PURCHASE AND SALE AGREEMENT
by and between
TLS Investors, L.L.C.
and
Black Hills Energy Capital, Inc.
June 18, 2001
Table of Contents
Page
ARTICLE 1 Certain Definitions...............................................................1
1.1 Certain Defined Terms.................................................................1
1.2 References, Gender, Number............................................................9
ARTICLE 2 Purchase and Sale.................................................................9
ARTICLE 3 Purchase Price and Payment........................................................9
3.1 Purchase Price........................................................................9
3.2 Payment..............................................................................10
3.3 Closing Statement....................................................................10
3.4 Post-Closing Adjustment to the Purchase Price........................................10
3.5 Allocation of Purchase Price.........................................................11
ARTICLE 4 Representations and Warranties...................................................12
4.1 Representations and Warranties of Seller.............................................12
4.2 Representations and Warranties of Buyer..............................................21
ARTICLE 5 Access and Confidentiality.......................................................23
5.1 General Access.......................................................................23
5.2 Confidential Information.............................................................24
5.3 No Other Contract....................................................................24
ARTICLE 6 Tax Matters......................................................................24
6.1 Preparation..........................................................................24
6.2 Access to Information................................................................24
6.3 Transfer Taxes.......................................................................25
6.4 Tax Sharing Agreements...............................................................25
6.5 Assistance and Cooperation...........................................................25
6.6 Tax Indemnity........................................................................25
6.7 Tax Indemnity Claims.................................................................26
6.8 Tax Refunds..........................................................................26
ARTICLE 7 Covenants of Seller and Buyer....................................................27
7.1 Conduct of Business Pending Closing..................................................27
7.2 Qualifications on Conduct............................................................31
7.3 Public Announcements.................................................................32
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7.4 Actions by Parties...................................................................32
7.5 Supplements to Schedules.............................................................32
7.6 Further Assurances...................................................................32
7.7 Records..............................................................................32
7.8 Assumption of Obligations of SWP and any Subsidiary..................................33
7.9 Regulatory and Other Authorizations and Consents.....................................33
7.10 Fees and Expenses....................................................................35
7.11 Excluded Assets......................................................................35
7.12 Guarantees and Other Affiliate Contracts.............................................36
7.13 Use of Enron Marks...................................................................36
7.14 Insurance............................................................................36
7.15 Lending Matters......................................................................37
ARTICLE 8 Closing Conditions...............................................................37
8.1 Seller's Closing Conditions..........................................................37
8.2 Buyer's Closing Conditions...........................................................38
ARTICLE 9 Closing..........................................................................39
9.1 Closing..............................................................................39
9.2 Seller's Closing Obligations.........................................................39
9.3 Buyer's Closing Obligations..........................................................40
ARTICLE 10 Limitations......................................................................40
10.1 Buyer's Review.......................................................................40
10.2 Disclaimer of Warranties.............................................................41
10.3 Waiver of Damages....................................................................42
ARTICLE 11 Indemnification..................................................................42
11.1 Indemnification By Seller............................................................42
11.2 Indemnification By Buyer.............................................................42
11.3 Limitations on Indemnity.............................................................43
11.4 Third Party Claims...................................................................43
11.5 Survival and Time Limitation.........................................................44
11.6 Sole and Exclusive Remedy............................................................44
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11.7 Compliance with Express Negligence Rule..............................................45
ARTICLE 12 Termination and Remedies.........................................................45
12.1 Termination..........................................................................45
12.2 Remedies.............................................................................45
ARTICLE 13 Other Provisions.................................................................46
13.1 Counterparts.........................................................................46
13.2 Governing Law........................................................................46
13.3 Arbitration..........................................................................46
13.4 Entire Agreement.....................................................................47
13.5 Notices..............................................................................47
13.6 Successors and Assigns...............................................................48
13.7 Amendments and Waivers...............................................................48
13.8 Schedules and Exhibits...............................................................49
13.9 Interpretation and Rules of Construction.............................................49
13.10 Agreement for the Parties' Benefit Only..............................................49
13.11 Attorneys' Fees......................................................................50
13.12 Severability.........................................................................50
13.13 Time of Essence......................................................................50
13.14 Bulk Sales or Transfer Laws..........................................................50
ARTICLE 14 Letter of Credit; GUARANTY BY BKH................................................50
14.1 Letter of Credit.....................................................................50
14.2 Guaranty by BKH......................................................................51
14.3 Effect of Failure to Deliver Letter of Credit or Guaranty............................51
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of June
18, 2001, is by and between TLS Investors, L.L.C., a Delaware limited liability
company ("Seller"), and Black Hills Energy Capital, Inc. ("Buyer") a Delaware
corporation. Seller and Buyer are sometimes referred to herein individually as a
"Party" and collectively as the "Parties."
Recitals:
A. Seller desires to sell, or cause to be sold, to Buyer, and
Buyer desires to purchase, all of the issued and outstanding member interests
the "LLC Interests") of Southwest Power, L.L.C., a Delaware limited liability
company ("SWP"), upon the terms and subject to the conditions set forth in this
Agreement; and
B. In order to maintain the QF status of the Operating Facility, at the
Closing, Buyer will transfer no less than one-half of all of the issued and
outstanding member interests of the owners of the general and limited
partnership interests in the Operating Facility to one or more third parties
that are not electric utilities or electric utility holding companies and are
not affiliated or associated with electric utilities or electric utility holding
companies.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Parties agree as follows:
ARTICLE 1
Certain Definitions
1.1 Certain Defined Terms.
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Sections referred to below:
"Action" means any action, suit, investigation, proceeding,
condemnation, or audit by or before any court or other Governmental Authority or
any arbitration proceeding.
"Additional Project Agreement" is defined in Section 7.1(b)(iii).
"Adjusted Purchase Price" is defined in Section 3.1.
"Affiliate" means, as to the Person specified, any Person controlling,
controlled by or under common control with such specified Person. The concept of
control, controlling or controlled as used in the aforesaid context means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of another, whether through the
ownership of voting securities, by contract or otherwise. No Person shall be
deemed an Affiliate of any Person by reason of the exercise or existence of
rights, interests, or remedies under this Agreement.
"Agreement" is defined in the preamble.
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"Allegheny" means Allegheny Energy Supply Company, L.L.C., a Delaware
limited liability company.
"Assignment and Assumption Agreements" means the Assignment and
Assumption Agreements, each in substantially the form attached hereto as Exhibit
9.2, pursuant to which the LLC Interests shall be conveyed to Buyer.
"BKH" means Black Hills Corporation, a South Dakota corporation and the
parent corporation of Buyer.
"BKH Guaranty" is defined in Section 14.2.
"Bridge Loan" is defined in Section 3.2.
"Business" with respect to SWP, means the business and operations of
SWP related to the Operating Facility and the Development Project.
"Business Day" means any day which is not a Saturday, Sunday, or legal
holiday recognized by the United States of America.
"Buyer" is defined in the preamble.
"Buyer Indemnified Party" and "Buyer Indemnified Parties" are defined
in Section 11.1.
"Buyer's Construction Representative" is defined in Section 7.1(c).
"Closing" is defined in Section 9.1.
"Closing Date" means the later to occur of either (i) the first
Business Day after the conditions in Section 8.1 and Section 8.2 are either
satisfied or waived by the Party entitled to waive such condition, or (ii)
August 31, 2001, or such other date as may be mutually agreed to by Seller and
Buyer.
"Closing Payment" is defined in Section 3.2.
"Closing Statement" is defined in Section 3.3.
"Closing Statement Arbitrator" is defined in Section 3.4(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" is defined in Section 5.2.
"Damage Award" is defined in Section 14.1.
"Deductible Amount" means $500,000.
"Development Budget" means the budget for development and construction
of the Development Project set forth in Exhibit B.
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"Development Expenses" means any and all costs, expenses or liabilities
incurred, paid or performed by Seller, SWP or any Subsidiary in connection with
the development, permitting or construction of the Development Project in
accordance with Seller Practice, including, without limitation, expenditures for
equipment, consultants, contractors, permits, deposits, lease payments and
finance costs.
"Development Project" means the 222 (nominal) megawatt, natural gas
fired electrical generating facility currently under development by a Subsidiary
on the Development Project Site.
"Development Project Activities" is defined in Section 7.1(b)(i).
"Development Project Site" means the site of the Development Project
more fully described in Part I of Exhibit A.
"Dispute" is defined in Section 13.3.
"Dollar," "Dollars" and "$" mean United States dollars.
"Effective Date" means the date first written above.
"Enron Marks" means the name "Enron" and other trademarks, service
marks, and trade names owned by Seller and its Affiliates.
"Environmental Claim" means any claim by (i) any Governmental Authority
for enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law, and (ii) any other Person
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief (A) resulting from the presence or disposal of Hazardous
Materials off-site or at the Operating Facility or Development Project Site or
(B) otherwise arising under or related to Environmental Laws.
"Environmental Law" means all Laws, as existing as of the date
of this Agreement, relating to (i) the control of any pollutant, or protection
of the air, water, or land, (ii) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation, and (iii) exposure to
hazardous, toxic or other harmful substances. "Environmental Laws" shall
include, but not be limited to, the Clean Air Act, 42 U.S.C.ss.7401 et seq.,
the Resource Conservation Recovery Act, 42 U.S.C.ss.6901 et seq., the Federal
Water Pollution Control Act, 33 U.S.C.ss.1251 et seq., the Safe Drinking
Water Act, 42 U.S.C.ss.300f et seq., and the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended by the Superfund
Amendments and Reauthorization Act, 42 U.S.C.ss.9601 et seq.
"EPC Contract" means the Engineering, Procurement and
Construction Contract between Las Vegas Cogeneration II, L.L.C. and Modern
Continental South, Inc., dated as of March 29, 2001.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
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"Estimated Adjusted Purchase Price" is defined in Section 3.3.
"Excluded Assets" is defined in Section 7.11
"FERC" means the Federal Energy Regulatory Commission.
"Final Closing Statement" is defined in Section 3.4(b).
"Final Settlement Date" is defined in Section 3.4(a).
"Financial Statements" is defined in Section 4.1(q).
"GAAP" means United States generally accepted accounting principles as
in effect on the Effective Date.
"Government Antitrust Authority" means any Governmental Authority with
jurisdiction over the enforcement of any applicable antitrust Laws.
"Good Operating Practices" means, with respect to the Operating
Facility, the practices, methods, and acts generally engaged in or approved by a
significant portion of the independent electric power industry in the United
States for similarly situated facilities in the United States during a
particular time period, or any of such practices, methods, and acts, which, in
the exercise of reasonable judgment in light of the facts known or that
reasonably should be known at the time a decision is made, would be expected to
accomplish the desired result in a manner consistent with law, regulation,
reliability, safety, environmental protection, economy and expedition, and
taking into consideration the requirements of this Agreement, the applicable
Project Documents, the Transferred Contracts, and the other contracts and
agreements affecting the operation of the Operating Facility. Good Operating
Practices are not intended to be limited to the optimum practices, methods or
acts, to the exclusion of all others, but rather to include a spectrum of
possible practices, methods, or acts generally acceptable in the region during
the relevant period in light of the circumstances.
"Governmental Approvals" means all material consents and approvals of
Governmental Authorities, including those required under the HSR Act or from the
FERC and the Securities and Exchange Commission, that reasonably may be deemed
necessary so that the consummation of the transactions contemplated hereby will
be in compliance with applicable Laws and the failure to comply with which would
have a Material Adverse Effect.
"Governmental Authority" means (i) the United States of America, (ii)
any state, county, municipality, or other governmental subdivision within the
United States of America, and (iii) any court or any governmental department,
commission, board, bureau, agency, or other instrumentality of the United States
of America or of any state, county, municipality, or other governmental
subdivision within the United States of America.
"Guarantees" means any and all obligations relating to the guarantees,
letters of credit, surety bonds, and other credit assurances of a comparable
nature of Seller or any of its Affiliates (other than SWP) for the benefit of
SWP or any Subsidiary and listed or described on Schedule 7.12(a).
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"Hazardous Material" means (a) any "hazardous substance," as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, (b) any "hazardous waste," as defined by the Resource Conservation and
Recovery Act, and (c) any pollutant, contaminant or hazardous, dangerous or
toxic chemical, material, waste or substance within the meaning of any
applicable Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976 and the rules and regulations adopted pursuant thereto, as amended.
"Indemnified Party" is defined in Section 11.4.
"Indemnifying Party" is defined in Section 11.4.
"Interest Rate" means a rate of interest equal to the lesser of (i) the
LIBOR Rate or (ii) the maximum rate of interest from time to time allowed by
applicable Law.
"Knowledge of Buyer" means the actual knowledge of any fact,
circumstance or condition by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇.
"Knowledge of Seller" means the actual knowledge of any fact,
circumstance or condition by ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ and ▇. ▇. ▇▇▇▇▇▇▇.
"Law" means any applicable statute, law (including common law),
ordinance, regulation (including Environmental Laws), rule, treaty, code,
permit, certificate, license, interpretation, judgment, ruling, order, writ,
injunction, decree, or other official act of or by any Governmental Authority.
"Letter of Credit" is defined in Section 14.1.
"LIBOR Rate" means, for each calendar month, (i) the rate per annum
(rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest
1/100 of 1% per annum) appearing on Telerate Page 3750 (or any successor page)
as the London interbank offered rate for deposits in United States dollars at
approximately 11:00 a.m. (London time) two Business Days before the first day of
such calendar month for a term comparable thereto; (ii) if for any reason the
rate specified in clause (i) of this definition does not so appear on Telerate
Page 3750 (or any successor page), the rate per annum (rounded upward, if not an
integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum)
appearing on Reuters Screen LIBO page (or any successor page) as the London
interbank offered rate for deposits in United States dollars at approximately
11:00 a.m. (London time) two Business Days before the first day of such calendar
month for a term comparable thereto; provided, however, if more than one rate is
specified on Reuters Screen LIBO page (or any successor page), the applicable
rate shall be the arithmetic mean of all such rates; and (iii) if the rate
specified in clause (i) of this definition does not so appear on Telerate Page
3750 (or any successor page) and if no rate specified in clause (ii) of this
definition so appears on Reuters Screen LIBO page (or any successor page), the
interest rate per annum (rounded upward to the nearest whole multiple of 1/16 of
1% per annum if such rate is not such a multiple) equal to the rate per annum at
which deposits in United States dollars are offered by the principal office of
Citibank, N.A. in London, England to prime banks in the London interbank market
at 11:00 a.m. (London time) two Business Days before the first day of such
calendar month.
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"Lien" means any lien, security interest, charge, claim, mortgage, deed
of trust, option, warrant, purchase right, lease, or other encumbrance.
"LLC Interests" is defined in the Recital.
"Losses" means any and all claims, liabilities, losses, causes of
action, fines, penalties, litigation, lawsuits, administrative proceedings,
administrative investigations, costs, and expenses, including reasonable
attorneys' fees, court costs, and other costs of suit or proceeding.
"LVC Finance" means Las Vegas Cogeneration Energy Financing Company,
L.L.C., a subsidiary of SWP.
"LVC II" means Las Vegas Cogeneration II, L.L.C., a Delaware limited
liability company.
"Material Adverse Effect" means a material adverse effect on the value
of SWP and any Subsidiary taken as a whole, excluding any effect resulting from
any change in economic, industry, or market conditions (whether general or
regional in nature or limited to any area where any assets of SWP or any
Subsidiary are located) or from any change in law or regulatory policy.
"NatWest Loan" means loans and other credit accommodations made to or
for the account of Seller by National Westminster Bank PLC and certain other
lenders pursuant to the Credit Agreement dated August 31, 1999, as in effect as
of the Effective Date.
"Notice of Disagreement" is defined in Section 3.4(a).
"Operating Facility" means the generation and green house facilities
identified in Part II of Exhibit A, and all of the assets related thereto.
"Party" and "Parties" are defined in the preamble.
