Exhibit 10(I)
[EXECUTION COPY]
________________________________________________________________________________
ASSET SALE AGREEMENT
BETWEEN
NEVADA POWER COMPANY
AND
PINNACLE WEST ENERGY CORPORATION
FOR
THE XXXXX XXXXX ASSET BUNDLE
December 1, 2000
________________________________________________________________________________
ASSET SALE AGREEMENT
ASSET SALE AGREEMENT, dated as of December 1, 2000 (the "Agreement"),
between Nevada Power Company, a Nevada corporation (the "Seller"), and Pinnacle
West Energy Corporation, an Arizona corporation (the "Buyer").
WHEREAS, the Seller owns and operates the "Purchased Assets" (as
defined herein); and
WHEREAS, the Buyer desires to purchase and assume from the Seller, and
the Seller desires to sell to the Buyer, the Purchased Assets and certain
associated liabilities upon the terms and conditions hereinafter set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
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DEFINITIONS
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1.1 Definitions. As used in this Agreement, the following terms have
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the meanings specified or referred to in this Section 1.1:
(1) "Adjustment Amount" shall have the meaning set forth in Section
3.2(a) hereof.
(2) "Adjustment Statement" shall have the meaning set forth in
Section 3.2(a) hereof.
(3) "Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(4) "Agreement" means the Asset Sale Agreement, dated December 1,
2000, together with the Schedules and Exhibits thereto.
(5) "Ancillary Agreements" means the Interconnection Agreement, the
Transition Power Purchase Agreement, the Operating Easement Agreements and the
Water Supply Agreement.
(6) "Assignment of Leases" means the Assignment of Leases in the form
of Exhibit A hereto.
(7) "Assumed Liabilities" shall have the meaning set forth in Section
2.3 hereof.
(8) "Benefit Plans" shall have the meaning set forth in Section
2.4(i) hereof.
(9) "Benefit Plans of Buyer" shall have the meaning set forth in
Section 7.11(d) hereof.
(10) "Xxxx of Sale" means the Xxxx of Sale to be delivered at the
Closing with respect to the Purchased Assets which constitute personal property
and which are to be transferred at the Closing, substantially in the form of
Exhibit B hereto.
(11) "Business Day" means any day other than Saturday, Sunday and any
day which is a legal holiday or a day on which banking institutions in the State
of New York are authorized by law or other governmental action to close.
(12) "Buyer" shall have the meaning set forth in the preface hereto.
(13) "Buyer Representatives" means the Buyer's accountants, counsel,
environmental consultants, financial advisors and other authorized
representatives.
(14) "Buyer Required Regulatory Approvals" shall have the meaning set
forth in Section 6.3(b) hereof.
(15) "Buyer's Easements" shall have the meaning set forth in Section
4.3(f) hereof.
(16) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. (S)9601, et seq., as amended.
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(17) "Closing" shall have the meaning set forth in Section 4.1 hereof.
(18) "Closing Date" shall have the meaning set forth in Section 4.1
hereof.
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(19) "COBRA" means the Consolidated Omnibus Reconciliation Act of
1985, as amended.
(20) "Code" means the Internal Revenue Code of 1986, as amended.
(21) "Collective Bargaining Agreements" shall have the meaning set
forth in Section 7.11(a) hereof.
(22) "Confidentiality Agreement" means the Confidentiality and Auction
Protocols Agreement, dated March 1, 2000, between the Seller and the Buyer.
(23) "CPUC" means the California Public Utility Commission or any
successor thereto.
(24) "CSFB" shall have the meaning set forth in Section 7.7 hereof.
(25) "Direct Claim" shall have the meaning set forth in Section 9.2(c)
hereof.
(26) "Dispute" shall have the meaning set forth in Section 11.6
hereof.
(27) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and charges
of any kind.
(28) "Environmental Laws" means all federal, state and local laws,
regulations, rules, ordinances, codes, decrees, judgments, directives, or
judicial or administrative orders relating to pollution or protection of the
environment, natural resources or human health and safety, including, without
limitation, laws relating to Releases or threatened Releases of Hazardous
Substances (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances, laws relating to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances, and laws relating to the management and use of natural resources.
(29) "Environmental Permits" shall have the meaning set forth in
Section 5.12(a) hereof.
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(30) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(31) "ERISA Affiliate" shall have the meaning set forth in Section
2.4(i) hereof.
(32) "ERISA Affiliate Plans" shall have the meaning set forth in
Section 2.4(i) hereof.
(33) "Estimated Adjustment Amount" means (i) the Estimated Maintenance
and Capital Expenditures Amount plus (ii) the Estimated Inventory Adjustment
Amount plus (iii) the Estimated Materials and Supplies Adjustment Amount.
(34) "Estimated Inventory Adjustment Amount" means the book value, as
determined by an independent evaluator designated by the Seller and approved by
the Buyer, which approval shall not be unreasonably withheld, of the fuel
inventory priced as the Seller's weighted average fuel costs used at or in
connection with the Purchased Assets as of the date that is ten (10) days before
the Closing Date, which valuation shall be provided to the Buyer by the Seller
no later than five (5) days before the Closing Date.
(35) "Estimated Maintenance and Capital Expenditures Amount" means the
Seller's estimate of the Maintenance and Capital Expenditures Amount, which
estimate shall be the Seller's good faith reasonable estimate of the Maintenance
and Capital Expenditures Amount actually incurred, as set forth in Schedule
1.1(35) attached hereto as of the date set forth in such Schedule 1.1(35).
(36) "Estimated Materials and Supplies Adjustment Amount" means the
Seller's good faith reasonable estimate of the book value of materials and
supplies used at or in connection with the Purchased Assets on the Materials and
Supplies Valuation Date.
(37) "Estimated Purchase Price" shall have the meaning set forth in
Section 4.2 hereof.
(38) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(39) "Excluded Assets" shall have the meaning set forth in Section 2.2
hereof.
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(40) "Excluded Liabilities" shall have the meaning set forth in
Section 2.4 hereof.
(41) "Federal Power Act" means the Federal Power Act of 1935, as
amended.
(42) "FERC" means the Federal Energy Regulatory Commission or any
successor thereto.
(43) "Final Order" shall have the meaning set forth in Section 8.1(c)
hereof.
(44) "Governmental Authority" means any executive, legislative,
judicial, regulatory or administrative agency, body, commission, department,
board, court, tribunal, arbitrating body or authority of the United States or
any foreign country, or any state, local or other governmental subdivision
thereof.
(45) "Xxxxx Xxxxx Station" means the Xxxxx Xxxxx generating station
located in Xxxxx County, Nevada.
(46) "Hazardous Substances" means (i) any petrochemical or petroleum
products, oil or coal ash, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may contain
levels of polychlorinated biphenyls; (ii) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "restricted hazardous materials," "extremely
hazardous substances," "toxic substances," "contaminants" or "pollutants" or
words of similar meaning and regulatory effect; or (iii) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any applicable Environmental Law.
(47) "Holding Company Act" means the Public Utility Holding Company
Act of 1935, as amended.
(48) "Hourly Employees" shall have the meaning set forth in Section
7.11(a) hereof.
(49) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
(50) "Income Tax" means any federal, state, local or foreign Tax (i)
based upon, measured by or calculated with respect to net income, profits or
receipts (including, without limitation, capital gains Taxes and minimum Taxes)
or (ii) based
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upon, measured by or calculated with respect to multiple bases (including,
without limitation, corporate franchise taxes) if one or more of the bases on
which such Tax may be based, measured by or calculated with respect to, is
described in clause (i), in each case together with any interest, penalties, or
additions to such Tax.
(51) "Indemnifiable Losses" shall have the meaning set forth in
Section 9.1(a) hereof.
(52) "Indemnifying Party" shall have the meaning set forth in Section
9.1(c) hereof.
(53) "Indemnitee" shall have the meaning set forth in Section 9.1(c)
hereof.
(54) "Indenture" means Indenture of Mortgage and Deed of Trust dated
as of October 1, 1953, as amended from time to time, between the Seller and the
Bankers Trust Company, as successor trustee.
(55) "Independent Accounting Firm" means Deloitte & Touche LLP or such
other independent accounting firm of national reputation mutually appointed by
the Seller and the Buyer.
(56) "Independent Appraiser" shall have the meaning set forth in
Section 3.3 hereof.
(57) "Instrument of Assumption" means the Instrument of Assumption in
the form of Exhibit C attached hereto.
(58) "Interconnection Agreement" means the Interconnection Agreement,
dated as of December 1, 2000, between the Seller and the Buyer.
(59) "Inventory Adjustment Amount" shall have the meaning set forth in
Section 3.2(a) hereof.
(60) "Knowledge" means the actual knowledge of the directors and
executive officers of the specified Person, which directors and executive
officers are charged with the responsibility for the particular function as of
the date of the Agreement, or with respect to any certificate delivered pursuant
to the Agreement, the date of delivery of such certificate. In the case of
Seller, "executive officer" includes any person listed on Schedule 1.1(60).
(61) "Leased Assets" shall have the meaning set forth in Section 7.4
hereof.
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(62) "Leases" shall have the meaning set forth in Section 5.9 hereof.
(63) "Local 396 LOA" shall have the meaning set forth in Section
7.11(a) hereof.
(64) "Maintenance and Capital Expenditures Adjustment Amount" shall
have the meaning set forth in Section 3.2(a) hereof.
(65) "Maintenance and Capital Expenditures Amount" means the aggregate
amount of all funds actually expended on, or for which liabilities were accrued
in accordance with generally accepted accounting principles applied on a
consistent basis with respect to any maintenance expenditures and capital
expenditures beginning on the date of this Agreement and ending on the Closing
Date, excluding any unscheduled maintenance expenditures or capital
expenditures which are made by the Seller with the Buyer's consent, which shall
not be unreasonably withheld, but including (i) any Scheduled Maintenance
Expenditures or Scheduled Capital Expenditures, made with respect to the
Purchased Assets by the Seller, and (ii) any maintenance expenditures and
capital expenditures which were made by the Seller at the Buyer's request,
beginning on the date of this Agreement and ending on the Closing Date.
(66) "Management Employee" shall have the meaning set forth in Section
7.11(b) hereof.
(67) "Intentionally Left Blank"
(68) "Material Adverse Effect" means any change or changes in or
effect on the Purchased Assets that is materially adverse to the business,
results of operations, financial condition or physical condition of the
Purchased Assets, individually or in the aggregate, except for (i) any change or
effect resulting from changes in the international, national, regional or local
wholesale or retail markets for electric power, (ii) any change or effect
resulting from changes in the international, national, regional or local markets
for any fuel used at the Purchased Assets, (iii) any change or effect resulting
from changes in the North American, national, regional or local electric
transmission systems, (iv) any change in applicable laws, judgments, orders or
decrees, (v) any conditions imposed by a Governmental Authority in connection
with the consents or approvals required for the transactions contemplated
hereby, and (vi) any materially adverse change in or effect on the Purchased
Assets which is cured (including by the payment of money) by the Seller before
the Termination Date.
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(69) "Materials and Supplies Adjustment Amount" shall have the meaning
set forth in Section 3.2(a) hereof.
(70) "Materials and Supplies Valuation Date" means the date that is
ten (10) days prior to the Closing Date.
(71) "Necessary Capital Expenditures" shall have the meaning set forth
in Section 7.1(c) hereof.
(72) "Necessary Maintenance Expenditures" shall have the meaning set
forth in Section 7.1(e) hereof.
(73) "Off-Site Location" means any real property other than the Real
Property.
(74) "Operating Easement Agreements" means the operating easements
providing the right to continue operating and maintaining certain generation and
transmission facilities at the Purchased Assets, each in substantially the form
of Exhibit D or Exhibit E attached hereto. The parties recognize that the form
and substance of the Operating Easement Agreements will be controlled by BLM
procedures, however the parties acknowledge their intent that the definitive
Operating Easement Agreements, and such other documents as may be reasonably
necessary, shall substantially accomplish the objective and intent of the
Operating Easement Agreements attached hereto as Exhibit D and Exhibit E.
(75) "Operating Easements" means the Seller's Easements and/or Buyer's
Easements granted pursuant to the Operating Easement Agreements.
(76) "OPUC" means the Oregon Public Utility Commission or any
successor thereto.
(77) "Permits" shall have the meaning set forth in Section 5.19
hereof.
(78) "Permitted Encumbrances" means (i) those exceptions to title to
the Purchased Assets contained in the documents listed on Schedule 5.8; (ii) all
exceptions, restrictions, easements, covenants, charges, rights of way and
monetary and non-monetary Encumbrances of record or that are set forth in an
applicable FERC project license, except for such Encumbrances which secure
indebtedness; (iii) any state of facts that a current survey of the Real
Property would disclose, except for such facts which would have a Material
Adverse Effect; (iv) with respect to any date before the Closing Date,
Encumbrances under the Indenture; (v) mortgages, liens, pledges, charges,
Encumbrances and restrictions incurred in
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connection with the Seller's purchase of properties and assets after the date of
the Seller Balance Sheet securing all or a portion of the purchase price
therefor; (vi) the Buyer's Easements and the Seller's Easements (in accordance
with the Operating Easement Agreements applicable to such easements and the
Interconnection Agreement); (vii) statutory liens for current Taxes, assessments
or other governmental charges not yet due or delinquent or the validity of which
is being contested in good faith by appropriate proceedings; (viii) mechanics',
carriers', workers', repairers' and other similar liens arising or incurred in
the ordinary course of business relating to obligations which are not yet due
and payable or the validity of which are being contested in good faith by
appropriate proceedings; (ix) zoning, entitlement, conservation restriction and
other land use and environmental regulations by Governmental Authorities; and
(x) such other liens, imperfections in or failure of title, charges, easements,
restrictions and Encumbrances which do not materially detract from the value of
or materially interfere with the present use of the Purchased Assets and do not,
in the aggregate, have a Material Adverse Effect.
(79) "Person" means any individual, partnership, joint venture,
corporation, limited liability company, limited liability partnership, trust,
unincorporated organization or Governmental Authority or any department or
agency thereof.
(80) "Plan" shall have the meaning set forth in Section 7.11(d).
(81) "PUCN" means the Public Utilities Commission of Nevada or any
successor thereto.
(82) "Purchase Price" shall have the meaning set forth in Section 3.1
hereof.
