EXHIBIT 10-KK
PRIVILEGED AND CONFIDENTIAL
EXECUTION COPY
▇▇▇▇▇ CITY ELECTRIC GENERATING STATION
ASSET PURCHASE AGREEMENT
BY AND AMONG
Pennsylvania electric Company, NGE GENERATION, INC., and NEW YORK
STATE ELECTRIC & GAS CORPORATION as SELLERS,
MISSION ENERGY WESTSIDE, INC., as BUYER
Dated as of August 1, 1998
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions 1
1.2 Certain Interpretive Matters 13
ARTICLE II
PURCHASE AND SALE
2.1 Transfer of Assets 13
2.2 Excluded Assets 15
2.3 Assumed Liabilities 16
2.4 Excluded Liabilities 18
2.5 Control of Litigation 20
ARTICLE III
THE CLOSING
3.1 Closing 20
3.2 Payment of Purchase Price 20
3.3 Adjustment to Purchase Price 21
3.4 Allocation of Purchase Price 22
3.5 Prorations 23
3.6 Deliveries by Sellers 24
3.7 Deliveries by Buyer 25
3.8 Ancillary Agreements 26
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLERS
4.1 Incorporation; Qualification 26
4.2 Authority Relative to this Agreement 26
4.3 Consents and Approvals; No Violation 26
4.4 Insurance 27
4.5 Title and Related Matters 27
4.6 Real Property Leases 28
4.7 Environmental Matters 28
4.8 Labor Matters 29
4.9 Benefit Plans: ERISA 29
4.10 Real Property 30
4.11 Condemnation 30
4.12 Contracts and Leases 30
4.13 Legal Proceedings, etc. 31
4.14 Permits 31
4.15 Taxes 31
4.16 Intellectual Property 32
4.17 Capital Expenditures 32
4.18 Compliance with Laws 32
4.19 Disclaimers Regarding Purchased Assets 32
4.20 Transmission 33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization 34
5.2 Authority Relative to this Agreement 34
5.3 Consents and Approvals; No Violation 34
5.4 Availability of Funds 35
5.5 Financial Representations 35
5.6 Legal Proceedings 35
5.7 No Knowledge of Sellers' Breach 35
5.8 Qualified Buyer 36
5.9 Inspections 36
5.10 WARN Act 36
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Conduct of Business Relating to the Purchased
Assets 36
6.2 Access to Information 38
6.3 Public Statements 41
6.4 Expenses 41
6.5 Further Assurances 41
6.6 Consents and Approvals 43
6.7 Fees and Commissions 45
6.8 Tax Matters 45
6.9 Advice of Changes 46
6.10 Employees 47
6.11 Risk of Loss 51
6.12 Additional Covenants of Buyer 51
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Buyer 52
7.2 Conditions to Obligations of Sellers 54
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification 56
8.2 Defense of Claims 59
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1 Termination 62
9.2 Procedure and Effect of No-Default Termination 63
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Several Liability of Each Seller 62
10.2 Amendment and Modification 63
10.3 Waiver of Compliance; Consents 63
10.4 No Survival 63
10.5 Notices 64
10.6 Assignment 65
10.7 Governing Law 65
10.8 Counterparts 66
10.9 Interpretation 66
10.10 Schedules and Exhibits 66
10.11 Entire Agreement 66
10.12 Bulk Sales Laws 66
10.13 U.S. Dollars 66
10.14 Zoning Classification 67
10.15 Sewage Facilities 67
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of August 1, 1998, by and among
Pennsylvania Electric Company, a Pennsylvania corporation ("Penelec"), New York
State Electric & Gas Corporation, a New York corporation ("NYSEG"), NGE
Generation, Inc., a New York corporation ("NGE"), (Penelec, NGE and NYSEG,
collectively, "Sellers"), and Mission Energy Westside, Inc., a California
corporation ("Buyer"). Sellers and Buyer are referred to individually as a
"Party," and collectively as the "Parties."
W I T N E S S E T H
WHEREAS, each of Penelec and NGE owns as tenant-in-common a 50%
undivided interest in the ▇▇▇▇▇ City Electric Generating Station (the
"Facility") located near Indiana, Pennsylvania, and certain facilities and other
assets associated therewith and ancillary thereto; and
WHEREAS, Penelec and NGE have heretofore agreed jointly to divest
themselves of the Facility;
WHEREAS, Buyer, a wholly owned subsidiary of Edison Mission Energy, a
California corporation ("Buyer Parent", and together with Buyer, "Buyer
Entities") desires to purchase and assume, and Penelec and NGE desire to sell
and assign, the Purchased Assets (as defined in Section 2.1 below) and certain
associated liabilities, upon the terms and conditions hereinafter set forth in
this Agreement;
WHEREAS, to induce Sellers to execute this Agreement, Buyer Parent is
executing and delivering a certain Guaranty dated the date hereof ("Guaranty")
in favor of Sellers.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the Parties agree as follows:
ARTICLE
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms have
the meanings specified in this Section 1.1.
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934.
(2) "Agreement" means this Asset Purchase Agreement together with the
Schedules and Exhibits hereto, as the same may be from time to time amended.
(1)
(3) "Ancillary Agreements" means the Interconnection Agreement, the
Easement and Attachment Agreement and the Transition Power Purchase Agreements,
as the same may be from time to time amended.
(4) "Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement between Sellers and Buyer substantially in the form of
Exhibit A hereto, by which Sellers shall subject to the terms and conditions
hereof, assign the Sellers' Agreements, the Real Property Leases, certain
intangible assets and other Purchased Assets to Buyer and whereby Buyer shall
assume the Assumed Liabilities.
(5) "Assumed Liabilities" has the meaning set forth in Section 2.3.
(6) "Benefit Plans" has the meaning set forth in Section 4.9.
(7) "▇▇▇▇ of Sale" means the ▇▇▇▇ of Sale, substantially in the form of
Exhibit B hereto, to be delivered at the Closing, with respect to the Tangible
Personal Property included in the Purchased Assets transferred to Buyer at the
Closing.
(8) "Buyer Material Adverse Effect" has the meaning set forth in
Section 5.3(a).
(9) "Business Day" shall mean any day other than Saturday, Sunday and
any day on which banking institutions in New York State or the Commonwealth of
Pennsylvania are authorized by law or other governmental action to close.
(10)"Buyer Benefit Plans" has the meaning set forth in Section
6.10(f).
(11)"Buyer Indemnitee" has the meaning set forth in Section 8.1(b).
(12)"Buyer Required Regulatory Approvals" has the meaning set forth in
Section 5.3(b).
(13)"Capital Expenditures" has the meaning set forth in Section
3.3(a).
(14)"CERCLA" means the Federal Comprehensive Environmental Response,
Compensation, and Liability Act, as amended.
(15)"Closing" has the meaning set forth in Section 3.1.
(16)"Closing Adjustment" has the meaning set forth in Section 3.3(b).
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(17) "Closing Date" has the meaning set forth in Section 3.1.
(18) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
(19) "Code" means the Internal Revenue Code of 1986, as amended.
(20) "Commercially Reasonable Efforts" means efforts which are
reasonably within the contemplation of the Parties at the time of executing this
Agreement and which do not require the performing Party to expend any funds
other than expenditures which are customary and reasonable in transactions of
the kind and nature contemplated by this Agreement in order for the performing
Party to satisfy its obligations hereunder.
(21) "Confidentiality Agreement" means the Confidentiality Agreement,
dated April 1, 1998, by and among Sellers and Buyer Parent.
(22) "Direct Claim" has the meaning set forth in Section 8.2(c).
(23) "Easements" means, with respect to the Purchased Assets, the
easements and access rights to be granted by Buyer to Penelec and NYSEG pursuant
to the Easement and Attachment Agreement, including, without limitation,
easements authorizing access, use, maintenance, construction, repair,
replacement and other activities by Penelec and NYSEG, as further described in
the Easement and Attachment Agreement.
(24) "Easement and Attachment Agreement" means the Easement, License
and Attachment Agreement between Buyer, Penelec and NYSEG, in the form of
Exhibit C hereto, executed on the date hereof, whereby Buyer will provide
Penelec and NYSEG with Easements with respect to the Real Property transferred
to Buyer and whereby Penelec and NYSEG will provide Buyer with certain
attachment rights with respect to certain real property owned by Penelec and
NYSEG.
(25) "Emission Allowance" means all present and future authorizations
to emit specified units of pollutants or Hazardous Substances, which units are
established by the Governmental Authority with jurisdiction over the Plant under
(i) an air pollution control and emission reduction program designed to mitigate
global warming, interstate or intra-state transport of air pollutants; (ii) a
program designed to mitigate impairment of surface waters, watersheds, or
groundwater; or (iii) any pollution reduction program with a similar purpose.
Allowances include allowances, as described above, regardless as to whether the
Governmental Authority establishing such Allowances designates such allowances
by a name other than "allowances."
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(26) "Emission Reduction Credits" means credits, in units that are
established by the Governmental Authority with jurisdiction over the Plant that
has obtained the credits, resulting from reductions in the emissions of air
pollutants from an emitting source or facility (including, without limitation,
and to the extent allowable under applicable law, reductions from shut-downs or
control of emissions beyond that required by applicable law) that: (i) have been
identified by the PaDEP as complying with applicable Pennsylvania law governing
the establishment of such credits (including, without limitation, that such
emissions reductions are enforceable, permanent, quantifiable and surplus) and
listed in the Emissions Reduction Credit Registry maintained by the PaDEP or
with respect to which such identification and listing are pending; or (ii) have
been certified by any other applicable Governmental Authority as complying with
the law and regulations governing the establishment of such credits (including,
without limitation, certification that such emissions reductions are
enforceable, permanent, quantifiable and surplus). The term includes Emission
Reduction Credits that have been approved by the PaDEP and are awaiting USEPA
approval. The term also includes certified air emissions reductions, as
described above, regardless as to whether the Governmental Authority certifying
such reductions designates such certified air emissions reductions by a name
other than "emission reduction credits."
(27) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and charges
of any kind.
(28) "Environmental Claim" means any and all pending and/or threatened
administrative or judicial actions, suits, orders, claims, liens, notices,
notices of violations, investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or civil, pursuant
to or relating to any applicable Environmental Law by any person (including, but
not limited to, any Governmental Authority, private person and citizens' group)
based upon, alleging, asserting, or claiming any actual or potential (a)
violation of, or liability under any Environmental Law, (b) violation of any
Environmental Permit, or (c) liability for investigatory costs, cleanup costs,
removal costs, remedial costs, response costs, natural resource damages,
property damage, personal injury, fines, or penalties arising out of, based on,
resulting from, or related to the presence, Release, or threatened Release into
the environment of any Hazardous Substances at any location related to the
Purchased Assets, including, but not limited to, any off-Site location to which
Hazardous Substances, or materials containing Hazardous Substances, were sent
for handling, storage, treatment, or disposal.
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(29) "Environmental Condition" means the presence or Release to the
environment, whether at the Site or at an off-Site location, of Hazardous
Substances, including any migration of those Hazardous Substances through air,
soil or groundwater to or from the Site or any off-Site location regardless of
when such presence or Release occurred or is discovered.
(30) "Environmental Laws" means all Federal, state and local,
provincial and foreign, civil and criminal laws, regulations, rules, ordinances,
codes, decrees, judgments, directives, or judicial or administrative orders
relating to pollution or protection of the environment, natural resources or
human health and safety, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Substances (including, without
limitation, Releases to ambient air, surface water, groundwater, land, surface
and subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport, disposal or handling
of Hazardous Substances. "Environmental Laws" include, without limitation,
CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Oil Pollution Act (33 U.S.C. Section
2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
Section 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.),the Pennsylvania Hazardous Sites Cleanup Act (35 P.S.
Section 6020.101 et seq.), the Pennsylvania Solid Waste Management Act (35 P.S.
Section 6018.101 et seq.), the Pennsylvania Clean Stream Law (35 P.S. Section
691.1 et seq. ) and all other state laws analogous to any of the above.
(31) "Environmental Permits" has the meaning set forth in Section
4.7(a).
(32) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(33) "ERISA Affiliate" has the meaning set forth in Section 2.4(j).
(34) "ERISA Affiliate Plans" has the meaning set forth in Section
2.4(j).
(35) "Estimated Adjustment" has the meaning set forth in Section
3.3(b).
(36) "Estimated Closing Statement" has the meaning set forth in Section
3.3(b).
(37) "Excluded Assets" has the meaning set forth in Section 2.2.
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(4)
(38) "Excluded Liabilities" has the meaning set forth in Section 2.4.
(39) "Facilities Act" has the meaning set forth in Section 10.15.
(40)"FERC" means the Federal Energy Regulatory Commission or any
successor agency thereto.
(41) "FIRPTA Affidavit" means the Foreign Investment in Real Property
Tax Act Certification and Affidavit, substantially in the form of Exhibit D
hereto.
(42) "Genco" means GPU Generation, Inc., a Pennsylvania corporation and
wholly-owned subsidiary of GPU.
(43) "Good Utility Practices" mean any of the practices, methods and
acts engaged in or approved by a significant portion of the electric utility
industry during the relevant time period, or any of the practices, methods or
acts which, in the exercise of reasonable judgment in light of the facts known
at the time the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practices are not intended to
be limited to the optimum practices, methods or acts to the exclusion of all
others, but rather to be acceptable practices, methods or acts generally
accepted in the industry.
(44) "Governmental Authority" means any federal, state, local or other
governmental, regulatory or administrative agency, commission, department,
board, or other governmental subdivision, court, tribunal, arbitrating body or
other governmental authority.
(45) "GPU" means GPU, Inc., a Pennsylvania corporation and parent
company of Penelec.
(46) "Hazardous Substances" means (a) any petrochemical or petroleum
products, oil or coal ash, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may contain
levels of polychlorinated biphenyls; (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "hazardous constituents," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
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(47) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
(48) "IBEW" means Local 459 of the International Brotherhood of
Electrical Workers.
(49) "IBEW Collective Bargaining Agreement" has the meaning set forth
in Section 6.10(d).
(50) "Income Tax" means any federal, state, local or foreign Tax (a)
based upon, measured by or calculated with respect to net income, profits or
receipts (including, without limitation, capital gains Taxes and minimum Taxes)
or (b) based upon, measured by or calculated with respect to multiple bases
(including, without limitation, corporate franchise taxes) if one or more of the
bases on which such Tax may be based, measured by or calculated with respect to,
is described in clause (a), in each case together with any interest, penalties,
or additions to such Tax.
(51) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
(52) "Indemnifying Party" has the meaning set forth in Section 8.1(e).
(53) "Indemnitee" has the meaning set forth in Section 8.1(d).
(54) "Independent Accounting Firm" means such independent accounting
firm of national reputation as is mutually appointed by Sellers and Buyer.
(55) "Inspection" means all tests, reviews, examinations, inspections,
investigations, verifications, samplings and similar activities conducted by
Buyer or its agents or Representatives with respect to the Purchased Assets
prior to the Closing.
(56) "Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, inventions, copyrights and copyright rights
owned by the Sellers and necessary for the operation and maintenance of the
Purchased Assets, and all pending applications for registrations of patents,
trademarks, and copyrights, as set forth as part of Schedule 2.1(l)
(57) "Interconnection Agreement" means the Interconnection Agreement,
between Penelec, NYSEG and Buyer, in the form of Exhibit E hereto, executed on
the date hereof, under which Penelec and NYSEG will provide Buyer with
interconnection service to certain of their respective transmission facilities
and whereby Buyer will provide Penelec and NYSEG with continuing access to
certain of the Purchased Assets after the Closing Date.
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(58) "Inventories" means coal, fuel oil or alternative fuel
inventories, limestone, materials, spare parts, consumable supplies and chemical
and gas inventories relating to the operation of the Plant located at, or in
transit to, the Plant.
(59) "Knowledge" means the actual knowledge of the corporate officers
or managerial representatives of the specified Person charged with
responsibility for the particular function as of the date of the this Agreement,
or, with respect to any certificate delivered pursuant to this Agreement, the
date of delivery of the certificate.
(60) "Material Adverse Effect" means any change in, or effect on the
Purchased Assets that is materially adverse to the operations or condition
(financial or otherwise) of the Purchased Assets, taken as a whole, other than:
(a) any change affecting the international, national, regional or local electric
industry as a whole and not Sellers specifically and exclusively; (b) any change
or effect resulting from changes in the international, national, regional or
local wholesale or retail markets for electric power; (c) any change or effect
resulting from changes in the international, national, regional or local markets
for any fuel used in connection with the Purchased Assets; (d) any change or
effect resulting from, changes in the North American, national, regional or
local electric transmission systems or operations thereof; (e) any materially
adverse change in or effect on the Purchased Assets which is cured (including by
the payment of money) by the Sellers before the Termination Date; (f) any order
of any court or Governmental Authority or legislature applicable to providers of
generation, transmission or distribution of electricity generally that imposes
restrictions, regulations or other requirements thereon; and (g) any change or
effect resulting from action or inaction by a Governmental Authority with
respect to an independent system operator or retail access in Pennsylvania or
New York.
(61) "Mine Indemnities" means the indemnification agreements included
in (x) the Termination Agreement, dated as of February 11, 1993, among NYSEG,
Penelec, The ▇▇▇▇▇ Mining Company, The Valley Camp Coal Company and Quaker State
Corporation and (y) Amendment No. 5 to the Coal Sales Agreement, dated November
22, 1994, among NYSEG, Penelec, Helvetia Coal Company and Rochester & Pittsburgh
Coal Company.
(62) "Mines" means the ▇▇▇▇▇ and Helvetia coal mines and associated
facilities which are located on the Real Property.
(63) "Non-Union Employees" has the meaning as set forth in Section
6.10(b).