"Permits" is defined in Section 4.1(t).
"Permitted Exceptions" means, with respect to any Person, any one or
more of the following: (a) Liens for taxes, assessments or other governmental
charges or levies either not yet delinquent or which are being contested in good
faith by appropriate proceedings diligently prosecuted and as to which adequate
reserves shall have been set aside in conformity with GAAP, (b) deposits or
pledges to secure the payment of workers' compensation, unemployment insurance,
social security benefits or obligations arising under similar legislation, or to
secure the performance of public or statutory obligations, surety or appeal
bonds, and other obligations of a like nature incurred in the ordinary course of
business, (c) materialmen's, mechanics', workmen's, repairmen's, employees',
landlord's, lessor's or other like Liens arising in the ordinary course of
business to secure obligations not yet due or being contested in good faith and
as to which adequate reserves shall have been set aside in conformity with GAAP
or as to which adequate bonds shall have been obtained, (d) zoning restrictions,
easements, rights-of-way, restrictions,
6
servitudes, permits, reservations, encroachments, exceptions, conditions,
covenants, and any other restrictions on the use of real property none of which
materially impairs the use of such property by the owner of such property in the
operation of its business, (e) Liens and other matters shown on the Title
Commitment, (f) any obligations or duties affecting any of the property of such
Person to any municipality or public authority with respect to any franchise,
grant, license or permit which do not materially impair the use of such property
for the purposes for which it is held, (g) defects, irregularities and
deficiencies in title to any property of such Person which in the aggregate do
not materially impair the use of such property for the purposes for which such
property is held by such Person, (h) other minor Liens or encumbrances none of
which interferes materially with the use of the property affected in the
ordinary conduct of the Seller's business and which individually or in the
aggregate do not have a Material Adverse Effect, (i) utility easements, building
restrictions and such other encumbrances or charges against real property which
are of a nature generally existing with respect to properties of a similar
character and which do not materially affect the marketability of the same or
interfere with the use thereof in the business of such Person, and (j) Liens in
favor of Allegheny granted pursuant to the Tolling Agreement, which Liens shall
be fully subordinate to liens in favor of any "Senior Lender" as defined in the
Tolling Agreement.
"Person" means any Governmental Authority or any individual, firm,
partnership, corporation, limited liability company, joint venture, trust,
unincorporated organization or other entity or organization.
"Project Documents" is defined in Section 4.1(m)(ii).
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"Purchase Price" is defined in Section 3.1.
"PURPA" is defined in Section 4.1(v).
"QF" is defined in Section 4.1(v).
"Real Property" is defined in Section 4.1(s).
"Records" means any and all of the books, records, contracts,
agreements and files of SWP and any Subsidiary existing on the Closing Date and
all increases and additions thereto after the Closing Date, including computer
records and electronic copies of such information (but excluding electronic mail
and other computer-based communications) whether maintained by Seller, SWP, or
Buyer or, in each case, its Affiliate, but excluding in each case all
information protected by any attorney/client, work product or like privilege.
"Schedules" means Seller's disclosure schedules attached to this
Agreement.
"Securities Act" is defined in Section 4.2(i).
"Seller" is defined in the preamble.
7
"Seller Guaranty" means the Guaranty of Enron North America Corp. in
substantially the form of Exhibit E.
"Seller Practice" is defined in Section 7.1(b)(i).
"Seller Indemnified Party" and "Seller Indemnified Parties" are defined
in Section 11.2.
"Subordinated Note" means that certain Subordinated Note dated August
31, 1999 by Las Vegas Cogeneration Limited Partnership in favor of Enron North
America Corp. (formerly known as Enron Capital & Trade Resources Corp.).
"Subsidiary" means any limited liability company or limited partnership
of which at least a majority of the voting interests (i.e., member or partner
interests entitled to vote for the election of directors or managers, but
excluding interests entitled so to vote only upon the happening of some
contingency unless such contingency has occurred) are owned directly or
indirectly by SWP.
"SWP" is defined in the Recital.
"Tangible Personal Property" is defined in Section 4.1(r)(i).
"Tax" or "Taxes" means any and all taxes, including any interest,
penalties, or other additions to tax that may become payable in respect thereof,
imposed by any federal, state, local, or foreign government or any agency or
political subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income or profits taxes, payroll
and employee withholding taxes, unemployment insurance taxes, social security
taxes, severance taxes, license charges, taxes on stock, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, Transfer Taxes, workers' compensation, and other
obligations of the same or of a similar nature to any of the foregoing.
"Tax Proceeding" is defined in Section 6.5.
"Tax Return" means any and all returns, reports, declarations,
statements, bills, schedules, claims for refund, or written information of or
with respect to any Tax which is required to be supplied to any taxing
authority, including any schedule or attachment thereto, and including any
amendment thereof.
"Title Commitment" means Title Commitment No. 99090132(A)LJJ dated as
of June 5, 2001.
"Title Endorsement" means an endorsement to the Title Policy insuring
Buyer against loss or damage sustained by reason of the Title Company denying
liability under the Title Policy by reason of Knowledge of Seller.
"Title Policy" means that certain Final Title Insurance Policy
No. 99090132LJJ, dated September 1, 1999.
8
"Tolling Agreement" means the Capacity and Ancillary Services Sale and
Tolling Agreement, dated May 4, 2001, between LVC II and Allegheny.
"Transfer Taxes" means all transfer Taxes (excluding Taxes measured by
net income), including without limitation sales, use, excise (including excise
Taxes on petroleum, products of petroleum, petrochemicals and other taxable
substances), stock, stamp, documentary, filing, recording, permit, license,
authorization and similar Taxes, filing fees and similar charges.
"Transferred Contracts" is defined in Section 7.1(h).
"Transition Services" is defined in Section 7.1(e).
"Work Plan" means the activities to be undertaken and pursued by SWP
and any Subsidiary until the Closing Date in connection with the development,
construction and licensing of the Development Project, as set forth on Schedule
7.1.
1.2 References, Gender, Number.
All references in this Agreement to an "Article," "Section" or
"subsection" shall be to an Article, Section, or subsection of this Agreement,
unless the context requires otherwise. Unless the context otherwise requires,
the words "this Agreement," "hereof," "hereunder," "herein," "hereby" or words
of similar import shall refer to this Agreement as a whole and not to a
particular Article, Section, subsection, clause or other subdivision hereof.
Whenever the context requires, the words used herein shall include the
masculine, feminine and neuter gender, and the singular and the plural.
ARTICLE 2
Purchase and Sale
On and subject to the terms and conditions of this Agreement, Seller
agrees to sell and convey, or cause to be sold and conveyed, to Buyer, and Buyer
agrees to purchase and receive, all of the LLC Interests.
ARTICLE 3
Purchase Price and Payment
3.1 Purchase Price.
The purchase price for the sale and conveyance of the LLC Interests to
Buyer shall consist of a cash purchase price of $71,250,000 (the "Purchase
Price") subject to adjustment in accordance with the terms of this Agreement,
and shall be payable by Buyer as provided in Sections 3.2, 3.3 and 3.4. The
"Adjusted Purchase Price" shall be the Purchase Price, (i) plus all Transfer
Taxes applicable to the transactions contemplated hereby, (ii) plus all
Development Expenses which may be paid or incurred by Seller or by SWP or any
Subsidiary through the Closing Date, and (iii) plus the principal amount of (not
to exceed $53,543,000), and accrued and unpaid interest on, the NatWest Loan on
the Closing Date.
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3.2 Payment.
The "Closing Payment" shall be an amount equal to the Estimated
Adjusted Purchase Price. At the Closing, Buyer shall wire transfer the Closing
Payment in immediately available funds to the account of the Seller. Upon
payment of the Closing Payment to or for the account of Seller, (i) all
indebtedness of Las Vegas Cogeneration II, L.L.C. to Enron North America Corp.
incurred pursuant to that certain Amended and Restated Bridge Loan Agreement
effective as of May 10, 2001, by and between Enron North America Corp., Joint
Energy Development Investments II Limited Partnership, and Las Vegas
Cogeneration II, L.L.C. (the "Bridge Loan") shall be deemed to have been paid in
full and Buyer, SWP and its Subsidiaries shall be released of all liabilities
and obligations thereunder and (ii) all indebtedness of Las Vegas Cogeneration
Limited Partnership under the NatWest Loan and the Subordinated Note shall be
deemed to have been paid in full and Buyer, SWP and its Subsidiaries shall be
released of all liabilities and obligations thereunder.
3.3 Closing Statement.
Not later than three (3) Business Days prior to the Closing Date,
Seller shall prepare and deliver to Buyer a statement (the "Closing Statement")
of the estimated adjustments to the Purchase Price and the estimated Adjusted
Purchase Price which statement shall, among other things, set forth in
reasonable detail the estimated components thereof (the "Estimated Adjusted
Purchase Price").
3.4 Post-Closing Adjustment to the Purchase Price.
(a) Revised Closing Statement. On or before the date that is sixty (60)
days after the Closing Date, Seller shall prepare and deliver to Buyer a revised
Closing Statement setting forth the actual Adjusted Purchase Price which
statement shall, among other things, set forth in reasonable detail the
components thereof. To the extent reasonably required by Seller, Buyer shall
assist in the preparation of such revised Closing Statement. Seller shall
provide to Buyer such data and information as Buyer may reasonably request
supporting the amounts reflected on the revised Closing Statement. The revised
Closing Statement shall become final and binding upon the Parties on the date
(the "Final Settlement Date") that is sixty (60) days following receipt thereof
by Buyer unless Buyer gives written notice of its disagreement ("Notice of
Disagreement") to Seller prior to such date. Any Notice of Disagreement shall
specify in detail the dollar amount, nature, and basis of any disagreement so
asserted. If a Notice of Disagreement is received by Seller in a timely manner,
then the Closing Statement (as revised in accordance with paragraph (b) or (c)
below) shall become final and binding on the Parties on, and the Final
Settlement Date shall be, the earlier of (i) the date upon which Seller and
Buyer agree in writing with respect to all matters specified in the Notice of
Disagreement or (ii) the date upon which the Final Closing Statement is issued
by the Closing Statement Arbitrator.
(b) Final Closing Statement. During the thirty (30) days following the date
upon which Seller receives the Notice of Disagreement, if any, Seller and Buyer
shall attempt in good faith to resolve in writing any differences that they may
have with respect to all matters specified in the Notice of Disagreement. If at
the end of such thirty (30) day period (or earlier by mutual agreement), Buyer
and Seller have not reached agreement on such matters, the matters
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that remain in dispute may be submitted to an arbitrator (the "Closing Statement
Arbitrator") by either Party for review and resolution. The Closing Statement
Arbitrator shall be a nationally recognized independent public accounting firm
that does not serve as Seller's or Buyer's independent auditor, as shall be
agreed upon by Buyer and Seller in writing. The hearing date will be scheduled
by the Closing Statement Arbitrator as soon as reasonably practicable, and shall
be conducted on a confidential basis. Each Party shall, not later than seven (7)
days prior to the hearing date set by the Closing Statement Arbitrator, submit a
brief with dollar figures for settlement of the disputes as to the amount of the
Adjusted Purchase Price (together with a proposed Closing Statement that
reflects such figures). The figures submitted need not be the figures offered
during prior negotiations. The Closing Statement Arbitrator shall render a
decision limited to resolving the matters in dispute (which decision shall
include a written statement of findings and conclusions) within three (3)
Business Days after the conclusion of the hearing, unless the Parties reach
agreement prior thereto and withdraw the dispute from arbitration. The Closing
Statement Arbitrator shall provide to the Parties explanations in writing of the
reasons for its decisions regarding the Adjusted Purchase Price and shall issue
the Final Closing Statement reflecting such decisions. The decision of the
Closing Statement Arbitrator shall be final and binding on the Parties. The cost
of any arbitration (including the fees and expenses of the Closing Statement
Arbitrator) pursuant to this Section 3.4(b) shall be borne equally by Buyer and
Seller. The fees and disbursements of Seller's independent auditors incurred
with the procedures performed with respect to the Closing Statement shall be
borne by Seller and the fees and disbursements of Buyer's independent auditors
incurred in connection with respect to the Notice of Disagreement shall be borne
by Buyer. As used in this Agreement, the term "Final Closing Statement" shall
mean the revised Closing Statement described in Section 3.4(a), as prepared by
Seller and as may be subsequently adjusted to reflect any subsequent written
agreement between the Parties with respect thereto, or if submitted to the
Closing Statement Arbitrator, the Closing Statement issued by the Closing
Statement Arbitrator.
(c) Final Settlement. If the amount of the Adjusted Purchase Price as
set forth on the Final Closing Statement exceeds the amount of the Estimated
Adjusted Purchase Price, then Buyer shall pay to Seller, within five (5)
Business Days after the Final Settlement Date, the amount by which the Adjusted
Purchase Price as set forth on the Final Closing Statement exceeds the amount
of the Estimated Adjusted Purchase Price, together with interest on such excess
amount from the Closing Date until paid at the Interest Rate. If the amount of
the Adjusted Purchase Price as set forth on the Final Closing Statement is less
than the amount of the Estimated Adjusted Purchase Price, then Seller shall pay
to Buyer, within five (5) Business Days after the Final Settlement Date, the
amount by which the Adjusted Purchase Price as set forth on the Final Closing
Statement is less than the amount of the Estimated Adjusted Purchase Price,
together with interest on such deficiency amount from the Closing Date until
paid at the Interest Rate. Any post-Closing payment made pursuant to this
Section 3.4(c) shall be made by means of a wire transfer of immediately
available funds to a bank account designated by the Party receiving the funds.
3.5 Allocation of Purchase Price.
The Parties shall use their reasonable efforts to agree in good faith
upon an allocation of the Adjusted Purchase Price consistent with Section 1060
of the Code and the Treasury regulations thereunder as follows: Buyer shall
deliver to Seller a proposed allocation of the
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Adjusted Purchase Price among the assets of SWP and the Subsidiaries (the
"Proposed Allocation") as soon as practicable after the Closing Date. Within
twenty (20) days after the receipt of the Proposed Allocation, Seller shall
propose Seller's changes to the Proposed Allocation, if any. Any dispute with
respect to the Proposed Allocation that Buyer and Seller, acting in good faith,
are thereafter unable to resolve within twenty (20) days shall be conclusively
resolved by a nationally recognized independent public accounting firm mutually
agreed to in writing by Buyer and Seller to resolve such dispute, which
resolution shall be final and binding between Buyer and Seller. The Parties
shall report this transaction for federal income tax purposes in accordance with
the allocation so agreed upon, and to file all federal (including without
limitation Form 8594), state and local Tax Returns in accordance with such
allocation after delivery by Seller of its proposed changes to the Proposed
Allocation.
ARTICLE 4
Representations and Warranties
4.1 Representations and Warranties of Seller.
As of the date of this Agreement, Seller represents and warrants to
Buyer as follows:
(a) Organization and Good Standing; Subsidiaries. Seller is a limited
liability company duly organized, validly existing and in good standing under
the Laws of the State of Delaware. SWP is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. SWP owns, directly or indirectly, no equity or other ownership
interest in any Person, except for the Subsidiaries set forth on Schedule
4.1(a). Each Subsidiary is directly or indirectly wholly owned by SWP and is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization.
(b) Qualification of SWP and any Subsidiary; Business of LVC Finance. Each
of SWP and any Subsidiary has the requisite limited liability company or
partnership power to carry on its business as now being conducted and to own and
use their respective assets. No filing, recording, publication or other act that
has not been made or done is necessary in connection with the continuing
existence and good standing of SWP or any Subsidiary or the conduct of their
Business. Seller has prior to the execution of this Agreement delivered to Buyer
true and complete copies of the certificate of formation, limited liability
company agreements and partnership agreements, as applicable, of SWP and each
Subsidiary as in effect on the date hereof, other than any such documents in
respect of LVC Finance, copies of which shall be delivered prior to the Closing.