(83) "Purchased Assets" means, subject to the Permitted Encumbrances,
all of the right, title and interest in, to and under the real and personal
property, tangible or intangible, of the Seller constituting the Xxxxx Xxxxx
Station or used principally for generation purposes in connection with such
sites including, without limitation, the following assets owned by the Seller:
(i) the Real Property described on Schedule 1.1(83)(i) as associated with the
Xxxxx Xxxxx Station (the "Xxxxx Xxxxx Real Property"); (ii) all inventories of
fuels, supplies, materials and critical spares located on or in transit to the
Xxxxx Xxxxx Real Property on the Closing Date; (iii) the machinery, equipment,
vehicles, furniture and other personal property located on the Xxxxx Xxxxx Real
Property on the Closing Date, including, without limitation, the items of
personal property included in Schedule 1.1(83)(iii) as being associated with
Xxxxx Xxxxx Station, and all warranties against manufacturers or vendors
relating thereto, to the extent that such warranties are freely transferable;
(iv) the contracts, agreements and personal property leases listed on Schedules
1.1(83)(iv) as being associated with Xxxxx Xxxxx Station and which are
assignable;
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(v) the Permits listed on Schedule 1.1(83)(v) as being associated with Xxxxx
Xxxxx Station, to the extent transferable; (vi) all books, operating records,
operating, safety and maintenance manuals, engineering design plans, blueprints
and as-built plans, specifications, procedures and similar items of the Seller
relating specifically to the aforementioned assets other than books of account
associated with Xxxxx Xxxxx Station; (vii) the SO2 Allowances identified on
Schedule 1.1(83)(vii) associated with Xxxxx Xxxxx Station; (viii) any assets
purchased or to be purchased by the Seller pursuant to Section 7.4 associated
with Xxxxx Xxxxx Station; and (ix) any applications or permits, to the extent
transferrable with or without consent, to appropriate public waters,
certificates of appropriation, adjudicated or unadjudicated water rights,
applications to change the place of diversion, manner of use, or place of use,
decreed water rights, and any other claims to water associated with the Xxxxx
Xxxxx Station and the Real Property or personal property associated with the
Xxxxx Xxxxx Station, including without limitation, the applications or permits
listed on Schedule 1.1(83)(ix).
(84) "Qualifying Offer of Employment" shall have the meaning set forth
in Section 7.11(b) hereof.
(85) "Real Property" means each parcel of real property associated
with the Xxxxx Xxxxx Station owned by the Seller (or to which the Seller holds
an interest therein), including, but not limited to, buildings, structures and
improvements located thereon, fixtures contained therein and appurtenances
thereto and easements and other rights relating thereto and as more fully
described on Schedule 5.8.
(86) "Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, xxxxx, dump or allow to escape into or through
the environment.
(87) "Remediation" means an action of any kind to address a Release of
Hazardous Substance or the presence of Hazardous Substances at the Purchased
Assets or an Off-Site Location, including any or all of the following activities
to the extent they relate to or arise from the presence of a Hazardous Substance
at the Purchased Assets or an Off-Site Location: (i) monitoring, investigation,
assessment, treatment, cleanup, containment, removal, mitigation, response or
restoration work; (ii) obtaining any permits, consents, approvals or
authorizations of any Governmental Authority necessary to conduct any such
activity; (iii) preparing and implementing any plans or studies for any such
activity; (iv) obtaining a written notice from a Governmental Authority with
jurisdiction over the Purchased Assets or an Off-Site Location under
Environmental Laws that no material additional work is required by such
Governmental Authority; (v) the use, implementation, application, installation,
operation or maintenance of removal actions on the Purchased Assets or
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an Off-Site Location, remedial technologies applied to the surface or subsurface
soils, excavation and treatment or disposal of soils at an Off-Site Location,
systems for long-term treatment of surface water or ground water, engineering
controls or institutional controls; and (vi) any other activities reasonably
determined by a party to be necessary or appropriate or required under
Environmental Laws to address the presence or Release of Hazardous Substances at
the Purchased Assets or an Off-Site Location.
(88) "Rules" shall have the meaning set forth in Section 11.6 hereof.
(89) "Scheduled Capital Expenditures" means those capital expenditures
included on Schedule 1.1(89).
(90) "Scheduled Maintenance Expenditures" means those maintenance
expenditures included on Schedule 1.1(90).
(91) "SEC" means the Securities and Exchange Commission or any
successor thereto.
(92) "Securities Act" means the Securities Act of 1933, as amended.
(93) "Seller" shall have the meaning set forth in the preface hereto.
(94) "Seller Agreements" means those agreements listed on Schedule
5.17(a).
(95) "Seller Balance Sheet" shall have the meaning set forth in
Section 5.5 hereof.
(96) "Seller Required Regulatory Approvals" shall have the meaning set
forth in Section 5.3(b) hereof.
(97) "Seller's Easements" shall have the meaning set forth in Section
4.4(d) hereof.
(98) "Separation Schedule" means the schedule to be delivered to the
Buyer by the Seller by the earliest of March 29, 2001 or thirty (30) days prior
to the Closing Date, which shall delineate the Purchased Assets from the
Seller's other assets and which shall be consistent with the separation schedule
summary attached hereto as Exhibit F.
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(99) "SO2 Allowance" means an authorization by the Administrator of
the USEPA under the Clean Air Act, 42 U.S.C. (S)7401, et seq., to emit one ton
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of sulfur dioxide during or after a specified calendar year.
(100) "Subsidiary," when used in reference to any other person means
any corporation of which outstanding securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation are owned
directly or indirectly by such other person.
(101) "Tax" means any tax, charge, fee, levy, penalty or other
assessment (other than any Income Tax) imposed by any U.S. federal, state, local
or foreign taxing authority, including, but not limited to, any excise,
property, sales, transfer, franchise, payroll, withholding, social security or
other tax, including any interest, penalties or additions attributable thereto.
(102) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any related or
supporting information) supplied or required to be supplied to any authority
with respect to Taxes and including any supplement or amendment thereof.
(103) "Termination Date" shall have the meaning set forth in Section
10.1(b) hereof.
(104) "Third Party Claim" shall have the meaning set forth in Section
9.2(a) hereof.
(105) "Transition Power Purchase Agreement" means the Transition
Power Purchase Agreement, dated as of December 1, 2000, between the Buyer and
the Seller.
(106) "TPPA Amount" shall have the meaning set forth in Section 3.1
hereof.
(107) "USEPA" means the United States Environmental Protection
Agency, or any successor agency thereto.
(108) "WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.
(109) "Water Supply Agreement" means a Water Supply Agreement to be
negotiated and executed by and among the Seller, the Buyer and the buyer of the
Xxxxx Bundle located in Xxxxx County, Nevada, pursuant to Section 7.14.
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ARTICLE II
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PURCHASE AND SALE
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2.1 The Sale. Upon the terms and subject to the satisfaction of the
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conditions contained in this Agreement, at the Closing, the Seller shall sell,
assign, convey, transfer and deliver to the Buyer, and the Buyer shall purchase
and acquire from the Seller, free and clear of all Encumbrances (except for
Permitted Encumbrances and the operating easement(s) granted in accordance with
the Operating Easement Agreements and the Interconnection Agreement), all of the
Seller's right, title and interest in, to and under the real and personal
property, tangible or intangible, owned by the Seller and constituting the
Purchased Assets.
2.2 Excluded Assets. Notwithstanding any provision herein to the
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contrary, the Purchased Assets shall not include the following (collectively,
the "Excluded Assets"):
(a) all cash, cash equivalents, bank deposits, accounts receivable,
and any income, sales, payroll or other tax receivables;
(b) the names "Sierra Pacific Resources," "Sierra Pacific Power
Company," "Sierra Pacific," "Nevada Power Company" and "Nevada Power" or any
related or similar trade names, trademarks, service marks or logos;
(c) transmission, substation and communication facilities and related
support equipment described in Schedule 2.2(c);
(d) any refund, credit penalty payment, adjustment or reconciliation
(i) related to Real Property, personal property or other Taxes paid prior to the
Closing Date in respect of the Purchased Assets, whether such refund, adjustment
or reconciliation is received as a payment or as a credit against future Taxes
payable, or (ii) arising under the Seller Agreements and relating to a period
before the Closing Date;
(e) except to the extent specifically required by law, the personnel
records relating to any employees of the Seller;
(f) the rights and assets described in the Separation Schedule as not
part of the Purchased Assets; and
(g) the SO2 Allowances identified on Schedule 2.2(g).
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2.3 Assumed Liabilities. On the Closing Date, the Buyer shall
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deliver to the Seller the Instrument of Assumption pursuant to which the Buyer
shall assume and agree to discharge to the maximum extent permitted by law, all
of the liabilities and obligations of the Seller, direct or indirect, known or
unknown, absolute or contingent, which relate to the Purchased Assets, other
than Excluded Liabilities, in accordance with the respective terms and subject
to the respective conditions thereof, including, without limitation, the
following liabilities and obligations:
(a) all liabilities and obligations of the Seller to be paid or
performed after the Closing Date arising under (i) the Seller Agreements, the
Environmental Permits, the Permits, the Leases, contracts and any other
agreements assigned to the Buyer pursuant to this Agreement in accordance with
the terms thereof, and (ii) the leases, contracts and other agreements entered
into by the Seller with respect to the Purchased Assets after the date hereof
consistent with the terms of this Agreement (including in the case of (i) and
(ii), without limitation, agreements with respect to liabilities for real or
personal property taxes or other Taxes on any of the Purchased Assets); except,
in each case, to the extent such liabilities and obligations, but for a breach
or default by the Seller, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the extent the same arise out
of any such breach or default;
(b) all liabilities and obligations associated with the Purchased
Assets in respect of Taxes for which the Buyer is liable pursuant to Section 7.9
hereof;
(c) any liabilities and obligations for which the Buyer has
indemnified the Seller pursuant to Section 9.1 hereof;
(d) all liabilities to employees for which the Buyer is liable
pursuant to Section 7.11 hereof;
(e) any liability, obligation or responsibility under or related to
former, current or future Environmental Laws or the common law, whether such
liability or obligation or responsibility is known or unknown, contingent or
accrued, arising as a result of or in connection with (i) any violation or
alleged violation of Environmental Law, prior to the Closing Date, with respect
to the ownership or operation of the Purchased Assets, including, without
limitation, any fines or penalties that arise in connection with the ownership
or operation of the Purchased Assets prior to the Closing Date or the costs
associated with correcting any such violations; (ii) loss of life, injury to
persons or property or damage to natural resources (whether or not such loss,
injury or damage arose or was made manifest before the Closing Date or arises or
becomes manifest after the Closing Date),
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caused (or allegedly caused) by the presence or Release of Hazardous Substances
at, on, in, under, adjacent to, discharged from, emitted from or migrating from
the Purchased Assets prior to the Closing Date, including, without limitation,
Hazardous Substances contained in building materials at the Purchased Assets or
in the soil, surface water, sediments, groundwater, landfill cells, or in other
environmental media at or adjacent to the Purchased Assets; and (iii) the
investigation and/or Remediation (whether or not such investigation or
Remediation commenced before the Closing Date or commences after the Closing
Date) of Hazardous Substances that are present or have been Released prior to
the Closing Date at, on, in, under, adjacent to, discharged from, emitted from
or migrating from the Purchased Assets, including, without limitation, Hazardous
Substances contained in building materials at the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells, or in other
environmental media at or adjacent to the Purchased Assets; provided, as to all
of the above, that nothing set forth in this Section 2.3(e) shall require the
Buyer to assume any liabilities that are expressly excluded in Section 2.4
hereof;
(f) any liability, obligation or responsibility under or related to
former, current or future Environmental Laws or the common law, whether such
liability or obligation or responsibility is known or unknown, contingent or
accrued, arising as a result of or in connection with (i) any violation or
alleged violation of Environmental Law, on or after the Closing Date, with
respect to the ownership or operation of the Purchased Assets; (ii) compliance
with applicable Environmental Laws on or after the Closing Date with respect to
the ownership or operation of the Purchased Assets; (iii) loss of life, injury
to persons or property or damage to natural resources caused (or allegedly
caused) by the presence or Release of Hazardous Substances at, on, in, under,
adjacent to, discharged from, emitted from or migrating from the Purchased
Assets on or after the Closing Date, including, without limitation, Hazardous
Substances contained in building materials at the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells, or in other
environmental media at or adjacent to the Purchased Assets; (iv) loss of life,
injury to persons or property or damage to natural resources caused (or
allegedly caused) by the off-site disposal, storage, transportation, discharge,
Release, recycling, or the arrangement for such activities, of Hazardous
Substances, on or after the Closing Date, in connection with the ownership or
operation of the Purchased Assets; (v) the investigation and/or Remediation of
Hazardous Substances that are present or have been released on or after the
Closing Date at, on, in, under, adjacent to, discharged from, emitted from or
migrating from the Purchased Assets, including, without limitation, Hazardous
Substances contained in building materials at the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells or in other
environmental media at or adjacent to the Purchased Assets; and (vi) the
investigation and/or Remediation of Hazardous Substances that are disposed,
stored, transported, discharged, Released, recycled, or the arrangement of such
activities, on or
15
after the Closing Date, in connection with the ownership or operation of the
Purchased Assets, at any Off-Site Location; provided, that nothing set forth in
this Section 2.3(f) shall require the Buyer to assume any liabilities that are
expressly excluded in Section 2.4 hereof;
(g) all liabilities and obligations of the Seller with respect to the
Purchased Assets under the agreements or consent orders set forth on Schedule
5.12;
(h) all liabilities incurred by the Seller with respect to the
Maintenance and Capital Expenditures Amount made with respect to the Purchased
Assets by the Seller;
(i) all liabilities or obligations relating to leases for the
Purchased Assets; and
(j) all other liabilities or obligations exclusively relating to the
Purchased Assets no matter when the events or occurrences giving rise to such
liabilities or obligations took place.
All of the foregoing liabilities and obligations to be assumed by the Buyer
hereunder (excluding any Excluded Liabilities) are collectively referred to
herein as the "Assumed Liabilities." It is understood and agreed that nothing
in this Section 2.3 shall constitute a waiver or release of any claims arising
out of the contractual relationships between the Seller and the Buyer.
