Exhibit 10(Z)
[EXECUTION COPY]
ASSET PURCHASE AGREEMENT
between
SIERRA PACIFIC POWER COMPANY,
as Seller
and
TRUCKEE MEADOWS WATER AUTHORITY
as Purchaser
Dated as of January 15, 2001
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION.................................................. 1
1.1 Definitions and Rules of Construction.......................................... 1
ARTICLE II SALE OF ASSETS AND ASSUMPTION OF LIABILITIES.......................................... 1
2.1 Asset Purchase................................................................. 1
2.2 Assumption of Liabilities; Excluded Liabilities................................ 2
2.3 Transfer of Purchased Assets and Assumed Liabilities........................... 3
2.4 Governmental Approvals and Consents............................................ 3
2.5 Farad Insurance Claim.......................................................... 5
2.6 Novation....................................................................... 5
ARTICLE III PURCHASE PRICE AND ADJUSTMENTS....................................................... 6
3.1 Purchase Price................................................................. 6
3.2 Payment of Purchase Price...................................................... 6
3.3 Allocation of Purchase Price................................................... 6
3.4 Purchase Price Adjustments..................................................... 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.............................................. 8
4.1 Corporate Existence............................................................ 8
4.2 Corporate Authority............................................................ 8
4.3 Conflicts; Required Consents................................................... 8
4.4 Financial Statements........................................................... 9
4.5 Absence of Certain Changes..................................................... 9
4.6 Properties..................................................................... 9
4.7 Contracts...................................................................... 11
4.8 Litigation..................................................................... 12
4.9 Intellectual Property Rights................................................... 12
4.10 Insurance...................................................................... 12
4.11 Tax Matters.................................................................... 13
4.12 Employment and Benefits........................................................ 13
4.13 Compliance with Laws........................................................... 13
4.14 Environmental Matters.......................................................... 14
4.15 Undisclosed Liabilities........................................................ 15
4.16 Finders; Brokers............................................................... 15
ARTICLE V REPRESENTATIONS OF PURCHASER........................................................... 16
5.1 Corporate Existence............................................................ 16
5.2 Corporate Authority............................................................ 16
5.3 Governmental Approvals and Consents............................................ 17
5.4 Funding of Expenses Prior to Closing and Break-Up Fee.......................... 17
5.5 Financial Capacity............................................................. 17
5.6 Finders; Brokers............................................................... 17
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ARTICLE VI AGREEMENTS OF PURCHASER AND SELLER..................................................... 18
6.1 Operation of the Water Business................................................. 18
6.2 Investigation of Business....................................................... 19
6.3 Commercially Reasonable Efforts; Cooperation; No Inconsistent Action............ 20
6.4 Public Disclosures.............................................................. 21
6.5 Access to Records and Personnel................................................. 21
6.6 Employee Relations and Benefits................................................. 22
6.7 Post-Closing Arrangements....................................................... 24
6.8 Non-Competition................................................................. 24
6.9 Jointly Developed Intellectual Property......................................... 24
6.10 No Other Representations or Warranties.......................................... 24
6.11 Insurance Matters............................................................... 25
6.12 Use of Seller's Names........................................................... 25
6.13 Purchaser Financings............................................................ 25
6.14 Post-Closing Cooperation........................................................ 26
6.15 Risk of Loss.................................................................... 27
6.16 Condemnation.................................................................... 27
6.17 Real Property Investigation..................................................... 27
6.18 Approval of Fees and Expenses................................................... 28
6.19 Tax-Exempt Bonds................................................................ 28
6.20 Environmental Insurance......................................................... 29
ARTICLE VII PRELIMINARY SETTLEMENT AGREEMENT and DRAFT TRUCKEE RIVER OPERATING AGREEMENT.......... 29
7.1 Assumption of Obligations....................................................... 29
7.2 Seller's Responsibility Until Closing........................................... 29
ARTICLE VIII CONDITIONS TO CLOSING................................................................ 29
8.1 Conditions Precedent to Obligations of Purchaser and Seller..................... 29
8.2 Conditions Precedent to Obligation of Seller.................................... 30
8.3 Conditions Precedent to Obligation of Purchaser................................. 30
ARTICLE IX CLOSING................................................................................ 31
9.1 Closing Dates................................................................... 31
9.2 Purchaser Obligations........................................................... 31
9.3 Seller Obligations.............................................................. 32
ARTICLE X INDEMNIFICATION......................................................................... 32
10.1 Indemnification................................................................. 32
10.2 Certain Limitations............................................................. 33
10.3 Procedures for Third-Party Claims............................................... 34
10.4 Certain Claims Procedures....................................................... 35
10.5 Remedies Exclusive.............................................................. 35
10.6 Mitigation...................................................................... 35
ARTICLE XI TERMINATION............................................................................ 36
11.1 Termination Events.............................................................. 36
11.2 Effect of Termination........................................................... 37
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ARTICLE XII MISCELLANEOUS AGREEMENTS OF THE PARTIES........................................ 37
12.1 Notices.................................................................. 37
12.2 Bulk Transfers........................................................... 38
12.3 Severability............................................................. 38
12.4 Further Assurances; Further Cooperation.................................. 38
12.5 Counterparts............................................................. 38
12.6 Expenses................................................................. 39
12.7 Non-Assignability........................................................ 39
12.8 Amendment; Waiver........................................................ 39
12.9 Specific Performance..................................................... 39
12.10 Third Parties............................................................ 39
12.11 Governing Law............................................................ 40
12.12 Consent to Jurisdiction; Waiver of Jury Trial............................ 40
12.13 Interpretation; Absence of Presumption................................... 40
12.14 Entire Agreement......................................................... 40
12.15 Section Headings; Table of Contents...................................... 41
12.16 Schedules................................................................ 41
WATER COMPANY VEHICLES..................................................................... 1
Annex A Definitions
Schedule 3.3 Allocation of Purchase Price
Schedule 4.3 Conflicts; Required Consents
Schedule 4.4 Financial Statements
Schedule 4.5 Absence of Certain Changes
Schedule 4.6(b) Owned and Leased Properties
Schedule 4.6(c) Water Rights
Schedule 4.7 Contracts
Schedule 4.8 Litigation
Schedule 4.9 Intellectual Property Rights
Schedule 4.12(a) Employment & Benefits
Schedule 4.12(c) Employment & Benefits
Schedule 4.13 Compliance with Laws
Schedule 4.14 Environmental Matters
Schedule 4.15 Undisclosed Liabilities
Schedule 6.1 Operation of Water Business
Schedule 6.7 Post Closing Arrangements
Schedule 7.1 TROA Agreement Draft
Schedule 8.1 Regulatory Authorizations
Schedule 9.3 Instruments of Conveyance
Exhibit A Purchased Assets
Exhibit B Knowledge Persons
Exhibit C Certain Excluded Assets
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of January 15, 2001
(hereinafter, this "Agreement"), between Sierra Pacific Power Company, a Nevada
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corporation ("Seller"), and TRUCKEE MEADOWS WATER AUTHORITY, a joint powers
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authority ("Purchaser").
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W I T N E S S E T H:
WHEREAS, Seller owns the Purchased Assets (as defined herein) and uses
the Purchased Assets in the operation of a water sale and delivery business in
the Reno-Sparks, Nevada area (the "Water Business"); and
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WHEREAS, Purchaser desires to purchase, and Seller desires to sell and
transfer to Purchaser, the Purchased Assets, and Purchaser agrees to assume
certain liabilities as specified herein;
NOW, THEREFORE, upon the terms and subject to the conditions set forth
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
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1.1 Definitions and Rules of Construction
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(a) Defined terms used in this Agreement have the meanings
ascribed to them by definition in this Agreement, including in Annex A.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
(c) Whenever the words "include", "including", or "includes"
appear in this Agreement, they shall be read to be followed by the words
"without limitation" or words having similar import.
ARTICLE II
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
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2.1 Asset Purchase
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Upon the terms and subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the Closing (subject to Sections
2.4(e) and 2.5), Seller shall sell, assign, transfer, convey and deliver to
Purchaser and Purchaser shall purchase, acquire and accept from Seller all of
Seller's right, title and interest in and to the Purchased Assets. Purchaser and
Seller acknowledge and agree that Seller is not transferring to Purchaser, and
Purchaser is not acquiring, any of the Excluded Assets.
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2.2 Assumption of Liabilities; Excluded Liabilities
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Upon the terms and subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the Closing from and after the
Closing Date, Purchaser shall assume and faithfully pay, perform, fulfill and
discharge when due all Assumed Liabilities. The parties acknowledge and agree
that Purchaser is not assuming any of the Excluded Liabilities, nor is Purchaser
assuming liability for obligations to the extent Seller is obligated to
indemnify Purchaser pursuant to Article X. "Assumed Liabilities" mean the
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following:
(a) Except as provided below and for those liabilities set forth in
the definition of Excluded Liabilities, any past, existing and future liability
arising from the pre-Closing or post-Closing ownership or operation of the
Purchased Assets;
(b) all liabilities and obligations under the Contracts assigned
pursuant to Section 2.1 to the extent such Contracts are assigned, and including
to the extent such liabilities and obligations are unpaid, undelivered or
unperformed on the Closing Date, and any leases, contracts and other agreements
entered into by Seller in respect of the Purchased Assets after the date hereof
consistent with the terms of this Agreement including, without limitation,
agreements with respect to liabilities for real or personal property Taxes,
other than Excluded Liabilities, in accordance with their terms;
(c) all liabilities for obligations in respect of which Purchaser has
indemnified Seller pursuant to Section 10.1 of this Agreement;
(d) all liabilities in respect of employees of Seller that Purchaser
agrees to assume pursuant to Section 6.6 hereof, including, without limitation,
the liabilities described in the New IBEW Contract, and the Guide to the Water
Business Divestiture Severance Program for MPAT Employees; provided, however,
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that the parties acknowledge and agree that Purchaser is not assuming any
compensation expenses related to stay bonuses or any pre-closing employee-
related liabilities except as set forth in Section 6.6.
(e) all prorated real estate Taxes incurred in connection with the
transactions contemplated by this Agreement that Purchaser has agreed to pay
pursuant to Section 2.3;
(f) any past, existing and future liability arising from the pre-
Closing or post-Closing ownership or operation of the Purchased Assets
including, without limitation, all liability, obligation or responsibility under
or related to former, current or future Environmental Laws or the common law,
whether such liability or obligation or responsibility is known or unknown,
contingent or accrued, or arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, prior to the Closing Date,
with respect to the ownership or operation of the Purchased Assets, including,
without limitation, any fines or penalties that arise in connection with the
ownership or operation of the Purchased Assets prior to the Closing Date or the
costs associated with correcting such violations; (ii) loss of life, injury to
persons or property or damage to natural resources (whether or not such loss,
injury or damage arose or was made manifest before the Closing Date or arises or
becomes manifest after the Closing Date), caused (or allegedly caused) by the
presence or Release of Hazardous Materials at, on, in, under, adjacent to,
discharged from, emitted from or migrating from the Purchased
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Assets prior to the Closing Date, including, without limitation, Hazardous
Materials contained in building materials or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at or
adjacent to the Purchased Assets; and (iii) the investigation and/or Remediation
(whether or not such investigation or Remediation commenced before the Closing
Date or commences after the Closing Date) of Hazardous Materials that are
present or have been Released prior to the Closing Date at, on, in, under,
adjacent to, discharged from, emitted from or migrating from the Purchased
Assets; provided as to all of the above that nothing set forth in this Section
2.2(e) shall require the Purchaser to assume any Excluded Liabilities;
(g) all liabilities incurred after the date of this Agreement and
prior to the Closing in the normal course of operation of the Water Business
pursuant to Section 6.1 (except Excluded Liabilities); and
(h) any liabilities specified on Schedule 4.15.
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2.3 Transfer of Purchased Assets and Assumed Liabilities
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The Purchased Assets shall be sold, conveyed, transferred, assigned
and delivered, and the Assumed Liabilities shall be assumed, pursuant to
transfer and assumption agreements or other instruments in such form as is
necessary and appropriate to effect a conveyance of the Purchased Assets and an
assumption of the Assumed Liabilities in the jurisdictions in which such
transfers are to be made. Such transfer and assumption agreements or other
instruments shall be in a form reasonably satisfactory to Seller and Purchaser,
and shall be executed no later than on the Closing Date by Seller and/or one or
more of its Subsidiaries, as appropriate, and Purchaser. Purchaser and Seller
will agree to identify the required transfer and assumption documents in each
jurisdiction as promptly as practicable. Any transfer, filing, recordation or
similar fees or Taxes shall be borne by Seller. Real estate Taxes and
assessments (both general and special) shall be prorated to the Closing Date
using the most recent assessment and levy, and such Taxes and assessments shall
be reflected on the Closing Date Statement. Such prorations will be deemed to be
final absent manifest error. Security deposits given by Seller as tenant with
respect to leases for Leased Real Property and not refunded to Seller should be
assigned to Purchaser and Seller given credit on the Closing Date Statement.
2.4 Governmental Approvals and Consents
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(a) Seller and Purchaser shall cooperate with each other and promptly
(but in any event not later than ten days after the date of this Agreement with
respect to filings with the Public Utility Commission of Nevada) prepare and
file all necessary documentation and use commercially reasonable efforts to
obtain all necessary permits, consents approvals and authorizations of all
Governmental Authorities and all other parties necessary or advisable to
consummate the transactions contemplated by this Agreement or required by the
terms of any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument to which Seller or
Purchaser or any of their respective subsidiaries is a party or by which any of
them or their assets is bound.
(b) Purchaser shall, no later than ten Business Days after the
effective date of this Agreement, in cooperation with Seller, file an
application with the United States
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Government seeking assignment of Seller's Interim Storage Agreement, and shall
thereafter use commercially reasonable efforts to secure such assignment of the
Interim Storage Agreement at the earliest practicable date.
(c) Seller and Purchaser each shall have the right to review, and to
the extent not inconsistent with any legal obligation, approve in advance all
characterizations of the information relating to the transactions contemplated
by this Agreement made to, and which appear in any filings with, any
Governmental Authority made in connection with the transactions contemplated
hereby. The parties hereto agree that they shall consult with each other with
respect to the transferring to Purchaser or the obtaining by Purchaser of all
such necessary permits, consents, approvals and authorizations of all third
parties and Governmental Authorities. Seller and Purchaser shall designate
separate counsel with respect to all applications, notices, petitions and
filings (joint or otherwise) relating to this Agreement and the transactions
contemplated hereby on the behalf of Seller on the one hand and Purchaser on the
other hand, with all Governmental Authorities.
(d) If each condition to closing set forth in Article VIII has been
satisfied other than the receipt of any authorization in respect of the Hydro
Assets, the Closing shall occur notwithstanding the foregoing with the
adjustment to the Purchase Price set forth in Section 3.2. Following the
Closing, the parties shall use their commercially reasonable efforts, and shall
cooperate with each other, to effect the prompt issuance of any authorizations,
approvals, consents or waivers related thereto. Pending or in the absence of
such authorization, approval, consent or waiver, subject to applicable law
Purchaser and its employees (including any employees of Seller who are
transferred to the Purchaser along with the Water Business) shall, and Seller
shall permit Purchaser and such employees to, operate the Hydro Assets and
Seller shall hold such Hydro Assets for the use and benefit, insofar as
reasonably practicable, of Purchaser and its Designees (at the expense of
Purchaser). In addition, Seller shall and shall cause its Subsidiaries to, take
such other actions as may be reasonably requested by Purchaser in order to place
Purchaser and its Designees, insofar as reasonably practicable, in the same
position as if title to such Hydro Assets had been transferred at the Closing
and so that all the benefits and burdens relating to such Hydro Assets,
including possession, use, risk of loss, potential for gain, and dominion,
control and command over such Hydro Assets, is to inure from and after the
Closing Date to Purchaser and its Designees. From the Closing Date, Purchaser
agrees to assume all liabilities in connection with the ownership or operation
of the Hydro Assets as if such Hydro Assets had been transferred at the Closing,
including, without limitation, liability for any diminution in the value of the
Hydro Assets, any other Purchased Assets or any assets or interests of Seller.
If and when any required authorization, approval, consent or waiver, the absence
of which caused the deferral of transfer of any Hydro Assets pursuant to this
Section 2.4, is obtained, Seller shall provide Purchaser with documentation of
such approval and the transfer of such Hydro Assets shall be promptly effected
in accordance with the terms of this Agreement in respect of the Closing, the
payment contemplated in Section 3.2 shall be made and such Hydro Assets shall
thenceforth be Purchased Assets for all purposes under this Agreement.
(e) Notwithstanding anything to the contrary contained in this
Agreement:
(i) To the extent that the sale, conveyance, transfer,
assignment or delivery or attempted sale, conveyance, transfer, assignment
or delivery to Purchaser of
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any Purchased Asset (including any Contract) would be a violation of any
applicable law or would require any authorizations, approvals, consents or
waivers of Governmental Authorities or other third parties and such
authorizations, approvals, consents or waivers shall not have been obtained
prior to the Closing, this Agreement shall not constitute a sale,
conveyance, transfer, assignment or delivery, or an attempted sale,
conveyance, transfer, assignment or delivery thereof if any of the
foregoing would constitute a breach of applicable law or the rights of any
third party until such authorization, approval, consent or waiver is
obtained. To Seller's knowledge, there are no restrictions or requirements
such as are described in this Section 2.4(e)(i) except as disclosed herein.
(ii) In the event the Federal Trade Commission, the Department of
Justice or any other government or Governmental Authority shall (x) seek an
injunction or the enactment, entry, enforcement or promulgation of any
statute, rule, order or decree restraining or prohibiting the transactions
contemplated by this Agreement or (y) withhold or threaten to withhold any
consent, certification or other approval required to complete the
transactions contemplated by this Agreement, Purchaser and Seller shall use
commercially reasonable efforts to effect the Purchase notwithstanding any
such action by such government or Governmental Authority.
2.5 Farad Insurance Claim
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With respect to Seller's insurance claim relating to the loss,
reconstruction and replacement of the Farad dam and its associated
appurtenances, the Farad hydroelectric facility together with Hydro Water Rights
established in Claim #5 of the Orr Ditch Decree (the "Farad Facility")
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identified on Exhibit A shall not be transferred, and the portion of the
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Purchase Price in the amount of $2,000,000 attributable to the Farad Facility
shall not be payable, until either (x) Seller has reconstructed the Farad
Facility in a manner reasonably acceptable to Purchaser or (y) Seller's insurer
in respect of such claim has consented to the assignment of such claim by Seller
to Purchaser and Purchaser is reasonably satisfied regarding the rights relating
to such claim, at which time the transfer of the Farad Facility and assignment
of such claim to Purchaser shall be promptly effected.
2.6 Novation
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Each party hereto, at the request of the other, shall, and shall cause
their respective Subsidiaries to use commercially reasonable efforts to obtain,
or to cause to be obtained, any consent, substitution, approval or amendment
required to novate (including with respect to any federal governmental contract)
or assign all rights and obligations under agreements, leases, licenses and
other obligations or liabilities of any nature whatsoever that constitute
Assumed Liabilities or to obtain in writing the unconditional release of all
parties to such arrangements, so that, in any case, Purchaser will be solely
responsible for such Assumed Liabilities, provided, however, that neither party
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nor their respective Subsidiaries shall be obligated to pay any consideration
therefor to any third party from whom such consents, approvals, substitutions
and amendments are requested.
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ARTICLE III
PURCHASE PRICE AND ADJUSTMENTS
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3.1 Purchase Price
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The purchase price for the Purchased Assets shall be an amount in cash
equal to the sum of (i) $350,000,000 (subject to the provisions of Section 2.5)
and (ii) the Purchase Price Adjustment Amount (subject to reduction by the
amount of the Hydro Assets Purchase Price (as defined below)) (the "Purchase
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Price").
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3.2 Payment of Purchase Price
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On the Closing Date, Purchaser shall pay to Seller the Purchase Price. Such
amount shall be payable in United States dollars in immediately available
federal funds to such bank account or accounts as shall be designated by Seller
no later than the second Business Day prior to the Closing. If, however, Seller
is unable to deliver the Hydro Assets to Purchaser on the Closing Date because
any authorization has not been received, the Purchase Price shall be
$342,000,000. The remaining $8,000,000 (subject to the provisions of Section
2.5) (the "Hydro Assets Purchase Price") shall be paid at the earliest
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practicable date upon which the Hydro Assets can be transferred following the
receipt of such authorization but in no event later than five Business Days
after the receipt of the authorization.
