Exhibit 2.1
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PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT
by and between
Enron North America Corp.
and
Allegheny Energy Supply Company, L.L.C.
Dated November 13, 2000
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of November 13,
2000, is by and between Enron North America Corp., a Delaware corporation
("Seller"), and Allegheny Energy Supply Company, L.L.C., a Delaware limited
liability company ("Buyer"). Seller and Buyer are sometimes referred to herein
individually as a "Party" and collectively as the "Parties."
Recital
Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, all of the issued and outstanding member interests (collectively, the
"LLC Interests") of the limited liability companies named in Exhibit A hereto,
each a wholly owned subsidiary of Seller (the "LLCs"), upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Parties agree as follows:
1. Certain Definitions
1. Certain Defined Terms. As used in this Agreement, the following terms
have the respective meanings set forth below or set forth in the
Sections referred to below:
"Action" means any action, suit, investigation, proceeding,
condemnation, or audit by or before any court or other Governmental
Authority or any arbitration proceeding.
"Adjusted Purchase Price" is defined in Section 3.1.
"Affected LLCs" is defined in Section 7.11.
"Affiliate" means, as to the Person specified, any Person controlling,
controlled by or under common control with such specified Person. The
concept of control, controlling or controlled as used in the aforesaid
context means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
another, whether through the ownership of voting securities, by
contract or otherwise. No Person shall be deemed an Affiliate of any
Person by reason of the exercise or existence of rights, interests, or
remedies under this Agreement.
"Agreement" is defined in the preamble.
"Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement attached hereto as Exhibit 9.2.
"Back-to-Back Guaranty" is defined in Section 7.13.
"Business" with respect to each of the LLCs means the business and
operations of such LLC related to such LLC's Facility.
"Business Day" means any day which is not a Saturday, Sunday, or legal
holiday recognized by the United States of America.
"Buyer" is defined in the preamble.
"Buyer FERC Approvals" means (i) the approval of the FERC under
Section 203 of the Federal Power Act authorizing transfer of the LLC
Interests to Buyer, (ii) the approval of the FERC under Section 205 of
the Federal Power Act authorizing the rates to be charged for the sale
of electric energy by each of the LLCs, and (iii) the certification by
the FERC of the Facilities as "exempt wholesale generators" under the
Energy Policy Act of 1992 and applicable FERC regulations, all
obtained in accordance with the requirements of Section 7.9(c).
"Buyer Indemnified Parties" is defined in Section 11.1.
"Buyer Required Regulatory Approvals" means the SEC Approval and the
Buyer FERC Approvals.
"Casualty Loss Amount" is defined in Section 7.11.
"Closing" means the consummation of the transactions contemplated by
Article 9.
"Closing Date" means the first Business Day after the conditions in
Section 8.1 and Section 8.2 are either satisfied or waived by the
Party entitled to waive such conditions, or such other date as may be
mutually agreed to by Seller and Buyer.
"Closing Payment" is defined in Section 3.2.
"Closing Statement" is defined in Section 3.3.
"Closing Statement Arbitrator" is defined in Section 3.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" is defined in Section 5.2.
"Deductible Amount" means an amount equal to two percent (2%) of the
Purchase Price.
"Dispute" is defined in Section 13.3.
"Enron Marks" means the name "Enron" and other trademarks, service
marks, and trade names owned by Seller or its Affiliates.
"Environmental Laws" means all Laws, as existing as of the date of
this Agreement, relating to (i) the control of any pollutant, or
protection of the air, water, or land, (ii) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal or
transportation, and (iii) exposure to hazardous, toxic or other
harmful substances.
"Environmental Laws" shall include the Clean Air Act, 42 U.S.C. 7401
et seq., the Resource Conservation Recovery Act, 42 U.S.C. 6901 et
seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq
., the Safe Drinking Water Act, 42 U.S.C. 300f et seq., and the
Comprehensive Environmental Response, Compensation, and Liability Act,
as amended by the Superfund Amendments and Reauthorization Act, 42
U.S.C. 9601 et seq.
"Environmental Liabilities" means any and all liabilities, claims,
demands, costs, damages, losses, settlements, expenses, penalties,
fines, taxes, interest, attorneys' fees, court costs, and other costs
of suit (i) incurred or imposed (a) pursuant to any order, notice of
responsibility, directive, injunction, judgment, or similar act
(including settlements) by any Governmental Authority to the extent
arising out of or under Environmental Laws or (b) pursuant to any
claim or cause of action by a Governmental Authority or other third
Person for personal injury, property damage, damage to natural
resources, or remediation or response costs to the extent arising out
of or attributable to any violation of, or any remedial obligation
under, any Environmental Law, or (ii) otherwise arising under or
related to Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"Estimated Adjusted Purchase Price" is defined in Section 3.3.
"Excluded Assets" is defined in Section 7.12.
"Facility" with respect to each of the LLCs, means the facility
identified for such LLC in Exhibit A, and in each case all of the
assets related thereto.
"FERC" means the Federal Energy Regulatory Commission.
"Final Closing Statement" is defined in Section 3.4.
"Final Settlement Date" is defined in Section 3.4.
"GAAP" means United States generally accepted accounting principles as
in effect on the date of this Agreement.
"Good Operating Practices" means, with respect to the Facilities, the
practices, methods, and acts generally engaged in or approved by a
significant portion of the independent electric power industry in the
United States for similarly situated facilities in the United States
during a particular time period, or any of such practices, methods,
and acts, which, in the exercise of reasonable judgment in light of
the facts known or that reasonably should be known at the time a
decision is made, would be expected to accomplish the desired result
in a manner consistent with law, regulation, reliability, safety,
environmental protection, economy and expedition, and taking into
consideration the requirements of this Agreement, the Project
Documents, the Transferred Contracts, and the other contracts and
agreements affecting the operation of the Facilities. Good Operating
Practices are not intended to be limited to the optimum practices,
methods or acts, to the exclusion of all others, but rather to include
a spectrum of possible practices, methods, or acts generally
acceptable in the region during the relevant period in light of the
circumstances.
"Governmental Authority" means (i) the United States of America, (ii)
any state, county, municipality, or other governmental subdivision
within the United States of America, and (iii) any court or any
governmental department, commission, board, bureau, agency, or other
instrumentality of the United States of America or of any state,
county, municipality, or other governmental subdivision within the
United States of America.
"Guarantees" means any and all obligations relating to the guarantees,
letters of credit, bonds, and other credit assurances of a comparable
nature of Seller or any of its Affiliates (other than the LLCs) for
the benefit of any LLC and listed or described on Schedule 7.13.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976 and the rules and regulations adopted pursuant thereto.
"Indebtedness" means: (a) all obligations on account of money borrowed
by, or credit extended to or on behalf of, or for or on account of
deposits with or advances to, Buyer; (b) all obligations of Buyer
evidenced by bonds, debentures, notes or similar instruments or
short-term debt, evidenced by commercial paper or similar instruments;
(c) all obligations of Buyer for the deferred purchase price of
property or services; (d) all obligations secured by a lien on
property owned by Buyer (whether or not assumed) and all obligations
of Buyer under capitalized or synthetic leases (without regard to any
limitation of the rights and remedies of the holder of such lien or
the lessor under such capitalized or synthetic lease to repossession
or sale of such property); (e) the face amount of all letters of
credit issued for the account of Buyer and, without duplication, the
unreimbursed amount of all drafts drawn thereunder, and all other
obligations of Buyer associated with such letters of credit or draws
thereon; provided that Indebtedness shall not include obligations in
respect of undrawn letters of credit securing current trade payables
or performance obligations incurred in the ordinary course of business
other than in connection with Indebtedness described in clauses (a)
through (d) and (f) and (g) of this definition; (f) all obligations of
Buyer in respect of acceptances or similar obligations issued for the
account of Buyer; (g) all obligations of Buyer under any interest rate
or currency protection agreement, interest rate or currency future,
interest rate or currency option, interest rate or currency swap or
cap or other interest rate or currency hedge agreement; and (h)
without duplication, all contingent liabilities, provided that
Indebtedness shall not include trade payables and accrued expenses
relating to employees, in each case in the ordinary course of
business.
"Indemnified Party" is defined in Section 11.4.
"Indemnifying Party" is defined in Section 11.4.
"Interconnection Agreement" is defined in Section 3.1.
"Interest Rate" means a rate of interest equal to the lesser of (i)
the LIBOR Rate or (ii) the maximum rate of interest from time to time
allowed by law.
"Knowledge" means the actual knowledge of any fact, circumstance, or
condition, after reasonable investigation and inquiry, by the chief
executive officer, the chief financial officer, chief operating
officer, or the chief accounting officer of the Party involved and, in
the case of Seller, the general manager of each Facility.
"Law" means any applicable statute, law (including common law),
ordinance, regulation, rule, ruling, order, writ, injunction, decree,
or other official act of or by any Governmental Authority.
"Leases" is defined in Section 4.1(t).
"LIBOR Rate" means, for each calendar month, (i) the rate per annum
(rounded upward, if not an integral multiple of 1/100 of 1%, to the
nearest 1/100 of 1% per annum) appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in
United States dollars at approximately 11:00 a.m. (London time) two
Business Days before the first day of such calendar month for a term
comparable thereto; (ii) if for any reason the rate specified in
clause (i) of this definition does not so appear on Telerate Page 3750
(or any successor page), the rate per annum (rounded upward, if not an
integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per
annum) appearing on Reuters Screen LIBO page (or any successor page)
as the London interbank offered rate for deposits in United States
dollars at approximately 11:00 a.m. (London time) two Business Days
before the first day of such calendar month for a term comparable
thereto; provided, however, if more than one rate is specified on
Reuters Screen LIBO page (or any successor page), the applicable rate
shall be the arithmetic mean of all such rates; and (iii) if the rate
specified in clause (i) of this definition does not so appear on
Telerate Page 3750 (or any successor page) and if no rate specified in
clause (ii) of this definition so appears on Reuters Screen LIBO page
(or any successor page), the interest rate per annum (rounded upward
to the nearest whole multiple of 1/16 of 1% per annum if such rate is
not such a multiple) equal to the rate per annum at which deposits in
United States dollars are offered by the principal office of Citibank,
N.A. in London, England to prime banks in the London interbank market
at 11:00 A.M. (London time) two Business Days before the first day of
such calendar month.
"Lien" means any lien, security interest, charge, claim, mortgage,
deed of trust, option, warrant, purchase right, lease, or other
encumbrance.
"LLC Interests" is defined in the Recital.
"LLCs" is defined in the Recital.
"Losses" means any and all claims, liabilities, losses, causes of
action, fines, penalties, litigation, lawsuits, administrative
proceedings, administrative investigations, costs, and expenses,
including reasonable attorneys' fees, court costs, and other costs of
suit.
"Material Adverse Effect" means, with respect to the LLCs, a material
adverse effect on the business, assets, liabilities, financial
condition, or results of operations of the LLCs, taken as a whole,
excluding any effect resulting from any change in economic, industry,
or market conditions (whether general or regional in nature or limited
to any area where any of the Facilities are located) or from any
change in Law or regulatory policy.
"Material Casualty Loss" is defined in Section 7.11.
"Notice of Disagreement" is defined in Section 3.4.
"Other Contracts" means the contracts and agreements to which any of
the LLCs is a party or by which any of the LLCs or its Facility is
bound,
other than the Project Documents, that have been made available to
Buyer on DealBench, the online data room operated by an Affiliate of
Seller for the transactions contemplated under this Agreement.
"Permits" is defined in Section 4.1(u).
"Person" means any Governmental Authority or any individual, firm,
partnership, corporation, limited liability company, joint venture,
trust, unincorporated organization or other entity or organization.
"Personal Property" is defined in Section 4.1(r).
"Project Documents" is defined in Section 4.1(m).
"PUHCA" means the Public Utility Holding Company Act of 1935.
"Purchase Price" is defined in Section 3.1.
"Real Property" is defined in Section 4.1(s).
"Records" means any and all of the books, records, contracts,
agreements and files of the LLCs existing on the Closing Date and all
increases and additions thereto after the Closing Date, including
computer records and electronic copies of such information (but
excluding electronic mail and other computer based communications),
whether maintained by Seller, the LLCs, or Buyer or, in each case, its
Affiliate.
"Schedules" means Seller's disclosure schedules attached to this
Agreement for each LLC and each reference to a particular schedule in
this Agreement refers to that schedule for each of the LLCs.
"SEC" means the Securities and Exchange Commission.
"SEC Approval" means the approval of the SEC under PUHCA needed for
Buyer to finance the purchase of the LLC Interests hereunder,
including authority under Sections 6 and 7 of PUHCA for Allegheny
Energy, Inc., Buyer's parent company, to issue and sell equity
securities in an amount not to exceed $1,000,000,000, which approval
shall be obtained by Buyer in accordance with the requirements of
Section 7.9(c).
"SEC Termination Fee" means an amount equal to four percent (4%) of
Purchase Price.
"Securities Act" is defined in Section 4.2(j).
"Seller" is defined in the preamble.
"Seller FERC Approvals" means the approvals required by Seller from
FERC to consummate the transactions contemplated by this Agreement.
"Seller Indemnified Parties" is defined in Section 11.2.
"Seller Required Regulatory Approvals" means the Seller FERC Approvals
and the consents and approvals described in Schedule 4.1(h).
"Tax" or "Taxes" means any and all taxes, including any interest,
penalties, or other additions to tax that may become payable in
respect thereof, imposed by any federal, state, local, or foreign
government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality
of the foregoing, all
income or profits taxes, payroll and employee withholding taxes,
unemployment insurance taxes, social security taxes, severance taxes,
license charges, taxes on stock, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, workers'
compensation, and other obligations of the same or of a similar nature
to any of the foregoing.
"Tax Proceeding" is defined in Section 6.5.
