EXHIBIT 10.20
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is dated
as of December 31, 1996, by and among YOLO ENERGY
PARTNERS, INC., an Indiana corporation ("Seller"), YOLO
LANDFILL GAS CORPORATION, a California corporation ("Yolo
Gasco"), EMCON, a California corporation ("Emcon"), YOLO
NEO LLC, a Delaware limited liability company ("NEO Yolo")
and Minnesota Methane LLC, a Wyoming limited liability
company ("Buyer").
A. Seller is the owner of the lessee's interest under a Commercial Gas
Production Agreement dated June 18, 1985 (the "Production Agreement") with the
County of Yolo, California, as lessor, pursuant to which the Seller is granted
the rights to collect, process, use and sell landfill gas and produce electric
power at the Yolo County Central Landfill in Yolo County, California.
B. On April 22, 1988 certain of the rights and responsibilities under
the Production Agreement were delegated to and assumed by Yolo Gasco pursuant to
an amendment to the Production Agreement and the terms of a Delegation Agreement
between Seller and Yolo Gasco (the "Delegation Agreement").
C. Pursuant to the terms of the Delegation Agreement Yolo Gasco has
caused to be installed, owned and operated certain landfill gas collection
▇▇▇▇▇, piping, compressors and associated equipment for the collection, sale,
processing and sale to Seller of landfill gas (the "Gas Project").
D. Pursuant to the terms of the Production Agreement the Seller has
acquired, installed, owned and operated certain electric generation equipment
and associated rights, permits, contracts and other authorizations for the
production and sale of electric power (the "Electric Project").
E. EMCON owns all of the issued and outstanding shares of Yolo Gasco.
EMCON also has provided services to Yolo Gasco for the operation and maintenance
of the landfill gas collection system owned by Yolo Gasco.
F. In 1995, Seller entered into an agreement with Pacific Gas &
Electric Company ("PG&E") pursuant to which Seller agreed to terminate all of
its rights to sell power to PG&E from the Power Project (the "Termination
Agreement"). The Termination Agreement includes certain other restrictions on
the sale of electric power to PG&E by any purchasers of the Electric Project
that may continue to utilize the electric power generation equipment at the Yolo
County Central Landfill.
G. Seller desires to sell and Buyer desires to buy the assets of the
Power Project for the purchase price and on the terms set forth herein.
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H. Yolo Gasco desires to sell and NEO Yolo desires to buy the assets of
the Gas Project for the purchase price and on the terms set forth herein.
I. As an inducement to NEO Yolo and Buyer to enter into this Agreement,
EMCON has agreed to provide its services at attractive rates for the operation
and maintenance of the landfill gas collection system in connection with the Gas
Project to be acquired by NEO Yolo.
J. In order to settle all claims that may exist between Yolo Gasco and
the Seller, the Seller and Buyer have agreed upon the terms of a settlement of
such claims which settlement will be a condition precedent to the closing of
this transaction.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements herein contained, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ELECTRIC PROJECT ASSETS. On the terms and
subject to the conditions set forth in this Agreement, Seller hereby agrees to
sell, assign, convey, transfer and deliver to Buyer, and Buyer hereby agrees to
purchase from Seller, on a going concern basis, all of the assets and business
properties of every kind and description, wherever located, personal or mixed,
tangible and intangible, owned or held by Seller and used or held for use in
connection with the Electric Project (collectively, the "Electric Assets"),
including, without limitation, all right, title and interest of Seller in, to
and under:
(a) All raw materials, supplies, work-in-process, and other
materials included in the inventory of the Electric Project or including,
without limitation, such items that have been ordered by Seller but have not yet
been received by Seller;
(b) All of the real estate and personal property leases listed and
described in Schedule 1(b) attached hereto (collectively the "Electric Project
Assumed Leases");
(c) All machinery and equipment, vehicles, furniture, fixtures, and
other personal property owned by Seller and used or useful in connection with
the Electric Project including, without limitation, the items listed or
described on Schedule 1(c) attached hereto;
(d) The contracts, agreements or understandings listed or described
on Schedule 1(d) attached hereto (collectively, the "Electric Project Assumed
Contracts");
(e) All of the permits, licenses and authorizations listed or
described on Schedule 1(e) attached hereto (collectively, the "Electric Project
Permits");
(f) All customer lists, processes, trade secrets, know how and
other proprietary or confidential information used in or related to the Electric
Project (but excluding privileged attorney-client communications, attorney work
product and such other confidential information as would ordinarily fall within
the category of "privileged" material for purposes of discovery in general civil
litigation in California's state or federal courts);
(g) All trademarks and trade names associated with the Electric
Project (the "Goodwill");
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(h) All of Seller's rights, claims or causes of action against
third parties related to the assets, properties, business or operations of the
Electric Project arising out of transactions occurring prior to the Closing
Date; and
(i) Copies of all books and records which copies shall be made at
Buyer's expense to the extent such cost exceeds $200.
2. PURCHASE AND SALE OF THE GAS PROJECT ASSETS. On the terms and
subject to the conditions set forth in this Agreement, Yolo Gasco hereby agrees
to sell, assign, convey, transfer and deliver to NEO Yolo, and NEO Yolo hereby
agrees to purchase from Yolo Gasco, on a going concern basis, all of the assets
and business properties of every kind and description, wherever located,
personal or mixed, tangible or intangible, owned by Yolo Gasco and used or held
for use in connection with the Gas Project (collectively, the "Gas Assets"),
excluding cash and accounts receivable, but including, without limitation, all
right, title and interest of Seller in, to and under:
(a) All raw materials, supplies, work-in-process, and other
materials included in the inventory of the Gas Project, including, without
limitation, such items that have been ordered by Yolo Gasco but have not yet
been received by Yolo Gasco;
(b) All of the real estate and personal property leases listed and
described in Schedule 2(b) attached hereto (collectively the "Gas Project
Assumed Leases");
(c) All machinery and equipment and other personal property owned
by Yolo Gasco and exclusively used in connection with the Gas Project including,
without limitation, the items listed or described on Schedule 2(c) attached
hereto;
(d) The contracts, agreements or understandings listed or described
on Schedule 2(d) attached hereto (collectively, the "Gas Project Assumed
Contracts");
(e) All of the permits, licenses and authorizations listed or
described on Schedule 2(e) attached hereto (collectively, the "Gas Project
Permits");
(f) All customer lists, processes, trade secrets, know-how and
other proprietary or confidential information exclusively used in or related to
the Gas Project (but excluding privileged attorney-client communications,
attorney work product and such other confidential information as would
ordinarily fall within the category of "privileged" material for purposes of
discovery in general civil litigation in California's state or federal courts);
(g) All trademarks and trade names of Yolo Gasco associated with
the Gas Project (the "Goodwill");
(h) All of Yolo Gasco's rights, claims or causes of action against
third parties related to the assets, properties, business or operations of the
Gas Project arising out of transactions occurring prior to the Closing Date; and
(i) Copies of all books and records, which copies shall be made at
NEO Yolo's expense to the extent such cost exceeds $200.
3. PURCHASE PRICE FOR ELECTRIC PROJECT. On the terms and subject to the
conditions set forth in this Agreement, and in
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consideration of the sale, conveyance, assignment, transfer and delivery of the
Electric Assets, Buyer agrees to deliver at Closing good funds in the amount of
$550,000 as the purchase price for the Electric Assets (the "Electric Project
Purchase Price"). As a condition to the Closing, Buyer shall pay the Electric
Project Purchase Price, and shall also pay certain other amounts, in accordance
with the following provisions:
(a) On the terms and subject to the conditions set forth in this
Agreement, including, without limitation, Section 3(b) below, upon the Closing,
Buyer agrees to assume and discharge the liabilities of Seller set forth on
Schedule l(b) attached hereto. All of the foregoing liabilities and obligations
of Seller to be assumed by Buyer pursuant to this Section 3(a) are referred to
as the "Electric Project Assumed Liabilities".
(b) Buyer expressly does not assume and does not agree to assume
any liability or obligation of Seller, direct or indirect, known or unknown,
absolute or contingent, not expressly assumed by Buyer pursuant to Section 3(a)
and, notwithstanding anything to the contrary in Section 3(a), none of the
following shall be Electric Project Assumed Liabilities for purposes of this
Agreement:
(i) any income taxes (including foreign, federal, state, county
or local) of Seller or Yolo Gasco;
(ii) any costs and expenses incurred by Seller incident to its
negotiation and preparation of this Agreement and the consummation of the
transactions contemplated herein (it being understood that such costs and
expenses are being and will be paid by Seller);
(iii) any liability under any insurance, pension, deferred
compensation or any other employee benefit plan including any claim or liability
to make any contribution to any such plan relating to the period prior to
Closing;
(iv) any sales, use or transfer taxes, if any, in connection
with this transaction, any tax liability of Yolo Gasco or Seller resulting from
the transactions contemplated herein, including, without limitation, any
recapture by Seller of investment tax credit or depreciation; (v) any claim or
liability the existence of which would constitute a breach of any of the
representations of Seller hereunder (provided, however, that the existence of
any such claim or liability shall not give rise to, or create an inference with
respect to, any independent basis for asserting or initiating any claim for
damages for breach of any representation of Seller hereunder); and
(vi) any debt, liability or obligation of Seller, its
shareholders, or any one of them, other than the Electric Project Assumed
Leases.
(c) Buyer expressly does not assume and does not agree to assume
any income, business, occupation, employment, withholding, sales and use,
personal property or real estate tax, assessment or governmental charge or any
other tax, assessment or governmental charge of any kind related to the Electric
Project or the Electric Assets for any period ending prior to or on the Closing;
provided, however, Buyer does expressly assume taxes, assessments or
governmental charges, if any, which accrue or relate to a period subsequent to
the Closing as a result of Buyer's ownership, operation, sale or transfer of the
Electric Project or the Electric Assets subsequent to the Closing or as provided
elsewhere herein.
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(d) The purchase price for the Electric Assets shall be allocated
as set forth on Schedule 3(d) attached hereto.
4. Purchase Price for Gas Project Assets. On the terms and subject to
the conditions set forth in this Agreement, and in consideration of the sale,
conveyance, assignment, transfer and delivery of the Gas Assets, at the Closing
NEO Yolo agrees to deliver at Closing good funds in the amount of $250,000 as
the purchase price for the Gas Assets (the "Gas Project Purchase Price"). As a
condition to the Closing, Buyer shall pay the Gas Purchase Price, and shall also
pay certain other amounts, in accordance with the following provisions:
(a) On the terms and subject to the conditions set forth in this
Agreement, including, without limitation, Section 4(b) below, upon the Closing,
NEO Yolo agrees to assume and discharge the liabilities of Yolo Gasco set forth
on Schedule 2(b) attached hereto. All of the foregoing liabilities and
obligations of Yolo Gasco to be assumed by NEO Yolo pursuant to this Section
4(a) are referred to as the "Gas Project Assumed Liabilities".
