EXHIBIT (10)(a)(1)
UNIT PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 29, 2000
BY AND BETWEEN
NORTHWESTERN CORPORATION,
TOUCH AMERICA HOLDINGS, INC.
AND
THE MONTANA POWER COMPANY
WITH RESPECT TO ALL
OUTSTANDING MEMBERSHIP INTERESTS IN
THE MONTANA POWER LLC
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience only.
ARTICLE I SALE OF SHARES AND CLOSING................................................ 1
1.01 Purchase and Sale........................................... 1
1.02 Purchase Price.............................................. 1
1.03 Closing..................................................... 1
1.04 Further Assurances; Post-Closing Cooperation................ 1
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER AND MPC......................... 2
2.01 Corporate Existence of Seller and MPC....................... 2
2.02 Authority................................................... 2
2.03 Existence of the Company.................................... 2
2.04 Capitalization.............................................. 3
2.05 Subsidiaries................................................ 3
2.06 No Conflicts................................................ 3
2.07 Governmental Approvals and Filings.......................... 4
2.08 Books and Records........................................... 4
2.09 Financial Statements and Condition.......................... 4
2.10 Taxes....................................................... 5
2.11 Legal Proceedings........................................... 6
2.12 Compliance With Laws and Orders............................. 7
2.13 Benefit Plans; ERISA........................................ 7
2.14 Property.................................................... 8
2.15 Intellectual Property Rights................................ 8
2.16 Contracts................................................... 8
2.17 Licenses.................................................... 10
2.18 Insurance................................................... 10
2.19 Affiliate Transactions...................................... 11
2.20 Labor and Employment Matters................................ 11
2.21 Environmental Matters....................................... 11
2.22 Information Supplied........................................ 11
2.23 Vote Required............................................... 12
2.24 Brokers..................................................... 12
2.25 Public Utility Holding Company Act.......................... 12
2.26 Regulatory Filings.......................................... 12
2.27 Rights Agreement............................................ 12
2.28 Effect of Restructuring..................................... 12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER............................. 13
3.01 Corporate Existence......................................... 13
3.02 Authority................................................... 13
3.03 No Conflicts................................................ 13
3.04 Governmental Approvals and Filings.......................... 13
3.05 Legal Proceedings........................................... 13
3.06 Purchase for Investment..................................... 13
3.07 Brokers..................................................... 14
3.08 Financing................................................... 14
3.09 Ownership of the Capital Stock.............................. 14
3.10 Exon-Xxxxxx................................................. 14
3.11 Independent Evaluation...................................... 14
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ARTICLE IV COVENANTS OF SELLER AND MPC.............................................. 14
4.01 Regulatory and Other Approvals.............................. 15
4.02 HSR Filings................................................. 15
4.03 Investigation by Purchaser.................................. 15
4.04 No Solicitations............................................ 15
4.05 Conduct of Business......................................... 16
4.06 Financial Statements and Reports............................ 16
4.07 Certain Restrictions........................................ 17
4.08 Affiliate Transactions...................................... 18
4.09 Fulfillment of Conditions................................... 19
4.10 Completion of Restructuring................................. 19
4.11 Preparation and Mailing of Proxy Statement.................. 19
4.12 Approval of MPC Stockholders................................ 19
4.13 Completion of the Divestiture............................... 19
4.14 Regulatory Proceedings...................................... 19
4.15 Sale of Colstrip 1, 2, and 3 Transmission System............ 19
4.16 QF Contracts................................................ 20
4.17 MPC Benefit Restoration Plans............................... 20
4.18 Power Supply................................................ 20
4.19 Generation Sale Proceeds.................................... 20
4.20 Regional Transmission Organization and Independent
Transmission Company........................................ 20
4.21 Notification of Certain Matters............................. 20
4.22 Confidentiality and Standstill Agreements................... 20
ARTICLE V COVENANTS OF PURCHASER.................................................... 21
5.01 Regulatory and Other Approvals.............................. 21
5.02 HSR......................................................... 21
5.03 [INTENTIONALLY OMITTED...................................... 21
5.04 Employee Matters............................................ 21
5.05 Fulfillment of Conditions................................... 24