"Tax Return" means any and all returns, reports, declarations,
statements, bills, schedules, claims for refund, or written
information of or with respect to any Tax which is required to be
supplied to any taxing authority, including any schedule or attachment
thereto, and including any amendment thereof.
"Transfer Taxes" means all transfer Taxes (excluding Taxes measured by
net income), including without limitation sales, use, excise
(including excise Taxes on petroleum, products of petroleum,
petrochemicals and other taxable substances), stock, stamp,
documentary, filing, recording, permit, license, authorization and
similar Taxes, filing fees and similar charges.
"Transferred Contracts" is defined in Section 7.1(d).
2. References, Gender, Number. All references in this Agreement to an
"Article," "Section" or "subsection" shall be to an Article, Section,
or subsection of this Agreement, unless the context requires
otherwise. Unless the context otherwise requires, the words "this
Agreement," "hereof," "hereunder," "herein," "hereby" or words of
similar import shall refer to this Agreement as a whole and not to a
particular Article, Section, subsection, clause or other subdivision
hereof. Whenever the context requires, the words used herein shall
include the masculine, feminine and neuter gender, and the singular
and the plural.
2. Purchase and Sale
On and subject to the terms and conditions of this Agreement, Seller agrees
to sell and convey to Buyer, and Buyer agrees to purchase and receive from
Seller, all of the LLC Interests.
3. Purchase Price and Payment
1. Purchase Price. The purchase price for the sale and conveyance of the
LLC Interests to Buyer is One Billion Twenty-Eight Million and No/100
U.S. Dollars ($1,028,000,000.00) (the "Purchase Price"), subject to
adjustment in accordance with the terms of this Agreement. The
"Adjusted Purchase Price" shall be (i) the Purchase Price adjusted
upward by (ii) the amounts paid as of Closing by Xxxxxxx Power I
L.L.C. to the Tennessee Valley Authority under the Interconnection
Agreement (the "Interconnection Agreement") between the Tennessee
Valley Authority and Xxxxxxx Power I L.L.C. dated March 14, 2000
pursuant to Article 4 of the Interconnection Agreement for the costs
of the Shelby Upgrade (as defined in the Interconnection Agreement)
less any transmission credits used by Xxxxxxx Power I L.L.C. prior to
the Closing Date.
2. Payment. The "Closing Payment" shall be an amount equal to the
Estimated Adjusted Purchase Price. At the Closing, Buyer shall wire
transfer the
Closing Payment in immediately available funds to the account or
accounts specified by Seller to Buyer on or prior to the Business Day
immediately preceding the Closing Date.
3. Closing Statement. Not later than three (3) Business Days prior to the
Closing Date, Seller shall prepare and deliver to Buyer a statement
(the "Closing Statement") of the estimated purchase price adjustments
and the estimated Adjusted Purchase Price (the "Estimated Adjusted
Purchase Price"). As set forth in Section 3.2, the Closing Payment
payable by Buyer at Closing shall be based upon the Estimated Adjusted
Purchase Price.
4. Post-Closing Adjustment to the Purchase Price.
1. Revised Closing Statement. On or before the date that is sixty
(60) days after the Closing Date, Seller shall prepare and
deliver to Buyer a revised Closing Statement setting forth the
actual purchase price adjustments. To the extent reasonably
required by Seller, Buyer shall assist in the preparation of the
revised Closing Statement. Seller shall provide to Buyer such
data and information as Buyer may reasonably request supporting
the amounts reflected on the revised Closing Statement. The
revised Closing Statement shall become final and binding upon the
Parties on the date (the "Final Settlement Date") that is thirty
(30) days following receipt thereof by Buyer unless Buyer gives
written notice of its disagreement ("Notice of Disagreement") to
Seller prior to such date. Any Notice of Disagreement shall
specify in detail the dollar amount, nature, and basis of any
disagreement so asserted. If a Notice of Disagreement is received
by Seller in a timely manner, then the Closing Statement (as
revised in accordance with paragraph (b) or (c) below) shall
become final and binding on the Parties on, and the Final
Settlement Date shall be, the earlier of (i) the date upon which
Seller and Buyer agree in writing with respect to all matters
specified in the Notice of Disagreement or (ii) the date upon
which the Final Closing Statement is issued by the Closing
Statement Arbitrator.
2. Final Closing Statement. During the thirty (30) days following
the date upon which Seller received the Notice of Disagreement,
Seller and Buyer shall attempt in good faith to resolve in
writing any differences that they may have with respect to all
matters specified in the Notice of Disagreement. If at the end of
such thirty (30) day period (or earlier by mutual agreement to
arbitrate), Buyer and Seller have not reached agreement on such
matters, the matters that remain in dispute may be submitted to
an arbitrator (the "Closing Statement Arbitrator") by either
Party for review and resolution. The Closing Statement Arbitrator
shall be a nationally recognized independent public accounting
firm as shall be agreed upon by Buyer and Seller in writing. The
hearing date will be scheduled by the Closing Statement
Arbitrator as soon as reasonably practicable, and shall be
conducted on a confidential basis. Each Party shall, not later
than seven days prior to the hearing date set by the Closing
Statement Arbitrator, submit a brief with dollar figures for
settlement of the disputes as to the amount of the Adjusted
Purchase Price (together with a proposed Closing Statement that
reflects such figures). The figures submitted need not be the
figures discussed during prior conversations. The Closing
Statement Arbitrator shall render a decision resolving the
matters in dispute (which decision shall include a written
statement of findings and conclusions) within three Business Days
after the conclusion of the hearing,
unless the Parties reach agreement prior thereto and withdraw the
dispute from arbitration. The Closing Statement Arbitrator shall
provide to the Parties explanations in writing of the reasons for
its decisions regarding the Adjusted Purchase Price and shall
issue the Final Closing Statement reflecting such decisions. The
decision of the Closing Statement Arbitrator shall be final and
binding on the Parties. The cost of any arbitration (including
the fees and expenses of the Closing Statement Arbitrator)
pursuant to this Section 3.4(b) shall be borne equally by Buyer
and Seller. The fees and disbursements of Seller's independent
auditors incurred in connection with the procedures performed
with respect to the Closing Statement shall be borne by Seller
and the fees and disbursements of Buyer's independent auditors
incurred in connection with their preparation of the Notice of
Disagreement shall be borne by Buyer. As used in this Agreement,
the term "Final Closing Statement" shall mean the revised Closing
Statement described in Section 3.4(a), as prepared by Seller and
as may be subsequently adjusted to reflect any subsequent written
agreement between the Parties with respect thereto, or if
submitted to the Closing Statement Arbitrator, the Closing
Statement issued by the Closing Statement Arbitrator.
3. Final Settlement. If the amount of the Adjusted Purchase Price as
set forth on the Final Closing Statement exceeds the amount of
the Estimated Adjusted Purchase Price, then Buyer shall pay to
Seller, within five Business Days after the Final Settlement
Date, the amount by which the Adjusted Purchase Price as set
forth on the Final Closing Statement exceeds the amount of the
Estimated Adjusted Purchase Price, together with interest on such
excess amount from the Closing Date until paid at the Interest
Rate. If the amount of the Adjusted Purchase Price as set forth
on the Final Closing Statement is less than the amount of the
Estimated Adjusted Purchase Price, then Seller shall pay to
Buyer, within five (5) Business Days after the Final Settlement
Date, the amount by which the Adjusted Purchase Price as set
forth on the Final Closing Statement is less than the amount of
the Estimated Adjusted Purchase Price, together with interest on
such deficiency amount from the Closing Date until paid at the
Interest Rate. Any post-Closing payment made pursuant to this
Section 3.4(c) shall be made by means of a wire transfer of
immediately available funds to a bank account designated by the
Party receiving the funds.
5. Allocation of Purchase Price. The Parties shall use their reasonable
efforts to agree in good faith upon an allocation of the Adjusted
Purchase Price consistent with Section 1060 of the Code and the
Treasury regulations thereunder within sixty (60) days of the Closing
Date. If the Parties agree on a mutually satisfactory allocation by
the Closing Date, the Parties shall report this transaction for
federal income tax purposes in accordance with the allocation so
agreed upon.
4. Representations and Warranties
1. Representations and Warranties of Seller. As of the date of this
Agreement, Seller represents and warrants to Buyer as follows:
1. Organization and Good Standing. Seller is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Delaware. Each of the LLCs is a limited liability
company duly organized, validly existing, and in good standing
under the laws of the State of Delaware.
2. Qualification of the LLCs. Each of the LLCs has the requisite
limited liability company power to carry on its business as now
being conducted. Each of the LLCs is duly qualified to do
business, and is in good standing, in each jurisdiction in which
the property owned, leased, or operated by it or the nature of
its business make such qualification necessary, except where the
failure to so qualify and be in good standing is not likely to
have a Material Adverse Effect.
3. Authority. Seller has all requisite corporate power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery, and performance
of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all requisite corporate
action on the part of Seller.
4. Enforceability. This Agreement has been duly and validly executed
and delivered by Seller and constitutes a valid and binding
agreement of Seller enforceable against it in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws of general
application from time to time in effect that affect creditors'
rights generally, (ii) general principles of equity, and (iii)
the power of a court to deny enforcement of remedies generally
based upon public policy.
5. LLC Interests. Seller holds of record and owns beneficially the
LLC Interests free and clear of any Liens (except as may be
created by this Agreement and except for any restrictions on
sales of securities under applicable securities laws). Seller is
not a party to any option, warrant, purchase right, or other
contract or commitment (other than this Agreement) that would
require Seller to sell, transfer, or otherwise dispose of any LLC
Interests. Seller is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of
any LLC Interests.
6. Capitalization. The LLC Interests constitute all of the issued
and outstanding membership interests of the LLCs. All LLC
Interests have been duly authorized and are validly issued, fully
paid, and nonassessable and were not issued in violation of the
preemptive rights of any Person. None of the LLCs has outstanding
any convertible security, call, preemptive right, option,
warrant, purchase right, or other contract or commitment that
would, directly or indirectly, require such LLC to sell, issue,
or otherwise dispose of any equity interest in any of the LLCs.
7. No Violation or Breach. Except for any exceptions set forth in
Schedule 4.1(g), neither the execution and delivery of this
Agreement nor the consummation of the transactions and
performance of the terms and conditions hereof by Seller will (i)
result in a violation or breach of any provision of the
certificate of incorporation, by-laws, or other similar governing
documents of Seller or the limited liability company agreement or
other similar governing document of the LLCs or any agreement,
indenture or other instrument under which either Seller or any of
the LLCs is bound, other than such breaches or violations of
agreements, indentures, or other instruments that would not,
individually or in the aggregate, have a Material Adverse Effect
or (ii) violate any Law applicable to Seller or the LLCs or the
Facilities other than such violations that
would not, individually or in the aggregate, have a Material
Adverse Effect.
8. Consents. No consent, approval, authorization or permit of, or
filing with or notification to, any Person is required for or in
connection with the execution and delivery of this Agreement by
Seller or for or in connection with the consummation of the
transactions and performance of the terms and conditions
contemplated hereby by Seller, except for (i) the Seller Required
Regulatory Approvals, (ii) requirements under the HSR Act, and
(iii) consents, approvals, authorizations, permits, filings, or
notices that, if not obtained or made, would not, individually or
in the aggregate, have a Material Adverse Effect.
9. Actions. Except as set forth on Schedule 4.1(i), there is no
Action pending or, to Seller's Knowledge, threatened against any
of the LLCs or the Facilities, except for Actions that would not,
individually or in the aggregate, have a Material Adverse Effect.
10. Compliance With Laws. Except as set forth on Schedule 4.1(j), no
uncured violation of any Law by the LLCs or by Seller (which
could reasonably be expected to relate to any of the Facilities
or any of the LLCs) exists, other than violations of Law which
could not be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect. Seller is not
making any representation or warranty in the preceding sentence
with respect to any Environmental Law, any Tax Law, or any
employee benefit plans or arrangements, and such matters are
addressed in Sections 4.1(n), (o), and (p).
11. Brokerage Fees and Commissions. Neither Seller nor any Affiliate
of Seller has incurred any obligation or entered into any
agreement for any investment banking, brokerage, or finder's fee
or commission in respect of the transactions contemplated by this
Agreement for which Buyer or any of the LLCs shall incur any
liability. Seller has engaged Credit Suisse First Boston in
connection with the transactions contemplated by this Agreement
and agrees to be responsible for any and all fees which are due
and payable pursuant to the terms of such engagement.
12. Bankruptcy. There are no bankruptcy, reorganization, or
arrangement proceedings pending against, being contemplated by,
or, to the Knowledge of Seller, threatened against Seller or any
of the LLCs.
13. Project Documents.
1. Set forth in Part I of Schedule 4.1(m) is a list of the
following agreements and contracts to which any of the LLCs
is a party or by which any of the LLCs or its Facility is
bound (the "Project Documents"):
1. gas pipeline interconnection agreements, gas supply
agreements, gas purchase and sale agreements, and gas
transportation agreements;
2. power purchase agreements, electricity transmission
agreements, and electricity interconnection agreements;
3. swap, exchange, commodity option or hedging agreements;
4. operating and maintenance agreements;
5. equipment purchase and sale contracts and construction
contracts;
6. any contract (i) requiring known or liquidated
expenditures or payments by any of the LLCs in excess
of $100,000 in any calendar year or (ii) that cannot be
terminated without penalty by the LLC that is a party
to such contract upon one hundred eighty (180) days'
notice or less;
7. any pending sale or lease of real or personal property
of any of the LLCs (other than sales of electric energy
in the ordinary course of business) in excess of
$100,000;
8. any contract that contains a covenant not to compete
applicable to any LLC; and
9. any amendment relating to any of the foregoing.