(b) NEO Yolo expressly does not assume and does not agree to assume
any liability or obligation of Yolo Gasco, direct or indirect, known or unknown,
absolute or contingent, not expressly assumed by NEO Yolo pursuant to Section
4(a) and, notwithstanding anything to the contrary in Section 4(a), none of the
following shall be Gas Project Assumed Liabilities for purposes of this
Agreement:
(i) any income taxes (including foreign, federal, state, county
or local) of Seller or Yolo Gasco;
(ii) any costs and expenses incurred by Yolo Gasco incident to
its negotiation and preparation of this Agreement and the consummation of the
transactions contemplated herein (it being understood that such costs and
expenses are being and will be paid by Yolo Gasco);
(iii) any liability under any insurance, pension, deferred
compensation or any other employee benefit plan including any claim or liability
to make any contribution to any such plan relating to the period prior to
Closing;
(iv) any sales, use or transfer taxes, if any, in connection
with this transaction, any tax liability of Yolo Gasco or Seller resulting from
the transactions contemplated herein, including, without limitation, any
recapture by Yolo Gasco of investment tax credit or depreciation;
(v) any claim or liability the existence of which would
constitute a breach of any of the representations of Yolo Gasco hereunder
(provided, however, that the existence of any such claim or liability shall not
give rise to, or create an inference with respect to, any independent basis for
asserting or initiating any claim for damages for breach of any representation
of Yolo Gasco hereunder); and
(vi) any debt, liability or obligation of Yolo Gasco, its
shareholders, or any one of them, other than the Gas Project Assumed
Liabilities.
(c) NEO Yolo expressly does not assume and does not agree to assume
any income, business, occupation, employment, withholding, sales and use,
personal property or real estate tax, assessment or governmental charge or any
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other tax, assessment or governmental charge of any kind related to the Gas
Project or the Gas Assets for any period ending prior to or on the Closing;
provided, however, NEO Yolo does expressly assume, taxes, assessments, and
governmental charges, if any, which accrue or relate to a period subsequent to
the Closing as a result of NEO Yolo's ownership, operation, sale or transfer of
the Gas Project or the Gas Assets subsequent to the Closing.
5. CLOSING. The purchase and sale of the Gas Assets and the Electrical
Assets (the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇',
Inc., at 10:00 a.m. local time on December 13, 1996, (the "Closing Date"), or at
such other place and time as the parties may mutually agree.
(a) Deliveries by Seller. At or prior to the Closing, Seller shall
deliver to Buyer, in a form reasonably satisfactory to Buyer, the following
items:
(i) A ▇▇▇▇ of sale and assignment in the form attached hereto
as Schedule 5(a)(i), duly executed by Seller, conveying all of Seller's rights,
title and interest in and to all of the Electric Assets to Buyer, to the full
extent of Seller's interest in the Electric Assets;
(ii) An assignment and assumption agreement in the form
attached hereto as Exhibit 5(a)(ii), duly executed by Seller, and such other
assignment agreements as are necessary to transfer, assign, and convey all of
Seller's right, title, and interest in and to all leases, agreements, contracts,
licenses, permits, orders and other Electric Assets which constitute an Electric
Project Assumed Lease, an Electric Project Assumed Contract or Electric Project
Permit;
(iii) Such other instruments of sale, conveyance, transfer and
assignment as Buyer may reasonably request, duly executed by Seller, as are
necessary to vest in Buyer as of the Closing all of Seller's rights, title and
interest in and to all of the Electric Assets to the full extent of Seller's
interest in the Electric Assets; and
(iv) A duly certified copy of resolutions of the Board of
Directors and shareholders of Seller authorizing the transactions that are the
subject of this Agreement.
(v) A duly executed Certificate of Seller certifying the
accuracy of Seller's representations contained in this Agreement as of the
Closing Date and Seller's compliance with, and fulfillment of, all covenants,
agreements, obligations and conditions as required by this Agreement.
(vi) Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., counsel for Seller,
dated the Closing Date and in the form attached hereto as Exhibit 5(a) (vi).
(vii) Signed consents or approvals by third parties set forth
in Schedule 6(c).
(viii) A power purchase agreement on Form Standard Offer 1
between Southern California Edison and Buyer with respect to the Electric
Project on terms satisfactory to Buyer.
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(ix) A transmission and interconnection agreement between
Pacific Gas and Electric Company and Buyer with respect to the delivery of
electric power from the Electric Project to Southern California Edison on terms
satisfactory to Buyer.
In connection with the foregoing deliveries, on the Closing Date, Seller shall
deliver full possession and enjoyment of all of the Electric Assets to Buyer, to
the full extent of Seller's interest therein, in accordance with the provisions
of this Agreement. Seller shall cooperate with Buyer after the Closing and shall
execute and deliver such additional documents or instruments which are
reasonably necessary to sell, convey, transfer or assign Seller's interest in
the Electric Assets to Buyer.
(b) DELIVERIES BY BUYER. At or prior to the Closing, Buyer shall
deliver to Seller, in form reasonably satisfactory to Seller, the following
items:
(i) Good funds in the amount of $550,000;
(ii) An assignment and assumption agreement in the form
attached hereto as Exhibit 5(a)(ii), duly executed by Buyer, pursuant to which
Buyer assumes and agrees to discharge all of the Electric Project Assumed
Liabilities;
(iii) A duly certified copy of resolutions of the Managers or
Members of Buyer authorizing the transactions contemplated by this Agreement;
(iv) A duly executed Certificate of President or Manager of
Buyer certifying the accuracy of Buyer's representations and warranties
contained in this Agreement and Buyer's compliance with, and fulfillment of, all
covenants, agreements, obligations and conditions as required by this Agreement;
(c) DELIVERIES BY YOLO GASCO. At or prior to the Closing, Yolo
Gasco shall deliver to NEO Yolo, in a form reasonably satisfactory to NEO Yolo,
the following items:
(i) A ▇▇▇▇ of sale and assignment in the form attached hereto
as Exhibit 5(c)(i), duly executed by Yolo Gasco, conveying all of Yolo Gasco's
rights, title and interest in and to all of the Gas Assets to NEO Yolo, to the
full extent of Yolo Gasco's interest in the Gas Assets;
(ii) An assignment and assumption agreement in the form
attached hereto as Exhibit 5(c)(ii), duly executed by Yolo Gasco, and such other
assignment agreements as are necessary to transfer, assign, and convey all of
Yolo Gasco's right, title and interest in and to all leases, agreements,
contracts, licenses, permits, orders and other Gas Assets which constitute a Gas
Project Assumed Lease, a Gas Project Assumed Contract or a Gas Project Permit;
(iii) Such other instruments of sale, conveyance, transfer and
assignment as NEO Yolo may reasonably request, duly executed by Yolo Gasco, as
are necessary to vest in NEO Yolo as of the Closing all of Yolo Gasco's rights,
title and interest in and to all of the Gas Assets to the full extent of
Seller's interest in the Gas Assets;
(iv) A certified copy of resolutions of the Board of Directors
and Shareholder of Yolo Gasco authorizing the transactions that are the subject
of this Agreement.
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(v) A duly executed Certificate of President of Yolo Gasco
certifying the accuracy of Yolo Gasco's representations contained in this
Agreement as of the Closing Date and Yolo Gasco's compliance with, and
fulfillment of, all covenants, agreements, obligations and conditions as
required by this Agreement.
In connection with the foregoing deliveries, on the Closing Date, Yolo
Gasco shall deliver full possession and enjoyment of all of the Gas Assets to
NEO Yolo to the full extent of Yolo Gasco's interest therein, in accordance with
the provisions of this Agreement. Yolo Gasco shall cooperate with NEO Yolo after
the closing and shall execute and deliver such additional documents or
instruments which are reasonably necessary to sell, convey, transfer or assign
Yolo Gasco's interest in the Gas Assets to NEO Yolo.
(d) Deliveries by NEO Yolo. At or prior to the Closing, NEO Yolo
shall deliver to Yolo Gasco, in a form reasonably satisfactory to Yolo Gasco,
the following items:
(i) Good funds in the amount of $250,000;
(ii) An assignment and assumption agreement in the form
attached hereto as Exhibit 5(c)(ii), duly executed by NEO Yolo, pursuant to
which NEO Yolo assumes and agrees to discharge all of the Gas Project Assumed
Liabilities;
(iii) A duly certified copy of resolution of the manager or
members of NEO Yolo authorizing the transactions contemplated by this Agreement;
(iv) Consents, waivers, settlement and termination agreements
and such other documents duly executed by other third parties listed on Schedule
3(b)(iv), as are reasonably required for the consummation of the transactions
contemplated by this Agreement;
(v) An agreement of indemnification by NEO Yolo in the form of
Exhibit 5(c)(v) of Yolo Gasco and EMCON for liabilities, costs and expenses that
arise after the Closing Date for actions by NEO Yolo for actions taken after the
Closing Date that relate to the Gas Project.
(vi) A duly executed Certificate of the President or a Manager
or Member of NEO Yolo certifying the accuracy of NEO Yolo's representations and
warranties contained in this Agreement and NEO Yolo's compliance with, and
fulfillment of, all covenants, agreements, obligations and conditions as
required by this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer the following (both as of the Closing Date and as of the date
hereof):
(a) DUE CORPORATE FORMATION AND QUALIFICATION. Seller is a
corporation duly organized and validly existing under the laws of the State of
Indiana, and is qualified to do business in the State of California and has the
power and lawful authority to carry on its business as now being conducted, and
to own or lease and operate its properties and assets as now owned, leased or
operated by it. To the best knowledge and belief of the Seller, the Seller is
not required to be licensed or qualified as a foreign corporation in any other
jurisdiction other than the State of California except where a failure to be so
qualified would have a material adverse effect upon the business of the Seller.
Seller has no subsidiaries and does not own any securities issued by any other
business organization or governmental authority. Seller does not own or have any
direct or indirect interest in or control over any other corporation,
partnership, joint venture or entity of any kind.
