Exhibit A
PURCHASE AND SALE AGREEMENT
by and between
Enron North America Corp.
and
Allegheny Energy Supply Company, L.L.C.
Dated November 13, 2000
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated
as of November 13, 2000, is by and between Enron North America
Corp., a Delaware corporation ("Seller"), and Allegheny Energy
Supply Company, L.L.C., a Delaware limited liability company
("Buyer"). Seller and Buyer are sometimes referred to herein
individually as a "Party" and collectively as the "Parties."
Recital
Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, all of the issued and outstanding member
interests (collectively, the "LLC Interests") of the limited
liability companies named in Exhibit A hereto, each a wholly
owned subsidiary of Seller (the "LLCs"), upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, the Parties agree as
follows:
Article 1
Certain Definitions
1.1 Certain Defined Terms. As used in this Agreement, the
following terms have the respective meanings set forth below or
set forth in the Sections referred to below:
"Action" means any action, suit, investigation, proceeding,
condemnation, or audit by or before any court or other
Governmental Authority or any arbitration proceeding.
"Adjusted Purchase Price" is defined in Section 3.1.
"Affected LLCs" is defined in Section 7.11.
"Affiliate" means, as to the Person specified, any Person
controlling, controlled by or under common control with such
specified Person. The concept of control, controlling or
controlled as used in the aforesaid context means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of another, whether
through the ownership of voting securities, by contract or
otherwise. No Person shall be deemed an Affiliate of any Person
by reason of the exercise or existence of rights, interests, or
remedies under this Agreement.
"Agreement" is defined in the preamble.
"Assignment and Assumption Agreement" means the Assignment
and Assumption Agreement attached hereto as Exhibit 9.2.
"Back-to-Back Guaranty" is defined in Section 7.13.
"Business" with respect to each of the LLCs means the
business and operations of such LLC related to such LLC's
Facility.
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"Business Day" means any day which is not a Saturday,
Sunday, or legal holiday recognized by the United States of
America.
"Buyer" is defined in the preamble.
"Buyer FERC Approvals" means (i) the approval of the FERC
under Section 203 of the Federal Power Act authorizing transfer
of the LLC Interests to Buyer, (ii) the approval of the FERC
under Section 205 of the Federal Power Act authorizing the rates
to be charged for the sale of electric energy by each of the
LLCs, and (iii) the certification by the FERC of the Facilities
as "exempt wholesale generators" under the Energy Policy Act of
1992 and applicable FERC regulations, all obtained in accordance
with the requirements of Section 7.9(c).
"Buyer Indemnified Parties" is defined in Section 11.1.
"Buyer Required Regulatory Approvals" means the SEC Approval
and the Buyer FERC Approvals.
"Casualty Loss Amount" is defined in Section 7.11.
"Closing" means the consummation of the transactions
contemplated by Article 9.
"Closing Date" means the first Business Day after the
conditions in Section 8.1 and Section 8.2 are either satisfied or
waived by the Party entitled to waive such conditions, or such
other date as may be mutually agreed to by Seller and Buyer.
"Closing Payment" is defined in Section 3.2.
"Closing Statement" is defined in Section 3.3.
"Closing Statement Arbitrator" is defined in Section 3.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" is defined in Section 5.2.
"Deductible Amount" means an amount equal to two percent
(2%) of the Purchase Price.
"Dispute" is defined in Section 13.3.
"Enron Marks" means the name "Enron" and other trademarks,
service marks, and trade names owned by Seller or its Affiliates.
"Environmental Laws" means all Laws, as existing as of the
date of this Agreement, relating to (i) the control of any
pollutant, or protection of the air, water, or land, (ii) solid,
gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation, and (iii) exposure to hazardous,
toxic or other harmful substances. "Environmental Laws" shall
include the Clean Air Act, 42 U.S.C. 7401 et seq., the Resource
Conservation Recovery Act, 42 U.S.C. 6901 et seq., the Federal
Water Pollution Control Act, 33 U.S.C. 1251 et seq., the Safe
Drinking Water Act, 42 U.S.C. 300f et seq., and the
Comprehensive Environmental Response, Compensation, and Liability
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Act, as amended by the Superfund Amendments and Reauthorization
Act, 42 U.S.C. 9601 et seq.
"Environmental Liabilities" means any and all liabilities,
claims, demands, costs, damages, losses, settlements, expenses,
penalties, fines, taxes, interest, attorneys' fees, court costs,
and other costs of suit (i) incurred or imposed (a) pursuant to
any order, notice of responsibility, directive, injunction,
judgment, or similar act (including settlements) by any
Governmental Authority to the extent arising out of or under
Environmental Laws or (b) pursuant to any claim or cause of
action by a Governmental Authority or other third Person for
personal injury, property damage, damage to natural resources, or
remediation or response costs to the extent arising out of or
attributable to any violation of, or any remedial obligation
under, any Environmental Law, or (ii) otherwise arising under or
related to Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
"Estimated Adjusted Purchase Price" is defined in
Section 3.3.
"Excluded Assets" is defined in Section 7.12.
"Facility" with respect to each of the LLCs, means the
facility identified for such LLC in Exhibit A, and in each case
all of the assets related thereto.
"FERC" means the Federal Energy Regulatory Commission.
"Final Closing Statement" is defined in Section 3.4.
"Final Settlement Date" is defined in Section 3.4.
"GAAP" means United States generally accepted accounting
principles as in effect on the date of this Agreement.
"Good Operating Practices" means, with respect to the
Facilities, the practices, methods, and acts generally engaged in
or approved by a significant portion of the independent electric
power industry in the United States for similarly situated
facilities in the United States during a particular time period,
or any of such practices, methods, and acts, which, in the
exercise of reasonable judgment in light of the facts known or
that reasonably should be known at the time a decision is made,
would be expected to accomplish the desired result in a manner
consistent with law, regulation, reliability, safety,
environmental protection, economy and expedition, and taking into
consideration the requirements of this Agreement, the Project
Documents, the Transferred Contracts, and the other contracts and
agreements affecting the operation of the Facilities. Good
Operating Practices are not intended to be limited to the optimum
practices, methods or acts, to the exclusion of all others, but
rather to include a spectrum of possible practices, methods, or
acts generally acceptable in the region during the relevant
period in light of the circumstances.
"Governmental Authority" means (i) the United States of
America, (ii) any state, county, municipality, or other
governmental subdivision within the United States of America, and
(iii) any court or any governmental department, commission,
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board, bureau, agency, or other instrumentality of the United
States of America or of any state, county, municipality, or other
governmental subdivision within the United States of America.
"Guarantees" means any and all obligations relating to the
guarantees, letters of credit, bonds, and other credit assurances
of a comparable nature of Seller or any of its Affiliates (other
than the LLCs) for the benefit of any LLC and listed or described
on Schedule 7.13.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations adopted pursuant
thereto.
"Indebtedness" means: (a) all obligations on account of
money borrowed by, or credit extended to or on behalf of, or for
or on account of deposits with or advances to, Buyer; (b) all
obligations of Buyer evidenced by bonds, debentures, notes or
similar instruments or short-term debt, evidenced by commercial
paper or similar instruments; (c) all obligations of Buyer for
the deferred purchase price of property or services; (d) all
obligations secured by a lien on property owned by Buyer (whether
or not assumed) and all obligations of Buyer under capitalized or
synthetic leases (without regard to any limitation of the rights
and remedies of the holder of such lien or the lessor under such
capitalized or synthetic lease to repossession or sale of such
property); (e) the face amount of all letters of credit issued
for the account of Buyer and, without duplication, the
unreimbursed amount of all drafts drawn thereunder, and all other
obligations of Buyer associated with such letters of credit or
draws thereon; provided that Indebtedness shall not include
obligations in respect of undrawn letters of credit securing
current trade payables or performance obligations incurred in the
ordinary course of business other than in connection with
Indebtedness described in clauses (a) through (d) and (f) and (g)
of this definition; (f) all obligations of Buyer in respect of
acceptances or similar obligations issued for the account of
Buyer; (g) all obligations of Buyer under any interest rate or
currency protection agreement, interest rate or currency future,
interest rate or currency option, interest rate or currency swap
or cap or other interest rate or currency hedge agreement; and
(h) without duplication, all contingent liabilities, provided
that Indebtedness shall not include trade payables and accrued
expenses relating to employees, in each case in the ordinary
course of business.
"Indemnified Party" is defined in Section 11.4.
"Indemnifying Party" is defined in Section 11.4.
"Interconnection Agreement" is defined in Section 3.1.
"Interest Rate" means a rate of interest equal to the lesser
of (i) the LIBOR Rate or (ii) the maximum rate of interest from
time to time allowed by law.
"Knowledge" means the actual knowledge of any fact,
circumstance, or condition, after reasonable investigation and
inquiry, by the chief executive officer, the chief financial
officer, chief operating officer, or the chief accounting officer
of the Party involved and, in the case of Seller, the general
manager of each Facility.
"Law" means any applicable statute, law (including common
law), ordinance, regulation, rule, ruling, order, writ,
injunction, decree, or other official act of or by any
Governmental Authority.
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"Leases" is defined in Section 4.1(t).
"LIBOR Rate" means, for each calendar month, (i) the rate
per annum (rounded upward, if not an integral multiple of 1/100
of 1%, to the nearest 1/100 of 1% per annum) appearing on
Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in United States dollars at
approximately 11:00 a.m. (London time) two Business Days before
the first day of such calendar month for a term comparable
thereto; (ii) if for any reason the rate specified in clause (i)
of this definition does not so appear on Telerate Page 3750 (or
any successor page), the rate per annum (rounded upward, if not
an integral multiple of 1/100 of 1%, to the nearest 1/100 of 1%
per annum) appearing on Reuters Screen LIBO page (or any
successor page) as the London interbank offered rate for deposits
in United States dollars at approximately 11:00 a.m. (London
time) two Business Days before the first day of such calendar
month for a term comparable thereto; provided, however, if more
than one rate is specified on Reuters Screen LIBO page (or any
successor page), the applicable rate shall be the arithmetic mean
of all such rates; and (iii) if the rate specified in clause (i)
of this definition does not so appear on Telerate Page 3750 (or
any successor page) and if no rate specified in clause (ii) of
this definition so appears on Reuters Screen LIBO page (or any
successor page), the interest rate per annum (rounded upward to
the nearest whole multiple of 1/16 of 1% per annum if such rate
is not such a multiple) equal to the rate per annum at which
deposits in United States dollars are offered by the principal
office of Citibank, N.A. in London, England to prime banks in the
London interbank market at 11:00 A.M. (London time) two Business
Days before the first day of such calendar month.
"Lien" means any lien, security interest, charge, claim,
mortgage, deed of trust, option, warrant, purchase right, lease,
or other encumbrance.
"LLC Interests" is defined in the Recital.
"LLCs" is defined in the Recital.
"Losses" means any and all claims, liabilities, losses,
causes of action, fines, penalties, litigation, lawsuits,
administrative proceedings, administrative investigations, costs,
and expenses, including reasonable attorneys' fees, court costs,
and other costs of suit.
"Material Adverse Effect" means, with respect to the LLCs, a
material adverse effect on the business, assets, liabilities,
financial condition, or results of operations of the LLCs, taken
as a whole, excluding any effect resulting from any change in
economic, industry, or market conditions (whether general or
regional in nature or limited to any area where any of the
Facilities are located) or from any change in Law or regulatory
policy.
"Material Casualty Loss" is defined in Section 7.11.
"Notice of Disagreement" is defined in Section 3.4.
"Other Contracts" means the contracts and agreements to
which any of the LLCs is a party or by which any of the LLCs or
its Facility is bound, other than the Project Documents, that
have been made available to Buyer on DealBench, the online data
room operated by an Affiliate of Seller for the transactions
contemplated under this Agreement.
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"Permits" is defined in Section 4.1(u).
"Person" means any Governmental Authority or any individual,
firm, partnership, corporation, limited liability company, joint
venture, trust, unincorporated organization or other entity or
organization.
"Personal Property" is defined in Section 4.1(r).
"Project Documents" is defined in Section 4.1(m).
"PUHCA" means the Public Utility Holding Company Act of 1935.
"Purchase Price" is defined in Section 3.1.
"Real Property" is defined in Section 4.1(s).
"Records" means any and all of the books, records,
contracts, agreements and files of the LLCs existing on the
Closing Date and all increases and additions thereto after the
Closing Date, including computer records and electronic copies of
such information (but excluding electronic mail and other
computer based communications), whether maintained by Seller, the
LLCs, or Buyer or, in each case, its Affiliate.
"Schedules" means Seller's disclosure schedules attached to
this Agreement for each LLC and each reference to a particular
schedule in this Agreement refers to that schedule for each of
the LLCs.
"SEC" means the Securities and Exchange Commission.
"SEC Approval" means the approval of the SEC under PUHCA
needed for Buyer to finance the purchase of the LLC Interests
hereunder, including authority under Sections 6 and 7 of PUHCA
for Allegheny Energy, Inc., Buyer's parent company, to issue and
sell equity securities in an amount not to exceed $1,000,000,000,
which approval shall be obtained by Buyer in accordance with the
requirements of Section 7.9(c).
"SEC Termination Fee" means an amount equal to four percent
(4%) of Purchase Price.
"Securities Act" is defined in Section 4.2(j).
"Seller" is defined in the preamble.
"Seller FERC Approvals" means the approvals required by
Seller from FERC to consummate the transactions contemplated by
this Agreement.
"Seller Indemnified Parties" is defined in Section 11.2.
"Seller Required Regulatory Approvals" means the Seller FERC
Approvals and the consents and approvals described in
Schedule 4.1(h).
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"Tax" or "Taxes" means any and all taxes, including any
interest, penalties, or other additions to tax that may become
payable in respect thereof, imposed by any federal, state, local,
or foreign government or any agency or political subdivision of
any such government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits taxes,
payroll and employee withholding taxes, unemployment insurance
taxes, social security taxes, severance taxes, license charges,
taxes on stock, sales and use taxes, ad valorem taxes, excise
taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp
taxes, environmental taxes, transfer taxes, workers'
compensation, and other obligations of the same or of a similar
nature to any of the foregoing.
"Tax Proceeding" is defined in Section 6.5.
"Tax Return" means any and all returns, reports,
declarations, statements, bills, schedules, claims for refund, or
written information of or with respect to any Tax which is
required to be supplied to any taxing authority, including any
schedule or attachment thereto, and including any amendment
thereof.