3.3 Allocation of Purchase Price
---------------------------------
Seller shall reasonably allocate the Purchase Price (and all other
capitalizable costs) for all Tax purposes as shown on an allocation schedule
attached hereto as Schedule 3.3 and as prepared in accordance with Section 1060
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of the Code and the Treasury Regulations promulgated thereunder. Seller and
Purchaser shall file Internal Revenue Service Form 8594 and any comparable
state, local or foreign forms (including any successor forms) (collectively the
"1060 Forms") and any required attachments thereto required to be filed pursuant
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to Section 1060 of the Code, the Treasury Regulations promulgated thereunder or
any provisions of state, local or foreign law, together with all Federal, state
and local Tax returns, in accordance with the allocation schedule. Seller and
Purchaser shall cooperate in the preparation of any 1060 Forms and in the filing
of such 1060 Forms in the manner required by law. Each of Seller and Purchaser
shall notify and provide the other with reasonable assistance in the event of an
examination, audit or other proceeding regarding the agreed upon allocation of
the Purchase Price. Any Purchase Price Adjustment pursuant to Section 3.4 shall
also be allocated in accordance with the allocation schedule.
3.4 Purchase Price Adjustments
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(a) No later than 60 days after the Closing Date, Seller shall deliver
to Purchaser the Closing Date Statement setting forth the Net Worth Amount as of
the Closing Date. The Closing Date Statement shall be prepared using the same
accounting principles, policies and methods as Seller used in preparing the
September 30, 2000 financial statements referred to in Section 4.4(a). Purchaser
shall cooperate with Seller in connection with the
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preparation of the Closing Date Statement. Purchaser shall have 30 days from its
receipt of such statement to notify Seller of any objections to any item or
items on the Closing Date Statement. Any such notice shall specify the item or
items in dispute (a "Disputed Item" or "Disputed Items"). Any Disputed Item
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shall be resolved in the manner set forth in Section 3.4(b) below. If (A)
Purchaser does not deliver to Seller its objections to the Closing Date
Statement in writing within 30 days of its receipt of such statement, (B)
Purchaser acknowledges in writing that the Closing Date Statement is accurate or
(C) Purchaser and Seller resolve all Disputed Items in accordance with Section
3.4(b) below, then the Closing Date Statement shall be final, binding and
conclusive on all parties.
(b) If Purchaser and Seller shall be unable to resolve any Disputed
Items within 30 days after notice from Seller to Purchaser that a dispute
exists, then Seller's independent accounting representative, Deloitte & Touche
LLC ("D&T") and Purchaser's independent accounting representative ("PR") (which
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shall be a "big five" accounting firm other than D&T) shall endeavor in good
faith to resolve any Disputed Item(s). In the event that D&T and PR are unable
to resolve the Disputed Item(s) within 30 days, D&T and PR shall together,
within ten days thereafter, appoint a representative from a "big five"
accounting firm (other than D&T or PR) to arbitrate the dispute (the
"Arbitrator"). Seller and Purchaser shall, within the next 20 days thereafter,
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present their positions with respect to the Disputed Item(s) to the Arbitrator
together with such other materials as the Arbitrator deems appropriate. The
Arbitrator shall, after the submission of evidentiary materials, submit its
written decision on each Disputed Item to Seller and Purchaser. Any
determination by the Arbitrator with respect to any Disputed Item shall be
final, binding and conclusive on each party to this Agreement. Except as
specifically set forth to the contrary in this Section 3.4(b) or specifically
agreed to by the parties in writing, the Arbitrator shall comply with, and the
arbitration shall be conducted in Nevada in accordance with, the commercial
arbitration rules of the American Arbitration Association ("AAA") as in effect
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for commercial arbitrations conducted in Nevada by the AAA. Seller and Purchaser
agree that the cost of the Arbitrator shall be borne by the parties in
proportion to the outcome of the arbitration in respect of the amount at issue.
(c) If it is finally determined pursuant to the provisions of this
Section 3.4 that there is a Deficiency, then within ten days after all Disputed
Items with respect thereto have been resolved, Seller shall pay to Purchaser the
amount of the Deficiency, and if it is finally determined pursuant to the
provisions of this Section 3.4 that there is an Excess, then within ten days
after all Disputed Items with respect thereto have been resolved, Purchaser
shall pay to Seller the amount of the Excess (any such Deficiency or Excess, the
"Purchase Price Adjustment Amount"); provided, however, that no adjustment shall
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be made to the Purchase Price unless the amount of such Deficiency or Excess
exceeds $250,000.
(d) In addition to the adjustment to the Purchase Price for any
Deficiency or Excess described in paragraph (c) above, the Purchase Price shall
be reduced by $1,000,000 if Purchaser purchases insurance in respect of
environmental exposures for events occurring prior to Closing on terms
reasonably acceptable to Seller.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller represents and warrants to Purchaser as follows:
4.1 Corporate Existence
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Seller is duly organized and validly existing and in good standing
under the laws of the State of Nevada. Seller has the requisite corporate power
and authority to own, lease and operate its properties and assets, including the
properties and assets included in the Purchased Assets, and to carry on the
Water Business as the same is now being conducted, and is duly authorized,
qualified or licensed to do business in every jurisdiction wherein, by reason of
the nature of the Water Business, the same is required.
4.2 Corporate Authority
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This Agreement and the other agreements, instruments and documents to
be executed, delivered and/or filed in connection herewith (collectively with
this Agreement, the "Transaction Documents") to which Seller is a party and the
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consummation of the transactions contemplated hereby and thereby involving such
persons have been or, in the case of the other Transaction Documents will be
prior to the Closing, duly authorized by the Board of Directors (or a duly
authorized committee or representative thereof) of Seller by all requisite
corporate, shareholder, partnership or other action prior to the Closing, and
Seller has full power and authority to execute, deliver and/or file the
Transaction Documents to which it is a party and to perform its obligations
hereunder or thereunder. This Agreement has been duly executed and delivered by
Seller, and the other Transaction Documents will be duly executed, delivered
and/or filed by Seller, and this Agreement constitutes, and the other
Transaction Documents when so executed, delivered and/or filed will constitute,
valid and legally binding obligations of Seller, enforceable against it or them,
as the case may be, in accordance with its terms except as enforceability may be
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
4.3 Conflicts; Required Consents
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Except (a) for any applicable laws or regulations relating to
antitrust or competition (collectively, "Antitrust Regulations"), (b) Laws,
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practices and Orders of any state public utility control or public service
commissions or similar state regulatory bodies ("PUCs"), each of which is
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identified in Schedule 4.3, (c) Laws, practices and Orders of any state
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departments of public health or departments of health or similar state
regulatory bodies or of any federal or state regulatory body having jurisdiction
over environmental protection or environmental conservation or similar matters
("Health Agencies"), each of which is identified in Schedule 4.3, (d) as
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otherwise set forth in Schedule 4.3 and (e) any approvals or consents of
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Purchaser or its Affiliates required pursuant to its Joint Powers Agreement, the
execution, delivery and/or filing of this Agreement and the other Transaction
Documents by Seller and the
9
consummation by Seller of the transactions contemplated hereby and thereby will
not (A) violate or conflict with any provision of the respective certificate of
incorporation or by-laws or similar organizational documents of Seller or any of
its Subsidiaries, (B) result in any breach or constitute any material default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or a loss
of a material benefit under, or result in the creation of any Lien (including
any Lien for unpaid Taxes) under, any Contract or any license or permit to which
Seller is subject or is a party and which is a part of the Purchased Assets or
necessary or useful in the operation of the Water Business, (C) violate,
conflict with or result in any breach under any provision of any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Seller,
the Purchased Assets or the Water Business, or (D) require any consent,
approval, order or authorization of, license or permit from, notice to or
registration, declaration or filing with, (each of the foregoing, a "Consent")
-------
any United States or foreign, federal, state, provincial, county, municipal or
local government agency, board, bureau, department, court of competent
jurisdiction, administrative agency or commission or other governmental or
regulatory authority or instrumentality (other than Purchaser or its Affiliates)
("Governmental Authority") or any third party.
----------------------
4.4 Financial Statements
-------------------------
(a) Schedule 4.4 presents an accounting of the Purchased Assets and
Assumed Liabilities as of December 31, 1999 and September 30, 2000 (the "Balance
-------
Sheet Date"), and the related pro forma and pretax consolidated statements of
- ----------
income for the fiscal year and the nine-month period, respectively, ended on
such respective date (collectively, the "Financial Statements"). The Financial
--------------------
Statements present fairly in all material respects the financial condition and
the results of operations of Seller or the Water Business, as the case may be,
as of such date and for such period in accordance with GAAP, except that the
statements do not include all of the information required to be included in the
footnotes required by GAAP and, in the case of the financial statements as at
and for the period ended September 30, 2000, are subject to year-end adjustments
which adjustments to the knowledge of the Seller will not be material.
(b) Seller makes no representation with respect to any financial
information delivered to Purchaser other than as contained in or pursuant to
this Agreement.
4.5 Absence of Certain Changes
-------------------------------
Since September 30, 2000, the Water Business has been conducted in all
material respects in the ordinary course and in substantially the same manner as
previously conducted, except as set forth on Schedule 4.5.
4.6 Properties
---------------
(a) Seller has, or at the Closing will have, good title to the
personal property owned by Seller in respect of the Water Business, free and
clear of all Liens, except Permitted Liens.
10
(b) Schedule 4.6(b) contains a list of all fee interests in real
---------------
property owned by Seller and used in connection with the Water Business ("Owned
-----
Real Property") and all material easements, rights-of-way and other interests in
- -------------
real property owned or held by Seller and used or held for use in connection
with the Water Business other than Water Rights ("Other Real Property
-------------------
Interests") or leased by Seller in respect of the Water Business as lessee or
- ---------
lessor ("Leased Real Property" and, together with Owned Real Property and Other
--------------------
Real Property Interests, the "Real Property"), including all buildings,
-------------
structures and other improvements situated thereon. Except as set forth in
Schedule 4.6(b), Seller holds good and marketable title to the Owned Real
- ---------------
Property free and clear of all Liens except (i) Permitted Liens, and (ii) Liens
described on Schedule 4.6(b), all of which will be terminated or released, at or
---------------
prior to Closing. Except as disclosed on Schedule 4.6(b) and Schedule 4.7,
--------------- ------------
Seller has valid and enforceable leasehold interests in all Leased Real Property
and, with respect to Other Real Property Interests, has valid and enforceable
rights to use such Other Real Property Interests, subject only to Permitted
Liens. Except as disclosed on Schedule 4.6(b), Seller has a valid and
enforceable right to assign each Leased Real Property and Other Real Property
Interest to Purchaser without obtaining the approval or consent of any third
party, including any Governmental Authority. Each parcel of Owned Real Property
and each parcel of Leased Real Property and any improvements thereon (x) has
access to and over public streets or private streets for which Seller has a
valid right of ingress and egress, (y) conforms in its current use and occupancy
to all material zoning requirements, and (z) conforms in its current use to all
restrictive covenants, if any, or other Liens affecting all or part of such
parcel. There are no pending condemnation, expropriation, eminent domain or
similar proceedings of which Seller has received notice, or, to Seller's
knowledge, affecting all or any portion of the Real Property. Except as
disclosed on Schedule 4.6(b), each parcel of Owned Real Property and Leased Real
---------------
Property, including any improvements located thereon, complies in all material
respects with all building codes, fire codes and other Laws concerning the use,
occupancy and physical condition of the Real Property, including the Americans
with Disabilities Act. The Real Property represents all interests in real
property necessary to operate the Water Business as it is currently being
operated. Seller has not disposed of, or taken any steps to dispose of, the Real
Property and is not under any commitment to dispose of it in whole or in part.
There are no pending actions, suits or proceedings of which Seller has received
written notice, or, to Seller's knowledge, affecting or relating to the Owned
Real Property, Leased Real Property or material Other Real Property Interests,
in any court or before any federal, state, county or municipal department,
commission, board, bureau or agency or other Governmental Authority.
(c) Schedule 4.6(c) contains a list of all material interests in water
---------------
owned by Seller in respect of the Water Business including those Water Rights
associated with the Hydro Assets (the "Owned Water Rights") or material water
------------------
rights leased, licensed or otherwise available to Seller in respect of the Water
Business (the "Leased Water Rights" and, together with the Owned Water Rights,
-------------------
the "Water Rights"). Seller will deliver to Purchaser on the Closing Date in the
------------
form of a quitclaim deed all of its right, title and interest in the Owned Water
Rights (other than the Water Rights associated with the Hydro Assets which shall
be transferred in accordance with the provisions of Section 2.5) and as soon as
practicable thereafter all of its right, title and interest in the Leased Water
Rights by means of assignment of the Water Sale Agreements and Treatment and
Distribution Agreements in respect of such Leased Water Rights as set forth on
Schedule 4.7. Seller warrants that the Water Rights listed in Schedule 4.6(c),
- ------------ ---------------
11
together with the Leased Water Rights and the Hydro Assets Water Rights, all of
which are to be conveyed as is pursuant to this Agreement, are adequate to
support the current operation of the Water Business. Seller agrees to indemnify
Purchaser for 50% of the entire amount, up to a maximum of $2,500,000, of
Purchaser Losses resulting from any defect in title with respect to the 1700
acre feet of Water Rights referred to in Schedule 4.8, and such indemnification
shall not be subject to the Deductible or the Minimum Claim Threshold.
(d) Seller shall deliver to Purchaser a deed by which Seller conveys
to Purchaser the dam, outlet channel, spillway channel, flashboard structure and
controlling works at Independence Lake and related easements (the "Conveyed
--------
Property") which shall include a covenant, for the benefit of the Conveyed
- --------
Property and which burdens the Independence Lake Real Property listed on Exhibit
C, providing that (i) neither Seller, as owner of the Independence Lake Real
Property, nor its successors in ownership may use such property in any manner
that unreasonably causes harm to the operation of the Water Business and (ii)
Seller as the owner of the Independence Lake Real Property for itself and its
successors in ownership waives all present and future rights to object to
Purchaser's operation of the Conveyed Property pursuant to the Independence Lake
appropriative water rights that are conveyed to Purchaser and any resulting
water levels of Independence Lake, including, without limitation, any drawdown
of the lake level below the sill of the dam.
4.7 Contracts
--------------
(a) Except as otherwise disclosed in Schedule 4.6(b) (Owned and Leased
---------------
Real Properties), Schedule 4.9 (Intellectual Property Rights) and Schedule
------------ --------
4.12(a) (Employment & Benefits) (collectively, the "Covered Schedules") and
- ------- -----------------
Schedule 4.7, and except for Liens that will be released prior to Closing, as of
- -------------
the date hereof there are, no commitments, contracts or groups of related
contracts, indentures and agreements, or any notes, bonds, mortgages,
indentures, deeds of trust, licenses, franchises, permits, concessions, leases
or other instruments evidenced in writing, to which Seller is a party or by
which Seller is bound that relates to the Water Business (hereinafter
"Contracts") that (i) involve commitments by Seller for terms of one year or
---------
longer and that involve or are reasonably likely to involve payment by Seller or
to Seller in each case of more than $100,000 in the aggregate, (ii) involve
obligations of Seller for borrowed money or to maintain deposits or advances of
any kind as evidenced by bonds, debentures, notes or similar instruments or
guarantees or capital lease obligations or any other obligations upon which
interest charges are customarily paid, other than those entered into in the
ordinary course of business, (iii) involve any non-compete agreement that will
be applicable to the Purchased Assets or Purchaser following the Closing or (iv)
constitute joint venture or partnership agreements. Contracts disclosed or
required to be disclosed in the Covered Schedules or in Schedule 4.7 are
------------
hereafter referred to as the "Disclosed Contracts".
-------------------
(b) Seller has furnished or made available to Purchaser a copy or
summary of the material terms of each Disclosed Contract. Each Disclosed
Contract is valid and in full force and effect according to its terms and Seller
is not in default or breach under any such Disclosed Contract, except as set
forth on Schedule 4.7.
------------
12
4.8 Litigation
---------------
As of the date of this Agreement, Seller is not subject to any Order
relating to the Purchased Assets except as set forth on Schedule 4.8. Except as
set forth in Schedule 4.8, no claim, legal action, suit, arbitration,
------------
governmental investigation, action or other legal or administrative proceeding
is pending or, to the knowledge of Seller, threatened in law or in equity, or
before any Governmental Authority, against Seller or any of its Subsidiaries (a)
which is reasonably expected to enjoin or materially delay the consummation of
the Purchase, (b) involving alleged violations of laws or regulations for the
health or safety of employees or others, (c) involving equal employment
opportunity, discrimination, ADA or similar claim or litigation, (d) involving
antitrust claims or litigation, (e) involving claims or litigation seeking
injunctive relief, or (f) involving the Water Business, Purchased Assets, or
employees involved in the Water Business or which could otherwise materially
affect the transactions contemplated by this Agreement.
4.9 Intellectual Property Rights
---------------------------------
All of the registrations and applications for patents, trademarks and
copyrights owned by Seller and necessary for the operation of the Water Business
and/or all licenses or other agreements concerning Intellectual Property (as
defined below) material to the operation of the Water Business to which Seller
is a party are set forth on Schedule 4.9. Except as set forth on Schedule 4.9,
------------ ------------
(i) Seller owns or has the right to use all patents, inventions, discoveries,
technology, copyrights, software, trademarks, service marks, trade names,
corporate names, trade dress, trade secrets and all other intellectual property
rights ("Intellectual Property") material to the operation of the Water Business
---------------------
as currently conducted (such Intellectual Property, the "Water Business
--------------
Intellectual Property"); (ii) Seller has taken all reasonably necessary actions
- ---------------------
to preserve and maintain its Water Business Intellectual Property; (iii) Seller
has not received any written notices nor does Seller have other knowledge of any
claim of infringement, misappropriation, challenge, violation, or conflict
("Infringement") with respect to the Water Business Intellectual Property; (iv)
------------
to Seller's knowledge, the Water Business Intellectual Property does not
infringe the Intellectual Property of any third parties; and (v) Seller has the
right, subject to any consents and approvals in respect thereof, to transfer to
Purchaser all of the Water Business Intellectual Property included as Purchased
Assets under this Agreement.
4.10 Insurance
--------------
Seller is, and at all times during the past two years has been,
insured with reputable insurers (or self-insured) against all risks normally
insured against by companies in similar lines of business, and all material
policies of fire, liability, workers' compensation and other forms of insurance
purchased or held by and insuring the Purchased Assets are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date as of which this representation is being made have been paid,
and no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior to
the date of such cancellation.
13
4.11 Tax Matters
----------------
There is no liability for Taxes in respect of the Purchased Assets
except as provided for in Section 2.3.
4.12 Employment and Benefits
----------------------------
(a) Seller has previously delivered to the Purchaser copies of all
labor union and collective bargaining agreements relating to the Purchased
Assets to which the Seller is a party or is subject. With respect to its
employees associated with the Purchased Assets, Schedule 4.12(a) sets forth a
----------------
list of each material "employee benefit plan" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
-----
and all severance, change in control or employment plans, programs or
agreements, and vacation, incentive, bonus, stock option, stock purchase, and
restricted stock plans, programs or policies under which any employee or former
employee of the Water Business has any present or future right to benefits and
under which Seller has had or has any present or future liability (collectively,
the "Seller Plans"), to Seller's knowledge: (i) Seller is in compliance, in all
------------
material respects, with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours; (ii) Seller
has not received written notice of any unfair labor practice complaint against
Seller pending before the National Labor Relations Board; (iii) there is no
labor strike, slowdown or stoppage actually pending or threatened against or
affecting Seller; (iv) Seller has not received notice that any representation
petition respecting the employees of Seller has been filed with the National
Labor Relations Board; (v) no arbitration proceeding arising out of or under
collective bargaining agreements is pending against Seller; and (vi) Seller has
never experienced any primary work stoppage.
(b) With respect to each Seller Plan, Seller has made available to
Purchaser a current, accurate and complete copy thereof and, to the extent
applicable: (i) the most recent determination letter, if applicable; (ii) any
summary plan description; and (iii) for the two most recent years (A) the Form
5500 and attached schedules, (B) audited financial statements and (C) actuarial
valuation reports, if applicable.
(c) Except as set forth in Schedule 4.12(c), with respect to its
----------------
employees associated with the Purchased Assets, the Seller Plans are in
compliance in all material respects with all applicable requirements of ERISA,
the Code, and other applicable laws and have been administered in accordance
with their terms and such laws. Each Seller Plan which is intended to be
qualified within the meaning of Section 401 of the Code has received a favorable
determination letter as to its qualification, and, to the knowledge of Seller,
nothing has occurred that could reasonably be expected to affect such
qualification.