(b) CORPORATE AUTHORIZATION OF SELLER. The Seller has full
corporate power and authority to execute and deliver this Agreement and each
agreement, document and instrument executed and delivered by Seller pursuant to
this Agreement and to consummate the transactions contemplated hereby, and
assuming due authorization, execution and delivery of this Agreement by the
Buyer, Yolo Gasco and NEO Yolo, this Agreement and each agreement, document and
instrument executed and delivered by Seller pursuant to this Agreement
constitutes the valid and binding obligation of the Seller enforceable in
accordance with its terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors rights
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generally and the remedy of specific performance and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) AUTHORITY OF THE SELLER. Except as set forth in Schedule
attached hereto, to the best knowledge and belief of the Seller, no consent,
authorization or approval of, or declaration, filing or registration with, any
governmental, administrative or regulatory body, or any consent, authorization
or approval of any other third party, is necessary in order to enable the Seller
to enter into and perform its obligations under this6 Agreement and to
consummate the transactions contemplated hereby, and, to the best knowledge and
belief of the Seller, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will:
(i) be in violation of the articles of incorporation or code of
bylaws of the Seller or constitute a breach of any evidence of indebtedness or
agreement relating to the business to which the Seller is a party;
(ii) cause a default under any mortgage or deed of trust or
other lien, charge or encumbrance to which any of the Electric Assets is subject
or under any contract relating to the Seller's business to which the Seller is a
party, or permit the termination of any such contract by another person;
(iii) result in the creation or imposition of any security
interest, lien, charge or other encumbrance upon any of the Electric Assets
under any agreement or commitment to which the Seller is bound;
(iv) accelerate, or constitute an event entitling, or which
would, on notice or lapse of time or both, entitle, the holder of any
indebtedness of the Seller to accelerate the maturity of any such indebtedness;
(v) conflict with or result in the breach of any writ,
injunction or decree of any court or governmental instrumentality; or
(vi) violate any statute, law, regulation, permit order or
other governmental authorization of any jurisdiction as such statute, law,
regulation, permit, order or other governmental authorization relates to the
properties of the Electric Project.
(d) FINANCIAL STATEMENTS AND TAX RETURNS. Seller has heretofore
furnished the Buyer with the balance sheet of Seller dated December 31, 1994
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(the "Seller Balance Sheet Date"), together with the statement of earnings,
stockholders equity and cash flow of Seller for the twelve-month period ending
December 31, 1994 and for the two years ending December 31, 1992 and 1993
(collectively, the "Seller Financial Statements"). Copies of the Seller
Financial Statements are attached hereto as Schedule 6(d). Except as otherwise
indicated in the Seller Financial Statements, to the best knowledge and belief
of Seller, the Seller Financial Statements have been prepared utilizing
generally accepted accounting principles consistently applied. Seller has
furnished to Buyer true and correct copies of its federal and state tax returns
and all amendments thereto for the years 1992, 1993 and 1994.
(e) ABSENCE OF UNDISCLOSED LIABILITIES. All liabilities of the
Seller with respect to the Seller's business and the Electric Assets (whether
accrued, absolute, contingent or otherwise and whether due or to become due) are
set forth or adequately reserved against in the Seller Financial Statements in
accordance with generally accepted accounting principles, except for liabilities
set forth on Schedule 6(e) attached hereto and except for liabilities incurred
since the Seller Balance Sheet Date in the ordinary course of business as
therefore conducted.
(f) TITLE TO PROPERTIES; ENCUMBRANCES. Except as reflected in the
Seller Financial Statements, and except for assets and properties which have
been sold or otherwise disposed of in the ordinary course of business, the
Seller has good, valid and marketable title (except for leasehold interests,
rights pursuant to easements, licenses and other interests of third parties
specifically set forth on any Schedule annexed hereto) to all its material
tangible and intangible personal properties and assets, including all tangible
and intangible personal properties and assets, which are included among the
Electric Assets reflected in the Seller Financial Statements, and all other
tangible and intangible personal properties and assets, which are included among
the Electric Assets, purchased by the Seller since the Seller Balance Sheet
Date, in each case subject to no encumbrance, lien, charge or other restriction
of any kind or character, except for (i) consisting of zoning or planning
restrictions, easements, permits and other restrictions or limitations on the
use of real or tangible or intangible personal property which are described in
Schedule 6(f) attached hereto, (ii) liens for current taxes, assessments or
governmental charges or levies on property not yet due and delinquent and (iii)
liens, encumbrances and easements under the contracts and agreements which are
included among the Electric Assets and which are specifically identified on any
Schedule annexed hereto (liens of the type described in clause (i), (ii), and
(iii) above are hereinafter sometimes referred to as "Electric Project Permitted
Liens"), and (iv) the liens or other encumbrances set forth on Schedule 6(f)
attached hereto.
(g) COMPLIANCE WITH LAWS. Except as set forth on Schedule attached
hereto, to the Seller's best knowledge and belief, with respect to the Seller's
business, (i) Seller has received no notice from any governmental authority that
it is in violation of applicable laws and regulations, and (ii) Seller has not
received any notification of past violations of such laws or regulations that
could reasonably be expected to result in future material claims against it. To
the best knowledge and belief of the Seller, set forth on Schedule 6(g) attached
hereto is a list of all of the Seller's licenses, permits, orders and approvals
of any federal, state or local governmental or regulatory bodies that are
material to or necessary for the conduct of the Seller's business (collectively
"Electric Project Permits"). To the best knowledge and belief of the Seller, all
Electric Project Permits are in full force and effect and no proceeding is
pending or threatened to revoke or limit any Electric Project Permit.
(h) LITIGATION. Except as set forth on Schedule 6(h) attached
hereto, there are no actions, suits or claims, or legal, administrative or
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arbitral proceedings or investigations pending or, to the best knowledge and
belief of the Seller, threatened against or involving the Seller or any of its
properties or assets with respect to the Seller's business. To the best
knowledge and belief of the Seller, none of the actions, suits, claims,
proceedings or investigations set forth on Schedule 6(h), individually or in the
aggregate, can reasonably be expected to have a material adverse effect on the
Electric Project.
(i) POWER PURCHASE AGREEMENTS. Seller has delivered true and
correct copies of the termination agreement and any amendments thereto entered
into between Seller and PG&E. Schedule 6(i) sets forth a list of all documents
and agreements between Seller and PG&E that have or could have a material
adverse effect on the Electric Project or on the use of the Electric Assets at
the Yolo County Central Landfill, copies of which documents have been provided
to Buyer.
(j) CONTRACTS AND OTHER AGREEMENTS. Schedule 6(j) attached hereto
contains a complete and accurate list of all of the following contracts and
other agreements with respect to the Electric Project to which the Seller is a
party or by or to which it or its assets or properties are bound or subject;
(i) contracts and other agreements with any current or former
officer, director, or employee not cancelable without penalty on notice of
thirty (30) days or less;
(ii) contracts and other agreements with material suppliers of
products sold or leased by Seller in the normal course of the Seller's business;
(iii) contracts and other agreements relating to the borrowing
of money including any indenture, mortgage, promissory note, loan agreement, or
guaranty;
(iv) operations and maintenance agreements with respect to the
Electric Project;
(v) any water supply agreement or any other agreement for
condensate or other liquid disposal; and
(vi) any other contract or other agreement which the Seller
reasonably believes is material to the Electric Project (other than those
reflected on any of the other Schedules to this Agreement). There have been
delivered or made available to the Buyer true and complete copies of all of the
contracts and other agreements set forth on Schedule 6(j) or on any other
Schedule attached hereto. To the best knowledge and belief of the Seller, all of
such contracts and other agreements are valid and binding upon the Seller in
accordance with their terms, and, except as set forth on Schedule 6(c), the
Seller is not in material default under any such contracts.
(k) REAL ESTATE LEASES. Schedule 6(k) attached hereto sets forth a list
and summary description of all leases, subleases, easements, licenses or other
agreement under which the Seller is the lessor or lessee of, or uses or occupies
or allows the use or occupancy of, any real property (the "Seller Leases and
Easements"). All of the Seller Leases and Easements, true and complete copies of
which have been delivered or made available to the Buyer, are in effect and, to
the best knowledge and belief of the Seller, the Seller is not in material
default under or with respect to any of the Seller Leases or Easements nor has
the Seller received or sent any notice of any default under or with respect to
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any of the same. To the best knowledge and belief of the Seller, no other party
to any of the Seller Leases and Easements is in material default under or with
respect to any of the same.
(l) ACCOUNTS AND NOTES RECEIVABLE. To the best knowledge and belief
of the Seller, all accounts receivable reflected on the Seller Financial
Statements, and all accounts receivable arising subsequent to the Seller Balance
Sheet Date and prior to the Closing Date, have arisen, or will have arisen at
the Closing Date, in the ordinary course of business of the Seller and
represent, or will represent, valid obligations due to the Seller and subject to
no set off and counterclaim. Seller has no account or loans receivable from any
person, firm or corporation which is affiliated with Seller or from any
director, officer or employee of Seller.
(m) INTELLECTUAL PROPERTY. Schedule 6(m) attached hereto sets forth
a list of all patents, trade secrets, proprietary rights, trademarks, service
marks and trade names (collectively, "Intellectual Property") that relate to the
Seller's business. Except as set forth on Schedule 6(m), to the best knowledge
and belief of the Seller, all Intellectual Property is owned outright by Seller,
free and clear of any lien or encumbrance and except as so set forth, there
exist no obligations with respect to any Intellectual Property requiring the
Seller to make any payment in respect of its use or otherwise. Except as set
forth on Schedule 6(m), to the best knowledge and belief of the Seller, the
Seller has no notice of any patent, trademark, service ▇▇▇▇ or trade name of any
other person that infringes upon, or is infringed upon by, any of the property
set forth on Schedule 6(m) or notice of any claim of any other person relating
to any of the property set forth or any process or confidential information of
the Seller. Seller's rights in all of such Intellectual Property are freely
transferable.
(n) BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of the Seller is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein.
(o) EMPLOYEE BENEFIT PLANS.
(i) Schedule 6(o) attached hereto lists all employee benefit
plans, as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar fringe or employee benefit plans, programs or arrangements, and any
employment or compensation agreements, written or otherwise, currently or
heretofore maintained, contributed to or entered into by the Seller for the
benefit or, relating to, or with any employee of the Seller employed in the
Seller's business (the "Employee Plans"). None of the Employee Plans is a
multi-employer plan, as defined in Section 4001(a)(3) of ERISA (a
"Multi-employer Plan"). There has been no "prohibited transaction", as such term
is defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Employee Plan. No Employee Plan has breached any requirement prescribed by
any applicable statute, order, or governmental rule or regulation currently in
effect with respect thereto, nor has the Seller failed to perform any
obligations required to be performed by it under, nor is it in default under or
in violation of, nor has it knowledge of any default or violation by any other
party of the Employee Plans which would result in liability to the Buyer. Each
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Employee Plan intended to qualify under Section 401(a) of the Code does so
qualify, and each trust created thereunder intended to be exempt from tax under
the provisions of Section 501(a) of the Code is so exempt, a determination
letter from the Internal Revenue Service (the "IRS") that each such plan is so
qualified and each such trust is so exempt has been applied for and the Seller
is aware of no reason why each such favorable determination letter should not be
issued; and there exists no fact which would adversely affect the qualified
status of any such plan or which would eliminate or partially eliminate the tax
treatment accorded to the employers, employees or the corpus of any such plan
under the Code. The Seller has not incurred and does not reasonably expect to
incur (i) any liability to the Pension Benefit Guaranty Corporation (other than
a liability for premiums pursuant to Section 4007 of ERISA) with respect to any
employee plan subject to Title IV of ERISA or (ii) any withdrawal liability with
respect to any Multi-employer Plan. All contributions required to be made to any
Employee Plan have been made, and all appropriate accruals of contributions,
disbursements and expenses have been made with respect to such Employee Plans.