2.4 Excluded Liabilities. The Buyer shall not assume or be
--------------------
obligated to pay, perform or otherwise discharge the following liabilities
(collectively, the "Excluded Liabilities"):
(a) any liabilities or obligations of the Seller in respect of any
Excluded Assets or other assets of the Seller which are not Purchased Assets;
(b) any liabilities or obligations in respect of Taxes attributable
to the Purchased Assets for taxable periods ending on or prior to the Closing
Date, except for Taxes for which the Buyer is liable pursuant to Section 7.9(a)
hereof;
(c) any liabilities, obligations or responsibilities relating to the
disposal, storage, transportation, discharge, Release, recycling, or the
arrangement for such activities, by the Seller, of Hazardous Substances that
were generated at the Purchased Assets, at any Off-Site Location, where the
disposal, storage, transportation, discharge, Release, recycling or the
arrangement for such activities at such Off-Site Location occurred prior to the
Closing Date, provided that for purposes of this Section 2.4(c), "Off-Site
Location" does not include any location to which
16
Hazardous Substances disposed of, discharged from, emitted from or Released at
the Purchased Assets have migrated including, but not limited to, surface waters
that have received waste water discharges from the Purchased Assets;
(d) any liabilities, obligations or responsibilities relating to (i)
the transmission facilities delineated in the Interconnection Agreement or
Operating Easement Agreements or (ii) any Seller's operations on, or usage of,
the operating easements, including, without limitation, liabilities, obligations
or responsibilities arising as a result of or in connection with (A) any
violation or alleged violation of Environmental Laws and (B) loss of life,
injury to persons or property or damage to natural resources, except to the
extent caused by the Buyer;
(e) any liabilities or obligations required to be accrued by the
Seller in accordance with generally accepted accounting principles and the FERC
Uniform System of Accounts on or before the Closing Date with respect to
liabilities related to the Purchased Assets other than any liability assumed by
the Buyer under Section 2.3(a), (e) or (f) hereof;
(f) any liabilities or obligations relating to any personal injury
(including, without limitation, workers' compensation claims), discrimination,
wrongful discharge, or unfair labor practice filed with or pending before any
court or administrative agency on the Closing Date, with respect to liabilities
principally relating to the Purchased Assets, other than any liabilities or
obligations assumed by the Buyer under Section 2.3(e) hereof;
(g) any payment obligations of the Seller for goods delivered or
services rendered prior to the Closing;
(h) any liabilities or obligations imposed upon, assumed or retained
by the Seller pursuant to the Interconnection Agreement, Operating Easement
Agreements or any other Ancillary Agreement; and
(i) any liabilities, obligations or responsibilities relating to any
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) maintained
by the Seller and any trade or business (whether or not incorporated) which are
or have ever been under common control, or which are or have ever been treated
as a single employer, with the Seller under Section 414(b), (c), (m) or (o) of
the Code (an "ERISA Affiliate") or to which the Seller and any ERISA Affiliate
contributed thereunder (the "ERISA Affiliate Plans"), including any
multiemployer plan, maintained by, contributed to, or obligated to contribute
to, at any time, by the Seller or any ERISA Affiliate (hereinafter referred to
as "Benefit Plans"), including any liability (i) to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (ii) with respect to non-compliance with
the notice and benefit continuation require-
17
ments of COBRA; (iii) with respect to any non-compliance with ERISA or any other
applicable laws; or (iv) with respect to any suit, proceeding or claim which is
brought against any Benefit Plan, ERISA Affiliate Plan, any fiduciary or former
fiduciary of any such Benefit Plan or ERISA Affiliate Plan.
ARTICLE III
-----------
PURCHASE PRICE
--------------
3.1 Purchase Price. The purchase price for the Purchased Assets shall
--------------
be an amount equal to the sum of (i) Sixty-Nine Million Eight Hundred and Ten
Thousand Dollars ($69,810,000), (ii) the Estimated Adjustment Amount, (iii) the
Adjustment Amount, and (iv) any amounts paid by the Seller with respect to
Leased Assets pursuant to Section 7.4 hereof (the "Purchase Price"). The amount
to be paid by Seller to Buyer for the Transition Power Purchase Agreement being
entered into by Buyer and Seller hereunder shall be Four Million Six Hundred and
Ten Thousand Dollars ($4,610,000) (the "TPPA Amount").
3.2 Purchase Price Adjustment. (a) Within sixty (60) days after
-------------------------
the Closing, the Seller shall prepare and deliver to the Buyer a statement (the
"Adjustment Statement") which reflects (i) the difference between (A) the book
value, as determined by an independent evaluator designated by the Seller and
approved by the Buyer as of the Closing Date, of all fuel inventory used at or
in connection with the Purchased Assets and (B) the Estimated Inventory
Adjustment Amount (such difference is referred to as the "Inventory Adjustment
Amount"), (ii) the difference between (A) the book value, as determined by an
independent evaluator designated by the Seller and approved by the Buyer as of
the Closing Date, of the materials and supplies used at or in connection with
the Purchased Assets and (B) the Estimated Materials and Supplies Adjustment
Amount (such difference is referred to as the "Materials and Supplies Adjustment
Amount") and (iii) the difference between (A) the Maintenance and Capital
Expenditures Amount and (B) the Estimated Maintenance and Capital Expenditures
Amount (such difference is referred to as the "Maintenance and Capital
Expenditures Adjustment Amount"). The Inventory Adjustment Amount, the
Materials and Supplies Adjustment Amount and the Maintenance and Capital
Expenditures Adjustment Amount are referred to collectively as the "Adjustment
Amount." The Adjustment Statement shall be prepared using the same generally
accepted accounting principles, policies and methods as the Seller has
historically used in connection with the calculation of the items reflected on
the Adjustment Statement. The Buyer agrees to cooperate with the Seller in
connection with the preparation of the Adjustment Statement and related
information, and shall provide to the Seller such books, records and information
as may be reasonably requested from time to time.
18
(b) The Buyer may dispute the Inventory Adjustment Amount, the
Materials and Supplies Adjustment Amount or the Maintenance and Capital
Expenditures Amount; provided, however, that the Buyer shall notify the Seller
-------- -------
in writing of the disputed amount, and the basis of such dispute, within ten
(10) Business Days of the Buyer's receipt of the Adjustment Statement. In the
event of a dispute with respect to the Inventory Adjustment Amount, the
Materials and Supplies Adjustment Amount or the Maintenance and Capital
Expenditures Amount, the Buyer and the Seller shall attempt to reconcile their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive on the parties. If the Buyer and the Seller are
unable to reach a resolution of such differences within thirty (30) days of
receipt of the Buyer's written notice of dispute to the Seller, the Buyer and
the Seller shall submit the amounts remaining in dispute for determination and
resolution to the Independent Accounting Firm, which shall be instructed to
determine and report to the parties, within thirty (30) days after such
submission, upon such remaining disputed amounts, and such report shall be
final, binding and conclusive on the parties hereto with respect to the amounts
disputed. The fees and disbursements of the Independent Accounting Firm shall be
allocated between the Buyer and the Seller so that the Buyer's share of such
fees and disbursements shall be in the same proportion that the aggregate amount
of such remaining disputed amounts so submitted by the Buyer to the Independent
Accounting Firm that is unsuccessfully disputed by the Buyer (as finally
determined by the Independent Accounting Firm) bears to the total amount of such
remaining disputed amounts so submitted by the Buyer to the Independent
Accounting Firm.
(c) Within ten (10) Business Days after the Buyer's receipt of the
Adjustment Statement, the Buyer shall pay all undisputed portions of the
Adjustment Amount. If there is a dispute with respect to any amount on the
Adjustment Statement, within five (5) Business Days after the final
determination of such disputed amounts on the Adjustment Statement, the Buyer
shall pay to the Seller an amount equal to the disputed portion of the
Adjustment Amount as finally determined to be payable with respect to the
Adjustment Statement; provided, however, that if such amount shall be less than
-------- -------
zero, then the Seller shall pay to the Buyer the amount by which such amount is
less than zero. All payments made pursuant to this Section 3.2(c) shall be paid
together, with interest thereon for the period commencing on the Closing Date
through the date of payment, calculated at the prime rate of The Chase Manhattan
Bank in effect on the Closing Date, in cash by federal or other wire transfer of
immediately available funds.
3.3 Allocation of Purchase Price. The Buyer and the Seller shall
----------------------------
use their good faith best efforts to agree upon an allocation among the
Purchased Assets of the sum of the Purchase Price consistent with Section 1060
of the Code and the Treasury Regulations thereunder within one-hundred twenty
(120) days of the date of this Agreement but in no event less than thirty (30)
days prior to the Closing.
19
The Buyer and the Seller may jointly agree to obtain the services of an
independent appraiser (the "Independent Appraiser") to assist the parties in
determining fair value of the Purchased Assets for purposes of such allocation.
If such an appraisal is made, both the Buyer and the Seller agree to accept the
Independent Appraiser's determination of the fair value of the Purchased Assets.
The parties shall jointly select the Independent Appraiser. The cost of the
appraisal shall be borne equally by the Buyer and the Seller. Each of the Buyer
and the Seller agrees to file Internal Revenue Service Form 8594, and all
federal, state, local and foreign Tax Returns, in accordance with such agreed
allocation. Each of the Buyer and the Seller shall report the transactions
contemplated by this Agreement for federal Income Tax and all other tax purposes
in a manner consistent with the allocation determined pursuant to this Section
3.3. Each of the Buyer and the Seller agrees to provide the other promptly with
any other information required to complete Form 8594. Each of the Buyer and the
Seller shall notify and provide the other with reasonable assistance in the
event of an examination, audit or other proceeding regarding the agreed upon
allocation of the Purchase Price.
3.4 Proration. (a) The Buyer and the Seller agree that all of the
---------
items normally prorated, including those listed below, relating to the business
and operation of the Purchased Assets shall be prorated as of the Closing Date,
with the Seller liable to the extent such items relate to any time period
through the Closing Date, and the Buyer liable to the extent such items relate
to periods subsequent to the Closing Date:
(i) personal property, real estate, occupancy and any other
Taxes, assessments and other charges, if any, on or with respect to the
business and operation of the Purchased Assets. In addition, in the event
that the Seller is subject to Taxes, assessments and other charges on
property of which the Purchased Assets comprises only a portion, the
portion of such Taxes, assessments and other charges allocated to the
Purchased Assets and subject to proration by this Section 3.4 shall be
determined by reference to the relative value of the Purchased Assets, as
determined by the Purchase Price paid by the Buyer, compared with the value
of the Seller's property subject to such Taxes, assessments and other
charges, as assessed by the relevant taxing authority;
(ii) rent, Taxes and other items payable by or to the Seller
under any of the Seller Agreements to be assigned to and assumed by the
Buyer hereunder;
(iii) any permit, license or registration fees with respect to
any Environmental Permit or other Permit; and
20
(iv) sewer rents and charges for water, telephone, electricity
and other utilities.
(b) In connection with such proration, in the event that actual
figures are not available at the Closing Date, the proration shall be based upon
the actual amount of such Taxes or fees for the preceding year (or appropriate
period) for which actual Taxes or fees are available and such Taxes or fees
shall be reprorated upon request of either the Seller or the Buyer made within
sixty (60) days of the date that the actual amounts become available. The Seller
and the Buyer agree to furnish each other with such documents and other records
as may be reasonably requested in order to confirm all adjustment and proration
calculations made pursuant to this Section 3.4.
ARTICLE IV
----------
THE CLOSING
-----------
4.1 Time and Place of Closing. Upon the terms and subject to the
-------------------------
satisfaction of the conditions contained in this Agreement, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 4 Times Square, New
York, New York, at 10:00 a.m., local time, on the first Business Day following
the date on which all of the conditions to each party's obligations hereunder
have been satisfied or waived, or at such other place or time as the parties may
agree. The date and time at which the Closing actually occurs is hereinafter
referred to as the "Closing Date."
4.2 Payment of Purchase Price. Upon the terms and subject to the
-------------------------
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Assets, the Buyer shall pay or cause to be paid to the Seller the
Purchase Price. The Purchase Price shall be paid as follows: (i) an amount at
Closing equal to the sum of $69,810,000, plus (ii) any amounts with respect to
Leased Assets to be paid pursuant to Section 7.4 hereof, plus (iii) the
Estimated Adjustment Amount for the Closing pursuant to Section 3.2 hereof, and
less (iv) the TPPA Amount (the "Estimated Purchase Price"), by wire transfer of
immediately available funds or by such other means as are agreed to by the
Seller and the Buyer.
4.3 Deliveries by Seller. At the Closing, the Seller shall deliver to
--------------------
the Buyer the following:
(a) The Xxxx of Sale, duly executed by the Seller for the personal
property included in the Purchased Assets;
21
(b) The executed consents to transfer the Seller Agreements, the
Environmental Permits and the Permits, to the extent specifically required
hereunder;
(c) Each Ancillary Agreement required to be delivered under this
Agreement, duly executed by the Seller;
(d) The certificate and opinion of counsel as contemplated by Section
8.2 hereof;
(e) One or more deeds of conveyance transferring the Seller's
interest in the Real Property to the Buyer, without covenant or warranty of
title, duly executed and acknowledged by the Seller and in recordable form
subject to Permitted Encumbrances and retaining to the extent necessary or any
existing easements in favor of the Seller with respect to Real Property conveyed
to the Buyer, each substantially in the form of Exhibit G attached hereto;
(f) One or more easements to the extent necessary to evidence the
right of the Buyer to use the Real Property of the Seller (the "Buyer's
Easements") associated with the Purchased Assets, duly executed and acknowledged
by the Seller and in recordable form, each substantially in the form of Exhibit
D attached hereto;
(g) The Assignment of Leases, in the form of Exhibit A attached
hereto, assigning to the Buyer all of the Seller's right, title and interest as
lessor (or lessee, as the case may be) under the Leases;
(h) Copies of the resolutions adopted by the board of directors of
the Seller, certified by the secretary of the Seller, as having been duly and
validly adopted and as being in full force and effect, authorizing the execution
and delivery by the Seller of this Agreement, the Ancillary Agreements, the Xxxx
of Sale and other closing documents described in this Agreement to which the
Seller is a party, and the performance by the Seller of its obligations
hereunder and thereunder;
(i) All such other instruments of assignment or conveyance as shall,
in the reasonable opinion of the Buyer and its counsel, be necessary to transfer
to the Buyer the Purchased Assets in accordance with this Agreement, the
Ancillary Agreements and where necessary or desirable, in recordable form; and
(j) Such other agreements, documents, instruments and writings as are
required to be delivered by the Seller at or prior to the Closing Date pursuant
to this Agreement, the Ancillary Agreements or otherwise required in connection
herewith or therewith.
