Exhibit 10.12
PURCHASE AND SALE AGREEMENT
BETWEEN
NORTHEAST GENERATION COMPANY
AND
WESTERN MASSACHUSETTS ELECTRIC COMPANY
JULY 2, 1999
TABLE OF CONTENTS
1. DEFINITIONS..............................................................................................1
2. ACQUISITION OF ASSETS BY BUYER..........................................................................12
2.1. PURCHASE AND SALE OF ASSETS....................................................................12
2.2. EXCLUDED ASSETS................................................................................13
2.3. ASSUMPTION OF LIABILITIES......................................................................14
2.4. EXCLUDED LIABILITIES. .........................................................................15
2.5. PURCHASE PRICE.................................................................................16
2.6. ADJUSTMENTS TO INITIAL PURCHASE PRICE..........................................................16
2.7. ALLOCATION OF PURCHASE PRICE...................................................................18
2.8. PRORATION......................................................................................18
2.9. THE CLOSING....................................................................................19
2.10. DELIVERIES BY THE SELLER AT THE CLOSING........................................................19
2.11. DELIVERIES BY THE BUYER AT THE CLOSING.........................................................20
3. REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF THE SELLER...............................................21
3.1. ORGANIZATION OF THE SELLER.....................................................................21
3.2. AUTHORIZATION OF TRANSACTION...................................................................21
3.3. NONCONTRAVENTION...............................................................................22
3.4. BROKERS' FEES..................................................................................22
3.5. TITLE TO ACQUIRED ASSETS.......................................................................22
3.6. LEGAL AND OTHER COMPLIANCE; PERMITS............................................................22
3.7. TAXES..........................................................................................22
3.8. CONTRACTS AND LEASES...........................................................................23
3.9. INSURANCE......................................................................................23
3.10. LITIGATION.....................................................................................23
3.11. EMPLOYEES......................................................................................23
3.12. ENVIRONMENTAL MATTERS..........................................................................24
3.13. CONDEMNATION...................................................................................24
3.14. REGULATION AS A UTILITY........................................................................24
DISCLAIMERS REGARDING ACQUIRED ASSETS............................................................................25
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.............................................................26
4.1. ORGANIZATION OF THE BUYER......................................................................26
4.2. AUTHORIZATION OF TRANSACTION...................................................................26
4.3. NONCONTRAVENTION...............................................................................27
4.4. BROKERS' FEES..................................................................................27
4.5. LITIGATION.....................................................................................27
4.6. NO KNOWLEDGE OF THE SELLER'S BREACH............................................................27
4.7. AVAILABILITY OF FUNDS..........................................................................27
4.8. "AS IS" SALE...................................................................................27
4.9. AFFILIATE GUARANTY.............................................................................28
4.10. QUALIFIED BUYER................................................................................28
4.11. CANDLEWOOD LAKE BEACHES SALES AND LOVER'S LEAP LAND SALE DUE DILIGENCE.........................28
5. COVENANTS...............................................................................................28
5.1. GENERAL........................................................................................28
5.2. NOTICES, CONSENTS AND APPROVALS................................................................29
5.3. OPERATION OF BUSINESS..........................................................................29
5.4. FULL ACCESS; YEAR 2000 COMPUTER PROBLEM........................................................31
5.5. INTERIM PERIOD NOTICE..........................................................................31
5.6. FURTHER ASSURANCES.............................................................................32
5.7. EMPLOYEE MATTERS...............................................................................33
5.8. ACCESS AFTER CLOSING...........................................................................36
(a) RECORDS...................................................................................36
(b) EMPLOYEES.................................................................................37
5.9. NEPOOL.........................................................................................37
5.10. RISK OF LOSS...................................................................................37
5.11. REGULATORY APPROVAL PROCESS....................................................................38
5.12. INTENTIONALLY OMITTED..........................................................................39
5.13. DISCHARGE OF ENVIRONMENTAL LIABILITIES.........................................................39
6. CONDITIONS TO OBLIGATION TO CLOSE.......................................................................39
6.1. CONDITIONS TO OBLIGATION OF THE BUYER TO CLOSE.................................................39
(a) REPRESENTATIONS AND WARRANTIES............................................................39
(b) PERFORMANCE BY THE SELLER.................................................................39
(c) BUYER'S REGULATORY APPROVALS..............................................................39
(e) ABSENCE OF LITIGATION.....................................................................39
(f) ANTITRUST MATTERS.........................................................................40
(h) DELIVERIES................................................................................40
6.2. CONDITIONS TO OBLIGATION OF THE SELLER TO CLOSE................................................40
(a) REPRESENTATIONS AND WARRANTIES............................................................40
(b) PERFORMANCE BY BUYER......................................................................40
(c) SELLER'S REGULATORY APPROVALS.............................................................40
(e) ABSENCE OF LITIGATION.....................................................................40
(f) ANTITRUST MATTERS.........................................................................40
(g) DELIVERIES................................................................................40
(h) NEPOOL....................................................................................41
7. CONFIDENTIALITY.........................................................................................41
8. TAXES...................................................................................................42
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; EFFECT OF CLOSING AND INDEMNIFICATION.......................42
9.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SURVIVAL OF COVENANTS AND AGREEMENTS...............42
9.2. EFFECT OF CLOSING..............................................................................43
9.3. INDEMNITY BY THE SELLER........................................................................43
9.4. INDEMNITY BY BUYER.............................................................................43
9.5. ...............................................................................................44
EXCLUSIVE REMEDY.................................................................................................44
9.6. MATTERS INVOLVING THIRD PARTIES................................................................44
9.7. NET OF TAXES AND INSURANCE.....................................................................45
9.8. NO RECOURSE....................................................................................45
10. TERMINATION.............................................................................................45
10.1. TERMINATION OF AGREEMENT.......................................................................45
10.2. EFFECT OF TERMINATION..........................................................................46
11. MISCELLANEOUS...........................................................................................47
11.1. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS........................................................47
11.2. NO THIRD PARTY BENEFICIARIES...................................................................47
11.3. NO JOINT VENTURE...............................................................................47
11.4. ENTIRE AGREEMENT...............................................................................47
11.5. SUCCESSION AND ASSIGNMENT......................................................................47
11.6. COUNTERPARTS...................................................................................47
11.7. HEADINGS.......................................................................................48
11.8. NOTICES........................................................................................48
11.9. GOVERNING LAW..................................................................................49
11.10. CHANGE IN LAW..................................................................................49
11.11. CONSENT TO JURISDICTION........................................................................49
11.12. AMENDMENTS AND WAIVERS.........................................................................49
11.13. SEVERABILITY...................................................................................49
11.14. EXPENSES.......................................................................................49
11.15. CONSTRUCTION...................................................................................49
11.16. INCORPORATION OF EXHIBITS AND SCHEDULES........................................................50
11.17. SPECIFIC PERFORMANCE...........................................................................50
11.18. DISPUTE RESOLUTION.............................................................................50
EXHIBITS
Exhibit A-1 - Form of Deed
Exhibit A-2 - Form of Reserved Easement
Exhibit B - Form of ▇▇▇▇ of Sale
Exhibit C - Form of Assignment and Assumption Agreement
Exhibit D - Form of Property Tax Agreement
Exhibit E - Form of Interconnection Agreement
Exhibit F - Form of Guaranty
Exhibit G - Form of Asset Demarcation Agreement
Exhibit H - Form of Mortgage Indenture Release
Exhibit I - Intentionally Omitted
Exhibit J - Northfield Mountain Upper Reservoir
Energy Storage Tables
Exhibit K - Form of Environmental Consultant Reliance
Letter
SCHEDULES
Schedule 2.1(a)(i) - Real Property
Schedule 2.1(a)(ii) - Real Property Matters
Schedule 2.1(b) - Personal Property
Schedule 2.1(c) - Leases
Schedule 2.1(d) - Permits
Schedule 2.1(e) - Contracts
Schedule 2.1(g) - Names of Facilities
Schedule 2.2(a) - T&D and Associated Telecommunication Assets
Schedule 2.10(q) - Matters for Opinion from Counsel to the Seller
Schedule 2.11(j) - Matters for Opinion from Counsel to the Buyer
Schedule 3.3 - Matters of Contravention
Schedule 3.5 - Title Commitments/Policies, Defects In Title
Schedule 3.6 - Compliance
Schedule 3.8(b) - Exceptions to Contract Obligations
Schedule 3.9 - Insurance
Schedule 3.10 - Litigation
Schedule 3.11 - Collective Bargaining Agreements and Related
Matters
Schedule 3.12 - Environmental
Schedule 3.13 - Condemnation
Schedule 3.15 - Benefit Plans
Schedule 3.16 - Material Asset Exception
Schedule 3.18 - Year 2000 Computer Problem Performance
Schedule 5.3 - Pre-Approved Capital Expenditures
Schedule 5.3(g) - Modifications to Employee Benefit Plans
Schedule 5.7(c)(iii) - Eligible Non-Represented Employee Benefits
Schedule 5.7(g) - Station Personnel
Schedule 6.1(c) - Buyer's Regulatory Approvals
Schedule 6.2(c) - Seller's Regulatory Approvals
[Exhibits and Schedules will be provided to the Securities and Exchange
Commission by
Northeast Generation Company upon request.]
PURCHASE AND SALE AGREEMENT
This
Purchase and Sale Agreement (the "AGREEMENT") is entered into on
July 2, 1999, by and between
Northeast Generation Company, a Connecticut
corporation (the "BUYER"), and Western
Massachusetts Electric Company, a
Massachusetts corporation (the "SELLER"). The Buyer and the Seller are each
referred to herein as a "PARTY" or, collectively as the "PARTIES."
This Agreement contemplates a transaction in which the Buyer will
purchase certain assets of the Seller (as defined in Section 2.1 below) in
consideration of the Purchase Price (as defined in Section 2.5 below).
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"ACQUIRED ASSETS" has the meaning set forth in Section 2.1.
"ACQUIRED ASSETS EMPLOYEES" has the meaning set forth in Section
5.7(b).
"ACQUIRED ASSETS EMPLOYEES' RECORDS" mean all personnel records
maintained by the Seller relating to the Acquired Assets Employees to the extent
such files contain (i) names, addresses, dates of birth, job titles and
descriptions; (ii) starting dates of employment; (iii) salary and benefits
information; (iv) resumes and job applications; and (v) any other documents that
the Seller is not prohibited by Law to deliver to the Buyer. To the extent the
consent of an Acquired Assets Employee is required in order for the Seller to
deliver a document which is part of the Acquired Assets Employees' Records to
the Buyer, the Seller agrees to use reasonable efforts to secure such consent.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AGREEMENT" has the meaning set forth in the preamble above.
"ASSET DEMARCATION AGREEMENT" means the agreement between the Parties
evidencing their agreement as to the demarcation of ownership with respect to
certain assets not situated wholly on real property owned, or to be owned, by
either the Seller or the Buyer, in substantially the form attached hereto as
EXHIBIT G.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the agreement between the
Parties by which the Seller shall assign certain rights, liabilities and
obligations and the Buyer shall assume the Assumed Liabilities, in substantially
the form attached hereto as EXHIBIT C.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.3.
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"▇▇▇▇ OF SALE" means the form of ▇▇▇▇ of sale by which the title to
personal property shall be conveyed to the Buyer, substantially in the form
attached hereto as EXHIBIT B.
"BUSINESS DAY" means any day other than a Saturday, Sunday or day on
which banks are legally closed for business in Hartford, Connecticut or New
York, New York.
"BUYER" has the meaning set forth in the preamble above.
"BUYER MATERIAL ADVERSE EFFECT" means any material adverse change in,
or effect on, the business, financial condition, operations, results of
operations or future prospects of the Buyer, including any change or effect that
is materially adverse to the Buyer's ability to own, operate or use the Acquired
Assets as so owned, operated and used by the Seller prior to the Effective Date,
taken as a whole; PROVIDED that any change or effect that is cured prior to
Closing shall not be considered a Buyer Material Adverse Effect; and PROVIDED,
FURTHER, that any change or effect having a value of five percent of the
Purchase Price or less shall not be deemed to be a Buyer Material Adverse
Effect.
"BUYER'S REGULATORY APPROVALS" means those approvals identified on
SCHEDULE 6.1(C) attached hereto to be obtained by the Buyer as a condition to
the Buyer's obligations under this Agreement.
"CAPITAL COMMITMENTS" means all binding contractual commitments to make
capital expenditures relating to the Acquired Assets, Facilities or Sites
incurred by the Seller during the Interim Period that extend beyond the Closing
Date, whether or not relating to the Pre-Approved Capital Expenditures.
"CASH" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP.
"CLOSING" has the meaning set forth in Section 2.9.
"CLOSING ADJUSTMENT" has the meaning set forth in Section 2.6(c).
"CLOSING DATE" has the meaning set forth in Section 2.9.
"CLOSING PURCHASE PRICE" has the meaning set forth in Section 2.5.
"CLOSING STATEMENT" has the meaning set forth in Section 2.6(d).
"CMR" means Code of
Massachusetts Regulations.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLECTIVE BARGAINING AGREEMENT" has the meaning set forth in Section
5.7(a).
"COMMERCIALLY REASONABLE EFFORTS" means efforts which are reasonably
within the contemplation of the Parties at the Effective Date and which do not
require the performing Party
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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.
"CONTRACTS" has the meaning set forth in Section 2.1(e).
"DEED" means the form of deed by which the Real Property shall be
conveyed to the Buyer, substantially in the form attached hereto as EXHIBIT A-1.
"DISCLOSING PARTY" has the meaning set forth in the definition of
Proprietary Information.
"DTE" means the
Massachusetts Department of Telecommunications and
Energy.
"DTE APPROVAL" means the order or orders of the DTE approving this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby and all related matters, including without
limitation approval of the amount of the proceeds of the sale of the Acquired
Assets, such order or orders to be in a form which is final, unconditional and
unappealable by any Person, including exhaustion of all administrative and
judicial appeals or remedies and the running of time periods and statutes of
limitation for rehearing and judicial review.
"EFFECTIVE DATE" means the date on which this Agreement has been duly
executed and validly delivered by the Parties.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program or (e) profit sharing, bonus, stock
option, stock purchase, equity, stock appreciation, deferred compensation,
incentive, severance plan or other benefit plan.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"ENVIRONMENT" means soil, land surface or subsurface strata, real
property, surface waters, groundwater, wetlands, sediments, drinking water
supply, ambient air (including indoor air) and any other environmental medium or
natural resource.
"ENVIRONMENTAL CLAIM" means a claim by any Person based upon a breach
of Environmental Laws or an Environmental Liability alleging loss of life,
injury to persons, property or business, damage to natural resources or trespass
to property, whether or not such
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loss, injury, damage or trespass arose or was made manifest before the Closing
Date or arises or becomes manifest after the Closing Date.
"ENVIRONMENTAL LAWS" means all applicable Laws and any binding
administrative or judicial interpretations thereof relating to: (a) the
regulation, protection and use of the Environment; (b) the conservation,
management, development, control and/or use of land, natural resources and
wildlife; (c) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation, or handling of, or exposure to, any
Hazardous Substances; or (d) noise; and includes, without limitation, the
following federal statutes (and their implementing regulations): the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended; the Solid Waste Disposal Act, as amended, 42 U.S.C. Section 6901 et
seq.; the Federal Water Pollution Control Act of 1972, as amended, 33 U.S.C.
Section 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15
U.S.C. Section 2601 et. seq.; the Clean Air Act of 1966, as amended, 42 U.S.C.