SWP and each Subsidiary is duly qualified to do business in the State of Nevada
and in all other places where necessary in light of the business it conducts and
the Real Property it owns and intends to own and in light of the transactions
contemplated hereby. Prior to taking possession of any equipment to be leased to
LVC II, LVC Finance will be authorized and licensed in the State of Nevada as a
company engaged in the business of purchasing goods for resale. Prior to the
Closing Date, LVC Finance shall not have engaged in any business or operations
other than the purchase of equipment for lease to, and the lease of such
equipment to LVC II and related activities. The major items of equipment
acquired to be incorporated into the Development Project will be acquired by LVC
Finance as inventory held for resale.
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(c) Authority. Seller has all requisite limited liability company power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly and validly authorized by all
requisite limited liability company action on the part of Seller.
(d) Enforceability. This Agreement has been duly and validly executed and
delivered by Seller and constitutes a legal, valid and binding obligation of
Seller enforceable against it in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and other similar
Laws of general application from time to time in effect that affect creditors'
rights generally, (ii) general principles of equity, and (iii) the power of a
court to deny enforcement of remedies generally based upon public policy.
(e) LLC Interests. At the Closing, Seller will deliver, or cause to be
delivered, to Buyer good and valid title to the LLC Interests free and clear of
any Liens (except as created by this Agreement and restrictions on sales of
securities under applicable securities Laws). There exists no option, warrant,
purchase right, or other contract or commitment (other than this Agreement) that
would require the sale, transfer, or other disposition of any LLC Interests or
member or partnership interests of any Subsidiary. There exists no voting trust,
proxy, or other agreement or understanding with respect to the voting of any LLC
Interests or member or partnership interests of any Subsidiary.
(f) Capitalization. The LLC Interests constitute all of the issued and
outstanding membership interests of SWP. All of the LLC Interests have been duly
authorized and are validly issued, fully paid, and nonassessable and were not
issued in violation of the preemptive rights of any Person. SWP has no
outstanding convertible security, call, preemptive right, option, warrant,
purchase right, or other contract or commitment that would, directly or
indirectly, require SWP to sell, issue, or otherwise create any membership
interests in addition to the LLC Interests.
(g) No Violation or Breach. Except as set forth in Schedule 4.1(g), neither
the execution and delivery of this Agreement nor the consummation of the
transactions and performance of the terms and conditions hereof by Seller will
(i) result in a violation or breach of any provision of the limited liability
company agreement or other similar governing documents of Seller, SWP or any
Subsidiary or any agreement, indenture or other instrument under which either
Seller, SWP or any Subsidiary is bound, other than such breaches or violations
of agreements, indentures, or other instruments that would not, individually or
in the aggregate, have a Material Adverse Effect or adversely affect the ability
of Seller to perform its obligations under this Agreement, (ii) violate any Law
applicable to Seller, SWP or any Subsidiary, the Operating Facility or the
Development Project in any material respect, other than such violations that
would not, individually or in the aggregate, have a Material Adverse Effect or
adversely affect the ability of Seller to perform its obligations under this
Agreement, or (iii) result in, or create any Lien (other than a Permitted
Exception) upon or with respect to any of the Real Property or Personal Property
now owned or hereafter acquired by SWP or any Subsidiary.
(h) Consents. No consent, approval, authorization or permit of, or filing
with or notification to, any Person is required for or in connection with the
execution and delivery of
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this Agreement by Seller or for or in connection with the consummation of the
transactions and performance of the terms and conditions contemplated hereby by
Seller, except for (i) requirements of the FERC, if any, (ii) requirements under
the HSR Act (which will be obtained or satisfied prior to the Closing Date),
(iii) the consents, filings, and notices set forth on Schedule 4.1(h), and (iv)
consents, approvals, authorizations, permits, filings or notices that, if not
obtained or made, would not, individually or in the aggregate, have a Material
Adverse Effect.
(i) Actions. Except as set forth on Schedule 4.1(i), there is no Action
pending or, to the Knowledge of Seller, threatened against Seller, SWP or any
Subsidiary, the Operating Facility or the Development Project, except for
threatened Actions that are not reasonably expected by Seller, individually or
in the aggregate, to have a Material Adverse Effect or adversely affect the
ability of Seller to perform its obligations under this Agreement.
(j) Compliance With Laws. Except as set forth on Schedule 4.1(j), and
except with respect to any Environmental Law, Tax Law or any employee matters,
which are exclusively addressed in Sections 4.1(n), (o) and (p), respectively,
no uncured violation of any Law by SWP or any Subsidiary or by Seller (which
could reasonably be expected to relate to the Operating Facility, the
Development Project, SWP or any Subsidiary) exists, other than violations of Law
which could not reasonably be expected by Seller, individually or in the
aggregate, to have a Material Adverse Effect.
(k) Brokerage Fees and Commissions. Neither Seller nor any Affiliate of
Seller has incurred any obligation or entered into any agreement for any
investment banking, brokerage, or finder's fee or commission in respect of the
transactions contemplated by this Agreement for which Buyer or SWP or any
Subsidiary shall have any liability.
(l) Bankruptcy. There are no bankruptcy, reorganization, or arrangement
proceedings pending against, being contemplated by, or, to the Knowledge of
Seller, threatened against Seller, SWP or any Subsidiary.
(m) Project Documents.
(i) Set forth in Part I of Schedule 4.1(m) is a list of the following
agreements and contracts to which SWP or any Subsidiary is a party or by
which SWP or any Subsidiary is bound and which relate to the Operating
Facility:
(A) gas pipeline interconnection agreements, gas supply
agreements, gas purchase and sale agreements, and gas transportation
agreements;
(B) power purchase agreements, tolling services agreements,
electricity transmission agreements, and electricity interconnection
agreements;
(C) swap, exchange, commodity option or hedging agreements;
(D) operating and maintenance agreements;
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(E) equipment purchase and sale contracts and construction
contracts;
(F) any contract requiring a capital expenditure or a commitment
by SWP or any Subsidiary in excess of $50,000 in any calendar year;
(G) any pending sale or lease of real or personal property of SWP
or any Subsidiary (other than sales of electric energy in the ordinary
course of business) in excess of $50,000;
(H) any loan agreements and related documents;
(I) any contract that contains a covenant not to compete
applicable to SWP or any Subsidiary; and
(J) any amendment relating to any of the foregoing.
(ii) Set forth in Part II of Schedule 4.1(m) is a list of all
agreements and contracts to which SWP or any Subsidiary is a party or by
which SWP or any Subsidiary is bound and which relate to the Development
Project. The agreements and contracts listed in Parts I and II of Schedule
4.1(m) are collectively referred to as the "Project Documents."
(iii) Set forth in Part III of Schedule 4.1(m) is a list of all
material agreements and contracts to which SWP or any Subsidiary is a party
or by which SWP or any Subsidiary is bound and which do not relate to the
Operating Facility or the Development Project.
(iv) Except as set forth in Part IV of Schedule 4.1(m), to the
Knowledge of Seller, neither SWP nor any Subsidiary is, in any material
respect, in breach of or in default under, and no event has occurred and is
continuing which would constitute a material breach or default by SWP or
any Subsidiary under, any material provision of any Project Document and
neither SWP nor any Subsidiary has received written notice from any other
party to any Project Document that SWP or any Subsidiary is in breach of
any Project Document which has not been remedied.
(v) True and complete copies of the Project Documents have been made
available to Buyer.
(n) Environmental Matters. This Section 4.1(n) shall constitute the sole
representations of Seller with respect to environmental matters. Except as set
forth in Schedule 4.1(n), or as would not, individually or in the aggregate,
have a Material Adverse Effect:
(i) there is no uncured violation of any Environmental Law by the
Seller, SWP or any Subsidiary that would result in any remediation
obligations of SWP or any Subsidiary under any Environmental Law;
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(ii) there have been no written notices or written complaints received
by Seller, SWP or any Subsidiary with respect to a violation of an
Environmental Law by SWP or any Subsidiary;
(iii) no Lien has been imposed on any property of SWP or any
Subsidiary by any Governmental Authority in connection with any violation
of or noncompliance with Environmental Laws;
(iv) to the Knowledge of Seller, there are no facts, circumstances,
conditions or occurrences that would reasonably be expected (A) to form the
basis of an Environmental Claim against SWP or any Subsidiary, or (B) to
cause SWP or any Subsidiary to be subject to any restrictions on ownership,
occupancy, use or transferability under any Environmental Law inconsistent
with the customary and standard operation of the Operating Facility or
development of the Development Project;
(v) there are no past, pending or, to the Knowledge of Seller,
threatened Environmental Claims against SWP or any Subsidiary;
(vi) to the Knowledge of Seller, Hazardous Materials are not now and
have not at any time been used or released at, on, under or from the Real
Property other than in compliance with applicable laws;
(vii) Seller has made available to Buyer all correspondence, studies,
audits, reviews, investigations, analyses, and reports on material
environmental matters relating to the Operating Facility or the Development
Project that are in the possession of Seller, SWP or any Subsidiary; and
(viii) to the Knowledge of Seller, there are no underground storage
tanks, active or abandoned, on the Real Property.
(o) Tax Matters. This Section 4.1(o) is the sole representation of Seller
with respect to tax matters. With respect to each of SWP and any Subsidiary,
except as set forth in Schedule 4.1(o) or as would not, individually or in the
aggregate, have a Material Adverse Effect:
(i) all Tax Returns required to be filed by or with respect to SWP and
any Subsidiary have been or will be timely filed with the appropriate
taxing authorities in all jurisdictions in which such Tax Returns are
required to be filed;
(ii) such Tax Returns are or will be true and correct in all material
respects, and all Taxes reported on such Tax Returns have been or will be
timely paid prior to Closing;
(iii) neither SWP nor any Subsidiary has extended or waived the
application of any statute of limitations of any jurisdiction regarding the
assessment or collection of any Tax;
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(iv) to the Knowledge of Seller, there are no audits, claims,
assessments, levies, administrative proceedings, or lawsuits pending or
threatened against SWP or any Subsidiary by any taxing authority;
(v) there are no Liens for Taxes (other than for current Taxes not yet
due or payable) upon the assets of either SWP or any Subsidiary);
(vi) neither SWP nor any Subsidiary has any liability for Taxes of any
Person (other than SWP and any Subsidiary) as transferee from or successor
to such Person;
(vii) no election has been made by SWP or any Subsidiary to be treated
as a corporation for federal income tax purposes;
(viii) none of the assets of SWP or any Subsidiary directly or
indirectly secures any debt the interest on which is tax exempt under
Section 103(a) of the Code; and
(ix) Seller is not a person other than a United States person within
the meaning of the Code and the transactions contemplated herein are not
subject to the tax withholding provisions of Chapter 3 of the Code.
Notwithstanding anything in this Section 4.1(o) to the contrary, no
representation or warranty is made with respect to the amount, availability,
expiration, limitation, or reduction of any net operating losses of any of SWP
or any Subsidiary.
(p) Employee Matters. This Section 4.1(p) is the sole representation of
Seller with respect to employee matters. Part I of Schedule 4.1(p) sets forth a
complete list of employees of either SWP or any Subsidiary as of the Effective
Date. Buyer has agreed to provide employment for the employees identified in
Part I of Schedule 4.1(p) in their current positions or in other substantially
similar positions with Buyer. Except as set forth in Part II of Schedule 4.1(p),
neither Seller nor SWP nor any Subsidiary is a party to or is bound by any
collective bargaining or labor agreement with respect to any employees assigned
to the business of SWP, and to the Knowledge of Seller, no present union
organizing efforts are underway with respect to any such employees. Part III of
Schedule 4.1(p) sets forth a complete listing of any employee benefit plan as
defined in Section 3(3) of ERISA that is maintained or sponsored by SWP or any
Subsidiary, or to which SWP or any Subsidiary is a party, or otherwise has any
obligations or liability.
(q) Financial Condition.
(i) Part I of Schedule 4.1(q) hereto contains copies of (A) the
audited financial statements of SWP (including the notes thereto) as of
December 31, 2000 and for the year then ended, and (B) the unaudited
financial statements of SWP (including the notes thereto) as of March 31,
2001 and for the period then ended, (collectively, the "Financial
Statements"). The Financial Statements are in each case true, complete and
correct and fairly present in all material respects the financial condition
of SWP and any Subsidiary as of the date thereof, all in accordance with
GAAP, consistently applied,
17
except as disclosed in Part I of Schedule 4.1(q), and in the case of the
Financial Statements which have not been audited, except for the absence of
footnote disclosure and the possibility of audit adjustments which shall
not, in the aggregate, be material in amount.
(ii) As of the Effective Date, and except (A) as set forth in Part II
of Schedule 4.1(q), (B) as reflected, reserved against or otherwise
disclosed in the Financial Statements, (C) as have been incurred in the
ordinary course of business of operating the Operating Facility consistent
with past practice or which may have arisen or have been incurred under any
Project Document, and (D) as would constitute Development Expenses
specified in the Development Budget or otherwise approved by Buyer pursuant
to Section 7.1(b), SWP and any Subsidiary do not have liabilities or
obligations (whether contingent or absolute, matured or unmatured, known or
unknown) which exceed $50,000 in the aggregate.
(iii) Except as disclosed in Part III of Schedule 4.1(q), since the
date set forth in each of the Financial Statements, there has not been any
adverse change in the assets, liabilities, business, results of operation,
or financial condition of SWP and any Subsidiary that would, individually
or in the aggregate, have a Material Adverse Effect.
(r) Personal Property.
(i) SWP and each Subsidiary is in possession of and has good and valid
title to, or has valid leasehold interests in or valid rights under
contract to use, all of its assets constituting personal property (the
"Tangible Personal Property"), and on the Closing Date a Subsidiary will
have possession of and good and valid title to the Tangible Personal
Property which is the subject of the Transferred Contracts, free and clear
of all Liens, except: (A) Liens arising by operation of law for amounts not
yet due and payable; (B) the rights of customers, suppliers, and
subcontractors in the ordinary course of business under general principles
of commercial law for amounts not in default; (C) Liens that would not
reasonably be expected to have a Material Adverse Effect; (D) Liens in
favor or Allegheny granted pursuant to the Tolling Agreement, which Liens
shall be fully subordinate to liens in favor of any "Senior Lender" as
defined in the Tolling Agreement; and (E) Liens listed on Schedule 4.1(r);
it being --------------- agreed that any such Liens relating to or securing
the NatWest Loan, the Bridge Loan and/or the Subordinated Note shall be
released at the Closing.
(ii) To the Knowledge of Seller, SWP and its Subsidiaries have the
exclusive right to use the "Las Vegas Delight" brand name, all
registrations with and applications to any Governmental Authority in
respect of such brand name are in full force and effect, and such brand
name is not being infringed by any other Person.
(s) Real Property. Schedule 4.1(s) lists all real property owned in whole
or in part by SWP and each Subsidiary (the "Real Property"), and except as set
forth on Schedule 4.1(s):
18
(i) SWP and each of the Subsidiaries has good and marketable fee
simple title to all of the Real Property owned by it, free and clear of all
Liens, except Permitted Exceptions, it being agreed that Permitted
Exceptions relating to or securing the NatWest Loan, the Bridge Loan and/or
the Subordinated Note shall be released at the Closing;
(ii) there are no leases, subleases, easements, licenses, concessions
or other agreements (written or oral) granting to any Person (other than
SWP or any Subsidiary) the right to use or occupy the Real Property or
granting to any Person a right or interest in any of the Real Property,
except as disclosed in the Title Commitment or which would otherwise be a
Permitted Exception;
(iii) there are no outstanding options, rights of first offer or
rights of first refusal to purchase the Real Property or any portion
thereof or interests therein;
(iv) neither SWP nor any of its Subsidiaries has received any notice
in writing or by publication of any appropriation, condemnation or like
proceeding, or of any violation of any applicable zoning law, regulation or
rule or other law, order, regulation, rule or requirement relating to or
affecting any of the Real Property; and
(v) SWP does not owe any brokerage commissions with respect to the
Real Property.
