Exhibit 10(E)
________________________________________________________________________________
ASSET SALE AGREEMENT
BETWEEN
NEVADA POWER COMPANY,
NRG ENERGY, INC.
AND
DYNEGY HOLDINGS INC.
FOR
THE XXXXX ASSET BUNDLE
________________________________________________________________________________
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS............................. 1
1.1 Definitions.......................................................... 1
ARTICLE II
PURCHASE AND SALE............................ 13
2.1 The Sale............................................................. 13
2.2 Excluded Assets...................................................... 14
2.3 Assumed Liabilities.................................................. 14
2.4 Excluded Liabilities................................................. 17
2.5 License of Non-Transferred Intangible Assets......................... 20
ARTICLE III
PURCHASE PRICE............................. 20
3.1 Purchase Price....................................................... 20
3.2 Purchase Price Adjustment............................................ 21
3.3 Allocation of Purchase Price......................................... 22
3.4 Proration............................................................ 23
ARTICLE IV
THE CLOSING............................... 24
4.1 Time and Place of Closing............................................ 24
4.2 Payment of Purchase Price............................................ 24
4.3 Deliveries by Seller................................................. 24
4.4 Deliveries by Buyer.................................................. 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER................ 27
5.1 Organization; Qualification.......................................... 27
5.2 Authority Relative to this Agreement................................. 27
5.3 Consents and Approvals; No Violation................................. 27
5.4 Reports.............................................................. 28
5.5 Financial Statements................................................. 29
5.6 Undisclosed Liabilities.............................................. 29
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5.7 Absence of Certain Changes or Events............................. 29
5.8 Title to Real Property........................................... 29
5.9 Leasehold Interests.............................................. 30
5.10 Improvements..................................................... 30
5.11 Insurance........................................................ 30
5.12 Environmental Matters............................................ 30
5.13 Labor Matters.................................................... 31
5.14 ERISA; Benefit Plans............................................. 32
5.15 Real Property Encumbrances....................................... 32
5.16 Condemnation..................................................... 33
5.17 Certain Contracts and Arrangements............................... 33
5.18 Legal Proceedings, etc........................................... 33
5.19 Permits.......................................................... 34
5.20 Regulation as a Utility.......................................... 34
5.21 Taxes............................................................ 34
5.22 Title to Personal Property....................................... 34
5.23 Water............................................................ 35
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER.......... 35
6.1 Organization..................................................... 35
6.2 Authority Relative to this Agreement............................. 36
6.3 Consents and Approvals; No Violation............................. 36
6.4 Regulation as a Utility.......................................... 37
6.5 Availability of Funds............................................ 37
ARTICLE VII
COVENANTS OF THE PARTIES.................. 37
7.1 Conduct of Business of the Seller................................ 37
7.2 Access to Information............................................ 40
7.3 Expenses......................................................... 41
7.4 Further Assurances............................................... 41
7.5 Public Statements................................................ 42
7.6 Consents and Approvals........................................... 42
7.7 Fees and Commissions............................................. 44
7.8 Use of Pollution Control Facilities.............................. 44
7.9 Tax and Withholding Matters...................................... 44
7.10 Supplements to Schedules......................................... 46
7.11 Employees........................................................ 46
7.12 Risk of Loss..................................................... 48
7.13 Additional Covenants of the Buyer................................ 49
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7.14 Surveys and Certain Title Matters......................................................... 49
7.15 Documentation............................................................................. 50
7.16 Separation Issues......................................................................... 50
7.17 Additional Covenants of the Parties....................................................... 51
ARTICLE VIII
CLOSING CONDITIONS.............................................. 52
8.1 Conditions to Each Party's Obligations to Effect the Transactions
Contemplated Hereby....................................................................... 52
8.2 Conditions to Obligations of Buyer........................................................ 53
8.3 Conditions to Obligations of Seller....................................................... 55
ARTICLE IX
INDEMNIFICATION............................................... 57
9.1 Indemnification........................................................................... 57
9.2 Defense of Claims......................................................................... 59
ARTICLE X
TERMINATION AND ABANDONMENT......................................... 61
10.1 Termination............................................................................... 61
10.2 Procedure and Effect of Termination....................................................... 62
ARTICLE XI
MISCELLANEOUS PROVISIONS........................................... 62
11.1 Amendment and Modification................................................................ 62
11.2 Waiver of Compliance; Consents............................................................ 62
11.3 No Survival of Representations and Warranties............................................. 62
11.4 Notices................................................................................... 63
11.5 Assignment................................................................................ 64
11.6 Arbitration............................................................................... 66
11.7 Governing Law............................................................................. 67
11.8 Counterparts.............................................................................. 67
11.9 Interpretation............................................................................ 67
11.10 Entire Agreement.......................................................................... 67
11.11 Bulk Sales or Transfer Laws............................................................... 67
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ASSET SALE AGREEMENT
ASSET SALE AGREEMENT, dated as of November 16, 2000 (the "Agreement"),
between Nevada Power Company, a Nevada corporation (the "Seller"), NRG Energy,
Inc., a Delaware corporation ("NRG"), and Dynegy Holdings Inc. ("Dynegy") a
Delaware corporation (collectively, the "Buyer").
WHEREAS, the Seller owns and operates the "Purchased Assets" (as
defined herein); and
WHEREAS, the Buyer desires to purchase and assume from the Seller, and
the Seller desires to sell to the Buyer, the Purchased Assets and certain
associated liabilities upon the terms and conditions hereinafter set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
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DEFINITIONS
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1.1 Definitions. As used in this Agreement, the following terms
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have the meanings specified or referred to in this Section 1.1:
(1) "Adjustment Amount" shall have the meaning set forth in Section
3.2(a) hereof.
(2) "Adjustment Statement" shall have the meaning set forth in
Section 3.2(a) hereof.
(3) "Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(4) "Agreement" means the Asset Sale Agreement, dated as of November
16, 2000, together with the Schedules and Exhibits thereto.
(5) "Ancillary Agreements" means the Interconnection Agreement, the
Transitional Power Purchase Agreement, the Operating Easement Agreements, the
Waste Water Treatment Agreement and the Water Supply Agreement.
(6) "Assignment of Leases" means the Assignment of Leases in the form
of Exhibit A hereto.
(7) "Assumed Liabilities" shall have the meaning set forth in Section
2.3 hereof.
(8) "Benefit Plans" shall have the meaning set forth in Section
2.4(i) hereof.
(9) "Benefit Plans of Buyer" shall have the meaning set forth in
Section 7.11(d) hereof.
(10) "Xxxx of Sale" means the Xxxx of Sale to be delivered at the
Closing with respect to the Purchased Assets which constitute personal property
and which are to be transferred at the Closing, substantially in the form of
Exhibit B hereto.
(11) "Bonds" means the Pollution Control bonds, which were used to
finance the Pollution Control Facilities, as more fully described in Schedule
5.15.
(12) "Business Day" means any day other than Saturday, Sunday and any
day which is a legal holiday or a day on which banking institutions in the State
of New York are authorized by law or other governmental action to close.
(13) "Buyer" shall have the meaning set forth in the preface hereto.
(14) "Buyer Representatives" means the Buyer's accountants, counsel,
environmental consultants, financial advisors and other authorized
representatives.
(15) "Buyer Required Regulatory Approvals" shall have the meaning set
forth in Section 6.3(b) hereof.
(16) "Buyer's Easements" shall have the meaning set forth in Section
4.3(f) hereof.
(17) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. (S)9601, et seq., as amended.
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(18) "Xxxxx Bundle" means the Xxxxx Generating Station located in
Xxxxx County, Nevada.
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(19) "Closing" shall have the meaning set forth in Section 4.1 hereof.
(20) "Closing Date" shall have the meaning set forth in Section 4.1
hereof.
(21) "COBRA" means the Consolidated Omnibus Reconciliation Act of
1985, as amended.
(22) "Code" means the Internal Revenue Code of 1986, as amended.
(23) "Collective Bargaining Agreements" shall have the meaning set
forth in Section 7.11(a) hereof.
(24) "Confidentiality Agreement" means the Confidentiality and Auction
Protocols Agreement, dated March 14, 2000, between the Seller and NRG Energy,
Inc., and the Confidentiality and Auction Protocols Agreement dated April 7,
2000, between the Seller and Dynegy Power Corp. (a wholly owned subsidiary of
Dynegy Holdings Inc.).
(25) "CPUC" means the California Public Utility Commission or any
successor thereto.
(26) "CSFB" shall have the meaning set forth in Section 7.7 hereof.
(27) "Direct Claim" shall have the meaning set forth in Section 9.2(c)
hereof.
(28) "Dispute" shall have the meaning set forth in Section 11.6
hereof.
(29) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and charges
of any kind.
(30) "Environmental Audit Agreement" means the proposed Environmental
Audit Agreement which Seller has been seeking to execute with the Nevada
Division of Environmental Protection ("NDEP") relating to the Xxxxx Bundle.
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(31) "Environmental Laws" means all federal, state and local laws,
regulations, rules, ordinances, codes, decrees, judgments, directives, or
judicial or administrative orders relating to pollution or protection of the
environment, natural resources or human health and safety, including, without
limitation, laws relating to Releases or threatened Releases of Hazardous
Substances (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances, laws relating to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances, and laws relating to the management and use of natural resources.
(32) "Environmental Permits" shall have the meaning set forth in
Section 5.12(a) hereof.
(33) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(34) "ERISA Affiliate" shall have the meaning set forth in Section
2.4(i) hereof.
(35) "ERISA Affiliate Plans" shall have the meaning set forth in
Section 2.4(i) hereof.
(36) "Estimated Adjustment Amount" means (i) the Estimated Maintenance
and Capital Expenditures Amount plus (ii) the Estimated Inventory Adjustment
Amount plus (iii) the Estimated Materials and Supplies Adjustment Amount.
(37) "Estimated Closing Payment" shall have the meaning set forth in
Section 4.2 hereof.
(38) "Estimated Inventory Adjustment Amount" means the book value, as
determined by an independent evaluator designated by the Seller and approved by
the Buyer, which approval shall not be unreasonably withheld, of the fuel
inventory priced as the Seller's weighted average fuel costs used at or in
connection with the Purchased Assets as of the date that is ten (10) days before
the Closing Date, which valuation shall be provided to the Buyer by the Seller
no later than five (5) days before the Closing Date.
(39) "Estimated Maintenance and Capital Expenditures Amount" means the
Seller's estimate of the Maintenance and Capital Expenditures Amount, which
estimate shall be the Seller's good faith reasonable estimate of the Mainte-
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xxxxx and Capital Expenditures Amount actually incurred, as set forth in
Schedule 1.1(39) attached hereto as of the date set forth in such Schedule
1.1(39).
(40) "Estimated Materials and Supplies Adjustment Amount" means the
Seller's good faith reasonable estimate of the book value of materials and
supplies used at or in connection with the Purchased Assets on the Materials and
Supplies Valuation Date.
(41) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(42) "Excluded Assets" shall have the meaning set forth in Section 2.2
hereof.
(43) "Excluded Liabilities" shall have the meaning set forth in
Section 2.4 hereof.
(44) "Federal Power Act" means the Federal Power Act of 1935, as
amended.
(45) "FERC" means the Federal Energy Regulatory Commission or any
successor thereto.
(46) "Final Order" shall have the meaning set forth in Section 8.1(c)
hereof.
(47) "Governmental Authority" means any executive, legislative,
judicial, regulatory or administrative agency, body, commission, department,
board, court, tribunal, arbitrating body or authority of the United States or
any foreign country, or any state, local or other governmental subdivision
thereof.
(48) "Hazardous Substances" means (i) any petrochemical or petroleum
products, oil or coal ash, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may contain
levels of polychlorinated biphenyls; (ii) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "restricted hazardous materials," "extremely
hazardous substances," "toxic substances," "contaminants" or "pollutants" or
words of similar meaning and regulatory effect; or (iii) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any applicable Environmental Law.
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(49) "Holding Company Act" means the Public Utility Holding Company
Act of 1935, as amended.
(50) "Hourly Employees" shall have the meaning set forth in Section
7.11(a) hereof.
(51) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
(52) "Income Tax" means any federal, state, local or foreign Tax (i)
based upon, measured by or calculated with respect to net income, profits or
receipts (including, without limitation, capital gains Taxes and minimum Taxes)
or (ii) based upon, measured by or calculated with respect to multiple bases
(including, without limitation, corporate franchise taxes) if one or more of the
bases on which such Tax may be based, measured by or calculated with respect to,
is described in clause (i), in each case together with any interest, penalties,
or additions to such Tax.
(53) "Indemnifiable Losses" shall have the meaning set forth in
Section 9.1(a) hereof.
(54) "Indemnifying Party" shall have the meaning set forth in Section
9.1(c) hereof.
(55) "Indemnitee" shall have the meaning set forth in Section 9.1(c)
hereof.
(56) "Indenture" means Indenture of Mortgage and Deed of Trust dated
as of October 1, 1953, as amended from time to time, between the Seller and
Bankers Trust Company, as successor trustee.
(57) "Independent Accounting Firm" means Deloitte & Touche LLP or such
other independent accounting firm of national reputation mutually appointed by
the Seller and the Buyer.
(58) "Independent Appraiser" shall have the meaning set forth in
Section 3.3 hereof.
(59) "Instrument of Assumption" means the Instrument of Assumption in
the form of Exhibit C attached hereto.
(60) "Interconnection Agreement" means the Interconnection Agreement,
dated as of November 16, 2000, between the Seller and the Buyer.
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(61) "Inventory Adjustment Amount" shall have the meaning set forth in
Section 3.2(a) hereof.
(62) "Knowledge" means the actual knowledge of the directors and
executive officers of the specified Person, which directors and executive
officers are charged with the responsibility for the particular function as of
the date of the Agreement, or with respect to any certificate delivered pursuant
to the Agreement, the date of delivery of such certificate. In the case of
Seller, "executive officer" includes (i) any person listed on Schedule 1.1(62),
and (ii) any person who replaces a person listed on Schedule 1.1(62) between the
date of this Agreement and the Closing Date in a listed position or the
successor to that position.
(63) "Leased Assets" shall have the meaning set forth in Section 7.4
hereof.
(64) "Leases" shall have the meaning set forth in Section 5.9 hereof.
(65) "Local 396 LOA" shall have the meaning set forth in Section
7.11(a) hereof.
(66) "Maintenance and Capital Expenditures Adjustment Amount" shall
have the meaning set forth in Section 3.2(a) hereof.
(67) "Maintenance and Capital Expenditures Amount" means the aggregate
amount of all funds actually expended on, or for which liabilities were accrued
in accordance with generally accepted accounting principles applied on a
consistent basis with respect to any maintenance expenditures and capital
expenditures beginning on the date of this Agreement and ending on the Closing
Date, excluding (i) any unscheduled maintenance expenditures or capital
expenditures which are made by the Seller with the Buyer's consent, which shall
not be unreasonably withheld (ii) any maintenance expenditures or capital
expenditures made by Seller in breach of Section 7.1, but including (i) any
Scheduled Maintenance Expenditures or Scheduled Capital Expenditures, made with
respect to the Purchased Assets by the Seller, and (ii) any maintenance
expenditures and capital expenditures which were made by the Seller at the
Buyer's request, beginning on the date of this Agreement and ending on the
Closing Date.
(68) "Management Employee" shall have the meaning set forth in Section
7.11(b) hereof.
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(69) "Management Transition Plan" means the Management Transition
Plan, Generation Bundled Employees, as detailed in the Generation Divestiture
Severance Packet of the Seller dated July, 2000.
(70) "Material Adverse Effect" means any change or changes in or
effect on the Purchased Assets that is materially adverse to the business,
results of operations, financial condition or physical condition of the
Purchased Assets, individually or in the aggregate, except for (i) any change or
effect resulting from changes in the international, national, regional or local
wholesale or retail markets for electric power, (ii) any change or effect
resulting from changes in the international, national, regional or local markets
for any fuel used at the Purchased Assets, (iii) any change or effect resulting
from changes in the North American, national, regional or local electric
transmission systems, (iv) any change in applicable laws, judgments, orders or
decrees, (v) any conditions imposed by a Governmental Authority in connection
with the consents or approvals required for the transactions contemplated
hereby, and (vi) any materially adverse change in or effect on the Purchased
Assets which is cured (including by the payment of money) by the Seller before
the Termination Date.
(71) "Materials and Supplies Adjustment Amount" shall have the meaning
set forth in Section 3.2 hereof.
(72) "Materials and Supplies Valuation Date" means the date that is
ten (10) days prior to the Closing Date.
(73) "Necessary Capital Expenditures" shall have the meaning set forth
in Section 7.1(c) hereof.
(74) "Necessary Maintenance Expenditures" shall have the meaning set
forth in Section 7.1(e) hereof.
(75) "Off-Site Location" means any real property other than the Real
Property.
(76) "Operating Easement Agreements" means the operating easements
providing the right to continue operating and maintaining certain generation and
transmission facilities at the Purchased Assets, each in substantially the form
of Exhibit D or Exhibit E attached hereto.
(77) "Operating Easements" means the Seller's Easements and/or Buyer's
Easements granted pursuant to the Operating Easement Agreements.
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(78) "OPUC" means the Oregon Public Utility Commission or any
successor thereto.
(79) "Permits" shall have the meaning set forth in Section 5.19
hereof.