With respect to each Employee Plan which is covered by Title IV of ERISA, the
market value of assets of such plan as of the date hereof exceeds the actuarial
present value of benefits accrued under such plan as of the date hereof,
determined in accordance with the actuarial assumptions set forth in the most
recent actuarial valuation report of such plan.
(ii) The Seller has delivered to the Buyer true and complete
copies of all Employee Plans listed in Schedule 6(o) and of all agreements,
including trust agreements and other funding instruments, such as insurance
contracts, embodying such plans. With respect to each employee benefit plan, as
defined in Section 3(3) of ERISA, listed in Schedule 6(o), true and complete
copies of the (i) last filed Form 5500 and all applicable schedules thereto;
(ii) summary plan description and all modifications thereto communicated to
employees; and (iii) most recent annual and periodic accounting of related plan
assets, if any, have been delivered to the Buyer and are correct in all material
respects. With respect to each employee pension benefit plan, as defined in
Section 3(2) of ERISA, listed on Schedule 6(o), true and complete copies of the
(i) most recent determination letter, if any, issued by the IRS and the
application therefor, and (ii) most recent annual actuarial valuation report, if
any, have been delivered to the Buyer and are correct in all material respects.
(p) LABOR MATTERS. Except as set forth in Schedule 6(p) attached
hereto, with respect to the Seller's business, the Seller is currently in
compliance in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those related to
wages, hours, collective registrations, and authorizations.
(q) TAX RETURNS. Seller, as appropriate, has timely filed
(including extensions) with the appropriate governmental authorities, all tax
and other returns required to be filed by it and such returns are true and
complete and all taxes due have been paid. The Seller will timely file
(including extensions) with appropriate governmental authorities, all tax and
other returns which shall be required to be filed by it after the Closing Date
and such returns shall be true and complete and all taxes due shall be paid by
the Seller.
(r) INSURANCE. All insurance policies and arrangements of Seller
relative the Electric Project are set forth on Schedule 6(r) attached hereto.
Said insurance policies and arrangements are in full force and effect, all
premiums with respect thereto are currently paid, and Seller is in compliance in
all material respects with the terms thereof.
(s) ENVIRONMENTAL MATTERs. Seller has provided to Buyer copies of
all documents, records and information available to Seller, a complete listing
of which is set forth on Schedule 6(s) attached hereto, concerning any
environmental or health and safety matter relevant to Seller, whether generated
90
by Seller or others, including, without limitation, environmental audits,
environmental risk assessments, site assessments, documentation regarding
offsite disposal, spill control plans, and reports, correspondence, permits,
licenses, approvals, consents, and other authorizations related to environmental
or health and safety matters issued by any governmental agency.
(t) QUALIFYING FACILITY. Seller has taken all actions and filed all
notices or applications necessary to obtain and maintain qualifying facility
status of the Electric Project pursuant to the Public Utility Regulatory
Policies Act of 1978. Seller has received no notices and has no knowledge of any
facts or circumstances that (i) violate the requirements for maintaining
qualifying facility status for the operations of the Electric Project, or (ii)
following the purchase of the Electric Project by Buyer, would prevent the
obtaining or maintaining or would increase the cost of obtaining or maintaining
qualifying facility status under such statute for the Electric Project by the
Buyer.
(u) PERMITS AND GOVERNMENTAL AUTHORITY.
(i) All Electric Project Permits required for the construction
and operation of the Electric Project either (i) have been obtained and remain
in full force and effect and are not subject to any appeals or further
proceedings or to any unsatisfied conditions that may allow material
modification or revocation or (ii) with respect to Electric Project Permits
required for operation and construction and not yet obtained, are of a type that
are routinely granted on application and that could not be reasonably obtained
before the Closing Date. Upon the purchase of the Electric Assets, the Buyer
will, to the extent permitted by law, without penalty, additional cost or
consent of any person, be entitled to the benefit of each such Electric Project
Permit so that the operation of the Electric Project may continue, except as set
forth on Schedule 6(u). All applicable Electric Project Permits obtained as of
the Closing Date are listed in Schedule l(e).
(ii) Except for the Electric Project Permits identified in
Schedule l(e), no action by, and no notice to or filing with, any federal, state
or local governmental authority or regulatory body (x) is or will be required
for the due execution, delivery and performance by the Seller of this Agreement
or any agreement, lease or document to be entered into, assigned or delivered
pursuant to the terms hereof of to which it is or will be a party, or (y) is or
will be required for the financing and operation of the Electric Assets.
(v) ENVIRONMENTAL COMPLIANCE. Seller has taken all necessary steps
to investigate the past and present condition and usage of its properties and
the operations conducted thereon and, based upon such diligent investigation,
has determined and hereby represents and warrants that:
(i) Neither the Seller nor any operator of its properties is in
violation, or alleged violation, of any judgment, decree, order, law, license,
rule or regulation pertaining to the environmental matters, including without
limitation, those arising under federal, state or local environmental laws,
which violation would have a material adverse effect on the business, assets or
financial condition of the Seller;
(ii) The Seller has not received notice from any third party
including, without limitation; any federal, state or local governmental
authority, (a) that it has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R. Part ▇▇▇
▇▇▇▇▇▇▇▇ ▇ (1986); (b) that any hazardous waste, as defined by 42 U.S.C.
ss.6903(5), any hazardous waste, as defined by 42 U.S.C. ss.9601(14), any
pollutant or contaminant as defined by 42 U.S.C. ss.9601(33) or any toxic
91
substance, oil or hazardous materials or other chemicals or substances regulated
by any federal, state or local environmental laws ("Hazardous Substances") which
it has generated, transported or disposed of has been found at any site at which
a federal, state or local agency or other third party has conducted or has
ordered that the Seller conduct a remedial investigation, removal or other
response action pursuant to any federal, state or local environmental law; or
(c) that it is or shall be a named party to any claim, action, cause of action,
complaint, legal or administrative proceeding arising out of any third party's
incurrence of costs, expenses, losses or damages of any kind whatsoever in
connection with the release of Hazardous Substances;
(iii) (a) No portion of the Seller's leased real property has
been used for the handling, processing, storage or disposal of Hazardous
Substances except in accordance with applicable federal, state or local
environmental laws; and no underground tank or other underground storage
receptacle for Hazardous Substances is located on such real property; (b) in the
course of any activities conducted by the Seller or operators of the real
property, no Hazardous Substances have been generated or are being used on such
real property except in accordance with applicable federal, state or local
environmental laws; (c) there have been no unpermitted releases (i.e. any past
or present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened releases
property, which releases would have a material adverse effect on the value of
such real property or adjacent properties or the environment; (d) to the best of
the Seller's knowledge, there have been no releases on, upon, from or into any
real property in the vicinity of the real property which, through soil or
groundwater contamination, may have come to be located on, and which would have
a material adverse effect on the value of, the real property; and (e) in
addition, any Hazardous Substances that have been generated on the real property
have been transported offsite only by carriers having an identification number
issued by the EPA, treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable federal, state
or local environmental laws, which transporters and facilities have been and
are, to the best of the Seller's knowledge, operating in compliance with such
permits and applicable environmental laws;
(iv) The real property owned or leased by Seller in Yolo
County, California is not subject to any applicable environmental clean up
responsibility law or environmental restrictive transfer law or regulation by
virtue of the transactions set forth herein and contemplated hereby; and
(v) The Seller has provided the Buyer with true and complete
copies of all material, documents, reports, site assessments, data,
communications and other materials in its possession or to which it has access
which contain information with respect to potential environmental liabilities of
the Seller related to compliance with federal, state and local environmental
laws.
(w) Disclosure. No representation or warranty made by the Seller in
this Agreement or in any agreement, instrument, document, certificate, statement
or letter furnished to the Buyer by or on behalf of or at the request of the
Seller in connection with any of the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein not misleading
in light of the circumstances in which they are made.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. The Buyer represents and
warrants to Seller and Yolo Gasco the following (both as of the Closing Date and
as of the date hereof):
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(a) DUE FORMATION AND QUALIFICATION. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of its state of formation, and has the power and lawful authority to
carry on its business as now being conducted and to own or lease its properties
and assets as now owned, leased or operated by it. The Buyer is duly qualified
or otherwise authorized as a foreign limited liability company to transact
business and is in good standing in each jurisdiction in which, to the best
knowledge and belief of the Buyer, a failure to be so qualified would have a
material adverse effect on the business of the Buyer.
(b) AUTHORIZATION. The Buyer has full power and authority under its
formation documents and operating agreement and, the managers and members of
Buyer have taken all necessary action to authorize the Buyer to execute and
deliver this Agreement and to consummate the transactions contemplated hereby
and, assuming due authorization, execution and delivery of this Agreement by the
Seller and Yolo Gasco, this Agreement constitutes the valid and binding
obligation of the Buyer enforceable in accordance with its terms except that
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereafter in effect relating to
creditors' rights generally and the remedy of specific performance and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(c) NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement or the other agreements contemplated hereby nor the consummation of
the transactions contemplated hereby does or will violate, conflict with, result
in a breach of any provision of, constitute a default under, result in the
termination of or permit any third party to terminate (with or without notice,
lapse of time or pursuant to any legal or equitable principle) or accelerate the
performance required on the part of the Buyer by the terms of, or accelerate the
maturity of or require the prepayment of any indebtedness of the Buyer under,
any judgment, order, decree or agreement or instrument to or by which the Buyer
or any of its assets is subject or bound.
(d) AUTHORITY OF THE BUYER. Except as set forth on Schedule 7(d)
attached hereto, no consent, authorization or approval of, or declaration,
filing or registration with, any governmental, administrative or regulatory
body, or any consent, authorization or approval of any other third party, is
necessary in connection with the Buyer's purchase of the Electric Assets
contemplated hereby or the consummation of the other transactions contemplated
hereby.
(e) LITIGATION. Except as set forth on Schedule 7(e) attached
hereto, there are no claims, actions, suits, proceedings or investigations
pending or, to the best knowledge and belief of the Buyer, threatened by or
against the Buyer with respect to the transactions contemplated hereby, at law
or in equity or before or by any federal, state, municipal, foreign or other
93
governmental department, commission, board, agency, instrumentality or authority
nor does the Buyer know or have any reason to know of any basis for any such
claim, action, suit, proceeding or investigation except with respect to those
claims, actions, suits, proceedings or investigations which would not have a
material adverse effect on the Buyer.