5.06 Communication Between the Parties........................... 24
5.07 Charitable Contributions.................................... 24
5.08 Transaction Structure....................................... 24
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER................................... 25
6.01 Representations and Warranties.............................. 25
6.02 Performance................................................. 25
6.03 Officers' Certificates...................................... 25
6.04 Orders and Laws............................................. 25
6.05 Regulatory Consents and Approvals........................... 25
6.06 Third Party Consents........................................ 25
6.07 Completion of the Restructuring............................. 25
6.08 Assignment of Contracts..................................... 25
6.09 Benefits Plans.............................................. 25
6.10 Resignation of Seller as Manager of the Company............. 25
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER..................................... 26
7.01 Representations and Warranties.............................. 26
7.02 Performance................................................. 26
7.03 Officers' Certificates...................................... 26
7.04 Orders and Laws............................................. 26
7.05 Regulatory Consents and Approvals........................... 26
7.06 Third Party Consents........................................ 26
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ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES..................................... 26
8.01 Tax Returns................................................. 26
8.02 Notice of Audit............................................. 27
8.03 Tax Adjustments............................................. 27
8.04 Tax Sharing Agreements...................................... 28
8.05 Transfer Taxes.............................................. 28
8.06 Post-Closing Elections...................................... 28
8.07 Post-Closing Transactions not in the Ordinary Course........ 28
8.08 Allocation of Purchase Price................................ 28
8.09 Section 338(h)(10) Election................................. 29
8.10 Section 338(g) Election..................................... 29
8.11 Nonforeign Affidavit........................................ 29
8.12 Code Section 754 Election................................... 29
ARTICLE IX SURVIVAL; NO OTHER REPRESENTATIONS....................................... 29
9.01 Survival of Representations, Warranties, Covenants and
Agreements.................................................. 29
9.02 No Other Representations.................................... 29
ARTICLE X INDEMNIFICATION........................................................... 29
10.01 Tax Indemnification......................................... 29
10.02 Indemnification for Restructuring; Divestiture; Oil and Gas
Sale........................................................ 30
10.03 Other Indemnification....................................... 30
10.04 Special Environmental Indemnity............................. 30
10.05 Special Litigation Indemnity................................ 31
10.06 Method of Asserting Claims.................................. 31
10.07 Requirements for Indemnity.................................. 33
10.08 Exclusivity................................................. 33
ARTICLE XI TERMINATION.............................................................. 33
11.01 Termination................................................. 33
11.02 Effect of Termination....................................... 34
11.03 Fees and Expenses........................................... 35
ARTICLE XII DEFINITIONS............................................................. 35
12.01 Definitions................................................. 35
ARTICLE XIII MISCELLANEOUS.......................................................... 43
13.01 Notices..................................................... 43
13.02 Entire Agreement............................................ 44
13.03 Expenses.................................................... 44
13.04 Public Announcements........................................ 44
13.05 Confidentiality............................................. 44
13.06 Waiver...................................................... 45
13.07 Amendment................................................... 45
13.08 No Third Party Beneficiary.................................. 45
13.09 No Assignment; Binding Effect............................... 45
13.10 Headings.................................................... 45
13.11 Invalid Provisions.......................................... 45
13.12 Governing Law............................................... 46
13.13 Counterparts................................................ 46
13.14 Insurance Coverage After Closing............................ 46
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EXHIBITS
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EXHIBIT A Officer's Certificate of Seller
EXHIBIT B Secretary's Certificate of Seller
EXHIBIT C Officer's Certificate of Purchaser
EXHIBIT D Secretary's Certificate of Purchaser
ANNEXES
------------------------------------
Annex I Financial Statement
Annex II Budget Principles
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This
UNIT PURCHASE AGREEMENT dated as of September 29, 2000 is made and
entered into by and between
NorthWestern Corporation, a Delaware corporation
("PURCHASER"), Touch America Holdings, Inc., a Delaware corporation
("SELLER") and The Montana Power Company, a Montana corporation ("MPC").