(80) "Permitted Encumbrances" means (i) those exceptions to title to
the Purchased Assets listed on Schedule 5.8; (ii) subject to (S)(S) 7.14 and
8.2(g) any state of facts that a current survey of the Real Property would
disclose; (iii) with respect to any date before the Closing Date, Encumbrances
under the Indenture or under the pollution control bond indentures of trust
listed in Schedule 5.15; (iv) mortgages, liens, pledges, charges, Encumbrances
and restrictions incurred in connection with the Seller's purchase of properties
and assets after the date of the Seller Balance Sheet, but only if and to the
extent that such mortgage, lien, pledge, charge, Encumbrance or restriction is
against such properties or assets and secures all or a portion of the purchase
price therefor; (v) the Buyer's Easements and the Seller's Easements (in
accordance with the Operating Easement Agreements applicable to such easements
and the Interconnection Agreement); (vi) statutory liens for current Taxes,
assessments or other governmental charges not yet due or delinquent or the
validity of which is being contested in good faith by appropriate proceedings
and with respect to which Seller pays the Taxes, assessments or other government
charges under protest; (vii) mechanics', carriers', workers', repairers' and
other similar liens arising or incurred in the ordinary course of business
relating to obligations which are not yet due and payable or the validity of
which are being contested in good faith by appropriate proceedings in which
Seller has posted an appropriate bond to secure payment or placed sufficient
Funds in escrow pending the outcome of such dispute; (viii) zoning, entitlement,
conservation restriction and other land use and environmental regulations by
Governmental Authorities; and (ix) such other liens, imperfections in or failure
of title, charges, easements, restrictions and Encumbrances which do not
materially detract, individually or in the aggregate, from the value of or
materially interfere with the present use of the Purchased Assets and do not, in
the aggregate, have a Material Adverse Effect.
(81) "Person" means any individual, partnership, joint venture,
corporation, limited liability company, limited liability partnership, trust,
unincorporated organization or Governmental Authority or any department or
agency thereof.
(82) "Plan" shall have the meaning set forth in Section 7.11(d).
(83) "Pollution Control Facilities" means pollution control facilities
relating to the Xxxxx Bundle as more fully described in Schedule 5.15.
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(84) "PUCN" means the Public Utilities Commission of Nevada or any
successor thereto.
(85) "Purchase Price" shall have the meaning set forth in Section 3.1
hereof.
(86) "Purchased Assets" means, subject to the Permitted Encumbrances,
all of the right, title and interest in, to and under the real and personal
property, tangible or intangible, of the Seller constituting the Xxxxx Bundle or
used principally for generation purposes in connection with such sites
including, without limitation, all of the Seller's right, title and interest in
the following assets: (i) the Real Property described on Schedule 1.1(86)(i) as
associated with the Xxxxx Bundle (the "Xxxxx Bundle Real Property"); (ii) all
inventories of fuels, supplies, materials and critical spares located on or in
transit to the Xxxxx Bundle Real Property on the Closing Date; (iii) the
machinery, equipment, vehicles, furniture and other personal property located on
or in transit to the Xxxxx Bundle Real Property on the Closing Date, including,
without limitation, the items of personal property included in Schedule
1.1(86)(iii) as being associated with the Xxxxx Bundle, and all warranties
against manufacturers or vendors relating thereto, to the extent that such
warranties are transferable without consent or with consent obtained through
Seller's commercially reasonable efforts pursuant to Section 7.6(b); (iv) the
contracts, agreements and personal property leases listed on Schedule
1.1(86)(iv) as being associated with the Xxxxx Bundle and which are assignable
without consent or with consent obtained through Seller's commercially
reasonable efforts pursuant to Section 7.6(b); (v) the Permits listed on
Schedule 1.1(86)(v) as being associated with the Xxxxx Bundle, to the extent
transferable without consent or with consent obtained through Seller's
commercially reasonable efforts pursuant to Section 7.6(b); (vi) all books,
operating records, operating, safety and maintenance manuals, engineering design
plans, blueprints and as-built plans, specifications, procedures and similar
items of the Seller relating specifically to the aforementioned assets other
than books of account and associated with the Xxxxx Bundle; (vii) the SO2
Allowances identified on Schedule 1.1(86)(vii) and associated with the Xxxxx
Bundle; and (viii) any assets purchased or to be purchased by the Seller
pursuant to Section 7.4 and associated with the Xxxxx Bundle; (ix) all
telephones, computer hardware, firmware, software, and associated licenses
located at and used in the operation of the Xxxxx Bundle, including but not
limited to the computer assets listed on Schedule 1.1(86)(iii) but excluding
non-material licenses that cannot be transferred and other intangible assets to
be licensed by the Buyer pursuant to Section 2.5 of this Agreement; and (x) all
water rights specifically associated with the Xxxxx Bundle, including but not
limited to the water rights listed on Schedule 5.19(a).
(87) "Qualifying Offer of Employment" shall have the meaning set forth
in Section 7.11(b) hereof.
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(88) "Real Property" means each parcel of real property owned by the
Seller (or to which the Seller holds an interest therein), including, but not
limited to, buildings, structures and improvements located thereon, fixtures
contained therein and appurtenances thereto and easements and other rights
relating thereto and as more fully described on Schedule 5.8.
(89) "Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, xxxxx, dump or allow to escape into or through
the environment.
(90) "Remediation" means an action of any kind to address a Release of
Hazardous Substance or the presence of Hazardous Substances at the Purchased
Assets or an Off-Site Location, including any or all of the following activities
to the extent they relate to or arise from the presence of a Hazardous Substance
at the Purchased Assets or an Off-Site Location: (i) monitoring, investigation,
assessment, treatment, cleanup, containment, removal, mitigation, response or
restoration work; (ii) obtaining any permits, consents, approvals or
authorizations of any Governmental Authority necessary to conduct any such
activity; (iii) preparing and implementing any plans or studies for any such
activity; (iv) obtaining a written notice from a Governmental Authority with
jurisdiction over the Purchased Assets or an Off-Site Location under
Environmental Laws that no material additional work is required by such
Governmental Authority; (v) the use, implementation, application, installation,
operation or maintenance of removal actions on the Purchased Assets or an Off-
Site Location, remedial technologies applied to the surface or subsurface soils,
excavation and treatment or disposal of soils at an Off-Site Location, systems
for long-term treatment of surface water or ground water, engineering controls
or institutional controls; and (vi) any other activities reasonably determined
by a party to be necessary or appropriate or required under Environmental Laws
to address the presence or Release of Hazardous Substances at the Purchased
Assets or an Off-Site Location.
(91) "Rules" shall have the meaning set forth in Section 11.6 hereof.
(92) "Scheduled Capital Expenditures" means those capital expenditures
included on Schedule 1.1(92).
(93) "Scheduled Maintenance Expenditures" means those maintenance
expenditures included on Schedule 1.1(93).
(94) "SEC" means the Securities and Exchange Commission or any
successor thereto.
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(95) "Securities Act" means the Securities Act of 1933, as amended.
(96) "Seller" shall have the meaning set forth in the preface
hereto.
(97) "Seller Agreements" means those agreements listed on Schedule
5.17(a), the Collective Bargaining Agreements and the Management Transition
Plan.
(98) "Seller Balance Sheet" shall have the meaning set forth in
Section 5.5 hereof.
(99) "Seller Required Regulatory Approvals" shall have the meaning
set forth in Section 5.3(b) hereof.
(100) "Seller's Easements" shall have the meaning set forth in
Section 4.4(d) hereof.
(101) "Separation Schedule" means the schedule to be delivered to the
Buyer by the Seller by the earlier of March 14, 2001 or thirty (30) days prior
to the Closing Date, which shall delineate the Purchased Assets from the
Seller's other assets and which shall be consistent with the separation schedule
summary and one line drawing attached hereto as Exhibit F.
(102) "SO2 Allowance" means an authorization by the Administrator of
the USEPA under the Clean Air Act, 42 U.S.C. (S)7401, et seq., to emit one ton
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of sulfur dioxide during or after a specified calendar year.
(103) "Subsidiary," when used in reference to any other person means
any corporation of which outstanding securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation are owned
directly or indirectly by such other person.
(104) "Tax" means any tax, charge, fee, levy, penalty or other
assessment (other than any Income Tax) imposed by any U.S. federal, state, local
or foreign taxing authority, including, but not limited to, any excise,
property, sales, transfer, franchise, payroll, withholding, social security or
other tax, including any interest, penalties or additions attributable thereto.
(105) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any related or
supporting
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information) supplied or required to be supplied to any authority with respect
to Taxes and including any supplement or amendment thereof.
(106) "Termination Date" shall have the meaning set forth in Section
10.1(b) hereof.
(107) "Third Party Claim" shall have the meaning set forth in Section
9.2(a) hereof.
(108) "Transitional Power Purchase Agreement" means Transitional
Power Purchase Agreement, dated as of November 16, 2000, between the Buyer and
the Seller.
(109) "TPPA Amount" shall have the meaning set forth in Section 3.1.
hereof.
(110) "USEPA" means the United States Environmental Protection
Agency, or any successor agency thereto.
(111) "WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.
(112) "Waste Water Treatment Agreement" means a Waste Water Treatment
Agreement, to be negotiated and executed between Seller, Buyer and the buyer of
the Sunrise Bundle located in Xxxxx County, Nevada, pursuant to Section 7.17(d).
(113) "Water Supply Agreement" means a Water Supply Agreement, to be
negotiated and executed between Buyer and the buyer of the Xxxxx Xxxxx Bundle
located in Xxxxx County, Nevada, pursuant to Section 7.17(d).
ARTICLE II
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PURCHASE AND SALE
-----------------
2.1 The Sale. Upon the terms and subject to the satisfaction of the
--------
conditions contained in this Agreement, at the Closing, the Seller shall sell,
assign, convey, transfer and deliver to the Buyer, and the Buyer shall purchase
and acquire from the Seller, free and clear of all Encumbrances (except for
Permitted Encumbrances and the Operating Easement(s) granted in accordance with
the Operating Easement Agreements and the Interconnection Agreement), the
Purchased Assets.
13
2.2 Excluded Assets. Notwithstanding any provision herein to the
---------------
contrary, the Purchased Assets shall not include the following (collectively,
the "Excluded Assets"):
(a) all cash, cash equivalents, bank deposits, accounts receivable,
and any income, sales, payroll or other tax receivables;
(b) the names "Sierra Pacific Resources," "Sierra Pacific Power
Company," "Sierra Pacific," "Nevada Power Company" and "Nevada Power" or any
related or similar trade names, trademarks, service marks or logos;
(c) transmission, substation and communication facilities and related
support equipment described in Schedule 2.2(c);
(d) any refund, credit penalty payment, adjustment or reconciliation
(i) related to Real Property, personal property or other Taxes paid prior to the
Closing Date in respect of the Purchased Assets, whether such refund, adjustment
or reconciliation is received as a payment or as a credit against future Taxes
payable, or (ii) arising under the Seller Agreements and relating to a period
before the Closing Date;
(e) except to the extent specifically required by law and except such
personnel records set forth on Schedule 2.2(e), the personnel records relating
to any employees of the Seller;
(f) the rights and assets described in the Separation Schedule as not
part of the Purchased Assets; and
(g) the SO2 Allowances identified on Schedule 2.2(g);
(h) any agreement between Seller and an Affiliate of Seller, except
as disclosed on Schedule 2.2(h); and
(i) any agreement for the purchase or sale of energy, capacity or
ancillary services from the Xxxxx Bundle, other than the Transitional Power
Purchase Agreement, Interconnection Agreement or as disclosed on Schedule
2.2(i).
2.3 Assumed Liabilities. On the Closing Date, the Buyer shall
-------------------
deliver to the Seller the Instrument of Assumption pursuant to which the Buyer
shall assume and agree to discharge to the maximum extent permitted by law, all
of the liabilities and obligations of the Seller, direct or indirect, known or
unknown, absolute or contingent, which relate to the Purchased Assets, other
than Excluded Liabilities, in accordance with the respective terms and subject
to the respective
14
conditions thereof, including, without limitation, the following liabilities and
obligations:
(a) all liabilities and obligations of the Seller to be paid or
performed after the Closing Date arising under (i) the Seller Agreements, the
Environmental Permits, the Permits, the Leases, contracts and any other
agreements assigned to the Buyer pursuant to this Agreement in accordance with
the terms thereof, and (ii) the leases, contracts and other agreements entered
into by the Seller with respect to the Purchased Assets after the date hereof
consistent with the terms of this Agreement (including in the case of (i) and
(ii), without limitation, agreements with respect to liabilities for real or
personal property taxes or other Taxes on any of the Purchased Assets); except,
in each case, to the extent such liabilities and obligations, but for a breach
or default by the Seller, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the extent the same arise out
of any such breach or default;
(b) all liabilities and obligations associated with the Purchased
Assets in respect of Taxes for which the Buyer is liable pursuant to Section 7.9
hereof;
(c) any liabilities and obligations for which the Buyer has
indemnified the Seller pursuant to Section 9.1 hereof;
(d) all liabilities to employees for which the Buyer is liable
pursuant to Section 7.11 hereof, including the Collective Bargaining Agreements
and the Management Transition Plan;
(e) any liability, obligation or responsibility under or related to
former, current or future Environmental Laws or the common law, whether such
liability or obligation or responsibility is known or unknown, contingent or
accrued, arising as a result of or in connection with (i) any violation or
alleged violation of Environmental Law, prior to the Closing Date, with respect
to the ownership or operation of the Purchased Assets, including, without
limitation, any fines or penalties that arise in connection with the ownership
or operation of the Purchased Assets prior to the Closing Date or the costs
associated with correcting any such violations; (ii) loss of life, injury to
persons or property or damage to natural resources (whether or not such loss,
injury or damage arose or was made manifest before the Closing Date or arises or
becomes manifest after the Closing Date), caused (or allegedly caused) by the
presence or Release of Hazardous Substances at, on, in, under, discharged from,
emitted from or migrating from the Purchased Assets prior to the Closing Date,
including, without limitation, Hazardous Substances contained in building
materials at the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at the
15
Purchased Assets; and (iii) the investigation and/or Remediation (whether or not
such investigation or Remediation commenced before the Closing Date or commences
after the Closing Date) of Hazardous Substances that are present or have been
Released prior to the Closing Date at, on, in, under, discharged from, emitted
from or migrating from the Purchased Assets, including, without limitation,
Hazardous Substances contained in building materials at the Purchased Assets or
in the soil, surface water, sediments, groundwater, landfill cells, or in other
environmental media at the Purchased Assets; provided, as to all of the above,
that nothing set forth in this Section 2.3(e) shall require the Buyer to assume
any liabilities that are expressly excluded in Section 2.4 hereof;
(f) any liability, obligation or responsibility under or related to
former, current or future Environmental Laws or the common law, whether such
liability or obligation or responsibility is known or unknown, contingent or
accrued, arising as a result of or in connection with (i) any violation or
alleged violation of Environmental Law, on or after the Closing Date, with
respect to the ownership or operation of the Purchased Assets; (ii) compliance
with applicable Environmental Laws on or after the Closing Date with respect to
the ownership or operation of the Purchased Assets; (iii) loss of life, injury
to persons or property or damage to natural resources caused (or allegedly
caused) by the presence or Release of Hazardous Substances at, on, in, under,
discharged from, emitted from or migrating from the Purchased Assets on or after
the Closing Date, including, without limitation, Hazardous Substances contained
in building materials at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at the
Purchased Assets; (iv) loss of life, injury to persons or property or damage to
natural resources caused (or allegedly caused) by the off-site disposal,
storage, transportation, discharge, Release, recycling, or the arrangement for
such activities, of Hazardous Substances, on or after the Closing Date, in
connection with the ownership or operation of the Purchased Assets; (v) the
investigation and/or Remediation of Hazardous Substances that are present or
have been released on or after the Closing Date at, on, in, under, discharged
from, emitted from or migrating from the Purchased Assets, including, without
limitation, Hazardous Substances contained in building materials at the
Purchased Assets or in the soil, surface water, sediments, groundwater, landfill
cells or in other environmental media at the Purchased Assets; and (vi) the
investigation and/or Remediation of Hazardous Substances that are disposed,
stored, transported, discharged, Released, recycled, or the arrangement of such
activities, on or after the Closing Date, in connection with the ownership or
operation of the Purchased Assets, at any Off-Site Location; provided, that
nothing set forth in this Section 2.3(f) shall require the Buyer to assume any
liabilities that are expressly excluded in Section 2.4 hereof;
(g) all liabilities and obligations of the Seller with respect to the
Purchased Assets under the agreements or consent orders set forth on Schedule
5.12;
16
(h) subject to Sections 7.1(c) and (e), all liabilities incurred by
the Seller with respect to the Maintenance and Capital Expenditures Amount made
with respect to the Purchased Assets by the Seller except for any liabilities
that Buyer has already paid to Seller at Closing as an accrued liability
included in the Estimated Adjustment Amount;
(i) all liabilities or obligations relating to leases for the
Purchased Assets; and
(j) all other liabilities or obligations exclusively relating to the
Purchased Assets no matter when the events or occurrences giving rise to such
liabilities or obligations took place.
All of the foregoing liabilities and obligations to be assumed by the Buyer
hereunder (excluding any Excluded Liabilities) are collectively referred to
herein as the "Assumed Liabilities." It is understood and agreed that nothing
in this Section 2.3 shall constitute a waiver or release of any claims arising
out of the contractual relationships between the Seller and the Buyer. Nothing
in this Section 2.3 shall be construed to require Buyer to assume any liability
excluded by Section 2.4.