"Transfer Taxes" means all transfer Taxes (excluding Taxes
measured by net income), including without limitation sales, use,
excise (including excise Taxes on petroleum, products of
petroleum, petrochemicals and other taxable substances), stock,
stamp, documentary, filing, recording, permit, license,
authorization and similar Taxes, filing fees and similar charges.
"Transferred Contracts" is defined in Section 7.1(d).
1.2 References, Gender, Number. All references in this
Agreement to an "Article," "Section" or "subsection" shall be to
an Article, Section, or subsection of this Agreement, unless the
context requires otherwise. Unless the context otherwise
requires, the words "this Agreement," "hereof," "hereunder,"
"herein," "hereby" or words of similar import shall refer to this
Agreement as a whole and not to a particular Article, Section,
subsection, clause or other subdivision hereof. Whenever the
context requires, the words used herein shall include the
masculine, feminine and neuter gender, and the singular and the
plural.
Article 2
Purchase and Sale
On and subject to the terms and conditions of this
Agreement, Seller agrees to sell and convey to Buyer, and Buyer
agrees to purchase and receive from Seller, all of the LLC
Interests.
Article 3
Purchase Price and Payment
3.1 Purchase Price. The purchase price for the sale and
conveyance of the LLC Interests to Buyer is One Billion Twenty-
Eight Million and No/100 U.S. Dollars ($1,028,000,000.00) (the
"Purchase Price"), subject to adjustment in accordance with the
terms of this Agreement. The "Adjusted Purchase Price" shall be
(i) the Purchase Price adjusted upward by (ii) the amounts paid
as of Closing by Gleason Power I L.L.C. to the Tennessee Valley
Authority under the Interconnection Agreement (the
"Interconnection Agreement") between the Tennessee Valley
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Authority and Gleason Power I L.L.C. dated March 14, 2000
pursuant to Article 4 of the Interconnection Agreement for the
costs of the Shelby Upgrade (as defined in the Interconnection
Agreement) less any transmission credits used by Gleason Power I
L.L.C. prior to the Closing Date.
3.2 Payment. The "Closing Payment" shall be an amount equal to
the Estimated Adjusted Purchase Price. At the Closing, Buyer
shall wire transfer the Closing Payment in immediately available
funds to the account or accounts specified by Seller to Buyer on
or prior to the Business Day immediately preceding the Closing
Date.
3.3 Closing Statement. Not later than three (3) Business Days
prior to the Closing Date, Seller shall prepare and deliver to
Buyer a statement (the "Closing Statement") of the estimated
purchase price adjustments and the estimated Adjusted Purchase
Price (the "Estimated Adjusted Purchase Price"). As set forth in
Section 3.2, the Closing Payment payable by Buyer at Closing
shall be based upon the Estimated Adjusted Purchase Price.
3.4 Post-Closing Adjustment to the Purchase Price.
(a) Revised Closing Statement. On or before the date that is
sixty (60) days after the Closing Date, Seller shall prepare and
deliver to Buyer a revised Closing Statement setting forth the
actual purchase price adjustments. To the extent reasonably
required by Seller, Buyer shall assist in the preparation of the
revised Closing Statement. Seller shall provide to Buyer such
data and information as Buyer may reasonably request supporting
the amounts reflected on the revised Closing Statement. The
revised Closing Statement shall become final and binding upon the
Parties on the date (the "Final Settlement Date") that is thirty
(30) days following receipt thereof by Buyer unless Buyer gives
written notice of its disagreement ("Notice of Disagreement") to
Seller prior to such date. Any Notice of Disagreement shall
specify in detail the dollar amount, nature, and basis of any
disagreement so asserted. If a Notice of Disagreement is
received by Seller in a timely manner, then the Closing Statement
(as revised in accordance with paragraph (b) or (c) below) shall
become final and binding on the Parties on, and the Final
Settlement Date shall be, the earlier of (i) the date upon which
Seller and Buyer agree in writing with respect to all matters
specified in the Notice of Disagreement or (ii) the date upon
which the Final Closing Statement is issued by the Closing
Statement Arbitrator.
(b) Final Closing Statement. During the thirty (30) days
following the date upon which Seller received the Notice of
Disagreement, Seller and Buyer shall attempt in good faith to
resolve in writing any differences that they may have with
respect to all matters specified in the Notice of Disagreement.
If at the end of such thirty (30) day period (or earlier by
mutual agreement to arbitrate), Buyer and Seller have not reached
agreement on such matters, the matters that remain in dispute may
be submitted to an arbitrator (the "Closing Statement
Arbitrator") by either Party for review and resolution. The
Closing Statement Arbitrator shall be a nationally recognized
independent public accounting firm as shall be agreed upon by
Buyer and Seller in writing. The hearing date will be scheduled
by the Closing Statement Arbitrator as soon as reasonably
practicable, and shall be conducted on a confidential basis.
Each Party shall, not later than seven days prior to the hearing
date set by the Closing Statement Arbitrator, submit a brief with
dollar figures for settlement of the disputes as to the amount of
the Adjusted Purchase Price (together with a proposed Closing
Statement that reflects such figures). The figures submitted
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need not be the figures discussed during prior conversations.
The Closing Statement Arbitrator shall render a decision
resolving the matters in dispute (which decision shall include a
written statement of findings and conclusions) within three
Business Days after the conclusion of the hearing, unless the
Parties reach agreement prior thereto and withdraw the dispute
from arbitration. The Closing Statement Arbitrator shall provide
to the Parties explanations in writing of the reasons for its
decisions regarding the Adjusted Purchase Price and shall issue
the Final Closing Statement reflecting such decisions. The
decision of the Closing Statement Arbitrator shall be final and
binding on the Parties. The cost of any arbitration (including
the fees and expenses of the Closing Statement Arbitrator)
pursuant to this Section 3.4(b) shall be borne equally by Buyer
and Seller. The fees and disbursements of Seller's independent
auditors incurred in connection with the procedures performed
with respect to the Closing Statement shall be borne by Seller
and the fees and disbursements of Buyer's independent auditors
incurred in connection with their preparation of the Notice of
Disagreement shall be borne by Buyer. As used in this Agreement,
the term "Final Closing Statement" shall mean the revised Closing
Statement described in Section 3.4(a), as prepared by Seller and
as may be subsequently adjusted to reflect any subsequent written
agreement between the Parties with respect thereto, or if
submitted to the Closing Statement Arbitrator, the Closing
Statement issued by the Closing Statement Arbitrator.
(c) Final Settlement. If the amount of the Adjusted Purchase
Price as set forth on the Final Closing Statement exceeds the
amount of the Estimated Adjusted Purchase Price, then Buyer shall
pay to Seller, within five Business Days after the Final
Settlement Date, the amount by which the Adjusted Purchase Price
as set forth on the Final Closing Statement exceeds the amount of
the Estimated Adjusted Purchase Price, together with interest on
such excess amount from the Closing Date until paid at the
Interest Rate. If the amount of the Adjusted Purchase Price as
set forth on the Final Closing Statement is less than the amount
of the Estimated Adjusted Purchase Price, then Seller shall pay
to Buyer, within five (5) Business Days after the Final
Settlement Date, the amount by which the Adjusted Purchase Price
as set forth on the Final Closing Statement is less than the
amount of the Estimated Adjusted Purchase Price, together with
interest on such deficiency amount from the Closing Date until
paid at the Interest Rate. Any post-Closing payment made
pursuant to this Section 3.4(c) shall be made by means of a wire
transfer of immediately available funds to a bank account
designated by the Party receiving the funds.
3.5 Allocation of Purchase Price. The Parties shall use their
reasonable efforts to agree in good faith upon an allocation of
the Adjusted Purchase Price consistent with Section 1060 of the
Code and the Treasury regulations thereunder within sixty (60)
days of the Closing Date. If the Parties agree on a mutually
satisfactory allocation by the Closing Date, the Parties shall
report this transaction for federal income tax purposes in
accordance with the allocation so agreed upon.
Article 4
Representations and Warranties
4.1 Representations and Warranties of Seller. As of the date of
this Agreement, Seller represents and warrants to Buyer as
follows:
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(a) Organization and Good Standing. Seller is a corporation
duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Each of the LLCs is a limited
liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
(b) Qualification of the LLCs. Each of the LLCs has the
requisite limited liability company power to carry on its
business as now being conducted. Each of the LLCs is duly
qualified to do business, and is in good standing, in each
jurisdiction in which the property owned, leased, or operated by
it or the nature of its business make such qualification
necessary, except where the failure to so qualify and be in good
standing is not likely to have a Material Adverse Effect.
(c) Authority. Seller has all requisite corporate power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder. The execution, delivery, and
performance of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all requisite
corporate action on the part of Seller.
(d) Enforceability. This Agreement has been duly and validly
executed and delivered by Seller and constitutes a valid and
binding agreement of Seller enforceable against it in accordance
with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws of general
application from time to time in effect that affect creditors'
rights generally, (ii) general principles of equity, and
(iii) the power of a court to deny enforcement of remedies
generally based upon public policy.
(e) LLC Interests. Seller holds of record and owns beneficially
the LLC Interests free and clear of any Liens (except as may be
created by this Agreement and except for any restrictions on
sales of securities under applicable securities laws). Seller is
not a party to any option, warrant, purchase right, or other
contract or commitment (other than this Agreement) that would
require Seller to sell, transfer, or otherwise dispose of any LLC
Interests. Seller is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of
any LLC Interests.
(f) Capitalization. The LLC Interests constitute all of the
issued and outstanding membership interests of the LLCs. All LLC
Interests have been duly authorized and are validly issued, fully
paid, and nonassessable and were not issued in violation of the
preemptive rights of any Person. None of the LLCs has
outstanding any convertible security, call, preemptive right,
option, warrant, purchase right, or other contract or commitment
that would, directly or indirectly, require such LLC to sell,
issue, or otherwise dispose of any equity interest in any of the
LLCs.
(g) No Violation or Breach. Except for any exceptions set forth
in Schedule 4.1(g), neither the execution and delivery of this
Agreement nor the consummation of the transactions and
performance of the terms and conditions hereof by Seller will
(i) result in a violation or breach of any provision of the
certificate of incorporation, by-laws, or other similar governing
documents of Seller or the limited liability company agreement or
other similar governing document of the LLCs or any agreement,
indenture or other instrument under which either Seller or any of
the LLCs is bound, other than such breaches or violations of
agreements, indentures, or other instruments that would not,
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individually or in the aggregate, have a Material Adverse Effect
or (ii) violate any Law applicable to Seller or the LLCs or the
Facilities other than such violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
(h) Consents. No consent, approval, authorization or permit of,
or filing with or notification to, any Person is required for or
in connection with the execution and delivery of this Agreement
by Seller or for or in connection with the consummation of the
transactions and performance of the terms and conditions
contemplated hereby by Seller, except for (i) the Seller Required
Regulatory Approvals, (ii) requirements under the HSR Act, and
(iii) consents, approvals, authorizations, permits, filings, or
notices that, if not obtained or made, would not, individually or
in the aggregate, have a Material Adverse Effect.
(i) Actions. Except as set forth on Schedule 4.1(i), there is
no Action pending or, to Seller's Knowledge, threatened against
any of the LLCs or the Facilities, except for Actions that would
not, individually or in the aggregate, have a Material Adverse
Effect.
(j) Compliance With Laws. Except as set forth on
Schedule 4.1(j), no uncured violation of any Law by the LLCs or
by Seller (which could reasonably be expected to relate to any of
the Facilities or any of the LLCs) exists, other than violations
of Law which could not be reasonably expected, individually or in
the aggregate, to have a Material Adverse Effect. Seller is not
making any representation or warranty in the preceding sentence
with respect to any Environmental Law, any Tax Law, or any
employee benefit plans or arrangements, and such matters are
addressed in Sections 4.1(n), (o), and (p).
(k) Brokerage Fees and Commissions. Neither Seller nor any
Affiliate of Seller has incurred any obligation or entered into
any agreement for any investment banking, brokerage, or finder's
fee or commission in respect of the transactions contemplated by
this Agreement for which Buyer or any of the LLCs shall incur any
liability. Seller has engaged Credit Suisse First Boston in
connection with the transactions contemplated by this Agreement
and agrees to be responsible for any and all fees which are due
and payable pursuant to the terms of such engagement.
(l) Bankruptcy. There are no bankruptcy, reorganization, or
arrangement proceedings pending against, being contemplated by,
or, to the Knowledge of Seller, threatened against Seller or any
of the LLCs.
(m) Project Documents.
(i) Set forth in Part I of Schedule 4.1(m) is a list of the
following agreements and contracts to which any of the LLCs is a
party or by which any of the LLCs or its Facility is bound (the
"Project Documents"):
(A) gas pipeline interconnection agreements, gas supply
agreements, gas purchase and sale agreements, and gas
transportation agreements;
(B) power purchase agreements, electricity transmission
agreements, and electricity interconnection agreements;
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(C) swap, exchange, commodity option or hedging agreements;
(D) operating and maintenance agreements;
(E) equipment purchase and sale contracts and construction
contracts;
(F) any contract (i) requiring known or liquidated expenditures
or payments by any of the LLCs in excess of $100,000 in any
calendar year or (ii) that cannot be terminated without penalty
by the LLC that is a party to such contract upon one hundred
eighty (180) days' notice or less;
(G) any pending sale or lease of real or personal property of
any of the LLCs (other than sales of electric energy in the
ordinary course of business) in excess of $100,000;
(H) any contract that contains a covenant not to compete
applicable to any LLC; and
(I) any amendment relating to any of the foregoing.
(ii) Except as set forth in Part II of Schedule 4.1(m), to
Seller's Knowledge, none of the LLCs is, in any material respect,
in breach of or in default under, and no event has occurred and
is continuing which would constitute a material default by any of
the LLCs under, any material provision of any Project Document
and none of the LLCs has received written notice from any other
party to any Project Document that such LLC is in breach of any
Project Document which has not been remedied and, to Seller's
Knowledge, no such other Party is, in any material respect, in
breach of or default under any Project Document.
(iii) True, correct, and complete copies of the Project
Documents and the Other Contracts have been made available to
Buyer, except to the extent certain provisions have been redacted
by Seller.