(64) "NYDEC" means the New York Department of Environmental
Conservation and any successor agency thereto.
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(65) "NYPSC" means the Public Service Commission of the State of
New York and any successor agency thereto.
(66) "PaPUC" means the Pennsylvania Public Utility Commission and any
successor agency thereto.
(67) "PaDEP" means the Pennsylvania Department of Environmental
Protection and any successor agency thereto.
(68) "Permits" has the meaning set forth in Section 4.14.
(69) "Permitted Encumbrances" means: (i) the Easements; (ii) those
exceptions to title to the Purchased Assets listed in Schedule 4.5 and those
Encumbrances set forth in Schedule 1.1(69); (iii) statutory liens for Taxes or
other governmental charges or assessments not yet due or delinquent or the
validity of which is being contested in good faith by appropriate proceedings
provided that the aggregate amount being so contested does not exceed $500,000;
(iv) mechanics', carriers', workers', repairers' and other similar liens arising
or incurred in the ordinary course of business relating to obligations as to
which there is no default on the part of the Sellers or the validity of which
are being contested in good faith, and which do not, individually or in the
aggregate, exceed $500,000; (v) zoning, entitlement, conservation restriction
and other land use and environmental regulations by Governmental Authorities;
and (vi) such other liens, imperfections in or failure of title, charges,
easements, restrictions and Encumbrances which do not materially, individually
or in the aggregate, detract from the value of the Purchased Assets as currently
used or materially interfere with the present use of the Purchased Assets and
neither secure indebtedness, nor individually or in the aggregate create a
Material Adverse Effect.
(70) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, or
governmental entity or any department or agency thereof.
(71) "Plant" means the three-unit coal-fired generating station and
related assets as more fully identified on Schedule
2.1 attached hereto.
(72) "Post-Closing Adjustment" has the meaning set forth in Section
3.3(c).
(73) "Post-Closing Statement" has the meaning set forth in Section
3.3(c).
(74) "Proposed Post-Closing Adjustment" has the meaning set forth in
Section 3.3(c).
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(75) "Proprietary Information" of a Party means all information about
the Party or its Affiliates, including their respective properties or
operations, furnished to the other Party or its Representatives by the Party or
its Representatives, after the date hereof, regardless of the manner or medium
in which it is furnished. Proprietary Information does not include information
that: (a) is or becomes generally available to the public, other than as a
result of a disclosure by the other Party or its Representatives; (b) was
available to the other Party on a nonconfidential basis prior to its disclosure
by the Party or its Representatives; (c) becomes available to the other Party on
a nonconfidential basis from a person, other than the Party or its
Representatives, who is not otherwise bound by a confidentiality agreement with
the Party or its Representatives, or is not otherwise under any obligation to
the Party or any of its Representatives not to transmit the information to the
other Party or its Representatives; (d) is independently developed by the other
Party; or (e) was disclosed pursuant to the Confidentiality Agreement and
remains subject to the terms and conditions of the Confidentiality Agreement.
(76) "Purchased Assets" has the meaning set forth in Section 2.1.
(77) "Purchase Price" has the meaning set forth in Section 3.2.
(78) "Qualifying Offer" has the meaning set forth in Section 6.10(b).
(79) "Real Property" has the meaning set forth in Section 2.1(a).
(80) "Real Property Leases" has the meaning set forth in Section 4.6.
(81) "Release" means release, spill, leak, discharge, dispose of, pump,
pour, emit, empty, inject, ▇▇▇▇▇, dump or allow to escape into or through the
environment.
(82) "Remediation" means action of any kind to address a Release or the
presence of Hazardous Substances at the Site or an off-Site location including,
without limitation, any or all of the following activities to the extent they
relate to or arise from the presence of a Hazardous Substance at the Site or an
off-Site location: (a) monitoring, investigation, assessment, treatment,
cleanup, containment, removal, mitigation, response or restoration work; (b)
obtaining any permits, consents, approvals or authorizations of any Governmental
Authority necessary to conduct any such activity; (c) preparing and implementing
any plans or studies for any such activity; (d) obtaining a written notice from
a Governmental Authority with jurisdiction over the Site or an off-Site location
under Environmental Laws that no material additional work is required by such
Governmental
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Authority; (e) the use, implementation, application, installation, operation or
maintenance of removal actions on the Site or an off-Site location, remedial
technologies applied to the surface or subsurface soils, excavation and off-Site
treatment or disposal of soils, systems for long term treatment of surface water
or ground water, engineering controls or institutional controls; and (f) any
other activities reasonably determined by a Party to be necessary or appropriate
or required under Environmental Laws to address the presence or Release of
Hazardous Substances at the Site or an off-Site location.
(83) "Replacement Welfare Plans" has the meaning set forth in Section
6.10(e)
(84) "Representatives" of a Party means the Party's Affiliates and
their directors, officers, employees, agents, partners, advisors (including,
without limitation, accountants, counsel, environmental consultants, financial
advisors and other authorized representatives) and parents and other controlling
persons.
(85) "SEC" means the Securities and Exchange Commission and any
successor agency thereto.
(86) "Sellers' Agreements" means those contracts, agreements, licenses
and leases relating to the ownership, operation and maintenance of the Plant and
being assigned to Buyer as part of the Purchased Assets, including without
limitation the IBEW Collective Bargaining Agreement.
(87) "Sellers' Indemnitee" has the meaning set forth in Section 8.1(a).
(88) "Sellers' Required Regulatory Approvals" has the meaning set forth
in Section 4.3(b).
(89) "Site" means the Real Property (including improvements) forming a
part of, or used or usable in connection with the operation of, the Plant,
including any disposal sites included in Real Property. Any reference to the
Site shall include, by definition, the surface and subsurface elements,
including the soils and groundwater present at the Site, and any reference to
items "at the Site" shall include all items "at, on, in, upon, over, across,
under and within" the Site.
(90) "Subsidiary" when used in reference to any Person means any entity
of which outstanding securities having ordinary voting power to elect a majority
of the Board of Directors or other Persons performing similar functions of such
entity are owned directly or indirectly by such Person.
(91) Reserved.
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(92) "Tangible Personal Property" has the meaning set forth in Section
2.1(c).
(93) "Taxes" means all taxes, charges, fees, levies, penalties or other
assessments imposed by any federal, state or local or foreign taxing authority,
including, but not limited to, income, excise, property, sales, transfer,
franchise, payroll, withholding, social security, gross receipts, license,
stamp, occupation, employment or other taxes, including any interest, penalties
or additions attributable thereto.
(94) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any schedule or
related or supporting information) required to be supplied to any taxing
authority with respect to Taxes including amendments thereto.
(95) "Termination Date" has the meaning set forth in Section 9.1(b).
(96) "Third Party Claim" has the meaning set forth in Section 8.2(a).
(97) "Transferable Permits" means those Permits and Environmental
Permits which may be transferred to Buyer without a filing with, notice to,
consent or approval of any Governmental Authority, and are set forth in Schedule
1.1 (97).
(98) "Transferred Employees" means Transferred Non-Union Employees and
Transferred Union Employees.
(99) "Transferred Non-Union Employees" has the meaning set forth in
Section 6.10(b).
(100) "Transferred Union Employees" has the meaning set forth in
Section 6.10(b).
(101) "Transferring Employee Records" means records related to Sellers'
personnel who will become employees of Buyer only to the extent such files
pertain to: (i) skill and development training and biographies, (ii) seniority
histories, (iii) salary and benefit information, (iv) Occupational, Safety and
Health Administration reports, and (v) active medical restriction forms.
(102) "Transition Power Purchase Agreements" means the agreements
between Penelec and Buyer and NYSEG and Buyer, respectively, in the form of
Exhibit G hereto, executed on the date hereof, relating to the sale of installed
capacity to Penelec and NYSEG, respectively, for a specified period of time
following the Closing Date.
(103) "Transmission Assets" has the meaning set forth in Section
2.2(a).
12
(104) "USEPA" means the United States Environmental Protection Agency
and any successor agency thereto.
(105)"Year 2000 Compliant" has the meaning set forth in Section 4.19.
"Year 2000 Compliance" has a meaning correlative to the foregoing.
(106) "WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.
1.2 Certain Interpretive Matters. In this Agreement, unless the context
otherwise required, the singular shall include the plural, the masculine shall
include the feminine and neuter, and vice versa. The term "includes" or
"including" shall mean "including without limitation." References to a Section,
Article, Exhibit or Schedule shall mean a Section, Article, Exhibit or Schedule
of this Agreement, and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended, supplemented and
restated through the date as of which such reference is made.
ARTICLE
PURCHASE AND SALE
2.1 Transfer of Assets. Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, at the Closing each of Penelec
and NGE will sell, assign, convey, transfer and deliver to Buyer, and Buyer will
purchase, assume and acquire from each such Seller, free and clear of all
Encumbrances (except for Permitted Encumbrances), and subject to Section 2.2,
all of such Seller's right, title and interest in and to all of the assets
constituting, or used in and necessary for generation purposes to the operation
of, the Plant, including without limitation those assets identified in Schedule
2.1 and those assets described below (but excluding the Excluded Assets), each
as in existence on the Closing Date (collectively, "Purchased Assets"):
(a) Those certain parcels of real property (including all
buildings, facilities and other improvements thereon and all appurtenances
thereto) described in Schedule 4.10 (the "Real Property"), but subject to the
Permitted Encumbrances and those exceptions listed in Schedule 4.5 and except as
otherwise constituting part of the Excluded Assets;
(b) All Inventories and Emission Allowances;
(c) All machinery, mobile or otherwise, equipment (including
communications equipment), vehicles, tools, furniture and furnishings and other
personal property located on the Real
13
Property on the Closing Date, including, without limitation, the items of
personal property included in Schedule 2.1(c), together with all the personal
property of Sellers used principally in the operation of the Plant and listed in
Schedule 2.1(c), other than property used or primarily usable as part of the
Transmission Assets or otherwise constituting part of the Excluded Assets
(collectively, "Tangible Personal Property");
(d) Subject to the provisions of Section 6.5(c), all Sellers'
Agreements;
(e) Subject to the provisions of Section 6.5(c), all Real
Property Leases;
(f) All Transferable Permits;
(g) All books, operating records, operating, safety and
maintenance manuals, engineering design plans, documents, blueprints and as
built plans, specifications, procedures and similar items of Sellers relating
specifically to the aforementioned assets and necessary for the operation of the
Plant (subject to the right of Sellers to retain copies of same for their use)
other than such items which are proprietary to third parties and accounting
records;
(h) All Emission Reduction Credits associated with the Plant
and identified in Schedule 2.1(h) that have accrued prior to, or that accrue on
or after, the date of this Agreement but prior to the Closing Date;
(i) All unexpired, transferable warranties and guarantees from
third parties with respect to any item of Real Property or personal property
constituting part of the Purchased Assets, as of the Closing Date;
(j) The name of the Plant. It is expressly understood that
Sellers are not assigning or transferring to Buyer any right to use the name
"Pennsylvania Electric Company", "Penelec", "GPU", "GPU Energy", "GPU
Generation", "GPU Genco", "New York State Electric & Gas Corporation", "NYSEG",
"NGE" or "NGE Generation" or any related or similar trade names, trademarks,
service marks, corporate names and logos or any part, derivative or combination
thereof;
(k) All drafts, memoranda, reports, information, technology,
and specifications relating to the Sellers' plans for Year 2000 Compliance;
(l) The Intellectual Property described on Schedule 2.1(l);
and
(m) The substation equipment set forth in Schedule A to the
Interconnection Agreement and designated therein as being transferred to Buyer.
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2.2 Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement will constitute or be construed as
conferring on Buyer, and Buyer is not acquiring, any right, title or interest in
or to the following specific assets which are associated with the Purchased
Assets, but which are hereby specifically excluded from the sale and the
definition of Purchased Assets herein (the "Excluded Assets"):
(a) Except as expressly identified in Schedule 2.1(c), the
electrical transmission or distribution facilities (as opposed to generation
facilities) of Sellers or any of their Affiliates located at the Site or forming
part of the Plant (whether or not regarded as a "transmission" or "generation"
asset for regulatory or accounting purposes), including all switchyard
facilities, substation facilities and support equipment, as well as all permits,
contracts and warranties, to the extent they relate to such transmission and
distribution assets (collectively, the "Transmission Assets"), and those certain
assets, facilities and agreements all as identified on Schedule 2.2(a) attached
hereto;
(b) Certain switches and meters in the Plant, gas facilities,
revenue meters and remote testing units, drainage pipes and systems, as
identified in the Easement and Attachment Agreement;
(c) Certificates of deposit, shares of stock, securities,
bonds, debentures, evidences of indebtedness, and interests in joint ventures,
partnerships, limited liability companies and other entities;
(d) All cash, cash equivalents, bank deposits, accounts and
notes receivable (trade or otherwise), and any income, sales, payroll or other
tax receivables;
(e) The rights of Sellers and their Affiliates to the names
"Pennsylvania Electric Company", "Penelec", "GPU", "GPU Energy", "GPU
Generation", "GPU Genco", "New York State Electric & Gas Corporation", "NYSEG",
"NGE" and "NGE Generation" or any related or similar trade names, trademarks,
service marks, corporate names or logos, or any part, derivative or combination
thereof;
(f) All tariffs, agreements and arrangements to which Sellers
are a party for the purchase or sale of electric capacity and/or energy or for
the purchase of transmission or ancillary services;
(g) The rights of Sellers in and to any causes of action
against third parties (including indemnification and contribution) relating to
any Real Property or personal property, Permits, Environmental Permits, Taxes,
Real Property Leases or Sellers' Agreements, if any, including any claims for
refunds,
15
prepayments, offsets, recoupment, insurance proceeds, condemnation awards,
judgments and the like, whether received as payment or credit against future
liabilities, relating specifically to the Plant or the Site and relating to any
period prior to the Closing Date except that Buyer shall be deemed to be a third
party beneficiary of the Mine Indemnitees to the extent permitted by such
agreements;
(h) All personnel records of Sellers or their Affiliates
relating to the Transferred Employees other than Transferring Employee Records
or other records, the disclosure of which is required by law, or legal or
regulatory process or subpoena; and
(i) Any and all of Sellers' rights in any contract
representing an intercompany transaction between Sellers and an Affiliate of
Sellers, whether or not such transaction relates to the provision of goods and
services, payment arrangements, intercompany charges or balances, or the like.
2.3 Assumed Liabilities. On the Closing Date, Buyer shall deliver to
Sellers the Assignment and Assumption Agreement pursuant to which Buyer shall
assume and agree to discharge when due, without recourse to Sellers, all of the
following liabilities and obligations of Sellers, direct or indirect, known or
unknown, absolute or contingent, which relate to the Purchased Assets, other
than Excluded Liabilities, in accordance with the respective terms and subject
to the respective conditions thereof (collectively, "Assumed Liabilities"):
(a) All liabilities and obligations of Sellers arising on or
after the Closing Date under the Sellers' Agreements, the Real Property Leases,
and the Transferable Permits in accordance with the terms thereof, including,
without limitation, (i) the contracts, licenses, agreements and personal
property leases entered into by Sellers with respect to the Purchased Assets,
whether or not disclosed on Schedule 4.12(a) and (ii) the contracts, licenses,
agreements and personal property leases entered into by Sellers with respect to
the Purchased Assets after the date hereof consistent with the terms of this
Agreement, except in each case to the extent such liabilities and obligations,
but for a breach or default by Sellers, would have been paid, performed or
otherwise discharged on or prior to the Closing Date or to the extent the same
arise out of any such breach or default or out of any event which after the
giving of notice would constitute a default by Sellers;
(b) All liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which Buyer is liable pursuant to
Sections 3.5 or 6.8(a) hereof;
(c) All liabilities and obligations with respect to the
Transferred Employees on and after the Closing Date for which (i) Buyer is
responsible pursuant to Section 6.10 and (ii) the
16
grievances and arbitration proceedings arising out of or under the Collective
Bargaining Agreement prior to (as set forth in Schedule 4.8), on or after the
Closing Date;
(d) Any liability, obligation or responsibility under or
related to Environmental Laws or the common law, whether such liability or
obligation or responsibility is known or unknown, contingent or accrued, arising
as a result of or in connection with (i) any violation or alleged violation of
Environmental Laws, whether prior to, on or after the Closing Date, with respect
to the ownership or operation of any of the Purchased Assets, including, but not
limited to, the Mines (except to the extent Sellers receive indemnity payments
under the Mine Indemnities); (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 on or
after the Closing Date) caused (or allegedly caused) by the presence or Release
of Hazardous Substances at, on, in, under, adjacent to or migrating from the
Purchased Assets prior to, on or after the Closing Date, including, but not
limited to, Hazardous Substances contained in building materials at or adjacent
to the Purchased Assets or in the soil, surface water, sediments, groundwater,
landfill cells, or in other environmental media at or near the Purchased Assets;
and (iii) the Remediation (whether or not such Remediation commenced before the
Closing Date or commences on or after the Closing Date) of Hazardous Substances
that are present or have been Released prior to, on or after the Closing Date
at, on, in, under, adjacent to or migrating from, the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells or in other
environmental media at or adjacent to the Purchased Assets; provided, that
nothing set forth in this subsection 2.3(d) shall require Buyer to assume any
liabilities or obligations that are expressly excluded in Section 2.4 including
without limitation liability for toxic torts as set forth in Section 2.4(i);
provided, further, however, that nothing set forth in this subsection 2.3(d) or
otherwise herein shall require Buyer to assume any obligation for payment of
fines, penalties or costs imposed by a Governmental Authority to the extent such
obligations arise out of or relate to acts or omissions of the Sellers prior to
the Closing that constitute violations of the New Source Performance Standards,
Prevention of Significant Deterioration or New Source Review regulations under
the Clean Air Act.