(t) Permits.
(i) Part I of Schedule 4.1(t) sets forth a list of all material
permits, franchises, approvals, or other authorizations ("Permits") of
Governmental Authorities required to operate the Operating Facility as
currently operated. Each Permit is in full force and effect, SWP and each
Subsidiary is in compliance in all material respects with all its
obligations with respect thereto, and, to the Knowledge of Seller, no event
has occurred which permits, or with or without the giving of notice or the
passage of time or both would permit, the revocation or termination of any
Permit.
(ii) Part II of Schedule 4.1(t) sets forth a list of all Permits
obtained by Seller, SWP or any Subsidiary as of the Effective Date and a
list of all applications for Permits filed with or requested from any
Governmental Authority as of the Effective Date in connection with the
Development Project. Seller has made available to Buyer a true and correct
copy of each of (i) the material documents, reports and correspondence from
SWP or Seller, (ii) the material documents provided by SWP or Seller to any
Governmental Authority, and, to the Knowledge of Seller, the material
documents and correspondence received by Seller form any Governmental
Authority, in each case with respect to such applications.
(iii) Part III of Schedule 4.1(t) sets forth a list of all material
permits, licenses, consents and approvals from a Governmental Authority
which, to the Knowledge of Seller as of the Effective Date, are or will be
required to be obtained by Seller, Buyer, SWP or any Subsidiary for the
development, construction and ownership and operation of the Development
Project.
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(iv) SWP and each Subsidiary is in material compliance with each
Permit issued to it or which governs its operations.
(u) Bank Accounts. Set forth on Schedule 4.1(u) are the names of each bank
or other financial institution with which SWP or any Subsidiary has an account
and description of such account.
(v) QF Status. The Operating Facility has been certified by the FERC as a
qualifying cogeneration facility ("QF") pursuant to the Public Utility
Regulatory Policy Act of 1978, as amended ("PURPA") and the FERC's regulations
implementing PURPA in an order issued on October 17, 1991. The Operating
Facility has satisfied the relevant criteria for QF status at all times after
September 1, 1999, and to the Knowledge of Seller, at all times after October
17, 1991 and prior to September 1, 1999.
(w) Sole Purpose; Nature of Business. Neither SWP nor any Subsidiary has
conducted at any time after August 31, 1999, and is not conducting, any business
or operations, other than the operations of the Operating Facility and related
operations and the development and construction of the Development Project and
the leasing of assets to LVC II in connection with the Development Project.
(x) Status.
(i) None of Seller or any of its Affiliates is or will be by virtue of
the execution, delivery, or performance of this Agreement (A) an "electric
utility company," a "registered holding company" or either a "subsidiary
company" or an "affiliate" of a "registered holding company," as such terms
are defined in PUHCA, (B) subject to regulation under PUHCA except pursuant
to Section 9(a)(2) thereof, or (C) subject to regulation under the
applicable Law of the State of Nevada respecting the rates of electric
utilities.
(ii) Neither SWP nor any Subsidiary is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940 or an "investment advisor" within the
meaning of the Investment Company Act of 1940.
(y) Affiliate Transactions. There is no indebtedness (other than
indebtedness which will be paid in full prior to the Closing Date) between SWP
or any Subsidiary, on the one hand, and Seller, any officer, director or
Affiliate (other than SWP or any Subsidiary) of Seller, on the other.
(z) Utility Services. All customary utility services necessary in the
development and operation of the Development Project (other than fuel supply and
water supply, the procurement of which is part of the development of the
Development Project), including as necessary, storm and sanitary services,
electric and telephone services and facilities, are or will be available to the
Development Project.
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4.2 Representations and Warranties of Buyer.
Buyer represents and warrants to Seller as follows:
(a) Organization and Qualification. Buyer is a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Delaware
and has the requisite power under its formation documents to carry on its
business as now being conducted. Buyer is duly qualified to do business in each
state in which it conducts business.
(b) Authority. Buyer has all requisite power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement. The
execution, delivery, and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all requisite
corporate action on the part of Buyer.
(c) Enforceability. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes a valid and binding agreement of Buyer
enforceable against it in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar Laws of
general application from time to time in effect that affect creditors' rights
generally, (ii) general principles of equity, and (iii) the power of a court to
deny enforcement of remedies generally based upon public policy.
(d) No Violation or Breach. Neither the execution and delivery of this
Agreement nor the consummation of the transactions and performance of the terms
and conditions hereof by Buyer will (i) result in a violation or breach of any
provision of the governing documents of Buyer or any material agreement,
indenture or other instrument under which Buyer is bound, other than such
breaches or violations of agreements, indentures or other instruments that would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on Buyer or adversely affect the ability of the Buyer to perform
its obligations under this Agreement or (ii) violate any Law applicable to Buyer
or the assets of Buyer other than such violations of Law that would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on Buyer or adversely affect the ability of the Buyer to perform
its obligations under this Agreement.
(e) Consents. No consent, approval, authorization, or permit of, or filing
with or notification to, any Person is required for or in connection with the
execution and delivery of this Agreement by Buyer or for or in connection with
the consummation of the transactions and performance of the terms and conditions
contemplated hereby by Buyer, except for any (i) requirements of the FERC, (ii)
requirements under the HSR Act, and (iii) consents, approvals, authorizations,
permits, filings or notices that, if not obtained or made, would not,
individually or in the aggregate, have a material adverse effect on Buyer or its
Affiliates.
(f) Actions. To the Knowledge of Buyer, there is no Action pending or
threatened against Buyer, except for Actions which are not reasonably expected
to have a material adverse effect on Buyer or its assets or adversely affect the
ability of the Buyer to perform its obligations under this Agreement.
(g) Brokerage Fees and Commissions. Neither Buyer nor any Affiliate of
Buyer has incurred any obligation or entered into any agreement for any
investment banking
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brokerage, or finder's fee or commission in respect of the transactions
contemplated by this Agreement for which either Seller, SWP or any Subsidiary
shall incur any liability.
(h) Funds. Buyer has, and at all times prior to Closing will have,
sufficient funds available to it to enable Buyer to consummate the transactions
contemplated hereby and to pay the Closing Payment, the other payments required
of Buyer hereunder, and all fees and expenses of Buyer.
(i) Experienced Investor; No Distribution. The parent company of Buyer is
an experienced and knowledgeable investor in the power generation and
development business in the United States. Prior to entering into this
Agreement, Buyer and its Affiliates were advised by counsel, accountants,
financial advisors, and such other Persons deemed appropriate concerning this
Agreement and has relied solely on an independent investigation and evaluation
of, and appraisal and judgment with respect to, SWP and each Subsidiary and the
revenue, price, and expense assumptions applicable thereto. Buyer hereby
acknowledges that the LLC Interests are not registered under the Securities Act
of 1933, as amended (the "Securities Act"), or registered or qualified for sale
under any state securities laws and cannot be resold without registration
thereunder or exemption therefrom. Buyer is an "accredited investor," as such
term is defined in Regulation D of the Securities Act and will acquire the LLC
Interests for its own account and not with a view to a sale or distribution
thereof in violation of the Securities Act, and the rules and regulations
thereunder, any applicable state blue sky laws or any other applicable
securities laws. Buyer has sufficient knowledge and experience in financial and
business matters to enable it to evaluate the risks of investment in the LLC
Interests and has the ability to bear the economic risk of this investment for
an indefinite period of time.
(j) Bankruptcy. There are no bankruptcy, reorganization, or arrangement
proceedings pending against, being contemplated by, or to the Knowledge of Buyer
threatened against, Buyer.
(k) Inspection. Buyer acknowledges that, prior to its execution of this
Agreement, (i) it has been afforded access to and the opportunity to inspect the
Operating Facility and the Development Project Site, and to review the Project
Documents, and all other due diligence items made available by Seller with
respect to SWP and any Subsidiary, (ii) it has inspected the Operating Facility
and the Development Project Site and reviewed the Project Documents and Permits,
and as of the Closing Date, it will have inspected the Operating Facility and
the Development Project Site and all other due diligence items made available by
Seller with respect to SWP and any Subsidiary to the extent it deems necessary
or advisable, and (iii) it is relying upon its own inspections and investigation
in order to satisfy itself as to the condition and suitability of the Operating
Facility and the Development Project Site.
(l) Qualified Entity. Buyer is a "Qualified Entity" as that term is defined
in the Tolling Agreement.
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ARTICLE 5
Access and Confidentiality
5.1 General Access.
Promptly following the execution of this Agreement and until the
Closing Date (or earlier termination of this Agreement), Seller shall permit
(and with respect to SWP and each Subsidiary, Seller shall cause SWP and each
Subsidiary to permit) Buyer and its representatives:
(a) to have reasonable access, at reasonable times and upon reasonable
advance notice in Seller's and SWP's offices and in a manner so as not to
interfere unduly with the business operations of Seller or SWP or any
Subsidiary, to the books, records, contracts, and documents of each of SWP and
any Subsidiary relating to their assets and operations, and of Seller to the
extent directly relating to the Operating Facility or the Development Project,
insofar as the same may be disclosed without (i) violating any legal constraints
or any legal obligation (it being agreed that if Seller denies access to any
materials pursuant to this clause (a), Seller shall disclose to Buyer the legal
constraints or obligations requiring such denial and shall, at the request of
Buyer, use commercially reasonable efforts to obtain any consents or waivers
necessary to afford Buyer the requested access), (ii) waiving any
attorney/client, work product, or like privilege, (iii) disclosing information
about the activities of Seller or its Affiliates (other than SWP and any
Subsidiary), or (iv) disclosing proprietary models of Seller or any of its
Affiliates pertaining to energy project evaluation, energy or natural gas price
curves or projections, or other economic predictive models; provided that all
requests for access shall be directed to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or such other persons as
Seller may designate from time to time.
(b) subject to any required consent of any third Person and upon reasonable
advance notice to Seller, to conduct at reasonable times and at Buyer's sole
risk, cost, and expense, in the presence of representatives of Seller,
reasonable inspections of the Operating Facility and the Development Project
Site. Buyer agrees to indemnify and hold harmless, release and defend Seller
Indemnified Parties and SWP and any Subsidiary from and against any and all
Losses arising, in whole or in part, from the acts or omissions of the Buyer
Indemnified Parties in connection with Buyer's inspection of the Operating
Facility, the Development Project Site and other assets and records of Seller or
SWP and any Subsidiary, including claims for personal injuries, property damage,
and reasonable attorneys' fees and expenses, except to the extent that any such
Losses arise from the acts or omissions of any one or more of the Seller
Indemnified Parties.
Nothing in this Article 5 shall be construed to permit Buyer or its
representatives to have access to any files, records, contracts, or documents of
Seller or SWP or any Subsidiary relating to this Agreement or the contemplated
transaction, including any bids or offers received by Seller or SWP or any
Subsidiary for the sale of the LLC Interests or the Operating Facility or the
Development Project Site, it being agreed that all such bids or offers shall be
the sole property of Seller.
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5.2 Confidential Information.
Buyer agrees to maintain all information made available to it under
this Agreement confidential and to cause its officers, directors, agents,
employees, representatives, consultants, and advisors to maintain all
information made available to them under this Agreement confidential, all as
provided in that certain confidentiality agreement dated October 13, 2000, as
amended on May 11, 2001 (the "Confidentiality Agreement"), by and between Seller
and Buyer which is attached hereto as Exhibit 5.2, the terms of which are
incorporated herein by reference and made a part of this Agreement.
5.3 No Other Contract.
Buyer shall not contact or correspond with any customer, employee or
other Person associated with the business of SWP without the prior written
consent of Seller.
ARTICLE 6
Tax Matters
6.1 Preparation.
Any Tax Return to be prepared pursuant to the provisions of this
Section 6.1 shall be prepared in a manner consistent with practices followed in
prior years with respect to similar Tax Returns, except for changes required by
changes in law or fact. Buyer shall not file an amended Tax Return for any
period ending on or prior to the Closing Date without the consent of Seller,
which may be withheld in Seller's sole discretion. The following provisions
shall govern the allocation of responsibility as between Buyer and Seller for
certain Tax matters following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. Seller shall
prepare or cause to be prepared and file or cause to be filed all Tax
Returns for SWP and each Subsidiary for all periods ending on or prior to
the Closing Date regardless of when they are to be filed. Seller shall pay
the Taxes attributable to SWP and each Subsidiary with respect to such
periods.
(b) Tax Periods Beginning Before and Ending After the Closing Date.
Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of SWP and each Subsidiary for Tax periods which end after
the Closing Date. Seller shall pay to Buyer within fifteen (15) days after
the date on which Buyer delivers substantiation of Taxes paid with respect
to such periods an amount equal to the portion of such Taxes that relates
to the portion of such Tax period ending on the Closing Date.
6.2 Access to Information.
After Closing, Seller shall grant to Buyer (or its designees) access at
all reasonable times to all of the information, books, and records relating to
SWP and any Subsidiary within the possession of Seller (including work papers
and correspondence with taxing authorities), and shall afford Buyer (or its
designees) the right (at Buyer's expense) to take extracts therefrom and to make
copies thereof, to the extent reasonably necessary to permit Buyer (or its
designees) to prepare Tax Returns and to conduct negotiations with taxing
authorities. After Closing,
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Buyer shall grant or cause SWP and any Subsidiary to grant to Seller (or its
designees) access at all reasonable times to all of the information, books and
records relating to SWP and any Subsidiary within the possession of Buyer or SWP
and any Subsidiary (including work papers and correspondence with taxing
authorities), and shall afford Seller (or its designees) the right (at Seller's
expense) to take extracts therefrom and to make copies thereof, to the extent
reasonably necessary to permit Seller (or its designees) to prepare Tax Returns
and to conduct negotiations with Tax authorities.
6.3 Transfer Taxes.
Buyer shall be responsible for the payment of all Transfer Taxes
resulting from the transactions contemplated by this Agreement.
6.4 Tax Sharing Agreements.
On or before the Closing Date, Seller shall ensure that no Tax
indemnity agreement, Tax allocation agreement, or Tax sharing agreement with
respect to SWP or any Subsidiary is in force or effect as to SWP or any
Subsidiary and that there shall be no liability of SWP or any Subsidiary on and
after the Effective Date under any such agreement.
6.5 Assistance and Cooperation.
After the Closing Date, in the case of any threatened or actual audit,
examination, or other proceeding with respect to Taxes ("Tax Proceeding") for
which Seller is or may be liable pursuant to this Agreement, Buyer shall inform
Seller within ten (10) days of the receipt of any notice of such Tax Proceeding,
and shall afford Seller, at Seller's expense, the opportunity to control the
conduct of such Tax Proceedings. Buyer shall execute or cause to be executed
powers of attorney or other documents necessary to enable Seller to take all
actions desired by Seller with respect to such Tax Proceeding to the extent such
Tax Proceeding may affect the amount of Taxes for which Seller is liable
pursuant to this Agreement. Seller shall have the right to control any such Tax
Proceedings and, if there is substantial authority therefor, to initiate any
claim for refund, file any amended return or take any other action which it
deems appropriate with respect to such Taxes.
6.6 Tax Indemnity.
Notwithstanding any other provisions of this Agreement, Sections 6.6
and 6.7 shall apply to indemnifications by Seller to Buyer for, and shall be the
sole remedy of Buyer in respect of, Losses described in the following sentence.
Seller agrees to indemnify and hold harmless Buyer from and against the entirety
of any and all Losses that Buyer may suffer for any Taxes attributable to SWP or
any Subsidiary with respect to any Tax year or portion thereof ending on or
before the Closing Date (or for any Tax year beginning before and ending after
the Closing Date to the extent allocable (determined in a manner consistent with
Section 6.1(b)) to the portion of such period beginning before and ending on the
Closing Date). No right to indemnity shall exist if the Loss is the result of
actions of Buyer or its Affiliates.