Section 7401 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act,
as amended, 7 U.S.C. Section 136 et seq.; the Coastal Zone Management Act of
1972, as amended, 16 U.S.C. Section 1451 et seq.; the Oil Pollution Act of 1990,
as amended, 33 U.S.C. Section 2701 et. seq.; the Rivers and Harbors Act of 1899,
as amended, 33 U.S.C. Section 401 et seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 1801 et seq.; the Endangered
Species Act of 1973, as amended, 16 U.S.C. Section 1531 et. seq.; the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651 et
seq.; and the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Section
300(f) et seq.; and all analogous or comparable state statutes and regulations,
including, without limitation, the
Massachusetts Oil and Hazardous Release
Prevention and Response Act, as amended, M.G.L. c. 21E.
"ENVIRONMENTAL LIABILITIES" means any Liability under or related to
Environmental Laws arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, prior to, on or after the
Closing Date, with respect to the ownership, operation or use of the Acquired
Assets; (ii) any Environmental Claims caused (or allegedly caused) by the
presence or Release of Hazardous Substances at, on, in, under, adjacent to or
migrating from the Acquired Assets prior to, on or after the Closing Date,;
(iii) the investigation and/or Remediation (whether or not such investigation or
Remediation commenced before the Closing Date or commences after the Closing
Date) of Hazardous 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 Acquired Assets; (iv) compliance with Environmental Laws on or after the
Closing Date with respect to the ownership or operation or use of the Acquired
Assets; (v) any Environmental Claim arising from or relating to the off-site
disposal, treatment, storage, transportation, discharge, Release or recycling,
or the arrangement for such activities, of Hazardous Substances, on or after the
Closing Date, in connection with the ownership or operation of the Acquired
Assets; and (vi) the investigation and/or remediation of Hazardous Substances
that are generated, disposed, treated, stored, transported, discharged,
Released, recycled, or the arrangement of such activities, on or after the
Closing Date, in connection with the ownership or operation of the Acquired
Assets, at any Offsite Disposal Facility.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESTIMATED ADJUSTMENT" has the meaning set forth in Section 2.6(c).
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"ESTIMATED CLOSING STATEMENT" has the meaning set forth in Section
2.6(c).
"EVENT OF LOSS" has the meaning set forth in Section 5.10.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.4.
"EXHIBITS" means the exhibits to this Agreement.
"FACILITIES" means the generating facilities identified by name on
SCHEDULE 2.1(g) attached hereto.
"FERC" means the Federal Energy Regulatory Commission, or its
regulatory successor, as applicable.
"FERC APPLICATIONS" has the meaning set forth in Section 5.11.
"FIRPTA AFFIDAVIT" means the affidavit to be delivered by the Parties
at Closing pursuant to Section 1445(b)(2) of the Code, to establish that each
Party is not a "foreign person" within the meaning of that Section.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"GENERATION SUPPORT SERVICES AGREEMENT" means an agreement between the
Buyer and Northeast Generation Services, Inc. under which the Buyer can
contract, at the Buyer's option, for the provision of certain services to the
Buyer after the Closing.
"GOOD UTILITY PRACTICES" means 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 practice, method or act to the exclusion of all others, but rather
to be acceptable practices, methods or acts generally accepted in the region.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or other
governmental, regulatory or administrative agency, commission, department,
board, or other governmental subdivision, court, tribunal, arbitral body or
other governmental authority, but excluding the Buyer and any subsequent owner
of the Sites (if otherwise a Governmental Authority under this definition).
"GROUP HEALTH PLAN" has the meaning set forth in Section 5000(b)(1)
of the Code.
"GUARANTY" means the form of guaranty in substantially the form
attached hereto as Exhibit F.
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"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"HAZARDOUS SUBSTANCE" means (a) any petrochemical or petroleum
products, oil, waste oil, asbestos in any form that is or could become friable,
urea formaldehyde foam insulations, lead-based paint and polychlorinated
biphenyls; (b) any products, mixtures, compounds, materials or wastes, air
emissions, toxic substances, wastewater discharges and any chemical, material or
substance that may give rise to liability pursuant to, or is listed or regulated
under, or the human exposure to which or the Release of which is controlled or
limited by applicable Environmental Laws; and (c) any materials or substances
defined in Environmental Laws as "hazardous", "toxic", "pollutant", or
"contaminant", or words of similar meaning or regulatory effect.
"IMPROVEMENTS" means all buildings, structures (including all fuel
handling and storage facilities), machinery and equipment, fixtures,
construction in progress, including all piping, cables and similar equipment
forming part of the mechanical, electrical, plumbing or HVAC infrastructure of
any building, structure or equipment, and including all generating units,
located on and affixed to the Sites.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9.6(a).
"INDEMNIFYING PARTY" has the meaning set forth in Section 9.6(a).
"INDEPENDENT APPRAISER" has the meaning set forth in Section 2.7.
"INITIAL PURCHASE PRICE" has the meaning set forth in Section 2.5.
"INSPECTIONS" means all tests, reviews, examinations, inspections,
investigations, verifications, samplings and similar activities conducted by any
Party or such Party's agents or representatives with respect to the Acquired
Assets prior to the Closing.
"INTERCONNECTION AGREEMENT" means the agreement between the Parties in
substantially the form attached hereto as EXHIBIT E.
"INTERIM PERIOD" means that period of time commencing on the Effective
Date and ending on the Closing Date.
"INVENTORY" or "INVENTORIES" means fuel inventories, materials, spare
parts, consumable supplies and chemical and gas inventories located at the
Sites, in transit to the Sites or identified in any Schedule.
"ISO NEW ENGLAND" means ISO New England, Inc., the independent system
operator as established or designated by NEPOOL.
"KNOWLEDGE" means the actual, current knowledge, after due inquiry, of
the corporate officers charged with responsibility for the particular function
at the date of this Agreement, or, with respect to any certificate delivered
pursuant to this Agreement, the date of delivery of the certificate.
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"LAWS" means all laws, rules, regulations, codes, injunctions,
judgments, orders, decrees, rulings, interpretations, constitution, ordinance,
common law, or treaty, of any federal, state, local municipal and foreign,
international, or multinational government or administration and related
agencies.
"LEASES" has the meaning set forth in Section 2.1(c).
"LIABILITY" or "LIABILITIES" means any liability or obligation (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
whether incurred or consequential and whether due or to become due), including
any liability for Taxes.
"LIEN" means any mortgage, pledge, lien, security interest, charge,
claim, equitable interest, encumbrance, restriction on transfer, conditional
sale or other title retention device or arrangement (including, without
limitation, a capital lease), transfer for security for the payment of any
indebtedness, or restriction on the creation of any of the foregoing, whether
relating to any property or right or the income or profits therefrom; PROVIDED,
HOWEVER, that the term "LIEN" shall not include any of the following "PERMITTED
ENCUMBRANCES": (i) Liens for Taxes or other charges or assessments by any
Governmental Authority to the extent that the payment thereof is not in arrears
or otherwise due or is being contested in good faith; (ii) encumbrances in the
nature of zoning restrictions, building and land use laws, ordinances, orders,
decrees, restrictions or any other conditions imposed by any Governmental
Authority; (iii) easements (including without limitation, the Reserved Easements
and any other easement or like right granted by an instrument executed in
connection with this Agreement or the Related Agreements or the transactions
contemplated hereby or thereby, but excluding such encumbrances that secure
indebtedness), rights, restrictions, title imperfections and similar matters
including such matters as are set forth in any applicable FERC license or
exemption on the uses of property if the same do not materially detract from the
operation or use of such property in the business of the Seller as conducted on
the Effective Date; (iv) deposits or pledges made in connection with, or to
secure payment of, worker's compensation, unemployment insurance, old age
pension programs mandated under applicable laws or other social security
regulations; (v) statutory or common law liens in favor of carriers,
warehousemen, mechanics and materialmen, statutory or common law liens to secure
claims for labor, materials or supplies and other like liens, which, in the case
of clauses (i) through (v), inclusive, secure obligations to the extent that
payment thereof is not in arrears or otherwise due and which have been incurred
under Good Utility Practices; (vi) any Lien with respect to the Acquired Assets
that arises under Good Utility Practices and is not material to the operation or
use of the Acquired Assets in the business of the Seller as conducted on the
Effective Date; (vii) any Lien or title imperfection with respect to the
Acquired Assets created by or resulting from any act or omission of the Buyer;
(viii) all exceptions set forth in the "Title Commitments" or discoverable based
on a review of an accurate survey of the Sites or the land records of the
respective towns in which the Sites are located; and (ix) matters set forth on
Schedule 2.1(a)(ii).
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"LOCAL" means the International Brotherhood of Electrical Workers,
Local Union No. 455.
"LOSSES" has the meaning set forth in Section 9.3.
"MAJOR LOSS" has the meaning set forth in Section 5.10(b).
"MATERIAL ADVERSE EFFECT" means any change in, or effect on, the
Acquired Assets that is materially adverse to the operations or condition of the
Acquired Assets as operated by the Seller on the Effective Date, taken as a
whole, other than any such change or effect resulting from (a) changes in the
international, national, regional or local wholesale or retail markets for
electric power or fuel used in connection with the Acquired Assets; (b) changes
in the North American, national, regional or local electric transmission systems
or the operation thereof or the costs imposed on generators of electricity in
connection with the use of such electric transmission systems; or (c) any order
of any Governmental Authority, or legislation applicable to providers of
generation, transmission or distribution of electricity generally that imposes
restrictions, regulations or other requirements thereon; PROVIDED that any
change or effect that is cured prior to Closing shall not be considered a
Material Adverse Effect.
"MORTGAGE INDENTURE" means that certain First Mortgage Indenture and
Deed of Trust between the Seller and State Street Bank and Trust Company, as
Trustee, dated as of August 1, 1954, as supplemented and amended.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section
3(37).
"NEPOOL" means the New England Power Pool, established by the NEPOOL
Agreement, or its successor.
"NEPOOL AGREEMENT" means the New England Power Pool Agreement, dated
September 1, 1971, as amended by the Restated New England Power Pool Agreement
filed with FERC on July 22, 1998, as finally approved by FERC and as further
amended from time to time.
"NON-REPRESENTED EMPLOYEES" has the meaning set forth in Section
5.7(b).
"NORTHFIELD MOUNTAIN ADDER" means an amount to compensate the Seller at
the Closing for the costs incurred by the Seller in connection with the
reservoir level of the Northfield Mountain upper reservoir on the Closing Date.
The Northfield Mountain Adder shall be equal to: (i) Generating Energy Available
x (ii) 1.35 x (iii) the ECP, where
Generating Energy Available means the generating energy
available above elevation level 938 feet, measured in megawatt
hours, for the corresponding elevation of the Northfield
Mountain upper reservoir, as measured as of 11:59 p.m. on the
Closing Date, using the Northfield Mountain Upper Reservoir
Energy Storage Tables attached hereto as Exhibit J; and
ECP means the average off-peak energy clearing price reported
by ISO New England for the thirty day period preceding the
Closing Date, where the off-peak
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period is the hours between 11:00 p.m. and 7:00 a.m. each day.
"OFFSITE DISPOSAL FACILITY" means a location, other than a Facility or
a Site, which receives or received Hazardous Substances for disposal by the
Seller prior to the Closing Date or by the Buyer on or after the Closing Date.
"PARTY" and "PARTIES" have the meanings set forth in the preamble
above.
"PERMITS" means all certificates, licenses, permits, approvals,
consents, orders, decisions and other actions of a Governmental Authority
pertaining to a particular Acquired Asset, or the ownership, operation or use
thereof.
"PERMITTED ENCUMBRANCES" has the meaning set forth in the definition of
Lien.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization, or a governmental entity (or
any department, agency, or political subdivision thereof).
"PRE-APPROVED CAPITAL EXPENDITURES" means those capital expenditures
set forth on SCHEDULE 5.3.
"PROPRIETARY INFORMATION" means all information about either Party (the
"DISCLOSING PARTY") or its properties or operations furnished to the other Party
(the "RECEIVING PARTY") or its Representatives by the Disclosing 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 Receiving Party or its Representatives in violation of this
Agreement; (b) was available to the Receiving Party on a nonconfidential basis
prior to its disclosure by the Disclosing Party or its Representatives; (c)
becomes available to the Receiving Party on a nonconfidential basis from a
Person, other than the Disclosing Party or its Representatives, who, to the
Receiving Party's actual knowledge, is not otherwise bound by a confidentiality
agreement with the Disclosing Party or its Representatives, or is not otherwise
under any obligation to the Disclosing Party or any of its Representatives not
to transmit the information to the Receiving Party or its Representatives, or
(d) the Disclosing Party discloses to others on a non-confidential basis.
"PURCHASE PRICE" has the meaning set forth in Section 2.5.
"PURCHASE PRICE ADJUSTMENT" has the meaning set forth in Section 2.6.
"REAL PROPERTY" has the meaning set forth in Section 2.1(a).
"RECEIVING PARTY" has the meaning set forth in the definition of
Proprietary Information.
"RELATED AGREEMENTS" means the Assignment and Assumption Agreement, the
▇▇▇▇ of Sale, the Deed, the Property Tax Agreement, the Interconnection
Agreement, the Guaranty, the Generation Support Services Agreement, the Release
of Mortgage Indenture, the Asset Demarcation Agreement, and the Reserved
Easement.
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"RELEASE" means any actual, threatened or alleged spilling, leaking,
pumping, pouring, emitting, dispersing, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing of any Hazardous Substance into the
Environment that may cause an Environmental Liability (including the disposal or
abandonment of barrels, containers, tanks or other receptacles containing or
previously containing any Hazardous Substance).
"RELEASE OF MORTGAGE INDENTURE" means the form of release substantially
in the form attached hereto as Exhibit H.
"REMEDIATION" means any or all of the following activities to the
extent required to address the presence or Release of Hazardous Substances: (a)
monitoring, investigation, assessment, treatment, cleanup containment, removal,
mitigation, response or restoration work as well as obtaining any permits,
consents, approvals or authorizations of any Governmental Authority necessary to
conduct any such activity; (b) preparing and implementing any plans or studies
for any such activity; (c) obtaining a written notice (or an oral notice which
is appropriately documented or memorialized) from a Governmental Authority with
competent jurisdiction under Environmental Laws or a written opinion of a
Licensed Site Professional (as defined in M.G.L. c21A ss.19 et seq.), as
contemplated by the relevant Environmental Laws and in lieu of a written notice
from a Governmental Authority, that no material additional work is required; and
(d) any other activities reasonably determined by a Party to be necessary or
appropriate or required under Environmental Laws.
"REPRESENTATIVE" means, as to any Person, such Person's Affiliates and
its and their directors, officers, employees, agents, advisors (including,
without limitation, financial advisors, counsel and accountants).
"REPRESENTED EMPLOYEES" has the meaning set forth in Section 5.7(a).
"RESERVED EASEMENTS" means easements to be reserved by the Seller with
respect to certain T&D Assets and associated telecommunications facilities
located on the site of the Acquired Assets, as set forth in Schedule 2.1(a)(i)
hereto, to be reserved in the Deeds by language substantially in the form
attached hereto as Exhibit A-2.
"SCHEDULE" means a schedule to this Agreement.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SELLER" has the meaning set forth in the preamble.
"SELLER'S REGULATORY APPROVALS" means those approvals identified on
SCHEDULE 6.2(c) hereto to be obtained by the Seller as a condition to the
Seller's obligation to close under this Agreement.
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"SITE" means the Real Property and Improvements forming a part of, or
used or usable in connection with, a Facility. Any reference to a Site shall
include, by definition, the surface and subsurface elements, including the soils
and groundwater present at such Site, and any reference to items "at the Site"
shall include all items "at, on, in, upon, over, across, under and within" the
Site.
"T&D" means the transmission and distribution of electricity.
"T&D ASSETS" means the transmission, distribution, communication,
substation and other assets necessary to current or future T&D Operations of the
Seller.
"T&D OPERATIONS" means the process of conducting and supporting T&D.
"TAKING" has the meaning set forth in Section 5.10.