(f) BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of Buyer is, or will be, entitled to any commission or broker's
or finder's fees from the Seller or from any person controlling, controlled by
or under common control with the Seller in connection with any of the
transactions contemplated herein.
8. REPRESENTATIONS AND WARRANTIES OF YOLO GASCO. Yolo Gasco represents
and warrants to NEO Yolo the following (both as of the Closing Date and as of
the date hereof):
(a) DUE CORPORATE FORMATION AND QUALIFICATION. Yolo Gasco is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California, and has the power and lawful authority to carry on
its business as now being conducted, and to own or lease and operate its
properties and assets as now owned, leased or operated by it. To the best
knowledge and belief of Yolo Gasco, Yolo Gasco is not required to be licensed or
qualified as a foreign corporation in any other jurisdiction except where a
failure to be so qualified would have a material adverse effect upon the Gas
Project. Yolo Gasco has no subsidiaries and does not own any securities issued
by any other business organization or governmental authority. Yolo Gasco does
not own or have any direct or indirect interest in or control over any
corporation, partnership, joint venture or entity of any kind.
(b) CORPORATE AUTHORIZATION OF YOLO GASCO. Yolo Gasco has full
power and authority under its corporate charter to execute and deliver this
Agreement and each agreement, document and instrument executed and delivered by
Yolo Gasco pursuant to this Agreement and to consummate the transactions
contemplated hereby, and assuming due authorization, execution and delivery of
this Agreement by the other parties hereto, this Agreement and each agreement,
document and instrument executed and delivered by Yolo Gasco pursuant to this
Agreement constitutes the valid and binding obligation of Yolo Gasco enforceable
in accordance with its terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and the remedy of
specific performance and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) AUTHORITY OF YOLO GASCO. Except as set forth in Schedule 8(c)
attached hereto, to the best knowledge and belief of Yolo Gasco, no consent,
authorization or approval of, or declaration, filing or registration with, any
governmental, administrative or regulatory body, or any consent, authorization
or approval of any other third party, is necessary in order to enable Yolo Gasco
to enter into and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby, and, to the best knowledge and belief of
Yolo Gasco, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will:
(i) be in violation of the articles of incorporation or bylaws
of Yolo Gasco or constitute a breach of any evidence of indebtedness or
agreement relating to the Gas Project to which Yolo Gasco is a party;
(ii) cause a default under any mortgage or deed of
trust or other lien, charge or encumbrance to which any Gas Asset is
subject or under any contract relating to the Gas Project to which
Yolo Gasco is a party, or permit the termination of any such contract
by another person;
(iii) result in the creation or imposition of any security
interest, lien, charge or other encumbrance upon any Gas Assets under any
agreement or commitment to which Yolo Gasco is bound;
94
(iv) accelerate, or constitute an event entitling, or which
would, on notice or lapse of time or both, entitle, the holder of any
indebtedness of Yolo Gasco to accelerate the maturity of any such indebtedness;
(v) conflict with or result in the breach of any writ,
injunction or decree of any court or governmental instrumentality; or
(vi) violate any statute, law, regulation, permit, order or
other governmental authorization of any jurisdiction as such statute, law,
regulation, permit, order or other governmental authorization relates to the
properties of the Gas Project.
(d) TITLE TO PROPERTIES; ENCUMBRANCES. Yolo Gasco has good, valid
and marketable title (except for leasehold interests, rights pursuant to
easements, licenses and other interests of third parties specifically set forth
on any Schedule annexed hereto) to all its material tangible and intangible
personal properties and assets, including all tangible and intangible personal
properties and assets which are included among the Gas Assets, to be purchased
by Yolo Gasco in each case subject to no encumbrance, lien, charge or other
restriction of any kind or character, except for (i) liens consisting of zoning
or planning restrictions, easements, permits and other restrictions or
limitations on the use of real or tangible or intangible personal property which
are described in Schedule 8(d) attached hereto, (ii) liens for current taxes,
assessments or governmental charges or levies on property not yet due and
delinquent and (iii) liens, encumbrances and easements under the contracts and
agreements which are included among the Gas Assets and which are specifically
identified on any Schedule annexed hereto (liens of the type described in clause
(i), (ii), and (iii) above are hereinafter sometimes referred to as "Yolo Gasco
Permitted Liens"), and (iv) the liens or other encumbrances set forth on
Schedule 8(d) attached hereto.
(e) COMPLIANCE WITH LAWS. Except as set forth on Schedule 8e(i)
attached hereto, to Yolo Gasco's best knowledge and belief, with respect to the
Gas Project, (i) Yolo Gasco has received no notice from any governmental
authority that it is in violation of applicable laws and regulations, and (ii)
Yolo Gasco has not received any notification of past violations of such laws or
regulations that could reasonably be expected to result in future material
claims against it. To the best knowledge and belief of Yolo Gasco, set forth on
Schedule 8e(ii) attached hereto is a list of all of Yolo Gasco's licenses,
permits, orders and approvals of any federal, state or local governmental or
regulatory bodies that are material to or necessary for the conduct of the Gas
Project (collectively "Gas Project Permits"). To the best knowledge and belief
of Yolo Gasco, all Gas Project Permits are in full force and effect and no
proceeding is pending or threatened to revoke, or limit any Gas Project Permit.
(f) LITIGATION. There are no actions, suits or claims, or legal,
administrative or arbitral proceedings or investigations pending or, to the best
knowledge and belief of Yolo Gasco, threatened against or involving Yolo Gasco
or any of its properties or assets with respect to the Gas Project.
(g) DELEGATION AGREEMENT. Yolo Gasco has received no notice from
either Seller or Yolo County that it is in violation or breach of any material
provision of the Delegation Agreement. The Delegation Agreement is in full force
and effect, and Yolo Gasco is not in default or breach under such agreement.
95
(h) CONTRACTS AND OTHER AGREEMENTS. Schedule 8(h) attached hereto
contains a complete and accurate list of all of the Gas Project contracts and
other agreements with respect to the Gas Project to which the Yolo Gasco is a
party or by or to which it or its assets or properties are bound or subject;
(i) contracts and other agreements with any current or former
officer, director, or employee not cancelable without penalty on notice of
thirty (30) days or less;
(ii) contracts and other agreements with material suppliers of
products sold or leased by Yolo Gasco in the normal course of the Gas Project;
(iii) contracts and other agreements relating to the
borrowing of money including any indenture, mortgage, promissory note,
loan agreement, or guaranty;
(iv) operations and maintenance agreements with respect to the
Gas Project;
(v) any water supply agreement or any other agreement for
condensate or other liquid disposal; and
(vi) any other contract or other agreement which Yolo Gasco
reasonably believes is material to the Gas Project (other than those reflected
on any of the other Schedules to this Agreement). There have been delivered or
made available to NEO Yolo true and complete copies of all of the contracts and
other agreements set forth on Schedule 8(h) or on any other schedule attached
hereto. To the best knowledge and belief of Yolo Gasco, all of such contracts
and other agreements are valid and binding upon Yolo Gasco in accordance with
their terms, and Yolo Gasco is not in material default under any such contracts.
(i) REAL ESTATE LEASES. Schedule 8(i) attached hereto sets forth a
list and summary description of all leases, subleases, easements, licenses or
other agreements under which Yolo Gasco is the lessor or lessee of, or uses or
occupies or allows the use or occupancy of, any real property (the "Yolo Gasco
Leases and Easements"). All of the Yolo Gasco Leases and Easements, true and
complete copies of which have been delivered to NEO Yolo, are in effect and, to
the best knowledge and belief of Yolo Gasco, Yolo Gasco is not in material
default under or with respect to any of Yolo Gasco Leases or Easements nor has
the Yolo Gasco received or sent any notice of any default under or with respect
to any of the same. To the best knowledge and belief of Yolo Gasco, no other
party to any of the Yolo Gasco Leases and Easements is in material default under
or with respect to any of the same.
(j) INTELLECTUAL PROPERTY. Schedule 8(j) attached hereto sets forth
a list of all patents, trade secrets, proprietary rights, trademarks, service
marks and trade names (collectively, "Yo1o Gasco Intellectual Property") owned
by Yolo Gasco that relate to the Gas Project. Except as set forth on Schedule
8(j), to the best knowledge and belief of Yolo Gasco, all Yolo Gasco
Intellectual Property is owned outright by Yolo Gasco, free and clear of any
lien or encumbrance and except as so set forth, there exist no obligations with
respect to any Yolo Gasco Intellectual Property requiring Yolo Gasco to make any
payment in respect of its use or otherwise. Except as set forth on Schedule
8(j), to the best knowledge and belief of Yolo Gasco, Yolo Gasco has no notice
of any patent, trademark, service ▇▇▇▇ or trade name of any other person that
96
infringes upon, or is infringed upon by, any of the property set forth on
Schedule 8(j) or notice of any claim of any other person relating to any of the
property set forth on Schedule 8(j) or any process or confidential information
of Yolo Gasco. Yolo Gasco's rights in all of such Yolo Gasco Intellectual
Property are freely transferable.
(k) BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of Yolo Gasco is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein.
(l) EMPLOYEE BENEFIT PLANS.
(i) Schedule 8(l) attached hereto lists all employee benefit
plans, as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar fringe or employee benefit plans, programs or arrangements, and any
employment or compensation agreements, written or otherwise, currently or
heretofore maintained, contributed to or entered into by Yolo Gasco for the
benefit or, relating to, or with any employee of Yolo Gasco employed in the Gas
Project (the "Employee Plans"). None of the Employee Plans is a multi-employer
plan, as defined in Section 4001(a)(3) of ERISA (a "Multi-employer Plan"). There
has been no "prohibited transaction", as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any Employee Plan. No
Employee Plan has breached any requirement prescribed by any applicable statute,
order, or governmental rule or regulation currently in effect with respect
thereto, nor has Yolo Gasco failed to perform any obligations required to be
performed by it under, nor is it in default under or in violation of, nor has it
knowledge of any default or violation by any other party of the Employee Plans
which would result in liability to NEO Yolo. Each Employee Plan intended to
qualify under Section 401 (a) of the Code does so qualify, and each trust
created thereunder intended to be exempt from tax under the provisions of
Section 501 (a) of the Code is so exempt a determination letter from the
Internal Revenue Service (the "IRS") that each such plan is so qualified and
each such trust is so exempt has been applied for and Yolo Gasco is aware of no
reason why each such favorable determination letter should not be issued, and
there exists no fact which would adversely affect the qualified status of any
such plan or which would eliminate or partially eliminate the tax treatment
accorded to the employers, employees or the corpus of any such plan under the
Code. Yolo Gasco has not incurred and does not reasonably expect to incur (i)
any liability to the Pension Benefit Guaranty Corporation (other than a
liability for premiums pursuant to Section 4007 of ERISA) with respect to any
employee plan subject to Title IV of ERISA or (ii) any withdrawal liability with
respect to any Multi-employer Plan. All contributions required to be made to any
Employee Plan have been made, and all appropriate accruals of contributions,
disbursements and expenses have been made with respect to such Employee Plans.