(n) Environmental Matters. This Section 4.1(n) shall constitute
the sole representations of Seller with respect to environmental
matters. Except as set forth in Schedule 4.1(n), or as would
not, individually or in the aggregate, have a Material Adverse
Effect:
(i) to Seller's Knowledge, there is no uncured violation of any
Environmental Law by any LLC at its Facility that would result in
any remediation obligations of such LLC under any Environmental
Law;
(ii) no Lien has been imposed on any Facility by any Governmental
Authority in connection with any violation of or noncompliance
with Environmental Laws;
(iii) Seller and the LLCs have all permits, licenses, and
other authorizations required to own and operate each Facility in
compliance with Environmental Laws and provided complete and
accurate information for such permits, licenses, and other
authorizations;
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(iv) none of the LLCs or the Facilities is (A) subject to any
outstanding consent decree, compliance order, or administrative
order, (B) in receipt of written notice under the citizen suit
provision of any Environmental Law, (C) in receipt of any written
request for information, notice, complaint, or claim with respect
to any violation of any Environmental Law relating to any
Facility, and (D) subject to, or to Seller's Knowledge,
threatened with any governmental or citizen enforcement action
under any Environmental Law with respect to any Facility; and
(v) to Seller's Knowledge, there has been no exposure of any
Person or property to any pollutant or hazardous or toxic
substance in connection with the operation of any Facility that
could reasonably be expected to result in any material
Environmental Liabilities.
(o) Tax Matters. With respect to each of the LLCs, except as
set forth in Schedule 4.1(o) or as would not, individually or in
the aggregate, have a Material Adverse Effect:
(i) all Tax Returns required to be filed by or with respect to
such LLC (or its assets) have been or will be timely filed with
the appropriate taxing authorities in all jurisdictions in which
such Tax Returns are required to be filed;
(ii) such Tax Returns were, when filed, or if not yet filed are
or will be true, complete, and correct in all material respects,
and all Taxes required to be reported on such Tax Returns have
been or will be timely paid;
(iii) neither Seller nor any such LLC has extended or waived
the application of any statute of limitations of any jurisdiction
regarding the assessment or collection of any Tax pertaining to
any LLC;
(iv) there are no audits, claims, assessments, levies,
administrative proceedings, or lawsuits pending, or to the
Knowledge of Seller, threatened against such LLC by any taxing
authority;
(v) no election has been made by or on behalf of such LLC to be
classified as an association taxable as a corporation for federal
or state income tax purposes, nor has either Seller or such LLC
taken any action that would cause such LLC to be treated as
either an association taxable as a corporation or as a publicly
traded partnership, each for federal, state, or local income or
franchise Tax purposes;
(vi) there are no Liens for Taxes (other than for current Taxes
not yet due or payable) upon the assets of any LLC;
(vii) none of the assets of any of the LLCs directly or
indirectly secures any debt the interest on which is tax exempt
under Section 103(a) of the Code;
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(viii) Seller is not a person other than a United States
person within the meaning of the Code and the transactions
contemplated herein are not subject to the tax withholding
provisions of Chapter 3 of the Code;
(ix) no claim has ever been made by an authority in a
jurisdiction where a Tax Return is not filed by, or concerning,
such LLC that such LLC is or may be subject to taxation in that
jurisdiction; and
(x) Seller has delivered, or will deliver within ten (10)
Business Days after the date hereof, to Buyer correct and
complete copies of all federal, state and local Tax Returns of
the LLCs (excluding cost data related to ad valorem and sales and
use Tax Returns), examination reports and statements of
deficiencies assessed against or agreed to by Seller and each
LLC.
Notwithstanding anything in this Section 4.1(o) to the contrary,
no representation or warranty is made with respect to the amount,
availability, expiration, limitation, or reduction of any net
operating losses of any of the LLCs.
(p) Employee Matters. Except as set forth in Schedule 4.1(p),
none of the LLCs has, or on the Closing Date will have, any
employees. The employees of one of Seller's Affiliates are
employed in the Business of the LLCs. None of Seller, its
Affiliates, or any of the LLCs is a party to or is bound by any
collective bargaining agreement with respect to any employees
assigned to the Business of the LLCs, and to the Knowledge of
Seller, no present union organizing efforts are underway with
respect to any such employees and no claim has been made by any
union as to the representation of such employees. None of the
LLCs has ever maintained, sponsored, or been a party to, or
otherwise has any obligations or liability relating to, any
employee benefit plan as defined in Section 3(3) of ERISA. No
employee assigned to the Businesses of the LLCs is a leased
employee within Section 414(n) of the Code.
(q) No Subsidiaries. None of the LLCs owns or holds, directly
or indirectly, any equity or other ownership interest in any
corporations, limited liability companies, partnerships, joint
ventures, or other entities (for purposes of any applicable Law
and for federal income tax purposes).
(r) Personal Property. To Seller's Knowledge, Schedule 4.1(r)
lists each item of personal property with a value of $5,000 or
greater and owned in whole or in part by any of the LLCs (the
"Personal Property"). Each of the LLCs has good and valid title
to its Personal Property, free and clear of all Liens, except:
(i) Liens arising by operation of Law for amounts not yet due and
payable; (ii) the rights of customers, suppliers, and
subcontractors in the ordinary course of business under general
principles of commercial law; and (iii) as described in
Schedule 4.1(r).
(s) Real Property. To Seller's Knowledge, Schedule 4.1(s) lists
of all material real property (other than the Leases) owned in
whole or in part by each of the LLCs (the "Real Property"). To
Seller's Knowledge, the Real Property is owned (or partially
owned) of record free and clear of all Liens, except: (i) as set
forth on Schedule 4.1(s); (ii) all matters that are disclosed in
the title policy (or the title commitment to the extent that a
title policy has not yet been issued) and survey for the burdened
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Real Property (copies of which have been made available to
Buyer); (iii) Liens arising by operation of Law for Taxes not yet
due and payable; (iv) statutory Liens (including materialmens',
mechanic's, repairman's, landlord's, and other similar Liens)
arising in the ordinary course of business; (v) imperfections or
irregularities of title and other Liens that would not,
individually or in the aggregate, have a Material Adverse Effect;
and (vi) zoning, planning, and other limitations and restrictions
of record. True and correct copies of each deed and lease
pursuant to which Seller acquired or leased the Real Property,
together with the title insurance policies (or the title
commitment to the extent that a title policy has not yet been
issued) and surveys related thereto, have been made available to
Buyer.
(t) Leases. Schedule 4.1(t) lists all material real property
leases (the "Leases") to which any of the LLCs is a party and of
which any real property leased by any such LLC is the subject
other than real property leases for which the aggregate annual
rent is less than $50,000 and a list of all leases of personal
property other than personal property leases for which the annual
rent is less than $50,000. During the twelve (12) months prior
to the date of this Agreement, such LLC has not received any
notice of default under any such lease that would reasonably be
expected to result in a Material Adverse Effect. No event has
occurred which with notice or passage of time would constitute a
default under the Leases by any LLC, or to Seller's Knowledge, by
any other party to the Leases, except for such defaults that
would not reasonably be expected to, individually or in the
aggregate, result in a Material Adverse Effect.
(u) Permits. Except as set forth on Schedule 4.1(u), each of
the LLCs has all material permits, franchises, approvals, or
other authorizations ("Permits") of Governmental Authorities
required to conduct its Business as currently conducted. Each
Permit is in full force and effect, such LLC is in compliance in
all material respects with all its obligations with respect
thereto, and, to the Knowledge of Seller, no event has occurred
and is continuing which permits, or with or without the giving of
notice or the passage of time or both would permit, the
revocation or termination of any Permit.
(v) Condition of Facility. All (i) equipment included in the
Personal Property (other than spares and other equipment not
currently in service) and (ii) all buildings, structures, and
fixtures comprising each Facility are in good operating condition
and repair and have been maintained by the LLC in accordance with
Good Operating Practices, except for (A) ordinary wear and tear,
(B) matters that are not likely to, individually or in the
aggregate, have a Material Adverse Effect, and (C) matters
described in Schedule 4.1(v).
(w) No Bank Accounts or Powers of Attorney. None of the LLCs
has an account with a bank or other financial institution. None
of the LLCs has any outstanding powers of attorney.
(x) Sole Purpose. Each of the LLCs that owns a Facility has not
conducted, and is not conducting, any business or operations,
other than the development, construction, ownership, operation,
and maintenance of its Facility, including the generation and
sale of electric energy at wholesale from its Facility.
(y) No Undisclosed Liabilities. Except as set forth in
Schedule 4.1(y), assuming that all contracts between Seller and
its Affiliates (other than the LLCs) and any of the LLCs have
been terminated as required by Section 7.13 and all Transferred
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Contracts are transferred to the LLCs as required by Section
7.1(d), the LLCs, taken as a whole, do not have any liabilities
or obligations, other than:
(i) the liabilities and obligations of the LLCs under the
Project Documents, the Transferred Contracts, and the Other
Contracts;
(ii) liabilities and obligations in connection with the
transactions contemplated by this Agreement;
(iii) liabilities and obligations under or in respect of the
Permits;
(iv) the requirements of Laws;
(v) liabilities and obligations incurred after the date hereof
in accordance with Article 7; or
(vi) liabilities and obligations that would not, individually or
in the aggregate, have a Material Adverse Effect.
(z) Intellectual Property. Assuming that all contracts between
Seller and its Affiliates (other than the LLCs) and any of the
LLCs have been terminated as required by Section 7.13 and all
Transferred Contracts are transferred to the LLCs as required by
Section 7.1(d), (i) the LLCs own, or are licensed or otherwise
possess sufficient legally enforceable rights to use, all
patents, copyrights, trademarks, service marks, technology, know-
how, computer software programs and applications, databases and
tangible or intangible proprietary information or materials that
are currently used in the operation of the Facilities, except for
the software listed on Schedule 7.12, and (ii) to Seller's
Knowledge, none of the LLCs, the Facilities, or the Businesses
are operated in a manner that infringes upon any patents,
copyrights, trademarks, or similar intellectual property rights
of any third parties.
(aa) Public Utility Holding Company Act. None of the Seller or
any of its Affiliates is a "registered holding company," or a
"subsidiary company" of a "registered holding company", or an
"affiliate" of a "registered holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(bb) EWG Status. Each LLC is an exempt wholesale generator
within the meaning of the Energy Policy Act of 1992 and
applicable FERC regulations.
(cc) Market Based Rates. Each LLC is authorized by the FERC to
sell electric capacity and energy at market based rates pursuant
to an approved rate schedule on file with the FERC.
(dd) No Advance Payments. None of the LLCs has received payment
for electric energy that was not sold and delivered by such LLC
prior to receiving payment therefor.
4.2 Representations and Warranties of Buyer. Buyer represents
and warrants to Seller as follows:
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(a) Organization and Qualification. Buyer is a limited
liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has the
requisite power under its formation documents to carry on its
business as now being conducted.
(b) Authority. Buyer has all requisite power and authority to
execute and deliver this Agreement and to perform its obligations
under this Agreement. The execution, delivery, and performance
of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all requisite action on the
part of Buyer.
(c) Enforceability. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes a valid and
binding agreement of Buyer enforceable against it in accordance
with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws of general
application from time to time in effect that affect creditors'
rights generally, (ii) general principles of equity, and
(iii) the power of a court to deny enforcement of remedies
generally based upon public policy.
(d) No Violation or Breach. Neither the execution and delivery
of this Agreement nor the consummation of the transactions and
performance of the terms and conditions hereof by Buyer will
(i) result in a violation or breach of any provision of the
certificate of incorporation, bylaws or other similar governing
documents of Buyer or any material agreement, indenture or other
instrument under which Buyer is bound or (ii) violate any Law
applicable to Buyer or the assets of Buyer.
(e) Consents. No consent, approval, authorization, or permit
of, or filing with or notification to, any Person is required for
or in connection with the execution and delivery of this
Agreement by Buyer or for or in connection with the consummation
of the transactions and performance of the terms and conditions
contemplated hereby by Buyer, except for Buyer Required
Regulatory Approvals and requirements under the HSR Act.
(f) Actions. There is no Action pending, or to Buyer's
Knowledge, threatened against Buyer, except for Actions that
would not have a material adverse effect on Buyer's ability to
perform its obligations under this Agreement.
(g) Brokerage Fees and Commissions. Neither Buyer nor any
Affiliate of Buyer has incurred any obligation or entered into
any agreement for any investment banking, brokerage, or finder's
fee or commission in respect of the transactions contemplated by
this Agreement for which either Seller or any of the LLCs shall
incur any liability. Buyer has engaged Salomon Smith Barney in
connection with the transactions contemplated by this Agreement
and agrees to be responsible for any and all fees which are due
and payable pursuant to the terms of such engagement.
(h) Funds. Buyer has, and at all times prior to Closing will
have, sufficient funds available to enable Buyer to consummate
the transactions contemplated hereby and to pay the Closing
Payment, the other payments required of Buyer hereunder, and all
fees and expenses of Buyer.
(i) Buyer's Knowledge. Buyer has no Knowledge of any fact which
results in any representation or warranty of Seller in
Section 4.1 being breached. If after the date of this Agreement,
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Buyer obtains Knowledge of any fact which results in any
representation or warranty of Seller in Section 4.1 being
breached, Buyer will immediately furnish to Seller written notice
thereof.
(j) No Distribution. Buyer is an experienced and knowledgeable
investor in the U.S. power generation and development business.
Prior to entering into this Agreement, Buyer was advised by its
counsel, accountants, financial advisors, and such other Persons
it has deemed appropriate concerning this Agreement and has
relied solely on Seller's representations and warranties
expressly contained herein and an independent investigation and
evaluation of, and appraisal and judgment with respect to, each
of the LLCs and the revenue, price, and expense assumptions
applicable thereto. Buyer hereby acknowledges that the LLC
Interests are not registered under the Securities Act of 1933, as
amended (the "Securities Act"), or registered or qualified for
sale under any state securities laws and cannot be resold without
registration thereunder or exemption therefrom. Buyer is an
"accredited investor," as such term is defined in Regulation D of
the Securities Act and will acquire the LLC Interests for its own
account and not with a view to a sale or distribution thereof in
violation of the Securities Act, and the rules and regulations
thereunder, any applicable state blue sky laws or any other
applicable securities laws. Buyer has sufficient knowledge and
experience in financial and business matters to enable it to
evaluate the risks of investment in the LLC Interests and has the
ability to bear the economic risk of this investment for an
indefinite period of time.
(k) Bankruptcy. There are no bankruptcy, reorganization, or
arrangement proceedings pending against, being contemplated by,
or to the knowledge of Buyer threatened against, Buyer.