2. Except as set forth in Part II of Schedule 4.1(m), to
Seller's Knowledge, none of the LLCs is, in any material
respect, in breach of or in default under, and no event has
occurred and is continuing which would constitute a material
default by any of the LLCs under, any material provision of
any Project Document and none of the LLCs has received
written notice from any other party to any Project Document
that such LLC is in breach of any Project Document which has
not been remedied and, to Seller's Knowledge, no such other
Party is, in any material respect, in breach of or default
under any Project Document.
3. True, correct, and complete copies of the Project Documents
and the Other Contracts have been made available to Buyer,
except to the extent certain provisions have been redacted
by Seller.
14. Environmental Matters. This Section 4.1(n) shall constitute the
sole representations of Seller with respect to environmental
matters. Except as set forth in Schedule 4.1(n), or as would not,
individually or in the aggregate, have a Material Adverse Effect:
1. to Seller's Knowledge, there is no uncured violation of any
Environmental Law by any LLC at its Facility that would
result in any remediation obligations of such LLC under any
Environmental Law;
2. no Lien has been imposed on any Facility by any Governmental
Authority in connection with any violation of or
noncompliance with Environmental Laws;
3. Seller and the LLCs have all permits, licenses, and other
authorizations required to own and operate each Facility in
compliance with Environmental Laws and provided complete and
accurate information for such permits, licenses, and other
authorizations;
4. none of the LLCs or the Facilities is (A) subject to any
outstanding consent decree, compliance order, or
administrative order, (B) in receipt of written notice under
the citizen suit provision of any Environmental Law, (C) in
receipt of any written request for information, notice,
complaint, or claim with respect to any violation of any
Environmental Law relating
to any Facility, and (D) subject to, or to Seller's
Knowledge, threatened with any governmental or citizen
enforcement action under any Environmental Law with respect
to any Facility; and
5. to Seller's Knowledge, there has been no exposure of any
Person or property to any pollutant or hazardous or toxic
substance in connection with the operation of any Facility
that could reasonably be expected to result in any material
Environmental Liabilities.
15. Tax Matters. With respect to each of the LLCs, except as set
forth in Schedule 4.1(o) or as would not, individually or in the
aggregate, have a Material Adverse Effect:
1. all Tax Returns required to be filed by or with respect to
such LLC (or its assets) have been or will be timely filed
with the appropriate taxing authorities in all jurisdictions
in which such Tax Returns are required to be filed;
2. such Tax Returns were, when filed, or if not yet filed are
or will be true, complete, and correct in all material
respects, and all Taxes required to be reported on such Tax
Returns have been or will be timely paid;
3. neither Seller nor any such LLC has extended or waived the
application of any statute of limitations of any
jurisdiction regarding the assessment or collection of any
Tax pertaining to any LLC;
4. there are no audits, claims, assessments, levies,
administrative proceedings, or lawsuits pending, or to the
Knowledge of Seller, threatened against such LLC by any
taxing authority;
5. no election has been made by or on behalf of such LLC to be
classified as an association taxable as a corporation for
federal or state income tax purposes, nor has either Seller
or such LLC taken any action that would cause such LLC to be
treated as either an association taxable as a corporation or
as a publicly traded partnership, each for federal, state,
or local income or franchise Tax purposes;
6. there are no Liens for Taxes (other than for current Taxes
not yet due or payable) upon the assets of any LLC;
7. none of the assets of any of the LLCs directly or indirectly
secures any debt the interest on which is tax exempt under
Section 103(a) of the Code;
8. Seller is not a person other than a United States person
within the meaning of the Code and the transactions
contemplated herein are not subject to the tax withholding
provisions of Chapter 3 of the Code;
9. no claim has ever been made by an authority in a
jurisdiction where a Tax Return is not filed by, or
concerning, such LLC that such LLC is or may be subject to
taxation in that jurisdiction; and
10. Seller has delivered, or will deliver within ten (10)
Business Days after the date hereof, to Buyer correct and
complete copies
of all federal, state and local Tax Returns of the LLCs
(excluding cost data related to ad valorem and sales and use
Tax Returns), examination reports and statements of
deficiencies assessed against or agreed to by Seller and
each LLC.
Notwithstanding anything in this Section 4.1(o) to the contrary,
no representation or warranty is made with respect to the amount,
availability, expiration, limitation, or reduction of any net
operating losses of any of the LLCs.
16. Employee Matters. Except as set forth in Schedule 4.1(p), none of
the LLCs has, or on the Closing Date will have, any employees.
The employees of one of Seller's Affiliates are employed in the
Business of the LLCs. None of Seller, its Affiliates, or any of
the LLCs is a party to or is bound by any collective bargaining
agreement with respect to any employees assigned to the Business
of the LLCs, and to the Knowledge of Seller, no present union
organizing efforts are underway with respect to any such
employees and no claim has been made by any union as to the
representation of such employees. None of the LLCs has ever
maintained, sponsored, or been a party to, or otherwise has any
obligations or liability relating to, any employee benefit plan
as defined in Section 3(3) of ERISA. No employee assigned to the
Businesses of the LLCs is a leased employee within Section 414(n)
of the Code.
17. No Subsidiaries. None of the LLCs owns or holds, directly or
indirectly, any equity or other ownership interest in any
corporations, limited liability companies, partnerships, joint
ventures, or other entities (for purposes of any applicable Law
and for federal income tax purposes).
18. Personal Property. To Seller's Knowledge, Schedule 4.1(r) lists
each item of personal property with a value of $5,000 or greater
and owned in whole or in part by any of the LLCs (the "Personal
Property "). Each of the LLCs has good and valid title to its
Personal Property, free and clear of all Liens, except: (i) Liens
arising by operation of Law for amounts not yet due and payable;
(ii) the rights of customers, suppliers, and subcontractors in
the ordinary course of business under general principles of
commercial law; and (iii) as described in Schedule 4.1(r).
19. Real Property. To Seller's Knowledge, Schedule 4.1(s) lists of
all material real property (other than the Leases) owned in whole
or in part by each of the LLCs (the "Real Property"). To Seller's
Knowledge, the Real Property is owned (or partially owned) of
record free and clear of all Liens, except: (i) as set forth on
Schedule 4.1(s); (ii) all matters that are disclosed in the title
policy (or the title commitment to the extent that a title policy
has not yet been issued) and survey for the burdened Real
Property (copies of which have been made available to Buyer);
(iii) Liens arising by operation of Law for Taxes not yet due and
payable; (iv) statutory Liens (including materialmens',
mechanic's, repairman's, landlord's, and other similar Liens)
arising in the ordinary course of business; (v) imperfections or
irregularities of title and other Liens that would not,
individually or in the aggregate, have a Material Adverse Effect;
and (vi) zoning, planning, and other limitations and restrictions
of record. True and correct copies of each deed and lease
pursuant to which Seller acquired or leased the Real Property,
together with the title insurance policies (or the title
commitment to the extent that a title policy has not yet been
issued) and surveys related thereto, have been made available to
Buyer.
20. Leases. Schedule 4.1(t) lists all material real property leases
(the "Leases") to which any of the LLCs is a party and of which
any real property leased by any such LLC is the subject other
than real property leases for which the aggregate annual rent is
less than $50,000 and a list of all leases of personal property
other than personal property leases for which the annual rent is
less than $50,000. During the twelve (12) months prior to the
date of this Agreement, such LLC has not received any notice of
default under any such lease that would reasonably be expected to
result in a Material Adverse Effect. No event has occurred which
with notice or passage of time would constitute a default under
the Leases by any LLC, or to Seller's Knowledge, by any other
party to the Leases, except for such defaults that would not
reasonably be expected to, individually or in the aggregate,
result in a Material Adverse Effect.
21. Permits. Except as set forth on Schedule 4.1(u), each of the LLCs
has all material permits, franchises, approvals, or other
authorizations ("Permits") of Governmental Authorities required
to conduct its Business as currently conducted. Each Permit is in
full force and effect, such LLC is in compliance in all material
respects with all its obligations with respect thereto, and, to
the Knowledge of Seller, no event has occurred and is continuing
which permits, or with or without the giving of notice or the
passage of time or both would permit, the revocation or
termination of any Permit.
22. Condition of Facility. All (i) equipment included in the Personal
Property (other than spares and other equipment not currently in
service) and (ii) all buildings, structures, and fixtures
comprising each Facility are in good operating condition and
repair and have been maintained by the LLC in accordance with
Good Operating Practices, except for (A) ordinary wear and tear,
(B) matters that are not likely to, individually or in the
aggregate, have a Material Adverse Effect, and (C) matters
described in Schedule 4.1(v).
23. No Bank Accounts or Powers of Attorney. None of the LLCs has an
account with a bank or other financial institution. None of the
LLCs has any outstanding powers of attorney.
24. Sole Purpose. Each of the LLCs that owns a Facility has not
conducted, and is not conducting, any business or operations,
other than the development, construction, ownership, operation,
and maintenance of its Facility, including the generation and
sale of electric energy at wholesale from its Facility.
25. No Undisclosed Liabilities. Except as set forth in Schedule
4.1(y), assuming that all contracts between Seller and its
Affiliates (other than the LLCs) and any of the LLCs have been
terminated as required by Section 7.13 and all Transferred
Contracts are transferred to the LLCs as required by Section
7.1(d), the LLCs, taken as a whole, do not have any liabilities
or obligations, other than:
1. the liabilities and obligations of the LLCs under the
Project Documents, the Transferred Contracts, and the Other
Contracts;
2. liabilities and obligations in connection with the
transactions contemplated by this Agreement;
3. liabilities and obligations under or in respect of the
Permits;
4. the requirements of Laws;
5. liabilities and obligations incurred after the date hereof
in accordance with Article 7; or
6. liabilities and obligations that would not, individually or
in the aggregate, have a Material Adverse Effect.
26. Intellectual Property. Assuming that all contracts between Seller
and its Affiliates (other than the LLCs) and any of the LLCs have
been terminated as required by Section 7.13 and all Transferred
Contracts are transferred to the LLCs as required by Section
7.1(d), (i) the LLCs own, or are licensed or otherwise possess
sufficient legally enforceable rights to use, all patents,
copyrights, trademarks, service marks, technology, know-how,
computer software programs and applications, databases and
tangible or intangible proprietary information or materials that
are currently used in the operation of the Facilities, except for
the software listed on Schedule 7.12, and (ii) to Seller's
Knowledge, none of the LLCs, the Facilities, or the Businesses
are operated in a manner that infringes upon any patents,
copyrights, trademarks, or similar intellectual property rights
of any third parties.
27. Public Utility Holding Company Act. None of the Seller or any of
its Affiliates is a "registered holding company," or a
"subsidiary company" of a "registered holding company", or an
"affiliate" of a "registered holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
28. EWG Status. Each LLC is an exempt wholesale generator within the
meaning of the Energy Policy Act of 1992 and applicable FERC
regulations.
29. Market Based Rates. Each LLC is authorized by the FERC to sell
electric capacity and energy at market based rates pursuant to an
approved rate schedule on file with the FERC.
30. No Advance Payments. None of the LLCs has received payment for
electric energy that was not sold and delivered by such LLC prior
to receiving payment therefor.
2. Representations and Warranties of Buyer. Buyer represents and warrants
to Seller as follows:
1. Organization and Qualification. Buyer is a limited liability
company duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has the requisite
power under its formation documents to carry on its business as
now being conducted.
2. Authority. Buyer has all requisite power and authority to execute
and deliver this Agreement and to perform its obligations under
this Agreement. The execution, delivery, and performance of this
Agreement and the transactions contemplated hereby have been duly
and validly authorized by all requisite action on the part of
Buyer.
3. Enforceability. This Agreement has been duly and validly executed
and delivered by Buyer and constitutes a valid and binding
agreement of Buyer enforceable against it in accordance with its
terms,
subject to (i) applicable bankruptcy, insolvency, reorganization,
moratorium, and other similar laws of general application from
time to time in effect that affect creditors' rights generally,
(ii) general principles of equity, and (iii) the power of a court
to deny enforcement of remedies generally based upon public
policy.
4. No Violation or Breach. Neither the execution and delivery of
this Agreement nor the consummation of the transactions and
performance of the terms and conditions hereof by Buyer will (i)
result in a violation or breach of any provision of the
certificate of incorporation, bylaws or other similar governing
documents of Buyer or any material agreement, indenture or other
instrument under which Buyer is bound or (ii) violate any Law
applicable to Buyer or the assets of Buyer.
5. Consents. No consent, approval, authorization, or permit of, or
filing with or notification to, any Person is required for or in
connection with the execution and delivery of this Agreement by
Buyer or for or in connection with the consummation of the
transactions and performance of the terms and conditions
contemplated hereby by Buyer, except for Buyer Required
Regulatory Approvals and requirements under the HSR Act.
6. Actions. There is no Action pending, or to Buyer's Knowledge,
threatened against Buyer, except for Actions that would not have
a material adverse effect on Buyer's ability to perform its
obligations under this Agreement.
7. Brokerage Fees and Commissions. Neither Buyer nor any Affiliate
of Buyer has incurred any obligation or entered into any
agreement for any investment banking, brokerage, or finder's fee
or commission in respect of the transactions contemplated by this
Agreement for which either Seller or any of the LLCs shall incur
any liability. Buyer has engaged Xxxxxxx Xxxxx Xxxxxx in
connection with the transactions contemplated by this Agreement
and agrees to be responsible for any and all fees which are due
and payable pursuant to the terms of such engagement.
8. Funds. Buyer has, and at all times prior to Closing will have,
sufficient funds available to enable Buyer to consummate the
transactions contemplated hereby and to pay the Closing Payment,
the other payments required of Buyer hereunder, and all fees and
expenses of Buyer.