(e) All liabilities and obligations of Sellers with respect to
the Purchased Assets under the agreements or consent orders set forth on
Schedule 4.7 arising on or after the Closing; and
(f) With respect to the Purchased Assets, any Tax that may be
imposed by any federal, state or local government on the ownership, sale,
operation or use of the Purchased Assets on or
17
after the Closing Date, except for any Income Taxes attributable to income
received by Sellers.
2.4 Excluded Liabilities. Buyer shall not assume or be obligated to
pay, perform or otherwise discharge the following liabilities or obligations
(the "Excluded Liabilities"):
(a) Any liabilities or obligations of Sellers in respect of
any Excluded Assets or other assets of Sellers which are not Purchased Assets;
(b) Any liabilities or obligations in respect of Taxes
attributable to the ownership, operation or use of Purchased Assets for taxable
periods, or portions thereof, ending before the Closing Date, except for Taxes
for which Buyer is liable pursuant to Sections 3.5 or 6.8(a) hereof;
(c) Any liabilities or obligations of Sellers accruing under
any of the Sellers' Agreements prior to the Closing Date;
(d) Any and all asserted or unasserted liabilities or
obligations to third parties (including employees) for personal injury or tort,
or similar causes of action arising solely out of the ownership or operation of
the Purchased Assets prior to the Closing Date, other than any liabilities or
obligations which have been assumed by Buyer under Section 2.3(d);
(e) Any fines, penalties or costs imposed by a Governmental
Authority resulting from (i) an investigation, proceeding, request for
information or inspection before or by a Governmental Authority pending prior to
the Closing Date but only regarding acts which occurred prior to the Closing
Date, or (ii) illegal acts, willful misconduct or gross negligence of Sellers
prior to the Closing Date, other than, any such fines, penalties or costs which
have been assumed by Buyer under Section 2.3(d);
(f) Any payment obligations of Sellers for goods delivered or
services rendered prior to the Closing Date, including, but not limited to,
rental payments pursuant to the Real Property Leases and Personal Property
Leases;
(g) Any liability, obligation or responsibility under or
related to Environmental Laws or the common law, whether such liability or
obligation or responsibility is known or unknown, contingent or accrued, arising
as a result of or in connection with 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 on or
after the Closing Date) to the extent caused (or allegedly caused) by the
off-Site disposal, storage, transportation, discharge, Release, or recycling of
Hazardous Substances, or the arrangement for such activities, of Hazardous
Substances, prior to the Closing Date, in connection with the
18
ownership or operation of the Purchased Assets, provided that for purposes of
this Section "off-Site" does not include any location to which Hazardous
Substances disposed of or Released at the Purchased Assets have migrated;
(h) Any liability, obligation or responsibility under or
related to Environmental Laws or the common law, whether such liability or
obligation or responsibility is known or unknown, contingent or accrued, arising
as a result of or in connection with the investigation and/or Remediation
(whether or not such investigation or Remediation commenced before the Closing
Date or commences on or after the Closing Date) of Hazardous Substances that are
disposed, stored, transported, discharged, Released, recycled, or the
arrangement of such activities, prior to the Closing Date, in connection with
the ownership or operation of the Purchased Assets, at any off-Site location,
provided that for purposes of this Section "off-Site" does not include any
location to which Hazardous Substances disposed of or Released at the Purchased
Assets have migrated;
(i) Third party liability for toxic torts arising as a result
of or in connection with loss of life or injury to persons (whether or not such
loss or injury arose or was made manifest on or after the Closing Date) caused
(or allegedly caused) by the presence or Release of Hazardous Substances at, on,
in, under, adjacent to or migrating from the Purchased Assets prior to the
Closing Date;
(j) Subject to Section 6.10, any liabilities or obligations
relating to any Benefit Plan maintained by the Sellers or any trade or business
(whether or not incorporated) which is or ever has been under common control, or
which is or ever has been treated as a single employer, with a Seller under
Section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") or to which a
Seller and any ERISA Affiliate contributed thereunder (the "ERISA Affiliate
Plans"), including any multi-employer plan, maintained by, contributed to, or
obligated to contribute to, at any time, by a Seller or any ERISA Affiliate,
including but not limited to any liability (i) relating to benefits payable
under any Benefit Plans (ii) relating to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (iii) relating to a multi-employer plan;
(iv) with respect to non-compliance with the notice and benefit continuation
requirements of COBRA; (v) with respect to any noncompliance with ERISA or any
other applicable laws; or (vi) with respect to any suit, proceeding or claim
which is brought against Buyer, any Benefit Plan, ERISA Affiliate Plan, any
fiduciary or former fiduciary of any such Benefit Plan or ERISA Affiliate Plan;
(k) Subject to Section 6.10, any liabilities or obligations
relating to the employment or termination of employment, including
discrimination, wrongful discharge, unfair labor practices, or constructive
termination by a Seller of any individual, attributable to any actions or
inactions by the
19
Sellers prior to the Closing Date other than such actions or inactions taken at
the written direction of Buyer;
(l) Subject to Section 6.10, any obligations for wages,
overtime, employment taxes, severance pay, transition payments in respect of
compensation or similar benefits accruing or arising prior to the Closing under
any term or provision of any contract, plan, instrument or agreement relating to
any of the Purchased Assets; and
(m) Any liability of a Seller arising out of a breach by a
Seller or any of its Affiliates of any of their respective obligations under
this Agreement or the Ancillary Agreements.
2.5 Control of Litigation. The Parties agree and acknowledge that
Sellers shall be entitled exclusively to control, defend and settle any
litigation, administrative or regulatory proceeding, and any investigation or
Remediation activities (including without limitation any environmental
mitigation or Remediation activities), arising out of or related to any Excluded
Liabilities, and Buyer agrees to cooperate fully in connection therewith.
ARTICLE III
THE CLOSING
3.1 Closing. Upon the terms and subject to the satisfaction of the
conditions contained in Article VII of this Agreement, the sale, assignment,
conveyance, transfer and delivery of the Purchased Assets to Buyer, the payment
of the Purchase Price to Sellers, and the consummation of the other respective
obligations of the Parties contemplated by this Agreement shall take place at a
closing (the "Closing"), to be held at the offices of Berlack, Israels &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m. local time,
or another mutually acceptable time and location, on the date that is fifteen
(15) Business Days following the date on which the last of the conditions
precedent to Closing set forth in Article VII of this Agreement have been either
satisfied or waived by the Party for whose benefit such conditions precedent
exist or such other date as the Parties may mutually agree. The date of Closing
is hereinafter called the "Closing Date." The Closing shall be effective for all
purposes as of 12:01 a.m. on the Closing Date.
3.2 Payment of Purchase Price. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Assets, Buyer will pay or cause to be paid to Sellers at the Closing
20
an aggregate amount of one billion, eight hundred and one million United States
Dollars(U.S. $1,801,000,000.00) (the "Purchase Price") plus or minus any
adjustments pursuant to the provisions of this Agreement, by wire transfer of
immediately available funds denominated in U.S. dollars or by such other means
as are agreed upon by Sellers and Buyer.
3.3 Adjustment to Purchase Price. (a) Subject to Section 3.3(b),
at the Closing, the Purchase Price shall be adjusted, without duplication, to
account for the items set forth in this Section 3.3(a):
(i) The Purchase Price shall be increased or
decreased, as applicable, to reflect the difference between the book
value of all Inventories as of the Closing Date and the value of all
Inventories as of December 31, 1997 reflected on Schedule 3.3(a)(i).
(ii) The Purchase Price shall be adjusted to account
for the items prorated as of the Closing Date pursuant to Section 3.5.
(iii) The Purchase Price shall be increased by the
amount expended, or for which liabilities are incurred, by Sellers
between the date hereof and the Closing Date for capital additions to
or replacements of property, plant and equipment included in the
Purchased Assets and other expenditures or repairs on property, plant
and equipment included in the Purchased Assets that would be
capitalized by Sellers in accordance with normal accounting policies of
Sellers and their Affiliates (together, "Capital Expenditures"), which
are not described on Schedule 6.1 and which either (A) are mandated
after the date of this Agreement by any Governmental Authority (subject
to Buyer's right to direct Sellers to contest such mandates by
appropriate proceedings at Buyer's expense and provided there is no
adverse impact on the Purchased Assets); or (B) do not fall within
category (A) above but do not exceed in the aggregate $500,000; or (C)
are approved in writing by Buyer.
(b) At least ten (10) Business Days prior to the Closing Date,
Sellers shall prepare and deliver to Buyer an estimated closing statement (the
"Estimated Closing Statement") that shall set forth Sellers' best estimate of
all estimated adjustments to the Purchase Price required by Section 3.3(a) (the
"Estimated Adjustment"). Within five (5) Business Days following the delivery of
the Estimated Closing Statement by Sellers to Buyer, Buyer may object in good
faith to the Estimated Adjustment in writing. If Buyer objects to the Estimated
Adjustment, the Parties shall attempt to resolve their differences by
negotiation. If the Parties are unable to do so within three (3) Business Days
prior to the Closing Date (or if Buyer does not object to the Estimated
Adjustment), the Purchase Price shall be
21
adjusted (the "Closing Adjustment") for the Closing by the amount of the
Estimated Adjustment not in dispute. The disputed portion shall be paid as a
Post-Closing Adjustment to the extent required by Section 3.3(c).
(c) Within sixty (60) days following the Closing Date, Sellers
shall prepare and deliver to Buyer a final closing statement (the "Post-Closing
Statement") that shall set forth all adjustments to the Purchase Price required
by Section 3.3(a) (the "Proposed Post-Closing Adjustment"). The Post-Closing
Statement shall be prepared using the same accounting principles, policies and
methods as Sellers have historically used in connection with the calculation of
the items reflected on such Post-Closing Statement. Within thirty (30) days
following the delivery of the Post-Closing Statement by Sellers to Buyer, Buyer
may object to the Proposed Post-Closing Adjustment in writing. Sellers agree to
cooperate with Buyer to provide Buyer and Buyer's Representatives information
used to prepare the Post-Closing Statement and information relating thereto. If
Buyer objects to the Proposed Post-Closing Adjustment, the Parties shall attempt
to resolve such dispute by negotiation. If the Parties are unable to resolve
such dispute within thirty (30) days of any objection by Buyer, the Parties
shall appoint the Independent Accounting Firm, which shall, at Sellers' and
Buyer's joint expense, review the Proposed Post-Closing Adjustment and determine
the appropriate adjustment to the Purchase Price, if any, within thirty (30)
days of such appointment. The Parties agree to cooperate with the Independent
Accounting Firm and provide it with such information as it reasonably requests
to enable it to make such determination. The finding of such Independent
Accounting Firm shall be binding on the Parties hereto. Upon determination of
the appropriate adjustment (the "Post-Closing Adjustment") by agreement of the
Parties or by binding determination of the Independent Accounting Firm, if the
Post-Closing Adjustment is more or less than the Closing Adjustment, the Party
owing the difference shall deliver such difference to the other Party no later
than two (2) Business Days after such determination, in immediately available
funds or in any other manner as reasonably requested by the payee.
3.4 Allocation of Purchase Price. Buyer and Sellers shall endeavor to
agree upon an allocation among the Purchased Assets of the sum of the Purchase
Price and the Assumed Liabilities consistent with Section 1060 of the Code and
the Treasury Regulations thereunder within sixty (60) days of the date of this
Agreement. Each of Buyer and Sellers agree to file Internal Revenue Service Form
8594, and all federal, state, local and foreign Tax Returns, in accordance with
any such agreed to allocation. Each of Buyer and Sellers shall report the
transactions contemplated by this Agreement for federal Tax and all other Tax
purposes in a manner consistent with any such agreed to allocation determined
pursuant to this Section 3.4. Each of Buyer and Sellers agree to provide the
other promptly with any information required to complete Form 8594. Buyer and
22
Sellers shall notify and provide the other with reasonable assistance in the
event of an examination, audit or other proceeding regarding any allocation of
the Purchase Price agreed to pursuant to this Section 3.4.
3.5 Prorations. (a) Buyer and Sellers agree that all of the items
normally prorated, including those listed below (but not including Income
Taxes), relating to the business and operation of the Purchased Assets shall be
prorated as of the Closing Date, with Sellers liable to the extent such items
relate to any time period prior to the Closing Date, and Buyer liable to the
extent such items relate to periods commencing with the Closing Date (measured
in the same units used to compute the item in question, otherwise measured by
calendar days):
(i) Personal property, real estate and occupancy
Taxes, assessments and other charges, if any, on or with respect to the
business and operation of the Purchased Assets;
(ii) Rent, Taxes and all other items (including
prepaid services or goods not included in Inventory) payable by or to
Sellers under any of the Sellers' Agreements;
(iii) Any permit, license, registration, compliance
assurance fees or other fees with respect to any Transferable Permit;
(iv) Sewer rents and charges for water, telephone,
electricity and other utilities; and
(v) Rent and Taxes and other items payable by
Sellers under the Real Property Leases assigned to Buyer.
(b) In connection with the prorations referred to in (a)
above, in the event that actual figures are not available at the Closing Date,
the proration shall be based upon the actual Taxes or other amounts accrued
through the Closing Date or paid for the most recent year (or other appropriate
period) for which actual Taxes or other amounts paid are available. Such
prorated Taxes or other amounts shall be re-prorated and paid to the appropriate
Party within sixty (60) days of the date that the previously unavailable actual
figures become available. The prorations shall be based on the number of days in
a year or other appropriate period (i) before the Closing Date and (ii)
including and after the Closing Date. Sellers and Buyer agree to furnish each
other with such documents and other records as may be reasonably requested in
order to confirm all adjustment and proration calculations made pursuant to this
Section 3.5.
Notwithstanding anything to the contrary herein, no proration
shall be made under this Section 3.5 with respect to Taxes payable under the
Pennsylvania Public Utility Realty Tax Act ("▇▇▇▇▇"). Buyer shall be fully
23
responsible for all Taxes payable under ▇▇▇▇▇ for the year in which the
Closing occurs.
3.6. Deliveries by Sellers. At the Closing, each of Sellers as to
itself will deliver, or cause to be delivered, the following to Buyer:
(a) The ▇▇▇▇ of Sale, duly executed by Penelec and NGE;
(b) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Sellers with respect to the transfer
of the Purchased Assets, or the consummation of the transactions contemplated by
this Agreement;
(c) The opinions of counsel and officer's certificates
contemplated by Section 7.1;
(d) One or more special warranty deeds conveying the Real
Property to Buyer, in substantially the form of Exhibit F hereto, duly executed
and acknowledged by Penelec and NGE and in recordable form;
(e) The Assignment and Assumption Agreement, duly executed by
Penelec and NGE;
(f) A FIRPTA Affidavit, duly executed by Sellers;
(g) Copies, certified by the Secretary or Assistant Secretary
of each Seller, of corporate resolutions authorizing the execution and delivery
of this Agreement and all of the agreements and instruments to be executed and
delivered by Sellers in connection herewith, and the consummation of the
transactions contemplated hereby;
(h) A certificate of the Secretary or Assistant Secretary of
each Seller identifying the name and title and bearing the signatures of the
officers of such Seller authorized to execute and deliver this Agreement and the
other agreements and instruments contemplated hereby;
(i) Certificates of Good Standing with respect to the Sellers,
issued by the Secretary of the State of each Sellers' state of incorporation, as
applicable;
(j) To the extent available, originals of all Sellers'
Agreements, Real Property Leases and Transferable Permits and, if not available,
true and correct copies thereof;
(k) All such other instruments of assignment, transfer or
conveyance as shall, in the reasonable opinion of Buyer and its counsel, be
necessary or desirable to transfer to Buyer the
24
Purchased Assets, in accordance with this Agreement and where necessary or
desirable in recordable form; and
(l) Such other agreements, documents, instruments and writings
as are required to be delivered by Sellers at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
3.7. Deliveries by Buyer. At the Closing, Buyer will deliver, or
cause to be delivered, the following to Sellers:
(a) The Purchase Price, as adjusted pursuant to Section 3.3,
by wire transfer of immediately available funds in accordance with Sellers'
instructions or by such other means as may be agreed to by Sellers and Buyer;
(b) The opinions of counsel and officer's certificates
contemplated by Section 7.2;
(c) The Assignment and Assumption Agreement, duly executed
by Buyer;
(d) Copies, certified by the Secretary or Assistant Secretary
of Buyer and Buyer Parent, respectively, of resolutions authorizing the
execution and delivery of this Agreement, the Guaranty and all of the agreements
and instruments to be executed and delivered by Buyer in connection herewith,
and the consummation of the transactions contemplated hereby;
(e) A certificate of the Secretary or Assistant Secretary of
Buyer and Buyer Parent, respectively, identifying the name and title and bearing
the signatures of the officers of Buyer authorized to execute and deliver this
Agreement, the Guaranty and the other agreements contemplated hereby;
(f) All such other instruments of assumption as shall, in the
reasonable opinion of Sellers and their counsel, be necessary for Buyer to
assume the Assumed Liabilities in accordance with this Agreement;
(g) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Buyer with respect to the transfer of
the Purchased Assets, or the consummation of the transactions contemplated by
this Agreement;
(h) Certificates of Insurance relating to the insurance
policies required pursuant to Article 10 of the Interconnection Agreement; and
(i) Such other agreements, documents, instruments and writings
as are required to be delivered by Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
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3.8 Ancillary Agreements. The Parties acknowledge that the
Ancillary Agreements have been executed on the date hereof.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLERS
Each of Sellers severally as to itself, in the case of Sections 4.1,
4.2, 4.3, 4.5 and 4.15, and, subject to Section 10.1, jointly and severally, as
to all other representations and warranties, represents and warrants to Buyer as
follows:
4.1 Incorporation; Qualification. Such Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation and has all requisite corporate power and authority to own,
lease, and operate its material properties and assets and to carry on its
business as is now being conducted. Such Seller is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which its business as now being conducted shall require it to be
so qualified, except where the failure to be so qualified would not have a
Material Adverse Effect. Such Seller has heretofore delivered to Buyer true,
complete and correct copies of its Certificate of Incorporation and Bylaws as
currently in effect.