(l) Balance Sheets. Buyer has previously delivered to Seller an
audited balance sheet as of December 31, 1999, and an unaudited
balance sheet as of September 30, 2000, for Buyer, each prepared
in accordance with GAAP except as stated therein, and such
balance sheets present fairly in all material respects the
financial position of such entity on the date thereof.
(m) Inspection. Buyer acknowledges that, prior to its execution
of this Agreement, (i) it has been afforded access to and the
opportunity to inspect each of the Facilities, the Project
Documents, and all other due diligence items made available by
Seller with respect to the LLCs, (ii) it has inspected each of
the Facilities, and as of the Closing Date, it will have
inspected each of the Facilities and reviewed the Project
Documents and all other due diligence items made available by
Seller with respect to the LLCs to the extent it deems necessary
or advisable, and (iii) it is relying upon Seller's
representations and warranties expressly contained herein and its
own inspections and investigation in order to satisfy itself as
to the condition and suitability of each of the Facilities.
(n) Development Activities. To Buyer's Knowledge, the electric
power generation projects planned or under development by Buyer
or any of its Affiliates should not delay, impede, or condition
the receipt by Buyer of Buyer's Required Regulatory Approvals.
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Article 5
Access and Confidentiality
5.1 General Access. Promptly following the execution of this
Agreement and until the Closing Date (or earlier termination of
this Agreement), Seller shall permit (and with respect to each of
the LLCs, Seller shall cause such LLC to permit) Buyer and its
representatives:
(i) to have reasonable access, at reasonable times and upon
reasonable advance notice, in Seller's and each of the LLC's
offices and in a manner so as not to interfere unduly with the
business operations of Seller or any of the LLCs, to the books,
records, contracts, and documents of each of the LLCs relating to
its Business and Facility insofar as the same may be disclosed
without (a) violating any legal constraints or any legal
obligation, (b) waiving any attorney/client, work product, or
like privilege, (c) disclosing information about the activities
of Seller or its Affiliates (other than the LLCs) that is
unrelated to the LLCs or the operation of the Facilities, or
(d) disclosing proprietary models of Seller or any of its
Affiliates pertaining to energy project evaluation, energy or
natural gas price curves or projections, or other economic
predictive models; and
(ii) subject to any required consent of any third Person and upon
reasonable advance notice to Seller, to conduct at reasonable
times and at Buyer's sole risk, cost, and expense, in the
presence of representatives of Seller, reasonable inspections of
the Facilities.
Buyer agrees to indemnify and hold harmless, release, and defend
the Seller Indemnified Parties and the LLCs from and against any
and all Losses arising, in whole or in part, from the acts or
omissions of the Buyer Indemnified Parties in connection with
Buyer's inspection of the Facilities and other assets and records
of Seller or the LLCs, including claims for personal injuries,
property damage, and reasonable attorneys' fees and expenses.
Nothing in this Article 5 shall be construed to permit Buyer or
its representatives to have access to any files, records,
contracts, or documents of Seller or any of the LLCs relating to
this transaction, including any bids or offers received by Seller
or the LLCs for the sale of the LLC Interests or the Facilities,
it being agreed that all such bids or offers shall be the sole
property of Seller.
5.2 Confidential Information. Buyer agrees to maintain all
information made available to it under this Agreement
confidential and to cause its officers, directors, agents,
employees, representatives, consultants, and advisors to maintain
all information made available to them under this Agreement
confidential, all as provided in that certain confidentiality
agreement dated August 31, 2000 (the "Confidentiality
Agreement"), by and between Seller and Buyer which is attached
hereto as Exhibit 5.2, the terms of which are incorporated herein
by reference and made a part of this Agreement.
5.3 No Other Contact. Buyer shall not contact or correspond
with any customer, employee, or other Person associated with the
Businesses of the LLCs, without the prior written consent of
Seller.
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Article 6
Tax Matters
6.1 Preparation. Any Tax Return to be prepared pursuant to the
provisions of this Section 6.1 shall be prepared in a manner
consistent with practices followed in prior years with respect to
similar Tax Returns, except for changes required by changes in
Law or fact. Buyer shall not file an amended Tax Return for any
period ending on or prior to the Closing Date without the consent
of Seller, which may not be unreasonably withheld. The following
provisions shall govern the allocation of responsibility as
between Buyer and Seller for certain Tax matters following the
Closing Date:
(i) Tax Periods Ending on or Before the Closing Date. Seller
shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the LLCs for all periods ending on or
prior to the Closing Date regardless of when they are to be
filed. Seller shall pay the Taxes attributable to the LLCs with
respect to such periods. Buyer and Seller acknowledge that for
federal income tax purposes the taxable year of each LLC shall
end on the Closing Date.
(ii) Tax Periods Beginning Before and Ending After the Closing
Date. Buyer shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the LLCs for Tax periods
which begin before the Closing Date and end after the Closing
Date. Seller shall pay to Buyer within fifteen (15) days after
the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the
portion of such Tax period ending on the Closing Date.
6.2 Access to Information. After Closing, Seller shall grant to
Buyer (or its designees) access at all reasonable times to all of
the information, books, and records relating to each of the LLCs
within the possession of Seller (including work papers and
correspondence with taxing authorities), and shall afford Buyer
(or its designees) the right (at Buyer's expense) to take
extracts therefrom and to make copies thereof, to the extent
reasonably necessary to permit Buyer (or its designees) to
prepare Tax Returns and to conduct negotiations with taxing
authorities. After Closing, Buyer shall grant or cause each of
the LLCs to grant to Seller (or its designees) access at all
reasonable times to all of the information, books and records
relating to such LLC within the possession of Buyer or such LLC
(including work papers and correspondence with taxing
authorities), and shall afford Seller (or its designees) the
right (at Seller's expense) to take extracts therefrom and to
make copies thereof, to the extent reasonably necessary to permit
Seller (or its designees) to prepare Tax Returns and to conduct
negotiations with taxing authorities.
6.3 Transfer Taxes. Buyer shall be responsible for the payment
of all Transfer Taxes resulting from the transactions
contemplated by this Agreement.
6.4 Tax Sharing Agreements. On or before the Closing Date,
Seller and each of the LLCs shall ensure that no Tax indemnity
agreement, Tax allocation agreement, or Tax sharing agreement
with respect to any such LLC is in force or effect as to any such
LLC and that there shall be no liability of any such LLC after
the Closing Date under any such agreement.
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6.5 Assistance and Cooperation. After the Closing Date, in the
case of any audit, examination, or other proceeding with respect
to Taxes ("Tax Proceeding") for which Seller is or may be liable
pursuant to this Agreement, Buyer shall inform Seller within ten
(10) days of the receipt of any notice of such Tax Proceeding,
and shall afford Seller, at Seller's expense, the opportunity to
control the conduct of such Tax Proceedings. Buyer shall execute
or cause to be executed powers of attorney or other documents
necessary to enable Seller to take all actions desired by Seller
with respect to such Tax Proceeding to the extent such Tax
Proceeding may affect the amount of Taxes for which Seller is
liable pursuant to this Agreement. Seller shall have the right
to control any such Tax Proceedings and to initiate any claim for
refund, file any amended return, or take any other action which
it deems appropriate with respect to such Taxes.
6.6 Tax Indemnity. Notwithstanding any other provisions of this
Agreement, Sections 6.6 and 6.7 shall apply to indemnifications
by Seller to Buyer for, and shall be the sole remedy of Buyer in
respect of, the Losses described in the following sentence.
Seller agrees to indemnify and hold harmless Buyer from and
against the entirety of any and all Losses that Buyer may suffer
for any Taxes attributable to the LLCs with respect to: (i) any
Tax year or portion thereof ending on or before the Closing Date
(or for any Tax year beginning before and ending after the
Closing Date to the extent allocable (determined in a manner
consistent with Section 6.1) to the portion of such period
beginning before and ending on the Closing Date); (ii) any Tax
attributable to events, transactions, sales, deposits, services,
or rentals occurring, received, or performed prior to the Closing
Date; and (iii) Losses resulting from the breach by Seller or any
of the LLCs of any covenant herein concerning Taxes or in this
Article 6. No right to indemnity shall exist if the Loss is the
direct and proximate result of actions of Buyer or its
Affiliates.
6.7 Tax Indemnity Claims. The provisions of this Section 6.7
shall apply only to the indemnification provided for under
Section 6.6. If a claim for Taxes is made against Buyer and if
Buyer intends to seek indemnity with respect thereto under
Section 6.6, Buyer shall promptly furnish written notice to
Seller of such claim. Failure of Buyer to so notify Seller
within fifteen (15) days of the Buyer's knowledge of the claim
being made against Buyer shall terminate all rights of Buyer to
indemnity by Seller as to such claim. Seller shall have thirty
(30) days after receipt of such notice to undertake, conduct, and
control (through counsel of its own choosing and at its own
expense) the settlement or defense thereof, and Buyer shall
cooperate with it in connection therewith, so long as the Seller,
at Seller's cost and expense, (i) has undertaken the defense of,
and assumed in writing full responsibility for all indemnified
Losses with respect to, such claim, (ii) is reasonably contesting
such claim in good faith, by appropriate proceedings, (iii) has
taken such action (including the posting of a bond, deposit, or
other security) as may be necessary to prevent any action to
foreclose a lien against or attachment of the property of Buyer
for payment of such claim, (iv) has maintained adequate reserves,
subject to Buyer's reasonable satisfaction, that Seller has
sufficient funds to indemnify Buyer for all Losses relating to
the claim, and (v) Seller's pursuit of the claim does not
adversely affect the business operations of Buyer. Provided that
the requirements in the previous sentence are met, Buyer shall
not pay or settle any such claim. Seller shall permit Buyer to
participate in such settlement or defense through counsel chosen
by Buyer (but the fees and expenses of such counsel shall be paid
by Buyer). Notwithstanding compliance by Seller with the
preceding sentence, Buyer shall have the right to pay or settle
any such claim, but in such event it shall waive any right to
indemnity by Seller for such claim. If within thirty (30) days
after the receipt of Buyer's notice of a claim of indemnity
hereunder, Seller does not notify Buyer that it elects (at
Seller's cost and expense) to undertake the defense thereof and
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assume full responsibility for all indemnified Losses with
respect thereto, or gives such notice and thereafter fails to
contest such claim in good faith or to prevent action to
foreclose a lien against or attachment of Buyer's property as
contemplated above, Buyer shall have the right to contest,
settle, or compromise such claim and Buyer shall not thereby
waive any right to indemnity for such claim under this Agreement.
6.8 Tax Refunds. Refunds of Taxes paid or payable with respect
to Taxes attributable to the LLCs shall be promptly paid as
follows (or to the extent payable but not paid due to offset
against other Taxes shall be promptly paid by the Party receiving
the benefit of the offset as follows): (i) to Seller if
attributable to Taxes with respect to any Tax year or portion
thereof ending on or before the Closing Date (or for any Tax year
beginning before and ending after the Closing Date to the extent
allocable (determined in a manner consistent with Section 6.1) to
the portion of such period beginning before and ending on the
Closing Date); and (ii) to Buyer if attributable to Taxes with
respect to any Tax year or portion thereof beginning after the
Closing Date (or for any Tax year beginning before and ending
after the Closing Date to the extent allocable (determined in a
manner consistent with Section 6.1) to the portion of such period
ending after the Closing Date).
Article 7
Covenants of Seller and Buyer
7.1 Conduct of Business Pending Closing. Subject to Section 7.2
and the constraints of applicable operating agreements and other
existing agreements, from the date of this Agreement through the
Closing Date, except as disclosed in Schedule 7.1 or as otherwise
consented to or approved in writing by Buyer (which consent or
approval shall not be unreasonably withheld, conditioned, or
delayed), Seller covenants and agrees that:
(a) Changes in Business. Seller shall cause each of the LLCs to
comply with the following:
(i) no LLC shall make any material change in the conduct of its
business or operations, except as contemplated by the matters
described in Part I of Schedule 7.1;
(ii) except in the ordinary course of business and consistent
with past practices and except for the transfer of the
Transferred Contracts as provided in Section 7.1(d), no LLC shall
enter into, assign, terminate, or amend, in any material respect,
any Project Document;
(iii) no LLC shall:
(A) declare or pay any dividends or make any distributions in
respect of, or issue any of, its equity securities or securities
convertible into its equity securities, or repurchase, redeem, or
otherwise acquire any such securities or make or propose to make
any other change in its capitalization; provided, however, that
on or before the Closing Date, Seller shall have the right to
cause such LLC to dividend to Seller any or all of the cash held
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by such LLC (to the extent such cash was not received as the
result of a breach by Seller of its obligations in this
Section 7.1(a));
(B) merge into or with or consolidate with any other Person or
acquire all or substantially all of the business or assets of any
Person;
(C) make any material change in its Certificate of Formation or
Limited Liability Company Agreement;
(D) purchase any securities of any Person, except for
investments made in the ordinary course of business and
consistent with prior practices;
(E) incur any obligations for borrowed money or guarantee or
otherwise become liable for the obligations of, or make any loans
or advances to, any Person not an Affiliate of Seller; or
(F) fail to fully perform and pay its obligations under or in
respect of any of the Material Agreements, the Transferred
Contracts, or the Other Contracts, the Permits, or liabilities
and obligations incurred under this Section 7.1, all to the
extent accruing before the Closing Date.
(iv) other than pursuant to the requirements of existing
contracts or commitments, no LLC shall sell, lease, or otherwise
dispose of any of its assets, except for (a) assets sold, leased,
or otherwise disposed of in the ordinary course of business,
(b) the sale or disposition of any item of personal property or
equipment having a value of less than $50,000, and (c) the
transfer or other disposition of the accounts receivable or
advances due or owed to such LLC from any Affiliate of Seller;
(v) no LLC shall take any action or enter into any commitment
with respect to or in contemplation of any liquidation,
dissolution, recapitalization, reorganization, or other winding
up of its business or operations;
(vi) no LLC shall change its accounting policies or practices
(including, without limitation, any change in depreciation or
amortization policies), except as required under GAAP;
(vii) no LLC shall enter into any employment agreement not
terminable by such LLC at will and without cost to such LLC;
(viii) no LLC shall create any employee benefit plan (within
the meaning of Section 3(3) of ERISA) or any other employee
benefit plan or program not subject to ERISA, except as required
by Law; and
(ix) no LLC shall take (or fail to take) any action that will or
could reasonably be anticipated to cause such LLC (1) to lose its
status as an exempt wholesale generator within the meaning of the
Energy Policy Act of 1992 and applicable FERC regulations, or (2)
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to lose its authorization under the Federal Power Act to make
wholesale sales of capacity and energy at market-based rates.