2.4 Excluded Liabilities. The Buyer shall not assume or be
--------------------
obligated to pay, perform or otherwise discharge the following liabilities
(collectively, the "Excluded Liabilities"):
(a) any liabilities or obligations of the Seller in respect of any
Excluded Assets or other assets of the Seller which are not Purchased Assets;
(b) any liabilities or obligations in respect of Taxes attributable
to the Purchased Assets for taxable periods ending on or prior to the Closing
Date, except for Taxes for which the Buyer is liable pursuant to Section 7.9(a)
hereof;
(c) any liabilities, obligations or responsibilities relating to the
disposal, storage, transportation, discharge, Release, recycling, or the
arrangement for such activities, by the Seller, of Hazardous Substances that
were generated at the Purchased Assets, at any Off-Site Location, where the
disposal, storage, transportation, discharge, Release, recycling or the
arrangement for such activities at such Off-Site Location occurred prior to the
Closing Date, provided that for purposes of this Section 2.4(c), "Off-Site
Location" does not include any location to which Hazardous Substances disposed
of, discharged from, emitted from or Released at the Purchased Assets have
migrated from the Purchased Assets including, but not limited to, surface waters
that have received waste water discharges from the Purchased Assets;
17
(d) any liabilities, obligations or responsibilities relating to (i)
the transmission facilities delineated in the Interconnection Agreement or
Operating Easement Agreements or (ii) any Seller's operations on, or usage of,
the operating easements, including, without limitation, liabilities, obligations
or responsibilities arising as a result of or in connection with (A) any
violation or alleged violation of Environmental Laws and (B) loss of life,
injury to persons or property or damage to natural resources, except to the
extent caused by the Buyer;
(e) any liabilities or obligations required to be accrued by the
Seller in accordance with generally accepted accounting principles and the FERC
Uniform System of Accounts on or before the Closing Date with respect to
liabilities related to the Purchased Assets other than any liability assumed by
the Buyer under Sections 2.3(a), (e) or (f) hereof;
(f) any liabilities or obligations relating to any personal injury to
an employee or a third party (including, without limitation, workers'
compensation claims), discrimination, wrongful discharge, unfair labor practice,
property damage, breach of contract or tort filed with or pending before any
court or administrative agency on the Closing Date, or any claim arising out of
an actual event or events of which Seller has Knowledge as of the Closing Date
if it is reasonably foreseeable that such event or events will give rise to a
claim that may be filed with any court or administrative agency, with respect to
liabilities affecting the Purchased Assets, other than any liabilities or
obligations assumed by the Buyer under Section 2.3(e) hereof;
(g) any payment obligations of the Seller for goods delivered or
services rendered prior to the Closing;
(h) any liabilities or obligations imposed upon, assumed or retained
by the Seller pursuant to the Interconnection Agreement, Operating Easement
Agreements or any other Ancillary Agreement;
(i) any liabilities, obligations or responsibilities relating to any
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) maintained
by the Seller and any trade or business (whether or not incorporated) which are
or have ever been under common control, or which are or have ever been treated
as a single employer, with the Seller under Sections 414(b), (c), (m) or (o) of
the Code (an "ERISA Affiliate") or to which the Seller and any ERISA Affiliate
contributed thereunder (the "ERISA Affiliate Plans"), including any
multiemployer plan, maintained by, contributed to, or obligated to contribute
to, at any time, by the Seller or any ERISA Affiliate (hereinafter referred to
as "Benefit Plans"), including any liability (i) to the Pension Benefit Guaranty
Corporation under Title IV of ERISA;
18
(ii) with respect to non-compliance with the notice and benefit continuation
requirements of COBRA; (iii) with respect to any non-compliance with ERISA or
any other applicable laws; or (iv) with respect to any suit, proceeding or claim
which is brought against any Benefit Plan, ERISA Affiliate Plan, any fiduciary
or former fiduciary of any such Benefit Plan or ERISA Affiliate Plan;
(j) liabilities or obligations under Section 2.3(e) that are the
subject of a claim filed with or pending before any court or administrative
agency on or before November 16, 2000, to the extent that any such claim is not
disclosed on Schedule 5.18;
(k) liabilities arising under any material intercompany agreement
between Seller and an Affiliate of Seller that is not disclosed on a Schedule to
this Agreement;
(l) liabilities arising under any agreement for the purchase or sale
of energy, capacity or ancillary services from the Purchased Assets, other than
the Transitional Power Purchase Agreement, the Interconnection Agreement or as
disclosed on a Schedule to this Agreement;
(m) any accrued liability included in the Estimated Adjustment Amount
for which Seller is paid at Closing;
(n) any liabilities paid or incurred in connection with obtaining
consents to assignment of Seller Agreements;
(o) any liabilities for borrowed money or guarantees of third party
obligations, except purchase money security interests;
(p) liabilities with respect to the pollution control Bonds listed on
Schedule 5.15, except for the obligations arising out of the covenants of Buyer
set forth in Section 7.8;
(q) liabilities with respect to any accrued payment obligations
incurred by Seller prior to the Closing Date;
(r) any liability for which Seller is entitled to payment under any
applicable insurance policy before the application of Section 2.3, to the extent
of such payment; and
(s) any allocation of charges to Seller or the owner of the Purchased
Assets by Southwest Gas Corporation of El Paso Natural Gas Company's
19
Risk Sharing Revenue Stability Charges based on gas transportation or purchases
with respect to the Purchased Assets that occurred before the Closing Date.
2.5 License of Non-Transferred Intangible Assets. It is understood
--------------------------------------------
by the parties that trade names of Seller are Excluded Assets, however, such
names appear on certain of the Purchased Assets, such as certain fixtures and
equipment, and on supplies, materials and similar consumable items that will be
on hand at the Purchased Assets at Closing. Notwithstanding that such trade
names are Excluded Assets, Buyer shall be entitled to use such consumable items
for a period of three (3) months following the Closing and shall have up to six
(6) months following the Closing to remove such names from fixed Purchased
Assets, provided that Buyer shall not send correspondence or other materials to
third parties on any stationery that contains a trade name or trademark of
Seller or any Affiliate of Seller. Seller hereby grants to Buyer a license to
use, solely in connection with the operation of the Xxxxx Bundle on and after
Closing, such proprietary computer software of Seller located at the Xxxxx
Bundle as is presently used at the Xxxxx Bundle exclusively in connection with
the operation of the Xxxxx Bundle and that would otherwise be an Excluded Asset,
except for such computer software that is designed to be part of a networked
computer system providing data processing capabilities or services beyond the
Xxxxx Bundle and any licenses which are not transferable and provided that in no
event shall Buyer or any successor have access under such license to Seller's
own computer networks. The rights and obligations relating to the licenses
contained in this Section 2.5 will be made the subject of a separate software
and trademark licensing agreement between the parties which shall address the
terms and conditions affecting the irrevocable, fully paid up, royalty-free,
transferable, non-exclusive rights and licenses granted therein, in which case
the parties shall negotiate such terms and conditions in good faith and deliver
such agreement at Closing.
ARTICLE III
-----------
PURCHASE PRICE
--------------
3.1 Purchase Price. The purchase price for the Purchased Assets
--------------
shall be an amount equal to the sum of (i) Three Hundred Forty Two Million Two
Hundred Thousand Dollars ($342,200,000), (ii) the Estimated Adjustment Amount,
(iii) the Adjustment Amount, and (iv) any amounts paid by the Seller with
respect to Leased Assets pursuant to Section 7.4 hereof (the "Purchase Price").
Notwithstanding any other provision of this Agreement, the Purchase Price
includes all applicable sales and similar taxes. As a result of the execution of
the Transitional Power Purchase Agreement, the amount to be paid by Buyer to
Seller at Closing shall be reduced by One Hundred Fifty Eight Million Dollars
($158,000,000) (the "TPPA Amount"), and such reduction is reflected in Section
4.2(iv).
20
3.2 Purchase Price Adjustment. (a) Within sixty (60) days after
-------------------------
the Closing, the Seller shall prepare and deliver to the Buyer a statement
(the "Adjustment Statement") which reflects (i) the difference between (A) the
book value, as determined by an independent evaluator designated by the Seller
and approved by the Buyer as of the Closing Date, of all fuel inventory used at
or in connection with the Purchased Assets and (B) the Estimated Inventory
Adjustment Amount (such difference is referred to as the "Inventory Adjustment
Amount"), (ii) the difference between (A) the book value, as determined by an
independent evaluator designated by the Seller and approved by the Buyer as of
the Closing Date, of the materials and supplies used at or in connection with
the Purchased Assets and (B) the Estimated Materials and Supplies Adjustment
Amount (such difference is referred to as the "Materials and Supplies Adjustment
Amount") and (iii) the difference between (A) the Maintenance and Capital
Expenditures Amount and (B) the Estimated Maintenance and Capital Expenditures
Amount (such difference is referred to as the "Maintenance and Capital
Expenditures Adjustment Amount"). The Inventory Adjustment Amount, the
Materials and Supplies Adjustment Amount and the Maintenance and Capital
Expenditures Adjustment Amount are referred to collectively as the "Adjustment
Amount." The Adjustment Statement shall be prepared using the same generally
accepted accounting principles, policies and methods as the Seller has
historically used in connection with the calculation of the items reflected on
the Adjustment Statement. The Buyer agrees to cooperate with the Seller in
connection with the preparation of the Adjustment Statement and related
information, and shall provide to the Seller such books, records and information
as may be reasonably requested from time to time.
(b) The Buyer may dispute the Inventory Adjustment Amount, the
Materials and Supplies Adjustment Amount or the Maintenance and Capital
Expenditures Amount; provided, however, that the Buyer shall notify the Seller
-------- -------
in writing of the disputed amount, and the basis of such dispute, within ten
(10) Business Days of the Buyer's receipt of the Adjustment Statement. In the
event of a dispute with respect to the Inventory Adjustment Amount, the
Materials and Supplies Adjustment Amount or the Maintenance and Capital
Expenditures Amount, the Buyer and the Seller shall attempt to reconcile their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive on the parties. If the Buyer and the Seller are
unable to reach a resolution of such differences within thirty (30) days of
receipt of the Buyer's written notice of dispute to the Seller, the Buyer and
the Seller shall submit the amounts remaining in dispute for determination and
resolution to the Independent Accounting Firm, which shall be instructed to
determine and report to the parties, within thirty (30) days after such
submission, upon such remaining disputed amounts, and such report shall be
final, binding and conclusive on the parties hereto with respect to the amounts
disputed. The fees and disbursements of the Independent Accounting Firm shall
be allocated between the Buyer and the Seller so that the Buyer's share of such
fees and disbursements shall be
21
in the same proportion that the aggregate amount of such remaining disputed
amounts so submitted by the Buyer to the Independent Accounting Firm that is
unsuccessfully disputed by the Buyer (as finally determined by the Independent
Accounting Firm) bears to the total amount of such remaining disputed amounts so
submitted by the Buyer to the Independent Accounting Firm.
(c) Within ten (10) Business Days after the Buyer's receipt of the
Adjustment Statement, the Buyer shall pay all undisputed portions of the
Adjustment Amount. If there is a dispute with respect to any amount on the
Adjustment Statement, within five (5) Business Days after the final
determination of such disputed amounts on the Adjustment Statement, the Buyer
shall pay to the Seller an amount equal to the disputed portion of the
Adjustment Amount as finally determined to be payable with respect to the
Adjustment Statement; provided, however, that if such amount shall be less than
-------- -------
zero, then the Seller shall pay to the Buyer the amount by which such amount is
less than zero within five (5) Business Days of such final determination. All
payments made pursuant to this Section 3.2(c) shall be paid together, with
interest thereon for the period commencing on the Closing Date through the date
of payment, calculated at the prime rate of The Chase Manhattan Bank in effect
on the Closing Date, in cash by federal or other wire transfer of immediately
available funds.
(d) Buyer acknowledges that if the Closing occurs after the closing
of the transactions contemplated by the Xxxx Xxxxxxx Asset Sales Agreement,
Buyer shall make the payment contemplated by Section 3.2(d) of the Xxxx Xxxxxxx
Asset Sales Agreement pursuant to the Xxxx Xxxxxxx Asset Sales Agreement in
accordance with the terms of the Xxxx Xxxxxxx Asset Sales Agreement.
3.3 Allocation of Purchase Price. The Buyer and the Seller shall use
----------------------------
their good faith best efforts to agree upon an allocation among the Purchased
Assets of the sum of the Purchase Price consistent with Section 1060 of the Code
and the Treasury Regulations thereunder within one-hundred twenty (120) days of
the date of this Agreement but in no event less than thirty (30) days prior to
the Closing. The Buyer and the Seller may jointly agree to obtain the services
of an independent appraiser (the "Independent Appraiser") to assist the parties
in determining fair value of the Purchased Assets for purposes of such
allocation. If such an appraisal is made, both the Buyer and the Seller agree to
accept the Independent Appraiser's determination of the fair value of the
Purchased Assets. The parties shall jointly select the Independent Appraiser.
The cost of the appraisal shall be borne equally by the Buyer and the Seller.
Each of the Buyer and the Seller agrees to file Internal Revenue Service Form
8594, and all federal, state, local and foreign Tax Returns, in accordance with
such agreed allocation. Each of the Buyer and the Seller shall report the
transactions contemplated by this Agreement for federal Income Tax and all other
tax purposes in a manner consistent with the allocation determined pursuant
22
to this Section 3.3. Each of the Buyer and the Seller agrees to provide the
other promptly with any other information required to complete Form 8594. Each
of the Buyer and the Seller shall notify and provide the other with reasonable
assistance in the event of an examination, audit or other proceeding regarding
the agreed upon allocation of the Purchase Price.
3.4 Proration. (a) The Buyer and the Seller agree that all of the
---------
items normally prorated, including those listed below, relating to the business
and operation of the Purchased Assets shall be prorated as of the Closing Date,
with the Seller liable to the extent such items relate to any time period
through the Closing Date, and the Buyer liable to the extent such items relate
to periods subsequent to the Closing Date:
(i) personal property, real estate, occupancy and any other
Taxes, assessments and other charges, if any, on or with respect to the
business and operation of the Purchased Assets. In addition, in the event
that the Seller is subject to Taxes, assessments and other charges on
property of which the Purchased Assets comprises only a portion, the
portion of such Taxes, assessments and other charges allocated to the
Purchased Assets and subject to proration by this Section 3.4 shall be
determined by reference to the relative value of the Purchased Assets, as
determined by the Purchase Price paid by the Buyer, compared with the value
of the Seller's property subject to such Taxes, assessments and other
charges, as assessed by the relevant taxing authority;
(ii) rent, Taxes and other items payable by or to the Seller
under any of the Seller Agreements to be assigned to and assumed by the
Buyer hereunder;
(iii) any permit, license or registration fees with respect to
any Environmental Permit or other Permit; and
(iv) sewer rents and charges for water, telephone, electricity
and other utilities.
(b) In connection with such proration, in the event that actual
figures are not available at the Closing Date, the proration shall be based upon
the actual amount of such Taxes or fees for the preceding year (or appropriate
period) for which actual Taxes or fees are available and such Taxes or fees
shall be reprorated upon request of either the Seller or the Buyer made within
sixty (60) days of the date that the actual amounts become available. The
Seller and the Buyer agree to furnish each other with such documents and other
records as may be reasonably
23
requested in order to confirm all adjustment and proration calculations made
pursuant to this Section 3.4.
ARTICLE IV
----------
THE CLOSING
-----------
4.1 Time and Place of Closing. Upon the terms and subject to the
-------------------------
satisfaction of the conditions contained in this Agreement, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 4 Times Square, New
York, New York, at 10:00 a.m., local time, on the first Business Day following
the date on which all of the conditions to each party's obligations hereunder
have been satisfied or waived, or such other place or time as the parties may
mutually agree, provided that such date shall not occur prior to June 1, 2001,
unless the parties mutually agree to an earlier date. The date and time at which
the Closing actually occurs is hereinafter referred to as the "Closing Date."
4.2 Payment of Purchase Price. Upon the terms and subject to the
-------------------------
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Assets, the Buyer shall pay or cause to be paid to the Seller the
Purchase Price. The portion of the Purchase Price to be paid at Closing shall be
as follows: (i) an amount equal to the sum of $342,200,000, plus (ii) any
amounts with respect to Leased Assets to be paid pursuant to Section 7.4 hereof,
plus (iii) the Estimated Adjustment Amount for the Closing, and less (iv) the
TPPA Amount (the "Estimated Closing Payment"), by wire transfer of immediately
available funds or by such other means as are agreed to by the Seller and the
Buyer. If, at the time of Closing, there is a payment required to be made
pursuant to Section 3.2(d) of the Xxxx Xxxxxxx Asset Sales Agreement, such
payment shall be made at Closing.
4.3 Deliveries by Seller. At the Closing, the Seller shall deliver
--------------------
to the Buyer the following:
(a) The Xxxx of Sale, duly executed by the Seller for the personal
property included in the Purchased Assets;
(b) The executed consents to transfer the Seller Agreements, the
Environmental Permits and the Permits, to the extent required hereunder or under
applicable law;
(c) Each Ancillary Agreement required to be delivered under this
Agreement, duly executed by the Seller;
24
(d) The certificate and opinion of counsel as contemplated by Section
8.2 hereof;
(e) One or more deeds of conveyance transferring the Seller's
interest in the Real Property to the Buyer, without covenant or warranty of
title other than as provided in the Form of Grant, Bargain, Sale Deed attached
as Exhibit G hereto, duly executed and acknowledged by the Seller and in
recordable form subject to Permitted Encumbrances and retaining to the extent
necessary any existing easements in favor of the Seller with respect to Real
Property conveyed to the Buyer, each substantially in the form of Exhibit G
attached hereto;
(f) One or more easements to the extent necessary to evidence the
right of the Buyer to use the Real Property of the Seller (the "Buyer's
Easements") associated with the Purchased Assets, duly executed and acknowledged
by the Seller and in recordable form, each substantially in the form of Exhibit
E attached hereto;
(g) The Assignment of Leases, in the form of Exhibit A attached
hereto, assigning to the Buyer all of the Seller's right, title and interest as
lessor (or lessee, as the case may be) under the Leases;
(h) Copies of the resolutions adopted by the board of directors of
the Seller, certified by the secretary of the Seller, as having been duly and
validly adopted and as being in full force and effect, authorizing the execution
and delivery by the Seller of this Agreement, the Ancillary Agreements, the Xxxx
of Sale and other closing documents described in this Agreement to which the
Seller is a party, and the performance by the Seller of its obligations
hereunder and thereunder;
(i) All such other instruments of assignment or conveyance as shall,
in the reasonable opinion of the Buyer and its counsel, be necessary to transfer
to the Buyer the Purchased Assets in accordance with this Agreement and the
Ancillary Agreements, and where necessary or desirable, in recordable form; and
(j) Such other agreements, documents, instruments and writings as are
required to be delivered by the Seller at or prior to the Closing Date pursuant
to this Agreement, the Ancillary Agreements or otherwise required in connection
herewith or therewith.