4.2 Authority Relative to this Agreement. Such Seller has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by it hereby. The execution and
delivery of this Agreement by such Seller and the consummation of the
transactions contemplated by such Seller hereby have been duly and validly
authorized by all necessary corporate action required on the part of such Seller
and this Agreement has been duly and validly executed and delivered by such
Seller. Subject to the receipt of Sellers' Required Regulatory Approvals, this
Agreement constitutes the legal, valid and binding agreement of such Seller,
enforceable against such Seller in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
4.3 Consents and Approvals; No Violation. (a) Except as set forth in
Schedule 4.3(a), and subject to obtaining Sellers' Required Regulatory
Approvals, neither the execution and delivery of this Agreement by such Seller
nor the consummation by such Seller of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of such Seller, (ii) result in a default (or give rise
to any right of termination, cancellation
26
or acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, material agreement or other instrument or obligation
to which such Seller is a party or by which it, or any of the Purchased Assets
may be bound, except for such defaults (or rights of termination, cancellation
or acceleration) as to which requisite waivers or consents have been obtained or
which, would not, individually or in the aggregate, create a Material Adverse
Effect; or (iii) constitute violations of any law, regulation, order, judgment
or decree applicable to such Seller, which violations, individually or in the
aggregate, would create a Material Adverse Effect.
(b) Except as set forth in Schedule 4.3(b), (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to as the
"Sellers' Required Regulatory Approvals"), no consent or approval of, filing
with, or notice to, any Governmental Authority is necessary for the execution
and delivery of this Agreement by such Seller, or the consummation by such
Seller of the transactions contemplated hereby, other than (i) such consents,
approvals, filings or notices which, if not obtained or made, will not prevent
such Seller from performing its material obligations hereunder and (ii) such
consents, approvals, filings or notices which become applicable to such Seller
or the Purchased Assets as a result of the specific regulatory status of Buyer
(or any of its Affiliates) or as a result of any other facts that specifically
relate to the business or activities in which Buyer (or any of its Affiliates)
is or proposes to be engaged.
4.4 Insurance. Except as set forth in Schedule 4.4, all material
policies of fire, liability, workers' compensation and other forms of insurance
owned or held by, or on behalf of, Sellers with respect to the business,
operations or employees at the Plant or the Purchased Assets are in full force
and effect, all premiums with respect thereto covering all periods up to and
including the date hereof has been paid (other than retroactive premiums which
may be payable with respect to comprehensive general liability and workers'
compensation insurance policies), and no notice of cancellation or termination
has been received with respect to any such policy which was not replaced on
substantially similar terms prior to the date of such cancellation. Except as
described in Schedule 4.4, within the 36 months preceding the date of this
Agreement, the Sellers have not been refused any insurance with respect to the
Purchased Assets nor has their coverage been limited by any insurance carrier to
which they have applied for any such insurance or with which they have carried
insurance during the last twelve (12) months.
4.5. Title and Related Matters. Except as set forth in Schedule 4.5 and
subject to Permitted Encumbrances, (i) each of Penelec and NGE is the owner of
record title to a 50% undivided interest in the Real Property and has good and
valid title to the other Purchased Assets which it purports to own, free and
clear of all Encumbrances and (ii) each such Seller shall convey to
27
Buyer such title with respect to the Real Property as a reputable title company
doing business in the Commonwealth of Pennsylvania would insure.
4.6 Real Property Leases. Schedule 4.6 lists, as of the date of this
Agreement, all real property leases under which each Seller is a lessee or
lessor and which relate to the Purchased Assets ("Real Property Leases"). Except
as set forth in Schedule 4.6, all such leases are valid, binding and enforceable
against Sellers in accordance with their terms; there are no existing material
defaults by Sellers or, to such Sellers' Knowledge, any other party thereunder;
and no event has occurred which (whether with or without notice, lapse of time
or both) would constitute a material default by Sellers or, to Sellers'
Knowledge, any other party thereunder. Sellers have delivered to Buyer true,
correct and complete copies of each of the Real Property Leases.
4.7 Environmental Matters. Except as disclosed in Schedule 4.7 or in
the "Phase I" and "Phase II" environmental site assessments prepared by Sellers'
outside environmental consultants ("Environmental Reports") and made available
for inspection by Buyer:
(a) The Sellers hold, and are in substantial compliance with,
all permits, certificates, certifications, licenses and governmental
authorizations under Environmental Laws ("Environmental Permits") that are
required for Sellers to conduct the business and operations of the Purchased
Assets, and Sellers are otherwise in compliance with applicable Environmental
Laws with respect to the business and operations of the Purchased Assets except
for such failures to hold or comply with required Environmental Permits, or such
failures to be in compliance with applicable Environmental Laws, as would not,
individually or in the aggregate, create a Material Adverse Effect;
(b) None of Sellers has received any written request for
information, or been notified that it is a potentially responsible party, under
CERCLA or any similar state law with respect to the Real Property;
(c) None of the Sellers has entered into or agreed to any
consent decree or order relating to the Purchased Assets, or is subject to any
outstanding judgment, decree, or judicial order relating to compliance with any
Environmental Law or to investigation or cleanup of Hazardous Substances under
any Environmental Law relating to the Purchased Assets.
(d) To Sellers' Knowledge, no Releases of Hazardous Substances
have occurred at, from, in, on, or under the Site, and no Hazardous Substances
are present in, on, about or migrating from the Site that could give rise to an
Environmental Claim related to the Purchased Assets for which Remediation
28
reasonably such Releases would not, individually or in the aggregate, create a
Material Adverse Effect.
The representations and warranties made in this Section 4.7 are the
Sellers' exclusive representations and warranties relating to environmental
matters.
4.8 Labor Matters. Sellers have previously delivered to Buyer true and
correct copies of all collective bargaining agreements to which Sellers are a
party or are subject and which relate to the business and operations of the
Purchased Assets. With respect to the business or operations of the Purchased
Assets, except to the extent set forth in Schedule 4.8 and except for such
matters as will not, individually or in the aggregate, create a Material Adverse
Effect, (a) Sellers are in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours; (b) neither Seller has received written notice of any unfair
labor practice complaint against such Seller pending before the National Labor
Relations Board; (c) no arbitration proceeding arising out of or under any
collective bargaining agreements is pending against either Seller; and (d)
Sellers have not experienced any work stoppage within the three-year period
prior to the date hereof and to Sellers' Knowledge none is currently threatened.
4.9 Benefit Plans: ERISA. (a)Schedule 4.9(a) lists all deferred
compensation, profit-sharing, retirement and pension plans, including
multi-employer plans (of which none exist), and all material bonus, fringe
benefit and other employee benefit plans maintained or with respect to which
contributions are made by Penelec or Genco in respect of the current employees
of Penelec or Genco connected with the Purchased Assets ("Benefit Plans"). True
and complete copies of all such Benefit Plans have been made available to Buyer.
(b) Except as set forth in Schedule 4.9(b), Sellers and the ERISA
Affiliates have fulfilled their respective obligations under the minimum funding
requirements of Section 302 of ERISA, and Section 412 of the Code, with respect
to each Benefit Plan which is an "employee pension benefit plan" as defined in
Section 3(2) of ERISA and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code. Except
as set forth in Schedule 4.9(b), neither the Sellers nor any ERISA Affiliate has
incurred any liability under Section 4062(b) of ERISA to the Pension Benefit
Guaranty Corporation in connection with any Benefit Plan which is subject to
Title IV of ERISA or any withdrawal liability, nor is there any reportable event
(as defined in Section 4043 of ERISA), except as set forth in Schedule 4.9(b).
Except as set forth in Schedule 4.9(b), the Internal Revenue Service has issued
a letter for each Benefit Plan which is intended to be qualified under Section
401(a) of the Code, which letter determines that such plan is exempt from United
States Federal Income Tax under
29
Section 401(a) and 501(a) of the Code, and there has been no occurrence since
the date of any such determination letter which has affected adversely such
qualification.
(c) Neither the Sellers nor any ERISA Affiliate has engaged in any
transaction within the meaning of Section 4069(b) or Section 4212(c) of ERISA.
No Benefit Plan is a multi-employer plan.
(d) To the extent the Sellers maintain a "group health plan" within the
meaning of Section 5000(b) (1) of the Code, Sellers have materially complied in
good faith with the notice and continuation requirements of Section 4980B of the
Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder.
4.10 Real Property. Schedule 4.10 contains a description of the Real
Property owned by Penelec and NGE and included in the Purchased Assets. True and
correct copies of any current surveys, abstracts or title opinions in Sellers'
possession and any policies of title insurance currently in force and in the
possession of Sellers with respect to the Real Property have heretofore been
made available to Buyer.
4.11 Condemnation. Except as set forth in Schedule 4.11, Sellers have
not received any written notices of and otherwise have no Knowledge of any
pending or threatened proceedings or governmental actions to condemn or take by
power of eminent domain all or any part of the Purchased Assets.
4.12 Contracts and Leases. (a) Schedule 4.12(a) lists each written
contract, license, agreement, or personal property lease which is material to
the business or operations of the Purchased Assets, other than any contract,
license, agreement or personal property lease which is listed or described on
another Schedule, or which is expected to expire or terminate prior to the
Closing Date, or which provides for annual payments by the Sellers after the
date hereof of less than $250,000 or payments by the Sellers after the date
hereof of less than $1,000,000 in the aggregate.
(b) Except as disclosed in Schedule 4.12(b), each Sellers'
Agreement (i) constitutes a legal, valid and binding obligation of the
applicable Seller and, to each Seller's Knowledge, constitutes a valid and
binding obligation of the other parties thereto, and (ii) may be transferred to
Buyer pursuant to this Agreement without the consent of the other parties
thereto and will continue in full force and effect thereafter, unless in any
such case the impact of such lack of legality, validity or binding nature, or
inability to transfer, would not, individually or in the aggregate, create a
Material Adverse Effect.
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(c) Except as set forth in Schedule 4.12(c), there is not,
under the Sellers' Agreements, any default or event which, with notice or lapse
of time or both, would constitute a default on the part of the Sellers or to
each Seller's Knowledge, any of the other parties thereto, except such events of
default and other events which would not, individually or in the aggregate,
create a Material Adverse Effect.
4.13 Legal Proceedings etc. Except as set forth in Schedule 4.13, there
are no actions or proceedings pending against Sellers before any court,
arbitrator or Governmental Authority, which could, individually or in the
aggregate, reasonably be expected to create a Material Adverse Effect. Except as
set forth in Schedule 4.13, neither Seller is subject to any outstanding
judgments, rules, orders, writs, injunctions or decrees of any court, arbitrator
or Governmental Authority which would, individually or in the aggregate, create
a Material Adverse Effect.
4.14 Permits. (a) The Sellers have all permits, licenses, franchises
and other governmental authorizations, consents and approvals, (other than
Environmental Permits, which are addressed in Section 4.7 hereof) (collectively,
"Permits") necessary to own and operate the Purchased Assets except where the
failure to have such Permits would not, individually or in the aggregate, create
a Material Adverse Effect. Except as disclosed on Schedule 4.14(a), Sellers have
not received any notification that any Seller is in violation of any such
Permits, except notifications of violations which would not, individually or in
the aggregate, create a Material Adverse Effect. Sellers are in compliance with
all such Permits except where non-compliance would not, individually or in the
aggregate, create a Material Adverse Effect.
(b) Schedule 4.14(b) sets forth all material Permits and
Environmental Permits, other than Transferable Permits (which are set forth on
Schedule 1.1(96)) related to the Purchased Assets.
4.15 Taxes. Penelec and NGE have filed all returns that are required to
be filed by it with respect to any Tax relating to the Purchased Assets, and
Penelec and NGE have each paid all Taxes that have become due as indicated
thereon, except where such Tax is being contested in good faith by appropriate
proceedings, or where the failure to so file or pay would not reasonably be
expected to create a Material Adverse Effect. Penelec and NGE have complied in
all material respects with all applicable laws, rules and regulations relating
to withholding Taxes relating to Transferred Employees. All Tax Returns relating
to the Purchased Assets are true, correct and complete in all material respects.
Except as set forth in Schedule 4.15, no notice of deficiency or assessment has
been received from any taxing authority with respect to liabilities for Taxes of
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such Sellers in respect of the Purchased Assets, which have not been fully paid
or finally settled, and any such deficiency shown in Schedule 4.15 is being
contested in good faith through appropriate proceedings. Except as set forth in
Schedule 4.15, there are no outstanding agreements or waivers extending the
applicable statutory periods of limitation for Taxes associated with the
Purchased Assets that will be binding upon Buyer after the Closing. None of the
Purchased Assets is property that is required to be treated as being owned by
any other person pursuant to the so-called safe harbor lease provisions of
former Section 168(f) of the Code, and none of the Purchased Assets is
"tax-exempt use" property within the meaning of Section 168(h) of the Code.
Schedule 4.15 sets forth the taxing jurisdictions in which either Penelec or NGE
own assets or conduct business that require a notification to a taxing authority
of the transactions contemplated by this Agreement, if the failure to make such
notification, or obtain Tax clearance certificates in connection therewith,
would either require Buyer to withhold any portion of the Purchase Price or
subject Buyer to any liability for any Taxes of Penelec or NGE.
4.16 Intellectual Property. Schedule 2.1(l) sets forth all Intellectual
Property used in and, individually or in the aggregate with other Intellectual
Property, is material to the operation or business of the Purchased Assets, each
of which a Seller or its Affiliates either has all right, title and interest in
or valid and binding rights under contract to use. Except as disclosed in
Schedule 4.16, (i) the Sellers are not, nor have they received any notice that
they are, in default (or with the giving of notice or lapse of time or both,
would be in default), under any contract to use such Intellectual Property, and
(ii), to Sellers' Knowledge, such Intellectual Property is not being infringed
by any other Person. Sellers have not received notice that they are infringing
any Intellectual Property of any other Person in connection with the operation
or business of the Purchased Assets, and Sellers, to their Knowledge, are not
infringing any Intellectual Property of any other Person the effect of which,
individually or in the aggregate, would have a Material Adverse Effect.
4.17 Capital Expenditures. Except as set forth in Schedule 6.1, there
are no capital expenditures associated with the Purchased Assets that are
planned by Sellers through December 31, 1999.
4.18 Compliance With Laws. The Sellers are in compliance with all
applicable laws, rules and regulations with respect to the ownership or
operation of the Purchased Assets except where the failure to be in compliance
would not, individually or in the aggregate, create a Material Adverse Effect.
4.19 DISCLAIMERS REGARDING PURCHASED ASSETS. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV, THE PURCHASED
ASSETS ARE SOLD "AS IS, WHERE IS", AND EACH SELLER EXPRESSLY DISCLAIMS ANY
32
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
LIABILITIES, OPERATIONS OF THE PLANT, THE TITLE, CONDITION, VALUE OR QUALITY OF
THE PURCHASED ASSETS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER
INCIDENTS OF THE PURCHASED ASSETS AND EACH SELLER SPECIFICALLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE WITH RESPECT TO THE PURCHASED ASSETS, OR ANY PART
THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS
THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENTS, INCLUDING
BUT NOT LIMITED TO ANY ENVIRONMENTAL LAWS, OR WHETHER EACH SELLER POSSESSES
SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE PURCHASED ASSETS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, EACH SELLER FURTHER SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS
SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS
WITH RESPECT TO THE PURCHASED ASSETS. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, EACH SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE CONDITION OF
THE PURCHASED ASSETS OR THE SUITABILITY OF THE PURCHASED ASSETS FOR OPERATION AS
A POWER PLANT AND NO SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER
MATERIAL OR INFORMATION PROVIDED BY OR COMMUNICATIONS MADE BY EACH SELLER OR
THEIR REPRESENTATIVES, OR BY ANY BROKER OR INVESTMENT BANKER, WILL CAUSE OR
CREATE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, CONDITION, VALUE OR
QUALITY OF THE PURCHASED ASSETS.
The Sellers make no warranties and representations of any kind, whether
direct or implied, that any of the hardware, software, and firmware product
(including embedded microcontrollers in non-computer equipment) which may be
included in the Purchased Assets to be transferred under this Agreement (the
"Computer Systems") is Year 2000 Compliant. For purposes hereof, "Year 2000
Compliant" shall mean that the Computer Systems will correctly differentiate
between years, in different centuries, that end in the same two digits, and will
accurately process date/time data (including, but not limited to, calculating,
comparing, and sequencing) from, into, and between the twentieth and
twenty-first centuries, including leap year calculations.
4.20 Transmission. NYSEG represents and warrants that Buyer shall not
be obligated to pay a NYSEG transmission charge in connection with any NYPP
Economy Energy transaction as defined in the NYPP Agreement as effective and on
file with FERC without waiving NYSEG's right to NYPP Economy Energy Transaction
Transmission Fund payments.
33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
5.1 Organization. Buyer is a California corporation, duly organized,
validly existing and in good standing under the laws of the state of its
organization and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as is now being
conducted. Buyer is, or by the Closing will be, qualified to do business in the
Commonwealth of Pennsylvania. Buyer has heretofore delivered to Sellers complete
and correct copies of its Certificate of Incorporation and Bylaws (or other
similar governing documents) as currently in effect.