4.13 Compliance with Laws
--------------------
Except as set forth on Schedule 4.13, (a) the Water Business is
-------------
conducted by Seller in compliance in all material respects with all statutes,
laws, regulations, ordinances, rules, judgments, orders or decrees applicable
thereto, and (b) all filings required to be made by Seller in respect of the
Water Business under any applicable Laws or Orders relating to the regulation of
public utilities, have been filed with the appropriate PUC or Health Agency or
any other
14
appropriate Governmental Authority, as the case may be, including all forms,
statements, reports, agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto, including but not limited to
all rates, tariffs franchises, service agreements and related documents and all
such filings complied, as of their respective dates, in all material respects
with all applicable requirements of the appropriate Laws or Orders.
4.14 Environmental Matters
------------------------------
Seller has made available to Purchaser (and Purchaser may provide
to its environmental insurance provider(s)) copies of Phase I environmental site
assessments in Seller's possession or control for certain of the real property
included in the Purchased Assets. Except as provided therein or in Schedule
--------
4.14, to the knowledge of Seller:
- ----
(a) Seller holds and is in compliance in all material respects
with all permits, licenses and governmental authorizations required for Seller
to construct and to operate the Purchased Assets under Environmental Laws, and
all such permits, licenses and governmental authorizations are in good standing
or, where applicable, a renewal application has been timely filed and is pending
agency approval, and Seller is otherwise in compliance with all Environmental
Laws with respect to the Purchased Assets, including, without limitation, the
possession of and compliance with all permits required under Environmental Laws;
(b) Seller has not received any written request for information,
or been notified in writing that it is a potentially responsible party under
CERCLA or any similar state law with respect to any of the Purchased Assets, and
Seller has not received any written communication that alleges that Seller,
solely with respect to the Purchased Assets, is not in compliance with
applicable Environmental Laws;
(c) Seller has no knowledge of any Environmental Claim pending (i)
against Seller in respect to the Purchased Assets, or (ii) against any of the
Purchased Assets that the Seller owns or operates.
(d) There are no Releases of any Hazardous Material that would
reasonably be expected to form the basis of any Environmental Claims against the
Seller in respect to the Purchased Assets;
(e) with respect to the Purchased Assets, Seller has not entered
into or agreed to any consent decree or order, and is not subject to any
judgment, decree or judicial order relating to compliance with any Environmental
Law or to the investigation or cleanup of Hazardous Materials under any
Environmental Law; and
(f) the representations and warranties made in this Section are
Seller's exclusive representations and warranties relating to environmental
matters.
"Environmental Claims" means any and all written
--------------------
administrative, regulatory or judicial actions, suits, demand, demand letters,
claims, liens, proceedings or notices of noncompliance or violation by any
person or entity (including any Governmental Authority) alleging potential
liability (including, without limitation, potential liability for enforcement,
15
damages, contribution, indemnification, cost recovery, compensation, injunctive
relief, cleanup costs, governmental resource costs, removal costs, remedial
costs, natural resources damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from (A) the presence, or
Release or threatened Release into the environment, of any Hazardous Materials
relating to ownership or operation of the Purchased Assets; or (B) any violation
of any Environmental Law related to the ownership or operation of the Purchased
Assets; or (C) any and all claims by any third party resulting from the presence
or release of any Hazardous Materials related to the Purchased Assets.
"Environmental Law" means any currently applicable federal, state
-----------------
or local laws, statutes, regulations, codes, or ordinances relating to, or
imposing standards regarding, pollution or the protection of human health (as
relating to the environment) or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws and regulations relating to Releases or
threatened Releases of Hazardous Materials, or otherwise relating to the
treatment, storage or disposal of Hazardous Materials.
"Hazardous Materials" means any hazardous or toxic substance,
-------------------
material or waste defined, listed, or classified as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or words of similar meaning and
regulatory effect, by any Environmental Laws, including, without limitation,
friable asbestos, petroleum or petroleum products, and transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls,
and including any other chemical material, substances or waste, exposure to
which is now prohibited, limited or regulated under Environmental Law.
"Release" shall be defined as that term is defined in 42
-------
U.S.C. (S) 9601 (22).
4.15 Undisclosed Liabilities
--------------------------------
Seller has no liabilities or obligations relating to the Water
Business or operation of the Purchased Assets (whether absolute, accrued,
contingent or otherwise) of a nature required by GAAP to be reflected in a
balance sheet or disclosed in the notes thereto, except (i) as are set forth or
reflected in the Financial Statements (or described in the notes thereto), (ii)
liabilities incurred in the ordinary course of business since the Balance Sheet
Date, (iii) liabilities disclosed in Schedule 4.15 or any other Schedule hereto,
(iv) liabilities under Contracts disclosed in the Schedules to this Agreement
and (v) liabilities under Contracts not required to be disclosed in the
Schedules to this Agreement.
4.16 Finders; Brokers
-------------------------
With the exception of fees and expenses payable to Lehman Brothers
Inc., which shall be Seller's sole responsibility and with respect to which
Seller will indemnify and hold Purchaser harmless, Seller has not employed any
finder or broker in connection with the Purchase who would have a valid claim
for a fee or commission from Purchaser in connection with the Purchase.
16
ARTICLE V
REPRESENTATIONS OF PURCHASER
----------------------------
Purchaser represents and warrants to Seller as follows:
5.1 Corporate Existence
------------------------
Purchaser is a duly organized political subdivision of the State of
Nevada and is validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party and to perform its obligations hereunder and thereunder. Other
than as would not reasonably be expected to have a Purchaser Material Adverse
Effect (as defined in Section 5.3), as of the Closing Date and, with respect to
the Hydro Assets, as of the actual date of transfer of such Hydro Assets,
Purchaser will have the requisite corporate, partnership or similar power and
authority to own, lease and operate the Purchased Assets, and to carry on the
Water Business in substantially the same manner as the same is now being
conducted by Seller and its Subsidiaries.
5.2 Corporate Authority
------------------------
This Agreement and the other Transaction Documents to which Purchaser
is a party and the consummation of the transactions contemplated hereby and
thereby involving such persons have been or, in the case of the other
Transaction Documents, will be prior to the Closing, duly authorized by
Purchaser, and Purchaser, will have at or prior to the Closing full power and
authority to execute, deliver and/or file the Transaction Documents to which it
is a party and to perform its obligations hereunder or thereunder. This
Agreement has been duly executed and delivered by Purchaser, and the other
Transaction Documents will be duly executed, delivered and/or filed by
Purchaser, and this Agreement constitutes, and the other Transaction Documents
when so executed, delivered and/or filed will constitute, a valid and legally
binding obligation of Purchaser, enforceable against it or them, as the case may
be, in accordance with its terms except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing. The execution, delivery
and/or filing of this Agreement and the other Transaction Documents by Purchaser
and the consummation by Purchaser of the transactions contemplated hereby and
thereby will not (A) violate or conflict with any provision of the respective
certificate of incorporation or by-laws or similar organizational documents of
Purchaser, (B) result in any breach or constitute any material default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any Lien under any
contract, indenture, mortgage, lease, note or other agreement or instrument to
which Purchaser is subject or is a party, or (C) violate, conflict with or
result in any breach under any provision of any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Purchaser or any of
its respective properties or assets.
17
5.3 Governmental Approvals and Consents
----------------------------------------
Purchaser is not subject to any order, judgment or decree which would
prevent the consummation of the Purchase. No claim, legal action, suit,
arbitration, governmental investigation, action or other legal or administrative
proceeding is pending or, to the knowledge of Purchaser, threatened against
Purchaser which would enjoin or delay the consummation of the Purchase or
prevent Purchaser from entering into the TROA. Except for any consents required
under any applicable Antitrust Regulations, any consents required for Seller to
transfer the assets, and approval of the issuance of bonds and filings
associated with the issuance of those bonds of Purchaser's Board of Directors,
no consent, approval, order or authorization of, license or permit from, notice
to or registration, declaration or filing with, any Governmental Authority, is
required on the part of Purchaser in connection with the execution, delivery
and/or filing of this Agreement or any of the other Transaction Documents or the
consummation of the transactions contemplated hereby and thereby except for such
consents, approvals, orders or authorizations of, licenses or permits, filings
or notices which have been obtained and remain in full force and effect, and
those with respect to which the failure to have obtained or to remain in full
force and effect would not, individually or in the aggregate, have a material
adverse effect on the ability of Purchaser to consummate the transactions
contemplated hereby and thereby (a "Purchaser Material Adverse Effect").
---------------------------------
5.4 Funding of Expenses Prior to Closing and Break-Up Fee
----------------------------------------------------------
Purchaser has made arrangements to pay for the expenses of its
financial, tax, accounting, legal, environmental, engineering and any other
advisors necessary to consummate this transaction (collectively, "Purchaser
---------
Expenses") with respect to the period from the date of execution hereof through
- --------
February 15, 2002, and Purchaser agrees to recommend to its members ("Members")
-------
to approve, within the three day period referred to in Section 6.18(a),
arrangements for the payment of all Purchaser Expenses incurred through and
including the Closing Date and the fee referred to in Section 11.1(b).
5.5 Financial Capacity
-----------------------
Subject to the provisions of Section 6.13, Purchaser will have
available on the Closing Date sufficient funds to enable it to consummate the
transactions contemplated hereby. The City of Reno has delivered a resolution to
the effect that it will act as a conduit financing vehicle. Purchaser has the
authority to issue revenue bonds for the purpose of purchasing the Purchased
Assets and such bonds could be structured as bonds whose interest is excluded
from gross income for federal income tax purposes.
5.6 Finders; Brokers
---------------------
Purchaser has not employed any finder or broker in connection with the
Purchase who would have a valid claim for a fee or commission from Seller in
connection with the Purchase.
18
ARTICLE VI
AGREEMENTS OF PURCHASER AND SELLER
----------------------------------
6.1 Operation of the Water Business
------------------------------------
Except as otherwise contemplated by this Agreement or as disclosed in
Schedule 6.1, Seller covenants that, in respect of the Water Business, until the
Closing and, with respect to the Hydro Assets, until the date of transfer
thereof, it shall use commercially reasonable efforts to operate and maintain
the Purchased Assets according to the ordinary and usual course of business
consistent with past practice, including, without limitation, continuing its
efforts to complete the TROA, the most recent draft of which is contained in
Schedule 7.1. Seller shall not, without the prior written approval of Purchaser
- ------------
(which approval shall not be unreasonably withheld) or as otherwise contemplated
by this Agreement and the Schedules hereto, take any of the following actions
with regard to the Purchased Assets or the Water Business:
(a) sell, lease (as lessor or lessee) transfer or otherwise dispose of
any of the Purchased Assets, other than assets used, consumed or replaced in the
ordinary course of business consistent with good industry practice or mortgage
or pledge, impose or suffer to be imposed any encumbrance on any Purchased
Assets;
(b) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations (i) create, incur or
assume any material long-term indebtedness for borrowed money (including
obligations in respect of capital leases), (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for any obligations of any person other than Seller or (iii) make any
loans, advances or capital contributions to or investments in any person (except
for customary loans or advances to employees not exceeding $500,000 in the
aggregate), in each case that would be a liability or asset of the Water
Business and reflected on the Closing Date Statement; provided, however, that no
-------- -------
obligations described in clauses (i) or (ii) shall become Assumed Liabilities.
(c) (i) grant any increase in the compensation of employees of the
Water Business in excess of $500,000 in the aggregate, except for increases in
the compensation of employees (A) scheduled as of the date hereof that are
consistent with past practice, (B) as a result of existing collective bargaining
agreements or collective bargaining or (C) as required by applicable law from
time to time in effect or by any Benefit Plan as in effect on the date hereof,
(ii) increase the number of employment positions, (iii) enter into any new
material employment, severance or other compensation agreement with any existing
employee or (iv) commit to any additional pension, profit-sharing, deferred
compensation, group insurance, severance pay, retirement or other employee
benefit plan, fund or similar arrangement or amend, or commit itself to amend
any of such plans, funds or similar arrangements;
(d) cancel any material third party indebtedness owed to Seller in
respect of the Water Business;
(e) acquire any assets (other than inventory) of the type used in the
Water Business which are material, individually or in the aggregate, to the
Water Business taken as a
19
whole; provided, however, that the foregoing shall not prohibit any merger,
acquisition or other business combination by or involving Seller which
combination would not affect the obligations of Seller under this Agreement or
the ability of Seller (or any successor entity) to perform such obligations;
(f) enter into any contract, agreement or other commitment relating
exclusively to the Water Business which is not terminable by the parties upon 30
days' notice or less or which involves aggregate consideration in excess of
$25,000 except as set forth on Schedule 6.1;
------------
(g) make, agree to or arrange for any individual capital expenditure
in respect of the Water Business in excess of $500,000 in the aggregate, except
that Seller shall make any capital expenditures (i) that it has agreed to or
arranged for prior to the date of this Agreement and set forth on Schedule 6.1,
------------
(ii) pursuant to any customer annexation agreements or for line extensions set
forth on Schedule 6.1, or contributions in aid of construction of new facilities
------------
consented to by Purchaser, whose consent shall not be unreasonably withheld;
(iii) requested by Purchaser that Purchaser agrees to reimburse or (iv) deemed
necessary by Seller and consented to in writing by Purchaser, whose consent
shall not be unreasonably withheld; provided however, that if Purchaser requests
that Seller make enhancements with a cost in excess of the cost of any necessary
capital expenditure, Purchaser shall reimburse Seller for the cost of such
enhancement;
(h) make any change in its accounting standards or methods; or
(i) agree, whether in writing or otherwise, to do any of the above.
6.2 Investigation of Business
------------------------------
(a) Seller shall, and shall cause its Subsidiaries to, permit
Purchaser and its authorized agents or representatives, including its
independent accountants, to have reasonable access to the properties, books and
records of the Water Business at reasonable hours to review information and
documentation relative to the properties, books, contracts, commitments and
other records of the Water Business; provided that such investigation shall only
--------
be upon reasonable notice and shall not unreasonably disrupt personnel and
operations of Seller and its Subsidiaries; and provided, further, that Seller
-------- -------
and Purchaser shall each designate a single contact person to manage the
transition from Seller to Purchaser, and Purchaser shall be allowed to contact
such designated contact person without providing any notice. All notices and
requests for access to the offices, properties, books and records of Seller and
its Subsidiaries shall be made to the designated contact person or such other
representatives of Seller as Seller shall designate in writing after the date of
this Agreement, who shall be solely responsible for coordinating all such
requests and all access permitted hereunder. It is further agreed that neither
Purchaser nor its Affiliates or representatives shall contact any of the
employees, customers, suppliers, joint venture partners or other Subsidiaries or
Affiliates of Seller in connection with the transactions contemplated hereby,
whether in person or by telephone, mail or other means of communication, without
the specific prior authorization of such representatives of Seller, which
authorization will not be unreasonably withheld.
20
(b) Within seven days following the date of this Agreement and
throughout the due diligence period (which shall last from the date hereof
through the Closing and shall be referred to herein as the "Due Diligence
-------------
Period"), Seller shall use commercially reasonable efforts to make available to
- ------
Purchaser and Purchaser's agents and consultants for inspection at Seller's
Virtual Data Room (or at such other location mutually agreed to by the parties)
the following documents and information to the extent they are in the possession
and control of Seller or Seller's agents and representatives: all Contracts
pertaining to Real Property including leases; all insurance policies pertaining
to the Real Property; all records pertaining to maintenance and repair of the
Real Property; any tax protests, notices of assessment or levy of Taxes, and tax
bills, concerning Real Property, prepared or received since January 1997; any
appraisals of Real Property; any architectural, construction, engineering, "as-
built" or other plans and specifications concerning improvements on Real
Property; any notices of condemnation proceedings or exercise of eminent domain
power; any architectural, engineering, soils, environmental or other
professional reports concerning Real Property; documents concerning any
potential zoning, building or fire code or other violation of Law pertaining to
any improvements on Real Property; any title commitments, title reports, title
policies and surveys concerning any Real Property; a legal description and, if
available, address, for each parcel of Owned Real Property and Leased Real
Property. Seller agrees to provide Purchaser with copies of any of the documents
or information identified in this Section at Purchaser's request, within five
business days following Seller's receipt of a request for copies from Purchaser.
(c) Purchaser and its representatives will hold in confidence all
confidential information obtained from Seller and its Subsidiaries or their
respective officers, agents, representatives or employees whether or not
relating to the Water Business, in accordance with the provisions of the non-
disclosure letters between the Members and Seller (the "Confidentiality
---------------
Agreements"); provided however that Purchaser may reasonably disclose such
- ---------- -------- -------
information as is required in order to comply with applicable law or to finance
the transaction as required by Section 6.13. Purchaser shall consult with Seller
prior to any such disclosure. The Confidentiality Agreement and all its
provisions shall remain in full force and effect following the execution of this
Agreement. The parties hereto agree to negotiate the extent to which the
Confidentiality Agreements shall stay in effect after the Closing Date.
6.3 Commercially Reasonable Efforts; Cooperation; No Inconsistent Action
-------------------------------------------------------------------------
Subject to the terms and conditions hereof, Seller and Purchaser agree
to use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement and the Transaction Documents and to cause the conditions to each
party's obligation to close the transactions contemplated hereby as set forth in
Article VIII to be satisfied, including, without limitation, obtaining all
Consents, including licenses, certificates, permits, approvals, clearances,
expirations or terminations of applicable waiting periods, authorizations,
qualifications and orders, and compliance with any Law or Order of any PUC,
Health Agency or other Governmental Authority listed on Schedule 8.1 and to
------------
obtain all other Consents described and defined in Section 4.3 or listed on
Schedule 4.3 (it being understood that the failure to obtain any such Consents
- ------------
shall not cause the condition set forth in Section 8.3(b) to be deemed not to be
satisfied but may form the basis for indemnification rights
21
under this Agreement). From time to time after the date hereof, without further
consideration, Seller shall, at its own expense, execute and deliver such
documents to Purchaser as Purchaser may reasonably request in order more
effectively to vest in Purchaser good title to the Purchased Assets. From time
to time after the date hereof, Purchaser shall, at its own expense, execute and
deliver such documents to Seller as Seller may reasonably request in order to
more effectively consummate the sale of the Purchased Assets pursuant to this
Agreement.
6.4 Public Disclosures
-----------------------
Except to the extent otherwise required by applicable law and except
as permitted under Section 6.2, regulation or legal process or by obligations
pursuant to any listing agreement with or rules of any securities exchange,
prior to the Closing Date and, with respect to the Hydro Assets, the date of
transfer thereof, neither party to this Agreement nor any of their respective
Affiliates will issue any press release or make any other public disclosures
concerning the transactions contemplated hereby or the contents of this
Agreement without consulting with the other party.
6.5 Access to Records and Personnel
------------------------------------
(a) The parties shall retain the books, records, documents,
instruments, accounts, correspondence, writings, evidences of title and other
papers relating to the Water Business and the Purchased Assets in their
possession (the "Books and Records") for at least seven years following the
-----------------
Closing Date or for such longer period as may be required by law or any
applicable court order or until the expiration of the relevant representation or
warranty under any of the Transaction Documents.
(b) The parties will allow each other reasonable access to such Books
and Records, or copies thereof, and to personnel having knowledge of the
whereabouts and/or contents of such Books and Records and other relevant
information, for legitimate business reasons, such as the preparation of Tax
Returns or the defense of litigation. The disclosing party shall be entitled to
recover from the requesting party its out-of-pocket costs (including copying
costs) incurred in providing such Books and Records and/or personnel to the
other party. The requesting party will hold in confidence all confidential
information identified as such by, and obtained from, the disclosing party, any
of its officers, agents, representatives or employees, provided, however, that
-------- -------
information of the type which would be excluded from the confidentiality
provisions of the Confidentiality Agreement in accordance with such agreement
shall not be deemed to be confidential information for purposes of this Section
6.5.
(c) Nothing in this Section 6.5 shall require either party to violate
any agreement with any third parties regarding the confidentiality of
confidential and proprietary information; provided, however, that in the event
-------- ------
that either party is required under this Section 6.5 to disclose any such
information, that party shall use all commercially reasonable efforts to seek to
obtain such third party's consent to the disclosure of such information.
22
6.6 Employee Relations and Benefits
------------------------------------
(a) Seller has made available to Purchaser a summary of all employees
related to the Water Business, including data on salaries and years of service,
organized according to MPAT and bargaining unit.