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6.7 Tax Indemnity Claims.
The provisions of this Section 6.7 shall apply only to the
indemnification provided for under Section 6.6. If a claim for Taxes is made
against Buyer and if Buyer intends to seek indemnity with respect thereto under
Section 6.6, Buyer shall promptly furnish written notice to Seller of such
claim. Failure of Buyer to so notify Seller within fifteen (15) days of the
claim being made against Buyer shall terminate all rights of Buyer to indemnity
by Seller as to such claim. Seller shall have thirty (30) days after receipt of
such notice to undertake, conduct, and control (through counsel of its own
choosing and at its own expense) the settlement or defense thereof, and Buyer
shall cooperate with it in connection therewith. Seller shall permit Buyer to
participate in such settlement or defense through counsel chosen by Buyer (but
the fees and expenses of such counsel shall be paid by Buyer). So long as
Seller, at Seller's cost and expense, (i) has undertaken the defense of, and
assumed full responsibility for all indemnified Losses with respect to, such
claim, (ii) is reasonably contesting such claim in good faith, by appropriate
proceedings, and (iii) has taken such action (including the posting of a bond,
deposit, or other security) as may be necessary to prevent any action to
foreclose a lien against or attachment of the property of Buyer for payment of
such claim, Buyer shall not pay or settle any such claim. Notwithstanding
compliance by Seller with the preceding sentence, Buyer shall have the right to
pay or settle any such claim, but in such event it shall waive any right to
indemnity by Seller for such claim. If within thirty (30) days after the receipt
of Buyer's notice of a claim of indemnity hereunder, Seller does not notify
Buyer that it elects (at Seller's cost and expense) to undertake the defense
thereof and assume full responsibility for all indemnified Losses with respect
thereto, or gives such notice and thereafter fails to contest such claim in good
faith or to prevent action to foreclose a lien against or attachment of Buyer's
property as contemplated above, Buyer shall have the right to contest, settle,
or compromise such claim and Buyer shall not thereby waive any right to
indemnity for such claim under this Agreement.
6.8 Tax Refunds.
Refunds of Taxes paid or payable with respect to Taxes attributable to
SWP or any Subsidiary shall be promptly paid as follows (or, to the extent
payable but not paid due to offset against other Taxes, shall be promptly paid
by the Party receiving the benefit of the offset as follows): (i) to Seller if
attributable to Taxes with respect to any Tax year or portion thereof ending on
or before the Closing Date (or for any Tax year beginning before and ending
after the Closing Date to the extent allocable (determined in a manner
consistent with Section 6.1(b)) to the portion of such period beginning before
and ending on the Closing Date); and (ii) to Buyer if attributable to Taxes with
respect to any Tax year or portion thereof beginning after the Closing Date (or
for any Tax year beginning before and ending after the Closing Date to the
extent allocable (determined in a manner consistent with Section 6.1) to the
portion of such period ending after the Closing Date).
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ARTICLE 7
Covenants of Seller and Buyer
7.1 Conduct of Business Pending Closing.
Subject to Section 7.2, except as disclosed in Schedule 7.1 or as
otherwise consented to or approved by Buyer (which consent or approval shall not
be unreasonably withheld, conditioned, or delayed), Seller covenants and agrees
that:
(a) Changes in Business. Except as contemplated by Section 7.1(b) in
respect of the Development Project, Seller shall cause SWP and each Subsidiary
to comply with the following:
(i) SWP shall not make, nor permit any Subsidiary to make, any
material change in the conduct of its business or operations, except as
contemplated by the matters described in Schedule 7.1;
(ii) except in the ordinary course of business and consistent with
past practices, and except for the transfer of the Transferred Contracts as
provided in Section 7.1(h), SWP shall not, nor permit any Subsidiary to,
enter into, assign, terminate, or amend in any material respect, any
Project Document;
(iii) Neither SWP nor any Subsidiary shall:
(A) merge into or with or consolidate with any other corporation
or acquire all or substantially all of the business or assets of any
Person;
(B) make any material change in its certificate of formation or
limited liability company agreement or partnership agreement;
(C) purchase any securities of any Person, except for investments
made in the ordinary course of business and consistent with prior
practices;
(D) declare or pay any dividends or make any distributions in
respect of, or issue any of, its equity securities or securities
convertible into its equity securities, or repurchase, redeem, or
otherwise acquire any such securities or make or propose to make any
other change in its capitalization; or
(E) except for obligations that will be repaid in full at or
prior to the Closing, incur any obligations for borrowed money or
guarantee or otherwise become liable for the obligations of, or make
any loans or advances to, any Person not an Affiliate of Seller.
(iv) other than pursuant to the requirements of existing contracts or
commitments, SWP shall not, nor permit any Subsidiary to, sell, lease, or
otherwise dispose of any of its assets, except for (a) assets sold, leased,
or otherwise disposed of in the ordinary course of business, (b) the sale
or disposition of any item of personal property or equipment having a value
of less than $50,000, and (c) the transfer or other
27
disposition of the accounts receivable or advances due or owed to SWP or
any Subsidiary from any Affiliate of Seller;
(v) SWP shall not, nor permit any Subsidiary to, take any action or
enter into any commitment with respect to or in contemplation of any
liquidation, dissolution, recapitalization, reorganization, or other
winding up of its business or operations;
(vi) SWP shall not, nor permit any Subsidiary to, change its
accounting policies or practices (including, without limitation, any change
in depreciation or amortization policies), except as required under GAAP;
(vii) SWP shall not, nor permit any Subsidiary to, enter into any
employment agreement not terminable by SWP or such Subsidiary at will and
without cost to SWP or such Subsidiary; and
(viii) SWP shall not, nor permit any Subsidiary to, create any
employee benefit plan (within the meaning of Section 3(3) of ERISA) or any
other employee benefit plan or program not subject to ERISA, except as
required by Law.
(b) Continued Development of Development Project. Notwithstanding anything
contained in Section 7.1(a) to the contrary, until the Closing Date, Seller and
SWP and any Subsidiary shall continue to pursue and control the development,
permitting and construction of the Development Project, all as Seller and SWP
and any Subsidiary deem appropriate, subject only to the express requirements of
this Agreement. Except as otherwise expressly provided in this Agreement:
(i) all activities of Seller, SWP and any Subsidiary in connection
with the development of the Development Project ("Development Project
Activities") shall be undertaken and pursued in substantial accordance with
the principles and practices which are applicable to Seller's power plant
development projects generally at the time in question ("Seller Practice");
provided, that Seller shall cooperate and coordinate with Buyer through the
Project Transition Committee as provided in Section 7.1(c) with respect to
the development and construction of the Development Project and shall
provide to Buyer, its agents, consultants and counsel upon reasonable prior
notice (which may be delivered by telephone or facsimile transmission),
access to the Development Project by Buyer's representatives on the Project
Transition Committee at all reasonable times for purposes of observing
Seller's development and construction activities and conducting (at Buyer's
expense) any examinations and surveys as Buyer may reasonably request;
(ii) subject to Section 7.1(b)(i), SWP and any Subsidiary and Seller,
on behalf of SWP and any Subsidiary, may spend or incur such Development
Expenses as they deem appropriate in connection with the Development
Project, provided that (x) no cost or expense incurred in connection with a
Change Order under the EPC Contract shall be included in the Adjusted
Purchase Price without Buyer's prior written consent (which consent shall
not be unreasonably withheld, conditioned or delayed), it being understood
28
that in the event Buyer unreasonably withholds, conditions or delays any
such consent to a Change Order which is performed under the EPC Contract
the costs or expenses incurred in connection with such Change Order shall
be included in the Adjusted Purchase Price and borne by Buyer and (y) no
Development Expenses (other than expenses to satisfy obligations under the
EPC Contract) in excess of 110% of the total amount of each line item of
expenses set forth in the Development Budget (determined after the
application by the Seller or SWP of any contingency amount included in the
Development Budget) shall be included in the Adjusted Purchase Price
without Buyer's prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed), it being understood that in
the event Buyer unreasonably withholds, conditions or delays any such
consent to any such expense the costs or expenses incurred in connection
therewith shall be included in the Adjusted Purchase Price and borne by
Buyer;
(iii) Neither Seller nor SWP or any Subsidiary shall, without Buyer's
prior written consent (which consent shall not be unreasonably withheld,
conditioned or delayed), amend or supplement any existing Project Document,
enter into any new agreement which is not consistent with Seller's Practice
(an "Additional Project Agreement") in respect of the development,
construction, ownership or operation of the Project which is material, or
amend or supplement any Additional Project Agreement once entered into, if
such amendment or supplement or Additional Project Agreement would cause a
Material Adverse Effect or would result in a payment obligation,
individually or in the aggregate, in excess of $50,000;
(iv) SWP and any Subsidiary may deal and contract with Seller, and
Seller and SWP and any Subsidiary may deal and contract with Affiliates of
Seller, freely and without limitation or restriction of any kind and on
such terms and conditions as SWP and any Subsidiary and Seller and such
Affiliates deem appropriate, subject only to the requirement that any
obligations of SWP and any Subsidiary paid or incurred to Seller or any
Affiliates of Seller shall be for reasonably equivalent value on terms no
less favorable to SWP and any Subsidiary than they could obtain in an
arm's-length transaction with a Person that is not an Affiliate of Seller;
and
(v) Seller and SWP and any Subsidiary may take or omit to take any
action in connection with the Development Project, the existing Project
Documents, the Additional Project Agreements or any of the Development
Project Activities for any or no reason, as it deems appropriate. The
phrase "deems appropriate," when used in this Agreement with respect to any
decision, action, or inaction by Seller or SWP and any Subsidiary, means
that the decision, action or inaction may be made or taken for any or no
reason deemed appropriate in the sole discretion of Seller or either of SWP
and any Subsidiary considering only its own interests and not the interests
of any other Person (including, but not limited to, Buyer), subject only to
any requirements of this Agreement.
(c) Transition Committee. Promptly after the Effective Date, Seller and
Buyer shall establish a project transition committee (the "Project Transition
Committee") for the purpose of facilitating ongoing communication between the
Parties with respect to the
29
development of the Development Project prior to the Closing Date. The Project
Transition Committee shall be comprised of four (4) members, two (2) appointed
by Seller and two (2) appointed by Buyer. The Project Transition Committee shall
meet no less frequently than weekly, or more often as the Parties may mutually
agree or this Agreement may require. Meetings shall be held at such locations as
the members of the Project Transition Committee may agree upon, on no less than
twenty-four (24) hours' prior written notice of either Party (which notice may
be waived in writing by both Parties), provided that either Party may call a
special meeting to address an urgent matter on such notice as may be practicable
under the circumstances. All meetings may be held telephonically and all
representatives shall be available for meetings on short notice (and shall
designate an alternate for purposes of unavailability). At each meeting, Seller
shall provide an update on any Development Project Activities undertaken since
the last weekly meeting of the Project Transition Committee (including an update
of Development Expenses) and shall consult with Buyer regarding anticipated
future Development Project Activities. The Parties shall discuss such other
matters related to Development Project Activities generally as they may deem
appropriate. Buyer shall designate one or more individuals (who may be a member
of the Project Transition Committee) to be available on a twenty-four (24) hour
per day basis to consult with Seller in respect of the Development Project and
to be available to receive "time critical" requests from Seller pursuant to
Section 7.1(d) (each such individual being a "Buyer's Construction
Representative").
(d) All requests by Seller for consent by Buyer to Development Expenses for
which Buyer's consent is required pursuant to Section 7.1(b)(ii) hereof shall be
submitted exclusively to the Project Transition Committee (which submission may
be made through any Buyer Construction Representative) and Seller shall have no
obligation to submit such requests to any other Person, notwithstanding anything
to the contrary provided herein. Buyer's representatives on the Project
Transition Committee shall have authority to grant or deny such consent. Seller
may designate certain events as "time critical" in the event Seller has
determined in good faith that such events are material to the Development
Project and are of such a nature that a decision related thereto by the Project
Transition Committee must be reached immediately in order to serve the overall
best interests of the Development Project. Buyer agrees that in the event Seller
designates any such request as "time critical," Buyer's representatives will
respond to such request with Buyer's consent or denial of consent within such
time period as Seller may specify therefor, which shall not in any case be less
than twelve (12) hours after Buyer's Construction Representative has personally
received such request. Any such request for consent shall include such detail as
is reasonably necessary for Buyer's representative to evaluate the merits of
such request. It shall be presumptively unreasonable for Buyer to withhold,
condition, delay or deny consent to any such item if it is substantially
consistent with Seller Practice and the Work Plan.
(e) Buyer may, at its reasonable discretion, engage the services of Seller
or its Affiliates for the purpose of providing any services deemed reasonable
and necessary to assist Buyer or SWP and any Subsidiary with the development and
management of the Development Project, including the services set forth in Part
I on Schedule 7.1(e) (the "Transition Services"). Seller shall have and shall
make available to Buyer and LLC that number of Seller employees which Seller
reasonably believes is necessary to perform fully the Transition Services. Part
II on Schedule 7.1(e) sets forth a list of the key Seller personnel whom Seller
shall make available to render the Transition Services, together with a list of
their hourly billing rates. In the event the
30
Parties mutually agree to utilize personnel not identified in Part I on Schedule
7.1(e), Seller shall ▇▇▇▇ Buyer or the LLC at an agreed-upon hourly costs for
such Transition Services. Seller, in consultation with Buyer, shall have the
right to exchange or reassign the personnel whom Seller shall make available to
render the Transition Services. All requests from Buyer or SWP or any Subsidiary
and all Transition Services performed by Seller or its affiliates under this
Section 7.1(e) shall be consistent with applicable Laws.
(f) Liens. Seller shall not, and will cause SWP and each Subsidiary not to,
grant any express Lien on any assets of SWP or any Subsidiary, except to the
extent (i) required or permitted incident to the operation of the assets of SWP
or any Subsidiary and the business of SWP or any Subsidiary or (ii) required or
evidenced by any of the Project Documents.
(g) Operation of Operating Facility. Seller shall:
(i) cause the Operating Facility to be maintained and operated in the
ordinary course of business consistent with past practices (including the
repair or replacement of damaged, destroyed, obsolete, depreciated,
non-working, or non-economical items of equipment or other personal
property), and in accordance with Good Operating Practices, maintain
insurance now in force with respect to such Facility, and pay or cause to
be paid all costs and expenses in connection therewith promptly when due;
(ii) cause SWP and each Subsidiary responsible therefor to maintain
the Operating Facility's QF status; and
(iii) cause SWP and each Subsidiary to use its reasonable efforts to
maintain its relationships with suppliers, customers, and others having
material business relationships with SWP and any Subsidiary with respect to
the Operating Facility so that they will be preserved for Buyer on and
after the Closing Date.
(h) Transferred Contracts. On or before the Closing Date, Seller shall
cause each of the contracts described in Schedule 7.1(h) (the "Transferred
Contracts") to be assigned and transferred to, and assumed by, SWP or its
appropriate Subsidiary shown for each such Transferred Contract in Schedule
7.1(h).
(i) Permits. Seller and its Affiliates shall use all commercially
reasonable efforts, and shall cause the SWP and any Subsidiary, to obtain
all authorizations, consents, orders, and approvals of, and to give all
notices to and make all filings with, all Governmental Authorities
(including those pertaining to the Governmental Approvals) and third
parties that may be or become necessary or desirable in connection with
this Agreement and the transactions contemplated hereby in order to
preserve and protect, and not to impair, the Permits (whether already
obtained or applied for).
7.2 Qualifications on Conduct.
Seller, SWP and any Subsidiary may take (or not take, as the case may
be) any of the actions described in Section 7.1 above if reasonably necessary
under emergency circumstances
31
(or if required or prohibited pursuant to Law) and provided Buyer is notified as
soon thereafter as practicable.
