

Easements, Licenses, Rights-Of-Way, Permits, Operating Rights And Franchises

See Attached


Schedule 1.1.12

Real Property

Tract A of the South Addition, Yakutat Alaska Subdivision, per Plat 579, page 4, recorded on April 1, 1970 in the records of the Juneau Recording District.


Schedule 1.2

Excluded Assets

See attached


Schedule 1.6.1

Employee Salary and Wage Rates


Exhibit 1.7.2.1

Bill of Sale

THIS BILL OF SALE (“Bill of Sale”) is being executed and delivered by [CITY AND BOROUGH OF YAKUTAT or YAKUTAT POWER, INC.] (“Seller”), pursuant to that certain Electric Utility Asset Purchase and Sale Agreement (the “Agreement”) dated as of ______________, 2015, by and between Seller, [CITY AND BOROUGH OF YAKUTAT or YAKUTAT POWER, INC.] and ALASKA VILLAGE ELECTRIC COOPERATIVE, INC. (“Purchaser”), an Alaska cooperative corporation.

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, Sellers does hereby transfer, convey, and assign to Purchaser all of Sellers’ right, title and interest in and to the items described in Section 1.1.3, Schedule 1.1.3, Section 1.1.4, Schedule 1.1.4, Section 1.1.5, Schedule 1.1.5, and Section 1.1.9 of the Agreement (hereinafter “Assets”).

TO HAVE AND TO HOLD said Assets unto Purchaser, Purchaser’s representatives, successors, and assigns, to and for its or their uses forever. Seller hereby represents and warrants it has good and marketable title to all such Assets and has the right to transfer its interest in such Assets, and Seller will defend such title and right against all lawful claims and demands of any person or persons whomsoever. Purchaser acknowledges that the Assets are sold “as is” and “where is”, in their present condition and with all faults. Purchaser acknowledges that Sellers are making no guaranty, warranty or representation, express or implied, as to the kind, size, quality, description, or condition of any of the Assets or their fitness for any use or purpose. Purchaser agrees that it has had full opportunity to inspect and evaluate the Assets and to have experts of its choice inspect the Assets prior to the sale. Purchaser agrees that it has not relied upon any representations of Sellers to induce Purchaser to purchase the Assets.

To the extent there is a conflict between the terms and provisions of this Bill of Sale and the Agreement, the terms and provisions of the Agreement will govern.

IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed effective as of this ___ day of ________________, 2016.

[CITY AND BOROUGH OF YAKUTAT or YAKUTAT POWER, INC.]

By: Its: Date: _______________________________ [NOTARY]


ALASKA VILLAGE ELECTRIC COOPERATIVE, INC. By: ________________________________ Meera Kohler Its: President and Chief Executive Officer Date: _______________________________


Exhibit 1.7.2.2

Assignment and Assumption Agreement Regarding Assigned Contracts and Assigned Operating Rights

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (“Assignment and

Assumption”) is entered into as of __________________, 2016, by and between ALASKA VILLAGE ELECTRIC COOPERATIVE, INC., an Alaska cooperative corporation (“Assignee”), and [CITY AND BOROUGH OF YAKUTAT or YAKUTAT POWER, INC.], [an Alaska municipal corporation or an Alaska Corporation] (“Assignor”), pursuant to the Electric Utility Asset Purchase and Sale Agreement dated ____________________, 2016, by and between Assignor and Assignee (“Agreement”). Capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Agreement.

For good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged, Assignor and Assignee hereby agree as follows:

Section 1.a. Assignment of Contracts. Subject to the terms and conditions of the Agreement, Assignor does hereby assign, grant, transfer and set over unto Assignee all of Assignor’s rights, benefits, privileges, causes of action and remedies under all of the Assigned Contracts referenced in Section 1.1, and more specifically identified on Schedule 1.1.7 of the Agreement together with such other rights, causes of action and remedies as may arise by operation of law, in law or equity, in connection with any of such Assigned Contracts to the extent that such other rights, causes of action and remedies address liabilities and obligations assumed by Assignee under Section 2 below.