Capitalized terms not otherwise defined herein have the meanings set forth in
SECTION 12.01.
WHEREAS, prior to the closing of the transactions contemplated by this
Agreement and as a condition to Purchaser's obligation to effect such
closing, Seller will cause the Restructuring (pursuant to which, among other
things, the Company (as defined below) shall become the owner of all assets
and securities currently owned by MPC, other than Entech and its
subsidiaries) to become effective; and
WHEREAS, prior to the closing of the transactions contemplated by this
Agreement, Seller will own all of the outstanding membership interests in The
Montana Power LLC, a Montana limited liability company (the "COMPANY"), such
membership interests being referred to herein as the "UNITS"; and
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, the
Units on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01 PURCHASE AND SALE. Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from Seller, all of the right, title and
interest of Seller in and to the Units at the Closing on the terms and
subject to the conditions set forth in this Agreement.
1.02 PURCHASE PRICE. The aggregate purchase price for the Units is $602
million (the "PURCHASE PRICE"), payable in immediately available United
States funds at the Closing in the manner provided in SECTION 1.03.
1.03 CLOSING. The Closing will take place at the offices of Milbank,
Tweed, Xxxxxx & XxXxxx LLP, 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place as Purchaser and Seller mutually agree, at
10:00 A.M. local time, on the Closing Date. At the Closing, Purchaser will
pay the Purchase Price by wire transfer of immediately available funds to
such account as Seller may reasonably direct by written notice delivered to
Purchaser by Seller at least two (2) Business Days before the Closing Date.
Simultaneously, Seller will assign and transfer to Purchaser all of Seller's
right, title and interest in and to the Units. At the Closing, there shall
also be delivered to Seller and Purchaser the certificates to be delivered
under ARTICLES VI and VII.
1.04 FURTHER ASSURANCES; POST-CLOSING COOPERATION. (a) Subject to the
terms and conditions of this Agreement, at any time or from time to time
after the Closing, each of the parties hereto shall execute and deliver such
other documents and instruments, provide such materials and information and
take such other actions as may reasonably be necessary, proper or advisable,
to the extent permitted by Law, to fulfill its obligations under this
Agreement.
(b) Following the Closing, each party will provide the other party, its
counsel and its accountants with copies of information or other data relating
to the Business or Condition of MPC and the Company in its possession with
respect to periods prior to the Closing, to the extent that such information
or data may be reasonably required by the requesting party in connection with
(i) the preparation of Tax Returns, (ii) compliance with the requirements of
any Governmental or Regulatory
1
Authority, or (iii) any third party actual or threatened Action or
Proceeding. Further, each party agrees for a period extending six (6) years
after the Closing Date not to destroy or otherwise dispose of any such books,
records and other data (excluding copies of materials previously supplied to
the other party) unless such party shall first offer in writing to surrender
such books, records and other data to the other party and such other party
shall not agree in writing to take possession thereof during the thirty (30)
day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other documents or
reports required to be filed with Governmental or Regulatory Authorities or
its financial statements or to fulfill its obligations hereunder, it is
necessary that a party be furnished with additional information, documents or
records relating to the Business or Condition of MPC and the Company not
referred to in paragraph (b) above, and such information, documents or
records are in the possession or control of the other party, such other party
agrees to use its reasonable best efforts to furnish or make available such
information, documents or records (or copies thereof) at the recipient's
request, cost and expense. Any information obtained by a party hereto in
accordance with this paragraph shall be held confidential by such party in
accordance with SECTION 13.05.
(d) In addition to furnishing information pursuant to paragraph (b) and
(c) of this SECTION 1.04, in order to close the books of MPC, the Company and
the Subsidiaries for accounting purposes, each party agrees to direct its
accounting personnel to provide reasonable cooperation and assistance to any
other party's accounting personnel to accomplish the work necessary to close
such books. Seller and Purchaser also agree to direct their human resources
and payroll personnel to cooperate with, and provide reasonable cooperation
and assistance to each other in connection with, preparing W-2's and other
associated payroll tax or related documents.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND MPC
Seller and MPC, jointly and severally, hereby represent and warrant to
Purchaser as follows:
2.01 CORPORATE EXISTENCE OF SELLER AND MPC. Seller is a corporation
duly incorporated, validly existing and in good standing under the Laws of
the State of Delaware and MPC is a corporation duly incorporated, validly
existing and in good standing under the Laws of the State of Montana. Each of
Seller and MPC has full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby, including, as to Seller, without
limitation, to own, hold, sell and transfer (pursuant to this Agreement) the
Units.