7.3 Public Announcements.
Prior to the Closing Date, without the prior written approval of the
other Party (which approval shall not be unreasonably withheld, conditioned, or
delayed), no Party will issue, or permit any agent or Affiliate of such Party to
issue, any press releases or otherwise make, or cause any agent or Affiliate of
such Party to make, any public statements with respect to this Agreement and the
transactions contemplated hereby, except when such release or statement is
deemed in good faith by the releasing Party to be required by Law or under the
applicable rules and regulations of a stock exchange or market on which the
securities of the releasing Party or any of its Affiliates are listed. In each
case to which such exception applies, the releasing Party will use its
reasonable efforts to provide a copy of such release or statement to the other
Party and incorporate any reasonable changes which are suggested by the
non-releasing Party prior to releasing or making the statement. After the
Closing Date, the Parties will confer with each other regarding their initial
public announcement for the transaction contemplated herein.
7.4 Actions by Parties.
Each Party agrees to use commercially reasonable efforts to satisfy the
conditions to Closing set forth in Article 8 and to refrain from taking any
action within its control which would cause a breach of a representation or
warranty set forth herein.
7.5 Supplements to Schedules.
Seller may, from time to time prior to the Closing by written notice to
Buyer, supplement or amend the Schedules to this Agreement to correct any matter
that would constitute a breach of any representation or warranty of Seller in
Section 4.1. For purposes of determining whether Buyer's condition set forth in
Section 8.2(a) has been fulfilled, the Schedules shall be deemed to include only
that information contained therein on the Effective Date and shall be deemed to
exclude all information contained in any supplement or amendment thereto, but if
the Closing shall occur, then all matters disclosed to Buyer pursuant to any
such supplement or amendment at or prior to the Closing shall be deemed to be
waived by Buyer and Buyer shall not be entitled to make any claim thereon or
relating thereto under Section 11.1.
7.6 Further Assurances.
Seller and Buyer each agree that from time to time after the Closing
Date, it will execute and deliver or cause its respective Affiliates (including
SWP and each Subsidiary) to execute and deliver such further instruments, and
take (or cause its respective Affiliates, including SWP and each Subsidiary, to
take) such other action, as may be reasonably necessary to carry out the
purposes and intents of this Agreement.
7.7 Records.
Buyer agrees to maintain, or cause SWP and each Subsidiary to maintain,
the Records in existence on the Closing Date until the fifth (5th) anniversary
of the Closing Date (or for such
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longer period of time as Seller shall advise Buyer is necessary to have Records
available with respect to open years for Tax audit purposes), or if any of the
Records pertain to any claim or dispute pending on the fifth (5th) anniversary
of the Closing Date, Buyer shall maintain any of the Records designated by
Seller until such claim or dispute is finally resolved and the time for all
appeals has been exhausted. After the Closing Date, Buyer shall provide or cause
SWP and each Subsidiary to provide Seller and its representatives during normal
business hours and upon reasonable notice, reasonable access to and the right to
copy the Records at Seller's cost and expense, for the purposes of:
(i) preparing and delivering any accounting statement provided for
under this Agreement and adjusting, prorating, and settling the charges and
credits provided for in this Agreement;
(ii) complying with any Law affecting Seller's ownership of the LLC
Interests or the Operating Facility, the Development Project or the
Development Project Site prior to the Closing Date;
(iii) preparing any audit of the books and records of any Person
relating to the LLC Interests or the Operating Facility or the Development
Project prior to the Closing Date, or responding to any audit prepared by
such third parties;
(iv) preparing Tax Returns;
(v) responding to or disputing any Tax audit; or
(vi) asserting, defending, or otherwise dealing with any claim or
dispute under this Agreement or with respect to SWP or any Subsidiary or
the Operating Facility or Development Project.
From and after the Closing Date until the fifth (5th) anniversary of
the Closing Date, in no event shall Buyer, SWP or any Subsidiary, or any of
their respective Affiliates destroy any Records without giving Seller at least
sixty (60) days advance written notice thereof and the opportunity, at Sellers
expense, for Seller to obtain such Records prior to their destruction.
Additionally, Buyer shall not, and shall not permit SWP or any Subsidiary to,
after the Closing Date, waive the attorney-client, work product or like
privilege of Seller, its Affiliates, or SWP or any Subsidiary with respect to
any of the Records existing as of the Closing Date, without Seller's prior
written consent.
7.8 Assumption of Obligations of SWP and any Subsidiary.
From and after the Closing Date, Buyer agrees to cause SWP and each
Subsidiary to fully perform and fulfill all of its obligations and commitments,
whether existing as of the Closing Date or arising or incurred thereafter.
7.9 Regulatory and Other Authorizations and Consents.
(a) Filings. Each Party shall use all commercially reasonable efforts to
obtain all authorizations, consents, orders, and approvals of, and to give all
notices to and make all
33
filings with, all Governmental Authorities (including those pertaining to the
Governmental Approvals) and third parties that may be or become necessary for
its execution and delivery of, and the performance of its obligations under,
this Agreement and will cooperate fully with the other Party in promptly seeking
to obtain all such authorizations, consents, orders, and approvals, giving such
notices, and making such filings. To the extent required by the HSR Act, each
Party shall (i) file or cause to be filed, as promptly as practicable but in no
event later than the tenth (10th) Business Day after the execution and delivery
of this Agreement, with the Federal Trade Commission and the United States
Department of Justice, all reports and other documents required to be filed by
such Party under the HSR Act concerning the transactions contemplated hereby and
(ii) promptly comply with or cause to be complied with any requests by the
Federal Trade Commission or the United States Department of Justice for
additional information concerning such transactions, in each case so that the
initial thirty (30) day waiting period applicable to this Agreement and the
transactions contemplated hereby under the HSR Act shall expire as soon as
practicable after the execution and delivery of this Agreement. Each Party
agrees to request, and to cooperate with the other Party in requesting, early
termination of any applicable waiting period under the HSR Act. Seller and Buyer
shall each pay one half of the filing fees in connection with the filings by the
Parties required by the HSR Act.
(b) Additional Undertakings of Buyer. Without limiting the generality of
Buyer's undertakings pursuant to Section 7.9(a), Buyer shall:
(i) take promptly any or all actions, including the following actions,
to the extent necessary to eliminate any concerns on the part of any
Governmental Authority regarding the legality, under any Law, of Buyer's
acquisition of the LLC Interests: entering into negotiations, providing
information, making proposals, entering into and performing agreements or
submitting to judicial or administrative orders, holding separate (through
the establishment of a trust or otherwise) particular assets or categories
of assets, or businesses, of SWP and any Subsidiary or Buyer or its
Affiliates, or agreeing to dispose of one or more assets or properties
(whether owned by Buyer or its Affiliates or SWP or any Subsidiary) whether
before or after the Closing; provided, however, that nothing in this
Agreement shall require Buyer or its Affiliates or SWP or any Subsidiary to
dispose of or sell assets or properties, hold separate particular assets or
categories of assets, or businesses, or agree to dispose of or hold
separate one or more assets or properties or to take any other action that
could have a material adverse impact on Buyer or its Affiliates, or SWP or
any Subsidiary;
(ii) use commercially reasonable efforts (including taking the steps
contemplated by Section 7.9(b)(i)) to prevent the entry in a judicial,
administrative or other proceeding brought under any Law by any
Governmental Authority or any other Person for a permanent or preliminary
injunction or other order that would make consummation of the transactions
contemplated by this Agreement unlawful or that would prevent or delay such
consummation; and
(iii) take promptly, in the event that such an injunction or order has been
issued in such a proceeding, any and all reasonable steps, including
the appeal thereof, the posting of a bond or the steps contemplated by
Section 7.9(b)(i), necessary to
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vacate, modify, or suspend such injunction or order so as to permit
such consummation on a schedule as close as possible to that
contemplated by this Agreement.
(c) Transfer. If the transfer of any instrument, contract, license, lease,
permit, or other document to Buyer hereunder shall require the consent of any
party thereto other than Seller, then this Agreement shall not constitute an
agreement to assign the same, and such item shall not be assigned to or assumed
by Buyer, if an actual or attempted assignment thereof would constitute a breach
thereof or default thereunder. In such case, Seller and Buyer shall cooperate
and each shall use commercially reasonable efforts to obtain such consents to
the extent required of such other parties and, if and when any such consents are
obtained, to transfer the applicable instrument, contract, license, lease,
permit, or other document. If any such consent cannot be obtained, Seller shall
cooperate in any reasonable arrangement designed to obtain for Buyer all
benefits, privileges, obligations and privileges of the applicable instrument,
contract, license, lease, permit, or document.
(d) Third Party Consents. Buyer will use its best efforts to assist Seller
in obtaining any consents of Persons and Governmental Authorities necessary or
advisable in connection with the transactions contemplated by this Agreement,
including providing to such Persons and Governmental Authorities such financial
statements and other publicly available financial information with respect to
Buyer and its parent company as such Persons or Governmental Authorities may
reasonably request.
7.10 Fees and Expenses.
Except as otherwise expressly provided in this Agreement, all fees and
expenses, including fees and expenses of counsel, financial advisors, and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such fee or expense,
whether or not the Closing shall have occurred. Buyer shall be obligated to pay
any and all costs of any audit of SWP and any Subsidiary as may be required to
enable Buyer to complete and file any filing by Buyer or an Affiliate of Buyer
with the Securities and Exchange Commission.
7.11 Excluded Assets.
Notwithstanding Article 9 hereof, the transactions contemplated by this
Agreement exclude, and prior to the Closing Date, Seller may cause SWP or any
Subsidiary to transfer to Seller or any of its Affiliates (other than SWP and
any Subsidiary) the following (the "Excluded Assets"):
(i) the assets listed or described on Schedule 7.11;
(ii) all insurance policies and rights under any insurance policies in
respect to any and all claims made under such policies whether such claims
are asserted before or after the Closing Date and all rights to any
proceeds payable under any such policy; and
(iii) the Enron Marks.
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Seller's representations and warranties in Article 4 shall not apply to any of
the items described in clauses (i) through (iii) of the preceding sentence.
7.12 Guarantees and Other Affiliate Contracts.
Buyer shall cause, at the Closing Date, (i) the Guarantees and any
liabilities related thereto to be released as to Seller and any Affiliate of
Seller and (ii) substitute arrangements, if required, of Buyer or its Affiliates
to be in effect for any such Guarantees. At the Closing Date, Seller may
terminate those Project Documents described on Schedule 7.12 as the "Terminated
Contracts."
7.13 Use of Enron Marks.
Enron Marks may appear on some of the assets of SWP or any Subsidiary,
including signage at the Operating Facility and the Development Project Site,
and on supplies, materials, stationery, brochures, advertising materials,
manuals and similar consumable items of SWP and any Subsidiary. Buyer
acknowledges and agrees that it obtains no right, title, interest, license, or
any other right whatsoever to use the Enron Marks. Buyer shall, (i) within
ninety (90) days after the Closing Date, remove the Enron Marks from the assets
of SWP and any Subsidiary, including signage at the Operating Facility and the
Development Project Site, and provide written verification thereof to Seller
promptly after completing such removal and (ii) within two (2) weeks after the
Closing Date, return or destroy (with proof of destruction) all other assets of
SWP and any Subsidiary that contain any Enron Marks that are not removable.
Buyer agrees never to challenge Seller's or its Affiliates' ownership of the
Enron Marks or any application for registration thereof or any registration
thereof or any rights of Seller or its Affiliates therein as a result, directly
or indirectly, of its ownership of SWP and any Subsidiary. Buyer will not do any
business or offer any goods or services under the Enron Marks. Buyer will not
send, or cause to be sent, any correspondence or other materials to any Person
on any stationery that contains any Enron Marks or otherwise operate SWP and any
Subsidiary in any manner which would or might confuse any Person into believing
that Buyer has any right, title, interest, or license to use the Enron Marks.
7.14 Insurance.
Buyer acknowledges and agrees that, effective upon the Closing, the
insurance policies of Seller related to SWP and any Subsidiary shall be
terminated or modified to exclude coverage of all or any portion of SWP and any
Subsidiary, and, as a result, Buyer shall be obligated at or before Closing to
obtain at its sole cost and expense replacement insurance, including insurance
required by any Person to be maintained by SWP and any Subsidiary. Buyer further
acknowledges and agrees that Buyer may need to provide to certain Governmental
Authorities and third parties evidence of such replacement or substitute
insurance coverage for the continued operations of the Businesses of SWP and any
Subsidiary following the Closing. Notwithstanding Section 7.11(ii), if any
claims are made or losses occur prior to the Closing Date that relate solely to
the Businesses of SWP and any Subsidiary and such claims, or the claims
associated with such losses, may be made against the policies retained by Seller
or its Affiliates under Section 7.11(ii) or under policies otherwise retained by
Seller or its Affiliates after the Closing, then Seller shall use its reasonable
commercial efforts so that SWP and any
36
Subsidiary can file, notice, and otherwise continue to pursue such claims
pursuant to the terms of such policies. Seller and its Affiliates shall be
reimbursed by Buyer (or otherwise indemnified and held harmless) for any Losses
or other costs incurred by Seller or its Affiliates (including by way of any
reduction in, or loss of, available insurance to cover other insurable losses or
associated expenses of Seller or its Affiliates) arising out of SWP and any
Subsidiary pursuing such claims under such policies.
7.15 Lending Matters.
Seller agrees to cooperate with Buyer and the Lender and to use
commercially reasonable efforts to assist Buyer in obtaining (x) such consents
from parties to the Project Documents as Buyer's lender may reasonably request,
and (y) mechanics' lien waivers for all work completed and paid for through the
Closing Date under the EPC Contract and material subcontracts thereunder
relating to the Development Project, provided that the inability of Buyer to
obtain any such item which (a) is not in a form reasonably customary for
transactions of this nature or (b) is required to be obtained from any third
party not an Affiliate of Seller shall not excuse Buyer's performance of its
obligations hereunder.
ARTICLE 8
Closing Conditions
8.1 Seller's Closing Conditions.
The obligation of Seller to proceed with the Closing contemplated
hereby is subject, at the option of Seller, to the satisfaction on or prior to
the Closing Date of all of the following conditions:
(a) Representations, Warranties, and Covenants. The representations and
warranties of Buyer contained in Section 4.2 of this Agreement shall be true and
correct in all material respects on and as of the Closing Date, except for
representations and warranties that speak as of a specific date or time other
than the Closing Date (which need only be true and correct in all material
respects as of such date or time) except that all representations and warranties
which by their terms are qualified as to materiality shall be true in all
respects as if made on and as of such date, and the covenants and agreements of
Buyer to be performed on or before the Closing Date shall have been duly
performed in all material respects in accordance with this Agreement, and Buyer
shall have delivered to Seller a Certificate, dated the Closing Date and
executed by a Vice President of Buyer, reasonably satisfactory in form and
substance to Seller, confirming the foregoing.
(b) Closing Documents. On or prior to the Closing Date, Buyer shall have
delivered, or be standing ready to deliver at the Closing, all agreements,
instruments, and documents required to be delivered by Buyer under Section 9.3.
(c) No Action. On the Closing Date, no Action (excluding any such matter
initiated by Seller or any of its Affiliates) shall be pending or threatened
before any Governmental Authority of competent jurisdiction seeking to enjoin or
restrain the consummation of the Closing or recover substantial damages from
Seller or any Affiliate of Seller resulting therefrom.
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(d) Waiting Period. The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have expired or been
terminated or the Parties shall have otherwise complied with the HSR Act.
(e) Governmental Approvals. The Governmental Approvals and other consents,
filings and notices required for the consummation of the transactions
contemplated hereby, as identified on Schedules 4.1(n) and 8.1(e) hereto, shall
have been obtained.
(f) Purchase Price. Buyer shall have delivered, or be ready, willing and
able to deliver at the Closing, the Closing Payment to Seller by wire transfer
in immediately available funds.