With respect to each Employee Plan which is covered by Title IV of ERISA, the
market value of assets of such plan as of the date hereof exceeds the actuarial
present value of benefits accrued under such plan as of the date hereof,
determined in accordance with the actuarial assumptions set forth in the most
recent actuarial valuation report of such plan.
(ii) Yolo Gasco has delivered to NEO Yolo true and complete
copies of all Employee Plans listed in Schedule 8(1) and of all agreements,
including trust agreements and other funding instruments, such as insurance
contracts, embodying such plans. With respect to each employee benefit plan, as
defined in Section 3(3) of ERISA, listed in Schedule 8(1), true and complete
copies of the (a) last filed Form 5500 and all applicable Schedules thereto, (b)
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summary plan description and all modifications thereto communicated to employees
and (c) most recent annual and periodic accounting of related plan assets, if
any, have been delivered to NEO Yolo and are correct in all material respects.
With respect to each employee pension benefit plan, as defined in Section 3(2)
of ERISA, listed on Schedule 8(1), true and complete copies of the (a) most
recent determination letter, if any, issued by the IRS and the application
therefor and (b) most recent annual actuarial valuation report, if any, have
been delivered to NEO Yolo and are correct in all material respects.
(m) LABOR MATTERS. Except as set forth in Schedule attached hereto,
with respect to the Gas Project, Yolo Gasco is currently in compliance in all
material respects with all applicable laws, rules and regulations relating to
the employment of labor, including those related to wages, hours, collective
registrations, and authorizations.
(n) TAX RETURNS. Yolo Gasco, as appropriate, has timely filed
(including extensions) with the appropriate governmental authorities, all tax
and other returns required to be filed by it and such returns are true and
complete and all taxes due have been paid. Yolo Gasco will timely file
(including extensions) with appropriate governmental authorities, all tax and
other returns which shall be required to be filed by it after the Closing Date
and such returns shall be true and complete and all taxes due shall be paid by
Yolo Gasco.
(o) ENVIRONMENTAL MATTERS. Yolo Gasco has provided to NEO Yolo
copies of all documents, records and information available to Yolo Gasco, a
complete listing of which is set forth on Schedule attached hereto, concerning
any environmental or health and safety matter relevant to Yolo Gasco, whether
generated by Yolo Gasco or others, including, without limitation, environmental
audits, environmental risk assessments, site assessments, documentation
regarding off-site disposal, spill control plans, and reports, correspondence,
permits, licenses, approvals, consents, and other authorizations related to
environmental or health and safety matters issued by any governmental agency.
(p) Section 29 Qualification. Yolo Gasco submitted a purchase order
for the requisition of certain equipment for the extraction of landfill gas in
connection with the Gas Project, a true and correct copy of which purchase order
is attached hereto as Exhibit 8 (p).
(q) PERMITS AND GOVERNMENTAL AUTHORITY.
(i) All Gas Project permits required for the construction and
operation of the Gas Project either (i) have been obtained and remain in full
force and effect and are not subject to any appeals or further proceedings or to
any unsatisfied conditions that may allow material modification or revocation or
(ii) with respect to Gas Project Permits required for operation and construction
and not yet obtained, are of a type that are routinely granted on application
and that could not be reasonably obtained before .the Closing Date. Upon the
purchase of the Gas Assets, NEO Yolo will, to the extent permitted by law,
without penalty, additional cost or consent of any person, be entitled to the
benefit of each such Gas Project Permit so that the operation of the Gas Project
may continue. All applicable Gas Project Permits obtained as of the Closing Date
are listed in Schedule 8(u)(i).
(ii) Except for the permits identified in Schedule 8(q)(ii), no
action by, and no notice to or filing with, any federal, state or local
governmental authority or regulatory body (i) is or will be required for the due
execution, delivery and performance by Yolo Gasco of this Agreement or any
agreement, lease or document to be entered into, assigned or delivered pursuant
to the terms hereof of to which it is or will be a party, or (ii) is required
for the construction, financing and operation of the Gas Project through the
Closing Date.
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(r) ENVIRONMENTAL COMPLIANCE. Yolo Gasco has taken all reasonable
steps to investigate the past and present condition and usage of the Gas Project
and the operations conducted thereon and, based upon such diligent
investigation, has determined and hereby represents and warrants that, except as
set forth on Schedule 8(r):
(i) Neither Yolo Gasco nor any operator of the Gas Project is
in violation, or alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to the environmental matters, including
without limitation, those arising under federal, state or local environmental
laws, which violation would have a material adverse effect on the Gas Project or
the Gas Assets.
(ii) Yolo Gasco has not received notice from any third party
including, without limitation, any federal, state or local governmental
authority, (a) that it has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R. Part ▇▇▇
▇▇▇▇▇▇▇▇ ▇ (1986); (b) that any hazardous waste, as defined by 42 U.S.C.
ss.6903(5), any hazardous waste, as defined 42 U.S.C. ss.9601(14), any pollutant
or contaminant as defined by 42 U.S.C. ss.9601(33) or any toxic substance, oil
or hazardous materials or other chemicals or substances regulated by any
federal, state or local environmental laws ("Hazardous Substances") which Yolo
Gasco has generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party to the best of Yolo
Gasco's knowledge has conducted or has ordered that Yolo Gasco conduct a
remedial investigation, removal or other response action pursuant to any
federal, state or local environmental law, or (c) that it is or shall be a named
party to any claim, action, cause of action, complaint, legal or administrative
proceeding arising out of any third party's incurrence of costs, expenses,
losses or damages of any kind whatsoever in connection with the release of
Hazardous Substances,
(iii) (a) No portion of Yolo Gasco's leased real property has
been used by Yolo Gasco for the handling, processing, storage or disposal of
Hazardous Substances except in accordance with applicable federal, state or
local environmental laws, and to the best of Yolo Gasco's knowledge no
underground tank or other underground storage receptacle for Hazardous
Substances is located on such real property; (b) in the course of any activities
conducted by Yolo Gasco, no Hazardous Substances have been generated or are
being used on such real property by Yolo Gasco except in accordance with
applicable federal, state or local environmental laws; (c) to the best of Yolo
Gasco's knowledge there have been no unpermitted releases (i.e. any past or
present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened releases
caused by Yolo Gasco, which releases Yolo Gasco has responsibility to correct
and which it left uncorrected and which would have a material adverse effect on
the value of such real property or adjacent properties or the environment; (d)
to the best of Yolo Gasco's knowledge, there have been no releases by Yolo Gasco
on, upon, from or into, any real property in the vicinity of the real property
which, through soil or groundwater contamination, may have come to be located
on, and which would have a material adverse effect on the value of, the real
property; and (e) in addition, any Hazardous Substances that have been generated
by Yolo Gasco on the real property have been (i) either delivered to Yolo County
for treatment and disposal or (ii) have been transported offsite only by
carriers having an identification number issued by the EPA, treated or disposed
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of only by treatment or disposal facilities maintaining valid permits as
required under applicable federal, state or local environmental laws, which
transporters and facilities have been and are, to the best of the Yolo Gasco's
knowledge, operating in compliance with such permits and applicable
environmental laws;
(iv) To the best of Yolo Gasco's knowledge, the real property
owned or leased by Yolo Gasco in Yolo County, California is not subject to any
applicable environmental clean up responsibility law or environmental
restrictive transfer law or regulation by virtue of Yolo Gasco's activities on
the property;
(v) Yolo Gasco has provided NEO Yolo with true and complete
copies of all material documents, reports, site assessments, data,
communications and other materials in its possession or to which it has access
which contain information with respect to potential environmental liabilities of
Yolo Gasco related to compliance with federal, state and local environmental
laws.
(s) DISCLOSURE. No representation or warranty made by Yolo Gasco in
this Agreement or in any agreement, instrument, document, certificate, statement
or letter furnished to NEO Yolo by or on behalf of or at the request of Yolo
Gasco in connection with any of the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein not misleading
in light of the circumstances in which they are made.
(t) INDEPENDENT OPERATIONS. The operations of Yolo Gasco have been
run completely independently from those of Seller, and Yolo Gasco makes no
representations or warranties about Seller. Seller's operations or the
conditions of Seller's assets or properties, whether owned, leased or used.
9. REPRESENTATIONS AND WARRANTIES OF NEO YOLO.
NEO Yolo represents and warrants to Yolo Gasco the following (both
as of the Closing Date and as of the date hereof):
(a) DUE FORMATION AND QUALIFICATION. NEO Yolo is a corporation duly
organized, validly existing and in good standing under the laws of its state of
formation, and has the power and lawful authority to carry on its business as
now being conducted and to own or lease its properties and assets as now owned,
leased or operated by it. NEO Yolo viii, prior to the commencement of activities
in California, be duly qualified or otherwise authorized as a foreign limited
liability company to transact business in California.
(b) AUTHORIZATION. NEO Yolo has full power and authority under its
formation documents and operating agreement, and the managers and members of NEO
Yolo have taken all necessary action to authorize NEO Yolo to execute and
deliver this Agreement and to consummate the transactions contemplated hereby
and, assuming due authorization, execution and delivery of this Agreement by
Yolo Gasco, Seller and Buyer, this Agreement constitutes the valid and binding
obligation of NEO Yolo enforceable in accordance with its terms except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
and other similar laws now or hereafter in effect relating to creditors1 rights
generally and the remedy of specific performance and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
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(c) NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement or the other agreements contemplated hereby nor the consummation of
the transactions contemplated hereby does or will violate, conflict with, result
in a breach of any provision of, constitute a default under, result in the
termination of or permit any third party to terminate (with or without notice,
lapse of time or pursuant to any legal or equitable principle) or accelerate the
performance required on the part of NEO Yolo by the terms of, or accelerate the
maturity of or require the prepayment of any indebtedness of NEO Yolo under, any
judgment, order, decree or agreement or instrument to or by which NEO Yolo or
any of its assets is subject or bound.
(d) AUTHORITY OF NEO YOLO. Except as set forth on Schedule 9(d)
attached hereto, no consent, authorization or approval of, or declaration,
filing or registration with, any governmental, administrative or regulatory
body, or any consent, authorization or approval of any other third party, is
necessary in connection with NEO Yolo's consummation of the other transactions
contemplated hereby.