9. Buyer's Knowledge. Buyer has no Knowledge of any fact which
results in any representation or warranty of Seller in Section
4.1 being breached. If after the date of this Agreement, Buyer
obtains Knowledge of any fact which results in any representation
or warranty of Seller in Section 4.1 being breached, Buyer will
immediately furnish to Seller written notice thereof.
10. No Distribution. Buyer is an experienced and knowledgeable
investor in the U.S. power generation and development business.
Prior to entering into this Agreement, Buyer was advised by its
counsel, accountants, financial advisors, and such other Persons
it has deemed appropriate concerning this Agreement and has
relied solely on Seller's representations and warranties
expressly contained herein and an independent investigation and
evaluation of, and appraisal and judgment with respect to, each
of the LLCs and the revenue, price, and expense assumptions
applicable thereto. Buyer
hereby acknowledges that the LLC Interests are not registered
under the Securities Act of 1933, as amended (the "Securities
Act"), or registered or qualified for sale under any state
securities laws and cannot be resold without registration
thereunder or exemption therefrom. Buyer is an "accredited
investor," as such term is defined in Regulation D of the
Securities Act and will acquire the LLC Interests for its own
account and not with a view to a sale or distribution thereof in
violation of the Securities Act, and the rules and regulations
thereunder, any applicable state blue sky laws or any other
applicable securities laws. Buyer has sufficient knowledge and
experience in financial and business matters to enable it to
evaluate the risks of investment in the LLC Interests and has the
ability to bear the economic risk of this investment for an
indefinite period of time.
11. Bankruptcy. There are no bankruptcy, reorganization, or
arrangement proceedings pending against, being contemplated by,
or to the knowledge of Buyer threatened against, Buyer.
12. Balance Sheets. Buyer has previously delivered to Seller an
audited balance sheet as of December 31, 1999, and an unaudited
balance sheet as of September 30, 2000, for Buyer, each prepared
in accordance with GAAP except as stated therein, and such
balance sheets present fairly in all material respects the
financial position of such entity on the date thereof.
13. Inspection. Buyer acknowledges that, prior to its execution of
this Agreement, (i) it has been afforded access to and the
opportunity to inspect each of the Facilities, the Project
Documents, and all other due diligence items made available by
Seller with respect to the LLCs, (ii) it has inspected each of
the Facilities, and as of the Closing Date, it will have
inspected each of the Facilities and reviewed the Project
Documents and all other due diligence items made available by
Seller with respect to the LLCs to the extent it deems necessary
or advisable, and (iii) it is relying upon Seller's
representations and warranties expressly contained herein and its
own inspections and investigation in order to satisfy itself as
to the condition and suitability of each of the Facilities.
14. Development Activities. To Buyer's Knowledge, the electric power
generation projects planned or under development by Buyer or any
of its Affiliates should not delay, impede, or condition the
receipt by Buyer of Buyer's Required Regulatory Approvals.
5. Access and Confidentiality
1. General Access. Promptly following the execution of this Agreement and
until the Closing Date (or earlier termination of this Agreement),
Seller shall permit (and with respect to each of the LLCs, Seller
shall cause such LLC to permit) Buyer and its representatives:
1. to have reasonable access, at reasonable times and upon
reasonable advance notice, in Seller's and each of the LLC's
offices and in a manner so as not to interfere unduly with the
business operations of Seller or any of the LLCs, to the books,
records, contracts, and documents of each of the LLCs relating to
its Business and Facility insofar as the same may be disclosed
without (a) violating any legal constraints or any legal
obligation, (b) waiving any attorney/client, work product,
or like privilege, (c) disclosing information about the
activities of Seller or its Affiliates (other than the LLCs) that
is unrelated to the LLCs or the operation of the Facilities, or
(d) disclosing proprietary models of Seller or any of its
Affiliates pertaining to energy project evaluation, energy or
natural gas price curves or projections, or other economic
predictive models; and
2. subject to any required consent of any third Person and upon
reasonable advance notice to Seller, to conduct at reasonable
times and at Buyer's sole risk, cost, and expense, in the
presence of representatives of Seller, reasonable inspections of
the Facilities.
Buyer agrees to indemnify and hold harmless, release, and defend the Seller
Indemnified Parties and the LLCs from and against any and all Losses
arising, in whole or in part, from the acts or omissions of the Buyer
Indemnified Parties in connection with Buyer's inspection of the Facilities
and other assets and records of Seller or the LLCs, including claims for
personal injuries, property damage, and reasonable attorneys' fees and
expenses. Nothing in this Article 5 shall be construed to permit Buyer or
its representatives to have access to any files, records, contracts, or
documents of Seller or any of the LLCs relating to this transaction,
including any bids or offers received by Seller or the LLCs for the sale of
the LLC Interests or the Facilities, it being agreed that all such bids or
offers shall be the sole property of Seller.
2. Confidential Information. Buyer agrees to maintain all information made
available to it under this Agreement confidential and to cause its
officers, directors, agents, employees, representatives, consultants, and
advisors to maintain all information made available to them under this
Agreement confidential, all as provided in that certain confidentiality
agreement dated August 31, 2000 (the "Confidentiality Agreement"), by and
between Seller and Buyer which is attached hereto as Exhibit 5.2, the terms
of which are incorporated herein by reference and made a part of this
Agreement.
3. No Other Contact. Buyer shall not contact or correspond with any customer,
employee, or other Person associated with the Businesses of the LLCs,
without the prior written consent of Seller.
6. Tax Matters
1. Preparation. Any Tax Return to be prepared pursuant to the provisions
of this Section 6.1 shall be prepared in a manner consistent with
practices followed in prior years with respect to similar Tax Returns,
except for changes required by changes in Law or fact. Buyer shall not
file an amended Tax Return for any period ending on or prior to the
Closing Date without the consent of Seller, which may not be
unreasonably withheld. The following provisions shall govern the
allocation of responsibility as between Buyer and Seller for certain
Tax matters following the Closing Date:
1. Tax Periods Ending on or Before the Closing Date. Seller
shall prepare or cause to be prepared and file or cause to
be filed all Tax Returns for the LLCs for all periods ending
on or prior to the Closing Date regardless of when they are
to be filed. Seller shall pay the Taxes attributable to the
LLCs with respect
to such periods. Buyer and Seller acknowledge that for
federal income tax purposes the taxable year of each LLC
shall end on the Closing Date.
2. Tax Periods Beginning Before and Ending After the Closing
Date. Buyer shall prepare or cause to be prepared and file
or cause to be filed any Tax Returns of the LLCs for Tax
periods which begin before the Closing Date and end after
the Closing Date. Seller shall pay to Buyer within fifteen
(15) days after the date on which Taxes are paid with
respect to such periods an amount equal to the portion of
such Taxes which relates to the portion of such Tax period
ending on the Closing Date.
2. Access to Information. After Closing, Seller shall grant to Buyer (or
its designees) access at all reasonable times to all of the
information, books, and records relating to each of the LLCs within
the possession of Seller (including work papers and correspondence
with taxing authorities), and shall afford Buyer (or its designees)
the right (at Buyer's expense) to take extracts therefrom and to make
copies thereof, to the extent reasonably necessary to permit Buyer (or
its designees) to prepare Tax Returns and to conduct negotiations with
taxing authorities. After Closing, Buyer shall grant or cause each of
the LLCs to grant to Seller (or its designees) access at all
reasonable times to all of the information, books and records relating
to such LLC within the possession of Buyer or such LLC (including work
papers and correspondence with taxing authorities), and shall afford
Seller (or its designees) the right (at Seller's expense) to take
extracts therefrom and to make copies thereof, to the extent
reasonably necessary to permit Seller (or its designees) to prepare
Tax Returns and to conduct negotiations with taxing authorities.
3. Transfer Taxes. Buyer shall be responsible for the payment of all
Transfer Taxes resulting from the transactions contemplated by this
Agreement.
4. Tax Sharing Agreements. On or before the Closing Date, Seller and each
of the LLCs shall ensure that no Tax indemnity agreement, Tax
allocation agreement, or Tax sharing agreement with respect to any
such LLC is in force or effect as to any such LLC and that there shall
be no liability of any such LLC after the Closing Date under any such
agreement.
5. Assistance and Cooperation. After the Closing Date, in the case of any
audit, examination, or other proceeding with respect to Taxes ("Tax
Proceeding") for which Seller is or may be liable pursuant to this
Agreement, Buyer shall inform Seller within ten (10) days of the
receipt of any notice of such Tax Proceeding, and shall afford Seller,
at Seller's expense, the opportunity to control the conduct of such
Tax Proceedings. Buyer shall execute or cause to be executed powers of
attorney or other documents necessary to enable Seller to take all
actions desired by Seller with respect to such Tax Proceeding to the
extent such Tax Proceeding may affect the amount of Taxes for which
Seller is liable pursuant to this Agreement. Seller shall have the
right to control any such Tax Proceedings and to initiate any claim
for refund, file any amended return, or take any other action which it
deems appropriate with respect to such Taxes.
6. Tax Indemnity. Notwithstanding any other provisions of this Agreement,
Sections 6.6 and 6.7 shall apply to indemnifications by Seller to
Buyer for, and shall be the sole remedy of Buyer in respect of, the
Losses described in the following sentence. Seller agrees to indemnify
and hold
harmless Buyer from and against the entirety of any and all Losses
that Buyer may suffer for any Taxes attributable to the LLCs with
respect to: (i) any Tax year or portion thereof ending on or before
the Closing Date (or for any Tax year beginning before and ending
after the Closing Date to the extent allocable (determined in a manner
consistent with Section 6.1) to the portion of such period beginning
before and ending on the Closing Date); (ii) any Tax attributable to
events, transactions, sales, deposits, services, or rentals occurring,
received, or performed prior to the Closing Date; and (iii) Losses
resulting from the breach by Seller or any of the LLCs of any covenant
herein concerning Taxes or in this Article 6. No right to indemnity
shall exist if the Loss is the direct and proximate result of actions
of Buyer or its Affiliates.
7. Tax Indemnity Claims. The provisions of this Section 6.7 shall apply
only to the indemnification provided for under Section 6.6. If a claim
for Taxes is made against Buyer and if Buyer intends to seek indemnity
with respect thereto under Section 6.6, Buyer shall promptly furnish
written notice to Seller of such claim. Failure of Buyer to so notify
Seller within fifteen (15) days of the Buyer's knowledge of the claim
being made against Buyer shall terminate all rights of Buyer to
indemnity by Seller as to such claim. Seller shall have thirty (30)
days after receipt of such notice to undertake, conduct, and control
(through counsel of its own choosing and at its own expense) the
settlement or defense thereof, and Buyer shall cooperate with it in
connection therewith, so long as the Seller, at Seller's cost and
expense, (i) has undertaken the defense of, and assumed in writing
full responsibility for all indemnified Losses with respect to, such
claim, (ii) is reasonably contesting such claim in good faith, by
appropriate proceedings, (iii) has taken such action (including the
posting of a bond, deposit, or other security) as may be necessary to
prevent any action to foreclose a lien against or attachment of the
property of Buyer for payment of such claim, (iv) has maintained
adequate reserves, subject to Buyer's reasonable satisfaction, that
Seller has sufficient funds to indemnify Buyer for all Losses relating
to the claim, and (v) Seller's pursuit of the claim does not adversely
affect the business operations of Buyer. Provided that the
requirements in the previous sentence are met, Buyer shall not pay or
settle any such claim. Seller shall permit Buyer to participate in
such settlement or defense through counsel chosen by Buyer (but the
fees and expenses of such counsel shall be paid by Buyer).
Notwithstanding compliance by Seller with the preceding sentence,
Buyer shall have the right to pay or settle any such claim, but in
such event it shall waive any right to indemnity by Seller for such
claim. If within thirty (30) days after the receipt of Buyer's notice
of a claim of indemnity hereunder, Seller does not notify Buyer that
it elects (at Seller's cost and expense) to undertake the defense
thereof and assume full responsibility for all indemnified Losses with
respect thereto, or gives such notice and thereafter fails to contest
such claim in good faith or to prevent action to foreclose a lien
against or attachment of Buyer's property as contemplated above, Buyer
shall have the right to contest, settle, or compromise such claim and
Buyer shall not thereby waive any right to indemnity for such claim
under this Agreement.
8. Tax Refunds. Refunds of Taxes paid or payable with respect to Taxes
attributable to the LLCs shall be promptly paid as follows (or to the
extent payable but not paid due to offset against other Taxes shall be
promptly paid by the Party receiving the benefit of the offset as
follows): (i) to Seller if attributable to Taxes with respect to any
Tax year or portion thereof ending on or before the Closing Date (or
for any Tax year beginning before and ending after the Closing Date to
the
extent allocable (determined in a manner consistent with Section 6.1)
to the portion of such period beginning before and ending on the
Closing Date); and (ii) to Buyer if attributable to Taxes with respect
to any Tax year or portion thereof beginning after the Closing Date
(or for any Tax year beginning before and ending after the Closing
Date to the extent allocable (determined in a manner consistent with
Section 6.1) to the portion of such period ending after the Closing
Date).