"TAX" or "TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar, including FICA), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY" means a Person who is not a Party, an Affiliate of a
Party, a Representative of a Party, a Representative of an Affiliate of a Party
or a shareholder of any of a Party, a Party's Affiliate or a Party's
Representative.
"THIRD PARTY CLAIM" has the meaning set forth in Section 9.6(a).
"TITLE COMMITMENTS" has the meaning set forth in Section 3.5.
"TRADEMARKS" means any trademarks, service marks, trade dress, and
logos, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith.
"TRANSFERABLE PERMITS" has the meaning set forth in Section 3.6(b).
"WARN ACT" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.
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"YEAR 2000 COMPUTER PROBLEM" means the failure or inability of any
hardware, software, or firmware product (including embedded microcontrollers in
non-computer equipment) to correctly differentiate between years, in different
centuries, which years end in the same two digits, or 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.
2. ACQUISITION OF ASSETS BY BUYER.
2.1. PURCHASE AND SALE OF ASSETS. The Seller agrees to sell, assign
and transfer to the Buyer, and the Buyer agrees to purchase from the Seller at
the Closing, subject to and upon the terms and conditions contained herein, free
and clear of any Lien, all of the right, title and interest of the Seller in and
to the following properties and assets owned by the Seller constituting, or used
in and necessary for the operation of, the Facilities (collectively, the
"ACQUIRED ASSETS"):
(a) the real property, Improvements thereon, easements
and other rights in real property described in SCHEDULE 2.1(a)(i), but
subject to the exceptions and encumbrances set forth in the Title
Commitments and subject to the Permitted Encumbrances, including the
matters set forth in SCHEDULE 2.1(a)(ii)(the "REAL PROPERTY");
(b) the machinery, equipment, furniture, boats, vehicles,
intellectual property and other personal property owned by the Seller
and located at the Facilities and Inventories (including without
limitation the items of personal property described on SCHEDULE 2.1(b),
all applicable warranties against manufacturers or vendors, to the
extent that such warranties are transferable without further action by
the Seller, and all items of personal property due under applicable
warranties), in each case as in existence on the Effective Date, but
excluding such items disposed of by the Seller in the ordinary course
of business during the Interim Period, and including such additional
items as may be acquired by the Seller for use in connection with the
Acquired Assets in the ordinary course of business during the Interim
Period;
(c) all rights with respect to leasehold interests and
subleases and rights thereunder relating to real property set forth on
SCHEDULE 2.1(c) (the "LEASES");
(d) all Permits relating to ownership or operation of the
Facilities including, but not limited to, the Permits listed on
Schedule 2.1(d);
(e) those contracts, agreements and personal property
leases which are related to the ownership, use or operation of the
Facilities and which are set forth in SCHEDULE 2.1(e) (the
"CONTRACTS"), and all other contracts which relate directly to the
operation of the Facilities; PROVIDED that the Seller shall retain the
rights and interests under any Contract to the extent such rights and
interests provide for indemnity and exculpation rights for pre-Closing
occurrences for which the Seller remains liable under this Agreement;
(f) all books, operating records, engineering designs,
blueprints, as-built plans, specifications, procedures, studies,
reports and equipment repair, safety, maintenance or
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service records of the Seller relating specifically to the operation of
the Facilities, including the Acquired Assets Employees' Records but
expressly excluding financial records, employees records (other than
the Acquired Assets Employees' Records) and books of account;
(g) the rights of the Seller to the use of the names of
the Facilities set forth in SCHEDULE 2.1(g);
(h) Intentionally Omitted;
(i) all rights of the Seller in and to any causes of
action against a Third Party relating to any Assumed Liability, whether
received as a payment or credit against future liabilities, including,
without limitation, insurance proceeds, condemnation awards and cash
payments under warranties covering the Acquired Assets to the extent
such payments relate to Assumed Liabilities.
2.2. EXCLUDED ASSETS. Notwithstanding anything to the contrary in
this Agreement, there shall be excluded from the Acquired Assets to be sold,
assigned, transferred, conveyed or delivered to the Buyer hereunder, and to the
extent in existence on the Effective Date or on the Closing Date, there shall be
retained by the Seller, any and all right, title or interest to the following
assets, properties and rights (collectively, the "EXCLUDED ASSETS"):
(a) as identified on SCHEDULE 2.2(a) or in the Asset
Demarcation Agreement, or any document or exhibit referred to or
incorporated in the Asset Demarcation Agreement, the property
comprising or constituting any or all of the T&D Assets located at the
Sites (whether or not regarded as a "transmission", "distribution" or
"generation" asset for regulatory or accounting purposes), including
all switchyard facilities, substation facilities and support equipment,
as well as all Permits and contracts, to the extent they relate to the
T&D Assets, and those certain assets and facilities identified for use
or used by the Seller or others pursuant to an agreement or agreements
with the Seller for telecommunications purposes;
(b) Intentionally Omitted;
(c) all Cash, accounts and notes receivable, checkbooks
and canceled checks, bank deposits and property or income tax
receivables or any other Tax refunds to the extent allocable to a
period ending on or before the Closing Date;
(d) all contracts, instruments or other agreements
relating to the sale by the Seller of electric capacity or energy under
wholesale rates, or otherwise subject to regulation by the FERC;
(e) all rights of the Seller in and to any causes of
action against a Third Party
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relating to any period through the Closing Date, whether received as a
payment or credit against future liabilities, including, without
limitation, any rights or interests in respect of any refunds relating
to property Taxes paid by the Seller for any period prior to the
Closing Date, insurance proceeds, condemnation awards and cash payments
under warranties covering the Acquired Assets to the extent such
payments relate to warranty claims made by the Seller prior to the
Closing Date, but excluding any such rights of the Seller to the extent
the associated Third Party claims relate to an Assumed Liability; and
(f) all rights of the Seller to the words "WMECO" and
"Western
Massachusetts Electric Company" and any Trademark which is
composed of or comprises any derivative.
2.3. ASSUMPTION OF LIABILITIES. On the terms and subject to the
conditions set forth herein, from and after the Closing, the Buyer will assume
and satisfy or perform all of the Liabilities of the Seller in respect of, or
otherwise arising from the operation or use of the Acquired Assets, other than
the Excluded Liabilities (as set forth in Section 2.4 below), including, without
limitation, the following Liabilities (the "ASSUMED LIABILITIES"):
(a) all Environmental Liabilities, other than the
Excluded Liabilities (as set forth in Section 2.4 below);
(b) all Liabilities under (i) the Contracts, Leases, and
the Transferable Permits in accordance with the terms thereof, (ii) the
contracts, leases and other agreements entered into by the Seller with
respect to the Acquired Assets which would be required to be disclosed
on SCHEDULE 2.1(c) or 2.1(e) but for the exception provided in clause
(iii) of Section 3.8(a), in accordance with the terms thereof, and
(iii) the contracts, leases, commitments and other agreements entered
into by the Seller with respect to the Acquired Assets during the
Interim Period consistent with the terms of this Agreement (including,
without limitation, Capital Commitments, agreements with respect to
Liabilities for real or personal property Taxes on any of the Acquired
Assets entered into in accordance with the provisions of Section 5.3(d)
or, to the extent such agreements do not allocate such Tax liability
between the Acquired Assets and the Excluded Assets, all Tax liability
under such agreements entered into by the Seller and any local
government); except (x) in each case, to the extent such Liabilities,
but for a breach or default by the Seller, 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 to
the extent the same relate to performance rendered to the Seller prior
to the Closing Date and (y) as otherwise provided in Section 2.4(f);
(c) all Liabilities under the Permitted Encumbrances
other than under or with respect to the exercise of the Reserved
Easements;
(d) all Liabilities relating to Employees for which the
Buyer is responsible under Section 5.7; and
(e) all other Liabilities expressly allocated to the
Buyer in this Agreement or in any of the Related Agreements.
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2.4. EXCLUDED LIABILITIES. The Buyer shall not assume or be
responsible for the performance of any of the following Liabilities
(collectively, the "EXCLUDED LIABILITIES"):
(a) any Liability of the Seller in respect of or
otherwise arising from the operation or use of the Excluded Assets or
any other assets of the Seller that are not Acquired Assets;
(b) any Liability of the Seller including, without
limitation, any Environmental Liability, in respect of or otherwise
arising from the exercise of the Reserved Easements;
(c) any Liability relating to the treatment, disposal,
storage, discharge, Release, recycling or the arrangement for such
activities at, or the transportation to, any Offsite Disposal Facility,
by the Seller, prior to the Closing Date, of Hazardous Substances that
were generated at the Sites, PROVIDED that for purposes of this
Section, "Offsite Disposal Facility" does not include any location to
which Hazardous Substances disposed of or Released at the Acquired
Assets have migrated;
(d) any Liability of the Seller arising from the making
or performance of this Agreement or a Related Agreement or the
transactions contemplated hereby or thereby;
(e) any Liability of the Seller in respect of payment
obligations for goods delivered or services rendered prior to the
Closing Date or other Liabilities under contracts or leases which the
Buyer has not assumed pursuant to Section 2.3(b);
(f) any Liability which is or would be required to be
accrued by the Seller on a balance sheet of the Seller as of the
Closing Date prepared in accordance with GAAP, other than those
Liabilities which are expressly set forth as Assumed Liabilities in
Sections 2.3(a), (b) and (c) hereof;
(g) any Liability of the Seller arising out of any
Employee Benefit Plan established or maintained by the Seller or to
which the Seller contributes or any Liability for the termination of
any such Employee Benefit Plan;
(h) any Liability of the Seller for any compensation or
any benefits, including, without limitation, vacation pay, severance
pay, post-retirement benefits and COBRA coverage, accruing on or prior
to the Closing Date under the terms or provisions of any Seller
Employee Benefit Plan, the Collective Bargaining Agreement or any other
agreement, plan, practice, policy, instrument or document relating to
any of the Acquired Assets Employees, other than the Liabilities
expressly assumed by the Buyer under Section 5.7;
(i) any Liability of the Seller relating to any cause of
action against the Seller filed with or pending before any court or
administrative agency on the Closing Date;
(j) any Liability of the Seller for any fines or
penalties imposed by a Governmental Authority resulting from (x) any
investigation or proceeding pending on or prior to the Closing Date or
(y) illegal acts or willful misconduct of the Seller on or prior to the
Closing Date;
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(k) any Environmental Liability to the extent such
Environmental Liability arises out of or relates to any Governmental
Authority's allegation and investigation of any criminal violations of
Environmental Laws by the Seller of which the Seller has received
formal written notification from such Governmental Authority on or
prior to the Closing Date;
(l) any Environmental Liability to the extent such
Environmental Liability derives from the same facts which form the
basis of a conviction of, or plea of NOLO CONTENDERE by, the Seller for
a violation of Environmental Laws which conviction or plea arises out
of a Governmental Authority's investigation of criminal violations of
Environmental Laws by the Seller of which the Seller receives formal
written notification from such Governmental Authority on or before the
sixth anniversary of the Effective Date; and
(m) any Liability in respect of Taxes attributable to the
Acquired Assets for taxable periods ending on or before the Closing
Date as such Taxes are to be pro rated in accordance with Section 2.8,
except those Taxes for which the Buyer is liable pursuant to Section 8.
2.5. PURCHASE PRICE. The Buyer agrees to assume the Assumed
Liabilities and pay to the Seller at the Closing an aggregate amount equal to
$184,150,000 (the "Initial Purchase Price") plus or minus amounts to account for
(i) the Estimated Adjustment to the Initial Purchase Price to be made as of the
Closing under Section 2.6(c), and (ii) the pro rations to be made as of the
Closing under Section 2.8(a), (the Initial Purchase Price, as so adjusted, shall
be referred to herein as the "Closing Purchase Price"). The Closing Purchase
Price shall be payable in cash by wire transfer to the Seller in accordance with
written instructions of the Seller given to the Buyer at least three (3)
Business Days prior to the Closing. Following the Closing, the Closing Purchase
Price shall be subject to adjustment pursuant to Sections 2.6(d) and 2.8(b), and
the Closing Purchase Price, as so adjusted pursuant to such Sections, shall be
herein referred to as the "Purchase Price."
2.6. ADJUSTMENTS TO INITIAL PURCHASE PRICE. The Initial Purchase
Price shall be increased or reduced as set forth in Sections 2.6(a), (b) and
(c), and the Closing Purchase Price shall be subject to adjustment as set forth
in Section 2.6(d). Such increases or reductions, as the case may be, shall be
referred to herein as the "PURCHASE PRICE ADJUSTMENT" and shall be determined
and paid as set forth below:
(a) the Initial Purchase Price shall be increased to
account for the following items: (i) the net book value of all
Inventories held by the Seller as of the Closing Date; (ii) the amount
paid by the Seller in purchasing the vehicles identified as leased
vehicles on Schedule 2.1(b); (iii) any Pre-Approved Capital
Expenditures paid by the Seller during the Interim Period; (iv) any
other capital expenditures paid by the Seller during the Interim Period
necessitated by Good Utility Practice and to which the Buyer shall have
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consented pursuant to Section 5.3(f); (v) any operations and
maintenance expenses paid for by the Seller during the Interim Period
that the Seller would not have actually paid but for the Buyer's
written request; (vi) the Northfield Mountain Adder; (vii) the amounts
paid by the Seller in having surveys of the Facilities and Real
Property performed in connection with the transactions contemplated
hereby;
(b) the Initial Purchase Price shall be reduced to
account for any Capital Commitments assumed by the Buyer that were not
(i) Pre-Approved Capital Expenditures or (ii) capital expenditures
necessitated by Good Utility Practice to which Buyer consented pursuant
to Section 5.3(f);
(c) at least twenty (20) Business Days prior to the
Closing Date, the Seller shall prepare and deliver to the Buyer an
Estimated Closing Statement (the "ESTIMATED CLOSING STATEMENT") that
shall set forth the Seller's best estimate of all adjustments to the
Initial Purchase Price required by Sections 2.6(a) and 2.6(b) (the
"ESTIMATED ADJUSTMENT"). Within ten (10) Business Days following the
delivery of the Estimated Closing Statement by the Seller to the Buyer,
the Buyer may object in good faith to the Estimated Adjustment in
writing. If the Buyer objects to the Estimated Adjustment, the Parties
shall attempt to resolve such dispute by negotiation. If the Parties
are unable to resolve such dispute before five (5) Business Days prior
to the Closing Date (or if the Buyer fails to object to the Estimated
Adjustment), the Initial Purchase Price shall be adjusted (the "CLOSING
ADJUSTMENT") for the Closing by the amount of the Estimated Adjustment
not in dispute; and
(d) within thirty (30) days following the Closing Date,
the Seller shall prepare and deliver to the Buyer a closing statement
that shall set forth the Seller's computation of the final Purchase
Price Adjustment based on Sections 2.6(a) and (b) and the components
thereof taking into account actual data (the "CLOSING STATEMENT").
Within twenty (20) days following the delivery of the Closing Statement
by the Seller to the Buyer, the Buyer may object to the Closing
Statement in writing. The Seller agrees to cooperate with the Buyer to
provide to the Buyer or the Buyer's Representatives information used to
prepare the Closing Statement and information relating thereto. If the
Buyer objects to the Closing Statement, the Parties shall attempt to
resolve such dispute by negotiation. If the Parties are unable to
resolve such dispute within twenty (20) days of any objection by the
Buyer, the Parties shall appoint Ernst & Young who shall, at the
Seller's and the Buyer's joint expense, review the Closing Statement
and determine the appropriate Purchase Price Adjustment under this
Section 2.6. The agreed upon Closing Statement or the finding of such
accounting firm, as the case may be, shall be the Purchase Price
Adjustment and shall be binding on the Parties. Upon the determination
of the Purchase Price Adjustment, the Party owing a balance on account
of the Purchase Price Adjustment shall deliver the balance due 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. The balance due shall be determined
by offsetting against each Party's credits and debits arising from the
Purchase Price Adjustment the credits and debits accorded to each Party
in the Closing Statement on account of the Estimated Adjustment. The
acceptance by the Buyer and the Seller of the Purchase Price Adjustment
shall not constitute or be deemed to constitute a waiver of the rights
of such Party in respect of any other provision of this Agreement.