(e) LITIGATION. Except as set forth on Schedule 9(e) attached
hereto, there are no claims, actions, suits, proceedings or investigations
pending or, to the best knowledge and belief of NEO Yolo threatened by or
against NEO Yolo with respect to the transactions contemplated hereby, at law or
in equity or before or by any federal, state, municipal, foreign or other
governmental department, commission, board, agency, instrumentality or authority
nor does NEO Yolo know or have any reason to know of any basis for any such
claim, action, suit, proceeding or investigation except with respect to those
claims, actions, suits, proceedings or investigations which would not have a
material adverse effect on NEO Yolo.
10. SELLER'S AND BUYER CONDITIONS OF CLOSING.
(a) The obligations of Buyer hereunder are subject to the
fulfillment to the reasonable satisfaction of Buyer of each of the following
conditions prior to or on the Closing Date: (i) Seller have been performed and
complied with all covenants and conditions, and shall have made all deliveries,
required by this Agreement to be performed or complied with by Seller prior to
or at the Closing and the representations of Seller shall be true and accurate
in all material respects as of the Closing.
(ii) On the Closing Date, neither Seller nor Buyer shall be a
party to, nor will there otherwise be pending, any judicial, administrative or
other action, proceeding or investigation (other than any such action brought by
Buyer) seeking to enjoin or restrain the transactions contemplated hereby, and
there will not be in effect any injunction, writ, temporary restraining order or
any order of any nature issued by a court of competent jurisdiction directing
that any transactions Provided for herein not be consummated as so provided.
(iii) Buyer shall have received executed counterparts of any
consents, releases and other documentation, including such consents, releases
and other documentation as are reasonably satisfactory to Buyer from the parties
listed on Schedule 3(b) (iv), required to permit Seller and Buyer to consummate
the transactions contemplated by this Agreement and to vest in Buyer all of
Seller's right, title and interest in the Electric Assets, in accordance with
the provisions of this Agreement.
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(iv) There shall have occurred no material adverse change in
the operations of the Electric Project or the condition of the Electric Assets
during the period from the date hereof to the Closing Date, except for ordinary
wear and tear, maintenance and repair of the Electric Assets- For purposes
hereof, "material adverse change" shall include, without limitation, (a) any
material breach by any party under a material contract to which Seller is a
party, by which Seller is bound to which the Electric Assets are subject which
causes a material diminution in value of the Electric Project, and the Electric
Assets, (b) any material adverse change in relationships with licensees,
suppliers, distributors, customers or other having material business
relationships with Seller which causes a material diminution in value of the
Electric Project and the Electric Assets, (c) any sale or other disposition of
any of the Electrical Assets other than in the ordinary course of business, (d)
any further encumbrance of any Electric Assets, and (e) any modification,
amendment or cancellation of any of Sellers existing commitments, contracts or
agreements relating to the Electric Project or the Electric Assets, or the
entering into of any new commitments, contracts or agreements other than in the
ordinary course of business.
(v) All liens, claims and encumbrances upon or against the
Electric Assets and the Electric Project other than the Electric Permitted Liens
shall be released and discharged against and with respect to the Electric Assets
and the Electric Project to the reasonable satisfaction of Buyer.
(vi) Buyer shall have received consents and waivers and other
documents reasonably satisfactory to Buyer, pursuant to which all third parties
under the Electric Project Assumed Contracts and Electric project Assumed Leases
have waived or agreed to waive all breaches and defaults by Seller under such
Electric Project Assumed Contracts and Electric Project Assumed Leases.
(vii) Buyer shall have received the approval of this Agreement
and the transaction that is the subject hereof by the Board of Directors of NEO
Corporation, as a member of Buyer.
(viii) Buyer shall be satisfied with (a) the results of the
legal, accounting and business due diligence investigation of the Electric
Assets and the Electric Project which will be performed by its attorneys,
accountants and representatives, and the performance of the Electric Project
prior to Closing and (b) that all legal and administrative proceedings and
actions related to the approval of this Agreement and the transactions
contemplated hereby have been fully and completely satisfied in such manner as
to vest in Buyer good and marketable title to the Electric Assets, free and
clear of all liens, claims and encumbrances (other than any such lien, claim or
encumbrance which comprises either an Electric Permitted Lien or an Electric
Project Assumed Liability) upon the consummation of the transactions
contemplated hereby.
(ix) NEO Yolo shall have received a ▇▇▇▇ of sale, in form and
substance reasonably satisfactory to NEO Yolo, duly executed by Yolo Gasco,
conveying all of Yolo Gasco's rights, title and interest in and to all of the
Gas Assets to NEO Yolo.
(x) Buyer shall have entered into (a) a Standard Offer No. 1
Power Purchase Agreement in form and substance satisfactory to Buyer with SCE
for purchase of electric power from the Electric Project, (b) a transmission
agreement in form and substance satisfactory to Buyer with PG&E for the
transmission by PG&E to SCE of electric power generated by Buyer from the
Electric Project, and (c) such interconnection, scheduling and other agreements
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with either PG&E or SCE, or both, as may be reasonably required by Buyer with
respect to the transmission and purchase of electric power generated by the
Electric Project as set forth above.
(xi) Buyer shall have received from Seller such other
documents, instruments, writings and actions as may. be reasonably requested by
Buyer or its legal counsel to confirm to Buyer marketable title to the Electric
Assets, the Electric Project and the agreements with SCE, PG&E and all other
third parties other than NEO Yolo or Yolo Gasco required for the profitable
operation of the Electric Project as contemplated herein.
(xii) Buyer shall have received from EMCON an agreement in form
and substance satisfactory to Buyer pursuant to which EMCON agrees to use its
best efforts to assist Buyer and NEO Yolo to negotiate with and obtain from Yolo
County an amended and restated Production Agreement in which Yolo County would
agree to reduce the compensation payable to it pursuant to such Production
Agreement to a level of compensation that is satisfactory to Buyer and NEO Yolo.
(xiii) The concurrent closing of the purchase by NEO Yolo of
the Gas Assets and the Gas Project from Yolo Gasco.
(b) The obligations of Seller hereunder are subject to the
fulfillment to the reasonable satisfaction of Seller of each of the following
conditions prior to or at the Closing:
(i) Buyer shall have performed and complied with all covenants
and conditions, and shall have made all deliveries, required by this Agreement
to be performed or complied with by Buyer prior to or at the Closing and the
representations and warranties of Buyer shall be true and accurate in all
material respects as of the Closing.
(ii) On the Closing Date, neither Seller nor Buyer shall be a
party to, nor will there otherwise be pending, .any judicial, administrative or
other action, proceeding or investigation (other than any such action brought by
Seller) seeking to enjoin or restrain the transactions contemplated hereby, and
there will not be in effect any injunction, writ, temporary restraining order or
any order of any nature issued by a court of competent jurisdiction directing
that any transactions Provided for herein not be consummated as so provided.
11. NEO YOLO'S AND THE YOLO GASCO'S CONDITIONS OF CLOSING.
(a) The obligations of NEO Yolo hereunder are subject to the
fulfillment to the reasonable satisfaction of NEO Yolo of each of the following
conditions prior to or on the Closing Date:
(i) Yolo Gasco shall have performed and complied with all
covenants and conditions, and shall have made all deliveries, required by this
Agreement to be performed or complied with by Yolo Gasco prior to or at the
Closing and the representations of Yolo Gasco shall be true and accurate in all
material respects as of the Closing.
(ii) On the Closing Date, neither Yolo Gasco nor NEO Yolo shall
be a party to, nor will there otherwise be pending, any judicial, administrative
or other action, proceeding or investigation (other than any such action brought
by NEO Yolo) seeking to enjoin or restrain the transactions contemplated hereby,
and there will not be in effect any injunction, writ, temporary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that any transactions Provided for herein not be consummated as so
provided.
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(iii) NEO Yolo shall have received executed counterparts of any
consents, releases and other documentation, including such consents, releases
another documentation, including such consents, releases and other documentation
as are reasonably satisfactory to NEO Yolo from the parties listed on Schedule
11(a)(iii), required to permit Yolo Gasco and NEO Yolo to consummate the
transactions contemplated by this Agreement and to vest in NEO Yolo all of Yolo
Gasco's right, title and interest in the Gas Assets, in accordance with the
provisions of this Agreement.
(iv) There shall have occurred no material adverse change in
the operations of the Gas Project, or the condition of the Gas Assets during the
period from the date hereof to the Closing Date, except for ordinary wear and
tear and maintenance and repair of the Gas Assets. For purposes hereof,
"material adverse change" shall include, without limitation, (a) any material
breach by any party under a material contract to which Yolo Gasco is a party, by
which Yolo Gasco is bound or to which the Gas Assets are subject which cause a
material diminution in value of the Gas Project, and the Gas Assets, (b) any
material adverse change in relationships with licensees, suppliers,
distributors, customers or others having material business relationships with
Yolo Gasco which causes a material diminution in value of the Gas Project and
the Gas Assets, (c) any sale or other disposition of any of the Gas Assets other
than in the ordinary course of business, (d) any further encumbrance of any Gas
Assets, and (e) any modification, amendment or cancellation of any of Yolo
Gasco's existing commitments, contracts or agreements relating to the Gas
Project or the Gas Assets, or the entering into of any new commitments,
contracts or agreements other than in the ordinary course of business.
(v) All liens, claims and encumbrances upon or against the Gas
Assets and the Gas Project shall be released and discharged against and with
respect to the Gas Assets and the Gas Project, to the reasonable satisfaction of
NEO Yolo.
(vi) NEO Yolo shall have received consents and waivers and
other documents reasonably satisfactory to NEO Yolo pursuant to which all third
parties under the Gas Project Assumed Contracts and Gas Project Assumed Leases
have waived or agreed to waive all breaches and default by Yolo Gasco under such
Gas Project Assumed Contracts and Gas Project Assumed Leases.
(vii) NEO Yolo shall have received the approval of this
Agreement and the transactions that is the subject hereof by the Board of
Directors of NEO Corporation, the sole shareholder of NEO Yolo.
(viii) NEO Yolo shall be satisfied with (a) the results of the
legal, accounting and business due diligence investigation of the Gas Assets and
the Gas Project which will be performed by its attorneys, accountants and
representatives, and the performance of the Gas Project prior to Closing and (b)
that all legal and administrative proceedings and actions related to the
approval of this Agreement and the transactions contemplated hereby have been
fully and completely satisfied in such manner as to vest in NEO Yolo good and
marketable title to the Gas Assets, free and clear of all liens, claims and
encumbrances upon the consummation of the transactions contemplated hereby.