(g) Guarantees. The Guarantees shall be released as to Seller and its
Affiliates and, if required, substitute arrangements of Buyer or its Affiliates
shall be in effect.
(h) Financing Commitment. Buyer shall have provided Seller with a written
commitment from its lender on or before August 24, 2001 acknowledging that all
of the conditions precedent to such lender making its loan to finance the
Adjusted Purchase Price are satisfied (other than the closing of the
transactions contemplated by this Agreement and Buyer's lending documents).
8.2 Buyer's Closing Conditions.
The obligation of Buyer to proceed with the Closing contemplated hereby
is subject, at the option of Buyer, to the satisfaction on or prior to the
Closing Date of all of the following conditions:
(a) Representations, Warranties, and Covenants. The representations and
warranties of Seller in Section 4.1 of this Agreement shall be true and correct
in all material respects on and as of the Closing Date, except for
representations and warranties that speak as of a specific date or time other
than the Closing Date (which need only be true and correct in all material
respects as of such date or time) except that all representations and warranties
which by their terms are qualified as to materiality shall be true in all
respects as if made on and as of such date, and the covenants and agreements of
Seller to be performed on or before the Closing Date shall have been duly
performed in all material respects in accordance with this Agreement, and Seller
shall have delivered to Buyer a Certificate, dated the Closing Date and executed
by a Vice President of Seller, reasonably satisfactory in form and substance to
Buyer, confirming the foregoing.
(b) Closing Documents. On or prior to the Closing Date, Seller shall have
delivered, or be standing ready to deliver at the Closing, all agreements,
instruments, and documents required to be delivered by Seller pursuant to
Section 9.2.
(c) No Action. On the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by Buyer or any of its Affiliates) shall be
pending or threatened before any court or governmental agency or body of
competent jurisdiction seeking to enjoin or restrain the consummation of the
Closing or recover substantial damages from Buyer or any Affiliate of Buyer
resulting therefrom.
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(d) Waiting Period. The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have expired or been
terminated or the Parties shall have otherwise complied with the HSR Act.
(e) Governmental Approvals. The Governmental Approvals and other consents,
filings and notices required for the consummation of the transactions
contemplated hereby, as identified on Schedules 4.1(h) and 8.2(e) hereto, shall
have been obtained.
(f) Equipment Procurement. At the Closing, Seller shall have caused to be
assigned to SWP or any Subsidiary, the rights of Seller as "buyer" under those
contracts and agreements described on Schedule 8.2(f), but only to the extent
that such contracts and agreements relate to the specific items of equipment
described therein.
(g) Payment of NatWest Loan and Bridge Loan. Buyer shall have received
evidence satisfactory to it that the obligations of SWP and any Subsidiary with
respect to NatWest Loan, the Bridge Loan and the Subordinated Note shall be paid
in full from the proceeds of the Adjusted Purchase Price and evidence
satisfactory to it of the release of Buyer and all Real Property therefrom for
any liabilities, obligations or otherwise under any of the agreement, document
or instrument with respect thereto, including the Subordinated Note and any
interest rate swap or other hedge arrangement in connection with the NatWest
Loan (including the Interest Rate Swap Transaction M186845 dated July 22, 1999
between Las Vegas Cogeneration Limited Partnership and Enron North America Corp.
(formerly known as Enron Capital & Trade Resources Corp.)) and of any Liens
securing such loans.
ARTICLE 9
Closing
9.1 Closing.
A closing (the "Closing") shall be held on the Closing Date at 10:00
a.m., Denver time, at the offices of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, in
Denver, Colorado, or at such other time or place as Seller and Buyer may
otherwise agree in writing. To facilitate the Closing, Buyer and Seller agree
that a pre-closing at which all closing agreements shall be signed shall occur
at least two Business Days prior to the Closing Date.
9.2 Seller's Closing Obligations.
At the Closing, Seller shall execute and deliver, or cause to be
executed and delivered, to Buyer the following:
(i) duly executed copies of the Assignment and Assumption Agreements;
(ii) a duly executed copy of the Seller Guaranty;
(iii) resignations or terminations of the officers, directors, and
managers of each of SWP and each Subsidiary from their status as officers,
directors, and managers effective as of the Closing;
39
(iv) the officer's certificate referred to in Section 8.2(a);
(v) an opinion of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP or Seller's
in-house counsel covering the matters described on Exhibit C, in form and
substance reasonably satisfactory to Buyer;
(vi) a "non-imputation endorsement affidavit" in the form customarily
used in the State of Nevada to allow Buyer to obtain the Title Endorsement
to the Title Policy; and
(vii) any other documents or instruments reasonably required by Buyer
to consummate the transactions contemplated hereunder.
9.3 Buyer's Closing Obligations.
At the Closing, Buyer shall deliver, or cause to be delivered, to
Seller the following:
(i) the Closing Payment to Seller in immediately available funds to
the bank account as provided in Section 3.2;
(ii) duly executed copies of the Assignment and Assumption Agreements;
(iii) the officer's certificate referred to in Section 8.1(a);
(iv) an opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP or Buyer's in-house
counsel covering the matters described on Exhibit D, in form and substance
reasonably satisfactory to Seller; and
(v) any other documents or instruments reasonably required by Seller
to consummate the transaction contemplated hereunder.
ARTICLE 10
Limitations
10.1 Buyer's Review.
(a) No Reliance. Buyer has reviewed and had access to all documents,
records and information which it has desired to review in connection with its
decision to enter into this Agreement, and to consummate the transactions
contemplated hereby. Buyer has not relied upon any representation, warranty,
statement, advice, document, projection, or other information of any type
provided by Seller or its Affiliates, SWP and any Subsidiary, or any of their
representatives, except for those representations and warranties expressly set
forth herein. In deciding to enter into this Agreement, and to consummate the
transactions contemplated hereby, Buyer has relied solely upon its own
knowledge, investigation, and analysis (and that of its representatives) and not
on any disclosure or representation made by, or any duty to disclose on the part
of, Seller or its Affiliates, SWP and any Subsidiary, or any of their
representatives, other than the express representations and warranties of Seller
set forth herein.
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(b) Limited Duties. Any and all duties and obligations which either Party
may have to the other with respect to or in connection with SWP and any
Subsidiary, this Agreement, or the transactions contemplated hereby are limited
to those set forth in this Agreement. Neither the duties nor obligations of
either Party, nor the rights of either Party, shall be expanded beyond the terms
of this Agreement on the basis of any legal or equitable principle or on any
other basis whatsoever. Neither any equitable nor legal principle nor any
implied obligation of good faith or fair dealing nor any other matter requires
either Party to incur, suffer or perform any act, condition or obligation
contrary to the terms of this Agreement, whether or not existing and whether
foreseeable or unforeseeable. The Parties acknowledge that it would be unfair,
and that they do not intend, to increase any of the obligations of any Party
under this Agreement on the basis of any implied obligation or otherwise.
10.2 Disclaimer of Warranties.
(a) INFORMATION. EXCEPT AS PROVIDED IN SECTION 4.1, SELLER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, STATUTORY OR
OTHERWISE, WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION,
RECORDS, AND DATA NOW, HERETOFORE, OR HEREAFTER MADE AVAILABLE TO BUYER IN
CONNECTION WITH THIS AGREEMENT (INCLUDING ANY DESCRIPTION OF SWP AND ANY
SUBSIDIARY, THE OPERATING FACILITY, THE DEVELOPMENT PROJECT, REVENUE, PRICE AND
EXPENSE ASSUMPTIONS, ELECTRICITY DEMAND FORECASTS, OR ENVIRONMENTAL INFORMATION,
OR ANY OTHER INFORMATION FURNISHED TO BUYER BY SELLER OR ANY AFFILIATE OF SELLER
OR ANY DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, AGENT, OR ADVISOR THEREOF).
(b) Facilities. Notwithstanding anything contained to the contrary in any
other provision of this Agreement, it is the explicit intent of each Party that
Seller and its Affiliates are not making any representation or warranty
whatsoever, express, implied, at common law, statutory or otherwise, except for
the express representations or warranties given in this Agreement, and it is
understood that Buyer, with such exceptions, takes the LLC Interests, the
Operating Facility, the Development Project, and any other assets of SWP and any
Subsidiary "as is" and "where is." Without limiting the generality of the
immediately preceding sentence, except as expressly provided in this Agreement,
Seller hereby expressly disclaims and negates any representation or warranty,
express or implied, at common law, statutory, or otherwise, relating to (i) the
condition of the Operating Facility, the Development Project, and other assets
of SWP and any Subsidiary (including any implied or express warranty of
merchantability or fitness for a particular purpose, or of conformity to models
or samples of materials, or the presence or absence of any hazardous materials
in or on, or disposed or discharged from, the Operating Facility, the
Development Project Site and other assets of SWP and any Subsidiary) or (ii) the
adequacy, completeness or accuracy of any plans or specifications for the
Development Project, the appropriateness, fitness for use or condition of any
equipment or materials intended to be used in connection with or incorporated
into the Development Project, the accuracy or sufficiency of any schedules or
budgets for completion of the Development Project or estimates of whether the
Development Project, if completed, will perform at any projected levels or will
comply with the terms of any permits or licenses, or any other matters relating
to Development Project, or (iii) any infringement by Seller, SWP or any
Subsidiary, or any of their Affiliates of any patent or proprietary right of any
Person. Buyer has
41
agreed not to rely on any representation made by Seller with
respect to the condition, quality, or state of the Operating Facility or the
Development Project except for those in this Agreement, but rather, as a
significant portion of the consideration given to Seller for this purchase and
sale, has agreed to rely solely and exclusively upon its own evaluation of the
SWP and any Subsidiary and the Operating Facility and the Development Project,
except as expressly provided herein. The provisions contained in this Agreement
are the result of extensive negotiations between Buyer and Seller and no other
assurances, representations or warranties about the quality, condition, or state
of SWP and any Subsidiary or the Operating Facility and the Development Project
were made by Seller in the inducement thereof, except as expressly provided
herein.
10.3 Waiver of Damages.
NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN THIS AGREEMENT,
SELLER AND BUYER AGREE THAT, EXCEPT FOR THE LIQUIDATED DAMAGES SPECIFICALLY
PROVIDED FOR IN SECTION 12.2, THE RECOVERY BY EITHER PARTY OF ANY DAMAGES
SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH BY THE OTHER PARTY OF ANY
OF ITS OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED TO THE ACTUAL DAMAGES
SUFFERED OR INCURRED BY THE NON-BREACHING PARTY AS A RESULT OF THE BREACH BY THE
BREACHING PARTY OF ITS OBLIGATIONS HEREUNDER AND IN NO EVENT SHALL THE BREACHING
PARTY BE LIABLE TO THE NON-BREACHING PARTY FOR ANY INDIRECT, CONSEQUENTIAL,
SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES (INCLUDING ANY DAMAGES ON ACCOUNT OF
LOST PROFITS OR OPPORTUNITIES OR LOST OR DELAYED GENERATION) SUFFERED OR
INCURRED BY THE NON-BREACHING PARTY AS A RESULT OF THE BREACH BY THE BREACHING
PARTY OF ANY OF ITS OBLIGATIONS HEREUNDER.
ARTICLE 11
Indemnification
11.1 Indemnification By Seller.
From and after the Closing, subject to the other terms and limitations
in this Agreement, Seller shall indemnify, defend, reimburse, and hold harmless
Buyer and its Affiliates, and its and their directors, officers, partners and
employees (individually a "Buyer Indemnified Party" or collectively, the "Buyer
Indemnified Parties") from and against any and all Losses asserted against or
incurred by any of the Buyer Indemnified Parties (i) for any breach of Seller's
representations or warranties made in this Agreement, (ii) for any breach of the
covenants or obligations of Seller under this Agreement, or (iii) in respect of
the Excluded Assets. In the event and to the extent that any such Losses
incurred by the Buyer Indemnified Parties are adjudicated to be attributable to
contributory negligence, concurrent liability or fault of the Buyer Indemnified
Parties, Seller shall remain liable to indemnify the Buyer Indemnified Parties
for all such Losses that are not so attributable.
11.2 Indemnification By Buyer.
From and after the Closing, subject to the other terms and limitations
in this Agreement, Buyer shall indemnify, defend, reimburse, and hold harmless
Seller, its Affiliates, and its and their directors, officers, partners,
employees, consultants, agents, representatives, advisors,
42
successors, and assigns (individually a "Seller Indemnified Party" or
collectively, the "Seller Indemnified Parties") from and against any and all
Losses asserted against or incurred by any of the Seller Indemnified Parties (i)
for any breach of Buyer's representations or warranties made in this Agreement,
(ii) for any breach of the covenants or obligations of Buyer and its Affiliates
under this Agreement, or (iii) that relate to or arise out of the businesses of
SWP or any Subsidiary or the development, construction, ownership, operation, or
maintenance of the Development Project or that otherwise relate to or arise out
of SWP or any Subsidiary (whether relating to periods of time prior to or after
the Closing Date) or to the extent such Losses are not properly asserted by
Buyer (or any Buyer Indemnified Party) under the provisions of Section 6.6 or
Section 11.1 (subject to the limitations in this Agreement) by the date
specified in Section 11.5. Buyer acknowledges that the Losses described in
clause (iii) of the preceding sentence shall be retained by and transferred with
SWP or any Subsidiary and shall continue to be the responsibility of SWP or any
Subsidiary and Buyer. In the event and to the extent that any such Losses
incurred by the Seller Indemnified Parties are adjudicated to be attributable to
contributory negligence, concurrent liability or fault of the Seller Indemnified
Parties', Buyer shall remain liable to indemnify the Seller Indemnified Parties
for all such Losses that are not so attributable.
11.3 Limitations on Indemnity.
None of the Buyer Indemnified Parties shall be entitled to assert any
right to indemnification under Section 11.1 until the aggregate amount of all
the Losses actually suffered by the Buyer Indemnified Parties exceeds the
Deductible Amount, and then only to the extent such Losses exceed, in the
aggregate, the Deductible Amount. Except as provided in the next succeeding
sentence of this Section 11.3, in no event shall Seller ever be required to
indemnify Buyer or the Buyer Indemnified Parties for Losses pursuant to Section
11.1, or any other provision of this Agreement, or pay any other amount in
connection with or with respect to this Agreement or the transactions
contemplated by this Agreement, in an amount exceeding, in the aggregate, the
Purchase Price. Notwithstanding anything contained in this Section 11.3 to the
contrary, Seller's maximum liability for Losses arising out of a breach of
Seller's representations and warranties contained in the first and second
sentences of Section 4.1(e) shall not exceed the Adjusted Purchase Price, and
the limits on liability of the Seller contained in this Section shall not apply
to indemnity claims pursuant to Section 6.6, and Sections 3.2(i) and 3.2(ii)
relating to the release of all liabilities and obligations under the Bridge
Loan, the NatWest Loan or the Subordinated Note.