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2.7. ALLOCATION OF PURCHASE PRICE. The Buyer and the Seller shall
use their good faith best efforts to agree upon an allocation among the Acquired
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 one
hundred and twenty (120) days of the Effective Date (or such later date as the
Parties may mutually agree) but in no event fewer than thirty (30) days prior to
the Closing. The Buyer and the Seller may jointly agree to obtain the services
of an independent engineer or appraiser (the "INDEPENDENT APPRAISER") to assist
the Parties in determining the fair value of the Acquired Assets solely for
purposes of such allocation under this Section 2.7. If such an appraisal is
made, both the Buyer and the Seller agree to accept the Independent Appraiser's
determination of the fair value of the Acquired Assets. The cost of the
appraisal shall be borne equally by the Buyer and the Seller. Each of the Buyer
and the Seller agrees to file Internal Revenue Service Form 8594 and all
federal, state, local and foreign Tax Returns in accordance with such agreed
allocation. Each of the Buyer and the Seller shall report the transactions
contemplated by this Agreement and the Related Agreements for federal Income Tax
and all other Tax purposes in a manner consistent with the allocation determined
pursuant to this Section 2.7. Each of the Buyer and the Seller agrees to provide
the other promptly with any other information required to complete Form 8594.
Each of the Buyer and the Seller shall notify and provide the other with
reasonable assistance in the event of an examination, audit or other proceeding
regarding the agreed upon allocation of the Purchase Price.
2.8. PRORATION.
(a) The Buyer and the Seller agree that all of the items
normally prorated in a sale of assets of the type contemplated by this
Agreement, including those listed below, relating to the business and
operations of the Acquired Assets, will be prorated as of the Closing
Date, with the Seller liable to the extent such items relate to any
period through the Closing Date, and the Buyer liable to the extent
such items relate to periods after the Closing Date: (i) personal
property, Real Property, occupancy and water Taxes, assessments and
other charges, if any, on or associated with the Acquired Assets; (ii)
rent, Taxes and other items payable by or to the Seller under any of
the Contracts or Leases assigned to and assumed by the Buyer hereunder;
(iii) any Permit, license, registration or fees with respect to any
Transferable Permit associated with the Acquired Assets; and (iv) sewer
rents and charges for water, telephone, electricity and other
utilities. Subject to Section 2.8(b), below, not less than five (5)
Business Days prior to the Closing Date, the Parties shall agree upon
the sum of the net amount of the prorated amounts to which either the
Seller or the Buyer shall be entitled pursuant to this Section 2.8(a)
and the Initial Purchase Price shall be adjusted to reflect such net
amount.
(b) If the amount of one or more Taxes, fees or other
liabilities to be prorated in accordance with Section 2.8(a) is not
known or determinable on or prior to the Closing Date, the amounts to
be prorated upon the Closing in accordance with Section 2.8(a) shall be
based upon the actual Taxes, fees or other liabilities for the
preceding year (or appropriate period) for which such actual Taxes,
fees or liabilities are available. The amount of Taxes, fees or other
liabilities prorated upon the Closing pursuant to Section 2.8(a) shall
be adjusted upon the request of either the Seller, on the one hand, or
the Buyer, on the other hand, made within sixty (60) days of the date
the actual amounts become available. The Seller and the Buyer agree to
furnish each other with such
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documents and other records that may be reasonably requested in order
to confirm all adjustment and proration calculations made pursuant to
this Section 2.8.
2.9. THE CLOSING. Unless otherwise agreed to by the Parties, the
closing of the transactions contemplated by this Agreement (the "CLOSING") shall
take place at the offices of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇, commencing at 9:00 a.m. Eastern time on the date that is
five (5) days (or, if the fifth day is not a Business Day, then the next
Business Day following such fifth day) following the date on which all of the
conditions set forth in Sections 6.1 and 6.2 have either been satisfied or
waived by the Party for whose benefit such condition exists, such satisfaction
or waiver to conform to Section 11.12. The date of Closing is hereinafter called
the "CLOSING DATE" and shall be effective for all purposes herein as of 11:59
p.m. Eastern time on the Closing Date.
2.10. DELIVERIES BY THE SELLER AT THE CLOSING. At the Closing, the
Seller shall deliver the following to the Buyer, duly executed and properly
acknowledged, if appropriate:
(a) deeds for the Real Property and Improvements,
substantially in the form attached hereto as EXHIBIT A-1 and otherwise
in a form suitable for recording;
(b) the ▇▇▇▇ of Sale, substantially in the form attached
hereto as EXHIBIT B, for the tangible personal property included in the
Acquired Assets;
(c) the Assignment and Assumption Agreement, in the form
attached hereto as EXHIBIT C, in recordable form if necessary;
(d) the Property Tax Agreement, substantially in the form
attached hereto as EXHIBIT D;
(e) the Interconnection Agreement, in the form attached hereto
as EXHIBIT E;
(f) the Asset Demarcation Agreement, in the form attached
hereto as EXHIBIT G;
(g) if requested by the Buyer, the Generation Support
Services Agreement, executed by Northeast Generation Services, Inc.;
(h) the Release of Mortgage Indenture, substantially in
the form attached hereto as EXHIBIT H;
(i) a FIRPTA Affidavit executed by the Seller;
(j) certificates of title for the vehicles and boats
which are part of the Acquired Assets;
(k) all attornment agreements, notices and other
documents and instruments required for the assignment or other transfer
of the Leases from the Seller to the Buyer, which agreements, notices,
documents and instruments shall, upon the reasonable request of the
Buyer, be in recordable form;
(l) copies of all consents, waivers or approvals obtained
by the Seller with respect
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to the Acquired Assets, the transfer of the Transferable Permits or the
consummation of the transactions contemplated by this Agreement and the
Related Agreements, to the extent specifically required under this
Agreement or the Related Agreements;
(m) the Environmental Consultant Reliance Letter in the
form of Exhibit K hereto, duly executed and addressed to the Buyer;
(n) a certificate from an authorized officer of the
Seller, dated the Closing Date, to the effect that, to such officer's
Knowledge, the conditions set forth in Sections 6.1(a), (b), (e) and
(g) and Sections 6.2(c) and (d) have been satisfied;
(o) a copy, certified by the Secretary or an Assistant
Secretary of the Seller, of corporate resolutions authorizing the
execution and delivery of this Agreement and the Related Agreements and
instruments attached as exhibits hereto and thereto, and the
consummation of the transactions contemplated hereby and thereby;
(p) a certificate of the Secretary or an Assistant
Secretary of the Seller which shall identify by name and title and bear
the signature of the officers of the Seller authorized to execute and
deliver this Agreement and the Related Agreements and instruments
attached as exhibits hereto and thereto;
(q) an opinion or opinions from one or more counsel to
the Seller (any of whom may be an employee of the Seller), dated the
Closing Date and reasonably satisfactory in form to the Buyer and its
counsel, covering substantially the matters set forth in SCHEDULE
2.10(q);
(r) all such other instruments of sale, transfer,
conveyance, assignment or assumption as the Buyer and its counsel may
reasonably request in connection with the sale of the Acquired Assets,
PROVIDED HOWEVER, that this Section 2.10(r) shall not require the
Seller to prepare or obtain any surveys relating to the Real Property
other than those previously provided to the Buyer; and
(s) copies of the Title Commitments and surveys described
in Schedule 2.1(a)(i).
2.11. DELIVERIES BY THE BUYER AT THE CLOSING. At the Closing, the
Buyer shall deliver to the Seller, properly executed and acknowledged, if
appropriate:
(a) the Closing Purchase Price;
(b) the Assignment and Assumption Agreement, in the form
attached hereto as EXHIBIT C to this Agreement, duly executed by the
Buyer, and if necessary or desirable to the Seller, in recordable form;
(c) the Property Tax Agreement, substantially in the form
attached hereto as EXHIBIT D;
(d) the Interconnection Agreement, in the form attached
hereto as EXHIBIT E;
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(e) the Asset Demarcation Agreement, in the form attached
hereto as EXHIBIT G;
(f) if requested by the Buyer, the Generation Support
Services Agreement;
(g) a certificate from an authorized officer of the
Buyer, dated the Closing Date, to the effect that, to such officer's
Knowledge, the conditions set forth in Sections 6.1(c) and (d) and
Sections 6.2(a), (b), (e) and (g) have been satisfied;
(h) a copy, certified by the Secretary or Assistant
Secretary of the Buyer, of resolutions authorizing the execution and
delivery of this Agreement and the Related Agreements and instruments
attached as exhibits hereto and thereto, and the consummation of the
transactions contemplated hereby and thereby;
(i) a certificate of the Secretary or Assistant Secretary
of the Buyer which shall identify by name and title and bear the
signature of the officers of the Buyer authorized to execute and
deliver this Agreement and the Related Agreements and instruments
attached as exhibits hereto and thereto;
(j) one or more opinions from counsel to the Buyer, dated
the Closing Date and reasonably satisfactory in form to the Seller and
its counsel, covering substantially the matters set forth in SCHEDULE
2.11(j);
(k) evidence of the Buyer's membership in NEPOOL; and
(l) all such other instruments of purchase, sale,
transfer, conveyance, delivery, receipt, assignment or assumption as
the Seller and its counsel may reasonably request in connection with
the sale or purchase of the Acquired Assets or assumption of the
Assumed Liabilities.
3. REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF THE SELLER. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 3 are correct and complete as of the Effective Date.
3.1. ORGANIZATION OF THE SELLER. The Seller is duly organized,
validly existing and in good standing under the laws of the Commonealth of
Massachusetts. Copies of the charter and by-laws of the Seller, each as amended
to date, have been heretofore delivered to the Buyer and are accurate and
complete.
3.2. AUTHORIZATION OF TRANSACTION. The Seller has the power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and the Related Agreements and, subject to receipt of all the
Seller's Regulatory Approvals, to perform its obligations hereunder and
thereunder. All corporate actions or proceedings to be taken by or on the part
of the Seller to authorize and permit the due execution and valid delivery by
the Seller of this Agreement and the Related Agreements and the instruments
required to be duly executed and validly delivered by the Seller pursuant hereto
and thereto, the performance by the Seller of its obligations hereunder and
thereunder, and the consummation by the Seller of the transactions contemplated
herein and therein, have been duly and properly taken. This Agreement and the
Related Agreements have been duly executed and validly delivered by the Seller
and constitute
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the legal, valid and binding obligation of Seller, enforceable in accordance
with their terms and conditions.
3.3. NONCONTRAVENTION. Subject to the Seller obtaining the Seller's
Regulatory Approvals, neither the execution and the delivery of this Agreement
or any of the Related Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Sections 2.10(r) and 2.11(l) above), will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, license or other restriction of any Governmental Authority to
which the Seller or any of its property is subject or any provision of the
charter or by-laws of the Seller, or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Seller is bound or to which any of the Acquired Assets is subject
(or result in the imposition of any Lien upon any of the Acquired Assets),
except for matters that will not have a Material Adverse Effect or as disclosed
in SCHEDULE 3.3 or any other Schedule.
3.4. BROKERS' FEES. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
3.5. TITLE TO ACQUIRED ASSETS. Except for Permitted Encumbrances,
the Seller has title to the Real Property to the extent, and only to the extent,
specified in the title policy commitments attached hereto on SCHEDULE 3.5 (the
"TITLE COMMITMENTS"). Except as set forth in SCHEDULE 3.5 and except for
Permitted Encumbrances, the Seller has good and valid title to the other
Acquired Assets.
3.6. LEGAL AND OTHER COMPLIANCE; PERMITS.
(a) The Seller is in compliance with all current Laws
applicable to the Acquired Assets or the Seller's operation of the
Acquired Assets the violation of which could have a Material Adverse
Effect, other than as disclosed in SCHEDULE 3.6 and other than with
respect to matters covered by SECTION 3.12 below.
(b) SCHEDULE 2.1(d) sets forth all Permits which are
material to the ownership or operation of the Facilities, and also
identifies those material Permits which are transferable or assignable
by the Seller to the Buyer or which will pass to the Buyer as successor
in title to the Facilities by operation of applicable Laws (the
"TRANSFERABLE PERMITS").
3.7. TAXES. The Seller has filed all Tax Returns that it was
required to file, and has paid all Taxes that have become due as indicated
thereon, where the failure so to file or pay could have a Material Adverse
Effect, except where the Seller is contesting the same in good faith by
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appropriate proceedings. There is no unpaid Tax due and payable that could have
a Material Adverse Effect on the Buyer's ownership, operation or use of the
Acquired Assets for which the Buyer could become liable.
3.8. CONTRACTS AND LEASES.
(a) Except (i) as listed in SCHEDULE 2.1(c) or 2.1(e) or
any other Schedule, (ii) for contracts, agreements, personal property
leases, commitments, understandings or instruments which will expire
prior to the Closing Date, and (iii) for agreements with suppliers
entered into in the ordinary course of business that will not by their
terms extend more than two years beyond the Closing Date and whose
payment obligations do not exceed more than $50,000 individually and
$500,000 in the aggregate, the Seller is not a party to any written
contract, agreement, personal property lease, commitment, understanding
or instrument which (x) is material to the business or operations of
the Acquired Assets or (y) which provides for the sale of any amount of
capacity or energy from any of the Acquired Assets (whether or not
entered into in the ordinary course of business).
(b) Except as disclosed in SCHEDULE 3.8(b) (i) each of
the Contracts constitutes a valid and binding obligation of the Seller,
(ii) the Seller is not in default in any material respect under any of
the Contracts and, to the Seller's Knowledge, the other parties to the
Contracts are not in default in any material respect under any thereof,
and (iii) the Contracts may be transferred to the Buyer pursuant to
this Agreement and will continue in full force and effect thereafter,
in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any material rights thereunder.
3.9. INSURANCE. Except as set forth in SCHEDULE 3.9, all material
policies of fire, liability, worker's compensation and other forms of insurance
owned or held by the Seller insuring the Acquired Assets are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date as of which this representation is being made have been paid
(other than retroactive premiums which may be payable with respect to
comprehensive general liability and worker's compensation insurance policies),
and no written 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 3.9, as
of the date of this Agreement, the Seller has not been refused any insurance
with respect to the Acquired Assets nor has its coverage been limited by any
insurance carrier to which it has applied for any such insurance or with which
it has carried insurance during the last twelve months.
3.10. LITIGATION. Except as disclosed in SCHEDULE 3.10, no action,
suit, claim, demand or other proceeding is pending or, to Seller's Knowledge,
threatened that would be reasonably likely to result in a Material Adverse
Effect or that questions the validity of this Agreement or the Related
Agreements or of any action taken or to be taken pursuant to or in connection
with the provisions of this Agreement or the Related Agreements.
3.11. EMPLOYEES. The Collective Bargaining Agreement referenced in
SCHEDULE 3.11 is the only collective bargaining agreement to which the Seller is
a party and which governs terms and conditions of employment of employees of the
Seller whose employment relates primarily to
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the Acquired Assets. A true and correct copy of the Collective Bargaining
Agreement has heretofore been delivered to the Buyer. Except as described in
SCHEDULE 3.11, and except as to such matters as will not have a Material Adverse
Effect: (i) the Seller has not experienced any labor disputes, strikes or work
stoppages by such employees due to labor disagreements since 1971 and to the
Seller's Knowledge none is currently pending; (ii) to the Seller's Knowledge the
Seller is in compliance with all applicable Laws respecting employment and
employment practices, equal employment opportunity, occupational health and
safety and affirmative action, terms and conditions of employment and wages and
hours; (iii) the Seller has not received written notice from any Governmental
Authority of any unfair labor practice charge, complaint or proceeding against
the Seller pending or threatened before the National Labor Relations Board or
any other Governmental Authority with respect to such employees; (iv) no
arbitration proceeding arising out of or under any collective bargaining
agreement with respect to the Acquired Assets is pending against the Seller; and
(v) the Seller is in compliance in all material respects with the Collective
Bargaining Agreement.