(b) Liens. Seller shall not, and will cause each of the LLCs
not to, grant any express Lien on any assets of such LLC, except
to the extent (i) required or permitted incident to the operation
of the assets of such LLC and the business of such LLC or
(ii) required or evidenced by any of the Project Documents.
(c) Operation of Facilities. Seller shall:
(i) cause each Facility to be maintained and operated in the
ordinary course of business consistent with such LLC's past
practices (including the repair or replacement of damaged,
destroyed, obsolete, depreciated, non-working, or non-economical
items of equipment or other personal property) and in accordance
with Good Operating Practices, maintain insurance now in force
with respect to such Facility, and pay or cause to be paid all
costs and expenses in connection therewith promptly when due, but
Seller shall not be obligated by this clause (i) to cause any LLC
to operate its Facility; and
(ii) cause each of the LLCs to use its reasonable efforts to
maintain its relationships with employees of any Affiliate of
Seller assigned to the Businesses of the LLCs, suppliers,
customers, and others having material business relationships
relating to the LLCs, the Facilities, or the Businesses so that
they will be preserved for Buyer on and after the Closing Date.
(d) Transferred Contracts. On or before the Closing Date,
Seller shall cause each of the contracts described in Part II of
Schedule 7.1 (the "Transferred Contracts") to be assigned and
transferred to, and assumed by, the LLC shown for each such
Transferred Contract in Part II of Schedule 7.1.
7.2 Qualifications on Conduct. Seller and each of the LLCs may
take (or not take, as the case may be) any of the actions
described in Section 7.1 above if reasonably necessary in
accordance with Good Operating Practices under emergency
circumstances (or if required or prohibited pursuant to Law) and
provided Buyer is notified as soon thereafter as practicable.
7.3 Public Announcements. Prior to the Closing Date, without
the prior written approval of the other Party (which approval
shall not be unreasonably withheld, conditioned, or delayed), no
Party will issue, or permit any agent or Affiliate of such Party
to issue, any press releases or otherwise make, or cause any
agent or Affiliate of such Party to make, any public statements
with respect to this Agreement and the transactions contemplated
hereby, except when such release or statement is deemed in good
faith by the releasing Party to be required by Law or under the
applicable rules and regulations of a stock exchange or market on
which the securities of the releasing Party or any of its
Affiliates are listed. In each case to which such exception
applies, the releasing Party will use its reasonable efforts to
provide a copy of such release or statement to the other Party
and incorporate any reasonable changes which are suggested by the
non-releasing Party prior to releasing or making the statement.
After the Closing Date, the Parties will confer with each other
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regarding their initial public announcement for the transaction
contemplated herein.
7.4 Actions by Parties. Each Party agrees to use commercially
reasonable efforts to satisfy the conditions to Closing set forth
in Article 8.
7.5 Supplement to Schedules. Seller shall, from time to time
prior to the Closing by written notice to Buyer, supplement or
amend the Schedules to this Agreement to correct any matter that
would constitute a breach of any representation or warranty of
Seller in Section 4.1 of this Agreement. For purposes of
determining whether Buyer's condition set forth in Section 8.2(a)
has been fulfilled, the Schedules shall be deemed to include only
that information contained therein on the date of this Agreement
and shall be deemed to exclude all information contained in any
supplement or amendment thereto, but if Closing shall occur, then
any matters disclosed to Buyer pursuant to any supplement or
amendment at or prior to the Closing shall be deemed to be waived
by Buyer and Buyer shall not be entitled to make a claim thereon
under this Agreement.
7.6 Further Assurances. Seller and Buyer each agree that from
time to time after the Closing Date, it will execute and deliver
or cause its respective Affiliates (including each of the LLCs)
to execute and deliver such further instruments, and take (or
cause its respective Affiliates, including each of the LLCs, to
take) such other action, as may be reasonably necessary to carry
out the purposes and intents of this Agreement.
7.7 Records. Buyer agrees to maintain, or cause each of the
LLCs to maintain, the Records in existence on the Closing Date
until the fifth (5th) anniversary of the Closing Date (or for
such longer period of time as Seller shall advise Buyer is
necessary to have Records available with respect to open years
for Tax audit purposes), or if any of the Records pertain to any
claim or dispute pending on the fifth anniversary of the Closing
Date, Buyer shall maintain any of the Records designated by
Seller until such claim or dispute is finally resolved and the
time for all appeals has been exhausted. After the Closing Date,
Buyer shall provide or cause each of the LLCs to provide Seller
and its representatives during normal business hours and upon
reasonable notice reasonable access to and the right to copy the
Records, at Seller's cost and expense, for the purposes of:
(i) preparing and delivering any accounting statement provided
for under this Agreement and adjusting, prorating, and settling
the charges and credits provided for in this Agreement;
(ii) complying with any Law affecting Seller's ownership of the
LLC Interests or the Facilities prior to the Closing Date;
(iii) preparing any audit of the books and records of any
third party relating to the LLC Interests or the Facilities prior
to the Closing Date, or responding to any audit prepared by such
third parties;
(iv) preparing Tax Returns;
(v) responding to or disputing any Tax audit; or
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(vi) asserting, defending, or otherwise dealing with any claim or
dispute under this Agreement or with respect to any of the LLCs
or its Facility.
Additionally, Buyer shall not, and shall not permit any of the
LLCs to, after the Closing Date, waive the attorney/client, work
product, or like privilege of Seller, its Affiliates, or any of
the LLCs with respect to any of the Records existing as of the
Closing Date, without Seller's prior written consent.
7.8 Assumption of LLC Obligations. From and after Closing,
Buyer agrees to cause each of the LLCs to fully perform and
fulfill all of its obligations and commitments, whether existing
as of the Closing Date or arising or incurred thereafter.
7.9 Regulatory and Other Authorizations and Consents.
(a) Filings. Each Party shall use all commercially reasonable
efforts to obtain all authorizations, consents, orders, and
approvals of, and to give all notices to and make all filings
with, all Governmental Authorities (including in the case of
Seller, the Seller Required Regulatory Approvals and, in the case
of Buyer, the Buyer Required Regulatory Approvals) that may be or
become necessary for its execution and delivery of, and the
performance of its obligations under, this Agreement and will
cooperate fully with the other Party in promptly seeking to
obtain all such authorizations, consents, orders, and approvals,
giving such notices, and making such filings.
(b) HSR Filing. To the extent required by the HSR Act, each
Party shall (i) file or cause to be filed, as promptly as
practicable but in no event later than the tenth (10th) Business
Day after the execution and delivery of this Agreement, with the
Federal Trade Commission and the United States Department of
Justice, all reports and other documents required to be filed by
such Party under the HSR Act concerning the transactions
contemplated hereby and (ii) promptly comply with or cause to be
complied with any requests by the Federal Trade Commission or the
United States Department of Justice for additional information
concerning such transactions, in each case so that the initial
thirty (30) day waiting period applicable to this Agreement and
the transactions contemplated hereby under the HSR Act shall
expire as soon as practicable after the execution and delivery of
this Agreement. Each Party agrees to request, and to cooperate
with the other Party in requesting, early termination of any
applicable waiting period under the HSR Act. Seller and Buyer
shall each be responsible for one-half of the filing fees
incurred by the Parties in connection with the initial filings
required by the HSR Act.
(c) Additional Undertakings of Buyer. In addition to Buyer's
undertakings pursuant to Section 7.9(a) and (b), Buyer shall take
the following actions.
(i) FERC Approvals. Buyer shall: (A) no later than the 10th
Business Day after the date hereof, gather all necessary
information, prepare and provide to Seller for its review a draft
of the complete filings seeking the FERC Approvals (including all
reports, studies, and exhibits related thereto) (the "FERC
Filings"); (B) no later than the 20th Business Day after the date
hereof, consult with Seller regarding the FERC Filings, consider
and incorporate all reasonable comments (if any) submitted by
Seller or its representatives, and finalize and file the FERC
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Filings with the FERC; (C) prior to and during the pendency of
the notice and approval period with the FERC, (x) consult with
Seller prior to providing any supplemental information to the
FERC and provide prompt written notice to Seller of all
discussions and correspondence between Buyer's employees and
representatives and the FERC that reasonably relates to or bears
upon the FERC Filings, (y) use all commercially reasonable
efforts and act in good faith to expedite and obtain the FERC
Filings, and (z) avoid taking other actions or making other
filings under the jurisdiction of the FERC that could reasonably
be expected to have the effect of delaying, conditioning, or
reducing the likelihood of receiving the FERC Approvals; and
(D) otherwise use all commercially reasonable efforts (acting in
good faith) to take all other actions required to obtain the FERC
Approvals.
(ii) SEC Approval. Buyer shall: (A) no later than the 10th
Business Day after the date hereof, gather all necessary
information, prepare and provide to Seller for its review a draft
of the filing seeking the SEC Approval (including all reports,
studies, and exhibits related thereto) (the "SEC Filing"); (B) in
the SEC Filing, request authorization under PUHCA that (x) is
limited to the authority reasonably required for Buyer to finance
only those transactions contemplated by this Agreement, but may
include a request by Buyer's parent company, Allegheny Energy,
Inc., to issue and sell up to $1,000,000,000 in equity securities
in connection with this transaction and for other corporate
purposes, subject to the requirements of clause (z) below, (y) is
consistent with any existing conditions or restrictions under
PUHCA applicable to either Buyer or any of its Affiliates subject
to PUHCA, and (z) does not seek a modification of any limit on
"aggregate investment" pursuant to Rule 53 under PUHCA in
connection with the SEC Filing or otherwise require the approval
or consent of any state Governmental Authority; (C) no later than
the 20th Business Day after the date hereof, consult with Seller
regarding the SEC Filing, consider and incorporate all reasonable
comments (if any) submitted by Seller or its representatives, and
finalize and file the SEC Filing with the SEC; (D) prior to and
during the pendency of the notice and approval period with the
SEC, (1) consult with Seller prior to providing any supplemental
information to the SEC and provide prompt written notice to
Seller of all discussions and correspondence between Buyer's
employees and representatives and the SEC that reasonably relates
to or bears upon the SEC Filing, (2) use all commercially
reasonable efforts and act in good faith to expedite and obtain
the SEC Filing, (3) avoid taking other actions or making other
filings under the jurisdiction of the SEC that could reasonably
be expected to have the effect of delaying, conditioning, or
reducing the likelihood of receiving the SEC Approval, and (4)
not seek (and shall cause its Affiliates not to seek) a
modification of any limit on "aggregate investment" pursuant to
Rule 53 under PUHCA in connection with the SEC Filing or take any
other action that would require the approval or consent of any
state Governmental Authority in connection with the SEC Filing;
and (E) otherwise use all commercially reasonable efforts (acting
in good faith) to take all other actions required to obtain the
SEC Approval.
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(iii) General Obligations. Buyer shall: (A) take promptly
any or all of the following actions to the extent necessary to
eliminate any concerns on the part of any Governmental Authority
regarding the legality under any Law of Buyer's acquisition of
the LLC Interests: entering into negotiations, providing
information, making proposals, entering into and performing
agreements or submitting to judicial or administrative orders,
holding separate (through the establishment of a trust or
otherwise) particular assets or categories of assets, or
businesses, of the LLCs or Buyer or its Affiliates, or agreeing
to dispose of one or more assets or properties (whether owned by
Buyer or its Affiliates or the LLCs) whether before or after the
Closing; provided, however, that nothing in this Agreement shall
require the Buyer, its Affiliates, or the LLCs to dispose of or
sell assets or properties with an aggregate fair market value of
$100,000,000 or more as a condition to eliminate a Governmental
Authority's concerns regarding the legality under any Law of
Buyer's acquisition of the LLC Interests; (B) use all
commercially reasonable efforts and act in good faith to prevent
the entry in a judicial or administrative proceeding brought
under any Law by any Governmental Authority or any other party
for a permanent or preliminary injunction or other order that
would make consummation of the transactions contemplated by this
Agreement unlawful or that would prevent or delay such
consummation; and (C) take promptly, in the event that such an
injunction or order has been issued in such a proceeding, any and
all reasonable steps, including the appeal thereof, the posting
of a bond, or the steps contemplated by clause (A) of this
Section 7.9(c)(iii), necessary to vacate, modify, or suspend such
injunction or order so as to permit such consummation on a
schedule as close as possible to that contemplated by this
Agreement.
(d) Transfer. If the transfer of any instrument, contract,
license, lease, permit, or other document to Buyer hereunder
shall require the consent of any party thereto other than Seller,
then this Agreement shall not constitute an agreement to assign
the same, and such item shall not be assigned to or assumed by
Buyer, if an actual or attempted assignment thereof would
constitute a breach thereof or default thereunder. In such case,
Seller and Buyer shall cooperate and each shall use commercially
reasonable efforts to obtain such consents to the extent required
of such other parties and, if and when any such consents are
obtained, to transfer the applicable instrument, contract,
license, lease, permit, or other document. If any such consent
cannot be obtained, Seller shall cooperate in any reasonable
arrangement designed to obtain for Buyer all benefits,
privileges, obligations and privileges of the applicable
instrument, contract, license, lease, permit, or document.
(e) Third Party Consents. Each Party will use its commercially
reasonable efforts to obtain any consents of third parties
necessary or advisable in connection with the transactions
contemplated by this Agreement, including providing to such third
parties such financial statements and other publicly available
financial information as such third parties may reasonably
request, and will cooperate fully with the other Party in
promptly seeking to obtain such third party consents.
7.10 Fees and Expenses. Except as otherwise expressly provided
in this Agreement, all fees and expenses, including fees and
expenses of counsel, financial advisors, and accountants,
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incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such fee
or expense, whether or not the Closing shall have occurred.
Buyer shall be obligated to pay any and all costs of any audit of
the LLCs as may be required to enable Buyer to complete and file
any filing by Buyer or an Affiliate of Buyer with the Securities
and Exchange Commission.