11.4 Third Party Claims.
If a claim by a Person is made against a Seller Indemnified Party or a
Buyer Indemnified Party (each, an "Indemnified Party"), and if such Indemnified
Party intends to seek indemnity with respect thereto under Article 11, such
Indemnified Party shall promptly furnish written notice to other party (the
"Indemnifying Party") of such claim. The failure of the Indemnified Party to
deliver prompt written notice of a claim shall not affect the indemnity
obligations of the Indemnifying Party hereunder except to the extent the
Indemnifying Party was substantially disadvantaged by such delay in delivery
notice of such claim. The Indemnifying Party shall have thirty (30) days after
receipt of such notice to undertake, conduct, and control (through counsel of
its own choosing and at its own expense) the settlement or defense thereof, and
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the Indemnified Party shall cooperate with it in connection therewith. The
Indemnifying Party shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by such Indemnified Party (but the
fees and expenses of such counsel shall be borne by such Indemnified Party). So
long as the Indemnifying Party, at the Indemnifying Party's cost and expense,
(i) has undertaken the defense of, and assumed full responsibility for all
indemnified liabilities with respect to, such claim, (ii) is reasonably
contesting such claim in good faith, by appropriate proceedings, and (iii) has
taken such action (including the posting of a bond, deposit, or other security)
as may be necessary to prevent any action to foreclose a Lien against or
attachment of the property of the Indemnified Party for payment of such claim,
the Indemnified Party shall not pay or settle any such claim. Notwithstanding
compliance by the Indemnifying Party with the preceding sentence, the
Indemnified Party shall have the right to pay or settle any such claim, but in
such event it shall waive any right to indemnity by the Indemnifying Party for
such claim. If within thirty (30) days after the receipt of the Indemnified
Party's notice of a claim of indemnity hereunder, the Indemnifying Party does
not notify the Indemnified Party that it elects (at the Indemnifying Party's
cost and expense) to undertake the defense thereof and assume full
responsibility for all indemnified liabilities with respect thereto, or gives
such notice and thereafter fails to contest such claim in good faith or to
prevent action to foreclose a Lien against or attachment of the Indemnified
Party's property as contemplated above, the Indemnified Party shall have the
right to contest, settle, or compromise such claim and the Indemnified Party
shall not thereby waive any right to indemnity for such claim under this
Agreement.
11.5 Survival and Time Limitation.
The terms and provisions of this Agreement shall survive the Closing of
the transactions contemplated hereunder. Notwithstanding the foregoing, after
Closing, any assertion by Buyer or any Buyer Indemnified Party that Seller is
liable to Buyer or any Buyer Indemnified Party for indemnification under the
terms of this Agreement or otherwise in connection with the transactions
contemplated in this Agreement must be made in writing and must be given to
Seller (or not at all) on or prior to the date that is eighteen (18) months
after the Closing Date, except for indemnification for matters addressed in
Sections 3.2(i), 3.2(ii), 4.1(e) and 6.6 which must be made in writing and must
be given to Seller (or not at all) on or prior to the date that is ninety (90)
days after the date on which the applicable statute of limitations expires with
respect to the matters covered thereby.
11.6 Sole and Exclusive Remedy.
FROM AND AFTER THE CLOSING, EXCEPT AS PROVIDED IN SECTION 6.6 OF THIS
AGREEMENT FOR ANY CLAIM IN RESPECT OF TAXES, THE INDEMNIFICATION PROVISIONS OF
THIS ARTICLE 11 SHALL BE THE SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE
OTHER PARTY'S REPRESENTATIONS, WARRANTIES, COVENANTS, OR AGREEMENTS CONTAINED IN
THIS AGREEMENT OR OTHERWISE WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
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11.7 Compliance with Express Negligence Rule.
ALL RELEASES, DISCLAIMERS, LIMITATIONS ON LIABILITY, AND INDEMNITIES IN
THIS AGREEMENT, INCLUDING THOSE IN THIS ARTICLE 11, SHALL APPLY EVEN IN THE
EVENT OF THE SOLE, JOINT, AND/OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR
FAULT OF THE PARTY WHOSE LIABILITY IS RELEASED, DISCLAIMED, LIMITED, OR
INDEMNIFIED.
ARTICLE 12
Termination and Remedies
12.1 Termination.
(a) Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing:
(i) by the mutual consent of Seller and Buyer; or
(ii) if the Closing has not occurred by the close of business on
August 31, 2001, then by Seller if any condition specified in Section 8.1
has not been satisfied on or before such close of business, and shall not
theretofore have been waived by Seller; provided, in each case, that the
failure to consummate the transactions contemplated hereby on or before
such date did not result from the failure by Seller to fulfill any
undertaking or commitment provided for herein on the part of Seller that is
required to be fulfilled on or prior to Closing; or
(iii) if the Closing has not occurred by the close of business on
August 31, 2001, then by Buyer if any condition specified in Section 8.2
has not been satisfied or waived on or before such close of business, and
shall not theretofore have been waived by Buyer, provided that the failure
to consummate the transactions contemplated hereby on or before such date
did not result from the failure by Buyer to fulfill any undertaking or
commitment provided for herein on the part of Buyer that is required to be
fulfilled on or prior to Closing.
(b) Effect of Termination. Without limiting Seller's and Buyer's respective
remedies in the event of termination of this Agreement by Seller or Buyer
pursuant to Section 12.1(a), written notice thereof shall promptly be given by
the terminating Party to the other Party, and this Agreement shall thereupon
terminate. Following any such termination, Buyer will continue to be bound by
its obligations set forth in Sections 5.1 and 5.2. If this Agreement is
terminated as provided herein, all filings, applications and other submissions
made to any Governmental Authority shall, to the extent practicable, be
withdrawn from the Governmental Authority to which they were made.
12.2 Remedies.
(a) Seller's Remedies. Notwithstanding anything herein to the contrary,
upon the failure by Buyer to fulfill any undertaking or commitment provided for
herein on the part of Buyer that is required to be fulfilled on or prior to
August 31, 2001 (August 24, 2001 in the case of the condition described in
Section 8.1(h)) for closing, Seller, at its sole option, may (i) enforce
45
specific performance of this Agreement or (ii) pursue any rights or remedies
available at law or in equity.
(b) Buyer's Remedies. Notwithstanding anything herein provided to the
contrary, upon failure of Seller to fulfill any undertaking or commitment
provided for herein on the part of Seller that is required to be fulfilled on or
prior to August 31, 2001, Buyer at its sole option may (i) enforce specific
performance of this Agreement or (ii) pursue any rights or remedies available at
law or in equity.
(c) Election of Remedies. If either Party elects to pursue singularly any remedy
available to it under this Section 12.2, then such Party may at any time
thereafter cease pursuing that remedy and elect to pursue any other remedy
available to it under this Section 12.2.
ARTICLE 13
Other Provisions
13.1 Counterparts.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the Parties and
delivered to the other Party.
13.2 Governing Law.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, ENFORCED, AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
13.3 Arbitration.
Except for matters that are covered by Section 3.4, any claim,
counterclaim, demand, cause of action, dispute, and controversy arising out of
or relating to this Agreement (or any agreement delivered in connection with
this Agreement) or in any way relating to the subject matter of this Agreement
involving the Parties or their representatives (each a "Dispute"), even if such
Disputes allegedly are extra-contractual in nature, sound in contract, tort or
otherwise, or arise under state or federal Law, shall be resolved by final and
binding arbitration. Arbitration shall be conducted in accordance with the rules
of arbitration of the Federal Arbitration Act and, to the extent an issue is not
addressed by the federal Law on arbitration, by the commercial arbitration rules
of the American Arbitration Association. The validity, construction and
interpretation of this Agreement to arbitrate, and all other procedural aspects
of the arbitration conducted pursuant hereto shall be decided by the
arbitrators. In deciding the substance of the Parties' Dispute, the arbitrators
shall refer to the governing Law. The arbitrators shall have no authority to
award treble, consequential, exemplary, or punitive damages of any type under
any circumstances whether or not such damages may be available under state or
federal Law, or under the Federal Arbitration Act, or under the commercial
arbitration rules of the American Arbitration Association, the Parties hereby
waiving their right, if any, to recover any such damages or to appeal or object
to the enforcement of any decision or award by the arbitrators. Each Party
agrees that any arbitration award against it may be enforced in any jurisdiction
46
in which such Party holds or keeps assets and that judgment on any arbitration
award may be entered by any court having jurisdiction. The arbitration
proceeding shall be conducted in Houston, Texas. Within thirty (30) days of the
notice initiation of the arbitration procedure, each Party shall select one
arbitrator. The two arbitrators shall select a third arbitrator. The third
arbitrator shall be a Person who has over eight (8) years professional
experience in power generation transactions and is not an Affiliate of and who
has not previously been employed by either Party and does not have a direct or
indirect interest in either Party or in any Person having an ownership interest
in either Party or the subject matter of the arbitration. While the third
arbitrator shall be neutral, the two Party appointed arbitrators are not
required to be neutral, and it shall not be grounds for removal of either of the
two Party appointed arbitrators or for vacating the arbitrators' award that
either of such arbitrators has past or present minimal relationships with the
Party that appointed such arbitrator. To the fullest extent permitted by Law,
any arbitration proceeding and the arbitrators award shall be maintained in
confidence by the Parties.
13.4 Entire Agreement.
This Agreement (including the Confidentiality Agreement) and the
Schedules and Exhibits hereto contain the entire agreement between the Parties
with respect to the subject matter hereof and there are no agreements,
understandings, representations, or warranties between the Parties other than
those set forth or referred to herein.
13.5 Notices.
All notices hereunder shall be sufficiently given for all purposes
hereunder if in writing and delivered personally, sent by documented overnight
delivery service or, to the extent receipt is confirmed, by United States Mail,
telecopy or overnight delivery to the appropriate address or number as set forth
below. Notices to Seller shall be addressed as follows:
TLS Investors, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
Enron North America Corp.
▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other Person as
Seller may designate by written notice to Buyer.
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Notices to Buyer shall be addressed to:
Black Hills Energy Capital, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other Person as Buyer may
designate by written notice to Seller.
Notice given by overnight delivery or mail shall be effective upon
actual receipt. Notice given by telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices by telecopier shall be
confirmed promptly after transmission in writing by certified mail or overnight
delivery.
13.6 Successors and Assigns.
The rights and obligations of the Parties shall not be assigned or
delegated by either Party without the written consent of the other Party, which
may be withheld in such Party's sole discretion, except that (and without being
released from any of its obligations hereunder) Buyer shall have the right,
without the consent of Seller, (a) to transfer, pledge or assign this Agreement
as security for any financing, or (b) transfer or assign this Agreement to any
Affiliate of Buyer. In the event of an assignment by Buyer to an Affiliate, such
assignee shall execute and deliver an agreement containing the assumption by
such assignee of the performance and observance of each covenant and condition
of this Agreement to be performed or observed by Buyer. Subject to the
preceding, this Agreement shall be binding upon and inure to the benefit of the
Parties and their successors and assigns.
13.7 Amendments and Waivers.
This Agreement may not be modified or amended except by an instrument
or instruments in writing signed by the Party against whom enforcement of any
such modification or amendment is sought. Any Party may, only by an instrument
in writing, waive compliance by the other Party with any term or provision of
this Agreement on the part of such other Party to be performed or complied with.
The waiver by a Party of a breach of any term or provision of this Agreement
shall not be construed as a waiver of any subsequent breach.
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13.8 Schedules and Exhibits.
All Schedules and Exhibits hereto which are referred to herein are
hereby made a part hereof and incorporated herein by such reference. Each
Schedule to this Agreement shall be deemed to include and incorporate all
disclosures made on the other Schedules to this Agreement. Certain information
set forth in the Schedules is included solely for informational purposes, is not
an admission of liability with respect to the matters covered by the
information, and may not be required to be disclosed pursuant to this Agreement.
The specification of any dollar amount in the representations and warranties
contained in this Agreement or the inclusion of any specific item in the
Schedules is not intended to imply that such amounts (or higher or lower
amounts) are or are not material, and no Party shall use the fact of the setting
of such amounts or the fact of the inclusion of any such item in the Schedules
in any dispute or controversy between the Parties as to whether any obligation,
item, or matter not described herein or included in a Schedule is or is not
material for purposes of this Agreement.
13.9 Interpretation and Rules of Construction.
This Agreement shall not be construed against either Party, and no
consideration shall be given or presumption made, on the basis of who drafted
this Agreement or any particular provision hereof or who supplied the form of
Agreement. In construing this Agreement:
(i) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate;
(ii) the word "includes" and its derivatives means "includes, but is
not limited to" and corresponding derivative expressions;
(iii) a defined term has its defined meaning throughout this Agreement
and each Exhibit and Schedule to this Agreement, regardless of whether it
appears before or after the place where it is defined;
(iv) each Exhibit and Schedule to this Agreement is a part of this
Agreement, but if there is any conflict or inconsistency between the main
body of this Agreement and any Exhibit or Schedule, the provisions of the
main body of this Agreement shall prevail; and
(v) the headings and titles herein are for convenience only and shall
have no significance in the interpretation hereof.
13.10 Agreement for the Parties' Benefit Only.
Except as specified in Section 5.1 and Article 11, which are also
intended to benefit and to be enforceable by the Seller Indemnified Parties,
this Agreement is not intended to confer upon any Person not a party hereto any
rights or remedies hereunder, and no Person, other than the Parties or the
Seller Indemnified Parties, is entitled to rely on any representation, warranty,
covenant, or agreement contained herein.
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13.11 Attorneys' Fees.
The prevailing Party in any legal proceeding brought under or to
enforce this Agreement shall be additionally entitled to recover court costs and
reasonable attorneys' fees from the nonprevailing Party.
13.12 Severability.
If any term or other provision of this Agreement is invalid, illegal,
or incapable of being enforced by any Law or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any adverse manner to a Party. Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
13.13 Time of Essence.
Time is of the essence in this Agreement. If the date specified in this
Agreement for giving any notice or taking any action is not a Business Day (or
if the period during which any notice is required to be given or any action
taken expires on a date which is not a Business Day), then the date for giving
such notice or taking such action (and the expiration date of such period during
which notice is required to be given or action taken) shall be the next day
which is a Business Day.
13.14 Bulk Sales or Transfer Laws.
Seller and Buyer hereby waive compliance by either Party with the
provisions of the bulk sales or transfer laws of all applicable jurisdictions.
ARTICLE 14
Letter of Credit; GUARANTY BY BKH
14.1 Letter of Credit.
In order to secure Buyer's obligations hereunder, it shall deliver to
Seller on or before 5:00 p.m. Central time on June 21, 2001, an irrevocable
letter of credit issued by (a) U.S. Bank or (b) another U.S. commercial bank or
a foreign bank with a U.S. branch, in each case having a minimum market
capitalization of $500,000,000 with the long term senior unsecured debt of such
bank having a credit rating of at least A- from S&P or A3 from ▇▇▇▇▇'▇, in a
form reasonably acceptable to Seller, in the principal amount of U.S.
$15,000,000 (the "Letter of Credit"), which may be drawn upon by Seller in the
amount of any Damage Award upon delivering to the issuing bank (i) a draw
request stating that the Agreement has been terminated pursuant to Article 12
hereof, and (ii) a statement that an arbitral body, in accordance with Section
13.3 hereof, shall have awarded Seller damages (the "Damage Award") payable by
Buyer resulting from the failure by Buyer to fulfill any undertaking or
commitment provided for
50
herein. Buyer may, at any time prior to Closing, substitute for the Letter of
Credit the BKH Guaranty as provided in Section 14.2 below.
14.2 Guaranty by BKH.
At Buyer's option, Buyer may at any time prior to Closing deliver to
Seller in substitution for the Letter of Credit (a) an unconditional guaranty by
BKH substantially in the form attached hereto as Exhibit F (the "BKH Guaranty"),
guaranteeing the full payment by Buyer of the Adjusted Purchase Price; provided,
however, that BKH shall in no event be obligated to pay pursuant to the BKH
Guaranty any amounts exceeding, in the aggregate, U.S. $15,000,000; and (b) an
opinion of counsel satisfactory to Seller confirming that the BKH Guaranty
constitutes a valid and binding agreement of BKH enforceable against BKH in
accordance with its terms, subject to (x) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws of general application from
time to time in effect that affect creditors' rights generally, (y) general
principles of equity, and (z) the power of a court to deny enforcement of
remedies generally based upon public policy.
14.3 Effect of Failure to Deliver Letter of Credit or Guaranty.
If Buyer fails to deliver the Letter of Credit or the BKH Guaranty on
or prior to 5:00 p.m. Central time on June 21, 2001, then Seller shall have the
right, but not the obligation, to terminate this Agreement by providing notice
to Buyer on or before 5:00 p.m. Central time on June 25, 2001, without any
further liability or obligation to Buyer.
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the Parties as of the day first above written.
Seller:
TLS Investors, L.L.C.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Buyer:
BLACK HILLS ENERGY CAPITAL, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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