7. Covenants of Seller and Buyer
1. Conduct of Business Pending Closing. Subject to Section 7.2 and the
constraints of applicable operating agreements and other existing
agreements, from the date of this Agreement through the Closing Date,
except as disclosed in Schedule 7.1 or as otherwise consented to or
approved in writing by Buyer (which consent or approval shall not be
unreasonably withheld, conditioned, or delayed), Seller covenants and
agrees that:
1. Changes in Business. Seller shall cause each of the LLCs to
comply with the following:
1. no LLC shall make any material change in the conduct of its
business or operations, except as contemplated by the
matters described in Part I of Schedule 7.1;
2. except in the ordinary course of business and consistent
with past practices and except for the transfer of the
Transferred Contracts as provided in Section 7.1(d), no LLC
shall enter into, assign, terminate, or amend, in any
material respect, any Project Document;
3. no LLC shall:
1. declare or pay any dividends or make any
distributions in respect of, or issue any of, its
equity securities or securities convertible into
its equity securities, or repurchase, redeem, or
otherwise acquire any such securities or make or
propose to make any other change in its
capitalization; provided, however, that on or
before the Closing Date, Seller shall have the
right to cause such LLC to dividend to Seller any
or all of the cash held by such LLC (to the extent
such cash was not received as the result of a
breach by Seller of its obligations in this
Section 7.1(a));
2. merge into or with or consolidate with any other
Person or acquire all or substantially all of the
business or assets of any Person;
3. make any material change in its Certificate of
Formation or Limited Liability Company Agreement;
4. purchase any securities of any Person, except for
investments made in the ordinary course of
business and consistent with prior practices;
5. incur any obligations for borrowed money or
guarantee or otherwise become liable for the
obligations of, or make any loans or advances to,
any Person not an Affiliate of Seller;
or
6. fail to fully perform and pay its obligations
under or in respect of any of the Material
Agreements, the Transferred Contracts, or the
Other Contracts, the Permits, or liabilities and
obligations incurred under this Section 7.1, all
to the extent accruing before the Closing Date.
4. other than pursuant to the requirements of existing contracts or
commitments, no LLC shall sell, lease, or otherwise dispose of
any of its assets, except for (a) assets sold, leased, or
otherwise disposed of in the ordinary course of business, (b) the
sale or disposition of any item of personal property or equipment
having a value of less than $50,000, and (c) the transfer or
other disposition of the accounts receivable or advances due or
owed to such LLC from any Affiliate of Seller;
5. no LLC shall take any action or enter into any commitment with
respect to or in contemplation of any liquidation, dissolution,
recapitalization, reorganization, or other winding up of its
business or operations;
6. no LLC shall change its accounting policies or practices
(including, without limitation, any change in depreciation or
amortization policies), except as required under GAAP;
7. no LLC shall enter into any employment agreement not terminable
by such LLC at will and without cost to such LLC;
8. no LLC shall create any employee benefit plan (within the meaning
of Section 3(3) of ERISA) or any other employee benefit plan or
program not subject to ERISA, except as required by Law; and
9. no LLC shall take (or fail to take) any action that will or could
reasonably be anticipated to cause such LLC (1) to lose its
status as an exempt wholesale generator within the meaning of the
Energy Policy Act of 1992 and applicable FERC regulations, or (2)
to lose its authorization under the Federal Power Act to make
wholesale sales of capacity and energy at market-based rates.
2. Liens. Seller shall not, and will cause each of the LLCs not to, grant
any express Lien on any assets of such LLC, except to the extent (i)
required or permitted incident to the operation of the assets of such
LLC and the business of such LLC or (ii) required or evidenced by any
of the Project Documents.
3. Operation of Facilities. Seller shall:
1. cause each Facility to be maintained and operated in the ordinary
course of business consistent with such LLC's past practices
(including the repair or replacement of damaged, destroyed,
obsolete, depreciated, non-working, or non-economical items of
equipment or other personal property) and in accordance with Good
Operating Practices, maintain insurance now in force with respect
to such Facility, and pay or cause to be paid all costs and
expenses in connection therewith promptly when due, but Seller
shall not be obligated by this clause (i) to cause any LLC to
operate its Facility; and
2. cause each of the LLCs to use its reasonable efforts to maintain
its relationships with employees of any Affiliate of Seller
assigned to the Businesses of the LLCs, suppliers, customers, and
others having material business relationships relating to the
LLCs, the Facilities, or the Businesses so that they will be
preserved for Buyer on and after the Closing Date.
4. Transferred Contracts. On or before the Closing Date, Seller shall
cause each of the contracts described in Part II of Schedule 7.1 (the
"Transferred Contracts") to be assigned and transferred to, and
assumed by, the LLC shown for each such Transferred Contract in Part
II of Schedule 7.1.
2. Qualifications on Conduct. Seller and each of the LLCs may take (or not
take, as the case may be) any of the actions described in Section 7.1 above
if reasonably necessary in accordance with Good Operating Practices under
emergency circumstances (or if required or prohibited pursuant to Law) and
provided Buyer is notified as soon thereafter as practicable.
3. Public Announcements. Prior to the Closing Date, without the prior written
approval of the other Party (which approval shall not be unreasonably
withheld, conditioned, or delayed), no Party will issue, or permit any
agent or Affiliate of such Party to issue, any press releases or otherwise
make, or cause any agent or Affiliate of such Party to make, any public
statements with respect to this Agreement and the transactions contemplated
hereby, except when such release or statement is deemed in good faith by
the releasing Party to be required by Law or under the applicable rules and
regulations of a stock exchange or market on which the securities of the
releasing Party or any of its Affiliates are listed. In each case to which
such exception applies, the releasing Party will use its reasonable efforts
to provide a copy of such release or statement to the other Party and
incorporate any reasonable changes which are suggested by the non-releasing
Party prior to releasing or making the statement. After the Closing Date,
the Parties will confer with each other regarding their initial public
announcement for the transaction contemplated herein.
4. Actions by Parties. Each Party agrees to use commercially reasonable
efforts to satisfy the conditions to Closing set forth in Article 8.
5. Supplement to Schedules. Seller shall, from time to time prior to the
Closing by written notice to Buyer, supplement or amend the Schedules to
this Agreement to correct any matter that would constitute a breach of any
representation or warranty of Seller in Section 4.1 of this Agreement. For
purposes of determining whether Buyer's condition set forth in Section
8.2(a) has been fulfilled, the Schedules shall be deemed to include only
that information contained therein on the date of this Agreement and shall
be deemed to exclude all information contained in any supplement or
amendment thereto, but if Closing shall occur, then any matters disclosed
to Buyer pursuant to any supplement or amendment at or prior to the Closing
shall be deemed to be waived by Buyer and Buyer shall not be entitled to
make a claim thereon under this Agreement.
6. Further Assurances. Seller and Buyer each agree that from time to time
after the Closing Date, it will execute and deliver or cause its respective
Affiliates (including each of the LLCs) to execute and deliver such further
instruments, and take (or cause its respective
Affiliates, including each of the LLCs, to take) such other action, as may
be reasonably necessary to carry out the purposes and intents of this
Agreement.
7. Records. Buyer agrees to maintain, or cause each of the LLCs to maintain,
the Records in existence on the Closing Date until the fifth (5th)
anniversary of the Closing Date (or for such longer period of time as
Seller shall advise Buyer is necessary to have Records available with
respect to open years for Tax audit purposes), or if any of the Records
pertain to any claim or dispute pending on the fifth anniversary of the
Closing Date, Buyer shall maintain any of the Records designated by Seller
until such claim or dispute is finally resolved and the time for all
appeals has been exhausted. After the Closing Date, Buyer shall provide or
cause each of the LLCs to provide Seller and its representatives during
normal business hours and upon reasonable notice reasonable access to and
the right to copy the Records, at Seller's cost and expense, for the
purposes of:
1. preparing and delivering any accounting statement provided for
under this Agreement and adjusting, prorating, and settling the
charges and credits provided for in this Agreement;
2. complying with any Law affecting Seller's ownership of the LLC
Interests or the Facilities prior to the Closing Date;
3. preparing any audit of the books and records of any third party
relating to the LLC Interests or the Facilities prior to the
Closing Date, or responding to any audit prepared by such third
parties;
4. preparing Tax Returns;
5. responding to or disputing any Tax audit; or
6. asserting, defending, or otherwise dealing with any claim or
dispute under this Agreement or with respect to any of the LLCs
or its Facility.
Additionally, Buyer shall not, and shall not permit any of the LLCs to,
after the Closing Date, waive the attorney/client, work product, or like
privilege of Seller, its Affiliates, or any of the LLCs with respect to any
of the Records existing as of the Closing Date, without Seller's prior
written consent.
8. Assumption of LLC Obligations. From and after Closing, Buyer agrees to
cause each of the LLCs to fully perform and fulfill all of its obligations
and commitments, whether existing as of the Closing Date or arising or
incurred thereafter.
9. Regulatory and Other Authorizations and Consents.
1. Filings. Each Party shall use all commercially reasonable efforts to
obtain all authorizations, consents, orders, and approvals of, and
to give all notices to and make all filings with, all Governmental
Authorities (including in the case of Seller, the Seller Required
Regulatory Approvals and, in the case of Buyer, the Buyer Required
Regulatory Approvals) that may be or become necessary for its
execution and delivery of, and the performance of its obligations
under, this Agreement and will cooperate fully with the other Party
in promptly seeking to obtain all such authorizations, consents,
orders, and approvals, giving such notices, and making such filings.
2. HSR Filing. To the extent required by the HSR Act, each Party shall
(i) file or cause to be filed, as promptly as practicable but in no
event later than the tenth (10th) Business Day after the execution
and delivery of this Agreement, with the Federal Trade Commission
and the United States Department of Justice, all reports and other
documents required to be filed by such Party under the HSR Act
concerning the transactions contemplated hereby and (ii) promptly
comply with or cause to be complied with any requests by the Federal
Trade Commission or the United States Department of Justice for
additional information concerning such transactions, in each case so
that the initial thirty (30) day waiting period applicable to this
Agreement and the transactions contemplated hereby under the HSR Act
shall expire as soon as practicable after the execution and delivery
of this Agreement. Each Party agrees to request, and to cooperate
with the other Party in requesting, early termination of any
applicable waiting period under the HSR Act. Seller and Buyer shall
each be responsible for one-half of the filing fees incurred by the
Parties in connection with the initial filings required by the HSR
Act.
3. Additional Undertakings of Buyer. In addition to Buyer's
undertakings pursuant to Section 7.9(a) and (b), Buyer shall take
the following actions.
1. FERC Approvals. Buyer shall: (A) no later than the 10th
Business Day after the date hereof, gather all necessary
information, prepare and provide to Seller for its review a
draft of the complete filings seeking the FERC Approvals
(including all reports, studies, and exhibits related thereto)
(the "FERC Filings"); (B) no later than the 20th Business Day
after the date hereof, consult with Seller regarding the FERC
Filings, consider and incorporate all reasonable comments (if
any) submitted by Seller or its representatives, and finalize
and file the FERC Filings with the FERC; (C) prior to and
during the pendency of the notice and approval period with the
FERC, (x) consult with Seller prior to providing any
supplemental information to the FERC and provide prompt
written notice to Seller of all discussions and correspondence
between Buyer's employees and representatives and the FERC
that reasonably relates to or bears upon the FERC Filings, (y)
use all commercially reasonable efforts and act in good faith
to expedite and obtain the FERC Filings, and (z) avoid taking
other actions or making other filings under the jurisdiction
of the FERC that could reasonably be expected to have the
effect of delaying, conditioning, or reducing the likelihood
of receiving the FERC Approvals; and (D) otherwise use all
commercially reasonable efforts (acting in good faith) to take
all other actions required to obtain the FERC Approvals.
2. SEC Approval. Buyer shall: (A) no later than the 10th Business
Day after the date hereof, gather all necessary information,
prepare and provide to Seller for its review a draft of the
filing seeking the SEC Approval (including all reports,
studies, and exhibits related thereto) (the "SEC Filing"); (B)
in the SEC Filing, request authorization under PUHCA that (x)
is limited to the authority reasonably required for Buyer to
finance only those transactions contemplated by this
Agreement, but may include a request by Buyer's parent
company, Allegheny Energy,
Inc., to issue and sell up to $1,000,000,000 in equity
securities in connection with this transaction and for other
corporate purposes, subject to the requirements of clause (z)
below, (y) is consistent with any existing conditions or
restrictions under PUHCA applicable to either Buyer or any of
its Affiliates subject to PUHCA, and (z) does not seek a
modification of any limit on "aggregate investment" pursuant
to Rule 53 under PUHCA in connection with the SEC Filing or
otherwise require the approval or consent of any state
Governmental Authority; (C) no later than the 20th Business
Day after the date hereof, consult with Seller regarding the
SEC Filing, consider and incorporate all reasonable comments
(if any) submitted by Seller or its representatives, and
finalize and file the SEC Filing with the SEC; (D) prior to
and during the pendency of the notice and approval period with
the SEC, (1) consult with Seller prior to providing any
supplemental information to the SEC and provide prompt written
notice to Seller of all discussions and correspondence between
Buyer's employees and representatives and the SEC that
reasonably relates to or bears upon the SEC Filing, (2) use
all commercially reasonable efforts and act in good faith to
expedite and obtain the SEC Filing, (3) avoid taking other
actions or making other filings under the jurisdiction of the
SEC that could reasonably be expected to have the effect of
delaying, conditioning, or reducing the likelihood of
receiving the SEC Approval, and (4) not seek (and shall cause
its Affiliates not to seek) a modification of any limit on
"aggregate investment" pursuant to Rule 53 under PUHCA in
connection with the SEC Filing or take any other action that
would require the approval or consent of any state
Governmental Authority in connection with the SEC Filing; and
(E) otherwise use all commercially reasonable efforts (acting
in good faith) to take all other actions required to obtain
the SEC Approval.