3.12. ENVIRONMENTAL MATTERS. During the two-year period preceding
the Effective Date, except as disclosed in SCHEDULE 3.12, and except where such
matters, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect, (i) the Seller did not receive any written
notice from any Governmental Authority that it is not in compliance with
Environmental Laws or failed to obtain material Permits required for the
ownership or operation of any Acquired Asset under Environmental Laws; (ii) the
Seller did not receive any written notice from any Governmental Authority that
any Acquired Asset is listed under the Comprehensive Environmental Response,
Compensation Liability Information Systems or any similar state list; (iii) the
Seller did not receive any written notice from any Person alleging Liability for
any Environmental Claims; and (iv) the Seller was not required by any applicable
Environmental Laws to place any use or activities restrictions or any
institutional controls on any Acquired Assets. The Seller has no Knowledge of
any matters which could give rise to Environmental Liabilities which would
reasonably be expected to have a Material Adverse Effect which are not disclosed
or identified in the Phase I and Phase II Reports referred to in SCHEDULE 3.12.
3.13. CONDEMNATION. Except as set forth in SCHEDULE 3.13, the Seller
has received no written notice from any Governmental Authority of any pending or
threatened proceeding to condemn or take by power of eminent domain or
otherwise, by any Governmental Authority, all or any part of the Acquired
Assets, which would constitute a Major Loss.
3.14. REGULATION AS A UTILITY. The Seller is an "electric company"
within the meaning of Chapter 164 of the
Massachusetts General Laws, and is a
"subsidiary company" of a "holding company" which is registered under (and as
those terms are defined in) the Public Utility Holding Company Act of 1935, as
amended.
3.15. BENEFIT PLANS. SCHEDULE 3.15 lists as of the Effective Date,
all Employee Benefit Plans established, sponsored, maintained or contributed to
by (or to which there is an obligation to contribute of) the Seller in respect
of the Acquired Assets Employees. Accurate and complete copies of all such
Employee Benefit Plans (excluding Multiemployer Plans) have been made available
to the Buyer. Except as disclosed on SCHEDULE 3.15, the Seller does not
contribute to, and has no obligation to contribute to, any Multiemployer Plan.
No liability under Title IV or Section 302 of ERISA or Section 412 of the Code
has been incurred by the Seller with respect to
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the Acquired Assets Employees that has not been satisfied in full, and to the
Seller's Knowledge no condition exists that presents a material risk to the
Seller of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation, which premiums have been paid.
3.16. ASSETS USED IN OPERATION OF THE FACILITIES. Except as set
forth in Schedule 3.16, the Acquired Assets include all material assets and
properties that are used by the Seller in the operation of the Facilities on the
Effective Date.
3.17. SURVEYS OF FACILITIES. The surveys of the Facilities provided
by the Seller to the Buyer show the locations of all of the material electric
generating buildings and related facilities located at such Facilities.
3.18. YEAR 2000 COMPUTER PROBLEM. The Seller has performed all of
the work regarding addressing the Year 2000 Computer Problem which the Seller
has advised ISO New England and NEPOOL has been performed, as more particularly
identified in SCHEDULE 3.18. The disclosures regarding the Year 2000 Computer
Problem set forth in the Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 of Northeast Utilities and in the subsequent reports filed by
Northeast Utilities under the Securities Exchange Act of 1934, as amended, prior
to the date of this Agreement, are true and correct in all material respects
insofar as such disclosures pertain to the Acquired Assets.
3.19. INTELLECTUAL PROPERTY. SCHEDULE 2.1(b) discloses all of the
material intellectual property owned or leased by the Seller and used for the
physical operation of the Acquired Assets. the Seller has all right, title and
interest in or valid, binding and irrevocable rights to use such intellectual
property without material limitation, Liens or royalty burdens. To the Knowledge
of the Seller, none of such intellectual property included in the Acquired
Assets is being infringed by any other Person, and the Seller, to its Knowledge,
is not infringing and has not received notice that it is infringing (or
allegedly infringing) any intellectual property of any other Person in
connection with the operation of the Acquired Assets, which in either case could
reasonably be expected to have a Material Adverse Effect. With respect to such
intellectual property, there are no restrictions on transfer by the Seller to
the Buyer of such intellectual property which restrictions would have a Material
Adverse Effect.
3.20. DISCLAIMERS REGARDING ACQUIRED ASSETS. EXCEPT FOR ANY
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS SECTION 3, THE ACQUIRED ASSETS
ARE SOLD "AS IS, WHERE IS," AND THE SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
LIABILITIES, OPERATIONS OF THE FACILITIES, TITLE, CONDITION, VALUE OR QUALITY OF
THE ACQUIRED ASSETS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER
INCIDENTS OF THE ACQUIRED ASSETS INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO
THE ACTUAL OR RATED GENERATING
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CAPABILITY OF ANY OF THE FACILITIES OR THE ABILITY OF THE BUYER TO SELL FROM ANY
OF THE FACILITIES ELECTRIC ENERGY, CAPACITY OR OTHER PRODUCTS RECOGNIZED BY ISO
NEW ENGLAND FROM TIME TO TIME, AND THE SELLER SPECIFICALLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, OR SUITABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ACQUIRED 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 AS TO THE CONDITION OF THE ACQUIRED ASSETS, OR ANY PART
THEREOF, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF THE ACQUIRED ASSETS
WITH RESPECT TO THE YEAR 2000 COMPUTER PROBLEM, OR WHETHER THE SELLER POSSESSES
SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE ACQUIRED ASSETS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE SELLER FURTHER SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS
SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY PROVIDED
HEREIN, THE SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY
KIND REGARDING THE CONDITION OF THE ACQUIRED ASSETS OR THE SUITABILITY OF THE
FACILITIES FOR OPERATION AS POWER PLANTS OR AS SITES FOR THE DEVELOPMENT OF
ADDITIONAL OR REPLACEMENT GENERATION CAPACITY AND NO SCHEDULE OR EXHIBIT TO THIS
AGREEMENT OR ANY RELATED AGREEMENT, NOR ANY OTHER MATERIAL OR INFORMATION
PROVIDED BY OR COMMUNICATIONS MADE BY THE SELLER, OR BY ANY BROKER OR INVESTMENT
BANKER, INCLUDING WITHOUT LIMITATION ANY INFORMATION OR MATERIAL CONTAINED IN
THE DESCRIPTIVE MEMORANDUM DATED AS OF FEBRUARY 10, 1999 AND ANY ORAL, WRITTEN
OR ELECTRONIC RESPONSE TO ANY INFORMATION REQUEST PROVIDED TO THE BUYER, WILL
CAUSE OR CREATE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, CONDITION,
VALUE OR QUALITY OF THE ACQUIRED ASSETS. NOTHING IN THIS DISCLAIMER OR THIS
AGREEMENT SHALL BE DEEMED TO AFFECT THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER ANY RELATED AGREEMENT FOR A BREACH OF ANY REPRESENTATION, WARRANTY OR
COVENANT CONTAINED IN SUCH RELATED AGREEMENT.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller that the statements contained in this Section 4 are
correct and complete as of the Effective Date.
4.1. ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Connecticut. Copies of the organizational documents and bylaws of the Buyer,
each as amended to date, have been heretofore delivered to the Seller and are
accurate and complete.
4.2. AUTHORIZATION OF TRANSACTION. The Buyer has the power and
authority (including
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full corporate power and authority) to execute and deliver this Agreement and
the Related Agreements and, subject to receipt of all Buyer's Regulatory
Approvals, to perform its obligations hereunder and thereunder. All corporate
actions or proceedings to be taken by or on the part of the Buyer to authorize
and permit the due execution and valid delivery by the Buyer of this Agreement,
the Related Agreements and the instruments required to be duly executed and
validly delivered by the Buyer pursuant hereto and thereto, the performance by
the Buyer of its obligations hereunder and thereunder, and the consummation by
the Buyer of the transactions contemplated herein and therein, have been duly
and properly taken. This Agreement and the Related Agreements have been duly
executed and validly delivered by the Buyer and constitute the valid and legally
binding obligations of the Buyer, enforceable in accordance with their terms and
conditions.
4.3. NONCONTRAVENTION. Subject to the Buyer obtaining the Buyer's
Regulatory Approvals, neither the execution and the delivery of this Agreement
or any of the Related Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Sections 2.10(t) and 2.11(l) above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any Governmental Authority to which the
Buyer is subject or any provision of the organizational documents or bylaws of
the Buyer or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject, except for matters that will not have a Buyer Material Adverse Effect.
4.4. BROKERS' FEES. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
4.5. LITIGATION. No action, suit, claim, demand or other proceeding
is pending or, to the Buyer's Knowledge, threatened that would be reasonably
likely to result in a Buyer Material Adverse Effect or that questions the
validity of this Agreement or the Related Agreements or of any action taken or
to be taken pursuant to or in connection with the provisions of this Agreement
or the Related Agreements. There are no judgments, orders, decrees, citations,
fines or penalties heretofore assessed against the Buyer that have a Buyer
Material Adverse Effect or impair, estop, impede, restrain, ban or otherwise
adversely affect the Buyer's ability to satisfy or perform any of the Assumed
Liabilities under any federal, state or local Law.
4.6. NO KNOWLEDGE OF THE SELLER'S BREACH. The Buyer has no
Knowledge of any breach by the Seller of any representation or warranty
contained in Section 3 hereof, or of any condition or circumstance that would
excuse the Buyer from performance of its obligations under this Agreement or the
Related Agreements.
4.7. AVAILABILITY OF FUNDS. The Buyer has sufficient funds
available to it to pay the Closing Purchase Price on the Closing Date.
4.8. "AS IS" SALE. The representations and warranties set forth in
Section 3 hereof constitute the sole and exclusive representations and
warranties of the Seller in connection with
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the transactions contemplated hereby. There are no representations, warranties,
covenants, understandings or agreements among the Parties regarding the Acquired
Assets or their transfer other than those incorporated in this Agreement. Except
for the representations and warranties expressly set forth in Section 3, the
Buyer disclaims reliance on any representations, warranties or guarantees,
either express or implied, by the Seller including but not limited to any
representation or warranty expressed or implied in the Descriptive Memorandum
dated as of February 10, 1999 and any oral, written or electronic response to
any information request provided to the Buyer. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED HEREIN, THE BUYER ACKNOWLEDGES AND AGREES THAT THE ACQUIRED ASSETS ARE
BEING ACQUIRED "AS IS, WHERE IS" ON THE CLOSING DATE, AND IN THEIR CONDITION ON
THE CLOSING DATE, AND THAT PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE BUYER
HAS CONDUCTED TO ITS SATISFACTION ALL NECESSARY AND SUFFICIENT EXAMINATION OF
THE ACQUIRED ASSETS, AND THAT THE BUYER IS RELYING ON ITS OWN EXAMINATION OF THE
ACQUIRED ASSETS, AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY MADE BY
THE SELLER, OR ANY BROKER OR INVESTMENT BANKER. THE BUYER FURTHER ACKNOWLEDGES
AND AGREES THAT, EXCEPT AS SET FORTH IN SECTION 9.1, THE REPRESENTATIONS AND
WARRANTIES OF THE SELLER SET FORTH IN THIS AGREEMENT TERMINATE AS OF THE CLOSING
DATE OR TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 10.1, AND THAT
FOLLOWING THE CLOSING DATE OR SUCH TERMINATION, AS THE CASE MAY BE, THE BUYER
SHALL HAVE NO RECOURSE AGAINST THE SELLER WITH RESPECT TO ANY BREACH OF SUCH
REPRESENTATIONS AND WARRANTIES.
4.9. AFFILIATE GUARANTY. If the Buyer assigns its rights and
interests to an Affiliate or Affiliates pursuant to Section 11.5 hereof, the
Buyer shall be deemed to have made the representations and warranties in this
Section 4 on behalf of itself and any such Affiliate as if such Affiliate were a
signatory to this Agreement.
4.10. QUALIFIED BUYER. To the Knowledge of the Buyer, the Buyer is
qualified to obtain any Permits necessary for the Buyer to own and operate the
Acquired Assets as of the Closing, to the extent such operation is either
required by any Related Agreement or this Agreement, or is contemplated by the
Buyer.
5. COVENANTS. The Parties agree as follows:
5.1. GENERAL. Prior to the Closing, each of the Parties will use
its best efforts to take all actions and to do all things necessary, proper or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Related Agreements prior to January 1,
2000 (including satisfaction, but not waiver, of the closing conditions set
forth in Section 6 below).
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5.2. NOTICES, CONSENTS AND APPROVALS.
(a) The Seller and the Buyer 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
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and the rules and regulations promulgated
thereunder with respect to the transactions contemplated hereby. The
Parties shall use Commercially Reasonable Efforts to make such filings,
as promptly as possible after the Effective Date, to respond promptly
to any requests for additional information made by either of such
agencies, and to cause the waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act to terminate or expire at the earliest possible date after the date
of filing. The Buyer will pay all filing fees under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, but each Party will bear its own costs for the
preparation of any filing. Both Parties shall use Commercially
Reasonable Efforts to cause any waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act with respect to the transactions contemplated by
this Agreement and the Related Agreements to expire or terminate at the
earliest possible time.
(b) Prior to the Closing, the Seller and the Buyer shall
cooperate with each other and use all Commercially Reasonable Efforts
to (i) promptly prepare and file all necessary documentation, (ii)
effect all necessary applications, notices, petitions and filings and
execute all agreements and documents, (iii) obtain the transfer or
reissuance to the Buyer of all necessary Permits and (iv) obtain all
necessary consents, approvals and authorizations of all other parties
necessary or advisable to consummate the transactions contemplated by
this Agreement or in any of the Related Agreements (including, without
limitation, the Seller's Regulatory Approvals and the Buyer's
Regulatory Approvals) or required by the terms of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument to which the Seller or
the Buyer is a party or by which any of them is bound. The Seller and
the Buyer shall have the right to review in advance all
characterizations of the information relating to the transactions
contemplated by this Agreement or in any of the Related Agreements
which appear in any filing made in connection with the transactions
contemplated hereby or thereby. Notwithstanding the foregoing, the
Seller is not obligated to assign or transfer any interest in any
Transferable Permits, including, without limitation, those obtained
pursuant to the applicable requirements of Environmental Laws, if the
consent or approval of the third Person for such assignment or transfer
cannot be obtained.
(c) The Buyer shall have primary responsibility for
securing the transfer or reissuance of the Permits (including the
Transferable Permits) effective as of the Closing Date. The Seller
shall cooperate with the Buyer's efforts in this regard and the Seller
shall use each and every Commercially Reasonable Effort to assist in
the transfer or reissuance when so requested by the Buyer. If Buyer is
unable to secure the transfer or reissuance of one or more Permits
effective on the Closing Date, the Seller shall continue to cooperate
with the Buyer's efforts to secure such transfer or reissuance
following the Closing Date.