22
4.4 Deliveries by Buyer. At the Closing, the Buyer shall deliver
-------------------
to the Seller the following:
(a) The Estimated Purchase Price by wire transfer of immediately
available funds or by such other means as are agreed to by the Seller and the
Buyer;
(b) Each Ancillary Agreement required to be delivered under this
Agreement, duly executed by the Buyer;
(c) The certificate and opinion of counsel as contemplated by Section
8.3 hereof;
(d) One or more easements, to the extent necessary for the Seller to
use the Real Property of the Buyer (the "Seller's Easements") to the extent
necessary for the Seller to continue and maintain its transmission and
distribution business, in favor of the Seller with respect to Real Property
conveyed to the Buyer, duly executed and acknowledged by the Buyer, each
substantially in the form of Exhibit E attached hereto, and the Buyer shall bear
any transfer or similar tax incurred in connection herewith as set forth in
Section 7.9 hereof;
(e) The Instrument of Assumption, duly executed by the Buyer
providing for the assumption of all of the Seller's right, title and interest as
lessor (or lessee as the case may be) under the Leases;
(f) All such other instruments of assumption as shall, in the
reasonable opinion of the Seller and its counsel, be necessary for the Buyer to
assume the Assumed Liabilities in accordance with this Agreement;
(g) Copies of the resolutions adopted by the board of directors of
the Buyer, certified by the secretary of the Buyer, as having been duly and
validly adopted and as being in full force and effect, authorizing the execution
and delivery by the Buyer of this Agreement, the Ancillary Agreements and other
closing documents described in this Agreement to which the Buyer is a party, and
the performance by the Buyer of its obligations hereunder and thereunder; and
(h) Such other agreements, documents, instruments and writings as are
required to be delivered by the Buyer at or prior to the Closing Date pursuant
to this Agreement, the Ancillary Agreements or otherwise required in connection
herewith or therewith.
23
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
The Seller represents and warrants to the Buyer as follows (all such
representations and warranties, except those regarding the Seller, being made to
the best Knowledge of the Seller):
5.1 Organization; Qualification. The Seller is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own, lease, and
operate its properties and to carry on its business as is now being conducted.
The Seller is duly qualified or licensed to do business as a foreign corporation
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect. The
Seller has heretofore delivered to the Buyer complete and correct copies of its
Certificate of Incorporation and Bylaws as currently in effect.
5.2 Authority Relative to this Agreement. The Seller has full
------------------------------------
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the board of directors of the
Seller and no other corporate proceedings on the part of the Seller are
necessary to authorize this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements have been duly and validly executed and delivered by
the Seller, and assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of the Buyer, subject to the receipt of
the Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, constitute valid and binding agreements of the Seller, enforceable
against the Seller in accordance with their terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors' rights
generally or general principles of equity.
5.3 Consents and Approvals; No Violation. (a) Except as set forth in
------------------------------------
Schedule 5.3(a), and other than obtaining the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, neither the execution and
delivery of this Agreement or the Ancillary Agreements by the Seller nor the
sale by the Seller of the Purchased Assets pursuant to this Agreement or the
Ancillary Agreements shall (i) conflict with or result in any breach of any
provision of the
24
Certificate of Incorporation or Bylaws of the Seller, (ii) require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority or regulatory authority, except (x) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not have a Material Adverse Effect or (y) for those
requirements which become applicable to the Seller as a result of the specific
regulatory status of the Buyer (or any of its Affiliates) or as a result of any
other facts that specifically relate to the business or activities in which the
Buyer (or any of its Affiliates) is or proposes to be engaged; (iii) result in a
default (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 the
Seller is a party or by which the Seller, or any of the Purchased Assets may be
bound, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not have a Material Adverse Effect; or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Seller, or any of its assets, which violation would have a
Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) and except for (i) any
required approvals under the Federal Power Act, (ii) approvals or other actions
by the PUCN, the CPUC and/or the OPUC (iii) the approval, if required, of the
SEC pursuant to the Holding Company Act, and (iv) the filings by the Seller and
the Buyer required by the HSR Act and the expiration or earlier termination of
all waiting periods under the HSR Act (the filings and approvals referred to in
clauses (i) through (iv) above are collectively referred to as the "Seller
Required Regulatory Approvals"), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any Governmental Authority
or regulatory authority is necessary for the consummation by the Seller of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
obtained or made, shall not, in the aggregate, have a Material Adverse Effect
and other than the Permits and Environmental Permits.
5.4 Reports. Since January 1, 1996, the Seller, pursuant to the
-------
Securities Act, the Exchange Act, the applicable state public utility laws, the
Federal Power Act and the Holding Company Act, has filed or caused to be filed
with the SEC, the applicable state or local utility commissions or regulatory
bodies, or the FERC, as the case may be, all material forms, statements, reports
and documents (including all exhibits, amendments and supplements thereto)
required to be filed by them with respect to the business and operations of the
Seller as it relates to the Purchased Assets under each of the Securities Act,
the Exchange Act, the applicable state public utility laws, the Federal Power
Act and the Holding Company Act and the respective rules and regulations
thereunder, all of which complied in all material
25
respects with all applicable requirements of the appropriate act and the rules
and regulations thereunder in effect on the date each such report was filed.
5.5 Financial Statements. The Seller has previously furnished to
--------------------
the Buyer (i) balance sheets of the Seller as of September 30, 2000, and (ii)
the related statements of income and retained earnings and changes in financial
position of the Seller for the fiscal year then ended. The balance sheet of the
Seller as of September 30, 2000 is referred to herein as the "Seller Balance
Sheet." Each of the balance sheets included in the financial statements
referred to in this Section 5.5 (including the related notes thereto) presents
fairly the financial position of the Seller as of their respective dates, and
the other related statements included therein (including the related notes
thereto) present fairly the results of operations and changes in financial
position for the periods then ended, all in conformity with generally accepted
accounting principles applied on a consistent basis, except as otherwise noted
therein.
5.6 Undisclosed Liabilities. Except as set forth in Schedule 5.6, the
-----------------------
Seller has no liability or obligation relating to the business or operations of
the Purchased Assets, secured or unsecured (whether absolute, accrued,
contingent or otherwise, and whether due or to become due), of a nature required
by generally accepted accounting principles to be reflected in a corporate
balance sheet or disclosed in the notes thereto, which are not accrued or
reserved against in the Seller Balance Sheet or disclosed in the notes thereto
in accordance with generally accepted accounting principles, except those which
either were incurred in the ordinary course of business, whether before or after
the date of the Seller Balance Sheet, or those which in the aggregate are not
material to the Purchased Assets.
5.7 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
Schedule 5.7, or in the reports, schedules, registration statements and
definitive proxy statements filed by the Seller with the SEC, and except as
otherwise contemplated by this Agreement, since the date of the Seller Balance
Sheet there has not been: (i) any Material Adverse Effect; (ii) any damage,
destruction or casualty loss, whether covered by insurance or not, which had a
Material Adverse Effect; (iii) any entry into any agreement, commitment or
transaction (including, without limitation, any borrowing, capital expenditure
or capital financing) by the Seller, which is material to the business or
operations of the Purchased Assets, except agreements, commitments or
transactions in the ordinary course of business or as contemplated herein; or
(iv) any change by the Seller, with respect to the Purchased Assets, in
accounting methods, principles or practices except as required or permitted by
generally accepted accounting principles.
5.8 Title to Real Property. Set forth in Schedule 5.8 is a true and
----------------------
complete list of the Real Property of the Seller which is part of the Purchased
Assets.
26
The Seller has insurable title to all of the Real Property, subject only to
Permitted Encumbrances.
5.9 Leasehold Interests. Schedule 5.9 lists, as of the date of this
-------------------
Agreement, all Real Property leases (the "Leases") relating to the Purchased
Assets under which the Seller is a lessee, lessor or under which Seller
otherwise has any interest and which are to be assigned to, and assumed by, the
Buyer on the Closing Date. Except as set forth in Schedule 5.9, to the Seller's
Knowledge, all such Leases are valid, binding and enforceable in accordance with
their terms, and are in full force and effect; there are no existing material
defaults by the Seller thereunder; and no event has occurred which (whether with
or without notice, lapse of time or both) would constitute a material default
thereunder.
5.10 Improvements. Except as set forth in Schedule 5.10, the Seller
------------
has not received any written notices from any Governmental Authority stating or
alle ging that any improvements with respect to the Purchased Assets have not
been constructed in compliance with applicable law. Except as set forth in
Schedule 5.10, no written notice has been received by the Seller from any
Governmental Authority requiring or advising as to the need for any repair,
alteration, restoration or improvement in connection with the Purchased Assets.
5.11 Insurance. Except as set forth in Schedule 5.11, all material
---------
policies of fire, liability, workers' compensation and other forms of insurance
purchased or held by and insuring the Purchased Assets are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date as of which this representation is being made have been paid,
and no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior to
the date of such cancellation. Except as described in Schedule 5.11, as of the
date of this Agreement, the Seller has not been refused any insurance with
respect to the Purchased Assets nor has its coverage been limited by any
insurance carrier to which it has applied for any such insurance or with which
it has carried insurance during the last twelve (12) months.
5.12 Environmental Matters. (a) Except as set forth in Schedule 5.12,
---------------------
in any public filing by the Seller pursuant to the Securities Act or the
Exchange Act, or in any environmental site assessment prepared by or for the
Seller and made available to the Buyer, the Seller holds, and is in substantial
compliance with, all material permits, licenses and governmental authorizations
(the "Environmental Permits") required for the Seller to operate the Purchased
Assets under applicable Environmental Laws, and to the Knowledge of the Seller,
the Seller is otherwise in compliance with applicable Environmental Laws with
respect to the Purchased Assets except for such failures to hold or comply with
required Environmental Permits, or such failures to be in compliance with
applicable Environmental Laws,
27
which, in the aggregate, are not reasonably likely to have a Material Adverse
Effect. The Seller's Environmental Permits are set forth on Schedule 5.12.
(b) Except as set forth in Schedule 5.12, the Seller has not received
any written request for information, or been notified in writing that it is a
potentially responsible party, under CERCLA or any similar state law with
respect to any of the Purchased Assets, except for such liability under such
laws as would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect.
(c) Except as set forth in Schedule 5.12, with respect to the
Purchased Assets, the Seller has not entered into or agreed to any consent
decree or order, and is not subject to any judgment, decree, or judicial order
relating to compliance with any Environmental Law or to investigation or cleanup
of Hazardous Substances under any Environmental Law, except such consent decrees
or orders, judgments, decrees or judicial orders that would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect.
(d) The representations and warranties made in this Section 5.12 are
the Seller's exclusive representations and warranties relating to environmental
matters.
5.13 Labor Matters. The Seller has previously delivered to the Buyer
-------------
copies of all labor union and Collective Bargaining Agreements relating to the
Purchased Assets to which the Seller is a party or is subject, if any. With
respect to its employees at the Purchased Assets, except to the extent set forth
in Schedule 5.13 and except for such matters as shall not have a Material
Adverse Effect, to the Seller's Knowledge: (i) the Seller is in compliance with
all applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours; (ii) the Seller has not received
written notice of any unfair labor practice complaint against the Seller pending
before the National Labor Relations Board; (iii) there is no labor strike,
slowdown or stoppage actually pending or threatened against or affecting the
Seller; (iv) the Seller has not received notice that any representation petition
respecting the employees of the Seller has been filed with the National Labor
Relations Board; (v) no arbitration proceeding arising out of or under
collective bargaining agreements is pending against the Seller; and (vi) the
Seller has not experienced any primary work stoppage since at least December 31,
1995. There are no employees of Seller who work full time at the Xxxxx Xxxxx
Station.
5.14 ERISA; Benefit Plans. (a) Except as set forth in Schedule
--------------------
5.14(a)(i), with respect to its employees, if any, at the Purchased Assets, the
Seller has fulfilled its obligations under the minimum funding requirements of
Section 302
28
of ERISA, and Section 412 of the Code, with respect to each "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) and each such plan is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Code. The Seller has not incurred any liability under Section
4062(b) of ERISA to the Pension Benefit Guaranty Corporation in connection with
any employee pension benefit plan relating to employees, if any, at the
Purchased Assets which is subject to Title IV of ERISA. Except as set forth in
Schedule 5.14(a)(ii), the Internal Revenue Service has issued a letter for each
employee pension benefit plan determining that such plan is exempt from United
States Federal Income Tax under Sections 401(a) and 501(a) of the Code, and
there has been no occurrence since the date of any such determination letter
which has adversely affected such qualification, and no withdrawal liability has
been incurred by or asserted against the Seller with respect to any employee
pension benefit plan which is a "multiemployer plan" (as defined in Section
3(37) of ERISA).
(b) Schedule 5.14(b) lists, as of the date of this Agreement, all
deferred compensation, pension, profit-sharing and retirement plans, including
multiemployer plans, and all material bonus and other employee benefit or fringe
benefit plans maintained or with respect to which contributions are made by the
Seller in respect of employees who are the employees of the Seller who work at
the Purchased Assets. Accurate and complete copies of all such plans, other than
multiemployer plans, have been made available to the Buyer.
5.15 Real Property Encumbrances. Schedule 5.15 describes any
--------------------------
Permitted Encumbrances on the Real Property. Copies of any surveys in the
Seller's possession or any policies of title insurance currently in force and in
the possession of the Seller with respect to such Real Property have been
delivered by the Seller to the Buyer.
5.16 Condemnation. Neither the whole nor any part of the Real Property
------------
or any other real property or rights leased, used or occupied by the Seller in
connection with the ownership or operation of the Purchased Assets is subject to
any pending suit for condemnation or other taking by any public authority, and,
to the Knowledge of the Seller, no such condemnation or other taking is
threatened or contemplated.
5.17 Certain Contracts and Arrangements. (a) Except (i) the Seller
----------------------------------
Agreements listed in Schedule 5.17(a) or any other Schedule hereto, (ii) for
contracts, agreements, personal property leases, commitments, understandings or
instruments which shall expire prior to the Closing Date, (iii) for agreements
with suppliers, distributors and sales representatives entered into in the
ordinary course of business, and (iv) for contracts, agreements, personal
property leases, commitments, understandings or instruments with a value less
than $250,000 or with annual
29
payments less than $50,000 the Seller is not a party to any written contract,
agreement, personal property lease, commitment, understanding or instrument
which is material to the business or operations of the Purchased Assets.
(b) Except as disclosed in Schedule 5.17(b), each material Seller
Agreement listed on Schedule 5.17(a) constitutes a valid and binding obligation
of the parties thereto and is in full force and effect and may be transferred to
the Buyer pursuant to this Agreement and shall continue in full force and effect
thereafter, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder.