3. General Obligations. Buyer shall: (A) take promptly any or all
of the following actions to the extent necessary to eliminate
any concerns on the part of any Governmental Authority
regarding the legality under any Law of Buyer's acquisition of
the LLC Interests: entering into negotiations, providing
information, making proposals, entering into and performing
agreements or submitting to judicial or administrative orders,
holding separate (through the establishment of a trust or
otherwise) particular assets or categories of assets, or
businesses, of the LLCs or Buyer or its Affiliates, or
agreeing to dispose of one or more assets or properties
(whether owned by Buyer or its Affiliates or the LLCs) whether
before or after the Closing; provided, however, that nothing
in this Agreement shall require the Buyer, its Affiliates, or
the LLCs to dispose of or sell assets or properties with an
aggregate fair market value of $100,000,000 or more as a
condition to eliminate a Governmental Authority's concerns
regarding the legality under any Law of Buyer's acquisition of
the LLC Interests; (B) use all commercially reasonable efforts
and act in good faith to prevent the entry in a judicial or
administrative proceeding brought under any Law by any
Governmental Authority or any other party for a permanent or
preliminary injunction or other order that would make
consummation of the transactions contemplated by this
Agreement unlawful or that would prevent or delay such
consummation; and (C) take promptly, in the event that such an
injunction or order has been issued in such a proceeding, any
and all reasonable steps, including the appeal thereof, the
posting of a bond, or the steps contemplated by clause (A) of
this Section 7.9(c)(iii), necessary to vacate, modify, or
suspend such injunction or order so as to permit such
consummation on a schedule as close as possible to that
contemplated by this Agreement.
4. Transfer. If the transfer of any instrument, contract, license, lease,
permit, or other document to Buyer hereunder shall require the consent
of any party thereto other than Seller, then this Agreement shall not
constitute an agreement to assign the same, and such item shall not be
assigned to or assumed by Buyer, if an actual or attempted assignment
thereof would constitute a breach thereof or default thereunder. In
such case, Seller and Buyer shall cooperate and each shall use
commercially reasonable efforts to obtain such consents to the extent
required of such other parties and, if and when any such consents are
obtained, to transfer the applicable instrument, contract, license,
lease, permit, or other document. If any such consent cannot be
obtained, Seller shall cooperate in any reasonable arrangement
designed to obtain for Buyer all benefits, privileges, obligations and
privileges of the applicable instrument, contract, license, lease,
permit, or document.
5. Third Party Consents. Each Party will use its commercially reasonable
efforts to obtain any consents of third parties necessary or advisable
in connection with the transactions contemplated by this Agreement,
including providing to such third parties such financial statements
and other publicly available financial information as such third
parties may reasonably request, and will cooperate fully with the
other Party in promptly seeking to obtain such third party consents.
10. Fees and Expenses. Except as otherwise expressly provided in this
Agreement, all fees and expenses, including fees and expenses of counsel,
financial advisors, and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
Party incurring such fee or expense, whether or not the Closing shall have
occurred. Buyer shall be obligated to pay any and all costs of any audit of
the LLCs as may be required to enable Buyer to complete and file any filing
by Buyer or an Affiliate of Buyer with the Securities and Exchange
Commission.
11. Casualty Loss. Notwithstanding anything to the contrary in this Agreement,
in the event of substantial and material damage by fire or other material
casualty to the Facility of any LLC prior to Closing (a "Material Casualty
Loss"), Seller shall promptly commence and diligently pursue the repair or
replacement of the equipment or other materials damaged at the affected
Facility, and this Agreement shall remain in full force and effect, and no
failure of a condition to Closing shall be deemed to exist by virtue of
such event, if, in any such event, Seller so commences and pursues such
repair or replacement and completes such repair or replacement work on or
before the Closing Date; provided, that if such repair or replacement shall
not have been completed on or before the Closing Date, the Closing of the
purchase and sale contemplated hereby shall nevertheless occur with respect
to each LLC owning a Facility that is not affected by such Material
Casualty Loss, the Purchase Price payable at such Closing shall be reduced
by the amount (the "Casualty Loss Amount") shown in Schedule 7.11 for each
LLC owning a Facility affected by such Casualty Loss (and any of the LLCs
owning or holding assets related to the affected Facility) (collectively,
the
"Affected LLCs"), and the Closing of the purchase and sale contemplated
hereby with respect to the Affected LLCs shall be deferred until such later
date, but in no event later than May 31, 2001, as shall be necessary to
permit Seller to complete the repair or replacement work with respect to
the affected Facility. At any such deferred Closing, the purchase price for
the sale and conveyance to Buyer of the LLC Interests of the Affected LLCs
shall be the Casualty Loss Amount with respect to such Affected LLCs. If
such a deferred Closing shall not have occurred with respect to such
Affected LLCs on or before May 31, 2001, Buyer or Seller may terminate this
Agreement with respect to each such Affected LLCs upon written notice to
the other Party, unless, prior to such termination, the Parties shall have
agreed in writing upon an extension of the latest date on which a deferred
Closing may occur pursuant to this Section 7.11.
12. Excluded Assets. Notwithstanding Article 9 hereof, the transactions
contemplated by this Agreement exclude, and prior to the Closing Date,
Seller may cause an LLC to transfer to Seller or any of its Affiliates
(other than the LLCs) the following (the "Excluded Assets"):
1. the assets listed or described on Schedule 7.12;
2. all insurance policies and rights under any insurance policies in
respect to any and all claims made under such policies whether such
claims are asserted before or after the Closing Date and all rights to
any proceeds payable under any such policy; and
3. the Enron Marks.
Seller's representations and warranties in Article 4 shall not apply to any
of the items described in clauses (a) through (c) of the preceding
sentence.
13. Guarantees and Other Affiliate Contracts. Buyer and Seller shall cooperate
and use commercially reasonable efforts (which shall not include any
obligation of Seller to pay any cost or expense or incur any obligation) in
order that, effective as of the Closing Date, (i) the Guarantees and any
liabilities related thereto shall be released as to Seller or its Affiliate
and (ii) substitute arrangements, if required, of Buyer or its Affiliates
shall be in effect. If Buyer and Seller are unable to cause any of the
Guarantees to be released as to Seller and its Affiliates prior to the
Closing Date, then Buyer shall provide (or cause to be provided) to Seller
and Enron Corp. a guaranty in a form and from a Person acceptable to Seller
guaranteeing the performance by Buyer of all obligations under such
unreleased Guarantees from and after the Closing Date (the "Back-to-Back
Guaranty"). Prior to or contemporaneously with the Closing, all other
agreements between any of the LLCs and Seller or any of its Affiliates
(other than the LLCs) shall be canceled or terminated.
14. Use of Enron Marks. Enron Marks will appear on some of the assets of the
LLCs, including on signage at the Facilities, and on supplies, materials,
stationery, brochures, advertising materials, manuals and similar
consumable items of the LLCs. Buyer acknowledges and agrees that it obtains
no right, title, interest, license, or any other right whatsoever to use
the Enron Marks. Buyer shall, (i) within ninety days after the Closing
Date, remove the Enron Marks from the assets of the LLCs, including signage
at the Facilities, and provide written verification thereof to Seller
promptly after completing such removal and (ii) within two weeks after the
Closing Date, return or destroy
(with proof of destruction) all other assets of the LLCs that contain any
Enron Marks that are not removable. Buyer agrees never to challenge
Seller's (or its Affiliates') ownership of the Enron Marks or any
application for registration thereof or any registration thereof or any
rights of Seller or its Affiliates therein as a result, directly or
indirectly, of its ownership of the LLCs. Buyer will not do any business or
offer any goods or services under the Enron Marks. Buyer will not send, or
cause to be sent, any correspondence or other materials to any Person on
any stationery that contains any Enron Marks or otherwise operate the LLCs
in any manner which would or might reasonably be expected to confuse any
Person into believing that Buyer has any right, title, interest, or license
to use the Enron Marks.
15. Insurance. Buyer acknowledges and agrees that, effective upon the Closing,
the insurance policies of Seller related to the LLCs shall be terminated or
modified to exclude coverage of all or any portion of the LLCs by Seller,
and, as a result, Buyer shall be obligated at or before Closing to obtain
at its sole cost and expense replacement insurance, including insurance
required by any third party to be maintained by any of the LLCs. Buyer
further acknowledges and agrees that Buyer may need to provide to certain
Governmental Authorities and third parties evidence of such replacement or
substitute insurance coverage for the continued operations of the
Businesses of the LLCs following the Closing. Notwithstanding Section
7.12(b), if any claims are made or losses occur prior to the Closing Date
that do not arise out of a Material Casualty Loss and that relate solely to
the Businesses of the LLCs and such claims, or the claims associated with
such losses, may be made against the policies retained by Seller or its
Affiliates under Section 7.12 or under policies otherwise retained by
Seller or its Affiliates after the Closing, then Seller shall use its
reasonable commercial efforts so that the LLCs can file, notice, and
otherwise continue to pursue such claims and recover proceeds under the
terms of such policies. Seller and its Affiliates shall be reimbursed by
Buyer (or otherwise indemnified and held harmless) for any Losses or other
costs incurred by Seller or its Affiliates (including by way of any
reduction in, or loss of, available insurance to cover other insurable
losses or associated expenses of Seller or its Affiliates) arising out of
the LLCs pursuing such claims under such policies.
16. Employee Matters. Buyer may offer employment from and after the Closing to
any employee of Operational Energy Corp. assigned to the Businesses of the
LLCs, on such terms and conditions as Buyer may reasonably determine, but
Buyer shall not be obligated to do so pursuant to this Agreement. Prior to
the Closing, upon reasonable prior notice to Seller, Buyer may communicate
with any employee of Operational Energy Corp. assigned to the Businesses of
the LLCs about employment with the Buyer.
17. Indebtedness. On any date from the date hereof untilthe Closing Date or
earlier termination of this Agreement, Buyer will not permit the ratio of
Indebtedness to the total capitalization of Buyer, determined on a
consolidated basis, as of the end of any fiscal quarter of Buyer, to exceed
65% (or exceed 60% in the event Buyer's senior unsecured credit rating is
below BBB- or Baa3 by Standard and Poors Rating Service or Xxxxx'x
Investors Services, Inc. respectively). Promptly after the filing thereof,
and in any event within 45 days after the end of the first 3 fiscal
quarters of each fiscal year of the Buyer, Buyer shall send to Seller a
copy of Buyer's report on Form 10-Q for such quarter, which shall include
the Buyer's quarterly unaudited financial statements as of the end of such
quarter and promptly after the filing thereof, and in any event within 90
days after the end of each fiscal year of the
Buyer, Buyer shall send to Seller a copy of Buyer's report on Form 10-K for
such year, which report will include the Buyer's annual audited financial
statements as of the end of such year.
8. Closing Conditions
1. Seller's Closing Conditions. The obligation of Seller to proceed with
the Closing contemplated hereby is subject, at the option of Seller,
to the satisfaction on or prior to the Closing Date of all of the
following conditions:
1. Representations, Warranties, and Covenants. The representations
and warranties of Buyer contained in Section 4.2 of this
Agreement that are qualified with respect to materiality (whether
by reference to Material Adverse Effect or otherwise) shall be
true and correct and the representations of Buyer contained in
Section 4.2 of this Agreement that are not so qualified shall be
true and correct in all material respects on and as of the
Closing Date, and the covenants and agreements of Buyer to be
performed on or before the Closing Date shall have been duly
performed in all material respects in accordance with this
Agreement.
2. Closing Documents. On or prior to the Closing Date, Buyer shall
have delivered, or be standing ready to deliver at the Closing,
all agreements, instruments, and documents required to be
delivered by Buyer under Section 9.3 .
3. No Action. On the Closing Date, no Action (excluding any such
matter initiated by Seller or any of its Affiliates) shall be
pending or threatened before any Governmental Authority of
competent jurisdiction seeking to enjoin or restrain the
consummation of the Closing or recover substantial damages from
Seller or any Affiliate of Seller resulting therefrom.
4. Waiting Period. The waiting period under the HSR Act applicable
to the consummation of the transactions contemplated hereby shall
have expired or been terminated or the Parties shall have
otherwise complied with the HSR Act.
5. Seller's Required Regulatory Approvals. Seller shall have
obtained or made Seller's Required Regulatory Approvals.
6. Purchase Price. Buyer shall have delivered, or be standing ready
to deliver at the Closing, the Closing Payment to Seller by wire
transfer in immediately available funds.
7. Guarantees. The Guarantees shall be released as to Seller and its
Affiliates and, if required, substitute arrangements of Buyer or
its Affiliates shall be in effect or Buyer shall have provided or
cause to be provided the Back-to-Back Guaranty for those
Guarantee obligations from which Seller or its Affiliates are not
released as of the Closing Date.
2. Buyer's Closing Conditions. The obligation of Buyer to proceed with
the Closing contemplated hereby is subject, at the option of Buyer, to
the satisfaction on or prior to the Closing Date of all of the
following conditions:
1. Representations, Warranties, and Covenants. The representations
and
warranties of Seller in Section 4.1 of this Agreement that are
qualified with respect to materiality (whether by reference to
Material Adverse Effect or otherwise), shall be true and correct,
and the representations and warranties of Seller contained in
Section 4.1 of this Agreement that are not so qualified shall be
true and correct in all material respects on and as of the
Closing Date, and the covenants and agreements of Seller to be
performed on or before the Closing Date shall have been duly
performed in all material respects in accordance with this
Agreement.
2. Closing Documents. On or prior to the Closing Date, Seller shall
have delivered, or be standing ready to deliver at the Closing,
all agreements, instruments, and documents required to be
delivered by Seller pursuant to Section 9.2.
3. No Action. On the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Buyer or any
of its Affiliates) shall be pending or threatened before any
court or governmental agency or body of competent jurisdiction
seeking to enjoin or restrain the consummation of the Closing or
recover substantial damages from Buyer or any Affiliate of Buyer
resulting therefrom.
4. Waiting Period. The waiting period under the HSR Act applicable
to the consummation of the transactions contemplated hereby shall
have expired or been terminated or the Parties shall have
otherwise complied with the HSR Act.
5. Buyer's Required Regulatory Approvals. Buyer shall have obtained
or made Buyer Required Regulatory Approvals.