5.3. OPERATION OF BUSINESS. During the Interim Period, the Seller
will operate and maintain the Acquired Assets in the ordinary course consistent
with Good Utility Practices (including the continued scheduling and performance
of regular and customary maintenance and maintenance overhauls), unless
otherwise contemplated by this Agreement or with the prior
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written consent of the Buyer. Without limiting the generality of the foregoing,
the Seller shall not, without the prior written consent of the Buyer, which
Buyer shall not unreasonably withhold or delay, during the Interim Period, with
respect to the Acquired Assets, except as otherwise provided in Schedule 5.3(g):
(a) sell, lease (as lessor), transfer or otherwise
dispose of, any of the Acquired Assets, other than as used, consumed or
replaced in the ordinary course of business consistent with Good
Utility Practices, or encumber, pledge, mortgage or suffer to be
imposed on any of the Acquired Assets any encumbrance other than
Permitted Encumbrances, other than such additional financing under the
Mortgage Indenture as shall not prevent the Seller from obtaining a
Mortgage Indenture Release substantially in the form attached hereto as
EXHIBIT H;
(b) make any material change in the levels of Inventories
customarily maintained by the Seller with respect to the Acquired
Assets, except for such changes that are consistent with Good Utility
Practices;
(c) amend, terminate or otherwise modify any Contract,
Lease or Permit other than in the ordinary course of business, or as
may be required in connection with transferring the Seller's rights or
obligations thereunder to the Buyer pursuant to this Agreement, or as
may be required in connection with the renewal of FERC licenses with
respect to certain of the Acquired Assets;
(d) enter into, amend, or otherwise modify any real or
personal property Tax agreement, treaty or settlement;
(e) enter into any commitment for the purchase or sale of
fuel (whether commodity or transportation) having a term greater than
nine (9) months and not terminable either (i) automatically on the
Closing Date; or (ii) by option of the Buyer in its sole discretion at
any time after the Closing Date, where the aggregate payment under such
fuel commitment and all other then outstanding fuel commitments would
be expected to exceed $75 million;
(f) make any capital expenditures that are not
Pre-Approved Capital Expenditures or enter into a Capital Commitment
with respect thereto, except for those capital expenditures or Capital
Commitments necessitated by Good Utility Practice, with respect to
which the Seller shall advise the Buyer of the proposed incurrence
thereof not less than thirty days prior to the time the capital
expenditures are to be made or a Capital Commitment with respect
thereto undertaken (or such shorter period as may be necessitated by an
emergency situation), and with respect to which the Buyer shall
promptly deliver the written consent contemplated by this Section 5.3
unless the Buyer reasonably objects thereto.
Notwithstanding anything in Section 5.3 to the contrary, the Seller may, in its
sole discretion, (i) make Pre-Approved Capital Expenditures or incur a Capital
Commitment with respect thereto and (ii) make Capital Commitments for which an
adjustment to the Initial Purchase Price will be made pursuant to Section
2.6(b).
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5.4. FULL ACCESS; YEAR 2000 COMPUTER PROBLEM
(a) During the Interim Period, the Seller will permit the
Buyer and Representatives of the Buyer during normal business hours (i)
to have access upon reasonable notice, in a manner so as not to
interfere with the normal business operations of the Seller, to all
premises, properties, management, personnel, books, records (including
Tax records) and documents associated with the Acquired Assets; (ii)
permit the Buyer to make such reasonable inspections thereof as the
Buyer may reasonably request; and (iii) furnish the Buyer with a copy
of each material report, schedule or other document filed or received
by it with respect to the Acquired Assets with a Governmental
Authority. Notwithstanding the foregoing, and without limiting the
generality of the confidentiality provisions set forth in Section 7
hereof, the Seller shall: (i) not provide any information that the
Seller or the Seller's counsel believes constitutes or could be deemed
to constitute a waiver of the attorney-client privilege, and (ii) not
be required to supply the Buyer with any information or records that
the Seller is under a legal obligation not to supply, including,
without limitation, any Acquired Assets Employees' Records.
(b) During the Interim Period, the Seller shall consult
with the Buyer and cooperate with the Buyer's reasonable requests
regarding modifications to any hardware, software or firmware
(including embedded microcontrollers in non-computer equipment)
included in the Acquired Assets so as to ensure to the extent
practicable that on and following the Closing Date the operation of the
Acquired Assets by the Buyer will not be interrupted or adversely
affected due to the Year 2000 Computer Problem. Any amounts expended by
the Seller at the request of the Buyer under this Section 5.4(b) shall
constitute an adjustment to the Initial Purchase Price pursuant to
Section 2.6(a) hereof.
(c) During the Interim Period, at the sole cost and
expense of the Buyer, the Seller will permit designated employees or
Representatives of the Buyer (the "Buyer's Observers") to observe all
operations of the Seller related to the Acquired Assets and such
observation shall be permitted on a cooperative basis in the presence
of personnel of the Seller during normal business hours of the Seller;
provided, however, that the Buyer's Observers shall not unreasonably
interfere with the operation of the Acquired Assets by the Seller.
5.5. INTERIM PERIOD NOTICE.
(a) Each Party shall notify the other promptly if any
information comes to its attention prior to the Closing that is likely
(i) to excuse it from the performance of its obligations under this
Agreement or the Related Agreements or (ii) cause any condition to
close set forth in Sections 6.1 or 6.2 not to be satisfied.
(b) The Seller shall notify the Buyer of the existence of
any matter which would
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cause any of the representations or warranties in Section 3 above to be
untrue or incorrect. Unless the Buyer has the right to terminate this
Agreement pursuant to Section 10.1(b)(vi) below by reason of such
notice and exercises that right within the period of 15 days referred
to in Section 10.1(b)(vi) below, the written notice pursuant to this
Section 5.5(b) shall be deemed to have amended the appropriate Schedule
or Schedules as of the Effective Date, to have qualified the
representations and warranties contained in Section 3 above as of the
Effective Date, and to have cured any misrepresentation or breach of
warranty that otherwise might have existed hereunder by reason of the
existence of such matter.
(c) The Buyer may elect at any time to notify the Seller
of the existence of any matter, which if in existence on the Effective
Date or the Closing Date would or might cause any of the
representations or warranties in Section 4 above to be untrue or
incorrect. Unless the Seller has the right to terminate this Agreement
pursuant to Section 10.1(c)(vi) below by reason of such notice and
exercises that right within the period of 15 days referred to in
Section 10.1(c)(vi) below, the written notice pursuant to this Section
5.5(c) shall be deemed to have amended the appropriate Schedule or
Schedules as of the Effective Date, to have qualified the
representations and warranties contained in Section 4 above as of the
Effective Date, and to have cured any misrepresentation or breach of
warranty that otherwise might have existed hereunder by reason of the
existence of such matter.
5.6. FURTHER ASSURANCES.
(a) At any time and from time to time after the Closing,
at the request of a Party, the other Party will execute and deliver
such instruments of sale, transfer, conveyance, assignment and
confirmation and take such action as the Seller and the Buyer may both
reasonably agree is necessary to transfer, convey and assign to the
Buyer, and to confirm the Buyer's title to or interest in the Acquired
Assets and Assumed Liabilities or to put the Buyer in actual possession
and operating control of the Acquired Assets.
(b) In the event that any asset that is an Acquired Asset
shall not have been conveyed to the Buyer at the Closing, the Seller
shall, subject to Sections 5.6(c), (d) and (e), use its best efforts to
convey such asset to the Buyer as promptly as is practicable after the
Closing.
(c) To the extent that the Seller's rights under any
Contract or 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,
and the Seller, at its expense, shall use its Commercially Reasonable
Efforts to obtain any such required consent(s) as promptly as possible.
The Seller and the Buyer agree that if any consent to an assignment
shall not be obtained, or if any attempted assignment would be
ineffective or would impair the Buyer's rights and obligations under
the Contract or Lease in question, so that the Buyer would not in
effect acquire the benefit of all such rights and obligations, the
Seller, to the maximum extent permitted by law and such Contract or
Lease, shall, after the Closing, appoint the Buyer to be the Seller's
agent with respect to such Contract or Lease, and the Seller shall, to
the maximum extent permitted by law and
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such Contract or Lease, enter into such reasonable arrangements with
the Buyer as are necessary to provide the Buyer with the benefits and
obligations of such Contract or Lease. The Seller and the Buyer shall
cooperate and shall each use their Commercially Reasonable Efforts
after the Closing to obtain an assignment of such Contract or Lease to
the Buyer; PROVIDED that neither the Seller nor the Buyer shall have
any obligation to offer or pay any consideration in order to obtain any
such consents.
(d) To the extent that the Seller's rights under any
warranty or guaranty described in Section 2.1(b) 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. The Seller and the Buyer
agree that if any consent to an assignment of any such warranty or
guaranty would be ineffective or would impair the Buyer's rights and
obligations under the warranty or guaranty in question, so that the
Buyer would not in effect acquire the benefit of all such rights and
obligations, the Seller shall use Commercially Reasonable Efforts, at
the Buyer's sole cost and expense, to the extent permitted by law and
such warranty or guaranty, to enforce such warranty or guaranty for the
benefit of the Buyer so as to the maximum extent possible to provide
the Buyer with the benefits and obligations of such warranty or
guaranty. Notwithstanding the foregoing, the Seller shall not be
obligated to bring or file suit against any Third Party, PROVIDED that
if the Seller shall determine not to bring or file suit after being
requested by the Buyer to do so, the Seller shall assign, to the extent
permitted by law or any applicable agreement or contract, its rights in
respect of the claims so that the Buyer may bring or file such suit.
(e) To the extent that any personal property lease cannot
be assigned to the Buyer or is not subject to arrangements described in
Section 5.6(c), upon the Buyer's request and at the Buyer's sole
expense, the Seller will use Commercially Reasonable Efforts to acquire
the assets relating to such lease and to include them in the Acquired
Assets before the Closing Date.
5.7. EMPLOYEE MATTERS.
(a) The Buyer shall offer employment, commencing as of
midnight on the Closing Date, to all employees of the Seller who are
represented by the Local and who were employed in the operation of the
Acquired Assets at any time during the three-month period prior to the
Closing Date, at levels of wages and overall compensation not lower
than each such employee's level of wages and overall compensation as of
the Effective Date; provided that the Buyer shall recognize all
increases in wages made in the ordinary course of business and in
accordance with the Collective Bargaining Agreement (as defined
hereinbelow) between the Effective Date and the Closing Date. Those
employees who accept such offer of employment are hereinafter referred
to as the "Represented Employees". All such offers of employment shall
be made in accordance with all applicable laws and regulations and the
Collective Bargaining Agreement between the Seller and the Locals dated
October 1, 1994, as amended by the Letter of Agreement dated February
25, 1998, as amended between the Local and the Seller (the "MOU", and,
together with the above-referenced Collective Bargaining Agreement,
referred to herein as the "Collective Bargaining Agreement"). Effective
as of the Closing Date, the Buyer
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shall agree to be bound by the terms of the Collective Bargaining
Agreement and to thereafter comply with all applicable obligations
thereunder, subject to changes negotiated with and acceptable to the
Local.
(b) The Buyer agrees to offer employment, commencing as
of midnight on the Closing Date, for a period of at least twelve months
(the "Minimum Employment Period") to all employees of the Seller who
were employed in the operation of the Acquired Assets at any time
during the three-month period prior to the Closing Date, other than
Represented Employees, at levels of wages and overall compensation not
lower than each such employee's level of wages and overall compensation
as of the Effective Date; provided that the Buyer shall recognize all
increases in wages made in the ordinary course of business between the
Effective Date and the Closing Date; and provided, further, that
nothing herein shall prevent the Buyer from terminating any
Non-Represented Employee's employment for cause during the Minimum
Employment Period. Those employees who accept such offer of employment
are hereinafter referred to as the "Non-Represented Employees, and the
Non-Represented Employees and the Represented Employees are hereafter
referred to as the "Acquired Assets Employees". All such offers of
employment shall be made in accordance with all applicable laws.
Notwithstanding anything herein to the contrary, all Non-Represented
Employees will be employed as at-will employees whose employment may be
terminated at any time with or without cause or reason by either the
employee or the Buyer. In addition, the Buyer shall provide to any
Non-Represented Employee who is furloughed during the six months
following the Minimum Employment Period out-placement assistance and
tuition reimbursement consistent with that provided to the Represented
Employees in the Local 455 MOU. For purposes of this Section 5.7, the
term "furloughed" shall refer to the termination of employment with or
without possibility of recall, made by the Buyer without cause.
(c) As soon as practical after the Effective Date, Buyer
shall take all action necessary and appropriate to establish and
maintain a tax qualified pension plan for the Acquired Assets Employees
(the "Buyer's Plan").
(i) The Buyer shall provide a minimum level of pension
benefits calculated using the pension benefit formula
applicable to each Acquired Asset Employee under the
NUSCO Retirement Plan (the "Seller's Plan") as of the
Effective Date. The Buyer's minimum obligation with
regard to this pension benefit will be calculated as
the difference between (a) the Acquired Assets
Employee's total pension benefit as calculated as of
the employee's retirement date using (i) the pension
benefit formula under the Seller's Plan applicable to
the employee as of the Effective Date, (ii) such
employee's final average earnings (as defined in the
Seller's Plan) as of the employee's retirement date,
taking into account compensation earned from the
Seller and the Buyer, (iii) such employee's total
years of service
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with the Seller and the Buyer as of the employee's
retirement date, and (iv) covered compensation as of
the employee's retirement date and (b) the pension
benefit payable to the employee by the Seller at
retirement as follows: the pension benefit payable to
each Acquired Assets Employee at age 65 by the Seller
shall be calculated by the Seller as of the Closing
Date, based upon (i) the pension benefit formula
under the Seller's Plan applicable to the employee as
of the Closing Date, (ii) years of credited service
with the Seller as of the Closing Date, (iii) final
average earnings (as defined in the Seller's Plan) as
of the Closing Date, and (iv) covered compensation as
of the Closing Date. This benefit shall be a vested
terminated benefit subject to the vested terminated
actuarial factors applied under the Seller's Plan.
(ii) The Seller shall provide each Acquired Assets
Employee with a vested and non-forfeitable right to a
benefit equal to his accrued benefit under the
Seller's Plan determined as of the Closing Date as
described in Section 5.7(c)(i) above.
(iii) If the Buyer terminates the employment of any
Eligible Non-Represented Employee (as defined below),
the Buyer will provide the benefits described in
Schedule 5.7(c)(iii). An Eligible Non-Represented
Employee is an employee whose age on the date of
announcement of the successful bidder(s) is between
50 and 54 years, inclusive, and whose age plus years
of credited service under the Seller's Plan on the
same date equals or exceeds 65 years.
(iv) Effective September 30, 1999, the Seller's Plan will
permit employees age 55 and older to retire on or
after January 1, 2000 with full pension benefits if
the sum of the employee's age and years of credited
service equals 85 at such employee's termination date
(the "Rule of 85"). The Buyer shall apply the Rule of
85 to all Acquired Assets Employees.
(d) The Buyer shall establish and maintain for the
Non-Represented Employees group for a period of at least twelve months
following the Closing Date plans and programs, which in the aggregate,
shall be generally comparable to the existing plans and programs
provided to such employees by the Seller as of the Effective Date as
listed on Schedule 3.15.
(e) The Buyer shall apply each Acquired Assets Employee's
prior service with the Seller toward any eligibility, vesting or other
waiting period requirements under the Buyer's Employee Benefit Plans
(including the Buyer's Plan) to the extent such conditions were
satisfied under the Seller's Employee Benefit Plans prior to the
Closing Date. In addition, the Buyer shall waive all limitations with
respect to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements under the Buyer's
Employee Benefit Plans and credit each Acquired Assets Employee for any
co-payments and deductibles paid prior to the Closing Date under any
such plans in which each Acquired Assets Employee participates. The
Buyer shall vest each Acquired Assets Employee to the extent such
employee is vested under the Seller's Employee
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Benefit Plans as of the Closing Date.
(f) Within a reasonable time prior to the Closing Date,
the Seller shall provide the Buyer with such pertinent data or
information as the Buyer shall reasonably require to determine each
Acquired Assets Employee's service, compensation and accrued benefits
under the Seller's Plan before the Closing Date.
(g) The authorized complement of employees (by position)
for the Acquired Assets, as of the Effective Date, is set forth on
Schedule 5.7(g).