(b) Purchaser shall make a Qualifying Offer of Employment (as defined
herein) commencing on the Closing Date to all Assigned MPAT Employees, including
those on personal time off, or leave of absence who were employed by Seller on
the day immediately preceding such Closing Date. Purchaser shall make a
Qualifying Offer of Employment (as defined herein) commencing on the date of
recovery from disability to any Assigned MPAT Employee on disability on the
Closing Date provided such Employee recovers from disability and is medically
determined to be fit to return to work within 18 months after the Closing Date.
Those Assigned MPAT Employees who accept such offer of employment from Purchaser
and who commence working with Purchaser on such Closing Date shall be referred
to herein as "Transferred Management Employees." An offer of employment shall be
--------------------------------
deemed a "Qualifying Offer of Employment" if (A) the proposed salary
------------------------------
compensation is at least 90% of the employee's base salary plus incentive
compensation immediately prior to the Closing Date and (B) the proposed
principal place of employment is within one hundred (100) miles of the
employee's principal place of employment immediately prior to the Closing Date.
(c) Purchaser shall maintain for a period of at least one year after
the Closing Date, without interruption, such employee compensation, welfare and
benefit plans, programs, policies and fringe benefits covering Transferred
Management Employees that will be of substantially similar value, in the
aggregate, as those provided pursuant to those employee compensation, welfare
and benefit plans, programs, policies and fringe benefits of the Seller for
employees related to the Water Business as in effect immediately prior to the
Closing Date. To the extent permissible under the terms of the Benefit Plans of
Purchaser and as required by applicable law, the Purchaser shall waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Transferred
Management Employees under any Benefit Plans of Purchaser that are welfare
benefit plans that such employees may be eligible to participate in after the
Closing Date, other than limitations or waiting periods that are already in
effect with respect to such employees and that have not been satisfied as of the
Closing Date under any welfare benefit plan maintained for the Transferred
Management Employees immediately prior to the Closing Date.
(d) Purchaser and Seller agree to negotiate benefits plans for
Transferred Management Employees that, to the extent permitted under Nevada law
given Purchaser's status as a public employer and its participation in the
Public Employees Retirement System in Nevada, provide in the aggregate for
benefits, vesting, service credits, and eligibility that recognizes those
Transferred Management Employees' past service with Seller; provided, however
that such service with Seller shall not be recognized for purposes of benefit
accrual in any Purchaser defined benefit pension plan or of any retiree medical
plan. Purchaser shall maintain for a period of at least eighteen (18) months
following the Closing Date, the Program Benefits of the Guide to the Water
Business Divestiture Severance Program for MPAT Employees.
23
(e) Purchaser shall offer employment to begin as of the Closing Date
to the Seller's employees ("IBEW 1245 Employees") who are covered by Seller's
-------------------
new collective bargaining agreement with Local Union 1245 of the International
Brotherhood of Electrical Workers (the "New IBEW Contract"). Purchaser shall
-----------------
assume (as co-signator) Seller's obligations under the New IBEW Contract to the
extent permitted under Nevada law given Purchaser's status as a public employer
and its participation in the Public Employees Retirement System in Nevada, and
in any event shall provide IBEW 1245 employees with compensation, welfare and
benefit plans, programs, policies and fringe benefits that will be of
substantially similar value in the aggregate to those provided by Seller under
the New IBEW Contract. Benefits accrued under such Benefits Plans of Seller and
all benefits currently payable as of the Closing Date shall be and shall remain
the obligation of the Seller. Any individual covered under any such Benefit Plan
of Seller that is a Group Health Plan (as defined in Section 49080B(g)(2) of the
Code and Section 607(1) of ERISA) and who is eligible for continued coverage
under such Group health Plan as of the Closing Date, shall continue to be
covered under Seller's Group Health Plan after Closing pursuant to the
provisions of COBRA.
(f) Purchaser shall not, at any time prior to 60 days after the
Closing Date, effectuate a "Plant Closing" or "mass layoff", as those terms are
defined in the Worker Adjustment and Retraining Notification Act of 1988
("WARN"), affecting in whole or in part any site of employment, facility,
----
operating unit or employee of Seller, without notifying Seller in advance and
without complying with the notice requirements and other provisions of WARN. In
addition, Purchaser shall provide a full defense to, and indemnify Seller for
any loss, liability, claim, damage or expense (including attorney's fees and
other costs of defense) which Seller may incur in connection with, any suit or
claim of violation brought against Seller under WARN for any actions taken by
Purchaser with regard to any site of employment, facility, operating unit or
employee affected by this Agreement.
(g) Purchaser agrees to provide any required notice under the
Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, ("COBRA")
-----
and any other applicable law on or after Closing. Purchaser shall indemnify and
hold harmless Seller and its affiliates with respect to any liability under
COBRA or other applicable law arising from the actions (or inactions) of
Purchaser or its affiliates on or after the Closing Date and arising as a result
of the transactions contemplated hereby.
(h) Seller and all of its relevant Subsidiaries will comply with all
duties to inform, consult and notify labor organizations prior to Closing and
shall indemnify and keep indemnified Purchaser and its Affiliates from and
against any costs, claims, charges, liabilities, demands, fines, penalties,
compensation awards or expenses incurred by Purchaser or any of its Affiliates
which are directly or indirectly attributable to any failure by Seller or any of
its Subsidiaries to comply with such duties.
(i) Purchaser shall indemnify, defend and hold Seller harmless from
and against any and all claims, actions, suits, demands, proceedings, losses,
expenses, damages, obligations and liabilities (including costs of collection,
attorney's fees and other costs of defense) ("Damages") arising out of or
-------
otherwise in respect of the failure of Purchaser to comply with its obligations
under this Section 6.6, including any statutory obligations directly related to
Purchaser's obligations under this Section 6.6; any suit or claim of violation
brought against
24
Seller under WARN with regard to any site of employment, facility, operating
unit or employee affected by this Agreement.
6.7 Post-Closing Arrangements
-------------------------
On the Closing Date, Purchaser shall execute and deliver, and Seller
or one or more Affiliates of Seller shall execute and deliver, transition
services and shared service agreements (the "Interim Services Agreements")
---------------------------
pursuant to which Seller or such Affiliates of Seller shall make available to
Purchaser the support and administrative services set forth on Schedule 6.7.
6.8 Non-Competition
---------------------
In order that Purchaser may have and enjoy the full benefit of the
Water Business, Seller agrees that for a period of five years from the date
hereof, Seller and its Subsidiaries will not, without the express written
approval of Purchaser, engage in or otherwise have a material direct or indirect
interest in any Competing Business (other than the Retained Businesses). For
purposes of this Section 6.8, a business shall be deemed to be a "Competing
---------
Business" if it is principally engaged in supplying or distributing water in the
- --------
Reno-Sparks metropolitan area. Notwithstanding the foregoing, neither Seller nor
its Subsidiaries shall be precluded from (i) having a passive investment
representing less than 25% of the equity of any entity that is engaged in a
Competing Business or (ii) acquiring, merging with or entering into any other
business combination with a company the primary business of which is not a
Competing Business.
6.9 Jointly Developed Intellectual Property
---------------------------------------
It is understood that with respect to Intellectual Property based on
inventions, discoveries, designs or writings made jointly by an employee or
employees of the Water Business and an employee or employees of another business
owned by Seller, Seller has determined, in the ordinary course of business,
whether or not such Intellectual Property relates primarily to the Water
Business or to another business owned by Seller. Schedule 4.9 includes all such
------------
jointly developed Intellectual Property relating primarily to the Water
Business. It is agreed that such determinations are final and binding on
Purchaser, and that Purchaser shall have no rights to any other jointly
developed Intellectual Property.
6.10 No Other Representations or Warranties
--------------------------------------------
Except for the representations and warranties contained in this
Agreement or any document delivered pursuant to this Agreement, Purchaser
acknowledges that neither Seller, the other Subsidiaries and Affiliates of
Seller nor any other person makes any other express or implied representation or
warranty with respect to the Purchased Assets, the Assumed Liabilities or
otherwise or with respect to any other information provided to Purchaser,
whether on behalf of Seller or such other persons, including as to (a)
merchantability or fitness for any particular use or purpose, (b) the use of the
Purchased Assets and the operation of the Water Business by Purchaser after the
Closing in any manner other than as used and operated by Seller or (c) the
probable success or profitability of the ownership, use or operation of the
Water Business by
25
Purchaser after such Closing. Except for the representations and warranties
contained in this Agreement or any document delivered pursuant to this
Agreement, neither Seller nor any other person will have or be subject to any
liability or indemnification obligation to Purchaser or any other person
resulting from the distribution to Purchaser, or Purchaser's use of, any such
information, including the Information Memorandum prepared by Lehman Brothers
Inc. related to the Water Business and any information, document, or material
made available to Purchaser in certain "data rooms," management presentations or
in any other form in expectation of the transactions contemplated by this
Agreement.
6.11 Insurance Matters
-----------------
Purchaser acknowledges that the policies and insurance coverage
maintained on behalf of the entities comprising the Water Business are part of
the corporate insurance program maintained by Seller (the "Seller Corporate
----------------
Policies"), and such coverage will not be available or transferred to Purchaser.
- --------
In furtherance and not in limitation of the foregoing, Purchaser agrees not to
bring any claim for recovery under any of the Seller Corporate Policies, whether
or not such person may be so entitled in accordance with the terms of such
Seller Corporate Policies. Notwithstanding the foregoing, to the extent
practicable Seller will cooperate with Purchaser to enforce any rights against
environmental consultants and assist in obtaining any insurance recoveries under
insurance policies of Purchaser relating to Environmental Claims.
6.12 Use of Seller's Names
---------------------
After the Closing, neither Purchaser nor any of its Affiliates shall
use "Sierra Pacific" or "Sierra" or any name or term confusingly similar to
"Sierra Pacific" or "Sierra" in any corporate name or in connection with the
operation of any business. Notwithstanding the foregoing, Purchaser shall have a
period of time (which in no event is to exceed 60 days following the Closing
Date) in which to remove or cover names including the words "Sierra Pacific" or
"Sierra" and any trademarks, trade names, servicemarks, trade dress or logos
relating to such names from all signs, billboards, advertising materials,
telephone listings, labels, stationery, office forms and mastheads acquired in
the Purchase; provided, however, that during such period of time such names,
-------- -------
trademarks, trade names, servicemarks, trade dress and logos shall be used (i)
only to the extent necessary to avoid financial hardship and (ii) only to the
extent and in the manner that such names, trademarks, trade names, servicemarks,
trade dress and logos were used by Seller as of immediately prior to the Closing
Date. This Section 6.12 shall not be construed to prohibit Purchaser from using
the words "Sierra Pacific" or "Sierra" in connection with the filing of any
documents required by any Governmental Authority or to require Purchaser to
remove "Sierra", "Sierra Pacific", "SPCo" or any similar name from any manhole
cover, meter box or similar metal or plastic piece of property used in the Water
Business, except for any transferred inventory of such items. Purchaser shall
not install any new items with such a name.
6.13 Purchaser Financings
--------------------
(a) Seller will provide such assistance as Purchaser may reasonably
require in connection with the sale by Purchaser of any debt, whether public or
private ("Purchaser Debt"), including, without limitation, at the request of
--------------
Purchaser's managing underwriters, making
26
available in connection with any sale of Purchaser Debt at least one of its
senior personnel who is familiar with the operations, finance and legal affairs
of Seller and Seller's systems and at least one of its senior personnel who is
familiar with the facilities and other property comprising the Water Business to
assist Purchaser and its underwriters (i) in their preparation of any official
statements, (ii) at the due diligence meetings with the underwriters or their
representatives and (iii) at information meetings with potential investors. Such
assistance shall be provided at such time and from time to time, and at such
places, as shall be reasonably requested by Purchaser's managing underwriters
and Purchaser. Purchaser shall use commercially reasonable efforts to market
such Purchaser Debt.
(b) Purchaser shall reimburse Seller for (i) the reasonable out-of
pocket expenses of Seller's representatives, in the event the attendance of
Seller's representatives at meetings pursuant to this Article shall become
extensive, (ii) the reasonable out-of pocket expenses and fees of certified
public accountants and experts employed pursuant to paragraph (a) above, which
would not otherwise be incurred by Seller and (iii) any other out-of pocket
expenses incurred by Seller in performing the duties set forth in paragraph (a)
above.
(c) Seller shall have the right to nominate three potential co-
managers, all of whom shall be investment banks with national reputations, and
if Seller nominates a slate of co-managers, Purchaser will hire one of such
nominees as a co-manager to participate in the financing related to the Purchase
and will provide such co-manager with an appropriate level of access to
information and a market level of compensation.
(d) Purchaser shall make every reasonable commercial effort to obtain
financing through the issuance of tax-exempt bonds such that Purchaser shall
have sufficient funds to pay the Purchase Price in full on and as of the Closing
Date, including by approving the financing as and when procedurally required
pursuant to the JPA Agreement after the execution of this Agreement and by
making every commercially reasonable effort to market such bonds. Purchaser
agrees to use the City of Reno as a conduit financing vehicle if Purchaser is
unable to finance the transactions contemplated hereby without such support. In
the event that Purchaser (or the City of Reno as a financing conduit) has not
obtained financing at a weighted average rate not to exceed 7.2% (after giving
effect to the cost of any bond insurance) on and as of the Closing Date,
Purchaser shall have the right to terminate this Agreement by written notice to
Seller and, upon such termination, shall have no further obligations or
liabilities hereunder, except those set forth in Section 11.1(b).
(e) Purchaser shall not permit its Members to exercise their options
to become Purveyor Members (as defined in the JPA Agreement) as part of the
financing of this transaction.
6.14 Post-Closing Cooperation
------------------------
(a) After the Closing, Purchaser will use commercially reasonable
efforts to perform or effect all filings, notices or other documentary
submissions of any kind required by any Governmental Authority in respect of the
transactions contemplated by this Agreement, and Seller will provide Purchaser
with any assistance reasonably requested by Purchaser in connection therewith.
27
(b) At or after the Closing, each of Purchaser and Seller shall grant
such easements and rights of way to the other as requested by the other and are
reasonably necessary for the operation in a manner consistent with such
operations on the date hereof of (i) in the case of Purchaser, the Water
Business and (ii) in the case of Seller, Seller's and its Affiliates' businesses
other than the Water Business as of the date of this Agreement; provided
--------
however, in the case of Purchaser, such easements and rights of way shall be
- -------
limited to easements and rights of way across the Purchased Assets.
6.15 Risk of Loss. Seller shall bear the risk of loss to the Purchased
------------------
Assets until the Closing. After the Closing Purchaser shall bear the risk of
loss. If any material casualty or damage occurs prior to the Closing to the
Chalk Bluff or Glendale water treatment plants which renders either of them
inoperable for a period in excess of seven (7) days, Purchaser shall have a
right to terminate this Agreement. If (i) other damage occurs to the Purchased
Assets as a result of a casualty occurring prior to Closing or (ii) a casualty
resulting in either of such treatment plants being inoperable as stated above
occurs but Purchaser elects not to exercise its right to terminate this
Agreement, then Purchaser shall be entitled to a credit against the Purchase
Price in the amount of the damage if the amount of the damage is not used to
reduce the Net Worth calculation under Section 3.4.
6.16 Condemnation. If, subsequent to the date of this Agreement but prior
------------------
to Closing, Seller is served with a summons or other evidence of an action by a
Governmental Authority (other than Purchaser or any of its Affiliates) to
condemn any of the Real Property, if such condemnation results in a Seller
Material Adverse Effect, Seller shall notify Purchaser immediately and Purchaser
shall have the right, at its option, to terminate this Agreement by written
notice to Seller. If Purchaser does not elect to terminate this Agreement, then
(i) Purchaser shall have the right to defend such action or negotiate for,
claim, contest and receive all damages with respect to the condemnation or
taking, and (ii) at Closing, Purchaser shall be assigned all of Seller's rights
to any damages or awards payable with respect to the condemnation or taking.
6.17 Real Property Investigation.
---------------------------------
(a) At least 45 days prior to the Closing, Seller shall deliver to
Purchaser an ALTA owner's title insurance policy (1992 form) for the Chalk Bluff
and Glendale Water Treatment Plants, and at the closing with respect to the
Hydro Assets Seller shall deliver to Purchaser an ALTA owner's title insurance
policy (1992 form) for the Owned Real Property included in the Hydro Assets with
respect to the Farad, Fleish, Verdi and Washoe Hydro Facilities and (ii) at the
Closing with respect to each other parcel of Owned Real Property, a CLTA owner's
title insurance policy (1992 form) (collectively, the "Title Commitments") by
-----------------
First American Title of Nevada or its local agent or such other national title
insurance company which is mutually acceptable to the parties (the "Title
-----
Company"), together with legible copies of the vesting deed and all documents
- -------
identified on the schedules of exceptions. Seller shall pay the cost of the
premiums at Closing for ALTA or CLTA, as the case may be, extended coverage
title insurance policies insuring Purchaser, or its designee, as owner of each
parcel of Owned Real Property, in an amount equal to the fair market value of
such parcel. As soon as practicable following the date of this Agreement Seller,
at its expense, shall deliver to Purchaser, for each of the Chalk Bluff and
Glendale Water Treatment Plants and the Farad, Fleish, Verdi and Washoe
28
Hydro Facilities a current ALTA survey sufficient to delete the standard survey
exceptions in the Title Commitments. For those properties requiring specific
easements pursuant to Section 6.14, Seller shall, at Seller's expense, provide
additional surveys to describe such easements. The Surveys shall be certified to
Purchaser and, if applicable, its designee.
(b) Throughout the Due Diligence Period, Purchaser and Purchaser's
agents and consultants shall have the right to enter into the Real Property to
conduct any environmental, soils, mechanical, structural, and other tests,
inspections and evaluations of the Real Property, including asbestos sampling,
as Purchaser deems necessary to investigate the physical condition of the Real
Property, provided that no Phase II or other invasive studies may be done
without the prior written consent of Seller. Purchaser agrees to indemnify
Seller and to hold Seller and Seller's agents and employees harmless from an
against any and all losses, costs, damages, claims, or liabilities, including
mechanic's and materialmen's liens and attorneys' fees, to the extent arising
out of or in connection with Purchaser's inspection and investigation of the
Real Property. Pursuant to this Section 6.17(b) and Section 6.2, Purchaser shall
give Seller at least 24 hours' notice by telephone prior to each entry upon Real
Property and Seller shall have a right to have a representative present during
such entry.
(c) If Purchaser notifies Seller at any time during the Due Diligence
Period of any Lien (other than a Permitted Lien or a Lien set forth in Schedule
4.6(b)) or other matter affecting title to Owned Real Property which prevents
access to or which could prevent or materially impede in any way the use or
operation of any parcel of Owned Real Property for the purposes for which it
currently is used or operated (each a "Title Defect"), Seller will use
------------
commercially reasonable efforts to (i) remove such Title Defect or (ii) with the
consent of Purchaser in its reasonable discretion, cause the Title Company to
irrevocably commit to insure over such Title Defect prior to Closing. If Seller
is unable to remove a Title Defect that materially and adversely affects the
operation of the Water Business, Purchaser and Seller shall enter into a written
agreement at Closing obligating Seller to use commercially reasonable efforts to
remedy the Title Defect following Closing, on terms satisfactory to Purchaser in
its reasonable discretion, and obligating Seller to indemnify Purchaser for such
Title Defect subject to the limitations set forth in Sections 10.1(a) and 10.2.
The foregoing provisions shall not affect Purchaser's rights under this
Agreement if such Title Defect constitutes a Seller Material Adverse Effect.
6.18 Approval of Fees and Expenses
-----------------------------------
Purchaser agrees to use its best efforts to obtain from its Members,
within three days after execution of this Agreement, (i) approval of the fees
described in Section 11.1(b) and (ii) approval of and agreement to implement
reasonable arrangements, including assessments against the Members of Purchaser
if necessary, for payment of the Purchaser Expenses incurred through and
including the Closing.
6.19 Tax-Exempt Bonds.
----------------------
Purchaser shall not substantially alter the use of the Purchased
Assets so as to cause (a) interest on any of Seller's existing tax-exempt bonds
to become includible in the gross income of the Seller for purposes of federal
income taxation or (b) the disallowance of any
29
deductions for interest expense payable by Seller to which to which the Seller
would otherwise be entitled. Purchaser shall fully cooperate with issuers of
Seller's tax-exempt bonds and Seller and its counsel in connection with any
audit, investigation or proceeding with respect to the tax-exempt bonds by the
Internal Revenue Service or the SEC.
6.20 Environmental Insurance.
-----------------------------
Purchaser shall obtain prior to the Closing, and shall maintain for a
period of three years following the Closing, insurance coverage with respect to
the Purchased Assets for exposures in respect of Environmental Claims arising
from conditions existing or events occurring prior to the Closing, on terms
reasonably satisfactory to Seller.