4.4 Deliveries by Buyer. At the Closing, the Buyer shall deliver to
-------------------
the Seller the following:
25
(a) The Estimated Closing Payment by wire transfer of immediately
available funds or by such other means as are agreed to by the Seller and the
Buyer;
(b) Each Ancillary Agreement required to be delivered under this
Agreement, duly executed by the Buyer;
(c) The certificate and opinion of counsel as contemplated by Section
8.3 hereof;
(d) One or more easements to the extent necessary to evidence the
right of Seller to use the Real Property of Buyer (the "Seller's Easements"), to
the extent necessary for the Seller to continue and maintain its transmission
and distribution business, in favor of the Seller with respect to Real Property
conveyed to the Buyer, duly executed and acknowledged by the Buyer, each
substantially in the form of Exhibit D attached hereto, and the Buyer shall bear
any transfer or similar tax incurred in connection herewith as set forth in
Section 7.9 hereof;
(e) The Instrument of Assumption, duly executed by the Buyer
providing for the assumption of all of the Seller's right, title and interest as
lessor (or lessee as the case may be) under the Leases;
(f) All such other instruments of assumption as shall, in the
reasonable opinion of the Seller and its counsel, be necessary for the Buyer to
assume the Assumed Liabilities in accordance with this Agreement;
(g) Copies of the resolutions adopted by the board of directors of
the Buyer, certified by the secretary of the Buyer, as having been duly and
validly adopted and as being in full force and effect, authorizing the execution
and delivery by the Buyer of this Agreement, the Ancillary Agreements and other
closing documents described in this Agreement to which the Buyer is a party, and
the performance by the Buyer of its obligations hereunder and thereunder; and
(h) Such other agreements, documents, instruments and writings as are
required to be delivered by the Buyer at or prior to the Closing Date pursuant
to this Agreement, the Ancillary Agreements or otherwise required in connection
herewith or therewith.
26
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
The Seller represents and warrants to the Buyer as follows:
5.1 Organization; Qualification. The Seller is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own, lease, and
operate its properties and to carry on its business as is now being conducted.
The Seller is duly qualified or licensed to do business as a foreign corporation
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect. The
Seller has heretofore delivered to the Buyer complete and correct copies of its
Certificate of Incorporation and Bylaws as currently in effect.
5.2 Authority Relative to this Agreement. The Seller has full
------------------------------------
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the board of directors of the
Seller and no other corporate proceedings on the part of the Seller are
necessary to authorize this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements have been duly and validly executed and delivered by
the Seller, and assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of the Buyer, subject to the receipt of
the Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, constitute valid and binding agreements of the Seller, enforceable
against the Seller in accordance with their terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors' rights
generally or general principles of equity.
5.3 Consents and Approvals; No Violation. (a) Except as set forth in
------------------------------------
Schedule 5.3(a), and other than obtaining the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, neither the execution and
delivery of this Agreement or the Ancillary Agreements by the Seller nor the
sale by the Seller of the Purchased Assets pursuant to this Agreement or the
Ancillary Agreements shall (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws of the Seller, (ii)
require any consent, approval, authorization or permit of, or filing with or
notification to, any
27
Governmental Authority or regulatory authority, except (x) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not have a Material Adverse Effect or (y) for those
requirements which become applicable to the Seller as a result of the specific
regulatory status of the Buyer (or any of its Affiliates) or as a result of any
other facts that specifically relate to the business or activities in which the
Buyer (or any of its Affiliates) is or proposes to be engaged; (iii) result in a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which the
Seller is a party or by which the Seller, or any of the Purchased Assets may be
bound, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not have a Material Adverse Effect; or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Seller, or any of its assets, which violation would have a
Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) and except for (i) any
required approvals under the Federal Power Act, (ii) approvals or other actions
by the PUCN, the CPUC, and/or the OPUC, (iii) the approval, if required, of the
SEC pursuant to the Holding Company Act, and (iv) the filings by the Seller and
the Buyer required by the HSR Act and the expiration or earlier termination of
all waiting periods under the HSR Act (the filings and approvals referred to in
clauses (i) through (iv) above are collectively referred to as the "Seller
Required Regulatory Approvals"), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any Governmental Authority
or regulatory authority is necessary for the consummation by the Seller of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
obtained or made, shall not, in the aggregate, have a Material Adverse Effect
and other than the Permits and Environmental Permits.
5.4 Reports. Since January 1, 1996, the Seller, pursuant to the
-------
Securities Act, the Exchange Act, the applicable State public utility laws, the
Federal Power Act and the Holding Company Act, has filed or caused to be filed
with the SEC, the applicable state or local utility commissions or regulatory
bodies, or the FERC, as the case may be, all material forms, statements, reports
and documents (including all exhibits, amendments and supplements thereto)
required to be filed by them with respect to the business and operations of the
Seller as it relates to the Purchased Assets under each of the Securities Act,
the Exchange Act, the applicable State public utility laws, the Federal Power
Act and the Holding Company Act and the respective rules and regulations
thereunder, all of which complied in all material
28
respects with all applicable requirements of the appropriate act and the rules
and regulations thereunder in effect on the date each such report was filed.
5.5 Financial Statements. The Seller has previously furnished to the
--------------------
Buyer (i) balance sheets of the Seller as of June 30, 2000, and (ii) the related
statements of income and retained earnings and changes in financial position of
the Seller for the fiscal year then ended. The balance sheet of the Seller as of
June 30, 2000 is referred to herein as the "Seller Balance Sheet." Each of the
balance sheets included in the financial statements referred to in this Section
5.5 (including the related notes thereto) presents fairly the financial position
of the Seller as of their respective dates, and the other related statements
included therein (including the related notes thereto) present fairly the
results of operations and changes in financial position for the periods then
ended, all in conformity with generally accepted accounting principles applied
on a consistent basis, except as otherwise noted therein.
5.6 Undisclosed Liabilities. Except as set forth in Schedule 5.6,
-----------------------
the Seller has no liability or obligation relating to the business or operations
of the Purchased Assets, secured or unsecured (whether absolute, accrued,
contingent or otherwise, and whether due or to become due), of a nature required
by generally accepted accounting principles to be reflected in a corporate
balance sheet or disclosed in the notes thereto, which are not accrued or
reserved against in the Seller Balance Sheet or disclosed in the notes thereto
in accordance with generally accepted accounting principles, except those which
either were incurred in the ordinary course of business, whether before or after
the date of the Seller Balance Sheet, or those which in the aggregate are not
material to the Purchased Assets.
5.7 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
Schedule 5.7, or in the reports, schedules, registration statements and
definitive proxy statements filed by the Seller with the SEC, and except as
otherwise contemplated by this Agreement, since the date of the Seller Balance
Sheet there has not been: (i) any Material Adverse Effect; (ii) any damage,
destruction or casualty loss, whether covered by insurance or not, which had a
Material Adverse Effect; (iii) any entry into any agreement, commitment or
transaction (including, without limitation, any borrowing, capital expenditure
or capital financing) by the Seller, which is material to the business or
operations of the Purchased Assets, except for non-material agreements,
commitments or transactions in the ordinary course of business or as
contemplated herein; or (iv) any change by the Seller, with respect to the
Purchased Assets, in accounting methods, principles or practices except as
required or permitted by generally accepted accounting principles.
5.8 Title to Real Property. Set forth in Schedule 5.8 is a true and
----------------------
complete list of the Real Property of the Seller which is part of the Purchased
Assets.
29
The Seller has good and marketable title to all of the Real Property (including
easements for access and utilities), subject only to Permitted Encumbrances.
5.9 Leasehold Interests. Schedule 5.9 lists, as of the date of this
-------------------
Agreement, all Real Property leases (the "Leases") relating to the Purchased
Assets under which the Seller is a lessee, lessor or under which Seller
otherwise has any interest and which are to be assigned to, and assumed by, the
Buyer on the Closing Date. Except as set forth in Schedule 5.9, to the Seller's
Knowledge, all such Leases are valid, binding and enforceable in accordance with
their terms, and are in full force and effect; there are no existing material
defaults by the Seller thereunder; and no event has occurred which (whether with
or without notice, lapse of time or both) would constitute a material default
thereunder. Subject only to Permitted Encumbrances, Seller has valid and
effective leasehold rights in each Lease in which Seller is the lessee.
5.10 Improvements. Except as set forth in Schedule 5.10, the Seller
------------
has not received any written notices from any Governmental Authority stating or
alleging that any improvements with respect to the Purchased Assets have not
been constructed in compliance with applicable law. Except as set forth in
Schedule 5.10, no written notice has been received by the Seller from any
Governmental Authority requiring or advising as to the need for any repair,
alteration, restoration or improvement in connection with the Purchased Assets.
5.11 Insurance. Except as set forth in Schedule 5.11, all material
---------
policies of fire, liability, workers' compensation and other forms of insurance
purchased or held by and insuring the Purchased Assets are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date as of which this representation is being made have been paid,
and no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior to
the date of such cancellation. Except as described in Schedule 5.11, as of the
date of this Agreement, the Seller has not been refused any insurance with
respect to the Purchased Assets nor has its coverage been limited by any
insurance carrier to which it has applied for any such insurance or with which
it has carried insurance during the last twelve (12) months.
5.12 Environmental Matters. (a) Except as set forth in Schedule 5.12,
---------------------
in any public filing by the Seller pursuant to the Securities Act or the
Exchange Act, or in any environmental site assessment prepared by or for the
Seller and made available to the Buyer, the Seller holds, and is in substantial
compliance with, all material permits, licenses and governmental authorizations
(the "Environmental Permits") required for the Seller to operate the Purchased
Assets under applicable Environmental Laws, and to the Knowledge of the Seller,
the Seller is otherwise in compliance with applicable Environmental Laws with
respect to the Purchased
30
Assets except for such failures to hold or comply with required Environmental
Permits, or such failures to be in compliance with applicable Environmental
Laws, which, in the aggregate, are not reasonably likely to have a Material
Adverse Effect. The Seller's Environmental Permits are set forth on Schedule
5.12.
(b) To Seller's knowledge and except as set forth in Schedule 5.12,
Seller has not received any request for information, or been notified in writing
or orally that it is a potentially responsible party, under CERCLA or any
similar state law with respect to any of the Purchased Assets, except for such
liability under such laws as would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
(c) Except as set forth in Schedule 5.12, with respect to the
Purchased Assets, the Seller has not entered into or agreed to any consent
decree or order, and is not subject to any judgment, decree, or judicial order
relating to compliance with any Environmental Law or to investigation or cleanup
of Hazardous Substances under any Environmental Law, except such consent decrees
or orders, judgments, decrees or judicial orders that would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect and has
no Knowledge of any pending investigation under any Environmental Law related to
the Purchased Assets, other than as contemplated by the Environmental Audit
Agreement, if applicable, between Nevada Power Company and the Nevada Division
of Environmental Protection related to the Xxxxx Bundle except for such
investigations that would not, individually or in the aggregate, be reasonably
willing to have a Material Adverse Effect and further, Seller shall disclose to
Buyer in writing any Remediation or investigation relating to the Purchased
Assets that is commenced after the date of this Agreement and prior to the
Closing Date.
(d) To Seller's Knowledge, Seller has disclosed and made available to
Buyer true, complete and correct copies of any material report, study,
investigation, audit, analysis, test or monitoring in the possession of or
initiated or prepared by Seller within the 5 years preceding the date of this
Agreement pertaining to any environmental matter relating to the Purchased
Assets, including without limitation, compliance with Environmental Laws or
employee safety.
(e) The representations and warranties made in this Section 5.12 are
the Seller's exclusive representations and warranties relating to environmental
matters.
5.13 Labor Matters. The Seller has previously delivered to the Buyer
-------------
copies of all labor union and Collective Bargaining Agreements relating to the
Purchased Assets to which the Seller is a party or is subject. With respect to
its employees at the Purchased Assets, except to the extent set forth in
Schedule 5.13
31
and except for such matters as shall not have a Material Adverse Effect, to the
Seller's Knowledge: (i) the Seller is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours; (ii) the Seller has not received written notice
of any unfair labor practice charge or complaint against the Seller pending
before the National Labor Relations Board; (iii) there is no labor strike,
slowdown or stoppage actually pending or threatened against or affecting the
Seller; (iv) the Seller has not received notice that any representation petition
respecting the employees of the Seller has been filed with the National Labor
Relations Board; (v) no arbitration proceeding arising out of or under
collective bargaining agreements is pending against the Seller; and (vi) the
Seller has not experienced any primary work stoppage since at least December 31,
1995.
5.14 ERISA; Benefit Plans. (a) Except as set forth in Schedule
--------------------
5.14(a)(i), with respect to its employees at the Purchased Assets, the Seller
has fulfilled its obligations under the minimum funding requirements of Section
302 of ERISA, and Section 412 of the Code, with respect to each "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) and each such plan
is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code. The Seller has not incurred any liability
under Section 4062(b) of ERISA to the Pension Benefit Guaranty Corporation in
connection with any employee pension benefit plan relating to employees at the
Purchased Assets which is subject to Title IV of ERISA. Except as set forth in
Schedule 5.14(a)(ii), the Internal Revenue Service has issued a letter for each
employee pension benefit plan determining that such plan is exempt from United
States Federal Income Tax under Sections 401(a) and 501(a) of the Code, and
there has been no occurrence since the date of any such determination letter
which has adversely affected such qualification, and no withdrawal liability has
been incurred by or asserted against the Seller with respect to any employee
pension benefit plan which is a "multiemployer plan" (as defined in Section
3(37) of ERISA).
(b) Schedule 5.14(b) lists, as of the date of this Agreement, all
deferred compensation, pension, profit-sharing and retirement plans, including
multiemployer plans, and all material bonus and other employee benefit or fringe
benefit plans maintained or with respect to which contributions are made by the
Seller in respect of employees who are the employees of the Seller who work at
the Purchased Assets. Accurate and complete copies of all such plans, other
than multiemployer plans, have been made available to the Buyer.
5.15 Real Property Encumbrances. Schedule 5.15 describes the
--------------------------
indentures of trust concerning the Pollution Control Facilities at the Xxxxx
Bundle (the "Bond Indentures") and the Indenture. At or before Closing, Seller
shall cause the Purchased Assets to be released from the liens of the Indenture
and the Bond
32
Indentures. Copies of any surveys in the Seller's possession or any policies of
title insurance currently in force and in the possession of the Seller with
respect to the Real Property will be delivered by the Seller to the Buyer
pursuant to Section 7.14.
5.16 Condemnation. Neither the whole nor any part of the Real
------------
Property or any other real property or rights leased, used or occupied by the
Seller in connection with the ownership or operation of the Purchased Assets is
subject to any pending suit for condemnation or other taking by any public
authority, and, to the Knowledge of the Seller, no such condemnation or other
taking is threatened or contemplated.
5.17 Certain Contracts and Arrangements. (a) Except for (i) the
----------------------------------
Seller Agreements listed in Schedule 5.17(a) or any other Schedule hereto, (ii)
contracts, agreements, personal property leases, commitments, understandings or
instruments which shall expire prior to the Closing Date, (iii) non-material
agreements with suppliers, distributors and sales representatives entered into
in the ordinary course of business, and (iv) contracts, agreements, personal
property leases, commitments, understandings or instruments with a value less
than $250,000 or with annual payments less than $50,000 the Seller is not a
party to any written contract, agreement, personal property lease, commitment,
understanding or instrument which is material to the business or operations of
the Purchased Assets.
(b) Except as disclosed in Schedule 5.17(b), each material Seller
Agreement constitutes a valid and binding obligation of the parties thereto and
is in full force and effect and may be transferred to the Buyer pursuant to this
Agreement and shall continue in full force and effect thereafter, in each case
without breaching the terms thereof or resulting in the forfeiture or impairment
of any rights thereunder.
(c) Except as set forth in Schedule 5.17(c), there is not, under any
of the Seller Agreements, any default or event which, with notice or lapse of
time or both, would constitute a default on the part of the Seller, except, with
respect to the Seller Agreements only, such events of default and other events
as to which requisite waivers or consents have been obtained or which would not,
in the aggregate, have a Material Adverse Effect. Except as set forth in
Schedule 5.17(c), Seller has not received written or other notice of a default
concerning a Seller Agreement, nor has Seller received any written or other
notice that a party intends to cancel or terminate a Seller Agreement.
5.18 Legal Proceedings, etc. Except as set forth in Schedule 5.18 or
-----------------------
in any filing made by the Seller pursuant to the Securities Act or the Exchange
Act, there are no claims, actions, proceedings, or investigations pending, and
to Seller's Knowledge no claims, actions, proceedings or investigations
threatened, against the Seller relating to the Purchased Assets before or by any
court, Governmental
33
Authority or regulatory authority or body acting in an adjudicative capacity,
which, if adversely determined, would have a Material Adverse Effect. Except as
set forth in Schedule 5.18, the Seller is not subject to any outstanding
judgment, rule, order, writ, injunction or decree of any court, Governmental
Authority or regulatory authority relating to the Purchased Assets which has a
Material Adverse Effect.
5.19 Permits. The Seller has all material permits, licenses,
--------
franchises and other governmental authorizations, consents and approvals (other
than with respect to the Environmental Permits addressed in Section 5.12)
(collectively, "Permits"), as set forth in Schedule 5.19(a), necessary to
operate the Purchased Assets as presently operated, except where the failure to
have such Permits does not have a Material Adverse Effect. Except as set forth
in Schedule 5.19(b), with respect to the Purchased Assets, the Seller has not
received any written notification, and does not otherwise have Knowledge, that
it is in violation of any of such Permits, or any law, statute, order, rule,
regulation, ordinance or judgment of any Governmental Authority or regulatory
body or authority applicable to the Purchased Assets, except for notifications
of violations which would not, in the aggregate, have a Material Adverse Effect.