5.2 Authority Relative to this Agreement. Buyer has full corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated by it hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements by Buyer and the consummation of the transactions contemplated hereby
and thereby by Buyer have been duly and validly authorized by all necessary
corporate action required on the part of Buyer. This Agreement and the Ancillary
Agreements have been duly and validly executed and delivered by Buyer. Subject
to the receipt of Buyer Required Regulatory Approvals, this Agreement and the
Ancillary Agreements constitute legal, valid and binding agreements of Buyer,
enforceable against Buyer in accordance with their terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
5.3 Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 5.3(a), and subject to
obtaining Buyer Required Regulatory Approvals, neither the execution and
delivery of this Agreement and the Ancillary Agreements by Buyer nor the
consummation by Buyer of the transactions contemplated hereby and thereby will
(i) conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws (or other similar governing documents) of Buyer, or (ii)
result in a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, material agreement or other instrument or obligation
to which Buyer or any of its Subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers
34
or consents have been obtained or which would not, individually or in the
aggregate, have a material adverse effects on the business, assets, operations
or condition (financial or otherwise) of Buyer Entities ("Buyer Material Adverse
Effect") or (iii) violate any law, regulation, order, judgment or decree
applicable to Buyer, which violations, individually or in the aggregate, would
create a Buyer Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) (the filings and
approvals referred to in such Schedule are collectively referred to as the
"Buyer Required Regulatory Approvals"), no consent or approval of, filing with,
or notice to, any Governmental Authority is necessary for Buyer's execution and
delivery of this Agreement and the Ancillary Agreements, or the consummation by
Buyer of the transactions contemplated hereby and thereby, other than such
consents, approvals, filings or notices, which, if not obtained or made, will
not prevent Buyer from performing its obligations under this Agreement and the
Ancillary Agreements.
5.4 Availability of Funds. Buyer has sufficient funds and lines of
credit available to it or has received binding written commitments from
creditworthy financial institutions, copies of which have been provided to
Sellers, to provide sufficient funds on the Closing Date to pay the Purchase
Price and to permit Buyer to timely perform all of its obligations under this
Agreement and the Ancillary Agreements.
5.5 Financial Representations. Buyer Parent has provided Sellers with
its balance sheet, income statement and statement of changes in cash flows for
each of the preceding three fiscal years and most recent interim period. Such
financial statements have been prepared in accordance with generally accepted
accounting principles and fairly reflect the financial posture and results of
operations of Buyer Parent as at and for the periods therein.
5.6 Legal Proceedings. There are no actions or proceedings pending
against Buyer Entities before any court or arbitrator or Governmental Authority,
which, individually or in the aggregate, could reasonably be expected to create
a Buyer Material Adverse Effect. Buyer Entities are not subject to any
outstanding judgments, rules, orders, writs, injunctions or decrees of any
court, arbitrator or Governmental Authority which would, individually or in the
aggregate, create a Buyer Material Adverse Effect.
5.7 No Knowledge of Sellers' Breach. Buyer Entities have no
Knowledge of any breach by Sellers of any representation or warranty of Sellers,
or of any other condition or circumstance that would excuse Buyer from its
timely performance of its obligations hereunder. Buyer Entities shall notify
Sellers
35
promptly if any such information comes to their attention prior to the Closing.
5.8 Qualified Buyer. Buyer is qualified to obtain any Permits and
Environmental Permits necessary for Buyer to own and operate the Purchased
Assets as of the Closing. Without limiting the foregoing, Buyer is not aware of
any reason or circumstance that would prevent Buyer from procuring Buyer
Required Regulatory Approvals associated with Exempt Wholesale Generator (as
defined in the Public Utility Holding Company Act of 1935) status and
market-based rate authorization specified in items 3 and 2 of Schedule 5.3(b).
5.9 Inspections. Subject to the restrictions set forth in Section
6.2(a), Buyer acknowledges and agrees that it has, prior to its execution of
this Agreement, (i) reviewed the Environmental Reports, (ii) had full
opportunity to conduct to its satisfaction Inspections of the Purchased Assets,
including the Site, and (iii) fully completed and approved the results of all
Inspections of the Purchased Assets. Subject to the restrictions set forth in
Section 6.2(a), Buyer acknowledges that it is satisfied through such review and
Inspections that no further investigation and study on or of the Site is
necessary for the purposes of acquiring the Purchased Assets for Buyer's
intended use. Buyer acknowledges and agrees that it hereby assumes the risk that
adverse past, present, and future physical characteristics and Environmental
Conditions may not have been revealed by its Inspections and the investigations
of the Purchased Assets contained in the Environmental Reports. In making its
decision to execute this Agreement, and to purchase the Purchased Assets, Buyer
has relied on and will rely upon, among other things, the results of its
Inspections and the Environmental Reports.
5.10 WARN Act. Buyer does not intend to engage in a Plant Closing or
Mass Layoff as such terms are defined in the WARN Act within sixty days of the
Closing Date.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Conduct of Business Relating to the Purchased Assets. (a) Except as
described in Schedule 6.1 or as expressly contemplated by this Agreement or to
the extent Buyer otherwise consents in writing, during the period from the date
of this Agreement to the Closing Date, Sellers (i) will operate the Purchased
Assets in the ordinary course of business consistent with the past practices of
Sellers or their Affiliates or with Good Utility Practices, (ii) shall use all
Commercially Reasonable Efforts to preserve intact the Purchased Assets, and
endeavor to preserve the goodwill and relationships with customers, suppliers
36
and others having business dealings with it, (iii) shall maintain the insurance
coverage described in Section 4.4, (iv) shall comply with all applicable laws
relating to the Purchased Assets, including without limitation, all
Environmental Laws, except where the failure to so comply would not result in a
Material Adverse Effect, and (v) shall continue with Sellers' program, or (at
Buyer's expense) as Buyer may direct, to install such equipment or software with
respect to Year 2000 Compliance in accordance with Sellers' plans referred to in
Section 2.1(k). Without limiting the generality of the foregoing, and, except as
contemplated in this Agreement or as described in Schedule 6.1, or as required
under applicable law or by any Governmental Authority, prior to the Closing
Date, without the prior written consent of Buyer, Sellers shall not with respect
to the Purchased Assets:
(i) Make any material change in the levels of
Inventories customarily maintained by Sellers or their Affiliates with
respect to the Purchased Assets, other than changes which are
consistent with Good Utility Practices;
(ii) Sell, lease (as lessor), encumber, pledge,
transfer or otherwise dispose of, any material Purchased Assets
individually or in the aggregate (except for Purchased Assets used,
consumed or replaced in the ordinary course of business consistent with
past practices of Sellers or their Affiliates or with Good Utility
Practices) other than to encumber Purchased Assets with Permitted
Encumbrances;
(iii) Modify, amend or voluntarily terminate prior to
the expiration date any of the Sellers' Agreements or Real Property
Leases or any of the Permits or Environmental Permits in any material
respect, other than (a) in the ordinary course of business, to the
extent consistent with the past practices of Sellers or their
Affiliates or with Good Utility Practices, (b) with cause, to the
extent consistent with past practices of Sellers or their Affiliates or
with Good Utility Practices, or (c) as may be required in connection
with transferring Sellers' rights or obligations thereunder to Buyer
pursuant to this Agreement;
(iv) Except as otherwise provided herein, enter into
any commitment for the purchase, sale, or transportation of fuel having
a term greater than six months and not terminable on or before the
Closing Date either (i) automatically, or (ii) by option of Sellers
(or, after the Closing, by Buyer) in its sole discretion, if the
aggregate payment under such commitment for fuel and all other
outstanding commitments for fuel not previously approved by Buyer would
exceed $1,000,000;
(v) Sell, lease or otherwise dispose of Emission
Allowances, or Emission Reduction Credits identified in
37
Schedule 2.1(h), except to the extent necessary to operate the
Purchased Assets in accordance with this Section 6.1;
(vi) Except as otherwise provided herein, enter into
any contract, agreement, commitment or arrangement relating to the
Purchased Assets that individually exceeds $250,000 or in the aggregate
exceeds $1,000,000 unless it is terminable by Sellers (or, after the
Closing, by Buyer) without penalty or premium upon no more than sixty
(60) days notice;
(vii) Except as otherwise required by the terms of
the IBEW Collective Bargaining Agreement (as defined in Section
6.10(d)), (a) hire at, or transfer to the Purchased Assets, any new
employees prior to the Closing, other than to fill vacancies in
existing positions in the reasonable discretion of Sellers, (b)
materially increase salaries or wages of employees employed in
connection with the Purchased Assets prior to the Closing, (c) take any
action prior to the Closing to effect a material change in the
Collective Bargaining Agreement, or (d) take any action prior to the
Closing to materially increase the aggregate benefits payable to the
employees employed in connection with the Purchased Assets;
(viii) Make any Capital Expenditures except as
permitted by Section 3.3(a)(iii) or for Sellers' account; and
(ix) Except as otherwise provided herein, enter into
any written or oral contract, agreement, commitment or arrangement with
respect to any of the proscribed transactions set forth in the
foregoing paragraphs (i) through (viii).
6.2. Access to Information.
(a) Between the date of this Agreement and the Closing Date,
Sellers will, at reasonable times and upon reasonable notice: (i) give Buyer and
its Representatives reasonable access to its managerial personnel and to all
books, records, plans, equipment, offices and other facilities and properties
constituting the Purchased Assets; (ii) furnish Buyer with such financial and
operating data and other information with respect to the Purchased Assets as
Buyer may from time to time reasonably request, and permit Buyer to make such
reasonable Inspections thereof as Buyer may request; (iii) furnish Buyer at its
request a copy of each material report, schedule or other document filed by
Sellers or any of their Affiliates with respect to the Purchased Assets with the
SEC, FERC, NYPSC, NYDEC, PaPUC, PaDEP or any other Governmental Authority; and
(iv) furnish Buyer with all such other information as shall be reasonably
necessary to enable Buyer to verify the accuracy of the representations and
38
warranties of Sellers contained in this Agreement; provided, however, that (A)
any such inspections and investigations shall be conducted in such a manner as
not to interfere unreasonably with the operation of the Purchased Assets, (B)
Sellers shall not be required to take any action which would constitute a waiver
of the attorney-client privilege, and (C) Sellers need not supply Buyer with any
information which Sellers are under a legal or contractual obligation not to
supply. Notwithstanding anything in this Section 6.2 to the contrary, Sellers
will only furnish or provide such access to Transferring Employee Records and
will not furnish or provide access to other employee personnel records or
medical information unless required by law or specifically authorized by the
affected employee and Buyer shall not have the right to perform or conduct any
environmental sampling or testing at, in, on, or underneath the Purchased
Assets.
(b) Each Party shall, and shall use its best efforts to cause
its Representatives to, (i) keep all Proprietary Information of the other Party
confidential and not to disclose or reveal any such Proprietary Information to
any person other than such Party's Representatives and (ii) not use such
Proprietary Information other than in connection with the consummation of the
transactions contemplated hereby. After the Closing Date, any Proprietary
Information to the extent related to the Purchased Assets shall no longer be
subject to the restrictions set forth herein. The obligations of the Parties
under this Section 6.2(b) shall be in full force and effect for three (3) years
from the date hereof and will survive the termination of this Agreement, the
discharge of all other obligations owed by the Parties to each other and the
closing of the transactions contemplated by this Agreement.
(c) For a period of seven (7) years after the Closing Date (or
such longer period as may be required by applicable law), each Party and its
Representatives shall have reasonable access to all of the books and records of
the Purchased Assets, including all Transferring Employee Records in the
possession of the other Party to the extent that such access may reasonably be
required by such Party in connection with the Assumed Liabilities or the
Excluded Liabilities, or other matters relating to or affected by the operation
of the Purchased Assets. Such access shall be afforded by the Party in
possession of any such books and records upon receipt of reasonable advance
written notice and during normal business hours. The Party exercising this right
of access shall be solely responsible for any costs or expenses incurred by it
or the other Party with respect to such access pursuant to this Section 6.2(c).
If the Party in possession of such books and records shall desire to dispose of
any books and records upon or prior to the expiration of such seven-year period
(or any such longer period), such Party shall, prior to such disposition, give
the other Party a reasonable opportunity at such other Party's reasonable
expense, to segregate and remove such books and records as such other Party may
select.
39
(d) Notwithstanding the terms of Section 6.2(b) above, the
Parties agree that prior to the Closing Buyer may reveal or disclose Proprietary
Information to any other Persons in connection with Buyer's financing of its
purchase of the Purchased Assets or any equity participation in Buyer's purchase
of the Purchased Assets (provided that such Persons agree in writing to maintain
the confidentiality of the Proprietary Information in accordance with this
Agreement).
(e) Upon the other Party's prior written approval (which will
not be unreasonably withheld), either Party may provide Proprietary Information
of the other Party to the NYPSC, the PaPUC, the SEC, the FERC or any other
Governmental Authority with jurisdiction or any stock exchange, as may be
necessary to obtain Sellers' Required Regulatory Approvals, or Buyer Required
Regulatory Approvals, respectively, or to comply generally with any relevant law
or regulation. The disclosing Party will seek confidential treatment for the
Proprietary Information provided to any Governmental Authority and the
disclosing Party will notify the other Party as far in advance as is practicable
of its intention to release to any Governmental Authority any Proprietary
Information.
(f) Except as specifically provided herein or in the
Confidentiality Agreement, nothing in this Section shall impair or modify any of
the rights or obligations of Buyer or its Affiliates under the Confidentiality
Agreement, all of which remain in effect until termination of such agreement in
accordance with its terms.
(g) Except as may be permitted in the Confidentiality
Agreement, Buyer agrees that, prior to the Closing Date, it will not contact any
vendors, suppliers, employees, or other contracting parties of Sellers or their
Affiliates with respect to any aspect of the Purchased Assets or the
transactions contemplated hereby, without the prior written consent of Sellers,
which consent shall not be unreasonably withheld.
(h) (i) Buyer shall be entitled to inspect, in accordance with
this Section 6.2(h), all of the Purchased Assets located adjacent to any Point
of Interconnection (as defined in the Interconnection Agreement), as shown in
Schedule A to the Interconnection Agreement, to verify and/or determine the
accuracy of the data, drawings, and records described in such Schedule. The
Parties shall cooperate to schedule Buyer's inspection at the Facility so that
any interference with the operation of the Facility is minimized, to the extent
reasonably feasible, and so that Buyer may complete its inspections of the
Facility within thirty (30) working days of commencement of inspections and
within two (2) months after the execution of this Agreement.
40
(ii) Sellers shall provide, or shall cause to be
provided, to Buyer, access to the Facility at the times scheduled for the
inspections. Buyer shall provide qualified engineering, operations, and
maintenance personnel to escort Buyer's personnel and to assist Buyer's
personnel in conducting the inspections. Sellers and Buyer shall each bear their
own costs of participating in the inspections. At a mutually convenient time not
more than one (1) month after Buyer has completed its inspections, the Parties
shall meet to discuss whether, as a result of the inspections, it is appropriate
to modify Schedule A to the Interconnection Agreement to portray more accurately
the Points of Interconnection. Any modification to any portion of Schedule A of
the Interconnection Agreement to which the Parties agree shall thereafter be
deemed part of Schedule A of the Interconnection Agreement for all purposes
under the Interconnection Agreement.
6.3 Public Statements. Subject to the requirements imposed by any
applicable law or any Governmental Authority or stock exchange, prior to the
Closing Date, no press release or other public announcement or public statement
or comment in response to any inquiry relating to the transactions contemplated
by this Agreement shall be issued or made by any Party without the prior
approval of the other Parties (which approval shall not be unreasonably
withheld). The Parties agree to cooperate in preparing such announcements.
6.4 Expenses. Except to the extent specifically provided herein,
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the Party incurring such costs and
expenses. Notwithstanding anything to the contrary herein, Buyer will be
responsible for (a) all costs and expenses associated with the obtaining of any
title insurance policy and all endorsements thereto that Buyer elects to obtain
and (b) all filing fees under the HSR Act.
6.5 Further Assurances.
(a) Subject to the terms and conditions of this Agreement,
each of the Parties hereto shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the purchase and sale of the Purchased Assets pursuant to this
Agreement and the assumption of the Assumed Liabilities, including without
limitation using its best efforts to ensure satisfaction of the conditions
precedent to each Party's obligations hereunder, including obtaining all
necessary consents, approvals, and authorizations of third parties and
Governmental Authorities required to be obtained in order to consummate the
transactions hereunder, and to effectuate a transfer of the Transferable Permits
to Buyer. Buyer agrees to perform all conditions required of Buyer
41
in connection with the Sellers' Required Regulatory Approvals, other than those
conditions which would create a Buyer Material Adverse Effect. Neither of the
Parties hereto shall, without prior written consent of the other Party, take or
fail to take any action, which might reasonably be expected to prevent or
materially impede, interfere with or delay the transactions contemplated by this
Agreement. Buyer further agrees that prior to the Closing Date, it will neither
enter into any other contract to acquire, nor acquire, electric generation
facilities or uncommitted generation capacity located in New York State if
Buyer's proposed acquisition of such additional electric generation facilities
or uncommitted generation capacity might reasonably be expected to prevent or
materially impede, interfere with or delay the transactions contemplated by this
Agreement. Buyer shall give Sellers reasonable advance notice (and in any event
not less than 10 days) before Buyer contracts to acquire or acquires any
electric generation facility or uncommitted generation capacity located in New
York.
(b) In the event that any Purchased Asset shall not have been
conveyed to Buyer at the Closing, each Seller shall, subject to Section 6.5(c)
and (d), use Commercially Reasonable Efforts to convey such asset to Buyer as
promptly as is practicable after the Closing. In the event that any Easement
shall not have been granted by Buyer to Penelec or NYSEG at the Closing, Buyer
shall use Commercially Reasonable Efforts to grant such Easement to Penelec or
NYSEG as promptly as is practicable after the Closing.