ARTICLE VII
PRELIMINARY SETTLEMENT AGREEMENT and
DRAFT TRUCKEE RIVER OPERATING AGREEMENT
---------------------------------------
7.1 Assumption of Obligations
-------------------------------
Purchaser shall assume, perform, fulfill and discharge all
obligations of Seller under the Preliminary Settlement Agreement, including,
without limitation, to enter into negotiations with respect to, and to become a
party to, an operating agreement provided for in Section 205 of the Settlement
Act which is in substantial conformity with the draft contained in Schedule 7.1.
------------
If such an operating agreement is executed by at least the United States,
California, Nevada, the Pyramid Lake Paiute Tribe of Indians and Purchaser,
Purchaser shall use its commercially reasonable efforts to satisfy or cause to
be satisfied all conditions to the effectiveness of such an operating agreement.
7.2 Seller's Responsibility Until Closing
-------------------------------------
Until the Closing, Seller shall use commercially reasonable efforts
to complete a draft operating agreement which is consistent in all material
respects with the TROA, shall inform Purchaser of all material developments with
respect to negotiation of such agreement and such other information relating
thereto as Purchaser may request from time to time, and shall not approve or
execute any agreements relating thereto without the prior written consent of
Purchaser, which shall not be unreasonably withheld.
ARTICLE VIII
CONDITIONS TO CLOSING
---------------------
8.1 Conditions Precedent to Obligations of Purchaser and Seller
-----------------------------------------------------------------
The respective obligations of Purchaser and Seller to consummate and
cause the consummation of the transactions contemplated by this Agreement shall
be subject to the satisfaction (or waiver by the party for whose benefit such
condition exists) at or prior to the Closing Date of each of the following
conditions:
30
(a) No Injunction, etc. No court or governmental authority in the
------------------
United States or any state of the United States shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, non-appealable
judgment, decree, injunction or other order which is in effect on the Closing
Date which has the effect of prohibiting the Purchase or making the Purchase
illegal.
(b) Regulatory Authorizations and Third Party Consents. All consents
--------------------------------------------------
or statutorily required indications of no objection of any Governmental
Authorities set forth on Schedule 8.1 shall have been obtained on terms
reasonably acceptable to Seller or Purchaser, as the case may be.
8.2 Conditions Precedent to Obligation of Seller
--------------------------------------------------
The obligation of Seller to consummate and cause the consummation of
the transactions contemplated by this Agreement shall be subject to the
satisfaction (or waiver by Seller) at or prior to the Closing Date of each of
the following conditions:
(a) Accuracy of Purchaser's Representations and Warranties. The
------------------------------------------------------
representations and warranties of Purchaser contained in this Agreement shall be
true and correct on the date of this Agreement and on the Closing Date as though
made on such Closing Date, except to the extent such representations and
warranties by their terms speak as of an earlier date, in which case they shall
be true and correct as of such date, except to the extent that the failure of
such representations and warranties to be true and correct would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect; and
Seller shall have received a certificate signed by an officer of Purchaser to
such effect.
(b) Covenants of Purchaser. Purchaser shall have complied in all
----------------------
material respects with all covenants contained in this Agreement to be performed
by it prior to the Closing; and Seller shall have received a certificate signed
by an officer of Purchaser to such effect.
8.3 Conditions Precedent to Obligation of Purchaser
----------------------------------------------------
The obligation of Purchaser to consummate and cause the consummation
of the transactions contemplated by this Agreement shall be subject to the
satisfaction (or waiver by Purchaser) at or prior to the Closing Date of each of
the following conditions:
(a) Accuracy of Seller's Representations and Warranties. The
---------------------------------------------------
representations and warranties of Seller contained in this Agreement shall be
true and correct on the date of this Agreement and on the Closing Date as though
made on such Closing Date, except to the extent such representations and
warranties by their terms speak as of an earlier date, in which case they shall
be true and correct as of such date, except to the extent that the failure of
such representations and warranties to be true and correct would not,
individually or in the aggregate, have a Seller Material Adverse Effect; and
Purchaser shall have received a certificate signed by an officer of Seller to
such effect.
31
(b) Covenants of Seller. Seller shall have complied in all material
-------------------
respects with all covenants contained in this Agreement to be performed by it
prior to the Closing including, without limitation, transferring to Purchaser
its rights under the Truckee River Agreement; and Purchaser shall have received
a certificate signed by an officer of Seller to such effect.
ARTICLE IX
CLOSING
9.1 Closing Dates
-------------------
Unless this Agreement shall have been terminated and the transactions
herein shall have been abandoned pursuant to Article XI hereof, the closing of
the transactions contemplated by this Agreement (the "Closing") shall take place
-------
at the offices of Simpson Thacher & Bartlett in New York at 10:00 a.m., New York
City time, and in such other places as are necessary to effect the transactions
to be consummated at the Closing, on the third Business Day after all of the
conditions to the Closing set forth in Article VIII hereof are satisfied or
waived, provided that the Closing will be delayed, if necessary to provide
Purchaser the opportunity to finalize its financing; provided, that the Closing
shall not be delayed for more than 45 days after the conditions set forth in
Section 8.1(b), with respect to the approval of Governmental Authorities, are
satisfied, or such other date, time and place as shall be agreed upon by Seller
and Purchaser (the actual date and time being herein called the "Closing Date").
------------
Notwithstanding the foregoing, the duty of each party to close the transactions
contemplated hereby shall be unconditional upon satisfaction of all the
conditions set forth in Article VIII, even if the Closing is postponed as set
forth above. In the event that the conditions set forth in Section 8.1(b) have
been satisfied except for the consent or approvals in respect of the Hydro
Assets, the Closing shall occur with respect to the Non-Hydro Assets only and
Seller shall transfer the Hydro Assets on the third Business Day after such
consent or approval shall have been obtained.
Notwithstanding the foregoing, each Closing shall for all purposes be
deemed to occur at the close of business in New York City on the Closing Date.
9.2 Purchaser Obligations
---------------------------
At the Closing, Purchaser shall execute, deliver to Seller and/or
file the following in such form and substance (except for clause (a)) as may be
indicated in any applicable schedule hereto, or as are reasonably acceptable to
Seller:
(a) the Purchase Price as provided in Section 3.2 hereof;
(b) the certificate described in Section 8.2(b) hereof;
(c) the assignment and conveyance instruments referred to Section
2.3 and such other assignment and conveyance documents as shall be necessary to
convey the Purchased Assets and consummate the other transactions contemplated
hereby in each jurisdiction; and
32
(d) such other documents and instruments as counsel for Purchaser and
Seller mutually agree to be reasonably necessary to consummate the transactions
described herein.
9.3 Seller Obligations
------------------------
At the Closing, Seller shall execute, deliver to Purchaser and/or
file the following in such form and substance as may be indicated in any
applicable schedule hereto, or as are reasonably acceptable to Purchaser:
(a) the certificate described in Section 8.3(b) hereof;
(b) such instruments of conveyance with respect to the Purchased
Assets and Assumed Liabilities referred to Section 2.3 or as are set forth in
Schedule 9.3 hereto and such other assignment and conveyance documents as shall
- ------------
be necessary to convey the Purchased Assets and consummate the other
transactions contemplated hereby in each jurisdiction; and
(c) such other documents and instruments as counsel for Purchaser and
Seller mutually agree to be reasonably necessary to consummate the transactions
described herein.
ARTICLE X
INDEMNIFICATION
---------------
10.1 Indemnification
---------------------
(a) Following the Closing and subject to the terms and conditions of
this Article X, Seller shall indemnify, defend and hold harmless Purchaser and
its Affiliates and their respective officers, directors, employees,
stockholders, assigns and successors (each, a "Purchaser Indemnified Party")
---------------------------
from and against, and shall reimburse each Purchaser Indemnified Party for, all
actual losses (but not lost profits or consequential, punitive, special or
indirect damages, except to the extent awarded by a court of competent
jurisdiction in respect of a third party claim), damages, liabilities, costs and
expenses, including interest, penalties, court costs and reasonable attorneys'
fees and expenses, imposed upon or incurred by such Purchaser Indemnified Party
("Purchaser Losses"), with respect to (i) any misrepresentation or breach of
----------------
warranty by Seller, (ii) any breach by Seller of any covenant or agreement made
by Seller herein, (iii) any Excluded Liabilities or (iv) any failure of Seller
to obtain third party consents related to the transfer of the Purchased Assets,
it being understood that such Purchaser Losses shall be calculated net of (x)
any Tax benefit realized by such Purchaser Indemnified Party as set forth more
fully in Section 10.3(b), and (y) any recovery available from any third party,
including insurance proceeds (including proceeds from the insurance policy
related to environmental exposures that Purchaser has agreed to purchase and
maintain pursuant to Section 6.20), and shall not include, (z) any liability
reflected on the Closing Date Statement (as adjusted for any Disputed Item(s)).
Notwithstanding the inclusion of any liability in the definition of Assumed
Liabilities, the Purchaser shall be entitled to enforce its indemnification
rights hereunder in respect of any misrepresentation or breach of warranty by
Seller regarding such liability, subject to the provisions set forth in this
Article X.
33
(b) Following the Closing and subject to the terms and conditions
provided in this Article X, Purchaser shall indemnify, defend and hold harmless
Seller and its Affiliates and their respective officers, directors, employees,
stockholders, assigns and successors (each, a "Seller Indemnified Party") from
------------------------
and against, and shall reimburse each Seller Indemnified Party for, all actual
losses (but not lost profits or consequential, punitive, special or indirect
damages, except to the extent awarded by a court of competent jurisdiction in
respect of a third party claim), damages, liabilities, costs and expenses,
including interest, penalties, court costs and reasonable attorneys' fees and
expenses, imposed upon or incurred by such Seller Indemnified Party ("Seller
------
Losses"), with respect to (i) any misrepresentation or breach of warranty by
- ------
Purchaser, (ii) any breach of any covenant or agreement made by Purchaser
herein, (iii) any of the Assumed Liabilities or (iv) the operation of the Water
Business following the Closing, it being understood that such Seller Losses
shall be calculated net of (x) any Tax benefit realized by any Seller
Indemnified Party and (y) any recovery available from any third party, including
insurance proceeds.
10.2 Certain Limitations
-------------------------
(a) Notwithstanding anything contained herein to the contrary, the
maximum aggregate liability of Seller to all Purchaser Indemnified Parties taken
together for all Purchaser Losses under Section 10.1(a) by Purchaser Indemnified
Parties shall be limited to a maximum of 33?% of the Purchase Price.
(b) Notwithstanding anything contained herein to the contrary, Seller
shall not be obligated to make any indemnification payment under Sections
10.1(a)(i) or 10.1(a)(iv) unless and until the aggregate Purchaser Losses
sustained by Purchaser Indemnified Parties (calculated as specified in Section
10.2(a)) for all claims that meet or exceed $100,000 (the "Minimum Claim
-------------
Threshold") exceed $5,000,000 (the "Deductible"), and then any indemnification
- --------- ----------
with respect to Purchaser Losses shall be made by Seller only to the extent that
such Purchaser Losses meeting the Minimum Claim Threshold exceed the Deductible;
provided that once the Deductible is satisfied, indemnification claims meeting
the Minimum Claim Threshold shall be made by Seller for the full amount of each
such claim.
(c) Notwithstanding anything contained herein to the contrary,
Purchaser shall not be obligated to make any indemnification payment under
Section 10.1(b)(i) unless and until the aggregate Seller Losses sustained by
Seller Indemnified Parties (calculated as specified in Section 10.2(a)) for all
claims that meet or exceed $100,000 (the "Minimum Claim Threshold") exceed
-----------------------
$5,000,000 (the "Deductible"), and then any indemnification with respect to
----------
Seller Losses shall be made by Purchaser only to the extent that such Seller
Losses meeting the Minimum Claim Threshold exceed the Deductible; provided that
once the Deductible is satisfied, indemnification claims meeting the Minimum
Claim Threshold shall be made by Purchaser for the full amount of each such
claim.
(d) The representations and warranties of Seller contained in this
Agreement shall survive for 18 months following the Closing Date or, in the case
of the Hydro Assets, for 18 months following the date of transfer of such Hydro
Assets; provided, however, that the representations and warranties set forth in
Sections 4.6(a), 4.6(c) and 4.11 and the representations and warranties with
respect to title contained in 4.6(b) shall survive until the
34
expiration of the statute of limitations relating to the subject matter of such
representations and warranties and that the representations and warranties set
forth in Section 4.14 shall survive until the third anniversary of the Closing
Date.
(e) The remedies provided for in this Article X constitute the sole
and exclusive remedy for claims for Purchaser Losses or Seller Losses caused by
or arising out of breach of warranty or inaccurate or erroneous representation.
Such claims may be made only pursuant to Article X and only by written notice
within the survival period of such representation and warranty provided for in
Section 10.2(d).
(f) The obligations to indemnify and hold harmless a party hereto
pursuant to this Article X shall terminate when the applicable representation
and warranty terminates pursuant to Section 10.2(d); provided, however, that
-------- -------
such obligations to indemnify and hold harmless shall not terminate with respect
to any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis of such claim) to the
indemnifying person.
10.3 Procedures for Third-Party Claims
---------------------------------------
(a) Promptly after the receipt by any Indemnified Party of a notice
of any claim, action, suit or proceeding by any third party that may be subject
to indemnification hereunder, such Indemnified Party shall give written notice
of such claim to the indemnifying party hereunder (the "Indemnifying Party"),
------------------
stating the nature and basis of the claim and the amount thereof, to the extent
known, along with copies of the relevant documents evidencing the claim and the
basis for indemnification sought. Failure of the Indemnified Party to give such
notice shall not relieve the Indemnifying Party from liability on account of
this indemnification, except if and to the extent that the Indemnifying Party is
actually prejudiced thereby. The Indemnifying Party shall have the right to
assume the defense of the Indemnified Party against the third party claim. So
long as the Indemnifying Party has assumed the defense of the third party claim
in accordance herewith and notified the Indemnified Party in writing thereof,
(i) the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the third party claim, it being
understood the Indemnifying Party shall pay all costs and expenses of counsel
for the Indemnified Party for all periods prior to such time as the Indemnifying
Party has notified the Indemnified Party that it has assumed the defense of such
third party claim, (ii) the Indemnified Party shall not file any papers or
consent to the entry of any judgment or enter into any settlement with respect
to the third party claim without prior written consent of the Indemnifying Party
(not to be unreasonably withheld or delayed) and (iii) the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the third party claim without the prior written consent of the
Indemnified Party (not to be unreasonably withheld or delayed). The parties
shall use commercially reasonable efforts to minimize Losses from claims by
third parties and shall act in good faith in responding to, defending against,
settling or otherwise dealing with such claims. The parties shall also cooperate
in any such defense and give each other reasonable access to all information
relevant thereto. Whether or not the Indemnifying Party shall have assumed the
defense, such party shall not be obligated to indemnify the Indemnified Party
hereunder for any settlement entered into without the Indemnifying Party's prior
written consent, which consent shall not be unreasonably withheld or delayed.
35
(b) Treatment of Indemnification Payments. Any payment made pursuant
to the indemnification obligations arising under this Agreement shall be treated
as an adjustment to the Purchase Price. Any indemnity payment under this
Agreement shall be decreased by any amounts actually recovered by the
Indemnified Party under insurance policies with respect to such Loss. If the
amount of any Loss for which indemnification is provided under this Agreement
(an "Indemnity Claim") gives rise to a currently realizable Tax Benefit (as
---------------
defined below) to the party making the claim, the indemnity payment shall be
reduced by the amount of the Tax Benefit available to the party making the
claim. To the extent such Indemnity Claim does not give rise to a currently
realizable Tax Benefit to the party making the claim, if the amount with respect
to which any Indemnity Claim is made gives rise to a subsequently realized Tax
Benefit to the party that made the claim, such party shall refund to the
Indemnifying Party the amount of such Tax Benefit when, as and if realized. For
purposes of this Section 10.3(b), a "Tax Benefit" means an amount by which the
-----------
Tax liability of the party (or group of corporations including the party) is
reduced (including, without limitation, by deduction, reduction of income by
virtue of increased tax basis or otherwise, entitlement to refund, credit or
otherwise) plus any related interest received from the relevant taxing
authority. Where a party has other losses, deductions, credits or items
available to it ("Other Tax Items"), the determination of any Tax Benefit shall
---------------
be calculated by utilizing proportionately the Tax Benefits arising from an
Indemnity Claim and any Other Tax Items. In the event that there should be a
determination disallowing the Tax Benefit, the indemnifying party shall be
liable to refund to the Indemnified Party the amount of any related reduction
previously allowed or payments previously made to the Indemnifying Party
pursuant to this Section 10.3(b).
10.4 Certain Claims Procedures
-------------------------------
The Indemnified Party shall notify the Indemnifying Party promptly of
its discovery of any matter giving rise to a claim of indemnity pursuant hereto.
The Indemnified Party shall cooperate and assist the Indemnifying Party in
determining the validity of any claim for indemnity by the Indemnified Party and
in otherwise resolving such matters. Such assistance and cooperation will
include providing access to and copies of information, records and documents
relating to such matters, furnishing employees to assist in the investigation,
defense and resolution of such matters and providing legal and business
assistance with respect to such matters.
10.5 Remedies Exclusive
------------------------
The remedies set forth in this Article X shall be exclusive and in
lieu of any other remedies that may be available to the Indemnified Parties
under any other agreement or pursuant to any statutory or common law with
respect to any Losses of any kind or nature incurred directly or indirectly
resulting from or arising out of any of this Agreement, the transactions
contemplated hereby, the Water Business, the Purchased Assets, or the Assumed
Liabilities.
10.6 Mitigation
----------------
Purchaser and Seller shall cooperate with each other with respect to
resolving any claim or liability with respect to which one party is obligated to
indemnify the other party hereunder, including by making commercially reasonable
efforts to mitigate or resolve any such
36
claim or liability. In the event that Purchaser and Seller shall fail to make
such commercially reasonable efforts to mitigate or resolve any claim or
liability, then notwithstanding anything else to the contrary contained herein,
the other party shall not be required to indemnify any person for any loss,
liability, claim, damage or expense that could reasonably be expected to have
been avoided if Purchaser or Seller, as the case may be, had made such efforts.
ARTICLE XI
TERMINATION
-----------
11.1 Termination Events
------------------------
(a) Without prejudice to other remedies which may be available to the
parties by law or under this Agreement, this Agreement may be terminated and the
transactions contemplated herein may be abandoned:
(i) by mutual consent of the parties hereto;
(ii) by any party by notice to the other party if the
Closing shall not have been consummated by June 30, 2001 (or such later
date in order to provide the 45 day financing period referred to in Section
9.1), provided (A) that if all conditions to the Closing other than those
set forth in Section 8.1(b) shall have been satisfied, such termination
date shall be automatically extended until December 31, 2001 (or such later
date in order to provide the 45 day financing period referred to in Section
9.1) and (B) that the right to terminate this Agreement under this clause
(ii) shall not be available (x) to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date or (y) in the event
that the Closing shall not have occurred as a result of a failure of any
representation to be true and correct, the terminating party shall not have
the right to terminate this Agreement if such party knew of such breach
prior to the date of this Agreement; and
(iii) by either party, if a final order, decree or ruling
enjoining or otherwise prohibiting any of the transactions contemplated by
this Agreement has been issued by any federal or state court in the United
States (unless such order, decree or ruling has been withdrawn, reversed or
otherwise made inapplicable) if the failure to consummate such prohibited
transaction (i) could not be remedied in accordance with Section 2.4 and
(ii) would have a material adverse effect on the business, operations,
assets or financial condition of the Water Business taken as a whole,
following the Closing Date, provided that the party seeking to terminate
this Agreement under this clause (iii) is not then in material breach of
this Agreement and provided, further, that the right to terminate this
Agreement under this clause (iii) shall not be available to any party who
shall not have used commercially reasonable efforts (including in
connection with the obligations specified in Section 6.3) to avoid the
issuance of such order, decree or ruling.
37
(b) If the Closing does not occur due to Purchaser's failure to
satisfy the conditions set forth in Sections 8.2(a) or 8.2(b), Purchaser shall
pay Seller $7,500,000.
(c) If the approvals set forth in Section 6.18 is not received within
the period set forth in Section 6.18, Seller shall have the right to terminate
this Agreement.