Section 1.b. Assignment of Licenses, Permits, Operating Rights and

Franchises. Subject to the terms and conditions of the Agreement, Assignor does hereby assign, grant, transfer and set over unto Assignee all of Assignor’s rights, benefits, privileges, causes of action and remedies under all of Assignor’s licenses, permits, operating rights, and franchises held or used by Assignor in connection with the Public Electric Utility and the operation of the Assets (“Assigned Operating Rights”) referenced in Section 1.1, and more specifically identified on Schedule 1.1.11 of the Agreement, together with such other rights, causes of action and remedies as may arise by operation of law, in law or equity, in connection with any of such Assigned Operating Rights.

Section 2. Assumption. Subject to the terms and conditions of the

Agreement, Assignee hereby accepts the assignment in Section 1.a. and 1.b. hereof and, from and after the date hereof, will assume, perform, and discharge all of the Assumed Liabilities and obligations arising under each of the Assigned Contracts and Assigned Operating Rights as provided in Section 1.3.1 of the Agreement, to the extent that such liabilities and obligations arise or accrue after the Closing Date, and will indemnify and hold Assignor harmless from such assumed liabilities and obligations.


Section 3. No Amendment. This Assignment and Assumption shall not alter, modify or amend the terms of the Assigned Contracts or Assigned Operating Rights in any respect, nor shall it subject Assignee to any greater liabilities, obligations or duties in connection therewith than would have been enforceable against Assignor in the event no Assignment and Assumption had occurred.

Section 4. Binding Effect. This Assignment and Assumption shall be binding upon and shall inure to the benefit of the Parties thereto and their respective successors and assigns.

Section 5. Governing Law. This Assignment and Assumption shall be

governed by and interpreted in accordance with the laws of the State of Alaska. Section 6. Conflicts. To the extent there is a conflict between the terms

and provisions of this Assignment and Assumption and the Agreement, the Agreement will govern.

The Parties have executed this Assignment and Assumption as of the date first

written above.

[CITY AND BOROUGH OF YAKUTAT or YAKUTAT POWER, INC.] (Assignor)

By: Its:

[NOTARY]

ALASKA VILLAGE ELECTRIC COOPERATIVE, INC. (Assignee) By: ________________________________ Its: [NOTARY]


Exhibit 1.7.2.5

Assignment and Assumption Agreement Regarding Assigned Land Use Rights


Assumption”) is entered into as of __________________, 2016, by and between ALASKA VILLAGE ELECTRIC COOPERATIVE, INC., an Alaska cooperative corporation (“Assignee”), and [CITY AND BOROUGH OF YAKUTAT or YAKUTAT POWER, INC.], [an Alaska municipal corporation or an Alaska Corporation] (“Assignor”), pursuant to the Electric Utility Asset Purchase and Sale Agreement dated ____________________, 2016, by and between Assignor and Assignee (“Agreement”). Capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Agreement.



Section 1. Assignment of Land Use Rights. Subject to the terms and conditions of the Agreement, Assignor does hereby assign, grant, transfer and set over unto Assignee all of Assignor’s rights, benefits, privileges, causes of action and remedies under all of the land use easements, licenses, rights-of-way, permits, franchises, access agreements, authorizations and other land rights, whether or not recorded, referenced in Section 1.1.11 of the Agreement (the “Assigned Land Use Rights”), and more specifically identified in Schedule 1.1.11 of the Agreement together with such other rights, causes of action and remedies as may arise by operation of law, in law or equity, in connection with any of such Assigned Land Use Rights to the extent that such other rights, causes of action and remedies address liabilities and obligations assumed by Assignee under Section 2 below.