2.02 AUTHORITY. The execution and delivery by Seller and MPC of this
Agreement, and the performance by Seller of its obligations hereunder, have
been duly and validly authorized by the Boards of Directors of Seller and
MPC, and, with the exception of the vote referred to in SECTION 2.23, no
other corporate action on the part of Seller or MPC is necessary. This
Agreement has been duly and validly executed and delivered by Seller and MPC
and constitutes a legal, valid and binding obligation of Seller and MPC
enforceable against Seller and MPC in accordance with its terms.
2.03 EXISTENCE OF THE COMPANY. The Company is a limited liability
company duly organized, validly existing and in good standing under the Laws
of the State of Montana, and has full corporate power and authority to
conduct its business as and to the extent now conducted and to own, use and
lease its Assets and Properties. MPC is, and prior to and as of the Closing
Date, MPC and the Company will be, duly qualified, licensed or admitted to do
business and each is in good standing in those jurisdictions specified in
SECTION 2.03 OF THE DISCLOSURE SCHEDULE, which are the only jurisdictions in
which the ownership, use or leasing of its Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for those jurisdictions in which the adverse
effects of all such failures to be qualified, licensed or admitted and in
good standing could not in the aggregate reasonably be expected to have a
material adverse effect on the Business or
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Condition of MPC and the Company. Seller has prior to the execution of this
Agreement made available to Purchaser true and complete copies of the
certificate of formation of the Company as in effect on the date hereof.
2.04 CAPITALIZATION. The authorized capitalization of the Company consists
of the Units. The Units are duly authorized, validly issued, outstanding, fully
paid and nonassessable. On and as of the Closing Date, Seller will own the
Units, beneficially and of record, free and clear of all Liens. Except for this
Agreement and as disclosed in SECTION 2.04 OF THE DISCLOSURE SCHEDULE, as of the
date of this Agreement there are, and on and as of the Closing Date there will
be, no outstanding Options with respect to the Company. The delivery of a
certificate or certificates at the Closing representing the Units in the manner
provided in SECTION 1.03 will transfer to Purchaser good and valid title to the
Units, free and clear of all Liens other than Liens created or suffered to exist
by Purchaser.
2.05 SUBSIDIARIES. (a) Each Subsidiary is a corporation validly
existing and in good standing under the Laws of its jurisdiction of
incorporation disclosed in SECTION 2.05(a) OF THE DISCLOSURE SCHEDULE, and
has full corporate power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its Assets and Properties.
Each Subsidiary is duly qualified, licensed or admitted to do business and is
in good standing in those jurisdictions disclosed in SECTION 2.05(a) OF THE
DISCLOSURE SCHEDULE, which are the only jurisdictions in which the ownership,
use or leasing of such Subsidiary's Assets and Properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for those jurisdictions in which the adverse effects of all
such failures by MPC or the Company and the Subsidiaries to be qualified,
licensed or admitted and in good standing could not in the aggregate
reasonably be expected to have a material adverse effect on the Business or
Condition of MPC and the Company. SECTION 2.05(a) OF THE DISCLOSURE SCHEDULE
lists for each Subsidiary the amount of its authorized capital stock, the
amount of its outstanding capital stock and the record owners of such
outstanding capital stock. Except as disclosed in SECTION 2.05(a) OF THE
DISCLOSURE SCHEDULE, all of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and are owned, directly or indirectly by MPC and, immediately
prior to the Closing will be owned, directly or indirectly, by the Company,
beneficially and of record, free and clear of all Liens. Except as set forth
in SECTION 2.05(a) OF THE DISCLOSURE SCHEDULE, there exists no restriction on
the payment of cash dividends by any Subsidiary. Except as disclosed in
SECTION 2.05(a) OF THE DISCLOSURE SCHEDULE, there are, and on and as of the
Closing Date there will be, no outstanding Options with respect to any
Subsidiary. Seller has prior to the execution of this Agreement made
available to Purchaser true and complete copies of the certificate or
articles of incorporation and by-laws (or other comparable corporate charter
documents) of each of the Subsidiaries as in effect on the date hereof.