The Seller is in compliance with all Permits, laws, statutes, orders, rules,
regulations, ordinances, or judgments of any Governmental Authority or
regulatory body or authority applicable to the Purchased Assets, except for
violations which, in the aggregate, do not have a Material Adverse Effect.
5.20 Regulation as a Utility. The Seller and certain of its
-----------------------
affiliates are regulated as public utilities in the States of Nevada and
California. Except as set forth on Schedule 5.20, the Seller is not subject to
regulation as a public utility or public service company (or similar
designation) by the United States, any State of the United States, any foreign
country or any municipality or any political subdivision of the foregoing.
5.21 Taxes. The Seller has, in respect of the Purchased Assets, (i)
-----
filed all Tax Returns required to be filed other than those Tax Returns the
failure of which to file would not have a Material Adverse Effect, and (ii) paid
in full or all material Taxes shown to be due on such Tax Returns. Except as set
forth in Schedule 5.21, the Seller has not received any notice of deficiency or
assessment from any taxing authority with respect to liabilities for Taxes of
the Seller in respect of the Purchased Assets, which have not been fully paid or
finally settled, and any such deficiency shown in such Schedule 5.21 is being
contested in good faith through appropriate proceedings. Except as set forth in
Schedule 5.21, there are no outstanding agreements or waivers extending the
applicable statutory periods of limitation for Taxes associated with the
Purchased Assets for any period.
5.22 Title to Personal Property. Schedule 1.l(86)(iii) sets forth a
--------------------------
true and complete list of the material machinery, equipment, vehicles, furniture
and other
34
tangible personal property located on the Real Property and used in the
operation of the Xxxxx Bundle as of the date of this Agreement ("Personal
Property"). The Seller has good and marketable title to the Personal Property
(or valid and effective leasehold rights in the case of leased Personal
Property).
5.23 Water. (a) Seller holds rights, by contract, permit, easement,
-----
resolution, ordinance and otherwise, sufficient to enable Seller to legally
take, transport and deliver water to the Xxxxx Bundle at rates and in quantities
sufficient to operate the Xxxxx Bundle in the manner in which it has
historically been operated. Without limiting the generality of the foregoing,
Seller represents and warrants that (i) its right to receive water at Xxxxx
Station from the Xxxxx County Sanitation District ("CCSD") derives exclusively
from permit #21728-S-1 (cert # 6885) and CCSD Resolution No. 88-002 and 99-004
and (ii) with the exception of pipeline operations and maintenance agreements
listed on Schedule 5.17(a) there are no other contracts or agreements affecting
Seller's right to receive water for Xxxxx Station from CCSD.
(b) To Seller's Knowledge there are no facts or circumstances that
would prevent Buyer from performing its obligations under the terms and
conditions of the proposed form of Waste Water Supply Agreement and the proposed
form of Water Supply Agreement.
(c) There has been sufficient pond capacity and brine concentration
treatment plant capacity to support the unit capacity factors set forth in
Schedule 5.23(c), and as of the Closing Date there will have been no material
reduction in the pond or brine concentrator treatment plant capacity from
historical levels.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
The Buyer represents and warrants to the Seller as follows:
6.1 Organization. Each of NRG and Dynegy is a corporation duly
------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as is now being conducted.
Each of NRG and Dynegy is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect. Each of NRG and Dynegy has heretofore delivered to the Seller complete
and correct copies of its Certificate of
35
Incorporation and Bylaws (or other similar governing documents), as currently in
effect.
6.2 Authority Relative to this Agreement. Each of NRG and Dynegy has
------------------------------------
full corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the board of directors of NRG
and Dynegy and no other corporate proceedings on the part of NRG or Dynegy are
necessary to authorize this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements have been duly and validly executed and delivered by
NRG and Dynegy, and assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of the Seller, subject to the receipt of
the Buyer Required Regulatory Approvals and the Seller Required Regulatory
Approvals, constitute valid and binding agreements of NRG and Dynegy,
enforceable against NRG and Dynegy in accordance with their terms, except that
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally or general principles of equity.
6.3 Consents and Approvals; No Violation. (a) Except as set forth in
------------------------------------
Schedule 6.3(a), and other than obtaining the Buyer Required Regulatory
Approvals and the Seller Required Regulatory Approvals, neither the execution
and delivery of this Agreement or the Ancillary Agreements by NRG or Dynegy nor
the purchase by NRG or Dynegy of the Purchased Assets pursuant to this Agreement
or the Ancillary Agreements shall (i) conflict with or result in any breach of
any provision of the Certificate of Incorporation or Bylaws (or other similar
governing documents) of NRG or Dynegy, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority or regulatory authority, except (x) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not have a Material Adverse Effect or (y) for those
requirements which become applicable to NRG or Dynegy as a result of the
specific regulatory status of the Seller (or any of its Affiliates) or as a
result of any other facts that specifically relate to the business or activities
in which the Seller (or any of its Affiliates) is or proposes to be engaged;
(iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, agreement, lease or other instrument or
obligation to which NRG or Dynegy or any of their respective subsidiaries is a
party or by which any of their respective assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained.
36
(b) Except as set forth in Schedule 6.3(b) and except for (i) filings
and approvals required by Section 203 of the Federal Power Act, (ii) a specific
determination by the appropriate state commission(s) that allowing the Purchased
Assets to be an eligible facility (1) will benefit consumers, (2) is in the
public interest, and (3) does not violate State law, as contemplated by Section
32(c) of the Holding Company Act, 15 USC section 79z-5a(c), (iii) an Exempt
Wholesale Generator determination made by FERC under Section 32 of the Holding
Company Act, 15 USC Section 79z-5a, and (iv) the filings by NRG and Dynegy and
the Seller required by the HSR Act and the expiration or earlier termination of
all waiting periods under the HSR Act (the filings and approvals referred to in
Schedule 6.3(b) and clauses (i), (ii) and (iii) are collectively referred to as
the "Buyer Required Regulatory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of any
Governmental Authority or regulatory body or authority is necessary for the
consummation by the Buyer of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not obtained or made, shall not, in the aggregate, have a
Material Adverse Effect.
6.4 Regulation as a Utility. NRG Energy, Inc., is a subsidiary of a
-----------------------
public utility holding company registered under the Holding Company Act. Dynegy
Holdings Inc. is neither a public utility company nor a public utility holding
company under the Holding Company Act. Except as set forth in Schedule 6.4, the
Buyer is not subject to regulation as a public utility or public service company
(or similar designation) by the United States, any State of the United States,
any foreign country or any municipality or any political subdivision of the
foregoing.
6.5 Availability of Funds. The Buyer has sufficient funds available
---------------------
to it or has received binding written commitments from responsible financial
institutions to provide sufficient funds on the Closing Date to pay the Purchase
Price.
ARTICLE VII
-----------
COVENANTS OF THE PARTIES
------------------------
7.1 Conduct of Business of the Seller. Except as described in
---------------------------------
Schedule 7.1, during the period from the date of this Agreement to the Closing
Date, the Seller shall operate and maintain the Purchased Assets according to
its ordinary and usual course of business consistent with good industry practice
and with Schedules 1.1(94) (Scheduled Capital Expenditures) and 1.1(95)
(Scheduled Maintenance Expenditures). Without limiting the generality of the
foregoing, and, except as contemplated in this Agreement or as described in
Schedule 7.1, prior to the Closing
37
Date, without the prior written consent of the Buyer (unless such consent would
be prohibited by law), the Seller shall not with respect to the Purchased
Assets:
(a) (i) create, incur or assume any material amount of indebtedness
for money borrowed, other than in the ordinary course of business, including
obligations in respect of capital leases but excluding purchase money mortgages
granted in connection with the acquisition of property in the ordinary course of
business; or (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person except in the ordinary course of business;
(b) make any material change in the operations of the Purchased
Assets including, without limitation, the levels of fuel inventory and materials
and supplies customarily maintained by the Seller;
(c) except as set forth in Schedule 1.1(92), make any capital
expenditures with respect to the Purchased Assets, except that the Seller shall
make any capital expenditures (i) requested by the Buyer, provided that the
Buyer shall reimburse the Seller for such capital expenditures as part of the
Adjustment Amount and (ii) deemed necessary by the Seller and consented to by
the Buyer, whose consent shall not be unreasonably withheld ("Necessary Capital
Expenditures"); provided, however, that if the Buyer requests that the Seller
-------- -------
make enhancements with a cost in excess of the cost of any Necessary Capital
Expenditure, the Buyer shall reimburse the Seller for the cost of such
enhancement to the extent that the cost of such enhancement exceeds the cost of
the Necessary Capital Expenditures as part of the Adjustment Amount;
(d) sell, lease (as lessor), transfer or otherwise dispose of, any of
the Purchased Assets, other than assets used, consumed or replaced in the
ordinary course of business consistent with good industry practice and not
mortgage or pledge, or impose or suffer to be imposed any Encumbrance on, any of
the Purchased Assets other than Permitted Encumbrances;
(e) except as set forth in Schedule 1.1(93), make any maintenance
expenditures, except that the Seller shall make any maintenance expenditures (i)
requested by the Buyer, provided that the Buyer shall reimburse the Seller for
such maintenance expenditures as part of the Adjustment Amount and (ii) deemed
necessary by the Seller and consented to by the Buyer, whose consent shall not
be unreasonably withheld ("Necessary Maintenance Expenditures"); provided,
--------
however, that if the Buyer requests that the Seller make enhancements/upgrades
-------
with a cost in excess of the cost of any Necessary Maintenance Expenditure, the
Buyer shall reimburse the Seller for the cost of such enhancements/upgrades to
the extent the
38
cost of such enhancements/upgrades exceeds the cost of the Necessary Maintenance
Expenditure as part of the Adjustment Amount;
(f) amend any of the Seller Agreements;
(g) enter into or amend any real or personal property Tax agreement,
treaty or settlement;
(h) execute, enter into or amend any agreement, order, decree or
judgment relating to any Permit other than non-material renewals of Permits in
the ordinary and usual course of business consistent with past practice;
(i) enter into any commitment for the purchase or sale of fuel
(whether commodity or transportation) that Seller intends to assign to Buyer
having a term of greater than ninety (90) days that extends beyond December 31,
2001 if the aggregate payment under such commitment is expected to exceed
$500,000 or if the aggregate payments under such commitment and all other then
outstanding commitments not previously consented to by the Buyer would be
expected to exceed $1,000,000;
(j) except for the Transitional Power Purchase Agreement, enter into
any wholesale sales agreements having a term extending beyond the Closing Date,
where the sale of energy is expected to be supplied via the Purchased Assets;
(k) sell, lease or otherwise dispose of SO2 Allowances, except those
listed in Schedule 2.2(g) or to the extent necessary to operate the Purchased
Assets in accordance with this Section 7.1; or
(l) enter into (i) any contract, agreement, commitment or
arrangement, whether written or oral, with respect to any of the transactions
set forth in the foregoing paragraphs (a) through (k) or (ii) otherwise enter
into any material new contract, agreement, commitment or arrangement affecting
the Purchased Assets that will survive Closing other than contracts, agreements,
commitments or arrangements entered into in the ordinary and usual course of
business consistent with Good Utility Practice (as defined in the Transitional
Power Purchase Agreement) and having a term of twelve (12) months or less and a
value of $250,000 or less ($1 million in the aggregate) provided that such per
contract and aggregate limitations imposed in this subparagraph (l) shall not
apply to commitments for the purchase or sale of fuel pursuant to subparagraph
(i) of this section (with Buyer's consent to a contract, agreement or commitment
that otherwise complies with this subsection (ii) but exceeds the preceding term
and value limits not to be unreasonably withheld or delayed) except that in no
event shall Seller enter into the Waste Water Treatment Agreement or the Water
Supply Agreement with a third party prior to Closing
39
without Buyer's consent, and (iii) Seller shall provide Buyer with prompt notice
with respect to any contract, agreement, commitment or arrangement entered into
in accordance with the provisions of subsection (ii) of this paragraph.
7.2 Access to Information. (a) Between the date of this Agreement
---------------------
and the Closing Date, the Seller shall, during ordinary business hours and upon
reasonable notice (i) give the Buyer and the Buyer Representatives reasonable
access to all books, records, plants, offices and other facilities and
properties constituting the Purchased Assets to which access by Buyer is not
prohibited by law excluding information relating to employee records other than
the information described on Schedule 2.2(e), (ii) subject to Seller's approval
of Buyer's selection (not to be unreasonably withheld) Buyer shall appoint a
representative and beginning sixty (60) days prior to Closing such
representative shall be permitted to make reasonably frequent visits on
reasonable notice to the Purchased Assets for the purpose of performing
reasonable inspections thereof; (iii) cause those persons in the positions
listed on Schedule 1.1(62) and its advisors to furnish the Buyer with such
financial and operating data and other information with respect to the Purchased
Assets as the Buyer may from time to time reasonably request; (iv) cause those
persons in the positions listed on Schedule 1.1(62) and its advisors to furnish
the Buyer a copy of each report, schedule or other document filed or received by
them with the SEC, PUCN, CPUC or FERC with respect to the Purchased Assets; and
(v) at Buyer's reasonable request, make those persons in the positions listed on
Schedule 1.1(62) and its advisors available during regular business hours for
reasonable time periods to answer Buyer's questions concerning the Purchased
Assets and their operation; provided, however, that (A) any such investigation
-------- -------
shall be conducted in such a manner as not to interfere unreasonably with the
operation of the Purchased Assets, (B) the Seller shall not be required to take
any action which would constitute a waiver of the attorney-client privilege and
(C) the Seller need not supply the Buyer with any information which the Seller
is under a legal obligation not to supply. Notwithstanding anything in this
Section 7.2 to the contrary, (i) the Seller shall only furnish or provide such
access to medical records as is required by law and (ii) the Buyer shall not
have the right to perform or conduct any environmental sampling or testing at,
in, on or underneath the Purchased Assets.
(b) All information furnished to or obtained by the Buyer and the
Buyer Representatives pursuant to this Section 7.2 shall be subject to the
provisions of the Confidentiality Agreement and shall be treated as "Evaluation
Material" (as defined in the Confidentiality Agreement) except for items
acquired by Buyer as part of the Purchased Assets including but not limited to
any books, operation records, operating, safety and maintenance manuals,
engineering design plans, blueprints and as-built plans, specifications and
procedures.
40
(c) Subject to Buyer's rights under the last sentence of this Section
7.2(c), for a period of ten (10) years after the Closing Date, the Seller and
its representatives shall have reasonable access to all of the books and records
of the Purchased Assets, as the case may be, transferred to the Buyer hereunder
to the extent that such access may reasonably be required by the Seller in
connection with matters relating to or affected by the operation of the
Purchased Assets prior to the Closing Date. Such access shall be afforded by
the Buyer upon receipt of reasonable advance notice and during normal business
hours. The Seller shall be solely responsible for any costs or expenses
incurred by them pursuant to this Section 7.2(c). If the Buyer shall desire to
dispose of any such books and records prior to the expiration of such ten-year
period, the Buyer shall, prior to such disposition, give the Seller a reasonable
opportunity at the Seller's expense, to segregate and remove such books and
records as the Seller may select.
7.3 Expenses. Except to the extent specifically provided herein,
--------
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring such costs and
expenses except that the costs, expenses and premium incurred to obtain title
insurance shall be shared equally by Buyer and Seller at Closing.
7.4 Further Assurances. Subject to the terms and conditions of this
------------------
Agreement, each of the parties hereto shall use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the sale of the Purchased Assets
pursuant to this Agreement including, without limitation, the use of the
Seller's and the Buyer's commercially reasonable efforts to obtain all Permits
and Environmental Permits necessary for the Buyer to operate the Purchased
Assets. From time to time after the date hereof, without further consideration,
the Seller shall, at its own expense, execute and deliver such documents to the
Buyer as the Buyer may reasonably request in order more effectively to vest in
the Buyer good title to the Purchased Assets. From time to time after the date
hereof, the Buyer shall, at its own expense, execute and deliver such documents
to the Seller as the Seller may reasonably request in order to more effectively
consummate the sale of the Purchased Assets pursuant to this Agreement. To the
extent that any personal property lease, relating to any assets (the "Leased
Assets") which are principally used by the Seller for generation purposes at the
Purchased Assets, cannot be assigned to the Buyer, the Seller shall, with
Buyer's written consent (which consent shall not be unreasonably withheld), use
its commercially reasonable efforts to acquire title to such Leased Assets and
to include them in the Purchased Assets before the Closing Date. The Seller's
reasonable costs associated with acquiring title to such Leased Assets shall be
paid by the Buyer as part of
41
the Purchase Price. The Leased Assets are identified as such on Schedule
1.1(86)(iii).
7.5 Public Statements. The parties shall consult with each other
-----------------
prior to issuing any public announcement, statement or other disclosure with
respect to this Agreement or the transactions contemplated hereby and neither
party may issue any such public announcement, statement or other disclosure
without having first received the written consent of the other party, except as
may be required by law and except that the parties may make public
announcements, statements or other disclosures with respect to this Agreement
and the transactions contemplated hereby to the extent and under the
circumstances in which the parties are expressly permitted by the
Confidentiality Agreement to make disclosures of "Evaluation Material" (as
defined in the Confidentiality Agreement).
7.6 Consents and Approvals. (a) The Seller and the Buyer shall each
----------------------
file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice any notifications required to be filed under the
HSR Act and the rules and regulations promulgated thereunder with respect to the
transactions contemplated hereby. The parties shall consult with each other as
to the appropriate time of filing such notifications and shall use their best
efforts to make such filings at the agreed upon time, to respond promptly to any
requests for additional information made by either of such agencies, and to
cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing.