(h) The Seller shall provide and remain liable for any
and all continuation of coverage under the Seller's Employee Benefit
Plans as required under Sections 601 through 608 of ERISA and
Section 4980B of the Code with respect to any person as to whom a
"qualifying event" as defined in Section 4980 of the Code occurred
on or prior to the Closing
Date.
(i) On or before the Closing Date, the Seller shall
terminate the employment of the Acquired Assets Employees and shall be
solely responsible for the payment of all wages and compensation
thereupon legally owing to or with respect to the Acquired Assets
Employees including, without limitation, accrued and payable vacation
pay, bonuses, severance pay, overtime, and all benefits under any
Employee Benefit Plan that became payable on account of such
termination of employment or any other amounts to which the Acquired
Assets Employees may be entitled for services rendered prior to their
termination or by virtue of their termination. The Seller shall retain
any and all liability under the Seller's Employee Benefit Plans for
retirees of the Seller as of the Closing Date.
(j) The Seller agrees to timely perform and discharge all
requirements under the WARN Act and under applicable state and local
Laws for the notification of its employees arising from the sale of the
Acquired Assets to the Buyer up to and including the Closing Date,
including those employees who will become Acquired Assets Employees
effective as of the Closing Date. After the Closing Date, the Buyer
shall be responsible 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, whether Acquired
Assets Employees or otherwise. All severance and other costs associated
with workforce restructuring activities associated with the Assets
and/or the Acquired Assets Employees subsequent to the Closing Date
shall be borne solely by the Buyer.
5.8. ACCESS AFTER CLOSING.
(a) RECORDS. For a period of five (5) years after the
Closing Date, each Party shall have reasonable access to all of the
records, books and documents related to the Acquired Assets of the
other Party to the extent that such access may reasonably be required
in connection with matters relating to or affected by the operations of
the Seller prior to the Closing Date or the operations of Buyer after
the Closing Date. Such access shall be afforded upon receipt of
reasonable advance notice and during normal business hours. The Party
seeking such access shall be solely responsible for any costs or
expenses incurred by it pursuant to this Section 5.8(a). If a Party
shall desire to dispose of any records, books or documents that may
relate to operation of the Acquired Assets before
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the Closing prior to the expiration of such five-year period, such
Party shall, prior to such disposition, give to the other Party a
reasonable opportunity, at the other Party's expense, to segregate and
remove such records, books or documents as the requesting Party may
select.
(b) EMPLOYEES. For a period of five (5) years after the
Closing Date, the Seller shall have reasonable access to the Acquired
Assets Employees and the Buyer shall have reasonable access to the
Seller's employees, for purposes of consultation or otherwise, to the
extent that such access may reasonably be required by the Seller or the
Buyer in connection with matters relating to or affected by the
operations of the Seller prior to the Closing or the operations of the
Buyer following the Closing, so long as the duration of any employee's
time commitment with respect thereto is not extensive and does not
materially impair said employee's performance of his or her duties.
5.9. NEPOOL. At the Closing, the Buyer shall be a member in good
standing in NEPOOL. Except as required to preserve system reliability and in
compliance with the requirements of the ISO or NEPOOL, and as may be otherwise
provided in any Related Agreement, the Seller shall not interfere with the
Buyer's efforts to expand or modify generation capacity at any of the Sites.
5.10. RISK OF LOSS. Except as otherwise provided in this Section
5.10, during the Interim Period all risk of loss or damage to the Acquired
Assets shall be borne by the Seller. If during the Interim Period the Acquired
Assets are damaged by fire or other casualty (each such event, an "EVENT OF
LOSS"), or are taken by a Governmental Authority by exercise of the power of
eminent domain (each, a "TAKING"), then the following provisions shall apply:
(a) the occurrence of (i) any one or more Events of Loss,
as a result of which the aggregate costs to restore, repair or replace,
less any insurance proceeds received or payable to the Seller in
connection with such Event or Events of Loss (provided that any
insurance proceeds received or payable in connection with an Event or
Events of Loss are either used to restore, repair or replace such Event
or Events of Loss or made available to the Buyer), are reasonably
estimated to be an amount less than or equal to two percent (2%) of the
Initial Purchase Price, and/or (ii) any one or more Takings, as a
result of which the aggregate condemnation proceeds equal an amount
less than or equal to two percent (2%) of the Initial Purchase Price,
shall have no effect on the transactions contemplated hereby;
(b) upon the occurrence of (i) any one or more Events of
Loss, as a result of which the aggregate costs to restore, repair or
replace, less any insurance proceeds received or payable to the Seller
in connection with such Event or Events of Loss (provided that any
insurance proceeds received or payable in connection with an Event or
Events of Loss are either used to restore, repair or replace such Event
or Events of Loss or made available to the Buyer), are reasonably
estimated to be an amount in excess of two
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percent (2%) of the Initial Purchase Price, or (ii) any one or more
Takings, as a result of which the aggregate condemnation proceeds equal
an amount in excess of two percent (2%) of the Initial Purchase Price
(a "MAJOR LOSS"), the Seller shall have, in the case of a Major Loss
relating to one or more Events of Loss, the option, exercised by notice
to the Buyer, to restore, repair or replace the damaged Acquired Assets
prior to Closing. If the Seller elects to restore, repair or replace
the Acquired Assets relating to a Major Loss, which election shall be
made by notice to the Buyer within fifteen (15) days following the
occurrence of the Major Loss, the completion of the repair, replacement
or restoration will be a condition to the Closing and the Closing Date
shall be postponed at the election of the Seller for the amount of time
reasonably necessary to complete the restoration, repair or
replacement, not to exceed one hundred and eighty (180) days without
the Buyer's consent. If the Seller elects not to restore, repair or
replace the Acquired Assets affected by a Major Loss, or such Major
Loss is the result of one or more Takings, the provisions of Section
5.10(c) will apply;
(c) in the event that the Seller elects not to restore,
repair or replace a Major Loss, or in the event that the Seller, having
elected to repair, replace or restore the Major Loss, fails to complete
the repair, replacement or restoration within the one hundred eighty
(180) days (or such longer period as the Buyer shall have consented
to), or in the event that a Major Loss is the result of one or more
Takings, then the Parties shall, within thirty (30) days following the
Seller's election, failure to complete, or the occurrence of such
Takings, as the case may be, negotiate in good faith an equitable
adjustment in the Purchase Price to reflect the impact of the Major
Loss, as mitigated by any repair, replacement or restoration work
actually completed by the Seller, on the Acquired Assets being sold to
the Buyer, and proceed to Closing. To assist the Buyer in its
evaluation of any and all Events of Loss, the Seller shall provide the
Buyer such access to the Acquired Assets and such information as the
Buyer may reasonably request in connection therewith; and
(d) in the event that the parties fail to reach agreement
on an equitable adjustment of the Purchase Price within the thirty (30)
days provided in Section 5.10(c), then the Buyer shall have the
election, exercisable by notice to the Seller within fifteen (15) days
immediately following the expiration of the thirty (30) day period, to
either (a) proceed with the consummation of the transaction at Closing,
with a reduction in the Purchase Price consistent with the Seller's
last offer communicated to the Buyer, in which event the Seller shall
assign over or deliver to the Buyer at Closing all condemnation
proceeds or insurance proceeds which the Seller receives, or to which
the Seller becomes entitled by virtue of the Events of Loss, less any
costs and expenses reasonably incurred by the Seller in obtaining such
condemnation proceeds or insurance proceeds, or (b) terminate this
Agreement, in which event this Agreement shall terminate and neither
Party shall thereafter have any obligation or liability to the other by
reason of this Agreement. If the Buyer fails to make the election
within the fifteen (15) day period, the Buyer will be deemed to have
made the election to proceed with the Closing.
5.11. REGULATORY APPROVAL PROCESS. The Parties acknowledge and agree
that it is essential that the Closing occur prior to December 31, 1999, and that
the Seller may suffer certain adverse consequences if the Closing does not take
place by that time. Accordingly, the Buyer hereby covenants that it shall (x)
submit its portion of the draft applications, including all
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required exhibits and attachments, under Sections 203 and 205 of the Federal
Power Act substantially in a form ready for filing with the FERC (the "FERC
Applications") to the Seller on or before August 2, 1999 for the Seller's review
and (y) cooperate with the Seller with a view to filing the FERC Applications
with the FERC in accordance with the rules and regulations of the FERC on or
before August 17, 1999 and shall not thereafter seek to amend or withdraw such
FERC Applications.
5.12. Intentionally Omitted.
5.13. DISCHARGE OF ENVIRONMENTAL LIABILITIES. In discharging its
Environmental Liabilities, if any, on or after the Closing Date, pursuant to
Section 2.3(a) hereof, the Buyer agrees and covenants that the Buyer will not
prejudice or impair the Seller's rights under the Environmental Laws or
interfere with the Seller's ability to contest in appropriate administrative,
judicial or other proceedings its liability, if any, for Environmental Claims or
Remediation. The Buyer further agrees to provide to the Seller draft copies of
all material plans and studies prepared in connection with any Site
investigation or Remediation associated with pre-Closing occurrences prior to
their submission to the Governmental Authority with jurisdiction under
Environmental Laws. The Seller shall have the right, without the obligation, to
attend all meetings between the Buyer, its agents or representatives, and such
Governmental Authorities. The Buyer shall promptly provide to the Seller copies
of all material written information, plans, documents and correspondence
submitted to or received from such Governmental Authorities relating to the
Buyer's discharge of any Environmental Liabilities assumed pursuant to this
Agreement associated with pre-Closing occurrences.
6. CONDITIONS TO OBLIGATION TO CLOSE.
6.1. CONDITIONS TO OBLIGATION OF THE BUYER TO CLOSE. The obligation
of the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in Section 3 above shall be true and correct
in all material respects at and as of the Closing Date;
(b) PERFORMANCE BY THE SELLER. The Seller shall have
performed and complied in all material respects with all of its
covenants, agreements and obligations hereunder through the Closing;
(c) BUYER'S REGULATORY APPROVALS. The Buyer shall have
received the Buyer's Regulatory Approvals specified in SCHEDULE 6.1(c),
with such terms and conditions as may be included therein except for
such terms and conditions that, either singly or in the aggregate, are
reasonably likely to have a Material Adverse Effect;
(d) SELLER'S REGULATORY APPROVALS. The Seller shall have
received the Seller's Regulatory Approvals specified in SCHEDULE
6.2(c), with such terms and conditions as may be included therein
except for such terms and conditions that, either singly or in the
aggregate, are reasonably likely to have a Material Adverse Effect;
(e) ABSENCE OF LITIGATION. There shall not be any
injunction, judgment, order,
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decree or ruling in effect or pending which would prevent or inhibit
consummation of the transactions contemplated by this Agreement or the
Related Agreements;
(f) ANTITRUST MATTERS. All applicable waiting periods
(and any extensions thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have
expired or otherwise been terminated;
(g) NO MATERIAL ADVERSE EFFECT. There shall not be any
Material Adverse Effect; and
(h) DELIVERIES. The Seller shall have complied in all
material respects with the delivery requirements of Section 2.10.
The Buyer may waive any condition specified in this Section 6.1 if it executes a
writing so stating at or prior to the Closing and such waiver shall not be
considered a waiver of any other provision in this Agreement unless the writing
specifically so states.
6.2. CONDITIONS TO OBLIGATION OF THE SELLER TO CLOSE. The
obligation of the Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in Section 4 above shall be true and correct
in all material respects at and as of the Closing Date;
(b) PERFORMANCE BY BUYER. The Buyer shall have performed
and complied in all material respects with all of its covenants,
agreements and obligations hereunder through the Closing;
(c) SELLER'S REGULATORY APPROVALS. The Seller shall have
received the Seller's Regulatory Approvals specified in SCHEDULE
6.2(c), in each case without terms and conditions that are reasonably
likely to have a material adverse effect on the Seller and in the case
of the DTE Approval, with such terms and conditions as are acceptable
to the Seller in its sole and absolute discretion;
(d) BUYER'S REGULATORY APPROVALS. The Buyer shall have
received the Buyer's Regulatory Approvals specified in SCHEDULE 6.1(c),
in each case without terms and conditions that are reasonably likely to
have a material adverse effect on the Seller;
(e) ABSENCE OF LITIGATION. There shall not be any
injunction, judgment, order, decree or ruling in effect or pending
which would prevent or inhibit consummation of the transactions
contemplated by this Agreement or the Related Agreements;
(f) ANTITRUST MATTERS. All applicable waiting periods
(and any extensions thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have
expired or otherwise been terminated;
(g) DELIVERIES. The Buyer shall have complied in all
material respects with the delivery requirements of Section 2.11; and
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(h) NEPOOL. The Buyer shall be a member in good standing
of NEPOOL
The Seller may waive any condition specified in this Section 6.2 if it executes
a writing so stating at or prior to the Closing and such waiver shall not be
considered a waiver of any other provision in this Agreement unless the writing
specifically so states.
7. CONFIDENTIALITY.
(a) Each Receiving Party and each Representative thereof
will treat and hold as confidential all of the Proprietary Information,
and refrain from using any of the Proprietary Information except in
connection with this Agreement and the Related Agreements and
transactions contemplated hereby and thereby. In the event that the
Receiving Party or any Representative thereof is requested or required
(including, without limitation, (i) pursuant to any rule or regulation
of any stock exchange or other self-regulatory organization upon which
any of the Receiving Party's securities are listed or (ii) by oral
question or request for information or documents in any legal
proceeding, including without limitation the Buyer's Regulatory
Approval and the Seller's Regulatory Approval processes, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose
any Proprietary Information, the Receiving Party will notify the
Disclosing Party promptly of the request or requirement so that the
Disclosing Party may seek an appropriate protective order or waive
compliance with the provisions of this Section 7. If, in the absence of
a protective order or the receipt of a waiver hereunder, the Receiving
Party or any Representative thereof is, on the advice of counsel,
compelled to disclose any Proprietary Information pursuant to any such
request or requirement, then the Receiving Party or such Representative
may disclose the Proprietary Information so requested or required to be
disclosed; PROVIDED, HOWEVER, that the Receiving Party shall use its
reasonable best efforts to obtain, at the request of the Disclosing
Party, an order or other assurance that confidential treatment will be
accorded to such portion of the Proprietary Information required to be
disclosed as the Disclosing Party shall designate. If this Agreement is
terminated pursuant to Section 10.1 hereof, then each Receiving Party
shall deliver promptly to the Disclosing Party or destroy, at the
request and option of the Disclosing Party, all tangible embodiments
(and all copies) of the Proprietary Information which are in his or its
possession
(b) The obligations of the Parties contained in this
Section 7 shall be in full force and effect for three 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 any transfer of title to the Acquired Assets. Nothing in this
Section 7 shall in any way alter the Buyer's obligations under the
Confidentiality Agreement dated February 17, 1999 by and between the
Buyer and ▇.▇. ▇▇▇▇▇▇ Securities, Inc.
(c) Upon the Disclosing Party's prior written approval
(which will not be unreasonably withheld), the Receiving Party may
provide Proprietary Information to the
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DTE, the FERC, the SEC, the United States Department of Justice, the
United States Federal Trade Commission or any other Governmental
Authority with jurisdiction, as necessary, to obtain any consents,
waivers or approvals as may be required for the Receiving Party to
undertake the transactions contemplated herein. The Receiving Party
will seek confidential treatment for such Proprietary Information
provided to any such Governmental Authority (if such confidential
treatment is available from the appropriate Governmental Authority) and
the Receiving Party will notify the Disclosing Party as far in advance
as is practicable of its intention to release to any such Governmental
Authority any such Proprietary Information.