(c) Except as set forth in Schedule 5.17(c), there is not, under any
of the Seller Agreements listed on Schedule 5.17(a), any default or event which,
with notice or lapse of time or both, would constitute a default on the part of
the Seller, except, with respect to the Seller Agreements only, such events of
default and other events as to which requisite waivers or consents have been
obtained or which would not, in the aggregate, have a Material Adverse Effect.
5.18 Legal Proceedings, etc. Except as set forth in Schedule 5.18
-----------------------
or in any filing made by the Seller pursuant to the Securities Act or the
Exchange Act, there are no claims, actions, or proceedings pending or
investigation pending or threatened against the Seller relating to the Purchased
Assets before any court, Governmental Authority or regulatory authority or body
acting in an adjudicative capacity, which, if adversely determined, would have a
Material Adverse Effect. Except as set forth in Schedule 5.18, the Seller is
not subject to any outstanding judgment, rule, order, writ, injunction or decree
of any court, Governmental Authority or regulatory authority relating to the
Purchased Assets which has a Material Adverse Effect.
5.19 Permits. The Seller has all material permits, licenses,
-------
franchises and other governmental authorizations, consents and approvals, other
than with respect to Environmental Laws (collectively, "Permits"), as set forth
in Schedule 5.19(a), necessary to operate the Purchased Assets as presently
operated, except where the failure to have such Permits does not have a Material
Adverse Effect. Except as set forth in Schedule 5.19(b), with respect to the
Purchased Assets, the Seller has not received any written notification that it
is in violation of any of such Permits, or any law, statute, order, rule,
regulation, ordinance or judgment of any Governmental Authority or regulatory
body or authority applicable to the Purchased Assets, except for notifications
of violations which would not, in the aggregate, have a Material Adverse Effect.
The Seller is in compliance with all Permits, laws, statutes, orders, rules,
regulations, ordinances, or judgments of any Governmental Authority or
regulatory body or authority applicable to the Purchased Assets, except for
violations which, in the aggregate, do not have a Material Adverse Effect.
30
5.20 Regulation as a Utility. The Seller and certain of its affiliates
-----------------------
are regulated as public utilities in the States of Nevada and California. Except
as set forth on Schedule 5.20, the Seller is not subject to regulation as a
public utility or public service company (or similar designation) by the United
States, any state of the United States, any foreign country or any municipality
or any political subdivision of the foregoing.
5.21 Taxes. The Seller has, in respect of the Purchased Assets, (i)
-----
filed all Tax Returns required to be filed other than those Tax Returns the
failure of which to file would not have a Material Adverse Effect, and (ii) paid
in full or all material Taxes shown to be due on such Tax Returns. Except as
set forth in Schedule 5.21, the Seller has not received any notice of deficiency
or assessment from any taxing authority with respect to liabilities for Taxes of
the Seller in respect of the Purchased Assets, which have not been fully paid or
finally settled, and any such deficiency shown in such Schedule 5.21 is being
contested in good faith through appropriate proceedings. Except as set forth in
Schedule 5.21, there are no outstanding agreements or waivers extending the
applicable statutory periods of limitation for Taxes associated with the
Purchased Assets for any period.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
The Buyer represents and warrants to the Seller as follows:
6.1 Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Arizona and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as is now being conducted. The Buyer is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not have a Material Adverse Effect. The Buyer has heretofore
delivered to the Seller complete and correct copies of its Certificate of
Incorporation and Bylaws (or other similar governing documents), as currently in
effect.
6.2 Authority Relative to this Agreement. The Buyer has full
------------------------------------
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby
31
have been duly and validly authorized by the board of directors of the Buyer and
no other corporate proceedings on the part of the Buyer are necessary to
authorize this Agreement or the Ancillary Agreements or to consummate the
transactions contemplated hereby and thereby. This Agreement and the Ancillary
Agreements have been duly and validly executed and delivered by the Buyer, and
assuming that this Agreement and the Ancillary Agreements constitute valid and
binding agreements of the Seller, subject to the receipt of the Buyer Required
Regulatory Approvals and the Seller Required Regulatory Approvals, constitute
valid and binding agreements of the Buyer, enforceable against the Buyer in
accordance with their terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or general principles of
equity.
6.3 Consents and Approvals; No Violation. (a) Except as set forth in
------------------------------------
Schedule 6.3(a), and other than obtaining the Buyer Required Regulatory
Approvals and the Seller Required Regulatory Approvals, neither the execution
and delivery of this Agreement or the Ancillary Agreements by the Buyer nor the
purchase by the Buyer of the Purchased Assets pursuant to this Agreement or the
Ancillary Agreements shall (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws (or other similar
governing documents) of the Buyer, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority or regulatory authority, except (x) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not have a Material Adverse Effect or (y) for those
requirements which become applicable to the Buyer as a result of the specific
regulatory status of the Seller (or any of its Affiliates) or as a result of any
other facts that specifically relate to the business or activities in which the
Seller (or any of its Affiliates) is or proposes to be engaged; (iii) result in
a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, agreement, lease or other instrument or obligation to
which the Buyer or any of its Subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained.
(b) Except as set forth in (i) Schedule 6.3(b) and (ii) the filings
by the Buyer and the Seller required by the HSR Act and the expirations or
earlier termination of all waiting periods under the HSR Act (the filings and
approvals referred to in clauses (i) and (ii) are collectively referred to as
the "Buyer Required Regulatory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of any
Governmental Authority or regulatory body or authority is necessary for the
consummation by the Buyer of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices,
32
authorizations, consents or approvals which if not obtained or made, shall not
in the aggregate, have a Material Adverse Effect.
6.4 Regulation as a Utility. Except as set forth in Schedule 6.4, the
-----------------------
Buyer is not subject to regulation as a public utility or public service company
(or similar designation) by the United States, any state of the United States,
any foreign country or any municipality or any political subdivision of the
foregoing.
6.5 Availability of Funds. The Buyer has sufficient funds available
---------------------
to it or has received binding written commitments from responsible financial
institutions to provide sufficient funds on the Closing Date to pay the Purchase
Price.
ARTICLE VII
-----------
COVENANTS OF THE PARTIES
------------------------
7.1 Conduct of Business of the Seller. Except as described in
---------------------------------
Schedule 7.1, during the period from the date of this Agreement to the Closing
Date, the Seller shall operate and maintain the Purchased Assets according to
its ordinary and usual course of business consistent with good industry
practice. Without limiting the generality of the foregoing, and, except as
contemplated in this Agreement or as described in Schedule 7.1, prior to the
Closing Date, without the prior written consent of the Buyer (unless such
consent would be prohibited by law), the Seller shall not with respect to the
Purchased Assets:
(a) (i) create, incur or assume any material amount of indebtedness
for money borrowed, other than in the ordinary course of business, including
obligations in respect of capital leases but excluding purchase money mortgages
granted in connection with the acquisition of property in the ordinary course of
business; or (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person except in the ordinary course of business;
(b) make any material change in the operations of the Purchased
Assets including, without limitation, the levels of fuel inventory and materials
and supplies customarily maintained by the Seller;
(c) except as set forth in Schedule 1.1(89), make any capital
expenditures with respect to the Purchased Assets or enter into any contract or
commitment therefor, except that the Seller shall make any capital expenditures
(i) requested by the Buyer, provided that the Buyer shall reimburse the Seller
for such capital expenditures as part of the Adjustment Amount and (ii) deemed
necessary by
33
the Seller and consented to by the Buyer, whose consent shall not be
unreasonably withheld ("Necessary Capital Expenditures"); provided, however,
-------- -------
that if the Buyer requests that the Seller make enhancements with a cost in
excess of the cost of any Necessary Capital Expenditure, the Buyer shall
reimburse the Seller for the cost of such enhancement to the extent that the
cost of such enhancement exceeds the cost of the Necessary Capital Expenditures
as part of the Adjustment Amount;
(d) sell, lease (as lessor), transfer or otherwise dispose of, any of
the Purchased Assets, other than assets used, consumed or replaced in the
ordinary course of business consistent with good industry practice and not
mortgage or pledge, or impose or suffer to be imposed any Encumbrance on, any of
the Purchased Assets other than Permitted Encumbrances;
(e) except as set forth in Schedule 1.1(90), make any maintenance
expenditures, except that the Seller shall make any maintenance expenditures (i)
requested by the Buyer, provided that the Buyer shall reimburse the Seller for
such maintenance expenditures as part of the Adjustment Amount and (ii) deemed
necessary by the Seller and consented to by the Buyer, whose consent shall not
be unreasonably withheld ("Necessary Maintenance Expenditures"); provided,
--------
however, that if the Buyer requests that the Seller make enhancements/upgrades
-------
with a cost in excess of the cost of any Necessary Maintenance Expenditure, the
Buyer shall reimburse the Seller for the cost of such enhancements/upgrades to
the extent the cost of such enhancements/upgrades exceeds the cost of the
Necessary Maintenance Expenditure as part of the Adjustment Amount;
(f) amend any of the Seller Agreements;
(g) enter into or amend any real or personal property Tax agreement,
treaty or settlement;
(h) execute, enter into or amend any agreement, order, decree or
judgment relating to any Permit;
(i) enter into any commitment for the purchase or sale of fuel
(whether commodity or transportation) that Seller intends to assign to Buyer
having a term of greater than ninety (90) days that extends beyond December 31,
2001 if the aggregate payment under such commitment is expected to exceed
$500,000 or if the aggregate payments under such commitment and all other then
outstanding commitments not previously consented to by the Buyer would be
expected to exceed $1,000,000;
34
(j) except for the Transition Power Purchase Agreement, enter into
any wholesale sale agreements having a term extending beyond the Closing Date
where the sale of energy is expected to be supplied via the Purchased Assets;
(k) sell, lease or otherwise dispose of SO2 Allowances, except those
listed in Schedule 2.2(g) or to the extent necessary to operate the Purchased
Assets in accordance with this Section 7.1; or
(l) enter into any contract, agreement, commitment or arrangement,
whether written or oral, with respect to any of the transactions set forth in
the foregoing paragraphs (a) through (k).
7.2 Access to Information. (a) Between the date of this Agreement and
---------------------
the Closing Date, the Seller shall, during ordinary business hours and upon
reasonable notice (i) give the Buyer and the Buyer Representatives reasonable
access to all books, records, plants, offices and other facilities and
properties constituting the Purchased Assets to which the Buyer is permitted
access by law, (ii) permit the Buyer to make such reasonable inspections thereof
as the Buyer may reasonably request; (iii) cause its officers and advisors to
furnish the Buyer with such financial and operating data and other information
with respect to the Purchased Assets as the Buyer may from time to time
reasonably request; (iv) cause its officers and advisors to furnish the Buyer a
copy of each report, schedule or other document filed or received by them with
the SEC, PUCN, CPUC or FERC with respect to the Purchased Assets; provided,
--------
however, that (A) any such investigation shall be conducted in such a manner as
-------
not to interfere unreasonably with the operation of the Purchased Assets, (B)
the Seller shall not be required to take any action which would constitute a
waiver of the attorney-client privilege and (C) the Seller need not supply the
Buyer with any information which the Seller is under a legal obligation not to
supply. Notwithstanding anything in this Section 7.2 to the contrary, (i) the
Seller shall only furnish or provide such access to medical records as is
required by law and (ii) except as provided in Section 7.2(d), the Buyer shall
not have the right to perform or conduct any environmental sampling or testing
at, in, on or underneath the Purchased Assets.
(b) All information furnished to or obtained by the Buyer and the
Buyer Representatives pursuant to this Section 7.2 shall be subject to the
provisions of the Confidentiality Agreement and shall be treated as "Evaluation
Material" (as defined in the Confidentiality Agreement).
(c) For a period of ten (10) years after the Closing Date, the Seller
and its representatives shall have reasonable access to all of the books and
records of the Purchased Assets, as the case may be, transferred to the Buyer
hereunder to the extent that such access may reasonably be required by the
Seller in connection with
35
matters relating to or affected by the operation of the Purchased Assets prior
to the Closing Date. Such access shall be afforded by the Buyer upon receipt of
reasonable advance notice and during normal business hours. The Seller shall be
solely responsible for any costs or expenses incurred by them pursuant to this
Section 7.2(c). If the Buyer shall desire to dispose of any such books and
records prior to the expiration of such ten-year period, the Buyer shall, prior
to such disposition, give the Seller a reasonable opportunity at the Seller's
expense, to segregate and remove such books and records as the Seller may
select.
(d) Buyer shall, upon 48 hour notice to Seller, have reasonable
access at reasonable times to the Xxxxx Xxxxx Station and other property
associated with the Purchased Assets, as may be reasonably necessary, to perform
(i) a geotechnical investigation to determine the subsurface conditions in
connection with the development of additional generating facilities and (ii)
hydrologic studies, pump testing, water analysis and well inspections associated
with or necessary to obtain cooling water, permits and engineering review
associated with securing permits and rights to water for development of
additional generating facilities, provided, that neither the access nor any of
the activities described in this Section 7.2(d) shall interfere with the use or
operation of the Purchased Assets, and provided, further, that Buyer shall
provide copies to Seller of all data, studies, tests, analyses, and reports
generated in connection with such access and activities. Buyer hereby agrees to
indemnify and hold Seller harmless from and against, any and all claims or
liabilities incurred as a result of or in any way associated with any action by
Buyer in connection with the access or activities described in the preceding
sentence.
7.3 Expenses. Except to the extent specifically provided herein,
--------
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring such costs and
expenses.
7.4 Further Assurances. Subject to the terms and conditions of
------------------
this Agreement, each of the parties hereto shall use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the sale of the Purchased Assets
pursuant to this Agreement including, without limitation, the use of the
Seller's and the Buyer's commercially reasonable efforts to obtain all Permits
and Environmental Permits necessary for the Buyer to operate the Purchased
Assets. From time to time after the date hereof, without further consideration,
the Seller shall, at its own expense, execute and deliver such documents to the
Buyer as the Buyer may reasonably request in order more effectively to vest in
the Buyer good title to the Purchased Assets. From time to time after the date
hereof, the Buyer shall, at its own expense, execute and deliver such documents
to the Seller as the Seller may reasonably
36
request in order to more effectively consummate the sale of the Purchased Assets
pursuant to this Agreement. To the extent that any personal property lease,
relating to any assets (the "Leased Assets") which are principally used by the
Seller for generation purposes at the Purchased Assets, cannot be assigned to
the Buyer, the Seller shall use its commercially reasonable efforts to acquire
title to such Leased Assets and to include them in the Purchased Assets before
the Closing Date. The Seller's costs associated with acquiring title to such
Leased Assets shall be paid by the Buyer as part of the Purchase Price. During
the period from the date of this Agreement to the Closing Date, the Seller
agrees to take no action which would materially limit or impair Buyer's efforts
to commence permitting activities related to the expansion at the Xxxxx Xxxxx
Station. In addition, Seller shall consult with Buyer on matters relating to
Seller's pending permit applications, permit assignments and permit consents
related to site expansion and shall work with Buyer in good faith to manage and
control such pending permit applications, permit assignments and permit
consents.