7.11 Casualty Loss. Notwithstanding anything to the contrary in
this Agreement, in the event of substantial and material damage
by fire or other material casualty to the Facility of any LLC
prior to Closing (a "Material Casualty Loss"), Seller shall
promptly commence and diligently pursue the repair or replacement
of the equipment or other materials damaged at the affected
Facility, and this Agreement shall remain in full force and
effect, and no failure of a condition to Closing shall be deemed
to exist by virtue of such event, if, in any such event, Seller
so commences and pursues such repair or replacement and completes
such repair or replacement work on or before the Closing Date;
provided, that if such repair or replacement shall not have been
completed on or before the Closing Date, the Closing of the
purchase and sale contemplated hereby shall nevertheless occur
with respect to each LLC owning a Facility that is not affected
by such Material Casualty Loss, the Purchase Price payable at
such Closing shall be reduced by the amount (the "Casualty Loss
Amount") shown in Schedule 7.11 for each LLC owning a Facility
affected by such Casualty Loss (and any of the LLCs owning or
holding assets related to the affected Facility) (collectively,
the "Affected LLCs"), and the Closing of the purchase and sale
contemplated hereby with respect to the Affected LLCs shall be
deferred until such later date, but in no event later than
May 31, 2001, as shall be necessary to permit Seller to complete
the repair or replacement work with respect to the affected
Facility. At any such deferred Closing, the purchase price for
the sale and conveyance to Buyer of the LLC Interests of the
Affected LLCs shall be the Casualty Loss Amount with respect to
such Affected LLCs. If such a deferred Closing shall not have
occurred with respect to such Affected LLCs on or before May 31,
2001, Buyer or Seller may terminate this Agreement with respect
to each such Affected LLCs upon written notice to the other
Party, unless, prior to such termination, the Parties shall have
agreed in writing upon an extension of the latest date on which a
deferred Closing may occur pursuant to this Section 7.11.
7.12 Excluded Assets. Notwithstanding Article 9 hereof, the
transactions contemplated by this Agreement exclude, and prior to
the Closing Date, Seller may cause an LLC to transfer to Seller
or any of its Affiliates (other than the LLCs) the following (the
"Excluded Assets"):
(a) the assets listed or described on Schedule 7.12;
(b) all insurance policies and rights under any insurance
policies in respect to any and all claims made under such
policies whether such claims are asserted before or after the
Closing Date and all rights to any proceeds payable under any
such policy; and
(c) the Enron Marks.
Seller's representations and warranties in Article 4 shall not
apply to any of the items described in clauses (a) through (c) of
the preceding sentence.
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7.13 Guarantees and Other Affiliate Contracts. Buyer and Seller
shall cooperate and use commercially reasonable efforts (which
shall not include any obligation of Seller to pay any cost or
expense or incur any obligation) in order that, effective as of
the Closing Date, (i) the Guarantees and any liabilities related
thereto shall be released as to Seller or its Affiliate and
(ii) substitute arrangements, if required, of Buyer or its
Affiliates shall be in effect. If Buyer and Seller are unable to
cause any of the Guarantees to be released as to Seller and its
Affiliates prior to the Closing Date, then Buyer shall provide
(or cause to be provided) to Seller and Enron Corp. a guaranty in
a form and from a Person acceptable to Seller guaranteeing the
performance by Buyer of all obligations under such unreleased
Guarantees from and after the Closing Date (the "Back-to-Back
Guaranty"). Prior to or contemporaneously with the Closing, all
other agreements between any of the LLCs and Seller or any of its
Affiliates (other than the LLCs) shall be canceled or terminated.
7.14 Use of Enron Marks. Enron Marks will appear on some of the
assets of the LLCs, including on signage at the Facilities, and
on supplies, materials, stationery, brochures, advertising
materials, manuals and similar consumable items of the LLCs.
Buyer acknowledges and agrees that it obtains no right, title,
interest, license, or any other right whatsoever to use the Enron
Marks. Buyer shall, (i) within ninety days after the Closing
Date, remove the Enron Marks from the assets of the LLCs,
including signage at the Facilities, and provide written
verification thereof to Seller promptly after completing such
removal and (ii) within two weeks after the Closing Date, return
or destroy (with proof of destruction) all other assets of the
LLCs that contain any Enron Marks that are not removable. Buyer
agrees never to challenge Seller's (or its Affiliates') ownership
of the Enron Marks or any application for registration thereof or
any registration thereof or any rights of Seller or its
Affiliates therein as a result, directly or indirectly, of its
ownership of the LLCs. Buyer will not do any business or offer
any goods or services under the Enron Marks. Buyer will not
send, or cause to be sent, any correspondence or other materials
to any Person on any stationery that contains any Enron Marks or
otherwise operate the LLCs in any manner which would or might
reasonably be expected to confuse any Person into believing that
Buyer has any right, title, interest, or license to use the Enron
Marks.
7.15 Insurance. Buyer acknowledges and agrees that, effective
upon the Closing, the insurance policies of Seller related to the
LLCs shall be terminated or modified to exclude coverage of all
or any portion of the LLCs by Seller, and, as a result, Buyer
shall be obligated at or before Closing to obtain at its sole
cost and expense replacement insurance, including insurance
required by any third party to be maintained by any of the LLCs.
Buyer further acknowledges and agrees that Buyer may need to
provide to certain Governmental Authorities and third parties
evidence of such replacement or substitute insurance coverage for
the continued operations of the Businesses of the LLCs following
the Closing. Notwithstanding Section 7.12(b), if any claims are
made or losses occur prior to the Closing Date that do not arise
out of a Material Casualty Loss and that relate solely to the
Businesses of the LLCs and such claims, or the claims associated
with such losses, may be made against the policies retained by
Seller or its Affiliates under Section 7.12 or under policies
otherwise retained by Seller or its Affiliates after the Closing,
then Seller shall use its reasonable commercial efforts so that
the LLCs can file, notice, and otherwise continue to pursue such
claims and recover proceeds under the terms of such policies.
Seller and its Affiliates shall be reimbursed by Buyer (or
otherwise indemnified and held harmless) for any Losses or other
costs incurred by Seller or its Affiliates (including by way of
any reduction in, or loss of, available insurance to cover other
insurable losses or associated expenses of Seller or its
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Affiliates) arising out of the LLCs pursuing such claims under
such policies.
7.16 Employee Matters. Buyer may offer employment from and after
the Closing to any employee of Operational Energy Corp. assigned
to the Businesses of the LLCs, on such terms and conditions as
Buyer may reasonably determine, but Buyer shall not be obligated
to do so pursuant to this Agreement. Prior to the Closing, upon
reasonable prior notice to Seller, Buyer may communicate with any
employee of Operational Energy Corp. assigned to the Businesses
of the LLCs about employment with the Buyer.
7.17 Indebtedness. On any date from the date hereof untilthe
Closing Date or earlier termination of this Agreement, Buyer will
not permit the ratio of Indebtedness to the total capitalization
of Buyer, determined on a consolidated basis, as of the end of
any fiscal quarter of Buyer, to exceed 65% (or exceed 60% in the
event Buyer's senior unsecured credit rating is below BBB- or
Baa3 by Standard and Poors Rating Service or Moody's Investors
Services, Inc. respectively). Promptly after the filing thereof,
and in any event within 45 days after the end of the first 3
fiscal quarters of each fiscal year of the Buyer, Buyer shall
send to Seller a copy of Buyer's report on Form 10-Q for such
quarter, which shall include the Buyer's quarterly unaudited
financial statements as of the end of such quarter and promptly
after the filing thereof, and in any event within 90 days after
the end of each fiscal year of the Buyer, Buyer shall send to
Seller a copy of Buyer's report on Form 10-K for such year, which
report will include the Buyer's annual audited financial
statements as of the end of such year.
Article 8
Closing Conditions
8.1 Seller's Closing Conditions. The obligation of Seller to
proceed with the Closing contemplated hereby is subject, at the
option of Seller, to the satisfaction on or prior to the Closing
Date of all of the following conditions:
(a) Representations, Warranties, and Covenants. The
representations and warranties of Buyer contained in Section 4.2
of this Agreement that are qualified with respect to materiality
(whether by reference to Material Adverse Effect or otherwise)
shall be true and correct and the representations of Buyer
contained in Section 4.2 of this Agreement that are not so
qualified shall be true and correct in all material respects on
and as of the Closing Date, and the covenants and agreements of
Buyer to be performed on or before the Closing Date shall have
been duly performed in all material respects in accordance with
this Agreement.
(b) Closing Documents. On or prior to the Closing Date, Buyer
shall have delivered, or be standing ready to deliver at the
Closing, all agreements, instruments, and documents required to
be delivered by Buyer under Section 9.3.
(c) No Action. On the Closing Date, no Action (excluding any
such matter initiated by Seller or any of its Affiliates) shall
be pending or threatened before any Governmental Authority of
competent jurisdiction seeking to enjoin or restrain the
consummation of the Closing or recover substantial damages from
Seller or any Affiliate of Seller resulting therefrom.
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(d) Waiting Period. The waiting period under the HSR Act
applicable to the consummation of the transactions contemplated
hereby shall have expired or been terminated or the Parties shall
have otherwise complied with the HSR Act.
(e) Seller's Required Regulatory Approvals. Seller shall have
obtained or made Seller's Required Regulatory Approvals.
(f) Purchase Price. Buyer shall have delivered, or be standing
ready to deliver at the Closing, the Closing Payment to Seller by
wire transfer in immediately available funds.
(g) Guarantees. The Guarantees shall be released as to Seller
and its Affiliates and, if required, substitute arrangements of
Buyer or its Affiliates shall be in effect or Buyer shall have
provided or cause to be provided the Back-to-Back Guaranty for
those Guarantee obligations from which Seller or its Affiliates
are not released as of the Closing Date.
8.2 Buyer's Closing Conditions. The obligation of Buyer to
proceed with the Closing contemplated hereby is subject, at the
option of Buyer, to the satisfaction on or prior to the Closing
Date of all of the following conditions:
(a) Representations, Warranties, and Covenants. The
representations and warranties of Seller in Section 4.1 of this
Agreement that are qualified with respect to materiality (whether
by reference to Material Adverse Effect or otherwise), shall be
true and correct, and the representations and warranties of
Seller contained in Section 4.1 of this Agreement that are not so
qualified shall be true and correct in all material respects on
and as of the Closing Date, and the covenants and agreements of
Seller to be performed on or before the Closing Date shall have
been duly performed in all material respects in accordance with
this Agreement.
(b) Closing Documents. On or prior to the Closing Date, Seller
shall have delivered, or be standing ready to deliver at the
Closing, all agreements, instruments, and documents required to
be delivered by Seller pursuant to Section 9.2.
(c) No Action. On the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Buyer or any
of its Affiliates) shall be pending or threatened before any
court or governmental agency or body of competent jurisdiction
seeking to enjoin or restrain the consummation of the Closing or
recover substantial damages from Buyer or any Affiliate of Buyer
resulting therefrom.
(d) Waiting Period. The waiting period under the HSR Act
applicable to the consummation of the transactions contemplated
hereby shall have expired or been terminated or the Parties shall
have otherwise complied with the HSR Act.
(e) Buyer's Required Regulatory Approvals. Buyer shall have
obtained or made Buyer Required Regulatory Approvals.
(f) Title Matters. Seller shall obtain and deliver to Buyer
(i) a title policy (in the name of Des Plaines Green Land
Development L.L.C.) insuring the Real Property owned by Des
Plaines Green Land Development Company L.L.C. which does not
differ in any material respect from the pro-forma title policy
for such Real Property prepared by Chicago Title Insurance
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Company, Policy No. 001370022 in the amount of $90,000,000 and
(ii) "as-built" surveys for the Real Property owned by West Fork
Land Development Company, L.L.C. and Des Plaines Green Land
Development L.L.C. that do not reflect any encroachments that
would have a Material Adverse Effect on those LLCs.
Article 9
Closing
9.1 Closing. The Closing shall be held on the Closing Date at
10:00 a.m., Houston time, at the offices of Andrews & Kurth
L.L.P. at 600 Travis Street, Houston, Texas, or at such other
time or place as Seller and Buyer may otherwise agree in writing.
9.2 Seller's Closing Obligations. At Closing, Seller shall
execute and deliver, or cause to be executed and delivered, to
Buyer the following:
(i) a duly executed copy of the Assignment and Assumption
Agreement;
(ii) resignations or terminations of the officers, directors, and
managers of each of the LLCs from their status as officers,
directors, and managers effective as of the Closing that are
requested by Buyer at least four days prior to the Closing Date;
and
(iii) any other documents or instruments reasonably required
by Buyer to consummate the transaction contemplated thereunder.
9.3 Buyer's Closing Obligations. At Closing, Buyer shall
deliver, or cause to be delivered, to Seller the following:
(i) the Closing Payment to Seller in immediately available funds
to the bank account as provided in Section 3.2;
(ii) a duly executed copy of the Assignment and Assumption
Agreement;
(iii) if required, a duly executed copy of the Back-to-Back
Guaranty; and
(iv) any other documents or instruments reasonably required by
Seller to consummate the transaction contemplated hereunder.
Article 10
Limitations
10.1 Buyer's Review.
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(a) No Reliance. Buyer has reviewed and had access to all
documents, records and information which it has desired to review
in connection with its decision to enter into this Agreement, and
to consummate the transactions contemplated hereby. Buyer has
not relied upon any representation, warranty, statement, advice,
document, projection, or other information of any type provided
by Seller, the LLCs, their Affiliates, or any of their
representatives, except for those expressly set forth in this
Agreement. In deciding to enter into this Agreement, and to
consummate the transactions contemplated hereby, Buyer has relied
solely upon its own knowledge, investigation, and analysis (and
that of its representatives) and not on any disclosure or
representation made by, or any duty to disclose on the part of,
Seller, the LLC, their Affiliates, or any of their
representatives, other than the representations and warranties of
Seller expressly set forth herein.
(b) Limited Duties. Any and all duties and obligations which
either Party may have to the other with respect to or in
connection with the LLCs, this Agreement, or the transactions
contemplated hereby are limited to those in this Agreement. The
Parties do not intend (i) that the duties nor obligations of
either Party, or the rights of either Party, shall be expanded
beyond the terms of this Agreement on the basis of any legal or
equitable principle or on any other basis whatsoever or (ii) that
any equitable or legal principle or any implied obligation of
good faith or fair dealing or any other matter requires either
Party to incur, suffer or perform any act, condition or
obligation contrary to the terms of this Agreement, whether
existing or not and whether foreseeable or unforeseeable. The
Parties acknowledge that it would be unfair, and that they do not
intend, to increase any of the obligations of any Party under
this Agreement on the basis of any implied obligation or
otherwise.