8. TAXES.
(a) All transfer and sales Taxes incurred in connection
with this Agreement and the transactions contemplated hereby shall be
borne by the Buyer, including, without limitation,
Massachusetts state
sales tax, and the Buyer, at its own expense, will file, to the extent
required by applicable Laws, all necessary Tax Returns and other
documentation with respect to all such transfer or sales Taxes, and, if
required by applicable Laws, the Seller will join in the execution of
any such Tax Returns or other documentation. Prior to the Closing Date,
the Buyer will provide to the Seller, to the extent possible, an
appropriate certificate of no tax due from each applicable taxing
authority.
(b) With respect to Taxes to be prorated in accordance
with Section 2.8 of this Agreement only, the Buyer shall prepare and
timely file all Tax Returns required to be filed after the Closing with
respect to the Acquired Assets, if any, and shall duly and timely pay
all such Taxes shown to be due on such Tax Returns. The Buyer's
preparation of any such Tax Returns shall be subject to the Seller's
approval, which approval shall not be unreasonably withheld. No later
than twenty-five (25) Business Days prior to the due date of any such
Tax Return, the Buyer shall make such Tax Return available for the
Seller's review and approval. The Seller shall respond no later than
ten (10) Business Days prior to the due date for filing such Tax
Return. With respect to such Tax Return, the Seller shall pay to the
Buyer its appropriate share of the amount shown as due on the Tax
Returns determined in accordance with Section 2.8 of this Agreement.
(c) Each of the Buyer and the Seller 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 for Taxes, and each
will retain and provide the requesting Party with any records or
information which may be relevant to such Tax Return, audit or
examination, proceedings or determination. Any information obtained
pursuant to this Section 8 or pursuant to any other Section hereof
providing for the sharing of information or review of any Tax Return or
other schedule relating to Taxes shall be deemed to be and shall be
Proprietary Information.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; EFFECT OF CLOSING AND
INDEMNIFICATION.
9.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SURVIVAL OF
COVENANTS AND AGREEMENTS. The representations and warranties of the Seller set
forth in Sections 3.1, 3.2, 3.3,
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3.4 and 3.16, and the representations and warranties of the Buyer set forth in
Sections 4.1, 4.2, 4.3 and 4.4, shall survive the Closing for a period of twelve
months; all other representations and warranties of the Parties contained in
this Agreement shall terminate at the Closing and all representations and
warranties of the Parties contained in this Agreement shall terminate upon a
termination of this Agreement pursuant to Section 10.1. The covenants of the
Parties contained in this Agreement, other than those which by their terms
survive the Closing and/or termination of this Agreement, shall terminate at the
Closing or the termination of this Agreement pursuant to Section 10.1.
9.2. EFFECT OF CLOSING. Upon the Closing, any condition to the
obligations of either Party hereunder that has not been satisfied, or any
representation, warranty or covenant that has been breached or left unsatisfied
by either Party will be deemed waived by the Parties, and each Party will be
deemed to fully release and forever discharge the other Party on account of any
and all claims, demands or charges, known or unknown, with respect to the same.
Nothing in this Section 9.2 shall be deemed to affect any provision herein which
expressly survives the Closing or pertains to matters which will occur after the
Closing.
9.3. INDEMNITY BY THE SELLER. The Seller shall indemnify, defend
and hold harmless the Buyer against and in respect of all Liabilities,
obligations, judgments, Liens, injunctions, charges, orders, decrees, rulings,
damages, assessments, Taxes, losses, fines, penalties, damages, expenses, fees,
costs, and amounts paid in settlement (including reasonable consultants',
attorneys' and expert witness fees and disbursements in connection with
investigating, defending or settling any action or threatened action), arising
out of any claim, complaint, demand, cause of action, audit, investigation,
hearing, action, suit or other proceeding asserted or initiated or otherwise
existing in respect of any matter (collectively, the "LOSSES"), that results
from:
(a) any Liability of the Seller that becomes a Liability
of the Buyer under any bulk transfer law of any jurisdiction;
(b) any Excluded Liability;
(c) any breach by the Seller of any representation or
warranty which by its terms survives the Closing or the termination of
this Agreement under Section 10.1, provided that the Losses associated
therewith have a Buyer Material Adverse Effect; and
(d) any breach by the Seller of any of its covenants
contained in Article V hereof.
9.4. INDEMNITY BY BUYER. The Buyer hereby agrees to indemnify,
defend and hold harmless the Seller and its Affiliates against and in respect of
all Losses that result from:
(a) any Third Party Claim against the Seller based on or
relating to the Buyer's ownership, operation or use of the Acquired
Assets on or after the Closing Date;
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(b) the Assumed Liabilities;
(c) any breach by the Buyer of any of its covenants
contained in Article V hereof; or
(d) the failure of the Buyer to close the transactions
contemplated hereby within the time provided in Section 2.9, other than
because of a failure of the Seller to perform its obligations under
this Agreement.
9.5. EXCLUSIVE REMEDY. Except as provided in Section 11.17, from
and after the Closing, the remedies set forth in this Section 9 shall constitute
the sole and exclusive remedies for any and all claims, damages, complaints,
demands, causes of action, investigations, hearings, actions, suits or other
proceedings relating to this Agreement and are in lieu of any and all other
rights and remedies which the Seller or the Buyer may have under this Agreement
or otherwise for monetary relief with respect to any breach or failure to
perform or with respect to the Assumed or Excluded Liabilities. Each Party
waives any provision of law to the extent that it would limit or restrict the
agreements contained in this Section 9. Nothing herein shall prevent either
Party from terminating this Agreement in accordance with Section 10.
9.6. MATTERS INVOLVING THIRD PARTIES.
(a) If any Third Party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against any other
Party (the "INDEMNIFYING PARTY") under this Section 9, then the
Indemnified Party shall promptly notify the Indemnifying Party thereof
in writing; PROVIDED, HOWEVER, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (i)
the Indemnifying Party notifies the Indemnified Party in writing within
fifteen days after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any Losses the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence acceptable to the
Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party Claim
involves only money damages and does not seek an injunction or other
equitable relief, settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or
practice adverse to the continuing business interests of the
Indemnified Party, and (iv) the Indemnifying Party conducts the defense
of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party
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Claim in accordance with Section 9.5(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnifying Party (which consent
shall not unreasonably be withheld), and (iii) the Indemnifying Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim unless written
agreement is obtained releasing the Indemnified Party from all
liability thereunder.
(d) In the event any of the conditions in Section 9.5(b)
above is or becomes unsatisfied, however, (i) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
may deem appropriate (and the Indemnified Party need not consult with,
or obtain any consent from, any Indemnifying Party in connection
therewith), (ii) the Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the costs of defending against the
Third Party Claim (including attorneys' fees and expenses,
notwithstanding Section 9.3), and (iii) the Indemnifying Party will
remain responsible for any Losses the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent provided in this
Section 9.
9.7. NET OF TAXES AND INSURANCE. Any calculation of a Loss under
this Section 9 shall, in each case, give full effect to (i) any and all income
Tax benefits to the Indemnified Party in respect of the Loss, and (ii) any and
all insurance proceeds received or payable to the Indemnified Party in respect
of the Loss.
9.8. NO RECOURSE. To the extent the transfer, conveyance,
assignment and delivery of the Acquired Assets to the Buyer as provided in this
Agreement is accomplished by deeds, assignments, easements, leases, licenses,
bills of sale, or other instruments of transfer and conveyance, whether executed
at the Closing or thereafter, these instruments are made without representation
or warranty by, or recourse against, the Seller, except as expressly provided in
this Agreement or in any such instrument.
10. TERMINATION.
10.1. TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:
(a) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing if any of
the following has occurred: (i) the Seller has breached any
representation, warranty or covenant contained in this Agreement in any
material respect, the Buyer has notified the Seller of the breach, and
the breach has continued without cure for a period of sixty (60) days
after the notice of breach; (ii) the Closing shall not have occurred on
or before June 30, 2000 by reason of the failure of any condition
precedent under Section 6.1 hereof (unless the failure results
primarily from the
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Buyer itself breaching any representation, warranty, or covenant
contained in this Agreement); (iii) one or more courts of competent
jurisdiction shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the Closing, which
order, judgment or decree shall not have been terminated, lifted,
vacated or otherwise rendered irrelevant within ninety (90) days of the
issuance thereof; (iv) any statute, rule or regulation shall have been
enacted by any Governmental Authority which, directly or indirectly,
prohibits the consummation of the transactions contemplated hereby; (v)
in accordance with Section 5.10 hereof; or (vi) (W) the Seller has
within the then previous fifteen (15) days given the Buyer any notice
pursuant to Section 5.5(a) above and the matter that is the subject of
such notice, if in existence on the Effective Date or the Closing Date,
would cause the representations and warranties of the Seller set forth
in Section 3 hereof not to be true and correct, (X) such matter would
have a Material Adverse Effect, (Y) the Buyer has notified the Seller
of its intent to terminate pursuant to this Section 10.1(b)(vi), and
(Z) the matter that is the subject of such notice continues to exist
for a period of sixty (60) consecutive days after such notice by the
Buyer; and
(c) the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing if any of
the following has occurred: (i) the Buyer has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect, the Seller has notified the Buyer of the breach,
and the breach has continued without cure for a period of sixty (60)
days after the notice of breach; (ii) the Closing shall not have
occurred on or before June 30, 2000 by reason of the failure of any
condition precedent under Section 6.2 hereof (unless the failure
results primarily from the Seller itself breaching any representation,
warranty, or covenant contained in this Agreement); (iii) one or more
courts of competent jurisdiction shall have issued an order, judgment
or decree permanently restraining, enjoining or otherwise prohibiting
the Closing, which order, judgment or decree shall not have been
terminated, lifted, vacated or otherwise rendered irrelevant within
ninety (90) days of the issuance thereof; (iv) any statute, rule or
regulation shall have been enacted by any Governmental Authority which,
directly or indirectly, prohibits the consummation of the transactions
contemplated hereby; (v) in accordance with Section 5.10 hereof; or
(vi) (W) the Buyer has within the then previous fifteen (15) days given
the Seller any notice pursuant to Section 5.5(a) above and the matter
that is the subject of such notice, if in existence on the Effective
Date or the Closing Date, would cause the representations and
warranties of the Buyer set forth in Section 4 hereof not to be true
and correct, (X) such matter would have a Material Adverse Effect, (Y)
the Seller has notified the Buyer of its intent to terminate pursuant
to this Section 10.1(c)(vi), and (Z) the matter that is the subject of
such notice continues to exist for a period of sixty (60) consecutive
days after such notice by the Seller.
10.2. EFFECT OF TERMINATION. If either Party terminates this
Agreement pursuant to Section 10.1 above, all rights and obligations of the
Parties hereunder shall terminate without any Liability of either Party to the
other Party (except for any Liability of any Party then in breach and except as
otherwise expressly provided herein).
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11. MISCELLANEOUS.
11.1. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior approval of the other
Party; PROVIDED, HOWEVER, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will provide the other Party with the opportunity to review in
advance the disclosure).
11.2. NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Third Party.
11.3. NO JOINT VENTURE. Nothing in this Agreement creates or is
intended to create an association, trust, partnership, joint venture or other
entity or similar legal relationship between the Parties, or impose a trust,
partnership or fiduciary duty, obligation, or liability on or with respect to
either Party. Except as provided in Section 5.6, neither Party is or shall act
as or be the agent or representative of the other Party.
11.4. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto), together with the Related Agreements and any other documents
referred to herein, constitute the entire agreement between the Parties and
supersede any prior understandings, agreements, or representations by or between
the Parties, written or oral, to the extent they relate in any way to the
subject matter hereof, PROVIDED HOWEVER, that the Confidentiality Agreement
dated as of February 17, 1999 shall remain in full force and effect without
regard to any provision of this Agreement. All conflicts or inconsistencies
between the terms hereof and the terms of any of the Related Agreements, if any,
shall be resolved in favor of this Agreement.
11.5. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
the Related Agreements or any of its rights, interests, or obligations hereunder
or thereunder without the prior written approval of the other Party; PROVIDED,
HOWEVER, that the Seller's written approval shall not be unreasonably withheld
if the Buyer elects to assign any or all of its rights and interests hereunder
to one or more of its Affiliates, PROVIDED that the Buyer shall deliver the
following documents before such assignment: (i) a Guaranty substantially in the
form of EXHIBIT F that guarantees the full and timely performance of all
obligations of such Affiliate under this Agreement, all Related Agreements and
all other agreements and commitments contemplated hereby or thereby or in
connection with the Closing entered into for the benefit of the Seller, as so
assigned; (ii) a copy, certified by the Secretary of the Buyer, of resolutions
authorizing the execution and delivery of such Guaranty; (iii) a certificate of
the Secretary of the Buyer identifying by name and title and bearing the
signatures of the officers of the Buyer authorized to execute and deliver the
Guaranty; (iv) an opinion from counsel to the Buyer, dated as of the date of
such assignment and reasonably satisfactory in form to the Seller and its
counsel, substantially to the effect that the Guaranty is a valid and binding
obligation of the Buyer; (v) evidence that such Affiliate is a member of NEPOOL.
11.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts,
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each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
11.7. HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.8. NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given (i) upon
confirmation of facsimile, (ii) one Business Day following the date sent when
sent by overnight delivery and (iii) five Business Days following the date
mailed when mailed by registered or certified mail return receipt requested and
postage prepaid at the following address:
If to the Seller:
Western Massachusetts Electric Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President - Administration
Copy to:
Vice President, Secretary and General Counsel
Northeast Utilities
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Buyer:
Northeast Generation Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President and Treasurer
Copy to:
Select Energy, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Senior Vice President - Power Supply Marketing
Either Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Either
Party may
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change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
11.9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the Commonwealth of
Massachusetts without giving effect to any choice or conflict of law provision
or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
Commonwealth of Massachusetts.
11.10. CHANGE IN LAW. If and to the extent that, during the Interim
Period, any laws or regulations that govern any aspect of this Agreement shall
change, so as to make any aspect of this transaction unlawful, then the Parties
agree to make such modifications to this Agreement as may be reasonably
necessary for this Agreement to accommodate any such legal or regulatory
changes.
11.11. CONSENT TO JURISDICTION. Each of the Seller and the Buyer
consents to the nonexclusive jurisdiction of any local, state or federal court
located within the City of Hartford, Connecticut, for adjudication of any suit,
claim, action or other proceeding at law or in equity relating to this
Agreement, or to any transaction contemplated hereby. The Seller and the Buyer
each accept, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts and waive any objection as to venue, and any defense of FORUM
NON CONVENIENS.
11.12. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
11.13. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.14. EXPENSES. Each of the Buyer and the Seller will bear its own
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including legal and accounting fees and
expenses, except as otherwise provided in Section 9 above), except that the
Buyer shall bear the entire cost of (i) all filings by both the Seller and the
Buyer under the ▇▇▇▇-▇▇▇▇▇- ▇▇▇▇▇▇ Act and (ii) the Joint Application for
authorization pursuant to Sections 203 and 205 of the Federal Power Act.
11.15. CONSTRUCTION. Ambiguities or uncertainties in the wording of
this Agreement will not be construed for or against any Party, but will be
construed in the manner that most
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accurately reflects the Parties' intent as of the Effective Date. The Parties
acknowledge that they have been represented by counsel in connection with the
review and execution of this Agreement, and, accordingly, there shall be no
presumption that this Agreement or any provision hereof be construed against the
Party that drafted this Agreement.
11.16. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.17. SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.
11.18. DISPUTE RESOLUTION. Prior to instituting any litigation or
dispute resolution mechanism, the Parties will attempt in good faith to resolve
any dispute or claim promptly by referring any such matter to their respective
chief executive officers for resolution. Either Party may give the other Party
written notice of any dispute or claim. Within ten (10) days after delivery of
said notice, the executives will meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary to exchange
information and to attempt to resolve the dispute or claim within thirty (30)
days.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
NORTHEAST GENERATION COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Vice President and Treasurer
WESTERN MASSACHUSETTS ELECTRIC
COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Title: Vice President - Generation Divestiture
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