(c) To the extent that Sellers' rights under any Sellers'
Agreement or Real Property Lease may not be assigned without the consent of
another Person which consent has not been obtained by the Closing Date, this
Agreement shall not constitute an agreement to assign the same, if an attempted
assignment would constitute a breach thereof or be unlawful. Sellers and Buyer
agree that if any consent to an assignment of any material Sellers' Agreement or
Real Property Lease shall not be obtained or if any attempted assignment would
be ineffective or would impair Buyer's rights and obligations under the material
Sellers' Agreement or Real Property Lease in question, so that Buyer would not
in effect acquire the benefit of all such rights and obligations, Sellers, at
Buyer's option and to the maximum extent permitted by law and such material
Sellers' Agreement or Real Property Lease, shall, after the Closing Date,
appoint Buyer to be Sellers' agent with respect to such material Sellers'
Agreement or Real Property Lease, or, to the maximum extent permitted by law and
such material Sellers' Agreement or Real Property Lease, enter into such
reasonable arrangements with Buyer or take such other actions as are necessary
to provide Buyer with the same or substantially similar rights and obligations
of such material Sellers' Agreement or Real Property Lease as Buyer may
reasonably request. Sellers and Buyer shall cooperate and shall each use
Commercially Reasonable Efforts prior to and after the Closing Date to
42
obtain an assignment of such material Sellers' Agreement or Real Property Lease
to Buyer. For purposes of this Section 6.5(c), all Sellers' Agreements listed on
Schedule 4.12(a) are deemed to be "material."
(d) To the extent that Sellers' rights under any warranty or
guaranty described in Section 2.1(i) may not be assigned without the consent of
another Person, which consent has not been obtained by the Closing Date, this
Agreement shall not constitute an agreement to assign same, if an attempted
assignment would constitute a breach thereof, or be unlawful. Sellers and Buyer
agree that if any consent to an assignment of any such warranty or guaranty
shall not be obtained, or if any attempted assignment would be ineffective or
would impair Buyer's rights and obligations under the warranty or guaranty in
question, so that Buyer would not in effect acquire the benefit of all such
rights and obligations, Sellers, at Buyer's expense, shall use Commercially
Reasonable Efforts, to the extent permitted by law and such warranty or
guaranty, to enforce such warranty or guaranty for the benefit of Buyer so as to
provide Buyer to the maximum extent possible with the benefits and obligations
of such warranty or guaranty.
6.6 Consents and Approvals.
(a) As promptly as possible after the date of this Agreement,
Sellers and Buyer, as applicable, shall each file or cause to be filed with the
Federal Trade Commission and the United States Department of Justice any
notifications required to be filed under the HSR Act and the rules and
regulations promulgated thereunder with respect to the transactions contemplated
hereby. The Parties shall use their respective best efforts to respond promptly
to any requests for additional information made by either of such agencies, and
to cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing. Buyer will pay all filing fees
under the HSR Act but each Party will bear its own costs of the preparation of
any filing.
(b) As promptly as possible after the date of this Agreement,
Buyer shall file with the FERC an application requesting Exempt Wholesale
Generator status for Buyer, which filing may be made individually by Buyer or
jointly with the Sellers in conjunction with other filings to be made with the
FERC under this Agreement, as reasonably determined by the Parties. Prior to
Buyer's submission of that application with the FERC, Buyer shall submit such
application to the Sellers for review and comment and Buyer shall incorporate
into the application any revisions reasonably requested by Sellers. Buyer shall
be solely responsible for the cost of preparing and filing this application, any
petition(s) for rehearing, or any re-application. If Buyer's initial application
for Exempt Wholesale Generator status is rejected by the FERC, Buyer agrees to
petition the FERC for rehearing and/or to re-submit an
43
application with the FERC, as reasonably required by the Sellers, provided that
in either case the action directed by the Sellers does not create a Buyer
Material Adverse Effect.
(c) As promptly as possible after the date of this Agreement,
Buyer shall file with the FERC an application requesting authorization under
Section 205 of the Federal Power Act to sell electric generating capacity and
energy, but not other services, including, without limitation, ancillary
services, at wholesale at market-based rates, which filing may be made
individually by Buyer or jointly with Sellers in conjunction with other filings
to be made with the FERC under this Agreement, as reasonably determined by the
Parties. Prior to the filing of that application with the FERC, Buyer shall
submit such application to the Sellers for review and comment and Buyer shall
incorporate into the application any revisions reasonably requested by the
Sellers. Buyer shall be solely responsible for the cost of preparing and filing
this application, any petition(s) for rehearing, or any reapplication. If
Buyer's initial application for market-based rate authorization results in a
FERC request for additional information or is rejected by the FERC, Buyer shall
provide that information promptly, to petition the FERC for rehearing and/or to
re-submit an application with the FERC, as reasonably required by the Sellers,
provided that the Sellers shall have a reasonable opportunity to make changes to
such a petition or re-submission application and, provided further, that the
action directed by the Seller does not create a Buyer Material Adverse Effect.
(d) As promptly as possible, and in any case within sixty (60)
days, after the date of this Agreement, Sellers and Buyer, as applicable, shall
file with the NYPSC, the PaPUC, the FERC and any other Governmental Authority,
and make any other filings required to be made with respect to the transactions
contemplated hereby. The Parties shall respond promptly to any requests for
additional information made by such agencies, and use their respective best
efforts to cause regulatory approval to be obtained at the earliest possible
date after the date of filing. Each Party will bear its own costs of the
preparation of any such filing.
(e) Sellers and Buyer shall cooperate with each other and
promptly prepare and file notifications with, and request Tax clearances from,
state and local taxing authorities in jurisdictions in which a portion of the
Purchase Price may be required to be withheld or in which Buyer would otherwise
be liable for any Tax liabilities of Sellers pursuant to such state and local
Tax law.
(f) Buyer shall have the primary responsibility for securing
the transfer, reissuance or procurement of the Permits and Environmental Permits
(other than Transferable Permits) effective as of the Closing Date. Sellers
shall cooperate with Buyer's efforts in this regard and assist in any transfer
44
or reissuance of a Permit or Environmental Permit held by Sellers or the
procurement of any other Permit or Environmental Permit when so requested by
Buyer.
6.7 Fees and Commissions. Each Seller, on the one hand, and Buyer, on
the other hand, represent and warrant to the other that, except for ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co., which are acting for and at the expense of Sellers, and ▇▇▇▇▇▇
Brothers Inc., which is acting for and at the expense of Buyer, no broker,
finder or other Person is entitled to any brokerage fees, commissions or
finder's fees in connection with the transaction contemplated hereby by reason
of any action taken by the Party making such representation. Each Seller, on the
one hand, and Buyer, on the other hand, will pay to the other or otherwise
discharge, and will indemnify and hold the other harmless from and against, any
and all claims or liabilities for all brokerage fees, commissions and finder's
fees (other than the fees, commissions and finder's fees payable to the parties
listed above) incurred by reason of any action taken by the indemnifying party.
6.8 Tax Matters.
(a) All transfer and sales taxes incurred in connection with
this Agreement and the transactions contemplated hereby (including, without
limitation, (a) Pennsylvania sales tax; (b) the Pennsylvania transfer tax on
conveyances of interests in real property; and (c) Pennsylvania sales tax and
transfer tax on deeds) shall be borne by Buyer. Sellers shall file, to the
extent required by, or permissible under, applicable law, all necessary Tax
Returns and other documentation with respect to all such transfer and sales
taxes, and, if required by applicable law, Buyer shall join in the execution of
any such Tax Returns and other documentation. Prior to the Closing Date, to the
extent applicable, Buyer shall provide to Sellers appropriate certificates of
Tax exemption from each applicable taxing authority.
(b) With respect to Taxes to be prorated in accordance with
Section 3.5 of this Agreement, Buyer shall prepare and timely file all Tax
Returns required to be filed after the Closing Date with respect to the
Purchased Assets, if any, and shall duly and timely pay all such Taxes shown to
be due on such Tax Returns. Buyer's preparation of any such Tax Returns shall be
subject to Sellers' approval, which approval shall not be unreasonably withheld.
Buyer shall make such Tax Returns available for Sellers' review and approval no
later than fifteen (15) Business Days prior to the due date for filing each such
Tax Return.
(c) Buyer and Sellers shall provide the other with such
assistance as may reasonably be requested by the other Party in connection with
the preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
45
for Taxes, and each shall retain and provide the requesting party with any
records or information which may be relevant to such return, audit, examination
or proceedings. Any information obtained pursuant to this Section 6.8(c) or
pursuant to any other Section hereof providing for the sharing of information or
review of any Tax Return or other instrument relating to Taxes shall be kept
confidential by the parties hereto.
(d) Disputes. In the event that a dispute arises between
Sellers and Buyer regarding Taxes, or any amount due under this Section 6.8, the
Parties shall attempt in good faith to resolve such dispute and any agreed upon
amount shall be paid to the appropriate Party. If such dispute is not resolved
within 30 days, the Parties shall submit the dispute to the Independent
Accounting Firm for resolution, which resolution shall be final, conclusive and
binding on the Parties. Notwithstanding anything in this Agreement to the
contrary, the fees and expenses of the Independent Accounting Firm in resolving
the dispute shall be borne 50% by Sellers and 50% by Buyer. Any payment required
to be made as a result of the resolution of the dispute by the Independent
Accounting Firm shall be made within ten days after such resolution, together
with any interest determined by the Independent Accounting Firm to be
appropriate.
6.9 Advice of Changes. Prior to the Closing, each Party will promptly
advise the other in writing with respect to any matter arising after execution
of this Agreement of which that Party obtains Knowledge and which, if existing
or occurring at the date of this Agreement, would have been required to be set
forth in this Agreement, including any of the Schedules hereto. Sellers may at
any time notify Buyer of any development causing a breach of any of its
representations and warranties in Article IV. Unless Buyer has the right to
terminate this Agreement pursuant to Section 9.1(f) below by reason of the
developments and exercises that right within the period of fifteen (15) days
after such right accrues, the written notice pursuant to this Section 6.9 will
be deemed to have amended this Agreement, including the appropriate Schedule, to
have qualified the representations and warranties contained in Article IV above,
and to have cured any misrepresentation or breach of warranty that otherwise
might have existed hereunder by reason of the development.
6.10 Employees.
(a) At least 90 days prior to the Closing Date, Buyer is
required to offer employment, effective on the Closing Date, to those employees
of Penelec who are covered by the IBEW Collective Bargaining Agreement as
defined in Section 6.10(d) below, and who are employed in positions relating to
the Purchased Assets ("Union Employees"). At least 90 days prior to the Closing
Date, Buyer shall provide Sellers with notice of its staffing level
requirements, listed by classification and operation, and shall be required to
offer employment only to that number of Union Employees necessary to
46
satisfy such staffing level requirements. In each classification, Union
Employees shall be so offered employment in order of their seniority.
(b) At least 90 days prior to the Closing Date, Buyer is also
required to make reasonable efforts to make a Qualifying Offer of employment,
effective on the Closing Date, to those salaried employees of Penelec or Genco
who are listed in, or are in a function or whose employment responsibilities are
listed in, Schedule 6.10(b) ("Non-Union Employees"). Each person who becomes
employed by Buyer pursuant to Section 6.10(a) or (b) (whether pursuant to a
Qualifying Offer or otherwise) shall be referred to herein as a "Transferred
Union Employee" or "Transferred Non-Union Employee", respectively. As used
herein, the term "Qualifying Offer" means an offer of at least 85% of an
employee's current total annual cash compensation at the time the offer was made
(consisting of base salary and target incentive bonus). Schedule 6.10(b) sets
forth, for each of the Non-Union Employees listed therein, their current base
salaries and target incentive bonuses.
(c) All offers of employment made pursuant to Sections 6.10(a)
or (b) shall be made (i) in accordance with seniority and all applicable laws
and regulations, and (ii) for Union Employees, in accordance with the IBEW
Collective Bargaining Agreement.
(d) Schedule 6.10(d) sets forth the collective bargaining
agreement, and amendments thereto, to which Penelec is a party with the IBEW in
connection with the Purchased Assets ("IBEW Collective Bargaining Agreement").
Transferred Union Employees shall retain their seniority and receive full credit
for service with Penelec in connection with entitlement to vacation and all
other benefits and rights under the IBEW Collective Bargaining Agreement and
under each compensation, retirement or other employee benefit plan or program
Buyer is required to maintain for Transferred Union Employees pursuant to the
IBEW Collective Bargaining Agreement. With respect to Transferred Union
Employees, on the Closing Date, Buyer shall assume the IBEW Collective
Bargaining Agreement for the duration of its term as it relates to Transferred
Union Employees to be employed at the Plant in positions covered by the IBEW
Collective Bargaining Agreement and shall comply with all applicable obligations
under the IBEW Collective Bargaining Agreement. Consistent with the obligations
under the IBEW Collective Bargaining Agreement and applicable laws, Buyer shall
be required to establish and maintain a pension plan and other employer benefit
programs for the Transferred Union Employees for the duration of the term of the
IBEW Collective Bargaining Agreement which are substantially equivalent to the
Penelec plans and programs in effect for the Transferred Union Employees
immediately prior to the Closing Date (the "Penelec Plans"), and which provide
at least the same level of benefits or coverage as do the Penelec Plans for the
duration of the IBEW Collective
47
Bargaining Agreement. Buyer further agrees to recognize the IBEW as the
collective bargaining agent for the Transferred Union Employees.
(e) As of the Closing Date, all Transferred Non-Union
Employees shall commence participation in welfare benefit plans of Buyer or its
Affiliates (the "Replacement Welfare Plans"). Buyer shall (i) waive all
limitations as to pre-existing condition exclusions and waiting periods with
respect to the Transferred Non-Union Employees under the Replacement Welfare
Plans, other than, but only to the extent of, limitations or waiting periods
that were in effect with respect to such employees under the welfare plans
maintained by Genco, Penelec or their Affiliates and that have not been
satisfied as of the Closing Date, and (ii) provide each Transferred Non-Union
Employee with credit for any copayments and deductibles paid prior to the
Closing Date in satisfying any deductible or out-of-pocket requirements under
the Replacement Welfare Plans (on a pro-rata basis in the event of a difference
in plan years).
(f) Transferred Non-Union Employees shall be given credit for
all service with Genco, Penelec and their Affiliates under all deferred
compensation, profit-sharing, 401(k), retirement and pension plans, incentive
compensation, bonus, fringe benefit and other employee benefit plans, programs
and arrangements of Buyer ("Buyer Benefit Plans") in which they may become
participants. The service credit so given shall be for purposes of eligibility
and vesting, but not for level of benefits and benefit accrual.
(g) To the extent allowable by law, Buyer shall take any and
all necessary action to cause the trustee of any defined contribution plan of
Buyer or its Affiliates in which any Transferred Employee becomes a participant
to accept a direct "rollover" of all or a portion of said employee's "eligible
rollover distribution" within the meaning of Section 402 of the Code from the
GPU Companies Employee Savings Plan for Non-Bargaining Employees or the Penelec
Employee Savings Plan for Bargaining Unit Employees (the "Sellers' Savings
Plans") if requested to do so by the Transferred Employee. Buyer agrees that the
property so rolled over and the assets so transferred may include promissory
notes evidencing loans from the Sellers' Savings Plans to Transferred Employees
that are outstanding as of the Closing Date. However, except as otherwise
provided in Section 6.10(d), any defined contribution plan of Buyer or its
Affiliates accepting such a rollover or transfer shall not be required to (x)
make any further loans to any Transferred Employee after the Closing Date or (y)
permit any additional investment to be made in GPU common stock on behalf of any
Transferred Employee after the Closing Date.
(h) Buyer shall pay or provide to Transferred Employees the
benefits described in subparagraphs (i), (ii) and (iii) of this Section 6.10(h),
and shall reimburse the Sellers for the benefits they will provide to Union
48
Employees and Non-Union Employees in accordance with subparagraph (iv) of this
Section 6.10(h).
(i) Buyer shall make a transition incentive payment
in the amount of $2,500 to each Transferred Union Employee. Payment
shall be made as soon as practicable after, but in any event no later
than 60 days following, the Closing Date.
(ii) In the case of each Transferred Non-Union
Employee who is initially assigned by Buyer to a principal place of
work that is at least 50 miles farther from the employee's principal
residence than was his principal place of work immediately prior to the
Closing Date and who relocates his or her principal residence to the
vicinity of his or her new principal place of work within 12 months
following the Closing Date, Buyer shall reimburse the employee for all
"moving expenses" within the meaning of Section 217(b) of the Code
incurred by the employee and other members of his or her household in
connection with such relocation, up to a maximum aggregate amount of
$5,000. Claims for reimbursement for such expenses shall be filed in
accordance with such procedures, and shall be accompanied by such
substantiation of the expenses for which reimbursement is sought, as
Buyer may reasonably request. All claims for reimbursement shall be
processed, and qualifying expenses shall be reimbursed, as soon as
practicable after, but in any event no later than 60 days following,
the date on which the employee's claim for reimbursement is submitted
to Buyer.
(iii) Buyer shall provide the severance benefits
described in Section 1 of Schedule 6.10(h) to each Transferred Employee
who is "Involuntarily Terminated" (as defined below) (a) within 12
months after the Closing Date or (b), in the case of any Transferred
Non-Union Employee who had attained age 50 and had completed at least
10 Years of Service (as defined in Section 1(c) of Schedule 6.10(h))
prior to the Closing Date, on or any time prior to June 30, 2004. For
purposes of this Section 6.10(h) and Schedule 6.10(h), a Transferred
Employee shall be treated as "Involuntarily Terminated" if his or her
employment with Buyer and all of its Affiliates is terminated by Buyer
or any of its Affiliates for any reason other than for cause,
disability or mandatory retirement. A Transferred Employee who
voluntarily leaves employment with Buyer and all of its Affiliates as a
result of a reduction of more than 15% in the rate of his or her total
annual cash compensation (including both base salary and target
incentive award) shall also be treated as having been Involuntarily
Terminated. Buyer shall require any Transferred Employee who is
Involuntarily Terminated, as a condition to receiving the severance
benefits described in Section 1(b), (c), (d), (e)
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and (g) of Schedule 6.10(h), to execute a release of claims against
Penelec or Genco, as applicable, and Buyer, in such form as Buyer and
Sellers shall agree upon.