7.5 Public Statements. The parties shall consult with each other
-----------------
prior to issuing any public announcement, statement or other disclosure with
respect to this Agreement or the transactions contemplated hereby and the Buyer
shall not issue any such public announcement, statement or other disclosure
without having first received the written consent of the Seller, except as may
be required by law and except that the parties may make public announcements,
statements or other disclosures with respect to this Agreement and the
transactions contemplated hereby to the extent and under the circumstances in
which the parties are expressly permitted by the Confidentiality Agreement to
make disclosures of "Evaluation Material" (as defined in the Confidentiality
Agreement).
7.6 Consents and Approvals. (a) The Seller and the Buyer shall each
----------------------
file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice any notifications required to be filed under the
HSR Act and the rules and regulations promulgated thereunder with respect to the
transactions contemplated hereby. The parties shall consult with each other as
to the appropriate time of filing such notifications and shall use their best
efforts to make such filings at the agreed upon time, to respond promptly to any
requests for additional information made by either of such agencies, and to
cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing.
(b) The Seller and the Buyer shall cooperate with each other and (i)
promptly prepare and file all necessary documentation, (ii) effect all necessary
applications, notices, petitions and filings and execute all agreements and
documents, (iii) use all commercially reasonable efforts to obtain the transfer
or reissuance to the Buyer of all necessary Environmental Permits, Permits,
consents, approvals and authorizations of all governmental bodies and (iv) use
all commercially reasonable
37
efforts to obtain all necessary consents, approvals and authorizations of all
other parties, in the case of each of the foregoing clauses (i), (ii), (iii) and
(iv), necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Seller Required Regulatory
Approvals, the Buyer Required Regulatory Approvals and assignment of the Seller
Agreements) or required by the terms of any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument to which the Seller or the Buyer is a party or by which either of
them is bound. The Seller shall have the right to review and approve in advance
all characterizations of the information relating to Purchased Assets; and each
of the Seller and the Buyer shall have the right to review and approve in
advance all characterizations of the information relating to the transactions
contemplated by this Agreement which appear in any filing made in connection
with the transactions contemplated hereby. The parties hereto agree that they
shall consult with each other with respect to the transferring to the Buyer or
the obtaining by the Buyer of all such necessary Environmental Permits, Permits,
consents, approvals and authorizations of all third parties and governmental
bodies. The Seller and the Buyer shall designate separate counsel with respect
to all applications, notices, petitions and filings (joint or otherwise)
relating to this Agreement and the transactions contemplated hereby on behalf of
the Seller, on the one hand and the Buyer on the other hand, with all
governmental bodies. To the extent that a consent to an assignment of any
material Seller Agreement cannot be obtained before the Closing Date, the Seller
shall enter into all such agreements with the Buyer as are necessary to give the
Buyer the rights, obligations and burdens of such Seller Agreements.
(c) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any federal, state
or local Governmental Authority or agency or any third party in connection with
any federal, state or local governmental consents and approvals legally required
for the consummation of the transactions contemplated hereby and shall not
propose or enter into any such stipulation or agreement without the other
party's prior written consent, which consent shall not be unreasonably withheld.
7.7 Fees and Commissions. The Seller and the Buyer each represent and
--------------------
warrant to the other that, except for Credit Suisse First Boston ("CSFB"), which
is acting for and at the expense of the Seller, no broker, finder or other
Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the party making such representation. The Seller and the Buyer shall
pay to the other or otherwise discharge, and shall indemnify and hold the other
harmless from and against, any and all claims or liabilities for all brokerage
fees, commissions and finder's fees (other than as described above) incurred by
reason of any action taken by such party.
38
7.8 Intentionally Left Blank.
------------------------
7.9 Tax Matters. (a) Notwithstanding any other provision of this
-----------
Agreement, all transfer, sales and similar Taxes incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by
the Buyer, and the Buyer shall, at its own expense, file, to the extent required
by law, all necessary Tax Returns and other documentation with respect to all
such Taxes, and, if required by applicable law, the Seller shall join in the
execution of any such Tax Returns or other documentation, provided, however,
Seller shall work with Buyer in good faith to minimize all transfer, sales and
similar taxes and Buyer shall indemnify Seller for any reasonable out-of-pocket
expenses incurred by Seller in minimizing such taxes.
(b) With respect to Taxes to be prorated in accordance with Section
3.4 hereof only, the Buyer shall prepare and timely file all Tax Returns
required to be filed with respect to the Purchased Assets, if any, and shall
duly and timely pay all such Taxes shown to be due on such Tax Returns. The
Buyer's preparation of any such Tax Returns shall be subject to the Seller's
approval, which approval shall not be unreasonably withheld. The Buyer shall
make such Tax Returns available for the Seller's review and approval no later
than twenty (20) days prior to the due date for filing such Tax Return. Within
ten (10) days after receipt of such Tax Return, the Seller shall pay to the
Buyer its proportionate share of the amount shown as due on such Tax Return
determined in accordance with Section 3.4 hereof. In addition to any amount of
reimbursement due in accordance with Section 3.4 hereof, Buyer shall reimburse
Seller for any Nevada property taxes incurred by Seller which relate to the
Purchased Assets and have a lien date after the Closing Date. The amount of such
reimbursement shall be determined based upon the proportion of (i) the
"historical cost less depreciation" of the Purchased Assets to (ii) the total
historical cost less depreciation of all the assets reported on Seller's Nevada
Operating Property Appraisal Report.
(c) Each of the Buyer and the Seller shall provide the other with
such assistance as may reasonably be requested by the other party in connection
with the preparation of any Tax Return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each shall retain and provide the requesting party with
any records or information which may be relevant to such return, audit or
examination, proceedings or determination. Any information obtained pursuant to
this Section 7.9 or pursuant to any other Section hereof providing for the
sharing of information or review of any Tax Return or other schedule relating to
Taxes shall be kept confidential by the parties hereto.
39
7.10 Supplements to Schedules. Prior to the Closing Date, the
------------------------
Seller shall supplement or amend the Schedules required by Article V with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such Schedules. No supplement or amendment of any Schedule made pursuant to
this Section 7.10 shall be deemed to cure any breach of any representation or
warranty made in this Agreement unless the parties agree thereto in writing.
7.11 Employees. (a) Schedule 7.11(a) sets forth all collective
---------
bargaining agreements to which the Seller is a party in connection with Seller's
employees assigned on a full-time basis to the Purchased Assets, if any (the
"Collective Bargaining Agreements"), as well as any Letters of Agreement between
Seller and IBEW Local 396 ("Local 396 LOA"), letters of intent, or other such
agreements or understandings related to the sale and transfer of certain plants.
The Buyer shall offer employment to begin as of the Closing Date to the Seller's
employees, if any, who work full time at the Purchased Assets and who are
included in the bargaining units covered by the Collective Bargaining Agreements
("Hourly Employees").
(b) Continued Employment. The Buyer shall, as of the Closing Date,
--------------------
make a Qualifying Offer of Employment (as defined herein) to each employee of
Seller who (i) worked full-time at the Purchased Assets and (ii) was an employee
of the Seller immediately prior to the Closing Date, other than (x) Hourly
Employees and (y) Directors (each such employee who accepts a Qualifying Offer
of Employment, a "Management Employee"). An offer of employment shall be deemed
a "Qualifying Offer of Employment" if (A) the proposed base salary and level of
incentive compensation is at least 90% of the employee's base salary and level
of incentive compensation immediately prior to the Closing Date and (B) the
proposed principal place of employment is within one hundred (100) miles of the
employee's principal place of employment immediately prior to the Closing Date.
(c) Benefit Continuation. Subject to applicable law, the Buyer shall
--------------------
maintain for a period of at least one year after the Closing Date, without
interruption, such employee compensation, welfare and benefit plans, programs,
policies and fringe benefits covering Management Employees that will be as
economically similar, in the aggregate, as those provided pursuant to those
employee compensation, welfare and benefit plans, programs, policies and fringe
benefits of the Seller and their Subsidiaries as in effect immediately prior to
the Closing Date. To the extent permissible under the terms of the Benefit
Plans of Buyer and required by applicable law, the Buyer shall waive all
limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Management
Employees under any Benefit Plans of Buyer that are welfare benefit plans that
such employees may be eligible to participate in after the Closing Date, other
than limitations or waiting periods that are already in
40
effect with respect to such employees and that have not been satisfied as of the
Closing Date under any welfare benefit plan maintained for the Management
Employees immediately prior to the Closing Date.
(d) Service Credit. The Management Employees shall be given credit
--------------
for all service with the Seller or its Subsidiaries (and service credited by
Seller or such Subsidiary), to the same extent as such service was credited for
such purpose by Seller or such Subsidiary, under all employee benefit plans,
programs and policies of the Buyer in which they become participants (the
"Benefit Plans of Buyer") for purposes of eligibility, vesting, benefit accrual
and determination of level of benefits. Notwithstanding the foregoing, such
service with the Seller shall be recognized for purposes of benefit accrual
under a defined benefit pension plan or a retiree medical plan (a "Plan")
sponsored by the Buyer only if assets and liabilities are transferred to the
Buyer's plan and trust from the Seller's plan and trust.
(e) Assumptions. The Buyer shall assume only those obligations that
-----------
are required to be assumed by the Buyer under the Collective Bargaining
Agreement or obligations for which there was a transfer of assets and
liabilities to the Buyer's plan and trust from the Seller's plan and trust.
Absent such transfer of plan assets and liabilities, benefits accrued under such
Benefits Plans of Seller and all benefits currently payable as of the Closing
Date shall be and shall remain the obligation of the Seller. Any individual
covered under any such Benefit Plan of Seller that is a Group Health Plan (as
defined in Section 4980B(g)(2) of the Code and Section 607(l) of ERISA) and who
is eligible for continued coverage under such Group Health Plan as of the
Closing Date, shall continue to be covered under such Group Health Plan after
Closing pursuant to the provisions of COBRA.
(f) Neutrality Regarding Future Employees. Subject to federal labor
-------------------------------------
law requirements, if Buyer hires employees whose duties are significantly the
same duties covered under the Generation Collective Bargaining Agreement between
Nevada Power Company and Local Union 396 of the IBEW (the "Union") that was
effective June 25, 1999, then the Buyer shall notify the Union of this
circumstance and, upon written request by the Union:
(1) Allow representatives of the Union reasonable access to the
business of the Buyer for the purpose of informing such employees of their
rights to form and join organizations of their own choosing for the purpose of
representation with their employer with respect to wages, hours, and other terms
and conditions of employment and to explain the benefits of membership in and
representation for such purposes by the Union. "Reasonable access" shall
include the right to meet with employees on at least three (3) occasions at the
business of the Buyer on non-work time (e.g., lunch hour) during normal business
hours.
41
(2) Buyer shall supply the Union with a list of such employees.
Such list shall contain the names, home addresses and home phone numbers of such
employees. The Union shall at all times maintain the confidentiality of any such
list.
(3) Buyer shall submit to a card check election to determine the
desires of such employees to be represented for the purpose of collective
bargaining by the Union. If a majority of such employees have signed cards
authorizing the Union to act as their collective bargaining representative, and
such authorization card majority is verified by the Federal Mediation and
Conciliation Service, then the Buyer shall recognize the Union as the exclusive
bargaining representative of such employees.
(4) If the Union is selected by a majority of such employees as
their collective bargaining representative, then the Buyer shall, immediately
upon the request by the Union, bargain in good faith with the Union for the
purpose of concluding a collective bargaining agreement.
(5) At all times Buyer shall remain neutral with regard to any
question concerning the representation of such employees by the Union.
"Neutral" shall mean that the Buyer or its affiliate(s) shall take no official
position, nor shall it direct or condone any of its agents or representatives,
including any attorneys or consultants, to take any position against the
exercise by its employees of their right to select the Union as their collective
bargaining representative or to oppose the selection of the Union as the
employees' collective bargaining representative.
(g) WARN Act. The Seller shall perform timely and discharge all
--------
requirements, if any, under the WARN Act and under applicable state and local
laws and regulations for the notification of its employees arising from the sale
of the Purchased Assets to the Buyer up to and including the Closing Date. The
Buyer shall cooperate with the Seller to provide the Seller with such
information as may be needed from the Buyer for inclusion in such notices,
including providing the Seller at least 90 days prior to the date on which the
Closing is anticipated to occur (or such date to which the Buyer and the Seller
mutually agree) with a list of all of the Seller's employees to whom the Buyer
shall make offers of employment. After the Closing Date, the Buyer shall be
responsible for performing and discharging all requirements under the WARN Act
and under applicable state and local laws and regulations for the notification
of its employees with respect to the Purchased Assets.
7.12 Risk of Loss. (a) From the date hereof through the Closing Date,
------------
all risk of loss or damage to the property included in the Purchased Assets
shall be borne by the Seller.
42
(b) If, before the Closing Date all or any portion of the Purchased
Assets are taken by eminent domain, or is the subject of a pending or (to the
knowledge of the Seller) contemplated taking which has not been consummated, the
Seller shall notify the Buyer promptly in writing of such fact. If such taking
would have a Material Adverse Effect, the Buyer and the Seller shall negotiate
in good faith to settle the loss resulting from such taking (including, without
limitation, by making a fair and equitable adjustment to the Purchase Price)
and, upon such settlement, consummate the transaction contemplated by this
Agreement pursuant to the terms of this Agreement. If no such settlement is
reached within sixty (60) days after the Seller has notified the Buyer of such
taking, then the Buyer or the Seller may, if such taking relates to the
Purchased Assets, terminate this Agreement pursuant to Section 10.1(f) hereof.
(c) If, before the Closing Date all or any material portion of the
Purchased Assets are damaged or destroyed by fire or other casualty, the Seller
shall notify the Buyer promptly in writing of such fact. If such damage or
destruction would have a Material Adverse Effect and the Seller has not notified
the Buyer of its intention to cure such damage or destruction within fifteen
(15) days after its occurrence, the Buyer and the Seller shall negotiate in good
faith to settle the loss resulting from such casualty (including, without
limitation, by making a fair and equitable adjustment to the Purchase Price)
and, upon such settlement, consummate the transactions contemplated by this
Agreement pursuant to the terms of this Agreement. If no such settlement is
reached within sixty (60) days after the Seller has notified the Buyer of such
casualty, then the Buyer or the Seller may terminate this Agreement pursuant to
Section 10.1(f) hereof.