(b) The Seller and the Buyer shall cooperate with each other and (i)
promptly prepare and file all necessary documentation, (ii) effect all necessary
applications, notices, petitions and filings and execute all agreements and
documents, (iii) use all commercially reasonable efforts to obtain the transfer
or reissuance to the Buyer of all necessary Environmental Permits, Permits,
consents, approvals and authorizations of all governmental bodies and (iv) use
all commercially reasonable efforts to obtain all necessary consents, approvals
and authorizations of all other parties, in the case of each of the foregoing
clauses (i), (ii), (iii) and (iv), necessary or advisable to consummate the
transactions contemplated by this Agreement (including, without limitation, the
Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, all consents, approvals and authorizations of all governmental bodies
to the transfer, reissuance or modification of the Permits and Environmental
Permits as necessary to enable Buyer to operate the Purchased Assets at and
after Closing substantially as they had been operated immediately prior to the
Closing Date, and FERC approval of the Ancillary Agreements and the Generation
Tariff applicable to the Purchased Assets) or required by the terms of any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument to which the Seller or the Buyer
is a party or by which either of them is bound. The Seller shall have the right
to review and approve
42
in advance all characterizations of the information relating to Purchased
Assets; and each of the Seller and the Buyer shall have the right to review and
approve in advance all characterizations of the information relating to the
transactions contemplated by this Agreement which appear in any filing made in
connection with the transactions contemplated hereby. The parties hereto agree
that they shall consult with each other with respect to the transferring to the
Buyer or the obtaining by the Buyer of all such necessary Environmental Permits,
Permits, consents, approvals and authorizations of all third parties and
governmental bodies. The Seller and the Buyer shall designate separate counsel
with respect to all applications, notices, petitions and filings (joint or
otherwise) relating to this Agreement and the transactions contemplated hereby
on behalf of the Seller, on the one hand and the Buyer on the other hand, with
all governmental bodies.
(c) To the extent that a consent to an assignment of any material
Seller Agreement cannot be obtained before the Closing Date, the Seller shall
enter into all such agreements with the Buyer as are necessary to give the Buyer
the rights, obligations and burdens of such Seller Agreements.
(d) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any federal, state
or local Governmental Authority or agency or any third party in connection with
any federal, state or local governmental consents and approvals legally required
for the consummation of the transactions contemplated hereby and shall not
propose or enter into any such stipulation or agreement without the other
party's prior written consent, which consent shall not be unreasonably withheld.
(e) Seller shall use commercially reasonable efforts to defend and
support the form of Generation Tariff applicable to the Purchased Assets in the
form on file with FERC as of November 14, 2000. Seller shall file with FERC and
use commercially reasonable efforts to defend and support the Transitional Power
Purchase Agreement and Interconnection Agreement. Seller shall, at Buyer's
request, file a certificate of concurrence in and shall use all commercially
reasonable efforts to support (i) any filing with the FERC that Buyer is
required to make in order to sell energy, capacity and ancillary service
pursuant to the Transitional Power Purchase Agreement, and (ii) any tariff filed
by Buyer with FERC and containing terms and conditions equivalent to the
applicable terms and conditions of the Generation Tariff, previously filed by
Seller with FERC and applicable to the Purchased Assets, provided, however,
Seller's obligation to support such filings shall continue only until such
filings have been approved by FERC. Seller shall not propose or enter into any
stipulation or agreement except for any stipulation pending as of the date of
this Agreement modifying the form of such tariffs or agreements without Buyer's
consent, which Buyer shall not unreasonably withhold. Buyer and Seller shall
cooperate in defending and supporting such tariffs and agreements.
43
(f) The Seller shall prepare and submit an application to the PUCN in
which the Seller shall seek approval of the sale of both the Purchased Assets
hereunder and the Xxxx Xxxxxxx Bundle and at Buyer's request Seller shall
include in such application a statement reflecting Buyer's preferences and
priorities with respect to the transactions contemplated by this Agreement and
the Asset Sale Agreement relating to the Xxxx Xxxxxxx Bundle of even date
herewith.
7.7 Fees and Commissions. The Seller and the Buyer each represent
--------------------
and warrant to the other that, except for Credit Suisse First Boston ("CSFB"),
which is acting for and at the expense of the Seller, no broker, finder or other
Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the party making such representation. The Seller and the Buyer shall
pay to the other or otherwise discharge, and shall indemnify and hold the other
harmless from and against, any and all claims or liabilities for all brokerage
fees, commissions and finder's fees (other than as described above) incurred by
reason of any action taken by such party.
7.8 Use of Pollution Control Facilities. (a) Prior to June 1, 2019,
-----------------------------------
the Buyer shall not use any of the Pollution Control Facilities in any manner
which would cause (i) interest on any of the Bonds to become includible in the
gross income of the owners of such Bonds for purposes of federal income taxation
or (ii) the disallowance of any deductions for interest expense payable by the
Seller to which the Seller would otherwise be entitled; provided, however, that
-------- -------
no violation of this Section 7.8 shall be deemed to have occurred solely as a
result of such facilities being (A) unused, (B) abandoned or (C) sent to a
landfill.
(b) The Buyer shall give the Seller reasonable access to any
Pollution Control Facilities included in the Purchased Assets and the books and
records with respect to such facilities.
(c) The Buyer shall fully cooperate with the issuers of the Bonds and
the Seller and its counsel in connection with any audit, investigation or
proceeding with respect to the Bonds or the Seller's interest expense deduction
with respect thereto by the Internal Revenue Service, the SEC or any other
entity.
7.9 Tax and Withholding Matters. (a) Notwithstanding any other
---------------------------
provision of this Agreement, the Purchase Price includes all applicable sales
and similar taxes (but not real property transfer taxes) imposed by the State of
Nevada as the result of the transaction ("Included Taxes"). Buyer shall bear all
real estate transfer taxes. At the Closing, Seller shall deliver to Buyer a
receipt for Buyer's payment of Included Taxes, and a separate closing
certificate setting forth Seller's calculation of the purchase price for that
portion of the Purchased Assets with respect
44
to which Included Taxes are anticipated by Seller to be due, as well as Seller's
calculation, in the exercise of reasonable judgment, of the amount of those
Included Taxes. Seller shall also include in this certificate its unqualified
representation, warranty and covenant, which shall survive Closing
notwithstanding any other provision of this Agreement, that the amount of taxes
so established is in fact the entire and correct amount of Included Taxes.
Seller is aware that, because of Seller's familiarity with the Purchased Assets
and their previous treatment for tax, accounting and other purposes, Buyer is
relying on Seller's calculation of such Included Taxes. Seller shall, as
provided by the laws of the State of Nevada, pay over to the Nevada Department
of Taxation the Included Taxes. To the extent, if any, that the State of Nevada
requires payment of Included Taxes in an amount higher than that certified by
Seller, after all opportunity for challenge or rehearing or appeal has been
exhausted (provided that Seller bears the costs thereof as incurred), Seller
--------
shall immediately adjust its books, nunc pro tunc, by decreasing the purchase
price of the Purchased Assets by an amount equal to such additional Included
Taxes, which amount shall constitute Included Taxes collected by Seller from
Buyer. Seller shall then deliver to Buyer a corrected receipt for payment of
Included Taxes and remit to the Nevada Department of Taxation the additional
Included Taxes due. The foregoing is in addition to Buyer's right to recover
damages for breach of Seller's representation, warranty and covenant in an
amount equal to any Included Taxes required to be paid by Buyer (after
exhausting all opportunity for appeal or rehearing, provided that Seller bears
--------
the costs thereof as incurred). Seller represents and warrants that this Section
7.9(a) is enforceable (which representation and warranty shall survive Closing
notwithstanding any contrary provision in this Agreement) and shall deliver a
reasoned opinion at Closing confirming that this provision will be enforceable
against Seller. The party responsible for remitting a Tax, shall, at its own
expense, file, to the extent required by law, all necessary Tax Returns,
receipts and other documentation with respect to the Tax. If reasonably
requested by the party responsible for paying a Tax the other party shall join
in the execution of any such Tax Returns, receipts or other documentation.
Notwithstanding the foregoing, the parties shall work together in good faith and
each at its own expense to minimize all transfer, sales and similar taxes and
shall not make any payment to the Nevada Department of Taxation if the amount of
payment is being disputed by either party until all opportunity for challenge or
rehearing or appeal has been exhausted (provided that Seller bears the costs
--------
thereof as incurred).
(b) With respect to Taxes to be prorated in accordance with Section
3.4 hereof only, the Buyer shall prepare and timely file all Tax Returns
required to be filed with respect to the Purchased Assets, if any, and shall
duly and timely pay all such Taxes shown to be due on such Tax Returns. The
Buyer's preparation of any such Tax Returns shall be subject to the Seller's
approval, which approval shall not be unreasonably withheld. The Buyer shall
make such Tax Returns available for the Seller's review and approval no later
than twenty (20) days
45
prior to the due date for filing such Tax Return. Within ten (10) days after
receipt of such Tax Return, the Seller shall pay to the Buyer its proportionate
share of the amount shown as due on such Tax Return determined in accordance
with Section 3.4 hereof. In addition to any amount of reimbursement due in
accordance with Section 3.4 hereof, Buyer shall reimburse Seller for any Nevada
property taxes incurred by Seller which relate to the Purchased Assets and have
a lien date after the Closing Date. The amount of such reimbursement shall be
determined based upon the proportion of (i) the "historical cost less
depreciation" of the Purchased Assets to (ii) the total historical cost less
depreciation of all the assets reported on Seller's Nevada Operating Property
Appraisal Report.
(c) Each of the Buyer and the Seller shall provide the other with
such assistance as may reasonably be requested by the other party in connection
with the preparation of any Tax Return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each shall retain and provide the requesting party with
any records or information which may be relevant to such return, audit or
examination, proceedings or determination. Any information obtained pursuant to
this Section 7.9 or pursuant to any other section hereof providing for the
sharing of information or review of any Tax Return or other schedule relating to
Taxes shall be kept confidential by the parties hereto. The provisions of
Section 7.9 shall survive for a period of two years.
(d) The provisions of Section 7.9 shall survive until 30 days after
the expiration of all applicable tax statutes of limitation.
7.10 Supplements to Schedules. Prior to the Closing Date, the Seller
------------------------
shall promptly supplement or amend the Schedules required by Article V with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such Schedules. No supplement or amendment of any Schedule made pursuant to this
Section 7.10 shall be deemed to cure any breach of any representation or
warranty made in this Agreement unless the parties agree thereto in writing.
7.11 Employees. (a) Schedule 7.11(a) sets forth all collective
---------
bargaining agreements to which the Seller is a party in connection with the
Purchased Assets (the "Collective Bargaining Agreements"), as well any Letters
of Agreement between Seller and IBEW Local 396 ("Local 396 LOA"), letters of
intent, or other such agreements or understandings related to the sale and
transfer of certain plants. The Buyer shall offer employment to begin as of the
Closing Date to the Seller's employees who work at the Purchased Assets and who
are included in the bargaining units covered by the Collective Bargaining
Agreements ("Hourly Employees"). The Buyer shall assume the Collective
Bargaining Agreements, and all of the Seller's obligations under such
agreements.
46
(b) Continued Employment. The Buyer shall, as of the Closing Date,
--------------------
make a Qualifying Offer of Employment (as defined herein) to each employee of
Seller who (i) worked at or directly serviced the Purchased Assets and (ii) was
an employee of the Seller immediately prior to the Closing Date, other than (x)
Hourly Employees and (y) Directors (each such employee who accepts a Qualifying
Offer of Employment is a "Management Employee"). An offer of employment shall
be deemed a "Qualifying Offer of Employment" if (A) the proposed base salary and
level of incentive compensation is at least 90% of the employee's base salary
and level of incentive compensation immediately prior to the Closing Date and
(B) the proposed principal place of employment is within one hundred (100) miles
of the employee's principal place of employment immediately prior to the Closing
Date.
(c) Benefit Continuation. Subject to applicable law, the Buyer shall
--------------------
maintain for a period of at least one year after the Closing Date, without
interruption, such employee compensation, welfare and benefit plans, programs,
policies and fringe benefits covering Management Employees that will be as
economically similar, in the aggregate, as those provided pursuant to those
employee compensation, welfare and benefit plans, programs, policies and fringe
benefits of the Seller and their subsidiaries as in effect immediately prior to
the Closing Date. To the extent permissible under the terms of the Benefit
Plans of Buyer and required by applicable law, the Buyer shall waive all
limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Management
Employees under any Benefit Plans of Buyer that are welfare benefit plans that
such employees may be eligible to participate in after the Closing Date, other
than limitations or waiting periods that are already in effect with respect to
such employees and that have not been satisfied as of the Closing Date under any
welfare benefit plan maintained for the Management Employees immediately prior
to the Closing Date.
(d) Service Credit. The Management Employees shall be given credit
--------------
for all service with the Seller or its subsidiaries (and service credited by
Seller or such subsidiary), to the same extent as such service was credited for
such purpose by Seller or such subsidiary, under all employee benefit plans,
programs and policies of the Buyer in which they become participants (the
"Benefit Plans of Buyer") for purposes of eligibility, vesting, benefit accrual
and determination of level of benefits. Notwithstanding the foregoing, such
service with the Seller shall be recognized for purposes of benefit accrual
under a defined benefit pension plan or a retiree medical plan (a "plan")
sponsored by the Buyer only if assets and liabilities are transferred to the
Buyer's plan and trust from the Seller's plan and trust.
(e) Assumptions. The Buyer shall assume only those obligations that
-----------
are required to be assumed by the Buyer under the Collective Bargaining
47
Agreement or obligations for which there was a transfer of assets and
liabilities to the Buyer's plan and trust from the Seller's plan and trust.
Absent such transfer of plan assets and liabilities, benefits accrued under such
Benefits Plans of Seller and all benefits currently payable as of the Closing
Date shall be and shall remain the obligation of the Seller. Any individual
covered under any such Benefit Plan of Seller that is a Group Health Plan (as
defined in Section 4980B(g)(2) of the Code and Section 607(l) of ERISA) and who
is eligible for continued coverage under such Group Health Plan as of the
Closing Date, shall continue to be covered under such Group Health Plan after
Closing pursuant to the provisions of COBRA.
(f) Severance Plan. The Buyer shall maintain the Management
--------------
Transition Plan for a period of eighteen (18) months following the Closing Date
and shall give all Management Employees service credit for purposes of
determining the level of benefits thereunder in the same manner as set forth in
Section 7.11(d) hereof. Each of the Buyer and the Seller shall be responsible
for 50% of any payments required under the Management Transition Plan for any
Management Employee terminated without Cause (as defined in the Management
Transition Plan) within eighteen (18) months following the Closing Date.
(g) WARN Act. The Seller shall perform timely and discharge all
--------
requirements, if any, under the WARN Act and under applicable state and local
laws and regulations for the notification of its employees arising from the sale
of the Purchased Assets to the Buyer up to and including the Closing Date. The
Buyer shall cooperate with the Seller to provide the Seller with such
information as may be needed from the Buyer for inclusion in such notices,
including providing the Seller at least ninety (90) days prior to the date on
which the Closing is anticipated to occur (or such date to which the Buyer and
the Seller mutually agree) with a list of all of the Seller's employees to whom
the Buyer shall make offers of employment. After the Closing Date, the Buyer
shall be responsible for performing and discharging all requirements under the
WARN Act and under applicable state and local laws and regulations for the
notification of its employees with respect to the Purchased Assets.
7.12 Risk of Loss. (a) From the date hereof through the Closing
------------
Date, all risk of loss or damage to the property included in the Purchased
Assets shall be borne by the Seller.
(b) If, before the Closing Date all or any portion of the Purchased
Assets are taken by eminent domain, or is the subject of a pending or (to the
Knowledge of the Seller) contemplated taking which has not been consummated, the
Seller shall notify the Buyer promptly in writing of such fact. If such taking
would have a Material Adverse Effect, the Buyer and the Seller shall negotiate
in good faith to settle the loss resulting from such taking (including, without
limitation, by making a fair and equitable adjustment to the Purchase Price)
and, upon such settlement,
48
consummate the transaction contemplated by this Agreement pursuant to the terms
of this Agreement. If no such settlement is reached within sixty (60) days after
the Seller has notified the Buyer of such taking, then the Buyer or the Seller
may, if such taking relates to the Purchased Assets, terminate this Agreement
pursuant to Section 10.1(f) hereof.
(c) If, before the Closing Date all or any material portion of the
Purchased Assets are damaged or destroyed by fire or other casualty, the Seller
shall notify the Buyer promptly in writing of such fact. If such damage or
destruction would have a Material Adverse Effect and the Seller has not notified
the Buyer of its intention to cure such damage or destruction within fifteen
(15) days after its occurrence, the Buyer and the Seller shall negotiate in good
faith to settle the loss resulting from such casualty (including, without
limitation, by making a fair and equitable adjustment to the Purchase Price)
and, upon such settlement, consummate the transactions contemplated by this
Agreement pursuant to the terms of this Agreement. If no such settlement is
reached within sixty (60) days after the Seller has notified the Buyer of such
casualty, then the Buyer or the Seller may terminate this Agreement pursuant to
Section 10.1(f) hereof.
7.13 Additional Covenants of the Buyer. Notwithstanding any other
---------------------------------
provision hereof, Buyer covenants and agrees that, for a period of five (5)
years commencing on the Closing Date, Buyer shall not transfer the Purchased
Assets, or any material portion of the Purchased Assets, to any entity or
Affiliate of such entity who at that time is the owner of any bundle of
generation assets previously owned by Seller within the southern regions of
Nevada, as such regions are described in the Offering Memorandum dated as of
March 2000, as supplemented from time to time. Buyer further covenants and
agrees that, in the event that Buyer transfers the Purchased Assets or any
material portion of the Purchased Assets during such five (5) year period, Buyer
shall obtain from its transferee a covenant and agreement which restricts such
transferee's ability to transfer the Purchased Assets that is substantially
similar to Buyer's covenant and agreement in the first sentence of this Section
7.13 and an additional covenant and agreement that is substantially similar to
that of this sentence, and each such covenant and agreement shall survive and
remain in effect until five (5) years from the Closing Date as defined in this
Agreement. The covenants and agreements contained in this Section 7.13 shall
survive Closing and shall continue in effect for a period of five (5) years
commencing on the Closing Date.