10.2 Disclaimer of Warranties.
(a) Information. Except as provided in Section 4.1, Seller
makes no representation or warranty, express, implied, at common
law, statutory or otherwise, with respect to the accuracy or
completeness of the information, records, and data now,
heretofore, or hereafter made available to Buyer in connection
with this Agreement (including any description of the LLCs or the
Facilities, revenue, price and expense assumptions, electricity
demand forecasts, or environmental information, or any other
information furnished to Buyer by Seller or any Affiliate of
Seller or any director, officer, employee, counsel, agent, or
advisor thereof).
(b) Facilities. Notwithstanding anything contained to the
contrary in any other provision of this Agreement, it is the
explicit intent of each Party that Seller and its Affiliates are
not making any representation or warranty whatsoever, express,
implied, at common law, statutory or otherwise, except for the
representations or warranties given in this Agreement, and it is
understood that Buyer, with such exceptions, takes the LLC
Interests, the Facilities, and any other assets of each of the
LLCs "as is" and "where is." Without limiting the generality of
the immediately preceding sentence, except as provided in this
Agreement, Seller hereby expressly disclaims and negates any
representation or warranty, express or implied, at common law,
statutory, or otherwise, relating to (i) the condition of the
Facility and other assets of each of the LLCs (including any
implied or express warranty of merchantability or fitness for a
particular purpose, or of conformity to models or samples of
materials, or the presence or absence of any hazardous materials
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in or on, or disposed or discharged from, the Facility and other
assets of each of the LLCs) or (ii) any infringement by Seller,
any of the LLCs, or any of their Affiliates of any patent or
proprietary right of any third party. Buyer has agreed not to
rely on any representation made by Seller with respect to the
condition, quality, or state of the Facilities except for those
in this Agreement, but rather, as a significant portion of the
consideration given to Seller for this purchase and sale, has
agreed to rely solely and exclusively upon its own evaluation of
the LLCs and the Facilities, except as provided herein. The
provisions contained in this Agreement are the result of
extensive negotiations between Buyer and Seller and no other
assurances, representations or warranties about the quality,
condition, or state of the LLCs or the Facilities were made by
Seller in the inducement thereof, except as provided herein.
10.3 Waiver of Damages. Notwithstanding anything contained to
the contrary in this Agreement, Seller and Buyer agree that,
except for the SEC Termination Fee specifically provided for in
Section 12.1, the recovery by either Party of any damages
suffered or incurred by it as a result of any breach by the other
Party of any of its obligations under this Agreement shall be
limited to the actual damages suffered or incurred by the non-
breaching Party as a result of the breach by the breaching Party
of its obligations hereunder and in no event shall the breaching
Party be liable to the non-breaching Party for any indirect,
consequential, special, exemplary, or punitive damages (including
any damages on account of lost profits or opportunities or lost
or delayed generation) suffered or incurred by the non-breaching
Party as a result of the breach by the breaching Party of any of
its obligations hereunder.
10.4 Environmental Waiver and Release. From and after Closing,
except as provided in this Agreement, Buyer does hereby agree,
warrant, and covenant to (and Buyer shall cause each of the LLCs
to) release, acquit, and forever discharge Seller and all Seller
Indemnified Parties from any and all Losses, including all
claims, demands, and causes of action for contribution and
indemnity under statute or common law, which could be asserted
now or in the future and that relate to or in any way arise out
of Environmental Liabilities or any other environmental matters
of any of the LLCs or the Facilities. From and after Closing,
Buyer and each of the LLCs warrant, agree, and covenant not to
sue or institute arbitration against Seller or any Seller
Indemnified Party upon any claim, demand, or cause of action for
indemnity and contribution that have been asserted or could be
asserted for any such Environmental Liabilities, except to the
extent Buyer or any Buyer Indemnified Party is entitled to
indemnity for such matters under Article 11.
Article 11
Indemnification
11.1 Indemnification by Seller. From and after the Closing,
subject to the other terms and limitations in this Agreement,
Seller shall indemnify, defend, reimburse, and hold harmless the
Buyer and its Affiliates, and its and their directors, officers,
partners, employees, consultants, agents, representatives,
advisors, successors, and assigns (collectively, the "Buyer
Indemnified Parties") from and against any and all Losses
asserted against or incurred by any of the Buyer Indemnified
Parties (i) for any breach of Seller's representations or
warranties made in this Agreement, (ii) for any breach of the
covenants or obligations of Seller and its Affiliates under this
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Agreement, (iii) for any claim for personal injury or death that
relates to or arises out of (A) the Businesses or the
development, construction, ownership, operation, or maintenance
of any of the Facilities and (B) events that occur prior to the
Closing Date, (iv) in respect of the matters described in
Schedule 4.1(j), or (v) in respect of the Excluded Assets, in
each case, even if such Losses are caused by the sole, joint,
and/or concurrent negligence, strict liability, or other fault of
the Buyer Indemnified Parties.
11.2 Indemnification By Buyer. From and after the Closing,
subject to the other terms and limitations in this Agreement,
Buyer shall indemnify, defend, reimburse, and hold harmless
Seller and its Affiliates, and its and their directors, officers,
partners, employees, consultants, agents, representatives,
advisors, successors, and assigns (collectively, the "Seller
Indemnified Parties") from and against any and all Losses
asserted against or incurred by any of the Seller Indemnified
Parties (i) for any breach of Buyer's representations or
warranties made in this Agreement, (ii) for any breach of the
covenants or obligations of Buyer and its Affiliates under this
Agreement, or (iii) that relate to or arise out of the Businesses
or the development, construction, ownership, operation, or
maintenance of any of the Facilities or that otherwise relate to
or arise out of any of the LLCs (whether relating to periods of
time prior to or after the Closing Date) to the extent such
Losses are not properly asserted by Buyer (or any Buyer
Indemnified Party) under the provisions of Section 6.6 or
Section 11.1 (subject to the limitations in this Agreement) by
the date specified in Section 11.5, in each case, even if such
Losses are caused by the sole, joint, and/or concurrent
negligence, strict liability, or other fault of the Seller
Indemnified Parties. Buyer acknowledges that the Losses
described in clause (iii) of the preceding sentence shall be
retained by and transferred with each of the LLCs and shall
continue to be the responsibility of such LLC and Buyer.
11.3 Limitations on Indemnity. None of the Buyer Indemnified
Parties shall be entitled to assert any right to indemnification
under Section 11.1 until the aggregate amount of all the Losses
actually suffered by the Buyer Indemnified Parties exceeds the
Deductible Amount, and then only to the extent such Losses
exceed, in the aggregate, the Deductible Amount. Anything in
this Agreement to the contrary notwithstanding, in no event shall
the Seller ever be required to indemnify the Buyer or the Buyer
Indemnified Parties for Losses pursuant to Section 6.6,
Section 11.1, or any of the other provisions of this Agreement,
or pay any other amount in connection with or with respect to
this Agreement or the transactions contemplated by this
Agreement, in any amount exceeding, in the aggregate, fifteen
percent (15%) of the Purchase Price.
11.4 Third Party Claims. If a claim by a third party is made
against a Seller Indemnified Party or a Buyer Indemnified Party
(each, an "Indemnified Party"), and if such Indemnified Party
intends to seek indemnity with respect thereto under Article 5 or
this Article 11, such Indemnified Party shall promptly furnish
written notice to the other Party (the "Indemnifying Party") of
such claim. The failure of the Indemnified Party to deliver
prompt written notice of a claim shall not affect the indemnity
obligations of the Indemnifying Party hereunder except to the
extent the Indemnifying Party was substantially disadvantaged by
such delay in delivery notice of such claim. The Indemnifying
Party shall have thirty (30) days after receipt of such notice to
undertake, conduct, and control (through counsel of its own
choosing and at its own expense) the settlement or defense
thereof, and the Indemnified Party shall cooperate with it in
connection therewith. The Indemnifying Party shall permit the
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Indemnified Party to participate in such settlement or defense
through counsel chosen by such Indemnified Party (but the fees
and expenses of such counsel shall be borne by such Indemnified
Party). So long as the Indemnifying Party, at the Indemnifying
Party's cost and expense, (i) has undertaken the defense of, and
assumed full responsibility for all indemnified liabilities with
respect to, such claim, (ii) is reasonably contesting such claim
in good faith, by appropriate proceedings, and (iii) has taken
such action (including the posting of a bond, deposit, or other
security) as may be necessary to prevent any action to foreclose
a lien against or attachment of the property of the Indemnified
Party for payment of such claim, the Indemnified Party shall not
pay or settle any such claim. Notwithstanding compliance by the
Indemnifying Party with the preceding sentence, the Indemnified
Party shall have the right to pay or settle any such claim, but
in such event it shall waive any right to indemnity by the
Indemnifying Party for such claim. If within thirty (30) days
after the receipt of the Indemnified Party's notice of a claim of
indemnity hereunder, the Indemnifying Party does not notify the
Indemnified Party that it elects (at the Indemnifying Party's
cost and expense) to undertake the defense thereof and assume
full responsibility for all indemnified liabilities with respect
thereto, or gives such notice and thereafter fails to contest
such claim in good faith or to prevent action to foreclose a lien
against or attachment of the Indemnified Party's property as
contemplated above, the Indemnified Party shall have the right to
contest, settle, or compromise such claim and the Indemnified
Party shall not thereby waive any right to indemnity for such
claim under this Agreement.
11.5 Survival and Time Limitation. The terms and provisions of
this Agreement shall survive the Closing of the transactions
contemplated hereunder. Notwithstanding the foregoing, after
Closing, any assertion by Buyer or any Buyer Indemnified Party
that Seller is liable to Buyer or any Buyer Indemnified Party for
indemnification under the terms of this Agreement or otherwise in
connection with the transactions contemplated in this Agreement
must be made in writing and must be given to Seller (or not at
all) on or prior to the date that is eighteen (18) months after
the Closing Date, except for (i) indemnification for breach of
Seller's representation in Section 4.1(n) which must be made in
writing and must be given to Seller (or not at all) on or prior
to the date that is twenty-four (24) months after the Closing
Date and (ii) indemnification for matters addressed in
Section 6.6 and Section 11.1(iii) which must be made in writing
and must be given to Seller (or not at all) on or prior to the
date that is ninety (90) days after the date on which the
applicable statute of limitations expires with respect to the
matters covered thereby.
11.6 Further Indemnity Limitations. The amount of any Loss shall
be reduced (i) to the extent any Indemnified Party receives any
insurance proceeds with respect to such Loss, (ii) to take into
account any net Tax benefit arising from the recognition of the
Loss, and (iii) to take into account any payment actually
received by an Indemnified Party with respect to a Loss.
11.7 Sole and Exclusive Remedy. From and after the Closing,
except as provided in Section 6.6 of this Agreement for any claim
in respect of Taxes, the indemnification provisions of this
Article 11 shall be the sole and exclusive remedy of each Party
(including the Seller Indemnified Parties and the Buyer
Indemnified Parties) (i) for any breach of the other Party's
representations, warranties, covenants, or agreements contained
in this Agreement or (ii) otherwise with respect to this
Agreement or the transactions contemplated hereby.
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11.8 Compliance with Express Negligence Rule. All releases,
disclaimers, limitations on liability, and indemnities in this
Agreement, including those in this Article 11, shall apply even
in the event of the sole, joint, and/or concurrent negligence,
strict liability, or fault of the party whose liability is
released, disclaimed, limited, or indemnified.
Article 12
Termination and Remedies
12.1 Termination.
(a) Termination of Agreement. This Agreement and the
transactions contemplated hereby may be terminated at any time
prior to the Closing:
(i) by the mutual consent of Seller and Buyer;
(ii) if the Closing has not occurred by the close of business on
May 30, 2001, then by Seller if any condition specified in
Section 8.1 has not been satisfied on or before such close of
business, and shall not theretofore have been waived by Seller,
provided that the failure to consummate the transactions
contemplated hereby on or before such date did not result from
the failure by Seller to fulfill any undertaking or commitment
provided for herein on the part of Seller that is required to be
fulfilled on or prior to Closing;
(iii) if the Closing has not occurred by the close of
business on May 30, 2001, then by Buyer if any condition
specified in Section 8.2 (other than receipt by Buyer of the SEC
Approval) has not been satisfied or waived on or before such
close of business, and shall not theretofore have been waived by
Buyer, provided that the failure to consummate the transactions
contemplated hereby on or before such date did not result from
the failure by Buyer to fulfill any undertaking or commitment
provided for herein on the part of Buyer that is required to be
fulfilled on or prior to Closing;
(iv) if the Closing has not occurred by the close of business on
May 30, 2001, then by Seller if the SEC Approval has not been
obtained by Buyer on or before such close of business; or
(v) if the Closing has not occurred by the close of business on
May 30, 2001, then by Buyer if SEC Approval has not been obtained
by Buyer in accordance with the requirements of Section
7.9(c)(ii) and (iii) on or before such close of business,
provided that the failure to consummate the transactions
contemplated hereby on or before such date did not result from
the failure by Buyer to fulfill any undertaking, commitment or
obligation provided for herein on the part of Buyer to obtain the
SEC Approval, including those obligations in Section 7.9(c)(ii)
and (iii)
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(b) Effect of Termination. In the event of termination of this
Agreement by Seller or Buyer pursuant to Section 12.1(a)(i),
(ii), or (iii), written notice thereof shall promptly be given by
the terminating Party to the other Party, and this Agreement
shall thereupon terminate. In the event of termination of this
Agreement by Seller pursuant to Section 12.1(a)(iv), written
notice thereof shall promptly be given by Seller to Buyer, Buyer
shall wire transfer the SEC Termination Fee to Seller within one
(1) Business Day of Seller's notice in immediately available
funds to an account or accounts designated by Seller, and this
Agreement shall terminate upon receipt by Seller of the SEC
Termination Fee. In the event of termination of this Agreement
by Buyer pursuant to Section 12.1(a)(v), written notice thereof
shall promptly be given by Buyer to Seller, Buyer shall wire
transfer the SEC Termination Fee to Seller concurrently with the
delivery of such notice in immediately available funds to an
account or accounts designated by Seller, and this Agreement
shall terminate upon receipt by Seller of the SEC Termination
Fee. Following any such termination, Buyer will continue to be
bound by its obligations set forth in Sections 5.1 and 5.2. If
this Agreement is terminated as provided herein, all filings,
applications and other submissions made to any Governmental
Authority shall, to the extent practicable, be withdrawn from the
Governmental Authority to which they were made. If Seller is
properly paid the SEC Termination Fee upon termination of this
Agreement when permitted under Section 12.1(a)(iv) or (v), Seller
and Buyer agree that such payment of the SEC Termination Fee as
liquidated damages (i) is appropriate due to the difficulty and
inconvenience of measuring actual damages and the uncertainty
thereof, (ii) is a reasonable estimate of Seller's loss in the
event of any such termination of this Agreement, and (iii) will
be the exclusive remedy of Seller for any such termination of
this Agreement.