11.2 Effect of Termination
---------------------------
In the event of any termination of this Agreement as provided in
Section 6.13(d) or Section 11.1 above, this Agreement shall forthwith become
wholly void and of no further force and effect and there shall be no liability
on the part of Purchaser or Seller, except that (a) the obligations of Purchaser
and Seller under Sections 6.2(c) (including the survival of the Confidentiality
Agreements) and 6.4, Article XI and Section 12.6 of this Agreement shall remain
in full force and effect and (ii) such termination shall not relieve either
party of any liability for any breach of any representation, warranty, covenant
or agreement contained in this Agreement.
ARTICLE XII
MISCELLANEOUS AGREEMENTS OF THE PARTIES
---------------------------------------
12.1 Notices
-------------
All communications provided for hereunder shall be in writing and
shall be deemed to be given when delivered in person or by private courier with
receipt, when telefaxed and received, or seven days after being deposited in the
United States mail, first-class, registered or certified, return receipt
requested, with postage paid and,
If to Purchaser: Truckee Meadows Water Authority
c/o City of Sparks
431 Prater Way
Sparks, Nevada 89432
Attention: Mr. Bill Isaeff
Fax: (775) 353-2489
with a copy to: Swendseid & Stern
Bank of America Building
50 West Liberty Street, Suite 660
Reno, Nevada 89501
Attention: John O. Swendseid, Esq.
Fax: (775) 323-2339
38
If to Seller: Sierra Pacific Power Company
P.O. Box 30150
6100 Neil Road
Reno, Nevada 89511
Attention: General Counsel
Fax: (775) 834-4098
with a copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Alan G. Schwartz
Fax: (212) 455-2502
or to such other address as any such party shall designate by written notice to
the other parties hereto.
12.2 Bulk Transfers
--------------------
Purchaser waives compliance with the provisions of all applicable
laws relating to bulk transfers in connection with the transfer of the Purchased
Assets.
12.3 Severability
------------------
If any provision of this Agreement shall be declared by any court of
competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall remain in full
force and effect, and Seller and Purchaser shall negotiate in good faith to
replace such illegal, void or unenforceable provision with a provision that
corresponds as closely as possible to the intentions of the parties as expressed
by such illegal, void or unenforceable provision.
12.4 Further Assurances; Further Cooperation
---------------------------------------------
Subject to the terms and conditions hereof, each of the parties
hereto agrees to use commercially reasonable efforts to execute and deliver, or
cause to be executed and delivered, all documents and to take, or cause to be
taken, all actions that may be reasonably necessary or appropriate, in the
reasonable opinion of counsel for Seller and Purchaser, to effectuate the
provisions of this Agreement.
12.5 Counterparts
------------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section 12.5,
provided that receipt of copies of such counterparts is confirmed.
- --------
39
12.6 Expenses
--------------
Whether or not the Closing occurs, Seller and Purchaser shall each
pay their respective expenses (such as legal, investment banker and accounting
fees) incurred in connection with this Agreement and the transactions
contemplated hereby; provided, however, that if the Seller terminates this
Agreement as a result of any term or condition imposed by the PUC relating to
the use of proceeds from the transactions contemplated by this Agreement, Seller
gshall pay upon demand by Purchaser all of Purchaser's reasonable, documented
out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement up to an aggregate of $5,000,000
(including 50% of staff salaries allocable to the transactions contemplated by
this Agreement up to a maximum of $500,000); provided, further, however, that
Seller shall not be obligated to pay Purchaser such out-of-pocket expenses
unless Purchaser has obtained the approvals described in Section 6.18.
12.7 Non-Assignability
-----------------------
This Agreement shall not be assigned by either party hereto without
the prior written consent of the other party, and any attempted assignment,
without such consent, shall be null and void; provided, however, that no such
-------- -------
assignment shall release Purchaser from any of its liabilities or obligations
hereunder.
12.8 Amendment; Waiver
-----------------------
This Agreement may be amended, supplemented or otherwise modified
only by a written instrument executed by the parties hereto. No waiver by either
party of any of the provisions hereof shall be effective unless explicitly set
forth in writing and executed by the party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants, or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement and in
connection with each Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
12.9 Specific Performance
--------------------------
The parties hereto agree that irreparable damage would occur in the
event any provision of this Agreement and the Exhibits hereto was not performed
in accordance with the terms hereof and that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in addition to any other
remedy to which they are entitled at law or in equity.
12.10 Third Parties
-------------------
This Agreement does not create any rights, claims or benefits inuring
to any person that is not a party hereto nor create or establish any third party
beneficiary hereto.
40
12.11 Governing Law
-------------------
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Nevada, except for the internal matters of any
corporation, partnership or similar entity which shall be governed by the laws
of the jurisdictions of incorporation of such corporation, partnership or
similar entity.
12.12 Consent to Jurisdiction; Waiver of Jury Trial
---------------------------------------------------
Each party hereto irrevocably submits to the exclusive jurisdiction
of the United States District Court for the District of Nevada, or if such court
does not have jurisdiction, the trial courts of the State of Nevada, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the parties hereto, further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth in Section 12.1
shall be effective service of process for any action, suit or proceeding in
Nevada with respect to any matters to which it has submitted to jurisdiction as
set forth above in the immediately preceding sentence. Each of the parties
hereto, irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (a) the United States District Court for the
District of Nevada or (b) the trial courts of the State of Nevada, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum. The parties hereto hereby
irrevocably and unconditionally waive trial by jury in any legal action or
proceeding relating to this Agreement or any other agreement entered into in
connection therewith and for any counterclaim with respect thereto.
12.13 Interpretation; Absence of Presumption
--------------------------------------------
(a) This agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
(b) Whenever the words "include", "including" or "includes" appear in
this Agreement, they shall be read to be followed by the words "without
limitation" or words having similar import.
12.14 Entire Agreement
----------------------
This Agreement, Annex A, the Schedules, the Exhibits hereto and the
Confidentiality Agreement set forth the entire understanding of the parties
hereto with respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties or their
respective Subsidiaries other than those set forth or referred to herein.
41
12.15 Section Headings; Table of Contents
-----------------------------------
The section headings contained in this Agreement and the Table of
Contents to this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
12.16 Schedules
---------------
Disclosures included in any schedule to this Agreement shall be
considered to be made for purposes of all other schedules to this Agreement
referred to in such schedule. Inclusion of any matter or item in any schedule to
this Agreement does not imply that such matter or item would, under the
provisions of this Agreement, have to be included in any schedule to this
Agreement or that such matter or term is otherwise material. For purposes of
determining any liability of Seller following Closing for misrepresentation or
breach of warranty under this Agreement, unless Purchaser objects as provided in
the next succeeding sentence the schedules delivered by Seller on the date of
this Agreement shall be deemed to include such other information as may be set
forth in any written amendment or supplement to such schedules delivered by
Seller to Purchaser and its counsel prior to the Closing (including any
supplement to such schedules which adds an additional schedule to, and a
corresponding reference thereto in, this Agreement) and identified in writing as
an amendment or supplement to the schedules. The Purchaser shall have ten days
to object to the amendment or supplement and if Purchaser submits an objection
in writing to Sellers, then the amendment or supplement shall not affect
Purchaser's rights under Section 8.3(a) or Purchaser's indemnification rights
under this Agreement.
IN WITNESS WHEREOF, the parties have caused this Asset Purchase Agreement
to be duly executed as of the date first above written.
SIERRA PACIFIC POWER COMPANY
By:___________________________
Name:
Title:
TRUCKEE MEADOWS WATER AUTHORITY
By:___________________________
Name:
Title:
ANNEX A
"AAA" has the meaning set forth in Section 3.4(b).
---
"Affiliate" of a person means a person that directly or indirectly,
---------
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person.
"Agreement" has the meaning set forth in the Recitals to this
---------
Agreement.
"Antitrust Regulations" has the meaning set forth in Section 4.3.
---------------------
"Arbitrator" has the meaning set forth in Section 3.4(b).
----------
"Assigned MPAT Employees" means management, professional,
-----------------------
administrative and technical employees of Seller who elected to be assigned to
the Water Business.
"Assumed Liabilities" has the meaning set forth in Section 2.2.
-------------------
"Balance Sheet Date" has the meaning set forth in Section 4.4.
------------------
"Benefit Plans of Purchaser" has the meaning set forth in Section
--------------------------
6.6(c).
"Books and Records" has the meaning set forth in Section 6.5(a).
-----------------
"Business Day" means any day other than a Saturday, a Sunday or a day
------------
on which banks in New York City are permitted or required by law to close.
"CERCLA" shall mean the Comprehensive Environmental Response,
------
Compensation and Liability Act, 42 U.S.C. ss.ss.9601 et seq., as amended, and
all regulations promulgated thereunder, as in effect on the date of this
Agreement.
"Closing" has the meaning set forth in Section 9.1.
-------
"Closing Date" has the meaning set forth in Section 9.1.
------------
"Closing Date Assets" means the Purchased Assets on the Closing Date as
-------------------
determined in a manner consistent with the accounting practices as set forth on
the Financial Statements.
"Closing Date Liabilities" means the Assumed Liabilities as determined
------------------------
in a manner consistent with the accounting practices as set forth on the
Financial Statements.
"Closing Date Statement" means the final statement of Closing Date
----------------------
Assets and Closing Date Liabilities.
"COBRA" has the meaning set forth in Section 6.6(g).
-----
"Code" means the Internal Revenue Code of 1986, as amended.
----
A-2
"commercially reasonable efforts" when used in connection with this
-------------------------------
Agreement with regard to either party shall mean the reasonable undertakings of
a corporate entity engaged in a business similar to the Water Business.
"Competing Business" has the meaning set forth in Section 6.8.
------------------
"Confidentiality Agreements" has the meaning set forth in Section
--------------------------
6.2(c).
"Consent" has the meaning set forth in Section 4.3.
-------
"Contracts" has the meaning set forth in Section 4.7(a).
---------
"Conveyed Property" has the meaning set forth in Section 4.6(d).
-----------------
"Covered Schedules" has the meaning set forth in Section 4.7(a).
-----------------
"D&T" has the meaning set forth in Section 3.4(b).
---
"Damages" has the meaning set forth in Section 6.6(i).
-------
"Deductible" has the meaning set forth in Section 10.2(b).
----------
"Deficiency" means the amount, if any, by which the Net Worth Amount is
----------
less than the Signing Net Worth Amount.
"Disclosed Contracts" has the meaning set forth in Section 4.7(a).
-------------------
"Disputed Item(s)" has the meaning set forth in Section 3.4(a).
----------------
"dollars" or "$", when used in this Agreement or any other Transaction
------- -
Document, means United States dollars unless otherwise stated.
"Due Diligence Period" has the meaning set forth in Section 6.2(b).
--------------------
"Environmental Claims" has the meaning set forth in Section 4.14.
--------------------
"Environmental Laws" has the meaning set forth in Section 4.14.
------------------
"ERISA" has the meaning set forth in Section 4.12(a).
-----
"Excess" means the amount, if any, by which the Net Worth Amount is
------
more than the Signing Net Worth Amount.
"Excluded Assets" means (a) Seller's corporate books and records of
---------------
internal corporate proceedings, tax records, work papers and books and records
relating to the Water Business and the Purchased Assets that Seller is required
by law to retain as described on Exhibit C, provided, however, that Seller shall
provide Purchaser with a copy of all such materials which relate primarily to
the Water Business; (b) all cash and cash equivalents, bank deposits and
accounts
A-3
receivable except in the meter installment fund (including receivables relating
to earned but unbilled revenues, but excluding amounts due from developers for
distribution facilities); (c) all accounting records and internal reports
relating to the business activities of Seller, provided, however, that Seller
shall provide Purchaser with a copy of all such records and reports which relate
primarily to the Water Business and provided, further, however, that any
accounting records or internal reports which solely relate to the Water Business
and accounting information including customer names, addresses, size of service,
etc., needed for billing Water Business Customers shall constitute Purchased
Assets; (d) other than the Water Business Intellectual Property, all software,
software systems, databases and database systems, to the extent they exist,
whether owned, leased or licensed by Seller, which are not used primarily with
respect to the Water Business; (e) any prepaid property and casualty or
liability insurance policies relating to the Water Business or the Purchased
Assets and any rights, claims or chooses in action under such insurance
policies; (f) any prepaid income, sales, payroll or other Taxes and any rights
to refunds of any Tax payments in respect of the Water Business or the Purchased
Assets relating to any period ending on or prior to the Closing Date; provided,
--------
that any credit or refund resulting from an overpayment of Taxes shall be
prorated based upon the method employed in the definition of Excluded
Liabilities; (g) the names "Sierra Pacific Resources," "Sierra Pacific Power
Company," "Westpac" and "Sierra Pacific" or any related or similar trade names,
trademarks, service marks or logos; (h) electric distribution, substation and
communication facilities and related support equipment except as described in
Schedule 4.6; (i) except to the extent specifically required by law, the
- ------------
personnel records relating to any employees of Seller provided, however, that
Seller shall provide Purchaser with a copy of all such records and (j) the items
set forth on Exhibit C.
"Excluded Liabilities" means (a) any liability of Seller for legal,
--------------------
accounting or broker's fees incurred in connection with the negotiation of this
Agreement or the consummation of the transactions contemplated hereby; (b)
liabilities in respect of any Taxes for periods or portions thereof ending on or
prior to the Closing Date arising out of the Purchased Assets; provided, that
--------
with respect to any Tax that is imposed on a periodic basis and is payable for a
taxable period that begins before and ends after the Closing Date, the portion
of such Taxes which is payable for the portion of such taxable period ending on
such Closing Date shall be the amount of such Tax for the entire period (or, in
the case of such Taxes determined on an arrears basis, the amount of such Tax
for the preceding period) multiplied by a fraction, the numerator of which is
the number of days in the portion of such taxable period ending on such Closing
Date and the denominator of which is the number of days in the entire taxable
period; (c) liabilities for accounts payable; (d) compensation expenses related
to stay bonuses or any pre-closing employee-related liabilities except as set
forth in Section 6.6; or (e) indebtedness for borrowed money or guarantees or
other obligations in respect of any other Person.
"Farad Facility" has the meaning set forth in Section 2.5.
--------------
"Financial Statements" has the meaning set forth in Section 4.4(a).
--------------------
"GAAP" means generally accepted accounting principles as in effect from
----
time to time in the United States, consistently applied.
A-4
"Governmental Authority" has the meaning set forth in Section 4.3.
----------------------
"Hazardous Materials" has the meaning set forth in Section 4.14.
-------------------
"Health Agency" has the meaning set forth in Section 4.3.
-------------
"Hydro Assets" means the assets comprising the hydroelectric power
------------
generating business of Seller including diversion structures, flumes, canals,
penstocks, turbine-generators, buildings and land associated with these
facilities, and Seller's Water Rights under the 1915 Truckee River General
Electric Decree as recognized and confirmed under Claim number 4 of the Orr
Ditch Decree and as affected by the Truckee River Agreement and Water Rights
Claims, numbers 5 through 9, under the Orr Ditch Decree and Water Rights for
hydroelectric generation associated with Donner and Independence Lakes.
"Hydro Assets Purchase Price" has the meaning set forth in Section 3.2.
---------------------------
"IBEW 1245 Employees" has the meaning set forth in Section 6.6(e).
-------------------
"Indemnified Party" means a Purchaser Indemnified Party or a Seller
-----------------
Indemnified Party, as the case may be.
"Indemnifying Party" has the meaning set forth in Section 10.3(a).
------------------
"Indemnity Claim" has the meaning set forth in Section 10.3(b).
---------------
"Infringement" has the meaning set forth in Section 4.9.
------------
"Intellectual Property" has the meaning set forth in Section 4.9.
---------------------
"Interim Services Agreement" has the meaning set forth in Section 6.7.
--------------------------
"Interim Storage Agreement" means the Interim Water Storage Agreement,
-------------------------
dated June 29, 1994, among Seller, the Bureau of Reclamation of the Department
of the Interior, WCWCD and the Pyramid Lake Tribe.
"IRS" means the United States Internal Revenue Service.
---
"JPA Agreement" means the Cooperative Agreement, entered into on or
-------------
about December 15, 2000, among the City of Reno, the City of Sparks and the
County of Washoe.
"the knowledge of" or "the best knowledge of" a party hereto means,
---------------- ---------------------
with respect to Seller, the actual knowledge of the individuals listed on Part 1
of Exhibit B hereto, and with respect to Purchaser, the actual knowledge of the
individuals listed on Part 2 of Exhibit B hereto.
"Law" means any. applicable common law and any statute, ordinance, code or
---
other law, rule, regulation, order, technical or other written standard,
requirement, policy or procedure enacted, adopted, promulgated, applied or
followed by any Governmental Authority, including
A-5
any judgment, writ, order, injunction, award and decree and all judicial
decisions applying common law or interpreting any other Law, in each case, as
amended.
"Leased Real Property" has the meaning set forth in Section 4.6(c).
--------------------
"Leased Water Rights" has the meaning set forth in Section 4.6(d).
-------------------
"Lien" any security interest, security agreement, financing statement
----
filed with any Governmental Authority, conditional sale or other title retention
agreement, any lease, consignment or bailment given for purposes of security,
any mortgage, lien, indenture, pledge, option, claim, charge, encumbrance,
adverse interest, constructive trust or other trust, claim, attachment,
exception to, defect in or other condition affecting title or other ownership
interest (including, but not limited to, reservations, rights of entry,
possibilities of reverter, encroachments, protrusions, easements, rights-of-way,
rights of first refusal, restrictive covenants, leases and licenses) of any
kind, which constitutes an interest in or claim against property, whether
arising pursuant to any Law, Contract or otherwise.
"Losses" means Purchaser Losses or Seller Losses, as the case may be.
------
"Members" has the meaning set forth in Section 5.4.
-------
"Minimum Claim Threshold" has the meaning set forth in Section 10.2(b).
-----------------------
"NDEP" has the meaning set forth in Schedule 4.14(a).
----
"Net Worth Amount" means the Closing Date Assets less the Closing Date
----------------
Liabilities as set forth on the Closing Date Statement.
"New IBEW Contract" has the meaning set forth in Section 6.6(e).
-----------------
"Non-Hydro Assets" means the Purchased Assets other than the Hydro
----------------
Assets.
"Off-Site Location" means any real property other than the Real
-----------------
Property.
"Order" means any judgment, rule, writ, injunction, order or decree,
-----
whether federal, state, local or foreign.
"Orr Ditch Decree" means the decree, dated January 1, 1944, concerning
----------------
certain Water Rights of the Seller as set forth on Schedule 4.6(d).
"Other Real Property Interests" has the meaning set forth in Section
-----------------------------
4.6(b).
"Other Tax Items" has the meaning set forth in 10.3(b).
---------------
"Owned Real Property" has the meaning set forth in Section 4.6(b).
-------------------
"Owned Water Rights" has the meaning set forth in Section 4.6(c).
------------------
A-6
"Permitted Lien" means any (a) Lien securing Taxes, assessments and
--------------
governmental charges not yet due and payable, (b) zoning law or ordinance or any
similar Law, (c) right reserved to any Governmental Authority to regulate the
affected property, (d) as to Owned Real Property and Other Real Property
Interests, any Lien not securing indebtedness or arising out of the obligation
to pay money that does not individually or in the aggregate interfere with the
right or ability to own, use or operate the Owned Real Property or Other Real
Property Interests as they are being used or operated or materially diminish the
value of such Owned Real Property or Other Real Property Interests, (e) in the
case of Owned Real Property and Leased Real Property, any lease or sublease by
Seller in favor of a third party that is disclosed in the Schedules to this
Agreement, and (f) in the case of Leased Real Property, (i) the rights of any
lessor and (ii) any Lien granted by any lessor of Leased Real Property; provided
that "Permitted Lien" will not include any Lien securing a debt or claim (other
than inchoate materialmen's, mechanics', workmen's, repairmen's or other like
Liens arising in the ordinary course of business or any Lien described in clause
(c) or (e) above) or any Lien which could prevent or materially impair the
conduct of the Water Business as it is currently being conducted.
"Person" means an individual, corporation, partnership, association,
------
trust, incorporated organization, other entity or group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934).
"PR" has the meaning set forth in Section 3.4(b).
--
"Preliminary Settlement Agreement" means an agreement entered into
--------------------------------
between Seller and the Pyramid Lake Paiute Tribe of Indians, May 29, 1989, and
ratified by the United States.
"PUC" has the meaning set forth in Section 4.3.
---
"PUHCA" has the meaning set forth in Schedule 4.3.
-----
"Purchase" means the purchase by Purchaser of the Purchased Assets upon
--------
the terms and subject to the conditions of this Agreement.
"Purchase Price" has the meaning set forth in Section 3.1.