7.14 Surveys and Certain Title Matters. Within thirty (30) days
---------------------------------
after the date of this Agreement, Seller shall deliver to Buyer final surveys of
the Real Property showing the location of (a) all exceptions listed in the
preliminary title reports referred to in Schedule 5.8, (b) the easements to be
retained and granted as described in Schedule 5.8, (c) all rights-of-way and
easements for water and gas
49
pipelines owned or used in connection with the operation of the Xxxxx Bundle,
and (d) all roads, rail spurs, and crossing and other access routes owned or
controlled by Seller used in connection with the operation of the Xxxxx Bundle.
On or before the thirtieth (30th) day (the "Notice Date") after Buyer has
received the final surveys of the Real Property, Buyer may notify Seller in
writing that Buyer disapproves of any matter disclosed by the final surveys
that, individually or in the aggregate, (in Buyer's reasonable judgment)
materially interferes with the operation and maintenance of the Xxxxx Bundle, or
that, individually or in the aggregate, has a Material Adverse Effect. Buyer's
failure to so notify Seller on or before the Notice Date shall be deemed an
approval of matters disclosed by and located in the final surveys; likewise, any
matters not disapproved in a notice from Buyer to Seller on or before the Notice
Date shall be deemed approved by Buyer as disclosed by and located in the final
surveys. If any new matters are disclosed by a revised survey, supplemental
preliminary title report or title commitment, Buyer shall have fifteen (15) days
from the date on which it receives a notice disclosing the new matter(s) in
reasonable detail to approve or disapprove of the new matter(s) as set forth
above. Seller shall cooperate with the Title Insurer and Buyer, to the extent
necessary, to clear any such disapproved matters. The exceptions shown in the
preliminary title reports that are approved by the Buyer as of the date of this
Agreement are listed in Schedule 5.8, subject to Buyer's review of final
surveys. If Buyer and Seller disagree about whether Buyer has properly
disapproved a matter under this Section 7.14, the parties shall meet within ten
(10) Business Days of the Notice Date to negotiate in good faith to settle their
disagreement. In addition, Seller and Buyer shall cooperate in good faith to
create and describe such Operating Easements as may be reasonably required or
desirable to serve the Purchased Assets or Seller's property to the extent not
already covered by the Operating Easements described in Schedule 5.8.
7.15 Documentation. Within sixty (60) days after the date of this
-------------
Agreement, Seller shall make available to Buyer copies of all material
contracts, leases and permits including all amendments thereto (in either
electronic or hard copy format) pertaining to the Purchased Assets which to
Seller's Knowledge are a complete set.
7.16 Separation Issues. (a) Seller shall cause the purchaser of the
-----------------
Sunrise/Sunpeak Bundle to accept a partial assignment of the Firm Transportation
Agreement dated February 1, 1995 ("FTA"), between Seller and Southwest Gas, such
that the purchaser of the Sunrise/Sunpeak Bundle would receive an allocation of
4,725 MMBtu/Hour of transportation capacity under the FTA. Buyer shall accept a
partial assignment of the FTA such that it would receive an allocation of 7,275
MMBtu/Hour of transportation capacity under the FTA. Capacity, demand and other
charges payable under the FTA would be allocated proportionately, such that the
owner of the Sunrise/Sunpeak Bundle would bear 4,725/12,000 of such charges and
Buyer would bear 7,275/12,000 of such charges.
50
(b) Buyer shall have no duty to make its employees available to
provide services to any asset other than the Xxxxx Bundle.
(c) To the extent that any contract, agreement, permit, easement or
other right serves generation assets other than the Purchased Assets, Seller
shall before Closing prepare such partial assignments and separation agreements
with the purchaser of the Sunrise/Sunpeak Bundle and the Xxxxx Xxxxx Bundle as
may be necessary to separate such rights. All such partial assignments and
separation agreements shall be subject to Buyer's consent (which shall not be
unreasonably withheld).
7.17 Additional Covenants of the Parties. (a) The parties shall work
-----------------------------------
together in good faith to address transition issues and to identify any
transition services that Seller will provide for a reasonable period after
Closing. If any such services are identified, the parties shall enter into an
agreement to be delivered at Closing describing the terms and conditions on
which Seller shall provide such transition services, including a provision which
limits the charges for such services to Seller's actual reasonable costs.
(b) Buyer and Seller shall negotiate in good faith to agree upon a
clearance procedure at least thirty (30) days before the expected Closing Date
that could make unnecessary certain disconnect switches shown in the one line
drawing included in Exhibit F that have not yet been installed. If Buyer and
Seller so agree, they shall promptly amend the one line drawing, the Separation
Schedule and the separation schedule summary to reflect their agreement. In any
event Seller shall be solely responsible for all costs associated with the
acquisition and installation of any such switches and related equipment.
(c) Seller shall use its commercially reasonable efforts to enter
into the Environmental Audit Agreement before Closing.
(d) Within fifteen (15) Business Days of the date of this Agreement
Buyer agrees to cooperate with Seller to develop a form of agreement, in a form
and substance acceptable to Buyer for execution, for each of the Waste Water
Treatment Agreement and the Water Supply Agreement which substantially reflect
the provisions set forth in Exhibit H and Exhibit I, respectively. Seller shall
use its commercially reasonable best efforts to present such forms of agreement
to the buyer of the Xxxxx Xxxxx Bundle and the buyer of the Sunrise/Sunpeak
Bundle as soon as practicable thereafter. Seller shall include a provision in
each of the Asset Sale Agreements relating to the Xxxxx Xxxxx Bundle and the
Sunrise/Sunpeak Bundle that would commit the respective buyers of such asset
bundles to execute definitive agreements in substantially the form developed by
Seller and Buyer. Seller and
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Buyer shall execute such definitive agreements, which will also be executed by
the respective buyers of the Xxxxx Xxxxx Bundle and the Sunrise/Sunpeak Bundle,
within 30 Business Days of the date of each of the Asset Sale Agreements
relating to the Xxxxx Xxxxx Bundle and the Sunrise/Sunpeak Bundle, respectively.
ARTICLE VIII
------------
CLOSING CONDITIONS
------------------
8.1 Conditions to Each Party's Obligations to Effect the
----------------------------------------------------
Transactions Contemplated Hereby. The respective obligations of each party to
--------------------------------
effect the transactions contemplated hereby or by the Ancillary Agreements shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have expired or been
terminated;
(b) No preliminary or permanent injunction or other order or decree
by any federal or state court which prevents the consummation of the
transactions contemplated hereby or by the Ancillary Agreements shall have been
issued and remain in effect (each party agreeing to use its reasonable best
efforts to have any such injunction, order or decree lifted) and no statute,
rule or regulation shall have been enacted by any state or federal government or
Governmental Authority in the United States which prohibits the consummation of
the transactions contemplated hereby or by the Ancillary Agreements;
(c) All federal, state and local government consents and approvals
required for the consummation of the transactions contemplated hereby or by the
Ancillary Agreements, including, without limitation, the Seller Required
Regulatory Approvals, the Buyer Required Regulatory Approvals, and all approvals
of FERC required to enable the parties to perform their respective obligations
under the Ancillary Agreements shall have become Final Orders (a "Final Order"
for purposes of this Agreement means a final order after all opportunities for
rehearing are exhausted (whether or not any appeal thereof is pending) that has
not been revised, stayed, enjoined, set aside, annulled or suspended, with
respect to which any required waiting period has expired; and as to which all
conditions to effectiveness prescribed therein or otherwise by law, regulation
or order have been satisfied) with such terms and conditions as shall have been
imposed by the Governmental Authority issuing such Final Order and such Final
Orders shall not have imposed terms and conditions which would have a material
adverse effect on the business, results of operations or financial condition of
the Purchased Assets; and
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(d) All consents and approvals required under the terms of any note,
bond, mortgage, indenture, contract or other agreement to which the Seller or
the Buyer, or any of their subsidiaries, is a party for the consummation of the
transactions contemplated hereby shall have been obtained, other than those (i)
which if not obtained, would not, in the aggregate, have a Material Adverse
Effect, or (ii) for which an agreement which is described in Section 7.6(c)
hereof has been entered into.
8.2 Conditions to Obligations of Buyer. The obligation of the Buyer
----------------------------------
to effect the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) There shall not have occurred and be continuing, a Material
Adverse Effect;
(b) The Seller shall have performed and complied with in all material
respects the covenants and agreements contained in this Agreement required to be
performed and complied with by it on or prior to the Closing Date, and the
representations and warranties of the Seller set forth in this Agreement shall
be true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing Date, and the
Buyer shall have received a certificate to that effect signed by an authorized
officer of the Seller;
(c) The Buyer shall have received a certificate from an authorized
officer of the Seller, dated the Closing Date, to the effect that to the best of
such officer's knowledge, the conditions set forth in Sections 8.2(a) and (b)
hereof have been satisfied;
(d) The Buyer shall have received an opinion from Xxxxxxxx & Wedge,
P.C., dated the Closing Date and satisfactory in form and substance to the Buyer
and its counsel, substantially to the effect that:
(1) The Seller is a corporation organized, existing and in good
standing under the laws of the State of Nevada and has the corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to consummate the transactions contemplated hereby and thereby; and the
execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by requisite corporate action taken on the part of the Seller;
(2) This Agreement and the Ancillary Agreements have been
executed and delivered by the Seller and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are obtained)
53
are valid and binding obligations of the Seller, enforceable against the Seller
in accordance with their terms, except that such enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, and (B) general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity) and except to the extent that the right to indemnification and
contribution contained therein may be limited by state or federal securities
laws or the public policy underlying such laws;
(3) The execution, delivery and performance of this Agreement
and the Ancillary Agreements by the Seller shall not constitute a violation of
the Certificate of Incorporation or Bylaws of the Seller; and
(4) No declaration, filing or registration with, or notice to,
or authorization, consent or approval of any Governmental Authority is necessary
for the consummation by the Seller of the Closing other than (i) the Seller
Required Regulatory Approvals, (ii) such declarations, filings or registrations
with, or notices to, or authorizations, consents or approvals relating to
Permits and Environmental Permits and (iii) such declarations, filings or
registrations with, or notices to, or authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have a Material
Adverse Effect.
As to any matter contained in such opinion which involves the laws of
any jurisdiction other than the federal laws of the United States or the laws of
the State of Nevada, such counsel may rely upon opinions of counsel admitted in
such other jurisdictions. Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel. Such opinion may
expressly rely as to matters of fact upon certificates furnished by the Seller
and appropriate officers and directors of the Seller and by public officials;
and
(e) The Seller shall have executed and delivered as of the Closing,
each of the Ancillary Agreements to be executed by the Seller and all required
approvals and conditions relating to the Ancillary Agreements shall have been
obtained or satisfied;
(f) Neither the PUCN nor the Nevada legislature shall have issued any
order or passed any legislation the effect of which would be to cause the Buyer,
as the owner of the Purchased Assets or the seller of electric power, energy or
capacity therefrom, to be regulated as to the wholesale pricing of such electric
power, energy or capacity, or to be regulated for any purposes as a public
utility under Nevada law; and
54
(g) First American Title Company (or an Affiliate thereof) or another
Title Insurer acceptable to Buyer (the "Title Insurer") shall be willing to
issue at regular rates ALTA owner's, or lessee's, as the case may be, extended
coverage policies of title insurance (1990 Form B) (the "Title Policies"), with
the general survey and creditors' rights exceptions removed, in amounts equal to
the portion of the Purchase Price allocated to such interests, showing title to
the Real Property vested in Buyer, subject to transfer of the Real Property to
Buyer. The Title Policies shall show title vested in Buyer subject only to
Permitted Encumbrances (not including the lien of the Indenture and the Bond
Indentures, from which the Purchased Assets are to be released at or before
Closing). Seller shall cooperate with the Title Insurer and Buyer, to the
extent necessary, to clear any defects of title. The first sentence of this
paragraph shall be deemed to be satisfied either by (i) the issuance of the
Title Policies, subject only to Permitted Encumbrances, at Closing, or (ii) by
the Title Insurer's delivery at the Closing of written commitments or binders
(dated as of the Closing but insuring title as of the date title conveyance
documents are recorded), to issue the Title Policies, subject only to Permitted
Encumbrances, within a reasonable time after the Closing Date, subject to actual
transfer of the Real Property. If the Title Insurer is unwilling to issue any
such Title Policy, it shall be required to provide Buyer and Seller, in writing,
with notice setting forth the reason(s) for such unwillingness as soon as
practicable. Seller shall have the right to seek to cure any defect which is
the reason for such unwillingness, and to extend the Closing and the Termination
Date, if necessary, for a period of up to thirty (30) Business Days to provide
to Seller the opportunity to cure; and
(h) Without limiting the generality of Section 8.1(a) of this
Agreement, Buyer shall have received the necessary consents, approvals and
authorizations required to transfer, re-issue or modify Permits and
Environmental Permits as needed to enable Buyer to operate the Purchased Assets
at and after the Closing Date substantially consistent with Seller's historical
operation.
8.3 Conditions to Obligations of Seller. The obligation of the
-----------------------------------
Seller to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Buyer shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed on
or prior to the Closing Date;
(b) The representations and warranties of the Buyer set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made at and as of the
Closing Date;
55
(c) The Seller shall have received a certificate from an authorized
officer of the Buyer, dated the Closing Date, to the effect that, to the best of
such officer's knowledge, the conditions set forth in Sections 8.3(a) and (b)
hereof have been satisfied; and
(d) The Seller shall have received an opinion from Stoel Rives LLP
and/or Xxxxxx Xxxxxx & Xxxxxxx, counsel for the Buyer, dated the Closing Date
and satisfactory in form and substance to the Seller and its counsel,
substantially to the effect that:
(1) Each of NRG and Dynegy is a corporation organized, existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby; and the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action taken on the part of the
Buyer;
(2) this Agreement and the Ancillary Agreements have been
executed and delivered by the Buyer and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are obtained)
are valid and binding obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except that such enforcement thereof may be limited
by (A) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (B) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought;
(3) the execution, delivery and performance of this Agreement
and the Ancillary Agreements by the Buyer shall not constitute a violation of
the Certificate of Incorporation or Bylaws (or other similar governing
documents), as currently in effect, of the Buyer; and
(4) no declaration, filing or registration with, or notice to,
or authorization, consent or approval of any Governmental Authority is necessary
for the consummation by the Buyer of the Closing other than the Buyer Required
Regulatory Approvals, all of such Buyer Required Regulatory Approvals having
been obtained and being in full force and effect with such terms and conditions
as shall have been imposed by any applicable Governmental Authority.
As to any matter contained in such opinion or opinions which involve
the laws of any jurisdiction other than the federal laws of the United States
and the
56
States of Oregon and Nevada, such counsel may rely upon opinions of counsel
admitted to practices in such other jurisdictions. Any opinions relied upon by
such counsel as aforesaid shall be delivered together with the opinion of such
counsel. Such opinion may expressly rely as to matters of facts upon
certificates furnished by appropriate officers and directors of the Buyer and
its subsidiaries and by public officials; and
(e) The Buyer shall have executed and delivered, as of the Closing,
each of the Ancillary Agreements to be executed by the Buyer and all required
approvals and conditions relating to the Ancillary Agreements have been obtained
or satisfied and provided that the Buyer shall be satisfied that the obligations
assumed under each of the Water Supply Agreement and the Waste Water Treatment
Agreement are not inconsistent with Seller's historical operation of the
Purchased Assets as it relates to waste water and water treatment.
ARTICLE IX
----------
INDEMNIFICATION
---------------
9.1 Indemnification. (a) The Seller shall indemnify, defend and
---------------
hold harmless the Buyer from and against any and all claims, demands or suits
(by any Person), losses, liabilities, damages (including consequential or
special damages), obligations, payments, costs, Taxes and expenses (including,
without limitation, the costs and expenses of any and all actions, suits,
proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) to the extent the foregoing are not paid by insurance,
(collectively, "Indemnifiable Losses"), asserted against or suffered by the
Buyer relating to, resulting from or arising out of (i) any breach by the Seller
of any covenant or agreement of the Seller contained in this Agreement or (ii)
the Excluded Liabilities.
(b) The Buyer shall indemnify, defend and hold harmless the Seller
from and against any and all Indemnifiable Losses asserted against or suffered
by the Seller relating to, resulting from or arising out of (i) any breach by
the Buyer of any covenant or agreement of the Buyer contained in this Agreement
or the Ancillary Agreements or (ii) the Assumed Liabilities.
(c) Either the person required to provide indemnification under this
Agreement (the "Indemnifying Party") or the person entitled to receive
indemnification under this Agreement (the "Indemnitee") may assert any offset or
similar right in respect of its obligations under this Section 9.1 based upon
any actual or alleged breach of any covenant or agreement contained in this
Agreement or the Ancillary Agreements.
57
(d) Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages, costs
and expenses from insurers of such Indemnitee under applicable insurance
policies so as to reduce the amount of any Indemnifiable Loss hereunder. The
amount of any Indemnifiable Loss shall be reduced (i) to the extent that the
Indemnitee receives any insurance proceeds with respect to an Indemnifiable Loss
and (ii) to take into account any Tax or Income Tax benefit recognized by the
Indemnitee arising from the recognition of the Indemnifiable Loss, net of any
Tax or Income Tax detriment, and any payment actually received with respect to
an Indemnifiable Loss.
(e) The expiration, termination or extinguishment of any covenant,
agreement, representation or warranty shall not affect the parties' obligations
under this Section 9.1 if the Indemnitee provided the Indemnifying Party with
proper notice of the claim or event for which indemnification is sought prior to
such expiration, termination or extinguishment.