12.2 Remedies.
(a) Seller's Remedies. Upon the failure by Buyer to fulfill or
perform any undertaking, commitment, or obligation provided for
herein on the part of Buyer that is required to be fulfilled on
or prior to the Closing Date, Seller, at its sole option, may
(i) enforce specific performance of this Agreement or (ii) pursue
any rights or remedies available at law or in equity.
(b) Buyer's Remedies. Upon failure of Seller to fulfill or
perform any undertaking, commitment, or obligation provided for
herein on the part of Seller that is required to be fulfilled on
or prior to the Closing Date, Buyer, at its sole option, may
(i) enforce specific performance of this Agreement or (ii) pursue
any other rights or remedies available at law or in equity.
(c) Election of Remedies. If either Party elects to pursue
singularly any remedy available to it under this Section 12.2,
then such Party may at any time thereafter cease pursuing that
remedy and elect to pursue any other remedy available to it under
this Section 12.2.
Article 13
Other Provisions
13.1 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more
counterparts have been signed by each of the Parties and
delivered to the other Party.
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13.2 Governing Law. This Agreement and the rights and
obligations of the parties hereunder and the transactions
contemplated hereby shall be governed by, enforced, and
interpreted in accordance with the laws of the State of Texas;
provided that the applicable Law of the jurisdiction in which the
relevant Facility is located shall govern with respect to the
matters pertaining to Real Property and matters involving
compliance with Environmental Laws.
13.3 Arbitration. Except for matters that are covered by
Section 3.4, any claim, counterclaim, demand, cause of action,
dispute, and controversy arising out of or relating to this
Agreement (or any agreement delivered in connection with this
Agreement) or in any way relating to the subject matter of this
Agreement involving the Parties or their representatives (each a
"Dispute"), even if such Disputes allegedly are extra-contractual
in nature, sound in contract, tort or otherwise, or arise under
state or federal law, shall be resolved by final and binding
arbitration. Arbitration shall be conducted in accordance with
the rules of arbitration of the Federal Arbitration Act and, to
the extent an issue is not addressed by the federal law on
arbitration, by the commercial arbitration rules of the American
Arbitration Association. The validity, construction and
interpretation of this Agreement to arbitrate, and all other
procedural aspects of the arbitration conducted pursuant hereto
shall be decided by the arbitrators. In deciding the substance
of the Parties' Dispute, the arbitrators shall refer to the
governing law. The arbitrators shall have no authority to award
treble, consequential, exemplary, or punitive damages of any type
under any circumstances whether or not such damages may be
available under state or federal Law, or under the Federal
Arbitration Act, or under the commercial arbitration rules of the
American Arbitration Association, the Parties hereby waiving
their right, if any, to recover any such damages or to appeal or
object to the enforcement of any decision or award by the
arbitrators. Each Party agrees that any arbitration award
against it may be enforced in any jurisdiction in which such
Party holds or keeps assets and that judgment on any arbitration
award may be entered by any court having jurisdiction. The
arbitration proceeding shall be conducted in Houston, Texas.
Within thirty (30) days of the notice initiation of the
arbitration procedure, each Party shall select one arbitrator.
The two arbitrators shall select a third arbitrator. The third
arbitrator shall be a Person who has over eight (8) years
professional experience in power generation transactions and is
not an Affiliate of and who has not previously been employed by
either Party and does not have a direct or indirect interest in
either Party or in any Person having an ownership interest in
either Party or the subject matter of the arbitration. While the
third arbitrator shall be neutral, the two Party appointed
arbitrators are not required to be neutral, and it shall not be
grounds for removal of either of the two Party appointed
arbitrators or for vacating the arbitrators' award that either of
such arbitrators has past or present minimal relationships with
the Party that appointed such arbitrator. To the fullest extent
permitted by Law, any arbitration proceeding and the arbitrators
award shall be maintained in confidence by the Parties.
13.4 Entire Agreement. This Agreement (including the
Confidentiality Agreement) and the Schedules and Exhibits hereto
contain the entire agreement between the Parties with respect to
the subject matter hereof and there are no agreements,
understandings, representations, or warranties between the
Parties other than those set forth or referred to herein.
13.5 Notices. All notices hereunder shall be sufficiently given
for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to
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the extent receipt is confirmed, by United States Mail, or
telecopy to the appropriate address or number as set forth below.
Notices to Seller shall be addressed as follows:
Enron North America Corp.
1400 Smith Street
Houston, Texas 77002
Attention: President and Chief Executive Officer
Telecopy No.: (713) 646-3702
with copies to:
Enron North America Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Stuart Zisman
Telecopy No.: (713) 646-3490
or at such other address and to the attention of such other
Person as Seller may designate by written notice to Buyer.
Notices to Buyer shall be addressed to:
Allegheny Energy Supply Company, L.L.C.
800 Cabin Hill Drive
Greensburg, PA 15601
Attention: President
Telecopy No.: (724) 830-5400
with copies to:
Allegheny Energy Supply Company, L.L.C
800 Cabin Hill Drive
Greensburg, PA 15601
Attention: Deputy General Counsel
Telecopy No.: (724) 830-5184
or at such other address and to the attention of such other
Person as Buyer may designate by written notice to Seller.
Notice given by overnight delivery or mail shall be effective
upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's
normal business hours, or at the beginning of the recipient's
next business day after receipt if not received during the
recipient's normal business hours. All notices by telecopier
shall be confirmed promptly after transmission in writing by
certified mail or overnight delivery.
13.6 Successors and Assigns. The rights and obligations of the
Parties shall not be assigned or delegated by either Party
without the written consent of the other Party, which may be
withheld in such Party's sole discretion, except that Buyer may
assign its rights hereunder, in whole or in part (including any
assignment of Buyer's right to purchase, receive and accept
conveyance of any one or more LLC Interests upon Seller's receipt
of the Purchase Price) to any one or more Affiliates of Buyer or
42
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to any such other Person as Buyer may designate to facilitate a
lease financing or other financing of any one or more LLC
Interests in connection with the transactions contemplated hereby
(but no such assignment shall (i) relieve Buyer of any of its
obligations hereunder, (ii) delay or condition receipt of any
Buyer Required Regulatory Approval, or (iii) otherwise affect or
delay Closing of the transactions contemplated hereunder).
Subject to the preceding sentence, this Agreement shall be
binding upon and inure to the benefit of the Parties and their
successors and assigns.
13.7 Amendments and Waivers. This Agreement may not be modified
or amended except by an instrument or instruments in writing
signed by the Party against whom enforcement of any such
modification or amendment is sought. Any Party may, only by an
instrument in writing, waive compliance by the other Party with
any term or provision of this Agreement on the part of such other
Party to be performed or complied with. The waiver by a Party of
a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.
13.8 Schedules and Exhibits. All Schedules and Exhibits hereto
which are referred to herein are hereby made a part hereof and
incorporated herein by such reference. Each Schedule to this
Agreement shall be deemed to include and incorporate all
disclosures made on the other Schedules to this Agreement.
Certain information set forth in the Schedules is included solely
for informational purposes, is not an admission of liability with
respect to the matters covered by the information, and may not be
required to be disclosed pursuant to this Agreement. The
specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any
specific item in the Schedules is not intended to imply that such
amounts (or higher or lower amounts) are or are not material, and
no Party shall use the fact of the setting of such amounts or the
fact of the inclusion of any such item in the Schedules in any
dispute or controversy between the Parties as to whether any
obligation, item, or matter not described herein or included in a
Schedule is or is not material for purposes of this Agreement.
13.9 Interpretation and Rules of Construction. This Agreement
shall not be construed against either Party, and no consideration
shall be given or presumption made, on the basis of who drafted
this Agreement or any particular provision hereof or who supplied
the form of Agreement. In construing this Agreement:
(i) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate;
(ii) the word "includes" and its derivatives means "includes, but
is not limited to" and corresponding derivative expressions;
(iii) a defined term has its defined meaning throughout this
Agreement and each Exhibit and Schedule to this Agreement,
regardless of whether it appears before or after the place where
it is defined;
(iv) each Exhibit and Schedule to this Agreement is a part of
this Agreement, but if there is any conflict or inconsistency
between the main body of this Agreement and any Exhibit or
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Schedule, the provisions of the main body of this Agreement shall
prevail; and
(v) the headings and titles herein are for convenience only and
shall have no significance in the interpretation hereof.
13.10 Agreement for the Parties' Benefit Only. Except as
specified in Section 5.1 and Article 11, which are also intended
to benefit and to be enforceable by the Seller Indemnified
Parties, this Agreement is not intended to confer upon any Person
not a party hereto any rights or remedies hereunder, and no
Person, other than the Parties or the Seller Indemnified Parties,
is entitled to rely on any representation, warranty, covenant, or
agreement contained herein.
13.11 Attorneys' Fees. The prevailing Party in any legal
proceeding brought under or to enforce this Agreement shall be
additionally entitled to recover court costs and reasonable
attorneys' fees from the nonprevailing Party.
13.12 Severability. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by
any Law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any adverse manner to a
Party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible
in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
13.13 Time of Essence. Time is of the essence in this
Agreement. If the date specified in this Agreement for giving
any notice or taking any action is not a Business Day (or if the
period during which any notice is required to be given or any
action taken expires on a date which is not a Business Day), then
the date for giving such notice or taking such action (and the
expiration date of such period during which notice is required to
be given or action taken) shall be the next day which is a
Business Day.
13.14 Bulk Sales or Transfer Laws. Buyer hereby waives
compliance by the Seller with the provisions of the bulk sales or
transfer laws of all applicable jurisdictions.
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IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the Parties as of the day first above written.
Seller:
Enron North America Corp.
By:
Name:
Title:
Buyer:
Allegheny Energy Supply Company,
L.L.C.
By:
Name:
Title:
<PAGE>
LIST OF EXHIBITS AND SCHEDULES:
List of Exhibits:
Exhibit A - List of LLCs and Facilities
Exhibit 5.2 - Confidentiality Agreement
Exhibit 9.2 - Assignment and Assumption Agreement
List of Schedules for each LLC:
Schedule 4.1(g) - Violations or Breaches
Schedule 4.1(h) - Consents
Schedule 4.1(i) - Actions
Schedule 4.1(j) - Compliance with Laws
Schedule 4.1(m) - Project Documents
Schedule 4.1(n) - Environmental Matters
Schedule 4.1(o) - Tax Matters
Schedule 4.1(p) - Employee Matters
Schedule 4.1(r) - Personal Property
Schedule 4.1(s) - Real Property
Schedule 4.1(t) - Leases
Schedule 4.1(u) - Permits
Schedule 4.1(v) - Condition of Facility
Schedule 4.1(y) - Undisclosed Liabilities
Schedule 7.1 - Preclosing Matters
Schedule 7.11 - Casualty Loss Amount
Schedule 7.12 - Excluded Assets
Schedule 7.13 - Guarantees
<PAGE>
Exhibit A
to
Purchase and Sale Agreement
LIST OF LLCs AND FACILITIES
1. List of LLCs.
Des Plaines Green Land Development L.L.C., a Delaware
limited liability company.
Gleason Power I L.L.C., a Delaware limited liability
company.
West Fork Land Development Company, L.L.C., a Delaware
limited liability company.
Energy Financing Company, L.L.C., a Delaware limited
liability company.
Lake Acquisition Company, L.L.C., a Delaware limited
liability company.
2. Description of Facilities.
See Part I of Schedule 4.1(r) for each LLC.
<PAGE>
Exhibit 5.2
to
Purchase and Sale Agreement
CONFIDENTIALITY AGREEMENT
[attached behind this page]
<PAGE>
Exhibit 9.2
to
Purchase and Sale Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"Assignment"), dated ____________, is from Enron North America
Corp., a Delaware corporation ("Assignor"), to Allegheny Energy
Supply Company, L.L.C., a Delaware limited liability company
("Assignee").
Recitals:
A. Assignor holds all issued and outstanding member
interests (the "Assigned Membership Interests") in and to the
limited liability companies described in Exhibit A.
B. Assignor and Assignee have entered into a Purchase and
Sale Agreement, dated _______, 2000 (the "Purchase Agreement"),
under which Assignor has agreed to sell and transfer, and
Assignee has agreed to purchase, the Assigned Membership
Interests, all as more fully provided therein.
C. Assignor now desires to transfer to Assignee the
Assigned Membership Interests.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Assignor and Assignee do hereby agree as follows:
Assignment and Agreements:
1. Assignment of Membership Interests. Assignor has
transferred, assigned, conveyed, and delivered, and by these
presents does transfer, assign, convey, and deliver, to Assignee,
the Assigned Membership Interests.
TO HAVE AND TO HOLD, the Assigned Membership Interests,
together with all and singular the rights and appurtenances
thereto in anywise belonging unto Assignee, and its successors
and assigns, forever.
2. Assumption. Assignee hereby agrees to assume and fully
perform all of Assignor's obligations and liabilities under and
in respect of the Assigned Membership Interests, whether relating
to periods of time before or after the date hereof.
3. Purchase Agreement. This Assignment is subject to, in all
respects, the terms and conditions of the Purchase Agreement, and
to the extent there is a conflict between this Assignment and the
Purchase Agreement, the terms of the Purchase Agreement shall
control.
4. Counterparts. This Assignment may be executed in
counterparts, including faxed counterparts.
<PAGE>
5. Governing Law. This Assignment shall be governed by, and
construed and enforced in accordance with, the laws of the State
of Texas.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment as of this the _____ day of ________________.
Assignor:
ENRON NORTH AMERICA CORP.
By:
Name:
Title:
Assignee:
ALLEGHENY ENERGY SUPPLY COMPANY,
L.L.C.
By:
Name:
Title:
STATE OF TEXAS
COUNTY OF HARRIS
This instrument was acknowledged before me on ___________,
by ____________, ______________ of Enron North America Corp., a
Delaware corporation, on behalf of said corporation.
Notary Public for the State of
Printed Name:
My Commission Expires:
STATE OF TEXAS
COUNTY OF HARRIS
This instrument was acknowledged before me on ___________,
by ____________, ______________ of _______________, a
________________, on behalf of said ____________.
Notary Public for the State of
Printed Name:
My Commission Expires:
<PAGE>