(iv) At the Closing or as soon thereafter as
practicable, but in any event no later than 60 days following the
Closing Date, Buyer shall pay to Sellers, in addition to all other
amounts to be paid by Buyer to Sellers hereunder, an amount equal to
the aggregate estimated cost that the Sellers will or may incur in
providing the severance, pension, health care and group term life
insurance benefits described in Section 2 of Schedule 6.10(h) to the
Union Employees and Non-Union Employees therein described. The
estimated cost of such benefits shall be calculated by the actuarial
firm regularly engaged to provide actuarial services to the GPU
Companies with respect to their pension, health care and life insurance
plans, and shall be determined using the same assumptions as to
mortality, turnover, interest rate and other actuarial assumption as
used by such firm in determining the cost of benefits under the GPU
Companies' pension, health and group term life insurance plans for
purposes of their most recently issued financial statements prior to
the Closing Date.
(i) Sellers shall be responsible for any payments required
under their voluntary early retirement plans offered in connection with the
transfer of the Purchased Assets. Within thirty (30) days following the last day
that any Union Employee or Non-Union Employee may elect to participate in such
plans, Sellers shall provide Buyer with a list of all such employees who have so
elected.
(j) Sellers shall be responsible, with respect to the
Purchased Assets, for performing and discharging all requirements under the WARN
Act and under applicable state and local laws and regulations for the
notification of its employees of any "employment loss" within the meaning of the
WARN Act which occurs prior to the Closing Date.
(k) Sellers are responsible for extending and continuing to
extend COBRA continuation coverage to all employees and former employees, and
qualified beneficiaries of such employees and former employees, who become or
became entitled to such COBRA continuation coverage on or before the Closing
Date, including those for whom the Closing Date occurs during their COBRA
election period.
(l) Sellers shall pay to all Sellers' employees that Buyer
offers employment pursuant to Section 6.10 hereof, all compensation, bonus,
vacation and holiday compensation, workers' compensation or other employment
benefits that are payable in cash which have accrued to such employees through
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and including the Closing Date, at such times as provided under the terms of the
applicable compensation or benefit programs.
6.11. Risk of Loss.
(a) From the date hereof through the Closing Date, all risk of
loss or damage to the property included in the Purchased Assets shall be borne
by Sellers, other than loss or damage caused by the acts or negligence of Buyer
or any Buyer Representative, which loss or damage shall be the responsibility of
Buyer.
(b) If, before the Closing Date, all or any portion of the
Purchased Assets is (i) taken by eminent domain or is the subject of a pending
or (to the Knowledge of Sellers) contemplated taking which has not been
consummated, or (ii) damaged or destroyed by fire or other casualty, Sellers
shall notify Buyer promptly in writing of such fact, and (x) in the case of a
condemnation, Sellers shall assign or pay, as the case may be, any proceeds
thereof to Buyer at the Closing and (y) in the case of a casualty, Sellers shall
either restore the damage or assign the insurance proceeds therefor (and pay the
amount of any deductible and/or self-insured amount in respect of such casualty)
to Buyer at the Closing. Notwithstanding the above, if such casualty or loss
results in a Material Adverse Effect, Buyer and Sellers shall negotiate to
settle the loss resulting from such taking (and such negotiation shall include,
without limitation, the negotiation of a fair and equitable adjustment to the
Purchase Price). If no such settlement is reached within sixty (60) days after
Sellers have notified Buyer of such casualty or loss, then Buyer or Sellers may
terminate this Agreement pursuant to Section 9.1(i). In the event of damage or
destruction which Sellers elect to restore, Sellers will have the right to
postpone the Closing for up to four (4) months. Buyer will have the right to
inspect and observe, or have its representatives inspect or observe, all repairs
necessitated by any such damage or destruction.
6.12 Additional Covenants of Buyer. Notwithstanding any other
provision hereof, Buyer covenants and agrees that, after the Closing Date, Buyer
will not make any modifications to the Purchased Assets or take any action which
would result in a loss of the exclusion of interest on the pollution control
bonds issued on behalf of Penelec or NYSEG in connection with the Purchased
Assets from gross income for federal income purposes under Section 103 of the
Code. Buyer further covenants and agrees that, in the event that Buyer transfers
any of the Purchased Assets, Buyer shall obtain from its transferee a covenant
and agreement that is analogous to Buyer's covenant and agreement pursuant to
the immediately preceding sentence, as well as a covenant and agreement that is
analogous to that of this sentence. This covenant shall survive Closing and
shall continue in effect so long as the pollution control bonds remain
outstanding.
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ARTICLE VII
CONDITIONS
7.1. Conditions to Obligations of Buyer. The obligation of Buyer to
effect the purchase of the Purchased Assets and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date (or the waiver by Buyer) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall have
expired or been terminated.
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court or Governmental Authority which prevents
the consummation of the sale of the Purchased Assets contemplated herein shall
have been issued and remain in effect (each Party agreeing to use its reasonable
best efforts to have any such injunction, order or decree lifted) and no
statute, rule or regulation shall have been enacted by any state or federal
government or Governmental Authority which prohibits the consummation of the
sale of the Purchased Assets;
(c) Buyer shall have received all of Buyer's Required
Regulatory Approvals, in form and substance reasonably satisfactory (including
no material adverse conditions) to it;
(d) Sellers shall have performed and complied in all material
respects with the covenants and agreements contained in this Agreement which are
required to be performed and complied with by Sellers on or prior to the Closing
Date;
(e) The representations and warranties of Sellers set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date as though made at and as of the Closing Date;
(f) Buyer shall have received certificates from an authorized
officer of each Seller, dated the Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Section 7.1(d) and (e) have
been satisfied by such Seller;
(g) Buyer shall have received an opinion from each Seller's
counsel reasonably acceptable to Buyer, dated the Closing Date and reasonably
satisfactory in form and substance to Buyer and its counsel, substantially to
the effect that:
(i) Such Seller is a corporation duly incorporated,
validly existing and in good standing under the laws its state of
incorporation and Seller has the corporate power and authority to own,
lease and operate its
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material assets and properties and to carry on its business as is now
conducted, and to execute and deliver the Agreement and each Ancillary
Agreement and to consummate the transactions contemplated by it
thereby; and the execution and delivery of the Agreement by such Seller
and the consummation of the sale of the Purchased Assets contemplated
thereby have been duly and validly authorized by all necessary
corporate action required on the part of such Seller;
(ii) The Agreement and each Ancillary Agreement has
been duly and validly executed and delivered by such Seller and
constitutes a legal, valid and binding agreement of such Seller,
enforceable in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity);
(iii) The execution, delivery and performance of the
Agreement and each Ancillary Agreement by such Seller does not (A)
conflict with the Certificate of Incorporation or Bylaws of such Seller
or (B) to the knowledge of such counsel, constitute a violation of or
default under those agreements or instruments set forth on a Schedule
attached to the opinion and which have been identified to such counsel
as all the agreements and instruments which are material to the
business or financial condition of such Seller;
(iv) The ▇▇▇▇ of Sale, the deeds, the Assignment and
Assumption Agreement and other transfer instruments described in
Section 3.6 are in proper form to transfer to Buyer such title as was
held by such Seller to the Purchased Assets;
(v) No consent or approval of, filing with, or notice
to, any Governmental Authority is necessary for the execution and
delivery of this Agreement by such Seller or the consummation by such
Seller of the transactions contemplated hereby, other than (i) such
consents, approvals, filings or notices set forth in Schedule 4.3(b) or
which, if not obtained or made, will not prevent such Seller from
performing its material obligations hereunder and (ii) such consents,
approvals, filings or notices which become applicable to Sellers or the
Purchased Assets as a result of the specific regulatory status of Buyer
(or any of its Affiliates) or as a result of any other facts that
specifically relate to the business or activities in which Buyer (or
any of its Affiliates) is or proposes to be engaged.
53
In rendering the foregoing opinion, each Seller's counsel may rely on opinions
of local law reasonably acceptable to Buyer.
(h) Sellers shall have delivered, or caused to be delivered,
to Buyer at the Closing, Sellers' closing deliveries described in Section 3.6.
(i) Buyer shall have received from a title insurance company
ALTA title owner's insurance policies on the Real Property insuring title as
described in Section 4.5, subject only to Permitted Encumbrances reasonably
acceptable to Buyer and standard printed exceptions. A Permitted Encumbrance
which is not removed prior to Closing shall be deemed reasonably acceptable to
Buyer as aforesaid unless such Permitted Encumbrance would have a Material
Adverse Effect. Buyer shall provide Sellers with a copy of a preliminary title
report and survey for the Real Property as soon as it is available.
(j) Since the date of this Agreement, no Material Adverse
Effect shall have occurred and be continuing.
7.2 Conditions to Obligations of Sellers. The obligation of Sellers to
effect the sale of the Purchased Assets and the other transactions contemplated
by this Agreement shall be subject to the fulfillment at or prior to the Closing
Date (or the waiver by Sellers) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall have
expired or been terminated;
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the sale
of the Purchased Assets contemplated herein shall have been issued and remain in
effect (each Party agreeing to use its reasonable best efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation shall
have been enacted by any state or federal government or Governmental Authority
in the United States which prohibits the consummation of the sale of the
Purchased Assets;
(c) NGE and NYSEG shall have received all of Sellers' Required
Regulatory Approvals applicable to NGE or NYSEG, in form and substance
reasonably satisfactory (including no material adverse conditions) to it;
(d) Penelec shall have received all of Sellers' Required
Regulatory Approvals applicable to Penelec, in form and substance reasonably
satisfactory (including no material adverse conditions) to it;
(e) All consents and approvals for the consummation of the
sale of the Purchased Assets contemplated hereby required under the terms of any
note, bond, mortgage, indenture, material agreement or other instrument or
54
obligation to which any Seller is party or by which any Seller, or any of the
Purchased Assets, may be bound, shall have been obtained, other than those which
if not obtained, would not, individually and in the aggregate, create a Material
Adverse Effect;
(f) Buyer shall have performed and complied with in all
material respects the covenants and agreements contained in this Agreement which
are required to be performed and complied with by Buyer on or prior to the
Closing Date;
(g) The representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date as though made at and as of the Closing Date;
(h) Sellers shall have received a certificate from an
authorized officer of Buyer, dated the Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Sections 7.2(f) and (g) have
been satisfied by Buyer;
(i) Effective upon Closing, Buyer shall have assumed, as set
forth in Section 6.10, all of the applicable obligations under the IBEW
Collective Bargaining Agreement as they relate to Transferred Union Employees;
(j) Sellers shall have received an opinion from Buyer's
counsel reasonably acceptable to Sellers, dated the Closing Date and
satisfactory in form and substance to Sellers and their counsel, substantially
to the effect that:
(i) Each Buyer Entity is a California corporation
duly organized, validly existing and in good standing under the laws of
the state of its organization and is qualified to do business in the
Commonwealth of Pennsylvania and has the full corporate power and
authority to own, lease and operate its material assets and properties
and to carry on its business as is now conducted, and to execute and
deliver the Agreement and the Ancillary Agreements by Buyer and the
Guaranty by Buyer Parent and to consummate the transactions
contemplated thereby; and the execution and delivery of the Agreement
and the Ancillary Agreements by Buyer and the Guaranty by Buyer Parent,
and the consummation of the transactions contemplated thereby have been
duly authorized by all necessary corporate action required on the part
of Buyer and Buyer Parent;
(ii) The Agreement, the Ancillary Agreements and the
Guaranty have been duly and validly executed and delivered by Buyer and
Buyer Parent, as applicable, and constitute legal, valid and binding
agreements of Buyer and Buyer Parent, as applicable, enforceable
against Buyer and Buyer Parent, as applicable, in accordance with their
terms, except that such enforceability may be limited by applicable
55
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting or relating to enforcement
of creditor's rights generally and general principles of equity
(regardless of whether enforcement is considered in a proceeding at law
or in equity);
(iii) The execution, delivery and performance of the
Agreement and the Ancillary Agreements by Buyer and the Guaranty by
Buyer Parent does not (A) conflict with the Certificate of
Incorporation or Bylaws (or other organizational documents), as
currently in effect, of Buyer and Buyer Parent or (B) to the knowledge
of such counsel, constitute a violation of or default under those
agreements or instruments set forth on a Schedule attached to the
opinion and which have been identified to such counsel as all the
agreements and instruments which are material to the business or
financial condition of Buyer or Buyer Parent;
(iv) The Assignment and Assumption Agreement and
other transfer instruments described in Section 3.7 are in proper form
for Buyer to assume the Assumed Liabilities; and
(v) No consent or approval of, filing with, or notice
to, any Governmental Authority is necessary for Buyer's execution and
delivery of the Agreement and the Ancillary Agreements, Buyer Parent's
execution and delivery of the Guaranty, or the consummation by Buyer
and Buyer Parent of the transactions contemplated hereby and thereby,
other than such consents, approvals, filings or notices, which, if not
obtained or made, will not prevent Buyer or Buyer Parent from
performing its respective obligations under the Agreement, the
Ancillary Agreements and Guaranty.
(k) Buyer shall have delivered, or caused to be delivered, to
Sellers at the Closing, Buyer's closing deliveries described in Section 3.7.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
(a) Buyer shall indemnify, defend and hold harmless Sellers,
their officers, directors, employees, shareholders, Affiliates and agents (each,
a "Sellers' Indemnitee") from and against any and all claims, demands, suits,
losses, liabilities, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all actions,
suits, proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) (each, an
56
"Indemnifiable Loss"), asserted against or suffered by any Sellers' Indemnitee
relating to, resulting from or arising out of (i) any breach by Buyer of any
covenant or agreement of Buyer contained in this Agreement or the
representations and warranties contained in Sections 5.1, 5.2 and 5.3, (ii) the
Assumed Liabilities, (iii) any loss or damages resulting from or arising out of
any Inspection, or (iv) any Third Party Claims against a Sellers' Indemnitee
arising out of or in connection with Buyer's ownership or operation of the Plant
and other Purchased Assets on or after the Closing Date.
(b) Sellers shall jointly and severally, except as otherwise
specified in Section 10.1, defend and hold harmless Buyer, its officers,
directors, employees, shareholders, Affiliates and agents (each, a "Buyer
Indemnitee") from and against any and all Indemnifiable Losses asserted against
or suffered by any Buyer Indemnitee relating to, resulting from or arising out
of (i) any breach by Sellers of any covenant or agreement of Sellers contained
in this Agreement or the representations and warranties contained in Sections
4.1, 4.2 and 4.3, (ii) the Excluded Liabilities, (iii) noncompliance by Sellers
with any bulk sales or transfer laws as provided in Section 10.12, or (iv) any
Third Party Claims against a Buyer Indemnitee arising out of or in connection
with Sellers' ownership or operation of the Excluded Assets on or after the
Closing Date.
(c) Buyer, for itself and on behalf of its Representatives and
Affiliates, does hereby release, hold harmless and forever discharge Sellers,
their Representatives and Affiliates, from any and all Indemnifiable Losses of
any kind or character, whether known or unknown, hidden or concealed, resulting
from or arising out of any Environmental Condition or violation of Environmental
Law relating to the Purchased Assets other than any liabilities or obligations
described in Sections 2.4(g), (h) and (i). Buyer hereby waives any and all
rights and benefits with respect to such Indemnifiable Losses that it now has,
or in the future may have conferred upon it by virtue of any statute or common
law principle which provides that a general release does not extend to claims
which a party does not know or suspect to exist in its favor at the time of
executing the release, if knowledge of such claims would have materially
affected such party's settlement with the obligor. In this connection, Buyer
hereby acknowledges that it is aware that factual matters now unknown to it may
have given or may hereafter give rise to Indemnifiable Losses that are presently
unknown, unanticipated and unsuspected, and it further agrees that this release
has been negotiated and agreed upon in light of that awareness and they
nevertheless hereby intend to release Sellers and their Representatives and
Affiliates from the Indemnifiable Losses described in the first sentence of this
paragraph.
(d) Notwithstanding anything to the contrary contained herein:
57
(i) Any Person entitled to receive indemnification
under this Agreement (an "Indemnitee") shall use Commercially
Reasonable Efforts to mitigate all losses, damages and the like
relating to a claim under these indemnification provisions, including
availing itself of any defenses, limitations, rights of contribution,
claims against third Persons and other rights at law or equity. The
Indemnitee's Commercially Reasonable Efforts shall include the
reasonable expenditure of money to mitigate or otherwise reduce or
eliminate any loss or expenses for which indemnification would
otherwise be due, and the Indemnitor shall reimburse the Indemnitee for
the Indemnitee's reasonable expenditures in undertaking the mitigation.
(ii) Any Indemnifiable Loss shall be net of (i) the
dollar amount of any insurance or other proceeds actually receivable by
the Indemnitee or any of its Affiliates with respect to the
Indemnifiable Loss, and (ii) income tax benefits to the Indemnitee, to
the extent realized by the Indemnitee. Any party seeking indemnity
hereunder shall use Commercially Reasonable Efforts to seek coverage
(including both costs of defense and indemnity) under applicable
insurance policies with respect to any such Indemnifiable Loss.
(e) The expiration or termination of any covenant or agreement
shall not affect the Parties' obligations under this Section 8.1 if the
Indemnitee provided the Person required to provide indemnification under this
Agreement (the "Indemnifying Party") with proper notice of the claim or event
for which indemnification is sought prior to such expiration, termination or
extinguishment.