(f) The rights and remedies of the Seller and the Buyer under this
Article IX are exclusive and in lieu of any and all other rights and remedies
which the Seller and the Buyer may have under this Agreement or otherwise for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement or (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be. Without limiting
the foregoing, with respect to the Purchased Assets, the Buyer, for itself and
its Affiliates, does hereby irrevocably release, hold harmless and forever
discharge the Seller from any and all claims of any kind or character, whether
known or unknown, hidden or concealed, resulting from or arising out of or in
connection with Hazardous Substances or any Environmental Law, other than those
liabilities and obligations set forth in Section 2.4(c) hereof. In furtherance
of the foregoing, the Buyer, for itself and on behalf of its Affiliates, hereby
irrevocably waives any and all rights and benefits with respect to such claims
that it now has, or in the future may have conferred upon it by virtue of any
statute, regulation or common law principle which provides that a general
release does not extend to claims which a party does not know or suspect to
exist in its favor at the time of executing the release, if knowledge of such
claims would have materially affected such party's settlement with the obligor.
In this connection, the Buyer hereby acknowledges that it is aware that factual
matters now unknown to it may have given, or hereafter may give, rise to claims
that are presently unknown, unanticipated and unsuspected, and it further agrees
that this release has been negotiated and agreed upon in light of that
awareness, and the Buyer, for itself and on behalf of its Affiliates,
nevertheless hereby intends irrevocably to release the Seller from the claims
described in this Section 9.1(f).
58
9.2 Defense of Claims. (a) If any Indemnitee receives notice of the
-----------------
assertion of any claim or of the commencement of any claim, action, or
proceeding made or brought by any Person who is not a party to this Agreement or
any Affiliate of a party to this Agreement (a "Third Party Claim") with respect
to which indemnification is to be sought from an Indemnifying Party, the
Indemnitee shall give such Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than ten (10) calendar days after the
Indemnitee's receipt of notice of such Third Party Claim. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and shall
indicate the estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying Party shall
have the right to participate in or, by giving written notice to the Indemnitee,
to elect to assume the defense of any Third Party Claim at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel, and the
Indemnitee shall cooperate in good faith in such defense at such Indemnitee's
own expense.
(b) If within ten (10) calendar days after an Indemnitee provides
written notice to the Indemnifying Party of any Third Party Claim the Indemnitee
receives written notice from the Indemnifying Party that such Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 9.2(a) hereof, the Indemnifying Party shall not be
liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the Indemnifying
-------- -------
Party fails to take reasonable steps necessary to defend diligently such Third
Party Claim within twenty (20) calendar days after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed to
take such steps, the Indemnitee may assume its own defense, and the Indemnifying
Party shall be liable for all reasonable expenses thereof. Without the prior
written consent of the Indemnitee, the Indemnifying Party shall not enter into
any settlement of any Third Party Claim which would lead to liability or create
any financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is
made to settle a Third Party Claim without leading to liability or the creation
of a financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party shall
give written notice to the Indemnitee to that effect. If the Indemnitee fails
to consent to such firm offer within ten (10) calendar days after its receipt of
such notice, the Indemnitee may continue to contest or defend such Third Party
Claim and, in such event, the maximum liability of the Indemnifying Party as to
such Third Party Claim shall be the amount of such settlement offer, plus
reasonable costs and expenses paid or incurred by the Indemnitee up to the date
of such notice.
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(c) Any claim by an Indemnitee on account of an Indemnifiable Loss
which does not result from a Third Party Claim (a "Direct Claim") shall be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event not later than ten (10)
calendar days after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party shall have a period of thirty (30) calendar days within which
to respond to such Direct Claim. If the Indemnifying Party does not respond
within such thirty (30) calendar day period, the Indemnifying Party shall be
deemed to have accepted such claim. If the Indemnifying Party rejects such
claim, the Indemnitee shall be free to seek enforcement of its rights to
indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time subsequent
to the making of an indemnity payment in respect thereof, is reduced by
recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement or payment by or against any
other entity, the amount of such reduction, less any costs, expenses or premiums
incurred in connection therewith (together with interest thereon from the date
of payment thereof at the prime rate then in effect of The Chase Manhattan
Bank), shall promptly be repaid by the Indemnitee to the Indemnifying Party.
Upon making any indemnity payment, the Indemnifying Party shall, to the extent
of such indemnity payment, be subrogated to all rights of the Indemnitee against
any third party in respect of the Indemnifiable Loss to which the indemnity
payment relates; provided, however, that (i) the Indemnifying Party shall then
-------- -------
be in compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party against any
such third party on account of such indemnity payment are hereby made expressly
subordinated and subjected in right of payment to the Indemnitee's rights
against such third party. Without limiting the generality or effect of any other
provision hereof, each such Indemnitee and Indemnifying Party shall duly execute
upon request all instruments reasonably necessary to evidence and perfect the
foregoing subrogation and subordination rights. Nothing in this Section 9.2(d)
shall be construed to require any party hereto to obtain or maintain any
insurance coverage.
(e) A failure to give timely notice as provided in this Section 9.2
shall not affect the rights or obligations of any party hereunder except if, and
only to the extent that, as a result of such failure, the party which was
entitled to receive such notice was actually prejudiced as a result of such
failure.
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ARTICLE X
---------
TERMINATION AND ABANDONMENT
---------------------------
10.1 Termination. (a) This Agreement may be terminated at any time
-----------
prior to the Closing Date, by mutual written consent of the Buyer and the
Seller.
(b) This Agreement may be terminated by the Seller or the Buyer if
(i) the transactions contemplated hereby shall not have been consummated on or
before eighteen (18) months from the date of this Agreement (the "Termination
Date"); provided, however, that the right to terminate this Agreement under this
-------- -------
Section 10.1(b) shall not be available to either Seller or Buyer if its failure
to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing Date to occur on or before such date;
provided, further, that if on the Termination Date the conditions to the Closing
-------- -------
set forth in Section 8.1(c) shall not have been fulfilled but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Termination Date shall be the date which is twenty-four (24)
months from the date of this Agreement.
(c) This Agreement may be terminated by either the Seller or the
Buyer if (i) any Governmental Authority or regulatory body, the consent of which
is a condition to the obligations of the Seller and the Buyer to consummate the
transactions contemplated hereby, shall have determined not to grant its consent
and all appeals of such determination shall have been taken and have been
unsuccessful, or (ii) any court of competent jurisdiction in the United States
or any State shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby and such order, judgment or decree shall have become final and
nonappealable.
(d) This Agreement may be terminated by the Buyer, if there has been
a material violation or breach by the Seller of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the Buyer impossible and such violation or
breach has not been waived by the Buyer.
(e) This Agreement may be terminated by the Seller, if there has been
a material violation or breach by the Buyer of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the Seller impossible and such violation or
breach has not been waived by the Seller.
(f) This Agreement may be terminated by either the Seller or the
Buyer in accordance with the provisions of Sections 7.12(b) or (c) hereof.
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10.2 Procedure and Effect of Termination. In the event of termination
-----------------------------------
of this Agreement and abandonment of the transactions contemplated hereby by
either or both of the parties pursuant to Section 10.1 hereof, written notice
thereof shall forthwith be given by the terminating party to the other party and
this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
(a) such termination shall be the sole remedy of the parties hereto
with respect to breaches of any agreement, representation or warranty contained
in this Agreement and none of the parties hereto nor any of their respective
trustees, directors, officers or Affiliates, as the case may be, shall have any
liability or further obligation to the other party or any of their respective
trustees, directors, officers or Affiliates, as the case may be, pursuant to
this Agreement, except in each case as stated in this Section 10.2 and in
Sections 7.2(b), 7.3 and 7.7 hereof; and
(b) all filings, applications and other submissions made pursuant to
this Agreement, to the extent practicable, shall be withdrawn from the agency or
other person to which they were made.
ARTICLE XI
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MISCELLANEOUS PROVISIONS
------------------------
11.1 Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified or supplemented only by written agreement of
the Seller and the Buyer.
11.2 Waiver of Compliance; Consents. Except as otherwise provided in
------------------------------
this Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
11.3 No Survival of Representations and Warranties. Each and every
---------------------------------------------
representation and warranty contained in this Agreement and each and every
covenant contained in this Agreement (other than the covenants in Sections 2.5,
3.2, 3.3, 3.4, 7.1(d), 7.1(f), 7.1(g), 7.1(h), 7.1(i), 7.1(j), 7.1(k), 7.1(l)(i)
and 7.1(1)(ii), 7.2(b), 7.2(c), 7.3, 7.4, 7.5, 7.6(e), 7.7, 7.8, 7.9, 7.11,
7.13, 7.17(b) (which covenants shall survive for a period of one year or
otherwise in accordance with their terms), 9.1 and 9.2 hereof ) shall expire
with, and be terminated and extinguished by, (i) the
62
consummation of the sale of the Purchased Assets and the transfer of the Assumed
Liabilities pursuant to this Agreement and shall not survive the Closing Date,
or (ii) the termination of this Agreement pursuant to Section 10.1 hereof or
otherwise; and none of the Seller, the Buyer or any officer, director, trustee
or Affiliate of either of them shall be under any liability whatsoever with
respect to any such representation or warranty.
11.4 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally or by facsimile
transmission, telexed or mailed by overnight courier or registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice, provided that notices of a change of address shall be effective
only upon receipt thereof):
(a) If to the Seller, to:
Nevada Power Company
x/x Xxxxxx Xxxxxxx Xxxxxxxxx
0000 Xxxx Xxxx
Xxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
with copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to the Buyer, to:
NRG Energy, Inc.
Symphony Towers
Suite 2740
000 "X" Xxxxxx
Xxx Xxxxx, XX 00000-0000
Attention: Xxxxx Xxxxx, Esq.
Telecopy: (000) 000-0000
63
Dynegy Holdings Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
with copies to:
Stoel Rives LLP
000 XX Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: 000-000-0000
11.5 Assignment. This Agreement and all of the provisions hereof
----------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but, except as provided in Section
11.5, neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto, including by operation of law
without the prior written consent of the other party, nor is this Agreement
intended to confer upon any other Person except the parties hereto any rights or
remedies hereunder.
For purposes of this Agreement, subject to Section 7.13, the term
"Affiliate Assignee" shall refer to any direct or indirect subsidiary of Buyer
and any constituent partner or participant in Buyer (if Buyer is a partnership,
joint venture, consortium or other association or organization) to whom any of
Buyer's rights and obligations under this Agreement are assigned in compliance
with the requirements of this Section. For purposes of this Agreement,
"Financing Entity" shall mean any Person designated by Buyer to Seller as a
lessor in connection with any Off-Balance Sheet Lease Facility, and "Permitted
Assignee" shall mean any Affiliate Assignee or Financing Entity, as the case may
be. For purposes of this Agreement, "Off-Balance Sheet Lease Facility" shall
mean any long-term lease of the Purchased Assets, where the lease is accounted
for by Buyer on its financial statements, prepared in accordance with GAAP, as
an operating lease, whether or not such transaction is a leveraged lease (in
which the Financing Entity is the owner of the Purchased Assets for U.S. federal
income tax purposes), or a synthetic lease, tax ownership operating lease, tax
retention Operating lease or similar lease transaction where Buyer is treated as
owner of the leased property for U.S. federal income tax purposes.
Notwithstanding any contrary provisions contained in this Agreement, the parties
agree that, before and after the Closing, Buyer, in its sole discretion, may
assign any or all of its rights and obligations arising under this Agreement or
any Ancillary Agreement to one or more Permitted Assignees, provided that,
--------
unless Seller shall
64
agree to alternative arrangements in writing, no such assignment shall relieve
Buyer of any obligation or liability to Seller under this Agreement or under any
Ancillary Agreement, and provided further that, unless Seller shall agree to
-------- -------
alternative arrangements in writing, the following shall apply:
(a) Buyer shall provide Seller with prompt written notice of any such
assignment.
(b) No such assignment shall be effected if the making of the
assignment will result in Seller's or Buyer's inability to obtain any consent or
authorization reasonably required to consummate the transactions contemplated by
this Agreement or to avoid economic detriment to the Seller arising from the
consummation of such transactions.
(c) Irrespective of any such assignment or the identity of the party
or parties executing any Ancillary Agreements:
(i) Buyer shall remain jointly and severally liable to
Seller and to third parties with respect to any Assumed Liabilities
transferred to or undertaken by a Permitted Assignee, and shall remain
jointly and severally liable to Seller with respect to any other covenant,
obligation or liability to Seller under this Agreement or under an
Ancillary Agreement that is transferred to, or undertaken by, a Permitted
Assignee, including without limitation, the payment of all sums due to
Seller hereunder or under an Ancillary Agreement, it being understood that
all such covenants, obligations and liabilities shall constitute the direct
and primary obligation of Buyer to Seller (and to third parties in the case
of the Assumed Liabilities); and
(ii) Without limiting the generality of the foregoing, if
and to the extent that the application of any principle of law or of common
law would construe the retention by Buyer of the direct and primary
obligation to perform any and all obligations, liabilities or covenants
assigned to or assumed or undertaken by a Permitted Assignee to be a
guaranty by the Buyer of the Permitted Assignee's performance, then the
Buyer hereby irrevocably, absolutely and unconditionally guarantees to
Seller the full, prompt and faithful performance by such Permitted Assignee
of all covenants and obligations to be performed by such Permitted Assignee
under this Agreement and any Ancillary Agreement assigned to such Permitted
Assignee.
(d) Buyer further hereby agrees that a separate action or actions may
be brought and prosecuted against Buyer for any such covenant, obligation or
liability assigned to a Permitted Assignee, whether action is brought against
the pertinent Permitted Assignee or whether such Permitted Assignee is joined in
any
65
such action or actions (Buyer hereby waiving any right to require Seller to
proceed against a Permitted Assignee).
(e) Buyer hereby authorizes Seller, without notice and without
affecting Buyer's liability hereunder, from time to time to (i) renew,
compromise, extend, accelerate, or otherwise change the terms of any obligation
of a Permitted Assignee hereunder or under any Ancillary Agreement with the
agreement of such Permitted Assignee, (ii) take and hold security for the
obligations of any such Permitted Assignee and exchange, enforce, waive and
release any such security, and (iii) apply such security and direct the order or
manner of sale thereof as Seller in its discretion may determine.
(f) Buyer hereby further waives:
(i) Any defense that may arise by reason of the incapacity or
lack of authority of any Permitted Assignee;
(ii) Any defense based upon a statute or rule of law which
provides that the obligations of a surety must be neither larger in amount
nor in other respects more burdensome than those of the principal;
(iii) Any duty on the part of Seller to disclose to Buyer any
facts that Seller may now or hereafter know about a Permitted Assignee; and
(g) So long as Buyer has any obligation to Seller under this
Agreement or the Ancillary Agreements, as to any Affiliate Assignee (but not any
Financing Entity), any right to subrogation, reimbursement, exoneration or
contribution or any other rights that would result in Buyer being deemed a
creditor of a Permitted Assignee under the federal Bankruptcy Code or any other
law, in each case resulting from the existence or performance of obligations of
a Permitted Assignee hereunder or under any Ancillary Agreement.
11.6 Arbitration. Any dispute, controversy or claim arising out of or
-----------
relating to this agreement, or the breach, termination or validity hereof (a
"Dispute"), shall be finally settled by arbitration in accordance with the then-
prevailing Commercial Arbitration Rules of the American Arbitration Association,
as modified herein (the "Rules"). The place of arbitration shall be Nevada.
There shall be three arbitrators, of whom the Seller shall appoint one and of
whom the Buyer shall appoint one. The two arbitrators so appointed shall select
a third arbitrator who shall act as the chairman of the tribunal. If any
arbitrator is not appointed within the time limits provided herein or in the
Rules, such arbitrator shall be appointed by the American Arbitration
Association. The arbitral tribunal is not empowered to award damages in excess
of compensatory damages, and each party hereby irrevocably waives any
66
right to recover punitive, exemplary or similar damages with respect to any
dispute. Any arbitration proceedings, decision or award rendered hereunder and
the validity, effect and interpretation of this arbitration provision shall be
governed by the Federal Arbitration Act, 9 U.S.C. (S)(S) 1-16, and judgment upon
any award may be entered in any court of competent jurisdiction.
11.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Nevada (regardless of the
laws that might otherwise govern under applicable Nevada principles of conflicts
of law) as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
11.8 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.9 Interpretation. The article and section headings contained in
--------------
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.10 Entire Agreement. This Agreement, including the documents,
----------------
exhibits, schedules, certificates and instruments referred to herein, and the
Confidentiality Agreement embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this Agreement.
There are no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein or
therein. It is expressly acknowledged and agreed that there are no restrictions,
promises, representations, warranties, covenants or undertakings of the Seller
contained in any material made available to the Buyer pursuant to the terms of
the Confidentiality Agreement (including the Offering Memorandum, dated March
2000) as supplemented, or the correspondence relating to the divestiture of
Seller's generation assets previously made available to the Buyer by the Seller
and CSFB. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such transactions other than the
Confidentiality Agreement; (i) provided, however, that the paragraph in the
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Confidentiality Agreement entitled "Non-Disclosure of Interest in Power
Generation Assets" is, only with respect to the Purchased Assets, superceded by
Section 7.5 of this Agreement, and (ii) in the event of any conflict between
Section 7.2(b) of this Agreement and the Confidentiality Agreement, Section
7.2(b) shall control
11.11 Bulk Sales or Transfer Laws. The Buyer acknowledges that the
---------------------------
Seller shall not comply with the provision of any bulk sales or transfer laws of
67
any jurisdiction in connection with the transactions contemplated by this
Agreement. The Buyer hereby waives compliance by the Seller with the provisions
of the bulk sales or transfer laws of all applicable jurisdictions.
68
IN WITNESS WHEREOF, the Seller and the Buyer have caused this Asset
Sale Agreement for the Xxxxx Asset Bundle to be signed by their respective duly
authorized officers as of the date first above written.
NEVADA POWER COMPANY
By:___________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Sr. Vice President, General Counsel
And Corporate Secretary Title:
NRG ENERGY, INC.
By: ___________________________________
Name: Xxxxx X. Xxxxxxxxxxx
Title: Senior Vice President Title:
DYNEGY HOLDINGS INC.
By: ___________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Attorney-in-Fact