6. Title Matters. Seller shall obtain and deliver to Buyer (i) a
title policy (in the name of Des Plaines Green Land Development
L.L.C.) insuring the Real Property owned by Des Plaines Green
Land Development Company L.L.C. which does not differ in any
material respect from the pro-forma title policy for such Real
Property prepared by Chicago Title Insurance Company, Policy No.
001370022 in the amount of $90,000,000 and (ii) "as-built"
surveys for the Real Property owned by West Fork Land Development
Company, L.L.C. and Des Plaines Green Land Development L.L.C.
that do not reflect any encroachments that would have a Material
Adverse Effect on those LLCs.
9. Closing
1. Closing. The Closing shall be held on the Closing Date at 10:00 a.m.,
Houston time, at the offices of Xxxxxxx & Xxxxx L.L.P. at 000 Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxx, or at such other time or place as Seller and
Buyer may otherwise agree in writing.
2. Seller's Closing Obligations. At Closing, Seller shall execute and
deliver, or cause to be executed and delivered, to Buyer the
following:
1. a duly executed copy of the Assignment and Assumption Agreement;
2. resignations or terminations of the officers, directors, and
managers of each of the LLCs from their status as officers,
directors, and managers effective as of the Closing that are
requested by Buyer at least four days prior to the Closing Date;
and
3. any other documents or instruments reasonably required by Buyer
to consummate the transaction contemplated thereunder.
3. Buyer's Closing Obligations. At Closing, Buyer shall deliver, or cause
to be delivered, to Seller the following:
1. the Closing Payment to Seller in immediately available funds to
the bank account as provided in Section 3.2;
2. a duly executed copy of the Assignment and Assumption Agreement;
3. if required, a duly executed copy of the Back-to-Back Guaranty;
and
4. any other documents or instruments reasonably required by Seller
to consummate the transaction contemplated hereunder.
10. Limitations
1. Buyer's Review.
1. No Reliance. Buyer has reviewed and had access to all documents,
records and information which it has desired to review in
connection with its decision to enter into this Agreement, and to
consummate the transactions contemplated hereby. Buyer has not
relied upon any representation, warranty, statement, advice,
document, projection, or other information of any type provided
by Seller, the LLCs, their Affiliates, or any of their
representatives, except for those expressly set forth in this
Agreement. In deciding to enter into this Agreement, and to
consummate the transactions contemplated hereby, Buyer has relied
solely upon its own knowledge, investigation, and analysis (and
that of its representatives) and not on any disclosure or
representation made by, or any duty to disclose on the part of,
Seller, the LLC, their Affiliates, or any of their
representatives, other than the representations and warranties of
Seller expressly set forth herein.
2. Limited Duties. Any and all duties and obligations which either
Party may have to the other with respect to or in connection with
the LLCs, this Agreement, or the transactions contemplated hereby
are limited to those in this Agreement. The Parties do not intend
(i) that the duties nor obligations of either Party, or the
rights of either Party, shall be expanded beyond the terms of
this Agreement on the basis of any legal or equitable principle
or on any other basis whatsoever or (ii) that any equitable or
legal principle or any implied obligation of good faith or fair
dealing or any other matter requires either Party to incur,
suffer or perform any act, condition or obligation contrary to
the terms of this Agreement, whether existing or not and whether
foreseeable or unforeseeable. The Parties acknowledge that it
would be unfair, and that they do not intend, to increase any of
the obligations of any Party under this Agreement on the basis of
any implied obligation or otherwise.
2. Disclaimer of Warranties.
1. Information. Except as provided in Section 4.1, Seller makes no
representation or warranty, express, implied, at common law,
statutory or otherwise, with respect to the accuracy or
completeness of the information, records, and data now,
heretofore, or hereafter made available to Buyer in connection
with this Agreement (including any description of the LLCs or the
Facilities, revenue, price and expense assumptions, electricity
demand forecasts, or environmental information, or any other
information furnished to Buyer by Seller or any Affiliate of
Seller or any director, officer, employee, counsel, agent, or
advisor thereof).
2. Facilities. Notwithstanding anything contained to the contrary in
any other provision of this Agreement, it is the explicit intent
of each Party that Seller and its Affiliates are not making any
representation or warranty whatsoever, express, implied, at
common law, statutory or otherwise, except for the
representations or warranties given in this Agreement, and it is
understood that Buyer, with such exceptions, takes the LLC
Interests, the Facilities, and any other assets of each of the
LLCs "as is" and "where is." Without limiting the generality of
the immediately preceding sentence, except as provided in this
Agreement, Seller hereby expressly disclaims and negates any
representation or warranty, express or implied, at common law,
statutory, or otherwise, relating to (i) the condition of the
Facility and other assets of each of the LLCs (including any
implied or express warranty of merchantability or fitness for a
particular purpose, or of conformity to models or samples of
materials, or the presence or absence of any hazardous materials
in or on, or disposed or discharged from, the Facility and other
assets of each of the LLCs) or (ii) any infringement by Seller,
any of the LLCs, or any of their Affiliates of any patent or
proprietary right of any third party. Buyer has agreed not to
rely on any representation made by Seller with respect to the
condition, quality, or state of the Facilities except for those
in this Agreement, but rather, as a significant portion of the
consideration given to Seller for this purchase and sale, has
agreed to rely solely and exclusively upon its own evaluation of
the LLCs and the Facilities, except as provided herein. The
provisions contained in this Agreement are the result of
extensive negotiations between Buyer and Seller and no other
assurances, representations or warranties about the quality,
condition, or state of the LLCs or the Facilities were made by
Seller in the inducement thereof, except as provided herein.
3. Waiver of Damages. Notwithstanding anything contained to the contrary
in this Agreement, Seller and Buyer agree that, except for the SEC
Termination Fee specifically provided for in Section 12.1, the
recovery by either Party of any damages suffered or incurred by it as
a result of any breach by the other Party of any of its obligations
under this Agreement shall be limited to the actual damages suffered
or incurred by the non-breaching Party as a result of the breach by
the breaching Party of its obligations hereunder and in no event shall
the breaching Party be liable to the non-breaching Party for any
indirect, consequential, special, exemplary, or punitive damages
(including any damages on account of lost profits or opportunities or
lost or delayed generation) suffered or incurred by the non-breaching
Party as a result of the breach by the breaching Party of any of its
obligations hereunder.
4. Environmental Waiver and Release. From and after Closing, except as
provided in this Agreement, Buyer does hereby agree, warrant, and
covenant to (and Buyer shall cause each of the LLCs to) release,
acquit, and forever discharge Seller and all Seller Indemnified
Parties from any and all Losses, including all claims, demands, and
causes of action for
contribution and indemnity under statute or common law, which could be
asserted now or in the future and that relate to or in any way arise
out of Environmental Liabilities or any other environmental matters of
any of the LLCs or the Facilities. From and after Closing, Buyer and
each of the LLCs warrant, agree, and covenant not to xxx or institute
arbitration against Seller or any Seller Indemnified Party upon any
claim, demand, or cause of action for indemnity and contribution that
have been asserted or could be asserted for any such Environmental
Liabilities, except to the extent Buyer or any Buyer Indemnified Party
is entitled to indemnity for such matters under Article 11.
11. Indemnification
1. Indemnification by Seller. From and after the Closing, subject to the
other terms and limitations in this Agreement, Seller shall indemnify,
defend, reimburse, and hold harmless the Buyer and its Affiliates, and
its and their directors, officers, partners, employees, consultants,
agents, representatives, advisors, successors, and assigns
(collectively, the "Buyer Indemnified Parties") from and against any
and all Losses asserted against or incurred by any of the Buyer
Indemnified Parties (i) for any breach of Seller's representations or
warranties made in this Agreement, (ii) for any breach of the
covenants or obligations of Seller and its Affiliates under this
Agreement, (iii) for any claim for personal injury or death that
relates to or arises out of (A) the Businesses or the development,
construction, ownership, operation, or maintenance of any of the
Facilities and (B) events that occur prior to the Closing Date, (iv)
in respect of the matters described in Schedule 4.1(j), or (v) in
respect of the Excluded Assets, in each case, even if such Losses are
caused by the sole, joint, and/or concurrent negligence, strict
liability, or other fault of the Buyer Indemnified Parties.
2. Indemnification By Buyer. From and after the Closing, subject to the
other terms and limitations in this Agreement, Buyer shall indemnify,
defend, reimburse, and hold harmless Seller and its Affiliates, and
its and their directors, officers, partners, employees, consultants,
agents, representatives, advisors, successors, and assigns
(collectively, the "Seller Indemnified Parties") from and against any
and all Losses asserted against or incurred by any of the Seller
Indemnified Parties (i) for any breach of Buyer's representations or
warranties made in this Agreement, (ii) for any breach of the
covenants or obligations of Buyer and its Affiliates under this
Agreement, or (iii) that relate to or arise out of the Businesses or
the development, construction, ownership, operation, or maintenance of
any of the Facilities or that otherwise relate to or arise out of any
of the LLCs (whether relating to periods of time prior to or after the
Closing Date) to the extent such Losses are not properly asserted by
Buyer (or any Buyer Indemnified Party) under the provisions of Section
6.6 or Section 11.1 (subject to the limitations in this Agreement) by
the date specified in Section 11.5, in each case, even if such Losses
are caused by the sole, joint, and/or concurrent negligence, strict
liability, or other fault of the Seller Indemnified Parties. Buyer
acknowledges that the Losses described in clause (iii) of the
preceding sentence shall be retained by and transferred with each of
the LLCs and shall continue to be the responsibility of such LLC and
Buyer.
3. Limitations on Indemnity. None of the Buyer Indemnified Parties shall
be entitled to assert any right to indemnification under Section 11.1
until the aggregate amount of all the Losses actually suffered by the
Buyer
Indemnified Parties exceeds the Deductible Amount, and then only to
the extent such Losses exceed, in the aggregate, the Deductible
Amount. Anything in this Agreement to the contrary notwithstanding, in
no event shall the Seller ever be required to indemnify the Buyer or
the Buyer Indemnified Parties for Losses pursuant to Section 6.6,
Section 11.1, or any of the other provisions of this Agreement, or pay
any other amount in connection with or with respect to this Agreement
or the transactions contemplated by this Agreement, in any amount
exceeding, in the aggregate, fifteen percent (15%) of the Purchase
Price.
4. Third Party Claims. If a claim by a third party is made against a
Seller Indemnified Party or a Buyer Indemnified Party (each, an
"Indemnified Party"), and if such Indemnified Party intends to seek
indemnity with respect thereto under Article 5 or this Article 11,
such Indemnified Party shall promptly furnish written notice to the
other Party (the "Indemnifying Party") of such claim. The failure of
the Indemnified Party to deliver prompt written notice of a claim
shall not affect the indemnity obligations of the Indemnifying Party
hereunder except to the extent the Indemnifying Party was
substantially disadvantaged by such delay in delivery notice of such
claim. The Indemnifying Party shall have thirty (30) days after
receipt of such notice to undertake, conduct, and control (through
counsel of its own choosing and at its own expense) the settlement or
defense thereof, and the Indemnified Party shall cooperate with it in
connection therewith. The Indemnifying Party shall permit the
Indemnified Party to participate in such settlement or defense through
counsel chosen by such Indemnified Party (but the fees and expenses of
such counsel shall be borne by such Indemnified Party). So long as the
Indemnifying Party, at the Indemnifying Party's cost and expense, (i)
has undertaken the defense of, and assumed full responsibility for all
indemnified liabilities with respect to, such claim, (ii) is
reasonably contesting such claim in good faith, by appropriate
proceedings, and (iii) has taken such action (including the posting of
a bond, deposit, or other security) as may be necessary to prevent any
action to foreclose a lien against or attachment of the property of
the Indemnified Party for payment of such claim, the Indemnified Party
shall not pay or settle any such claim. Notwithstanding compliance by
the Indemnifying Party with the preceding sentence, the Indemnified
Party shall have the right to pay or settle any such claim, but in
such event it shall waive any right to indemnity by the Indemnifying
Party for such claim. If within thirty (30) days after the receipt of
the Indemnified Party's notice of a claim of indemnity hereunder, the
Indemnifying Party does not notify the Indemnified Party that it
elects (at the Indemnifying Party's cost and expense) to undertake the
defense thereof and assume full responsibility for all indemnified
liabilities with respect thereto, or gives such notice and thereafter
fails to contest such claim in good faith or to prevent action to
foreclose a lien against or attachment of the Indemnified Party's
property as contemplated above, the Indemnified Party shall have the
right to contest, settle, or compromise such claim and the Indemnified
Party shall not thereby waive any right to indemnity for such claim
under this Agreement.
5. Survival and Time Limitation. The terms and provisions of this
Agreement shall survive the Closing of the transactions contemplated
hereunder. Notwithstanding the foregoing, after Closing, any assertion
by Buyer or any Buyer Indemnified Party that Seller is liable to Buyer
or any Buyer Indemnified Party for indemnification under the terms of
this Agreement or otherwise in connection with the transactions
contemplated in this Agreement must be made in writing and must be
given to Seller (or not at all) on or prior to the date that is
eighteen (18) months after the
Closing Date, except for (i) indemnification for breach of Seller's
representation in Section 4.1(n) which must be made in writing and
must be given to Seller (or not at all) on or prior to the date that
is twenty-four (24) months after the Closing Date and (ii)
indemnification for matters addressed in Section 6.6 and Section
11.1(iii) which must be made in writing and must be given to Seller
(or not at all) on or prior to the date that is ninety (90) days after
the date on which the applicable statute of limitations expires with
respect to the matters covered thereby.
6. Further Indemnity Limitations. The amount of any Loss shall be reduced
(i) to the extent any Indemnified Party receives any insurance
proceeds with respect to such Loss, (ii) to take into account any net
Tax benefit arising from the recognition of the Loss, and (iii) to
take into account any payment actually received by an Indemnified
Party with respect to a Loss.