Agreement, Assignee hereby accepts the assignment in Section 1 hereof and, from and after the date hereof, will assume, perform, and discharge all of the Assumed Liabilities and obligations arising under each of the Assigned Land Use Rights as provided in Section 1.3.1 of the Agreement, to the extent that such liabilities and obligations arise or accrue after the Closing Date, and will indemnify and hold Assignor harmless from such assumed liabilities and obligations.

Section 3. No Amendment. This Assignment and Assumption shall not

alter, modify or amend the terms of the Assigned Land Use Rights in any respect, nor shall it subject Assignee to any greater liabilities, obligations or duties in connection therewith than would have been enforceable against Assignor in the event no Assignment and Assumption had occurred.







written above.


By: Its:

[NOTARY]

ALASKA VILLAGE ELECTRIC COOPERATIVE, INC. (Assignee) By: ________________________________ Its:

[NOTARY]


Exhibit 1.7.2.6

Assignment and Assumption Agreement Regarding Customer Contracts, Deposits and Accounts Receivable


Assumption”) is entered into as of __________________, 2016, by and between ALASKA VILLAGE ELECTRIC COOPERATIVE, INC., an Alaska cooperative corporation (“Assignee”), and [CITY AND BOROUGH OF YAKUTAT or YAKUTAT POWER, INC.], [an Alaska municipal corporation or an Alaska Corporation] (“Assignor”), pursuant to the Electric Utility Asset Purchase and Sale Agreement dated as of ____________________, 2016, by and between Assignor and Assignee (“Agreement”). Capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Agreement.



Section 1. Assignment of Accounts Receivable. Subject to the terms and conditions of the Agreement, Assignor does hereby assign, grant, transfer and set over unto Assignee all of Assignor’s rights, benefits, privileges, causes of action and remedies regarding all Customer Contracts, customer deposits and the Accounts Receivable referenced in Section 1.1.2 of the Agreement, including but not limited to amounts receivable for sales of electricity, heat, service work, pro-rated amounts due under annual pole rental agreements, contributions-in-aid-of-construction, any deferred payment arrangements, amounts receivable from the State of Alaska Power Cost Equalization program, any amounts receivable from employees and vendors, including deposits held by vendors for the benefit of Assignor, together with such other rights, causes of action and remedies as may arise by operation of law, in law or equity, in connection with any of such Accounts Receivable to the extent that such other rights, causes of action and remedies address liabilities and obligations assumed by Assignee under Section 2 below.


Agreement, Assignee hereby accepts the assignment in Section 1 hereof and, from and after the date hereof, will assume, perform, and discharge all of the Assumed Liabilities and obligations arising under each of the Accounts Receivable as provided in Section 1.3.1 of the Agreement, to the extent that such liabilities and obligations arise or accrue after the Closing Date, and will indemnify and hold Assignor harmless from such assumed liabilities and obligations.

Section 3. No Amendment. This Assignment and Assumption shall not

alter, modify or amend the terms of the Accounts Receivable in any respect, nor shall it subject Assignee to any greater liabilities, obligations or duties in connection therewith than would have been enforceable against Assignor in the event no Assignment and Assumption had occurred.






Section 7. No Guarantees. Assignor does not make, and is not making,

any representations or guarantees regarding the collectability or enforceability of any accounts assigned hereunder.


written above.


By: Its:

[NOTARY]

ALASKA VILLAGE ELECTRIC COOPERATIVE, INC. (Assignee) By: ________________________________ Its:

[NOTARY]


Schedule 2.1.5

Mortgages, liens, pledges, charges, encumbrances, equities, and claims against Assets


Schedule 2.1.11

Disclosures regarding Hazardous Substances on the Real Property and Environmental Investigations Regarding the Real Property

1. There is an odor of fuel in the area under and adjacent to the older fuel tanks located on the Yakutat Power parcel. 2. See attached October 12, 2005 letter from the U.S. Environmental Protection Agency. 3. See attached November 3, 2015 Compliance Letter and Full Compliance Evaluation from the State of Alaska, Department of Environmental Conservation.

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