--------------
"Purchase Price Adjustment Amount" has the meaning set forth in Section
--------------------------------
3.4(c).
"Purchased Assets" means the assets set forth on Exhibit A and all
----------------
other rights and assets owned, leased or used by Seller in the operation of the
Water Business, other than the Excluded Assets.
"Purchaser" has the meaning set forth in the Recitals to this
---------
Agreement.
"Purchaser Debt" has the meaning set forth in Section 6.13(a).
--------------
"Purchaser Expenses" has the meaning set forth in Section 5.4.
------------------
"Purchaser Indemnified Party" has the meaning set forth in Section
---------------------------
10.1(a).
A-7
"Purchaser Losses" has the meaning set forth in Section 10.1(a).
----------------
"Purchaser Material Adverse Effect" has the meaning set forth in
---------------------------------
Section 5.3.
"Purchaser Plans" has the meaning set forth in Section 6.6(e).
---------------
"Pyramid Lake Tribe" means the Pyramid Lake Paiute Tribe of Indians.
------------------
"Qualifying Offer of Employment" has the meaning set forth in Section
------------------------------
6.6(b).
"Real Property" has the meaning set forth in Section 4.6(b).
-------------
"Release" has the meaning set forth in Section 4.14.
-------
"Remediation" means an action of any kind to address the Release of
-----------
Hazardous Materials or the presence of Hazardous Materials at the Purchased
Assets or an Off-Site Location, including any or all of the following activities
to the extent they relate to or arise from the presence of a Hazardous Material
at the Purchased Assets or an Off-Site Location: (i) monitoring, investigation,
assessment, treatment, cleanup, containment, removal, mitigation, response or
restoration work; (ii) obtaining any permits, consents, approvals or
authorizations of any Governmental Authority necessary to conduct any such
activity; (iii) preparing and implementing any plans or studies for any such
activity; (iv) obtaining written notice from a Governmental Authority with
jurisdiction over the Purchased Assets or an Off-Site Location under
Environmental Laws that no material additional work is required by such
Governmental Authority; (v) the use, implementation, application, installation,
operation or maintenance of removal actions on the Purchased Assets or an
Off-Site Location, remedial technologies applied to the surface or subsurface
soils, excavation and treatment or disposal of soils at an Off-Site Location,
systems for long-term treatment of surface water or ground water, engineering
controls or institutional controls; and (vi) any other activities reasonably
determined by a party to be necessary or appropriate or required under
Environmental Laws to address the presence or Release of Hazardous Materials at
the Purchased Assets or an Off-Site Location.
"SEC" means the Securities and Exchange Commission.
---
"Seller" has the meaning set forth in the Recitals to this Agreement.
------
"Seller Corporate Policies" has the meaning set forth in Section 6.11.
-------------------------
"Seller Indemnified Party" has the meaning set forth in Section
------------------------
10.1(b).
"Seller Losses" has the meaning set forth in Section 10.1(b).
-------------
"Seller Material Adverse Effect" means any effect on the financial
------------------------------
condition or results of operations of the Water Business, taken as a whole, that
is so severe as to substantially frustrate the benefits of the Purchase to
Purchaser, including, without limitation, (a) any material damage to the Chalk
Bluff or Glendale water treatment plants which render either plant inoperable
for a period in excess of seven (7) days (other than as a result of changes in
general economic
A-8
conditions, or of changes affecting industries in which the Water Business
operates) and (b) an uninsurable Title Defect sufficiently material as to deny
Purchaser the use of, or an inability to transfer, the Chalk Bluff or Glendale
water treatment plants or the Fleish, Verdi or Washoe Hydro Facilities.
"Seller Plans" has the meaning set forth in Section 4.12(a).
------------
"Settlement Act" means Public Law 101-618.
--------------
"Signing Net Worth Amount" means the difference as of September 30,
------------------------
2000 between Purchased Assets and Assumed Liabilities (each as determined using
GAAP as set forth on Schedule 4.4). Signing Net Worth is approximately $264
million.
"SPPC" means Sierra Pacific Power Company.
----
"Subsidiary" or "Subsidiaries" of Purchaser, Seller or any other person
---------- ------------
means any corporation, partnership or other legal entity of which Purchaser,
Seller or such other person, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly, more than 50%
of the stock or other equity interests the holder of which is generally entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
"Tax" or "Taxes" means all federal, state, local and foreign income,
--- -----
profits, franchise, sales, use, occupation, property, ad valorem, transfer,
excise, payroll, withholding, employment, estimated and other taxes of any
nature, including interest, penalties and other additions to such taxes.
"Tax Benefit" has the meaning set forth in 10.3(b).
-----------
"Tax Return" means any return, declaration, report and information
----------
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"1060 Forms" has the meaning set forth in Section 3.3.
----------
"Title Commitments" has the meaning set forth in Section 6.17(a).
-----------------
"Title Company" has the meaning set forth in Section 6.17(a).
-------------
"Title Defect" has the meaning set forth in Section 6.17(c).
------------
"Transaction Documents" has the meaning set forth in Section 4.2.
---------------------
"Transferred Management Employees" has the meaning set forth in Section
--------------------------------
6.6(b).
"TROA" is a proposed agreement among the States of Nevada and
----
California, the Pyramid Lake Paiute Tribe of Indians, the United States, Seller
and other parties, the current draft of which is in Schedule 7.1.
------------
A-9
"Truckee River Agreement" means the agreement, dated June 13, 1935,
-----------------------
among Seller, the United States, WCWCD, the Truckee Carson Irrigation District
et al.
"Truckee River Corridor" means Seller's real property described under
----------------------
such title in Exhibit C hereto.
"Vacation Policy" has the meaning set forth in Section 6.6(g).
---------------
"WARN" has the meaning set forth in Section 6.6(f).
----
"Water Business" has the meaning set forth in the Recitals hereto.
--------------
"Water Business Intellectual Property" has the meaning set forth in
------------------------------------
Section 4.9.
"Water Rights" has the meaning set forth in Section 4.6(c).
------------
EXHIBIT A
---------
Purchased Assets
----------------
I. Fee Owned Properties
- -------------------------------------------------------------------------------
Property APN - Area
-------- --- ----
- -------------------------------------------------------------------------------
Army Air Guard Well 086-240-07 - 1.0 acres
- -------------------------------------------------------------------------------
Chalk Bluff Treatment Plant 039-161-18 - 114.37 acres
039-161-29 - 17.76 acres
039-161-30 - 5.77 acres
- -------------------------------------------------------------------------------
Coleman Booster Pump 002-233-01 - 1.52 acres
- -------------------------------------------------------------------------------
Comstock Drive Water Tank 003-362-07 - 3.60 acres
- -------------------------------------------------------------------------------
Corbett School Well 013-333-31 - .098 acres
- -------------------------------------------------------------------------------
Delucchi Lane Well 025-460-03 - .37 acres
- -------------------------------------------------------------------------------
East 4th Street Well 008-372-03 - .20 acres
- -------------------------------------------------------------------------------
East Peckham Lane Well 025-261-34 - 1.19 acres
- -------------------------------------------------------------------------------
Farad Hydro 048-030-14 - 28.43 acres
048-060-07 - .5 acres
- -------------------------------------------------------------------------------
Fleish Hydro 038-260-16 - 84.44 acres
- -------------------------------------------------------------------------------
Glen Hare Well 010-051-36 - .18 acres
- -------------------------------------------------------------------------------
Glendale Water Treatment Plant 034-010-27 - .67 acres
21st Street Well 034-010-56 - 1.53 acres
Galletti Well 034-010-61 - 30.82 acres
- -------------------------------------------------------------------------------
Greg Street Well 034-403-05 - .91 acres
- -------------------------------------------------------------------------------
Highland Canal [survey in progress]
- -------------------------------------------------------------------------------
Highland Res./Stead Pump House 002-040-09 - .37 acres
- -------------------------------------------------------------------------------
Highland Reservoir 002-040-11 - 20.55 acres
- -------------------------------------------------------------------------------
Holcomb Lane Well 044-291-15 - .186 acres
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Property APN - Area
-------- --- ----
- -------------------------------------------------------------------------------
Hunter Creek Reservoir 009-030-05 - 34.30 acres
- -------------------------------------------------------------------------------
Kietzke Lane Well 012-391-02 - .82 acres
012-391-13 - .40 acres
- -------------------------------------------------------------------------------
Kings Row Tank 001-510-03 - 2.41 acres
- -------------------------------------------------------------------------------
Lakeridge Tank 042-313-63 - 1.44 acres
- -------------------------------------------------------------------------------
Lakeside Well 042-222-09 - .086 acres
- -------------------------------------------------------------------------------
Longley Lane Pump Station 164-131-01 - .20 7 acres
- -------------------------------------------------------------------------------
Mogul Water Plant 038-730-36 - 2.964 acres
- -------------------------------------------------------------------------------
Mogul Water Tanks 1 & 2 038-720-01 - 3.204 acres
- -------------------------------------------------------------------------------
Moraine Way Pump 003-272-04 - .189 acres
- -------------------------------------------------------------------------------
Morrill Avenue Well 008-360-25 - .14 acres
- -------------------------------------------------------------------------------
Northgate Tank #1 204-010-12 - 1.5 acres
204-171-04 - .066 acres
- -------------------------------------------------------------------------------
Northgate Tank #1 Pump Station 204-173-28 - .791 acres
(aka Tappan Pump)
- -------------------------------------------------------------------------------
Northgate Tank #2 038-800-06 - 3.903 acres
- -------------------------------------------------------------------------------
Patriot Well 043-020-33 - .49 acres
- -------------------------------------------------------------------------------
Poplar Street Well #1 & #2 032-275-13 - .32 acres
- -------------------------------------------------------------------------------
Pyramid Highway Water Tank 028-012-01 - .80 acres
028-012-07 - .70 acres
028-012-09 - .013 acres
- -------------------------------------------------------------------------------
Raleigh Heights Booster Pump 082-353-17 - .67 acres
- -------------------------------------------------------------------------------
Rattlesnake Mountain - 022-172-01 - 11.08 acres
Water Tank
- -------------------------------------------------------------------------------
Reno Highlands Tank 082-631-04 - 4.591 acres
- -------------------------------------------------------------------------------
Skyline Tank No. 1 023-061-02 - .94 acres
- -------------------------------------------------------------------------------
Skyline Tank No. 2 041-241-01 - 2.61 acres
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Property APN - Area
-------- --- ----
- -------------------------------------------------------------------------------
Silver Lake Tank 560-020-03 - 3.77 acres
- -------------------------------------------------------------------------------
Silver Lake North Well 090-050-47 - 1.0 acres
- -------------------------------------------------------------------------------
Socrates Tank 003-620-12 - .94 acres
- -------------------------------------------------------------------------------
South Hills Booster Pump 044-300-06 - .08 acres
- -------------------------------------------------------------------------------
South Hills Tank (aka Zollezzi Tank) 162-121-03 - 1.538 acres
- -------------------------------------------------------------------------------
South Virginia Street Well 025-330-09 - .16 acres
- -------------------------------------------------------------------------------
Southwest Terrace Tank 041-241-04 - 2.0 acres
- -------------------------------------------------------------------------------
Sparks Avenue Well 032-166-03 - .16 acres
- -------------------------------------------------------------------------------
Stead 1 & 2 Tank 090-150-02 - 13.523 acres
554-102-20 - .095 acres
554-102-15 - .266 acres
- -------------------------------------------------------------------------------
Stead Well 016-045-14 - .15 acres
- -------------------------------------------------------------------------------
Sullivan Lane Tank 026-021-41 - 2.70 acres
- -------------------------------------------------------------------------------
Swope Middle School Well 009-170-93 - .25 acres
- -------------------------------------------------------------------------------
Terminal Way Well 013-332-15 - .18 acres
- -------------------------------------------------------------------------------
Valley Road Booster Pump 008-013-25 - .014 acres
- -------------------------------------------------------------------------------
Valley Road Complex/ 004-081-27 - .28 acres
Vaughn Mill Tank
- -------------------------------------------------------------------------------
Verdi Hydro 038-030-08 - 10.70 acres
038-060-29 - 14.64 acres
038-200-03 - 25.14 acres
038-250-03 - 10.92 acres
038-250-04 - 3.76 acres
038-260-09 - 19.22 acres
038-394-07 - 0.23 acres
- -------------------------------------------------------------------------------
View Street Well 031-302-36 - .24 acres
- -------------------------------------------------------------------------------
Vista Water Tank 512-010-05 - 6.205 acres
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Property APN - Area
-------- --- ----
- -------------------------------------------------------------------------------
Washoe Highland Diversion 038-112-07 - 3.00 acres
038-112-08 - 1.15 acres
038-111-01 - 18.15 acres
038-112-10 - 0.78 acres
038-430-10 - 13.50 acres
038-430-07 - 0.27 acres
038-430-14 - 0.44 acres
038-430-05 - 3.52 acres
- -------------------------------------------------------------------------------
Washoe Hydro 038-182-03 - 6.16 acres
038-140-10 - 11.68 acres
- -------------------------------------------------------------------------------
Water Main in Fee 027-172-23 - .024 acres
- -------------------------------------------------------------------------------
West 7/th/ Street Tank 001-271-06 - 2.5 acres
- -------------------------------------------------------------------------------
II. Glendale Water Treatment Facility
All structures and facilities located at the Glendale Water Treatment Plant, and
all furniture, telemetry and laboratory equipment and office equipment contained
within the facility as well as all PCs and related peripheral equipment for the
employees who work at the plant and use the facility as their offices.
III. Water Production Groundwater Facilities
- -------------------------------------------------------------------------------------------------------------
Groundwater Facilities Number of Facilities (in service) Maximum Capacity (mgd)
---------------------- --------------------------------- ----------------------
Normal Production wells 20 36.4
PCE wells 5 13.6
Blended wells 3 7.2
Other 1 1.0
Total Ground Wells 29 57.2
- -------------------------------------------------------------------------------------------------------------
IV. Run of the River Hydroelectric Facilities
- ------------------ --------- ----------------------- -----------------
Date of
Facility Size Commercial/Operations Status
- ------------------ --------- ----------------------- -----------------
Re-design and
Farad 2.60 MW 1900 construction
Fleish 2.25 MW 1905 Operating
Verdi 2.15 MW 1912 Operating
Washoe 2.15 MW 1908 Operating
- ----------------------------------------------------------------------
For each plant included are the weir, flumes, structural forebay and penstocks
V. Chalk Bluff Water Treatment Facility
All structures and facilities located at the Chalk Bluff Treatment Plant. Also
included are all furniture and office equipment contained within the facility as
well as all PCs and related peripheral equipment for the employees who work at
the plant.
VI. Water Distribution and Storage Assets
- ----------------------------------------------------------------------------
Type of Facility Number of Facilities Capacity (Mgal)
- ---------------- -------------------- ---------------
Water Storage Tanks 30 53.2
Water Storage Reservoirs 2 50.0
Booster Pumps 94 -
Distribution Mains 1000 miles -
- ----------------------------------------------------------------------------
Together with all associated water meters, valves, regulators, telemeters,
automated control systems and service lines.
VII. Backflow Prevention Project PCs
All PCs and related peripheral equipment for the Backflow Prevention Project
work group
VIII. Intellectual Property
Bailey Control System/Software for Chalk Bluff Operating System SCADA system
software (includes Dynac software) - historical data and control routines for
Time of Use Pumping, Pump Logic and Meters
H2O-Net Distribution Modeling Software and distribution system models (includes
gravity models and pump zone models)
Ground Water Model
Surface Water Transport Model
Water Rights Data Base
Met-one Particle Counting System
Intellution Control Software for Glendale
Truckee River Operations Model
IX. Water Rights
- ------------------------------------------------------------------------------------------------------
Face Value of
Type of Water Right Water Right
(AF)
- ------------------------------------------------------------------------------------------------------
The "40 cfs right" allocated to the Water Business in the Orr Ditch Decree as
the first 28,959 right on the River except for the Pyramid Lake Tribe's rights
which are always made up by Truckee Meadows return flows.
- ------------------------------------------------------------------------------------------------------
Hunter Creek 13.6 cfs right 9,847
- ------------------------------------------------------------------------------------------------------
Irrigation Rights deeded to the Company. Included are the so called "excess water 37,164
rights" which are required to be stored for drought supplies under TROA
- ------------------------------------------------------------------------------------------------------
Irrigation Rights deeded to local governments for use by the Company for its new 18,601
service commitments
- ------------------------------------------------------------------------------------------------------
Banked Irrigation Rights deeded to the Company by developers for their future needs. 2,976
- ------------------------------------------------------------------------------------------------------
Effluent makeup rights 267
- ------------------------------------------------------------------------------------------------------
Tributary Creek rights 366
- ------------------------------------------------------------------------------------------------------
Independence Lake water rights including 3,000 acre feet of very high priority vested 17,500
water rights. These rights are restored under the interim water storage agreement to
augment drought supplies.
- ------------------------------------------------------------------------------------------------------
Donner Lake undivided one half interest with TCID in 9,500 acre feet of very high 4,750
priority drought supplies. These rights have certain restrictions which limit the
timing of their withdrawal and are restored under the interim water storage agreement
to augment drought supplies.
- ------------------------------------------------------------------------------------------------------
Groundwater permits in the Truckee Meadows are in excess of the amount of water the 47,757
State Engineer presently allows to be pumped. Recent orders by the State Engineer
allow the capped amount of 14,440 to be pumped on a long term average so that 22,000 AF
of water can be pumped in a drought year if pumping is cut back during normal years.
- -------------------------------------------------------------------------------------------------------
Total Water Rights
- -------------------------------------------------------------------------------------------------------
Hydro Assets Water Rights:
Seller's water rights under the 1915 Truckee River General Electric Decree as
recognized and confirmed under Claim number 4 of the Orr Ditch Decree and as
affected by the Truckee River Agreement and water rights Claims, numbers 5
through 9, under the Orr Ditch Decree and water rights for hydroelectric
generation associated with Donner and Independence Lakes.
X. Other Assets
All cash in meter installment fund in the approximate amount of $1.6 million
(which is collected and held in escrow for the benefit of the Water Meter
Retrofit Program).
All Contracts set forth on Schedule 4.3 and Schedule 4.7.
------------ ------------
All Leases, Licenses and Permits set forth on Schedule 4.6(b).
--------------
All Railroad Permits set forth on Schedule 4.6(b).
--------------
GIS data with respect to the location of all Purchased Assets
All vehicles and equipment with an original cost of $1.8 million on the attached
list.
Water Meter Testing Equipment.