7.13 Additional Covenants of the Buyer. Notwithstanding any other
---------------------------------
provision hereof, Buyer covenants and agrees that, for a period of five (5)
years commencing on the Closing Date, Buyer shall not transfer the Purchased
Assets, or any material portion of the Purchased Assets, to any entity or
Affiliate of such entity who at that time is the owner of any bundle of
generation assets previously owned by Seller within the southern regions of
Nevada, as such regions are described in the Offering Memorandum dated as of
March 2000, as supplemented from time to time. Buyer further covenants and
agrees that, in the event that Buyer transfers the Purchased Assets or any
material portion of the Purchased Assets during such five (5) year period, Buyer
shall obtain from its transferee a covenant and agreement which restricts such
transferee's ability to transfer the Purchased Assets that is substantially
similar to Buyer's covenant and agreement in the first sentence of this Section
7.13 and an additional covenant and agreement that is substantially similar to
that of this sentence, and each such covenant and agreement shall survive and
remain in effect until five (5) years from the Closing Date as defined in this
Agreement. The covenants and agreements contained in this Section 7.13 shall
survive Closing and
43
shall continue in effect for a period of five (5) years commencing on the
Closing Date.
7.14 Additional Covenants of the Parties. (a) Within fifteen (15)
-----------------------------------
Business Days of the date of this Agreement, Buyer agrees to cooperate with
Seller in the development of a form of water supply agreement which
substantially reflects the provisions set forth in Exhibit H hereto. Seller
shall use its commercially reasonable best efforts to present such form of
agreement to the buyer of the Xxxxx Bundle as soon as practicable thereafter.
Seller and Buyer shall execute such definitive agreement, which will also be
executed by the buyer of the Xxxxx Bundle, within thirty (30) Business Days of
the date of this Agreement.
(b) Seller shall conduct a performance test of the Xxxxx Xxxxx
turbogenerator system (the "Test") within 45 days of completion of the
combustion turbine overhaul scheduled for February, 2001 to confirm the unit is
able to perform at rated summer and winter capacity output levels presented in
Exhibit A to the Transitional Power Purchase Agreement. Seller shall give Buyer
reasonable notice, but not less than thirty (30) days, of the scheduled date of
such Test and protocols to be utilized therein. Buyer shall be entitled to
review and comment on such Test and protocols, and Seller shall consider the
incorporation of such comments in good faith. Buyer shall be entitled to
observe the conduct of such Test. Seller shall provide copies of the reports
prepared following such Test. The Test shall correct observed (measured) data
site conditions to International Standards Organization (ISO) standard
conditions, accounting for non-standard ambient temperature, relative humidity
and atmospheric pressure, utilizing the original General Electric turbine
correction curves for the turbine. The Test shall be conducted utilizing
natural gas fuel and shall measure output utilizing the evaporative cooler, if
meteorological conditions permit and consistent with good utility practice. The
correction curves will be utilized as the basis to extrapolate to typical summer
and winter conditions at the site of 90 degrees F (with the evaporative cooler
on) and 72 degrees F (with the evaporative cooler off) respectively.
(c) The parties agree to negotiate in good faith to reach an
agreement which will permit Buyer to store certain of Buyer's spare parts at the
Xxxxx Xxxxx Station prior to Closing.
ARTICLE VIII
------------
CLOSING CONDITIONS
------------------
8.1 Conditions to Each Party's Obligations to Effect the Transactions
-----------------------------------------------------------------
Contemplated Hereby. The respective obligations of each party to effect the
-------------------
44
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have expired or been
terminated;
(b) No preliminary or permanent injunction or other order or decree
by any federal or state court which prevents the consummation of the
transactions contemplated hereby or by the Ancillary Agreements shall have been
issued and remain in effect (each party agreeing to use its reasonable best
efforts to have any such injunction, order or decree lifted) and no statute,
rule or regulation shall have been enacted by any state or federal government or
Governmental Authority in the United States which prohibits the consummation of
the transactions contemplated hereby or by the Ancillary Agreements.
(c) All federal, state and local government consents and approvals
required for the consummation of the transactions contemplated hereby or by the
Ancillary Agreements, including, without limitation, the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals, shall have
become Final Orders (a "Final Order" for purposes of this Agreement means a
final order after all opportunities for rehearing are exhausted (whether or not
any appeal thereof is pending) that has not been revised, stayed, enjoined, set
aside, annulled or suspended, with respect to which any required waiting period
has expired; and as to which all conditions to effectiveness prescribed therein
or otherwise by law, regulation or order have been satisfied) with such terms
and conditions as shall have been imposed by the Governmental Authority issuing
such Final Order and such Final Orders shall not have imposed terms and
conditions which would have a material adverse effect on the Purchased Assets;
and
(d) All consents and approvals required under the terms of any note,
bond, mortgage, indenture, contract or other agreement to which the Seller or
the Buyer, or any of their Subsidiaries, is a party for the consummation of the
transactions shall have been obtained, other than those (i) which if not
obtained, would not, in the aggregate, have a Material Adverse Effect, or (ii)
for which an agreement which is described in the last sentence of Section 7.6(b)
hereof has been entered into.
8.2 Conditions to Obligations of Buyer. The obligation of the
----------------------------------
Buyer to effect the transactions contemplated by this Agreement shall be subject
to the fulfillment at or prior to the Closing Date of the following additional
conditions:
45
(a) There shall not have occurred and be continuing, a Material
Adverse Effect;
(b) The Seller shall have performed and complied with in all material
respects the covenants and agreements contained in this Agreement required to be
performed and complied with by it on or prior to the Closing Date, and the
representations and warranties of the Seller set forth in this Agreement shall
be true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing Date, and the
Buyer shall have received a certificate to that effect signed by an authorized
officer of the Seller;
(c) The Buyer shall have received a certificate from an authorized
officer of the Seller, dated the Closing Date, to the effect that to the best of
such officer's knowledge, the conditions set forth in Sections 8.2(a) and (b)
hereof have been satisfied;
(d) The Buyer shall have received an opinion from Xxxxxxxx & Wedge,
P.C., dated the Closing Date and satisfactory in form and substance to the Buyer
and its counsel, substantially to the effect that:
(1) The Seller is a corporation organized, existing and in good
standing under the laws of the State of Nevada and has the corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to consummate the transactions contemplated hereby and thereby; and the
execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by requisite corporate action taken on the part of the Seller;
(2) This Agreement and the Ancillary Agreements have been
executed and delivered by the Seller and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are obtained)
are valid and binding obligations of the Seller, enforceable against the Seller
in accordance with their terms, except that such enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, and (B) general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity) and except to the extent that the right to indemnification and
contribution contained therein may be limited by state or federal securities
laws or the public policy underlying such laws;
(3) The execution, delivery and performance of this Agreement
and the Ancillary Agreements by the Seller shall not constitute a violation of
the Certificate of Incorporation or Bylaws of the Seller; and
46
(4) No declaration, filing or registration with, or notice to,
or authorization, consent or approval of any Governmental Authority is necessary
for the consummation by the Seller of the Closing other than (i) the Seller
Required Regulatory Approvals, (ii) such declarations, filings or registrations
with, or notices to, or authorizations, consents or approvals relating to
Permits and Environmental Permits and (iii) such declarations, filings or
registrations with, or notices to, or authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have a Material
Adverse Effect.
As to any matter contained in such opinion which involves the laws of
any jurisdiction other than the Federal laws of the United States or the laws of
the State of Nevada, such counsel may rely upon opinions of counsel admitted in
such other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion may
expressly rely as to matters of fact upon certificates furnished by the Seller
and appropriate officers and directors of the Seller and by public officials;
and
(e) The Seller shall have executed and delivered, as of the Closing,
each of the Ancillary Agreements to be executed by the Seller and all required
approvals and conditions relating to the Ancillary Agreements shall have been
obtained or satisfied.
8.3 Conditions to Obligations of Seller. The obligation of the
-----------------------------------
Seller to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Buyer shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed on
or prior to the Closing Date;
(b) The representations and warranties of the Buyer set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made at and as of the
Closing Date;
(c) The Seller shall have received a certificate from an authorized
officer of the Buyer, dated the Closing Date, to the effect that, to the best of
such officer's knowledge, the conditions set forth in Sections 8.3(a) and (b)
hereof have been satisfied; and
(d) The Seller shall have received an opinion from Xxxxx & Xxxxxx
L.L.P., counsel for the Buyer, dated the Closing Date and satisfactory in form
and substance to the Seller and its counsel, substantially to the effect that:
47
(1) The Buyer is a corporation organized, existing and in good
standing under the laws of the State of Arizona and has the corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to consummate the transactions contemplated hereby and thereby; and the
execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite corporate action taken on the part of the Buyer;
(2) This Agreement and the Ancillary Agreements have been
executed and delivered by the Buyer and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are obtained)
are valid and binding obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except that such enforcement thereof may be limited
by (A) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (B) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought;
(3) The execution, delivery and performance of this Agreement
and the Ancillary Agreements by the Buyer shall not constitute a violation of
the Certificate of Incorporation or Bylaws (or other similar governing
documents), as currently in effect, of the Buyer; and
(4) No declaration, filing or registration with, or notice to,
or authorization, consent or approval of any Governmental Authority is necessary
for the consummation by the Buyer of the Closing other than (i) the Buyer
Required Regulatory Approvals, (ii) such declarations, filings or registrations
with, or notices to, or authorizations, consents or approvals relating to
Permits and Environmental Permits and (iii) such declarations, filings or
registrations with, or notices to, or authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have a Material
Adverse Effect.
As to any matter contained in such opinion which involves the laws of
any jurisdiction other than the federal laws of the United States and the State
of Arizona, such counsel may rely upon opinions of counsel admitted to practices
in such other jurisdictions. Any opinions relied upon by such counsel as
aforesaid shall be delivered together with the opinion of such counsel. Such
opinion may expressly rely as to matters of facts upon certificates furnished by
appropriate officers and directors of the Buyer and its Subsidiaries and by
public officials; and
48
(e) The Buyer shall have executed and delivered, as of the Closing,
each of the Ancillary Agreements to be executed by the Buyer and all required
approvals and conditions relating to the Ancillary Agreements have been obtained
or satisfied.
ARTICLE IX
----------
INDEMNIFICATION
---------------
9.1 Indemnification. (a) The Seller shall indemnify, defend and hold
---------------
harmless the Buyer from and against any and all claims, demands or suits (by any
Person), losses, liabilities, damages (including consequential or special
damages), obligations, payments, costs, Taxes and expenses (including, without
limitation, the costs and expenses of any and all actions, suits, proceedings,
assessments, judgments, settlements and compromises relating thereto and
reasonable attorneys' fees and reasonable disbursements in connection therewith)
to the extent the foregoing are not covered by insurance, (collectively,
"Indemnifiable Losses"), asserted against or suffered by the Buyer relating to,
resulting from or arising out of (i) any breach by the Seller of any covenant or
agreement of the Seller contained in this Agreement or the Ancillary Agreements
or (ii) the Excluded Liabilities.
(b) The Buyer shall indemnify, defend and hold harmless the Seller
from and against any and all Indemnifiable Losses asserted against or suffered
by the Seller relating to, resulting from or arising out of (i) any breach by
the Buyer of any covenant or agreement of the Buyer contained in this Agreement
or the Ancillary Agreements or (ii) the Assumed Liabilities.
(c) Either the person required to provide indemnification under this
Agreement (the "Indemnifying Party") or the person entitled to receive
indemnification under this Agreement (the "Indemnitee") may assert any offset or
similar right in respect of its obligations under this Section 9.1 based upon
any actual or alleged breach of any covenant or agreement contained in this
Agreement or the Ancillary Agreements or the Ancillary Agreements .
(d) Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages, costs
and expenses from insurers of such Indemnitee under applicable insurance
policies so as to reduce the amount of any Indemnifiable Loss hereunder. The
amount of any Indemnifiable Loss shall be reduced (i) to the extent that the
Indemnitee receives any insurance proceeds with respect to an Indemnifiable Loss
and (ii) to take into account any Tax or Income Tax benefit recognized by the
Indemnitee arising from the recognition of the Indemnifiable Loss, net of any
Tax or Income Tax detriment, and any payment actually received with respect to
an Indemnifiable Loss.
49
(e) The expiration, termination or extinguishment of any covenant,
agreement, representation or warranty shall not affect the parties' obligations
under this Section 9.1 if the Indemnitee provided the Indemnifying Party with
proper notice of the claim or event for which indemnification is sought prior to
such expiration, termination or extinguishment.
(f) The rights and remedies of the Seller and the Buyer under this
Article IX are exclusive and in lieu of any and all other rights and remedies
which the Seller and the Buyer may have under this Agreement or otherwise for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement or (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be. Without limiting
the foregoing, with respect to the Purchased Assets, the Buyer, for itself and
its Affiliates, does hereby irrevocably release, hold harmless and forever
discharge the Seller from any and all claims of any kind or character, whether
known or unknown, hidden or concealed, resulting from or arising out of or in
connection with Hazardous Substances or any Environmental Law, other than those
liabilities and obligations set forth in Section 2.4(c) hereof. In furtherance
of the foregoing, the Buyer, for itself and on behalf of its Affiliates, hereby
irrevocably waives any and all rights and benefits with respect to such claims
that it now has, or in the future may have conferred upon it by virtue of any
statute, regulation or common law principle which provides that a general
release does not extend to claims which a party does not know or suspect to
exist in its favor at the time of executing the release, if knowledge of such
claims would have materially affected such party's settlement with the obligor.
In this connection, the Buyer hereby acknowledges that it is aware that factual
matters now unknown to it may have given, or hereafter may give, rise to claims
that are presently unknown, unanticipated and unsuspected, and it further agrees
that this release has been negotiated and agreed upon in light of that
awareness, and the Buyer, for itself and on behalf of its Affiliates,
nevertheless hereby intends irrevocably to release the Seller from the claims
described in this Section 9.1(f).