(ix) NEO Yolo shall have received a ▇▇▇▇ of sale, in form and
substance reasonably satisfactory to NEO Yolo, duly executed by Yolo Gasco,
conveying all of Yolo Gasco's rights, title and interest in and to all of the
Gas Assets to NEO Yolo.
(x) The receipt by NEO Yolo of an agreement between NEO Yolo
and EMCON in which NEO Yolo shall have the right, at its sole option to retain
EMCON (i) to install additional landfill gas collection ▇▇▇▇▇ at the Yolo County
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Central Landfill at a cost not to exceed $3,250 per well for the period
commencing with the Closing Date and continuing for a period ending twelve
months from the Closing Date and (ii) to perform operations, maintenance and
repair services with respect to the landfill gas collection system at the Yolo
County Central Landfill at either a fixed price or at hourly rates, as set forth
in such agreement that are 75% of the normal fixed price or hourly rates
published and billed to other clients by EMCON for comparable services for the
period commencing on the Closing Date and continuing for a period ending twelve
months from the Closing Date.
(xi) NEO Yolo shall have received from Yolo Gasco such other
documents, instruments, writings and actions as may be reasonably requested by
NEO Yolo or its legal counsel to confirm to NEO Yolo marketable title to the Gas
Assets and the Gas Project, including any agreements with third parties other
than Seller or Buyer required for the Gas Project as contemplated herein.
(xii) The concurrent closing of the purchase by Buyer of the
Electric Assets and Electric Project from Buyer.
(b) The obligations of Yolo Gasco hereunder are subject to the
fulfillment to the reasonable satisfaction of Yolo Gasco of each of the
following conditions prior to or at the Closing:
(i) NEO Yolo shall have performed and complied with all
covenants and conditions, and shall have made all deliveries, required by this
Agreement to be performed or complied with by NEO Yolo prior to or at the
Closing and the representations and warranties of NEO Yolo shall be true and
accurate in all material respects as of the Closing.
(ii) On the Closing Date, neither Yolo Gasco or NEO Yolo shall
be a party to, nor will there otherwise be pending, any judicial, administrative
or other action, proceeding or investigation seeking to enjoin or restrain the
transactions contemplated hereby, and there will not be in effect any
injunction, writ, temporary restraining order or any order of any nature issued
by a court of competent jurisdiction directing that any transactions provided
for herein not be consummated as so provided.
(iii) The receipt from Seller of an agreement with Yolo Gasco
on terms and conditions and in a form satisfactory to Yolo Gasco providing for
(a) the settlement of outstanding claims between Seller and Yolo Gasco, and (b)
such other matters as maybe agreed upon between Seller and Yolo Gasco.
12. COVENANTS OF SELLER.
(a) Seller hereby covenants and agrees that, from and after the
date hereof and until the Closing Date:
(i) Seller shall provide full access to Buyer and its
representatives to all of its properties, books, contracts, commitments and
records concerning the Electric Assets and the Electric Project (other than
privileged attorney-client communications and privilege attorney work product
relating to the Electric Assets and the Electric Project) and shall furnish such
information relating thereto as Buyer may reasonably request.
105
(ii) Seller will notify Buyer regarding any significant
developments, transactions and proposals relating to the Electric Project and
the Electric Assets, other than in the ordinary course of business as conducted
as of the date hereof. In particular, Seller will notify Buyer of any event
that, to Seller's actual knowledge, occurs prior to the Closing Date that (a)
would have required disclosure in a Schedule or Exhibit to this Agreement if it
had occurred prior to the date hereof or (b) could reasonably cause a failure of
any condition set forth in Section 10(a) hereof.
13. COVENANTS OF YOLO GASCO.
(a) Yolo Gasco hereby covenants and agrees that, from and after the
date hereof and until the Closing Date:
(i) Yolo Gasco shall provide full access to NEO (Y) Yolo and
its representatives to all of its properties, books, contracts, commitments and
records concerning the Gas Assets-and the Gas Project (other than privileged
attorney-client communications and privileged attorney work product relating to
the Gas Assets and the Gas Project) and shall furnish such information relating
thereto as NEO (Y) Yolo may reasonably request.
(ii) Yolo Gasco will notify NEO Yolo regarding any significant
developments, transactions and proposals relating to the Gas Project and the Gas
Assets, other than in the ordinary course of business as conducted as of the
date hereof. In particular, Yolo Gasco will notify, NEO Yolo of any event that,
to Yolo Gasco's actual knowledge, occurs prior to the Closing Date that (a)
would have required disclosure in a Schedule or Exhibit to this Agreement if it
had occurred prior to the date hereof, or (b) could reasonably cause a failure
of any condition set forth in Section Il(a) hereof.
14. TAXES; PREPAID ITEMS; PRORATIONS; EXPENSES.
(a) Buyer shall pay all income, franchise and other taxes and
charges, if any, arising out of Buyer's ownership of the Electric Assets or
operation of the Electric Project after the Closing Date. Except as may be
included in the Electric Project Assumed Liabilities or under assumption
agreements, assignment agreements or consents to assignment executed by Buyer in
connection herewith, Buyer shall not pay nor be responsible for any income,
franchise, sales, use and other taxes and charges, if any, arising out of
Seller's ownership of the Electric Assets or operations of the Electric Project
prior to and through the Closing Date.
(b) NEO Yolo shall pay all income, franchise and other taxes and
charges, if any, arising out of NEO Yolo's ownership of the Gas Assets or
operation of the Gas Project after the Closing Date. Except as may be included
in the Gas Project Assumed Liabilities or under assumption agreements,
assignment agreements or consents to assignment executed by NEO Yolo in
connection herewith, NEO Yolo shall not pay nor be responsible for any income,
franchise, sales, use or other taxes and charges, if any, arising out of Yolo
Gasco's ownership of the Gas Assets or operations of the Gas Project prior to
and through the Closing Date.
(c) Property taxes and the payment for easement rights to ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as co-trustees of the ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Irrevocable Trust dated March 14, 1990 shall be prorated as of the
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Closing Date. All rights of Seller and Yolo Gasco to any refund or reduction in
assessment of taxes, whether existing before or after the Closing Date, shall be
transferred by Seller and (Y) Yolo Gasco to Buyer and NEO Yolo at the Closing
Date. Such prorations shall occur on the Closing Date or as soon thereafter as
is reasonable practicable.
(d) Each of the parties shall pay its own expenses in connection
with this Agreement and the transactions contemplated hereby. The expense of
furnishing documents required under this Agreement shall be borne by the parties
which is obligated to furnish the same.
15. ATTORNEYS; FEES. If any action be instituted between or among any
of the parties to enforce any of the provisions of this Agreement, the
prevailing party shall be entitled to recover any expenses incurred in
connection with such dispute, including reasonable accountants' and attorneys'
fees.
16. MISCELLANEOUS.
(a) Buyer and NEO Yolo each acknowledge that after the Closing
Seller will have no substantial assets. As a result thereof, any recovery of
monetary damages or relief against Seller for any breach of any representation
or covenant, or the inaccuracy of any warranty, under this Agreement would be
substantially unlikely and speculative. Notwithstanding the foregoing, Buyer and
NEO Yolo each hereby waives any claims it may have had against the officers,
directors and/or shareholders of Seller under "piercing the corporate veil" and
other similar theories for any such breach or inaccuracy.
(b) If the Closing Date has not occurred on or before December 31,
1996, any of the parties may terminate this Agreement by giving notice of its
election to terminate this Agreement to the other parties in accordance with the
provisions hereof.
(c) All Exhibits and Schedules referred to and attached to this
Agreement are hereby incorporated into and by this reference made apart of this
Agreement. Disclosure of information on any of the Schedules to this Agreement
shall be regarded for all purposes as disclosure of such information on any
other Schedule for which such information is relevant. This Agreement, including
all such Exhibits and Schedules, and any agreements and documents delivered or
entered into in connection herewith constitute the complete agreement of the
parties hereto and supersede all negotiations, prior agreements, or
understandings between or among the parties, and no term or provision of this
Agreement may be altered, amended or waived except by a writing signed by Buyer,
Seller, Yolo Gasco and NEO Yolo. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed as a waiver of
such provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of any such party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall constitute a
waiver of any other or subsequent breach or a continuing waiver.
(d) This Agreement shall be binding upon and inure to the benefit
of, and be enforceable by, the respective representatives, successors and
assigns of Buyer, Seller, Yolo Gasco and NEO Yolo.
(e) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
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(f) The subject headings of the Paragraphs of this Agreement are
included for purposes of convenience only and shall not affect the constructions
or interpretation of any of its provisions.
(g) Each party agrees to pay any brokerage commission or finder's
fee which may be due on account of the transactions contemplated by this
Agreement to any broker or finder employed or retained by it, and to indemnify
and hold the other party harmless from all liabilities, expenses (including
reasonable attorneys~ fees), damage and claims arising from any claim for such
commission or fees.
(h) All notices or other communications required or permitted
hereunder shall be in writing and shall be given by hand or by registered mail,
return receipt requested, addressed as follows:
If to Seller:
Yolo Energy Partners, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇,
President
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, PC
4000 Bank One Tower
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.' ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to Buyer:
Minnesota Methane LLC
c/o NEO Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
If to Yolo Gasco:
Yolo Landfill Gas Corporation
c/o Emcon
▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Financial Officer
If to Emcon:
Emcon
400. S. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
108
If to NEO Yolo:
Yolo NEO LLC
c/o NEO Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
(i) In case one or more provisions of this Agreement shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby and the parties hereto shall
enter into an agreement amending such provision in such manner as to make it
valid, legal and enforceable while retaining the original intent of the parties
with respect to such provision.
(j) This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
(k) Time is of the essence as to the provisions of this Agreement.
(l) This Agreement shall terminate and shall be of no further force
or effect upon mutual agreement of the parties. No termination of this Agreement
shall release, or be construed as releasing, any party hereto from any liability
or damage to the other party hereto arising out of, in connection with or
otherwise relating to, directly or indirectly, such party's material breach,
such party's material default or such party's failure in performance of any of
its material covenants, agreements, duties or obligations arising hereunder.
(m) Each party hereto intends that this Agreement shall not benefit
or create any right or cause of action in or on behalf of any person or entity
other than the parties hereto.
(n) This Agreement may be executed in counterparts, which
counterparts, taken collectively, shall constitute one and the same document.
109
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
SELLER:
YOLO ENERGY PARTNERS, INC.
an Indiana Corporation
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
Title: President
BUYER:
Minnesota Methane LLC
a Wyoming limited liability company
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
YOLO LANDFILL GAS CORPORATION
a California Corporation
By: /s/R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: CFO & Vice President Legal
YOLO NEO LLC
a Delaware Limited Liability Company
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
EMCON
a California Corporation
By: /s/R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: CFO & Vice President Legal
110