7. Sole and Exclusive Remedy. From and after the Closing, except as
provided in Section 6.6 of this Agreement for any claim in respect of
Taxes, the indemnification provisions of this Article 11 shall be the
sole and exclusive remedy of each Party (including the Seller
Indemnified Parties and the Buyer Indemnified Parties) (i) for any
breach of the other Party's representations, warranties, covenants, or
agreements contained in this Agreement or (ii) otherwise with respect
to this Agreement or the transactions contemplated hereby.
8. Compliance with Express Negligence Rule. All releases, disclaimers,
limitations on liability, and indemnities in this Agreement,
including those in this Article 11, shall apply even in the event of
the sole, joint, and/or concurrent negligence, strict liability, or
fault of the party whose liability is released, disclaimed, limited,
or indemnified.
12. Termination and Remedies
1. Termination.
1. Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the
Closing:
1. by the mutual consent of Seller and Buyer;
2. if the Closing has not occurred by the close of business on
May 30, 2001, then by Seller if any condition specified in
Section 8.1 has not been satisfied on or before such close
of business, and shall not theretofore have been waived by
Seller, provided that the failure to consummate the
transactions contemplated hereby on or before such date did
not result from the failure by Seller to fulfill any
undertaking or commitment provided for herein on the part of
Seller that is required to be fulfilled on or prior to
Closing;
3. if the Closing has not occurred by the close of business on
May 30, 2001, then by Buyer if any condition specified in
Section 8.2 (other than receipt by Buyer of the SEC
Approval) has not been satisfied or waived on or before such
close of business, and shall not theretofore have been
waived by Buyer, provided that the failure to consummate the
transactions contemplated hereby on or before such date did
not result from
the failure by Buyer to fulfill any undertaking or
commitment provided for herein on the part of Buyer that is
required to be fulfilled on or prior to Closing;
4. if the Closing has not occurred by the close of business on
May 30, 2001, then by Seller if the SEC Approval has not
been obtained by Buyer on or before such close of business;
or
5. if the Closing has not occurred by the close of business on
May 30, 2001, then by Buyer if SEC Approval has not been
obtained by Buyer in accordance with the requirements of
Section 7.9(c)(ii) and (iii) on or before such close of
business, provided that the failure to consummate the
transactions contemplated hereby on or before such date did
not result from the failure by Buyer to fulfill any
undertaking, commitment or obligation provided for herein on
the part of Buyer to obtain the SEC Approval, including
those obligations in Section 7.9(c)(ii) and (iii)
2. Effect of Termination. In the event of termination of this
Agreement by Seller or Buyer pursuant to Section 12.1(a)(i),
(ii), or (iii), written notice thereof shall promptly be given by
the terminating Party to the other Party, and this Agreement
shall thereupon terminate. In the event of termination of this
Agreement by Seller pursuant to Section 12.1(a)(iv), written
notice thereof shall promptly be given by Seller to Buyer, Buyer
shall wire transfer the SEC Termination Fee to Seller within one
(1) Business Day of Seller's notice in immediately available
funds to an account or accounts designated by Seller, and this
Agreement shall terminate upon receipt by Seller of the SEC
Termination Fee. In the event of termination of this Agreement by
Buyer pursuant to Section 12.1(a)(v), written notice thereof
shall promptly be given by Buyer to Seller, Buyer shall wire
transfer the SEC Termination Fee to Seller concurrently with the
delivery of such notice in immediately available funds to an
account or accounts designated by Seller, and this Agreement
shall terminate upon receipt by Seller of the SEC Termination
Fee. Following any such termination, Buyer will continue to be
bound by its obligations set forth in Sections 5.1 and 5.2. If
this Agreement is terminated as provided herein, all filings,
applications and other submissions made to any Governmental
Authority shall, to the extent practicable, be withdrawn from the
Governmental Authority to which they were made. If Seller is
properly paid the SEC Termination Fee upon termination of this
Agreement when permitted under Section 12.1(a)(iv) or (v), Seller
and Buyer agree that such payment of the SEC Termination Fee as
liquidated damages (i) is appropriate due to the difficulty and
inconvenience of measuring actual damages and the uncertainty
thereof, (ii) is a reasonable estimate of Seller's loss in the
event of any such termination of this Agreement, and (iii) will
be the exclusive remedy of Seller for any such termination of
this Agreement.
2. Remedies.
1. Seller's Remedies. Upon the failure by Buyer to fulfill or
perform any undertaking, commitment, or obligation provided for
herein on the part of Buyer that is required to be fulfilled on
or prior to the Closing Date, Seller, at its sole option, may (i)
enforce specific performance of this Agreement or (ii) pursue any
rights or remedies available at law or in equity.
2. Buyer's Remedies. Upon failure of Seller to fulfill or perform
any undertaking, commitment, or obligation provided for herein on
the part of Seller that is required to be fulfilled on or prior
to the Closing Date, Buyer, at its sole option, may (i) enforce
specific performance of this Agreement or (ii) pursue any other
rights or remedies available at law or in equity.
3. Election of Remedies. If either Party elects to pursue singularly
any remedy available to it under this Section 12.2, then such
Party may at any time thereafter cease pursuing that remedy and
elect to pursue any other remedy available to it under this
Section 12.2.
13. Other Provisions
1. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts
have been signed by each of the Parties and delivered to the other
Party.
2. Governing Law. This Agreement and the rights and obligations of the
parties hereunder and the transactions contemplated hereby shall be
governed by, enforced, and interpreted in accordance with the laws of
the State of Texas; provided that the applicable Law of the
jurisdiction in which the relevant Facility is located shall govern
with respect to the matters pertaining to Real Property and matters
involving compliance with Environmental Laws.
3. Arbitration. Except for matters that are covered by Section 3.4, any
claim, counterclaim, demand, cause of action, dispute, and controversy
arising out of or relating to this Agreement (or any agreement
delivered in connection with this Agreement) or in any way relating to
the subject matter of this Agreement involving the Parties or their
representatives (each a "Dispute"), even if such Disputes allegedly
are extra-contractual in nature, sound in contract, tort or otherwise,
or arise under state or federal law, shall be resolved by final and
binding arbitration. Arbitration shall be conducted in accordance with
the rules of arbitration of the Federal Arbitration Act and, to the
extent an issue is not addressed by the federal law on arbitration, by
the commercial arbitration rules of the American Arbitration
Association. The validity, construction and interpretation of this
Agreement to arbitrate, and all other procedural aspects of the
arbitration conducted pursuant hereto shall be decided by the
arbitrators. In deciding the substance of the Parties' Dispute, the
arbitrators shall refer to the governing law. The arbitrators shall
have no authority to award treble, consequential, exemplary, or
punitive damages of any type under any circumstances whether or not
such damages may be available under state or federal Law, or under the
Federal Arbitration Act, or under the commercial arbitration rules of
the American Arbitration Association, the Parties hereby waiving their
right, if any, to recover any such damages or to appeal or object to
the enforcement of any decision or award by the arbitrators. Each
Party agrees that any arbitration award against it may be enforced in
any jurisdiction in which such Party holds or keeps assets and that
judgment on any arbitration award may be entered by any court having
jurisdiction. The arbitration proceeding shall be conducted in
Houston, Texas. Within thirty (30) days of the notice initiation of
the arbitration procedure, each Party shall select one arbitrator. The
two arbitrators shall select a third arbitrator. The third arbitrator
shall be a Person who has over eight (8) years professional experience
in power generation transactions and is not an
Affiliate of and who has not previously been employed by either Party
and does not have a direct or indirect interest in either Party or in
any Person having an ownership interest in either Party or the subject
matter of the arbitration. While the third arbitrator shall be
neutral, the two Party appointed arbitrators are not required to be
neutral, and it shall not be grounds for removal of either of the two
Party appointed arbitrators or for vacating the arbitrators' award
that either of such arbitrators has past or present minimal
relationships with the Party that appointed such arbitrator. To the
fullest extent permitted by Law, any arbitration proceeding and the
arbitrators award shall be maintained in confidence by the Parties.
4. Entire Agreement. This Agreement (including the Confidentiality
Agreement) and the Schedules and Exhibits hereto contain the entire
agreement between the Parties with respect to the subject matter
hereof and there are no agreements, understandings, representations,
or warranties between the Parties other than those set forth or
referred to herein.
5. Notices. All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is
confirmed, by United States Mail, or telecopy to the appropriate
address or number as set forth below. Notices to Seller shall be
addressed as follows:
Enron North America Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: President and Chief Executive Officer
Telecopy No.: (000) 000-0000
with copies to:
Enron North America Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy No.: (000) 000-0000
or at such other address and to the attention of such other Person as
Seller may designate by written notice to Buyer.
Notices to Buyer shall be addressed to:
Allegheny Energy Supply Company, L.L.C.
000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: President
Telecopy No.: (000) 000-0000
with copies to:
Allegheny Energy Supply Company, L.L.C
000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Deputy General Counsel
Telecopy No.: (000) 000-0000
or at such other address and to the attention of such other Person as
Buyer may designate by written notice to Seller.
Notice given by overnight delivery or mail shall be effective upon
actual receipt. Notice given by telecopier shall be effective upon
actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next business day after
receipt if not received during the recipient's normal business hours.
All notices by telecopier shall be confirmed promptly after
transmission in writing by certified mail or overnight delivery.
6. Successors and Assigns. The rights and obligations of the Parties
shall not be assigned or delegated by either Party without the written
consent of the other Party, which may be withheld in such Party's sole
discretion, except that Buyer may assign its rights hereunder, in
whole or in part (including any assignment of Buyer's right to
purchase, receive and accept conveyance of any one or more LLC
Interests upon Seller's receipt of the Purchase Price) to any one or
more Affiliates of Buyer or to any such other Person as Buyer may
designate to facilitate a lease financing or other financing of any
one or more LLC Interests in connection with the transactions
contemplated hereby (but no such assignment shall (i) relieve Buyer of
any of its obligations hereunder, (ii) delay or condition receipt of
any Buyer Required Regulatory Approval, or (iii) otherwise affect or
delay Closing of the transactions contemplated hereunder). Subject to
the preceding sentence, this Agreement shall be binding upon and inure
to the benefit of the Parties and their successors and assigns.
7. Amendments and Waivers. This Agreement may not be modified or amended
except by an instrument or instruments in writing signed by the Party
against whom enforcement of any such modification or amendment is
sought. Any Party may, only by an instrument in writing, waive
compliance by the other Party with any term or provision of this
Agreement on the part of such other Party to be performed or complied
with. The waiver by a Party of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent
breach.
8. Schedules and Exhibits. All Schedules and Exhibits hereto which are
referred to herein are hereby made a part hereof and incorporated
herein by such reference. Each Schedule to this Agreement shall be
deemed to include and incorporate all disclosures made on the other
Schedules to this Agreement. Certain information set forth in the
Schedules is included solely for informational purposes, is not an
admission of liability with respect to the matters covered by the
information, and may not be required to be disclosed pursuant to this
Agreement. The
specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any
specific item in the Schedules is not intended to imply that such
amounts (or higher or lower amounts) are or are not material, and no
Party shall use the fact of the setting of such amounts or the fact of
the inclusion of any such item in the Schedules in any dispute or
controversy between the Parties as to whether any obligation, item, or
matter not described herein or included in a Schedule is or is not
material for purposes of this Agreement.
9. Interpretation and Rules of Construction. This Agreement shall not be
construed against either Party, and no consideration shall be given or
presumption made, on the basis of who drafted this Agreement or any
particular provision hereof or who supplied the form of Agreement. In
construing this Agreement:
1. examples shall not be construed to limit, expressly or by
implication, the matter they illustrate;
2. the word "includes" and its derivatives means "includes, but
is not limited to" and corresponding derivative expressions;
3. a defined term has its defined meaning throughout this
Agreement and each Exhibit and Schedule to this Agreement,
regardless of whether it appears before or after the place
where it is defined;
4. each Exhibit and Schedule to this Agreement is a part of
this Agreement, but if there is any conflict or
inconsistency between the main body of this Agreement and
any Exhibit or Schedule, the provisions of the main body of
this Agreement shall prevail; and
5. the headings and titles herein are for convenience only and
shall have no significance in the interpretation hereof.
10. Agreement for the Parties' Benefit Only. Except as specified in
Section 5.1 and Article 11, which are also intended to benefit and to
be enforceable by the Seller Indemnified Parties, this Agreement is
not intended to confer upon any Person not a party hereto any rights
or remedies hereunder, and no Person, other than the Parties or the
Seller Indemnified Parties, is entitled to rely on any representation,
warranty, covenant, or agreement contained herein.
11. Attorneys' Fees. The prevailing Party in any legal proceeding brought
under or to enforce this Agreement shall be additionally entitled to
recover court costs and reasonable attorneys' fees from the
nonprevailing Party.
12. Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any Law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not
affected in any adverse manner to a Party. Upon such determination
that any term or other provision is invalid, illegal, or incapable of
being enforced, the Parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
13. Time of Essence. Time is of the essence in this Agreement. If the date
specified in this Agreement for giving any notice or taking any action
is not a Business Day (or if the period during which any notice is
required to be given or any action taken expires on a date which is
not a Business Day), then the date for giving such notice or taking
such action (and the expiration date of such period during which
notice is required to be given or action taken) shall be the next day
which is a Business Day.
14. Bulk Sales or Transfer Laws. Buyer hereby waives compliance by the
Seller with the provisions of the bulk sales or transfer laws of all
applicable jurisdictions.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the Parties as of the day first above written.
Seller:
Enron North America Corp.
By: /s/ Xxxx Delainey
-----------------------------------------
Name: Xxxx Delainey
---------------------------------------
Title: President and CEO
-------------------------------------
Buyer:
Allegheny Energy Supply Company, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------------
Title: VP, Production & Sales
-------------------------------------