9.2 Defense of Claims. (a) If any Indemnitee receives notice of the
-----------------
assertion of any claim or of the commencement of any claim, action, or
proceeding made or brought by any Person who is not a party to this Agreement or
any Affiliate of a party to this Agreement (a "Third Party Claim") with respect
to which indemnification is to be sought from an Indemnifying Party, the
Indemnitee shall give such Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than ten (10) calendar days after the
Indemnitee's receipt of notice of such Third Party Claim. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and shall
indicate the estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying Party shall
have the right to participate in or, by giving written notice
50
to the Indemnitee, to elect to assume the defense of any Third Party Claim at
such Indemnifying Party's own expense and by such Indemnifying Party's own
counsel, and the Indemnitee shall cooperate in good faith in such defense at
such Indemnitee's own expense.
(b) If within ten (10) calendar days after an Indemnitee provides
written notice to the Indemnifying Party of any Third Party Claim the Indemnitee
receives written notice from the Indemnifying Party that such Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 9.2(a) hereof, the Indemnifying Party shall not be
liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the Indemnifying
-------- -------
Party fails to take reasonable steps necessary to defend diligently such Third
Party Claim within twenty (20) calendar days after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed to
take such steps, the Indemnitee may assume its own defense, and the Indemnifying
Party shall be liable for all reasonable expenses thereof. Without the prior
written consent of the Indemnitee, the Indemnifying Party shall not enter into
any settlement of any Third Party Claim which would lead to liability or create
any financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is
made to settle a Third Party Claim without leading to liability or the creation
of a financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party shall
give written notice to the Indemnitee to that effect. If the Indemnitee fails
to consent to such firm offer within ten (10) calendar days after its receipt of
such notice, the Indemnitee may continue to contest or defend such Third Party
Claim and, in such event, the maximum liability of the Indemnifying Party as to
such Third Party Claim shall be the amount of such settlement offer, plus
reasonable costs and expenses paid or incurred by the Indemnitee up to the date
of such notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable Loss
which does not result from a Third Party Claim (a "Direct Claim") shall be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event not later than ten (10)
calendar days after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party shall have a period of thirty (30) calendar days within which
to respond to such Direct Claim. If the Indemnifying Party does not respond
within such thirty (30) calendar day period, the Indemnifying Party shall be
deemed to have accepted such claim. If the Indemnifying Party rejects such
claim, the Indemnitee shall be free to seek enforcement of its rights to
indemnification under this Agreement.
51
(d) If the amount of any Indemnifiable Loss, at any time subsequent
to the making of an indemnity payment in respect thereof, is reduced by
recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement or payment by or against any
other entity, the amount of such reduction, less any costs, expenses or premiums
incurred in connection therewith (together with interest thereon from the date
of payment thereof at the prime rate then in effect of The Chase Manhattan
Bank), shall promptly be repaid by the Indemnitee to the Indemnifying Party.
Upon making any indemnity payment, the Indemnifying Party shall, to the extent
of such indemnity payment, be subrogated to all rights of the Indemnitee against
any third party in respect of the Indemnifiable Loss to which the indemnity
payment relates; provided, however, that (i) the Indemnifying Party shall then
-------- -------
be in compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party against any
such third party on account of such indemnity payment are hereby made expressly
subordinated and subjected in right of payment to the Indemnitee's rights
against such third party. Without limiting the generality or effect of any other
provision hereof, each such Indemnitee and Indemnifying Party shall duly execute
upon request all instruments reasonably necessary to evidence and perfect the
foregoing subrogation and subordination rights. Nothing in this Section 9.2(d)
shall be construed to require any party hereto to obtain or maintain any
insurance coverage.
(e) A failure to give timely notice as provided in this Section 9.2
shall not affect the rights or obligations of any party hereunder except if, and
only to the extent that, as a result of such failure, the party which was
entitled to receive such notice was actually prejudiced as a result of such
failure.
ARTICLE X
---------
TERMINATION AND ABANDONMENT
---------------------------
10.1 Termination. (a) This Agreement may be terminated at any time
-----------
prior to the Closing Date, by mutual written consent of the Buyer and the
Seller.
(b) This Agreement may be terminated by the Seller or the Buyer if
(i) the transactions contemplated hereby shall not have been consummated on or
before eighteen (18) months from the date of this Agreement (the "Termination
Date"); provided, however, that the right to terminate this Agreement under this
-------- -------
Section 10.1(b) shall not be available to either Seller or Buyer if its failure
to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing Date to occur on or before such date;
provided, further, that if on the Termination Date the conditions to the Closing
-----------------
set forth in Section 8.1(c) shall not
52
have been fulfilled but all other conditions to the Closing shall be fulfilled
or shall be capable of being fulfilled, then the Termination Date shall be the
date which is twenty-four (24) months from the date of this Agreement or the
Ancillary Agreements.
(c) This Agreement may be terminated by either the Seller or the
Buyer if (i) any Governmental Authority or regulatory body, the consent of which
is a condition to the obligations of the Seller and the Buyer to consummate the
transactions contemplated hereby, shall have determined not to grant its consent
and all appeals of such determination shall have been taken and have been
unsuccessful, or (ii) any court of competent jurisdiction in the United States
or any state shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby and such order, judgment or decree shall have become final and
nonappealable.
(d) This Agreement may be terminated by the Buyer, if there has been
a material violation or breach by the Seller of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the Buyer impossible and such violation or
breach has not been waived by the Buyer.
(e) This Agreement may be terminated by the Seller, if there has been
a material violation or breach by the Buyer of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the Seller impossible and such violation or
breach has not been waived by the Seller.
(f) This Agreement may be terminated by either the Seller or the
Buyer in accordance with the provisions of Section 7.12(b) or (c) hereof.
10.2 Procedure and Effect of Termination. In the event of termination
-----------------------------------
of this Agreement and abandonment of the transactions contemplated hereby by
either or both of the parties pursuant to Section 10.1 hereof, written notice
thereof shall forthwith be given by the terminating party to the other party and
this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
(a) such termination shall be the sole remedy of the parties hereto
with respect to breaches of any agreement, representation or warranty contained
in this Agreement and none of the parties hereto nor any of their respective
trustees, directors, officers or Affiliates, as the case may be, shall have any
liability or further obligation to the other party or any of their respective
trustees, directors, officers or
53
Affiliates, as the case may be, pursuant to this Agreement, except in each case
as stated in this Section 10.2 and in Sections 7.2(b), 7.3 and 7.7 hereof; and
(b) all filings, applications and other submissions made pursuant to
this Agreement, to the extent practicable, shall be withdrawn from the agency or
other person to which they were made.
ARTICLE XI
----------
MISCELLANEOUS PROVISIONS
------------------------
11.1 Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified or supplemented only by written agreement of
the Seller and the Buyer.
11.2 Waiver of Compliance; Consents. Except as otherwise provided in
------------------------------
this Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
11.3 No Survival of Representations and Warranties. Each and every
---------------------------------------------
representation and warranty contained in this Agreement and each and every
covenant contained in this Agreement (other than the covenants in Section 3.2,
3.3, 3.4, 7.2(b), 7.2(c), 7.2(d), 7.3, 7.7, 7.11(f), 7.13, 9.1 and 9.2 hereof
(which covenants shall survive in accordance with their terms)) shall expire
with, and be terminated and extinguished by, (i) the consummation of the sale of
the Purchased Assets and the transfer of the Assumed Liabilities pursuant to
this Agreement and shall not survive the Closing Date, or (ii) the termination
of this Agreement pursuant to Section 10.1 hereof or otherwise; and none of the
Seller, the Buyer or any officer, director, trustee or Affiliate of either of
them shall be under any liability whatsoever with respect to any such
representation, warranty or covenant.
11.4 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally or by facsimile
transmission, telexed or mailed by overnight courier or registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following addresses (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):
54
(a) If to the Seller, to:
Sierra Pacific Resources
0000 Xxxx Xxxx
Xxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
with copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to the Buyer, to:
Pinnacle West Energy Corporation
000 Xxxxx 0/xx/ Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Vice President
Telecopy: (000) 000-0000
with copies to:
Pinnacle West Capital Corporation
000 Xxxxx 0/xx/ Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Vice President and General Counsel
Telecopy: (000) 000-0000
11.5 Assignment. This Agreement and all of the provisions hereof shall
----------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto, including by operation of law without the prior written consent of the
other party, nor is this Agreement intended to confer upon any other Person
except the parties hereto any rights or remedies hereunder. Notwithstanding the
foregoing, the Buyer may assign the rights, but not the obligations, under this
Agreement to a wholly-owned Subsidiary or limited liability company prior to or
at Closing.
55
11.6 Arbitration. Any dispute, controversy or claim arising out of or
-----------
relating to this agreement, or the breach, termination or validity hereof (a
"Dispute"), shall be finally settled by arbitration in accordance with the
then-prevailing Commercial Arbitration Rules of the American Arbitration
Association, as modified herein (the "Rules"). The place of arbitration shall
be Nevada. There shall be three arbitrators, of whom the Seller shall appoint
one and of whom the Buyer shall appoint one. The two arbitrators so appointed
shall select a third arbitrator who shall act as the chairman of the tribunal.
If any arbitrator is not appointed within the time limits provided herein or in
the Rules, such arbitrator shall be appointed by the American Arbitration
Association. The arbitral tribunal is not empowered to award damages in excess
of compensatory damages, and each party hereby irrevocably waives any right to
recover punitive, exemplary or similar damages with respect to any dispute. Any
arbitration proceedings, decision or award rendered hereunder and the validity,
effect and interpretation of this arbitration provision shall be governed by the
Federal Arbitration Act, 9 U.S.C. (S)(S) 1-16, and judgment upon any award may
be entered in any court of competent jurisdiction.
11.7 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Nevada (regardless of the laws that
might otherwise govern under applicable Nevada principles of conflicts of law)
as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
11.8 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.9 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.
11.10 Entire Agreement. This Agreement, including the documents,
----------------
exhibits, schedules, certificates and instruments referred to herein, and the
Confidentiality Agreement embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this Agreement.
There are no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein or
therein. It is expressly acknowledged and agreed that there are no
restrictions, promises, representations, warranties, covenants or undertakings
of the Seller contained in any material made available to the Buyer pursuant to
the terms of the Confidentiality Agreement (including the Offering Memorandum,
dated March 2000) as supplemented, or the
56
correspondence relating to the divestiture of Seller's generation assets
previously made available to the Buyer by the Seller and CSFB. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such transactions other than the Confidentiality Agreement.
11.11 Bulk Sales or Transfer Laws. The Buyer acknowledges that the
---------------------------
Seller shall not comply with the provision of any bulk sales or transfer laws of
any jurisdiction in connection with the transactions contemplated by this
Agreement. The Buyer hereby waives compliance by the Seller with the provisions
of the bulk sales or transfer laws of all applicable jurisdictions.
57
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
NEVADA POWER COMPANY
By:____________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Sr. Vice President, General
Counsel and Corporate Secretary
PINNACLE WEST ENERGY CORPORATION
By:____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
58
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS...................................................... 1
1.1 Definitions.................................. 1
ARTICLE II
PURCHASE AND SALE................................................ 13
2.1 The Sale..................................... 13
2.2 Excluded Assets.............................. 13
2.3 Assumed Liabilities.......................... 14
2.4 Excluded Liabilities......................... 16
ARTICLE III
PURCHASE PRICE................................................... 18
3.1 Purchase Price........................... 18
3.2 Purchase Price Adjustment................ 18
3.3 Allocation of Purchase Price............. 19
3.4 Proration................................ 20
ARTICLE IV
THE CLOSING...................................................... 21
4.1 Time and Place of Closing................ 21
4.2 Payment of Purchase Price................ 21
4.3 Deliveries by Seller..................... 21
4.4 Deliveries by Buyer...................... 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER......................... 24
5.1 Organization; Qualification................ 24
5.2 Authority Relative to this Agreement....... 24
5.3 Consents and Approvals; No Violation....... 24
5.4 Reports.................................... 25
5.5 Financial Statements....................... 26
5.6 Undisclosed Liabilities.................... 26
5.7 Absence of Certain Changes or Events....... 26
5.8 Title to Real Property..................... 26
5.9 Leasehold Interests........................ 27
5.10 Improvements............................... 27
5.11 Insurance.................................. 27
5.12 Environmental Matters...................... 27
i
Page
----
5.13 Labor Matters..................................... 28
5.14 ERISA; Benefit Plans.............................. 28
5.15 Real Property Encumbrances........................ 29
5.16 Condemnation...................................... 29
5.17 Certain Contracts and Arrangements................ 29
5.18 Legal Proceedings, etc............................ 30
5.19 Permits........................................... 30
5.20 Regulation as a Utility........................... 31
5.21 Taxes............................................. 31
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER................................. 31
6.1 Organization...................................... 31
6.2 Authority Relative to this Agreement.............. 31
6.3 Consents and Approvals; No Violation.............. 32
6.4 Regulation as a Utility........................... 33
6.5 Availability of Funds............................. 33
ARTICLE VII
COVENANTS OF THE PARTIES................................................ 33
7.1 Conduct of Business of the Seller................. 33
7.2 Access to Information............................. 35
7.3 Expenses.......................................... 36
7.4 Further Assurances................................ 36
7.5 Public Statements................................. 37
7.6 Consents and Approvals............................ 37
7.7 Fees and Commissions.............................. 38
7.8 Intentionally Left Blank.......................... 39
7.9 Tax Matters....................................... 39
7.10 Supplements to Schedules.......................... 40
7.11 Employees......................................... 40
7.12 Risk of Loss...................................... 42
7.13 Additional Covenants of the Buyer................. 43
7.14 Additional Covenants of the Parties............... 44
ARTICLE VIII
CLOSING CONDITIONS...................................................... 44
8.1 Conditions to Each Party's Obligations to
Effect the Transactions Contemplated Hereby....... 44
8.2 Conditions to Obligations of Buyer................ 45
8.3 Conditions to Obligations of Seller............... 47
ii
Page
----
ARTICLE IX
INDEMNIFICATION.......................................................... 49
9.1 Indemnification................................... 49
9.2 Defense of Claims................................. 50
ARTICLE X
TERMINATION AND ABANDONMENT.............................................. 52
10.1 Termination....................................... 52
10.2 Procedure and Effect of Termination............... 53
ARTICLE XI
MISCELLANEOUS PROVISIONS................................................. 54
11.1 Amendment and Modification........................ 54
11.2 Waiver of Compliance; Consents.................... 54
11.3 No Survival of Representations and Warranties..... 54
11.4 Notices........................................... 54
11.5 Assignment........................................ 55
11.6 Arbitration....................................... 56
11.7 Governing Law..................................... 56
11.8 Counterparts...................................... 56
11.9 Interpretation.................................... 56
11.10 Entire Agreement.................................. 56
11.11 Bulk Sales or Transfer Laws....................... 57
iii