WATER COMPANY VEHICLES
- ------------------------------------------------------------------------------------------------------------------------------------
SPPC
Dept. Equipment MJR. Original Lease Monthly End
No. No. Description Make Model Year IMP. 4x4 Mileage Cost Company Rate Date Comment
- ------------------------------------------------------------------------------------------------------------------------------------
D335 10-2420 1990 DODGE SHADOW 4 DR Dodge Shadow 1990 No 93,493 $10,254.00
Sedan
- ------------------------------------------------------------------------------------------------------------------------------------
110 GMC Truck w/Welder 85 1 Ton
D335 20-1728 2WD GMC Truck 1985 No 139,119 $28,423.00
- ------------------------------------------------------------------------------------------------------------------------------------
D335 20-1853 1985 Ford 1 Ton Van Ford 1 Ton Van 1985 No 93,157 $18,737.00
- ------------------------------------------------------------------------------------------------------------------------------------
D335 20-2025 1986 1 Ton Van SB DRW 4x4 Ford 1 Ton 1986 Service Yes 99,672 25,470.00
Van Body
- ------------------------------------------------------------------------------------------------------------------------------------
D367 20-2029 1987 Dodge 1 Ton Van 4x4 Dodge 3/4 Ton 1984 No 72,733 $17,264.00
Van
- ------------------------------------------------------------------------------------------------------------------------------------
1987 Jeep Cherokee 4 DR 1/2 Ton
D335 20-2065 SUV 4x4 Jeep truck 4x4 1987 Yes 177,833 $16,396.00
- ------------------------------------------------------------------------------------------------------------------------------------
1 Ton
D335 20-2095 1987 Dodge 1 Ton SB Dodge Truck 4x4 1987 No 72,584 $17,449.00
- ------------------------------------------------------------------------------------------------------------------------------------
1987 Jeep Cherokee 4 SUV 1/2 Ton
D335 20-2120 4x4 Jeep Truck 4x4 1987 Yes 160,906 $15,802.00
- ------------------------------------------------------------------------------------------------------------------------------------
D335 20-2216 1988 Jeep Cherokee SUV 4x4 Jeep Cherokee 1988 Yes 118,992 $16,902.00
- ------------------------------------------------------------------------------------------------------------------------------------
1990 GMC 1 Ton SB 4x4 1 Ton Service
D336 20-2352 Tommy Liftgate GMC Truck 1990 Body Yes 192,555 $21,490.00
- ------------------------------------------------------------------------------------------------------------------------------------
1 Ton Service
D335 20-2395 1990 GMC 1 Ton S/B 4x4 Dodge Truck 4x4 1990 Body Yes 42,183 $21,034.00
- ------------------------------------------------------------------------------------------------------------------------------------
1990 GMC 1 Ton Weld 1 Ton
D335 20-2400 Truck, DRW 4x4 Dodge Truck 4x4 1990 Yes 57,476 $41,470.00
- ------------------------------------------------------------------------------------------------------------------------------------
1/2 Ton
D335 20-2401 1990 Ford1/2Ton P/U Ford Truck 1990 No 49,435 $15,207.00
- ------------------------------------------------------------------------------------------------------------------------------------
1991 Jeep Cherokee 4 DR
D335 20-2483 SUV 4x4 Jeep Cherokee 1991 Yes 128,152 $20,786.00
- ------------------------------------------------------------------------------------------------------------------------------------
3/4 Ton
D335 20-2488 1991 GMC3/4Ton CLB CB 4x4 GMC Truck 4x4 1991 Yes 136,096 $19,500.00
- ------------------------------------------------------------------------------------------------------------------------------------
1 Ton Service
D335 20-2569 1992 GMC 1 Ton S/B 4x4 GMC Truck 4x4 1992 Body Yes 29,823 $17,408.00
- ------------------------------------------------------------------------------------------------------------------------------------
1/2 Ton
D335 20-2570 1992 Ford1/2Ton P/U 4x4 Ford Truck 4x4 1992 Yes 88,895 $20,705.00
- ------------------------------------------------------------------------------------------------------------------------------------
1992 Jeep Cherokee 4 DR
D335 20-2571 SUV 4x4 Jeep Cherokee 1992 Yes 102,700 $25,752.00
- ------------------------------------------------------------------------------------------------------------------------------------
2
- ------------------------------------------------------------------------------------------------------------------------------------
SPPC
Dept. Equipment MJR. Original Lease Monthly End
No. No. Description Make Model Year IMP. 4x4 Mileage Cost Company Rate Date
- -----------------------------------------------------------------------------------------------------------------------------------
1 Ton Service
D367 20-2572 1992 GMC 1 Ton S/B GMC Truck 1992 Body No 145,748 $25,083.00
- -----------------------------------------------------------------------------------------------------------------------------------
D335 20-2616 1992 Dodge 1/2 Ton P/U Dodge Dakota 1992 Yes 59,772 $17,155.00
4x4
- -----------------------------------------------------------------------------------------------------------------------------------
1993 GMC 3/r Ton 3/4 Ton
D336 20-2647L EXTCABP/U 4x4 GMC Truck 1993 Yes 106,579 $22,905.66 BLC 190.88 12/31/03
- -----------------------------------------------------------------------------------------------------------------------------------
D335 20-2666: 1993 Dodge 1/2 Ton P/U Dodge Dakota 1993 Yes 88,599 $16,788.20 BLC 139.9 12/31/03
4x4
- -----------------------------------------------------------------------------------------------------------------------------------
D335 20-2667L 1994 Dodge 1/2 Ton P/U Dodge Dakota 1994 Yes 83,841 $17,016.91 BLC 141.81 12/31/03
4x4
- -----------------------------------------------------------------------------------------------------------------------------------
1993 Jeep Cherokee 4
D335 20-2677LD DR SB 4x4 Jeep Cherokee 1993 Yes 31,324 $19,137.00 BLC 0 12/31/99
- -----------------------------------------------------------------------------------------------------------------------------------
1996 Ford 1 Ton S/B 1 Ton Service
D336 20-2751 4x4 Ford Truck 1996 Body Yes 99,228 $46,648.00
- -----------------------------------------------------------------------------------------------------------------------------------
1 Ton Service
D367 20-2757 1995 GMC 1 Ton S/B GMC Truck 1995 Body No 89,182 $41,618.00
- -----------------------------------------------------------------------------------------------------------------------------------
1996 Ford 1 T 4x4 SB 1 Ton Service
D336 20-2785 SRW Ford Truck 1996 Body Yes 106,632 $40,210.00
- -----------------------------------------------------------------------------------------------------------------------------------
1996 Ford 3/4 Ton 3/4 Ton Service
D335 20-2818 EXTCAB S/B 4x4 Ford Truck 4x4 1996 Body Yes 26,800 $35,000.00
- -----------------------------------------------------------------------------------------------------------------------------------
1996 Ford 3/4 Ton 3/4 Ton Service
D335 20-2819 EXTCAB S/B 4x4 Ford Truck 4x4 1996 Body Yes 21,000 $35,000.00
- -----------------------------------------------------------------------------------------------------------------------------------
1996 Ford 3/4 Ton 3/4 Ton Service
D335 20-2820 EXTCAB S/B 4x4 Ford Truck 4x4 1996 Body Yes 24,920 $35,000.00
- -----------------------------------------------------------------------------------------------------------------------------------
1996 Ford 3/4 Ton 3/4 Ton Service
D335 20-2821 EXTCAB S/B 4x4 Ford Truck 4x4 1996 Body Yes 28,238 $35,000.00
- -----------------------------------------------------------------------------------------------------------------------------------
1/2 Ton
D335 20-2824 1997 Ranger 4x4 Ford Truck 1997 Yes 49,221 $43,507.00
- ------------------------------------------------------------------------------------------------------------------------------------
P1999 Ford 1 Ton
S/B Bw/LFTGTE, 1 Ton Service
D336 20-2869L SNWPLW 4x4 Ford Truck 1999 Body Yes 30,455 $42,000.00 Mellon 433.8 5/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
P1999 Ford 1 Ton 1 Ton Service
D336 20-2870L S/B DRW Bw/LFTGTE 4x4 Ford Truck 1999 Body Yes 40,410 $40,000.00 Mellon 439.09 5/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
B1999 Ford 1 Ton 1 Ton Service
D335 20-2928L S/B 4x4 Ford Truck 4x4 1999 body Yes 15,224 $40,000 Mellon 434.73 6/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
1998 Ford Explorer 4
D335 20-2929L DR SUV 4x4 Ford Explorer 2000 Yes 21,667 $23,973.11 Mellon 415.47 4/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
2000 Ford 1 1 Ton
D335 20-2972L Ton P/U GMC Truck 2000 No 20,359 $25,319.00 Mellon 440.34 8/31/04
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------------------------
Dept.
No. Comment
- ----------------------------
D335
- ----------------------------
D335
- ----------------------------
D335
- ----------------------------
D367
- ----------------------------
Sierra needs to
D335 purchase
- ----------------------------
D335
- ----------------------------
D335
- ----------------------------
D335
- ----------------------------
D336
- ----------------------------
D335
- ----------------------------
D335
- ----------------------------
D335
- ----------------------------
Plus Service
D335 Body cost
- ----------------------------
Plus Service
D335 Body cost
- ----------------------------
Plus Service
D335 Body cost
- ----------------------------
D335
- ----------------------------
D335
- ----------------------------
3
- ------------------------------------------------------------------------------------------------------------------------------------
SPPC
Dept. Equipment MJR. Original Lease Monthly End
No. No. Description Make Model Year IMP. 4x4 Mileage Cost Company Rate Date Comment
- ------------------------------------------------------------------------------------------------------------------------------------
2000 Ford 1/2 1/2 Ton
D335 20-3012L Ton P/U 4x4 Ford Truck 4x4 1999 Yes 18,478 $20,420.00 Mellon 395.98 9/30/04
- -----------------------------------------------------------------------------------------------------------------------------------
D335 20-3070 1999 Cherokee 4x4 4DR Jeep Cherokee 1999 Yes N/A $19,964.00
- -----------------------------------------------------------------------------------------------------------------------------------
1/2 T 4x4 2 DR Full Size 1/2 Ton
D336 21-1733 Utility Vehicle Ford Truck 1984 Yes 204,000 $10,895.00
- -----------------------------------------------------------------------------------------------------------------------------------
1/2 T Intermediate 4x4 1/2T
D335 21-2077 Pickup Dodge Dakota 1987 Yes N/A $15,208.00
- -----------------------------------------------------------------------------------------------------------------------------------
Service
1999 Ford FB DRW 4x4 1 Ton Body
D335 30-2927L w/Liftmoore Crane Ford Truck 1999 w/crane Yes 9,964 $55,488.64 Mellon 516.82 6/30/03
- -----------------------------------------------------------------------------------------------------------------------------------
2000 Ford 1 Ton WLD TRK 1 Ton Service
D335 30-3011L 4x4 Ford Truck 4x4 2000 Body Yes 8,930 $58,172.00 Mellon 518.72 8/31/04
- -----------------------------------------------------------------------------------------------------------------------------------
2000 Ford 1 ton WLD TRK 1 Ton Service
D335 30-3013L 4x4 Ford Truck 4x4 2000 Body Yes 5,538 $58,483.00 Mellon 518.72 8/31/04
- -----------------------------------------------------------------------------------------------------------------------------------
2000 Ford F450 4x4 DRW Service
D335 30-3076 w/SB w/Crane Ford F450 Truck 2000 Body Yes 1449 $65,742.00
- -----------------------------------------------------------------------------------------------------------------------------------
5 Yd Dump
D335 40-1722 1985 INTL 1654 4x2 INTL Truck 1985 No 114,170 $38,169.00
- -----------------------------------------------------------------------------------------------------------------------------------
1990 INTL 4900 4x2 SB Service
D336 50-2284 w/CRANE INTL Truck 1990 Body No 209,816 $55,104.00
- -----------------------------------------------------------------------------------------------------------------------------------
1990 INTL 2574 6x4 10/YD 10 YD
D335 60-2385 Dump INTL Dump Truck 1990 No 71,851 $88,578.00
- -----------------------------------------------------------------------------------------------------------------------------------
Boom
D335 60-2693 93 INTL 4x4 Boom Truck INTL $4,854 1993 TC4600 Yes 48,920 $141,990.00
- -----------------------------------------------------------------------------------------------------------------------------------
D335 70-1843 WATER PUMP TRAILER Trailer Pump 1985 N/A N/A Unavail.
- -----------------------------------------------------------------------------------------------------------------------------------
1821
D335 70-2244 FORKLIFT Clark Forklift 1988 N/A HRS $21,781.00
- -----------------------------------------------------------------------------------------------------------------------------------
250
D335 70-2325 Generator TRLR Cummings Generator N/A N/A N/A $21,377.00
- -----------------------------------------------------------------------------------------------------------------------------------
4 Wheel
D335 70-2730 MULE 4x4 Kawasaki ATV 1994 Yes 1202 $9,469.00
- -----------------------------------------------------------------------------------------------------------------------------------
4 Wheel
D335 70-2731 MULE 4x4 Kawasaki ATV 1993 Yes 336 $9,469.00
- -----------------------------------------------------------------------------------------------------------------------------------
331
D335 70-2732 7000LB Forklift Clark Forklift 1987 N/A HRS $17,490.00
- -----------------------------------------------------------------------------------------------------------------------------------
D336 70-2847 6x6 ATV Polaris ATV Unk Yes 266 $7,000.00
- -----------------------------------------------------------------------------------------------------------------------------------
D336 71-1863 Welder Trailer Trailer Welding 1990 No 115 $9,355.00
- -----------------------------------------------------------------------------------------------------------------------------------
250 110
D335 71-2324 Generator TRLR Cummings Generator 1968 N/A HRS $11,247.00
- -----------------------------------------------------------------------------------------------------------------------------------
4
- ------------------------------------------------------------------------------------------------------------------------------------
SPPC
Dept. Equipment MJR. Original Lease Monthly End
No. No. Description Make Model Year IMP. 4x4 Mileage Cost Company Rate Date
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
D335 80-0990 Trailer, Cargo Trailer Utility 1969 N/A N/A $337.00
- -----------------------------------------------------------------------------------------------------------------------------------
D335 80-1040 Trailer, Tank Trailer Tank 1976 N/A N/A $893.00
- -----------------------------------------------------------------------------------------------------------------------------------
D335 80-2093 Chemical Tank Trailer Trailer Chemical 1987 N/A N/A $15,649.00
- -----------------------------------------------------------------------------------------------------------------------------------
Trailer, Utility Service
D335 80-2152 Body Trailer Sign 1987 N/A N/A Unavail.
- -----------------------------------------------------------------------------------------------------------------------------------
900KW Trailer Mounted
D336 80-2252 Generator Trailer Generator 1990 No N/A Unavail.
- -----------------------------------------------------------------------------------------------------------------------------------
D367 80-2262 Water Meter Test Trailer Trailer Trailer 1987 N/A N/A $3,724.00
- -----------------------------------------------------------------------------------------------------------------------------------
Cargo Trailer, Water
D335 80-2789 Meter Project Trailer Utility 1996 N/A N/A Unavail.
- -----------------------------------------------------------------------------------------------------------------------------------
Cargo Trailer, Water
D335 80-2798 Meter Project Trailer Utility 1996 N/A N/A Unavail.
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly $851.00 per
D335 92-0002` 98 GMC Jimmy Leased GMC SUV 1998 Lease N/A mo.
- -----------------------------------------------------------------------------------------------------------------------------------
$850.00 per
D366 70-2140 FRONT END LOADER John Deere Loader 1987 mo.
- -----------------------------------------------------------------------------------------------------------------------------------
Dodge Extended Cab Dakota Monthly $850.00 per
D335 92-2002 4x4 Dodge Truck 2001 Lease Yes mo.
- -----------------------------------------------------------------------------------------------------------------------------------
Dodge Extended Cab Dakota Monthly $850.00 per
D335 92-2003 4x4 Dodge Truck 2001 Lease Yes mo.
- -----------------------------------------------------------------------------------------------------------------------------------
Dodge Extended Cab Dakota Monthly 850.00 per
D335 92-2004 4x4 Dodge Truck 2001 Lease Yes mo.
- -----------------------------------------------------------------------------------------------------------------------------------
Dodge Extended Cab Dakota Monthly 850.00 per
D335 92-2005 4x4 Dodge Truck 2001 Lease Yes mo.
- -----------------------------------------------------------------------------------------------------------------------------------
Dodge Extended Cab Dakota Monthly 850.00 per
D335 92-2006 4x4 Dodge Truck 2001 Lease Yes mo.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------
Dept. Comment
No.
- -----------------
- -----------------
D335
- -----------------
D335
- -----------------
D335
- -----------------
D335
- -----------------
D336
- -----------------
D367
- -----------------
D335
- -----------------
D335
- -----------------
D335
- -----------------
D366
- -----------------
D335
- -----------------
D335
- -----------------
D335
- -----------------
D335
- -----------------
D335
- -----------------
EXHIBIT B
----------
Part 1: Knowledge Persons of Seller
---------------------------
Jeff Ceccarelli President
William Peterson Sr. Vice President, General Counsel
Steve Oldman Sr. Vice President, Corporate
Development and Strategic Planning
Lori Williams Director, Water Production and
Policy
Janet Carson Director, Water Policy
Elizabeth Elliot Associate General Counsel
Don Rhoden Project Manager, Water Divestiture
Tony Karr Strategic Specialist
Tony Garcia Environmental Engineer
John Erwin Manager, Water Policy, Resources &
Programs
Debbie Kaye Manager, Water Treatment
Paul Miller Manager, Water Quality
Mark Foree Manager, Water System Planning &
Engineering
Peter McAllester Manager, Gas & Water Distribution
Jim Neill Manager, Water Distribution,
Hydro/Generation
Marie Stuersel HR Partner
Bruce Bullock Director, Gas & Water Distribution,
Operation & Maintenance
Kim Mazeres Director, Customer Care
Part 2: Knowledge Persons of Purchaser
------------------------------
Jeff Griffin Director
David Aiazzi Director
Jessica Sferrazza-Hogan Director
Tony Armstrong Director
Mike Carrigan Director
Geno Martini Director
Jim Shaw Director
EXHIBIT C
- ---------
Certain Excluded Assets
- -----------------------
Real Property. (The references below reflect the sites of the excluded Real
Property.)
- ----------------------------------------------------------------------------------------------------------------------
LOCATION A.P.N. AREA* DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------
BARRY M. CIRCLE 005-082-39 0.664 ac REGULATOR STATION ON WEST SEVENTH STREET
SUBSTATION.
- ----------------------------------------------------------------------------------------------------------------------
CAUGHLIN TANK 041-243-04 14.85 ac TANK ON MT. ROSE SUBSTATION.
- ----------------------------------------------------------------------------------------------------------------------
EL RANCHO WELL 031-021-02 0.08 ac WELL ON EL RANCHO SUBSTATION.
- ----------------------------------------------------------------------------------------------------------------------
HIGH STREET WELL 012-015-07 11,167 SF WELL ON HIGH STREET SUBSTATION.
- ----------------------------------------------------------------------------------------------------------------------
HOLCOMB OBSERVATION WELL 014-134-01 0.42 ac OBSERVATION WELL ON HOLCOMB SUBSTATION.
- ----------------------------------------------------------------------------------------------------------------------
PEZZI WELL 012-317-01 14.31 ac WELL ON OHM ST. PROPERTY
- ----------------------------------------------------------------------------------------------------------------------
SUTRO BOOSTER #1 004-130-52 39,916 S.F. BOOSTER PUMP ON ALAMEDA SUBSTATION
- ----------------------------------------------------------------------------------------------------------------------
G.O.B. WELL 025-460-22 41.66 ac PROPOSED WELL AT SIERRA PLAZA
- ----------------------------------------------------------------------------------------------------------------------
MILL ST. 013-083-18 35,532 SF WELL ON MILL ST. SUBSTATION
- ----------------------------------------------------------------------------------------------------------------------
IDLEWILD 010-051-26 9.41 ac PUMP ON IDLEWILD FACILITY
- ----------------------------------------------------------------------------------------------------------------------
WASHOE HYDRO 038-182-01 5.77 ac. WASHOE SUBSTATION
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 016-020-01 439.9 NEVADA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 016-010-04 Lake NEVADA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 016-010-03 40 NEVADA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 016-020-09 Lake NEVADA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 016-010-07 65.85 NEVADA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 016-010-05 135.33 NEVADA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 016-010-02 241.73 NEVADA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 019-050-007 178.5 SIERRA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 019-060-08 682.36 SIERRA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE 019-060-10 Lake SIERRA COUNTY
- ----------------------------------------------------------------------------------------------------------------------
WASHOE HIGHLAND DIVERSION 038-430-11 40.05 DIVERSION FOR HIGHLAND CANAL
- ----------------------------------------------------------------------------------------------------------------------
*Acreage listed is for the servient estate; easement acreage will be available
in the legal description.
Other Real Property: Truckee River Corridor
- -------------------------------------------------------------------------
NAME COUNTY A.P.N. ACRES
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-030-06 641.28
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-030-12 224.46
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-040-01 276.36
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-040-02 38.68
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-040-09 3.64
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-050-01 3.97
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-050-09 51.49
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-050-10 37.63
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-050-11 5.96
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-050-13 57.42
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-060-06 353
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-130-13 33.32
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-130-02 146
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-060-08 640
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-060-11 70.3
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-110-08 19.5
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-110-09 161.21
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-120-05 135.8
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-120-06 12.89
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-120-07 131.11
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-120-08 52.6
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-120-11 4.5
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-120-15 5
- -------------------------------------------------------------------------
TRUCKEE CANYON SIERRA 023-120-01 326.1
- -------------------------------------------------------------------------
TRUCKEE CANYON WASHOE 038-270-10 120
- -------------------------------------------------------------------------
TRUCKEE CANYON WASHOE 038-270-11 93.83
- -------------------------------------------------------------------------
TRUCKEE CANYON WASHOE 038-190-18 40
- -------------------------------------------------------------------------
TRUCKEE CANYON WASHOE 048-010-06 27.22
- -------------------------------------------------------------------------
TRUCKEE CANYON NEVADA 048-030-13 55.21
- -------------------------------------------------------------------------
3,768.48
- -------------------------------------------------------------------------
Customer Information System (CIS)
Proprietary Facility Design and Mapping Software
Hi Band 800 MHZ frequency and Radio Equipment
Telephone System Leased Centrex Lines and Equipment
Office Space at 6100 Niel Road, Reno, NV 89511
Office Space at 1 Ohm Place, Reno, NV 89502
Office Space at 11 Ohm Place, Reno, NV 89502
Warehouse/Material Storage Space at 11 Ohm, Reno, NV 89502