(f) Except to the extent otherwise provided in Article IX, the
rights and remedies of Sellers and Buyer under this Article VIII are exclusive
and in lieu of any and all other rights and remedies which Sellers and Buyer may
have under this Agreement or otherwise for monetary relief, with respect to (i)
any breach of or failure to perform any covenant, agreement, or representation
or warranty set forth in this Agreement, after the occurrence of the Closing, or
(ii) the Assumed Liabilities or the Excluded Liabilities, as the case may be.
The indemnification obligations of the Parties set forth in this Article VIII
apply only to matters arising out of this Agreement, excluding the Ancillary
Agreements. Any Indemnifiable Loss arising under or pursuant to an Ancillary
Agreement shall be governed by the indemnification obligations, if any,
contained in the Ancillary Agreement under which the Indemnifiable Loss arises.
(g) Notwithstanding anything to the contrary herein, no party
(including an Indemnitee) shall be entitled to recover from any other party
(including an Indemnifying Party) for any liabilities, damages, obligations,
payments losses, costs, or expenses under this Agreement any amount in excess of
58
the actual compensatory damages, court costs and reasonable attorney's and other
advisor fees suffered by such party. Buyer and Sellers waive any right to
recover punitive, incidental, special, exemplary and consequential damages
arising in connection with or with respect to this Agreement. The provisions of
this Section 8.1(g) shall not apply to indemnification for a Third Party Claim.
8.2 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any claim, action, or proceeding made or brought
by any Person who is not a party to this Agreement or any Affiliate of a Party
to this Agreement (a "Third Party Claim") with respect to which indemnification
is to be sought from an Indemnifying Party, the Indemnitee shall give such
Indemnifying Party reasonably prompt written notice thereof, but in any event
such notice shall not be given later than ten (10) calendar days after the
Indemnitee's receipt of notice of such Third Party Claim. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and shall
indicate the estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying Party will have
the right to participate in or, by giving written notice to the Indemnitee, to
elect to assume the defense of any Third Party Claim at such Indemnifying
Party's expense and by such Indemnifying Party's own counsel, provided that the
counsel for the Indemnifying Party who shall conduct the defense of such Third
Party Claim shall be reasonably satisfactory to the Indemnitee. The Indemnitee
shall cooperate in good faith in such defense at such Indemnitee's own expense.
If an Indemnifying Party elects not to assume the defense of any Third Party
Claim, the Indemnitee may compromise or settle such Third Party Claim over the
objection of the Indemnifying Party, which settlement or compromise shall
conclusively establish the Indemnifying Party's liability pursuant to this
Agreement.
(b) (i) If, within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claims, the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in Section 8.2(a), the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that if the Indemnifying Party shall fail to
take reasonable steps necessary to defend diligently such Third Party Claim
within twenty (20) calendar days after receiving notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense and the Indemnifying Party shall be
liable for all reasonable expenses thereof. (ii) Without the prior written
consent of the Indemnitee, the Indemnifying Party shall not enter
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into any settlement of any Third Party Claim which would lead to liability or
create any financial or other obligation on the part of the Indemnitee for which
the Indemnitee is not entitled to indemnification hereunder. If a firm offer is
made to settle a Third Party Claim without leading to liability or the creation
of a financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party shall
give written notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within ten (10) calendar days after its receipt of
such notice, the Indemnifying Party shall be relieved of its obligations to
defend such Third Party Claim and the Indemnitee may contest or defend such
Third Party Claim. In such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will be the amount of such settlement offer
plus reasonable costs and expenses paid or incurred by Indemnitee up to the date
of said notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") shall be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event such notice shall not be
given later than ten (10) calendar days after the Indemnitee becomes aware of
such Direct Claim, and the Indemnifying Party shall have a period of thirty (30)
calendar days within which to respond to such Direct Claim. If the Indemnifying
Party does not respond within such thirty (30) calendar day period, the
Indemnifying Party shall be deemed to have accepted such claim. If the
Indemnifying Party rejects such claim, the Indemnitee will be free to seek
enforcement of its right to indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is reduced
by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by, from or
against any other entity, the amount of such reduction, less any costs, expenses
or premiums incurred in connection therewith (together with interest thereon
from the date of payment thereof at the publicly announced prime rate then in
effect of Chase Manhattan Bank) shall promptly be repaid by the Indemnitee to
the Indemnifying Party.
(e) A failure to give timely notice as provided in this
Section 8.2 shall not affect the rights or obligations of any Party hereunder
except if, and only to the extent that, as a result of such failure, the Party
which was entitled to receive such notice was actually prejudiced as a result of
such failure.
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ARTICLE IX
TERMINATION
9.1 Termination. (a) This Agreement may be terminated at any time prior
to the Closing Date by mutual written consent of Sellers and Buyer.
(b) This Agreement may be terminated by Sellers or Buyer if
(i) any Federal or state court of competent jurisdiction shall have issued an
order, judgment or decree permanently restraining, enjoining or otherwise
prohibiting the Closing, and such order, judgment or decree shall have become
final and nonappeallable or (ii) any statute, rule, order or regulation shall
have been enacted or issued by any Governmental Authority which, directly or
indirectly, prohibits the consummation of the Closing; or (iii) the Closing
contemplated hereby shall have not occurred on or before the day which is 12
months from the date of this Agreement (the "Termination Date"); provided that
the right to terminate this Agreement under this Section 9.1(b) (iii) shall not
be available 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; and provided, further, that if on the day which is
12 months from the date of this Agreement the conditions to the Closing set
forth in Section 7.1(b) or 7.2(c) or (d) shall not have been fulfilled but all
other conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Termination Date shall be the day which is 18 months from
the date of this Agreement.
(c) Except as otherwise provided in this Agreement, this
Agreement may be terminated by Buyer if any of Buyer Required Regulatory
Approvals, the receipt of which is a condition to the obligation of Buyer to
consummate the Closing as set forth in Section 7.1(b), shall have been denied
(and a petition for rehearing or refiling of an application initially denied
without prejudice shall also have been denied) or shall have been granted but
are not in form and substance reasonably satisfactory to Buyer.
(d) This Agreement may be terminated by Sellers, if any of the
Sellers' Required Regulatory Approvals applicable to Penelec, the receipt of
which is a condition to the obligation of Penelec to consummate the Closing as
set forth in Section 7.2(d), shall have been denied (and a petition for
rehearing or refiling of an application initially denied without prejudice shall
also have been denied) or shall have been granted but are not in form and
substance reasonably satisfactory to Penelec.
(e) This Agreement may be terminated by Sellers, if any of
Sellers' Required Regulatory Approvals applicable to NGE or NYSEG, the receipt
of which is a condition to the obligations of NGE or NYSEG to consummate
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the Closing as set forth in Section 7.2(c) have been denied (and a petition for
rehearing or refiling of an application initially denied without prejudice shall
also have been denied), or shall have been granted but are not in form and
substance reasonably satisfactory to NGE and NYSEG.
(f) This Agreement may be terminated by Buyer if there has
been a violation or breach by Sellers of any covenant, representation or
warranty contained in this Agreement which has resulted in a Material Adverse
Effect and such violation or breach is not cured by the earlier of the Closing
Date or the date thirty (30) days after receipt by Sellers of notice specifying
particularly such violation or breach, and such violation or breach has not been
waived by Buyer.
(g) This Agreement may be terminated by Sellers, if there has
been a material violation or breach by Buyer of any covenant, representation or
warranty contained in this Agreement and such violation or breach is not cured
by the earlier of the Closing Date or the date thirty (30) days after receipt by
Buyer of notice specifying particularly such violation or breach, and such
violation or breach has not been waived by Sellers.
(h) This Agreement may be terminated by Sellers if there shall
have occurred any change that is materially adverse to the business, operations
or conditions (financial or otherwise) of Buyer.
(i) This Agreement may be terminated by either of Sellers
of NGE or NYSEG to consummate or Buyer in accordance with the provisions of
Section 6.11(b).
9.2 Procedure and Effect of No-Default Termination. In the event of
termination of this Agreement by either or both of the Parties pursuant to
Section 9, written notice thereof shall forthwith be given by the terminating
Party to the other Party, whereupon, if this Agreement is terminated pursuant to
any of Sections 9.1(a) through (e) and 9.1(h) and (i), the liabilities of the
Parties hereunder will terminate, except as otherwise expressly provided in this
Agreement, and thereafter neither Party shall have any recourse against the
other by reason of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Several Liability of each Seller. Notwithstanding anything to the
contrary contained herein, but subject to Section 10.4, it is expressly
understood and agreed that (i) the obligations and covenants of the Sellers in
Section 3.6 and the representations and warranties of Sellers in Sections 4.1,
4.2, 4.3, 4.5, 4.15 and 6.7 (and any indemnity under Article VIII
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relating thereto) are made severally as to itself in the case of Penelec, and
jointly and severally in the case of NYSEG and NGE as to themselves; and (ii)
all other obligations and covenants of the Sellers and all other representations
and warranties of the Sellers hereunder (except for Section 4.20 which is made
solely by NYSEG) are made severally by Penelec on the one hand, and jointly and
severally by NYSEG and NGE on the other, such that Penelec on the one hand, and
NYSEG and NGE on the other, shall in no event be liable to Buyer hereunder for
more than 50% of any Indemnifiable Loss incurred by Buyer under the indemnity
agreement in Article VIII or otherwise under this Agreement for a breach of such
representation, warranty, obligation or covenant.
10.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
Sellers and Buyer.
10.3 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the Parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the Party entitled to
the benefits thereof only by a written instrument signed by the Party granting
such waiver, but such waiver of such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent failure to comply therewith
10.4 No Survival. Each and every representation, warranty and covenant
contained in this Agreement (other than the covenants contained in Sections
3.3(c), 3.4, 3.5(b), 6.2, 6.4, 6.5, 6.6(f), 6.7, 6.8, 6.10, 6.12, 9.4, and in
Articles VIII and X, which provisions shall survive the delivery of the deed(s)
and the Closing in accordance with their terms and the representations and
warranties set forth in Sections 4.1, 4.2, 4.3, 5.1, 5.2 and 5.3, and claims
arising under Sections 6.1 and 6.6(e), which representations and warranties and
such claims shall survive the Closing for eighteen (18) months from the Closing
Date) shall expire with, and be terminated and extinguished by the consummation
of the sale of the Purchased Assets and shall merge into the deed(s) pursuant
hereto and the transfer of the Assumed Liabilities pursuant to this Agreement
and such representations, warranties and covenants shall not survive the Closing
Date; and none of Sellers, Buyer or any officer, director, trustee or Affiliate
of any of them shall be under any liability whatsoever with respect to any such
representation, warranty or covenant.
10.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the recipient Party at its
address (or at such other address or facsimile number for a Party as shall be
specified by like notice; provided however, that
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notices of a change of address shall be effective only upon receipt thereof):
(a) If to Sellers, to:
(Penelec)
c/o GPU Service, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
(NGE or NYSEG)
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Secretary
with a copy to:
(if to Penelec)
Berlack, Israels & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(if to NGE or NYSEG)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) if to Buyer, to:
Mission Energy Westside, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
President
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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10.6 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any Party
hereto, including by operation of law, without the prior written consent of each
other Party, nor is this Agreement intended to confer upon any other Person
except the Parties hereto any rights, interests, obligations or remedies
hereunder. No provision of this Agreement shall create any third party
beneficiary rights in any employee or former employee of Sellers (including any
beneficiary or dependent thereof) in respect of continued employment or resumed
employment, and no provision of this Agreement shall create any rights in any
such Persons in respect of any benefits that may be provided, directly or
indirectly, under any employee benefit plan or arrangement except as expressly
provided for thereunder. Notwithstanding the foregoing, (i) Buyer may assign all
of its rights and obligations hereunder to any majority owned Subsidiary (direct
or indirect) and upon Sellers' receipt of notice from Buyer of any such
assignment, such assignee will be deemed to have assumed, ratified, agreed to be
bound by and perform all such obligations, and all references herein to "Buyer"
shall thereafter be deemed to be references to such assignee, in each case
without the necessity for further act or evidence by the Parties hereto or such
assignee, and (ii) Buyer or its permitted assignee may assign, transfer, pledge
or otherwise dispose of (absolutely or as security) its rights and interests
hereunder to a trustee, lending institutions or other party for the purposes of
leasing, financing or refinancing the Purchased Assets, including such an
assignment, transfer or other disposition upon or pursuant to the exercise of
remedies with respect to such leasing, financing or refinancing, or by way of
assignments, transfers, pledges, or other dispositions in lieu thereof;
provided, however, that no such assignment in clause (i) or (ii) shall relieve
or discharge Buyer from any of its obligations hereunder. The Sellers agree, at
Buyer's expense, to execute and deliver such documents as may be reasonably
necessary to accomplish any such assignment, transfer, pledge or other
disposition of rights and interests hereunder so long as the Sellers' rights
under this Agreement are not thereby altered, amended, diminished or otherwise
impaired.
10.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of New York (without giving effect to
conflict of law principles) as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies. THE PARTIES
HERETO AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE
SUBJECT MATTER OF THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL COURTS IN AND
FOR NEW YORK COUNTY, NEW YORK, WHICH COURTS SHALL HAVE EXCLUSIVE JURISDICTION
FOR SUCH PURPOSE, AND THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVE THE DEFENSE OF
65
AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING.
SERVICE OF PROCESS MAY BE MADE IN ANY MANNER RECOGNIZED BY SUCH COURTS. EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Interpretation. The articles, section and schedule headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.
10.10 Schedules and Exhibits. Except as otherwise provided in this
Agreement, all Exhibits and Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
10.11 Entire Agreement. This Agreement, the Confidentiality Agreement,
and the Ancillary Agreements including the Exhibits, Schedules, documents,
certificates and instruments referred to herein or therein, embody the entire
agreement and understanding of the Parties hereto in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. It is expressly
acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in any material
made available to Buyer pursuant to the terms of the Confidentiality Agreement
(including the Offering Memorandum dated April 1998, previously delivered to
Buyer by Sellers and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.). This Agreement supersedes all prior
agreements and understandings between the Parties other than the Confidentiality
Agreement with respect to such transactions.
10.12 Bulk Sales Laws. Buyer acknowledges that, notwithstanding anything
in this Agreement to the contrary, Sellers will not comply with the provision of
the bulk sales laws of any jurisdiction in connection with the transactions
contemplated by this Agreement. Buyer hereby waives compliance by Sellers with
the provisions of the bulk sales laws of all applicable jurisdictions.
10.13 U.S. Dollars. Unless otherwise stated, all dollar amounts set
forth herein are United States (U.S.) dollars.
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10.14 Zoning Classification. Buyer acknowledges that the Real
Property is not zoned.
10.15 Sewage Facilities. Buyer acknowledges that there is no
community (municipal) sewage system available to serve the Real Property.
Accordingly, any additional sewage disposal planned by Buyer will require an
individual (on-site) sewage system and all necessary permits as required by the
Pennsylvania Sewage Facilities Act (the "Facilities Act"). Buyer recognizes that
certain of the existing individual sewage systems on the Real Property may have
been installed pursuant to exemptions from the requirements of the Facilities
Act or prior to the enactment of the Facilities Act and that soils and site
testing may not have been performed in connection therewith. The owner of the
property or properties served by such a system, at the time of any malfunction,
may be held liable for any contamination, pollution, public health hazard or
nuisance which occurs as the result of such malfunction.
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IN WITNESS WHEREOF, Sellers and Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
PENNSYLVANIA ELECTRIC COMPANY NGE GENERATION, INC.
By: ___________________________ By: _____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Title: Executive Vice President
Chief Financial Officer
MISSION ENERGY WESTSIDE, INC. NEW YORK STATE ELECTRIC &
GAS CORPORATION
By:_____________________________ By:______________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President Title: Executive Vice President
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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of ▇▇▇▇ of Sale
Exhibit C Form of Easement and Attachment Agreement
Exhibit D Form of FIRPTA Affidavit
Exhibit E Form of Interconnection Agreement
Exhibit F Form of Special Warranty Deed
Exhibit G Form of Transition Power Purchase Agreement
Exhibit H Guaranty
SCHEDULES
1.1(69) Permitted Encumbrances
1.1(97) Transferable Permits (both environmental and non-
environmental)
2.1 Schedule of Purchased Assets
2.1(c) Schedule of Tangible Personal Property to be Conveyed to
Buyer
2.1(h) Schedule of Emission Reduction Credits
2.1(l) Intellectual Property
2.2(a) Description of Transmission and other Assets not included in
Conveyance
3.3(a)(i) Schedule of Inventory
4.3(a) Third Party Consents
4.3(b) Sellers' Required Regulatory Approvals
4.4 Insurance Exceptions
4.5 Exceptions to Title
4.6 Real Property Leases
4.7 Schedule of Environmental Matters
4.8 Schedule of Noncompliance with Employment Laws
4.9(a) Schedule of Benefit Plans
4.9(b) Benefit Plan Exceptions
4.l0 Description of Real Property
4.11 Notices of Condemnation
4.12(a) List of Contracts
4.12(b) List of Non-assignable Contracts
4.12(c) List of Defaults under the Contracts
4.13 List of Litigation
4.14(a) List of Permit Violations
4.14(b) List of material Permits (other than Transferable Permits)
4.15 Tax Matters
4.16 Intellectual Property Exceptions
5.3(a) Third Party Consents
5.3(b) Buyer's Required Regulatory Approvals
6.1 Schedule of Permitted Activities prior to Closing
6.10(b) Schedule of Non-Union Employees
6.10(d) IBEW Collective Bargaining Agreement
6.10(h) Schedule of Severance Benefits
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