(b) Except as set forth on SECTION 2.05(b) OF THE DISCLOSURE SCHEDULE, as
of the Closing Date, the Company will not directly or indirectly beneficially
own more than five percent (5%) of either the equity interests in, or the
voting control of, any Person, other than the Subsidiaries.
2.06 NO CONFLICTS. The execution and delivery by Seller and MPC of this
Agreement do not, and the performance by Seller and MPC of their respective
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the certificate or articles of incorporation or
by-laws (or other comparable corporate charter documents) of Seller, MPC, the
Company or any Subsidiary;
(b) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in SECTION 2.07 OF THE DISCLOSURE
SCHEDULE, conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to Seller, MPC, the Company or any
Subsidiary or any of their respective Assets and Properties (other than such
conflicts, violations or breaches (i) which could not in the aggregate
reasonably be expected to adversely affect the validity or
3
enforceability of this Agreement or to have a material adverse effect on the
Business or Condition of MPC and the Company or (ii) as would occur solely as
a result of the identity or the legal or regulatory status of Purchaser or
any of its Affiliates); or
(c) except as disclosed in SECTION 2.06 OF THE DISCLOSURE SCHEDULE or as
could not, individually or in the aggregate, reasonably be expected to be
materially adverse to the Business or Condition of MPC and the Company or to
adversely affect the ability of Seller or MPC to consummate the transactions
contemplated hereby or to perform their obligations hereunder, (i) conflict
with or result in a violation or breach of, (ii) constitute (with or without
notice or lapse of time or both) a default under, (iii) require Seller, MPC,
the Company or any Subsidiary to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under
the terms of, (iv) result in or give to any Person any right of termination,
cancellation, acceleration, non-performance or modification in or with
respect to, or (v) result in the creation or imposition of any Lien upon
Seller, MPC, the Company or any Subsidiary or any of their respective Assets
and Properties under, any Contract or License to which Seller, MPC, the
Company or any Subsidiary is a party or by which any of their respective
Assets and Properties is bound.
2.07 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in SECTION
2.07 OF THE DISCLOSURE SCHEDULE, no consent, approval or action of, filing
with or notice to any Governmental or Regulatory Authority on the part of
Seller, MPC, the Company or any Subsidiary is required in connection with the
execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby, except (i) where the failure to obtain
any such consent, approval or action, to make any such filing or to give any
such notice could not reasonably be expected to adversely affect the ability
of Seller or MPC to consummate the transactions contemplated by this
Agreement or to perform its obligations hereunder, or to have a material
adverse effect on the Business or Condition of MPC and the Company, or (ii)
those as would be required solely as a result of the identity or the legal or
regulatory status of Purchaser or any of its Affiliates.
2.08 BOOKS AND RECORDS. The minute books and other similar records of
MPC, the Company and the Subsidiaries as made available to Purchaser prior to
the execution of this Agreement contain a true and complete record, in all
material respects, of all action taken at all meetings and by all written
consents in lieu of meetings of the stockholders, members, the boards of
directors and committees of the boards of directors of MPC, the Company and
the Subsidiaries. The stock transfer ledgers and other similar records of
MPC, the Company and the Subsidiaries as made available to Purchaser prior to
the execution of this Agreement accurately reflect all record transfers prior
to the execution of this Agreement in the capital stock or membership
interests of MPC, the Company and the Subsidiaries.
2.09 FINANCIAL STATEMENTS AND CONDITION. (a) Prior to the execution of
this Agreement, Seller has made available to Purchaser true and complete
copies of the following financial statements:
(i) the unaudited balance sheet of MPC and the Subsidiaries as of
December 31, 1999 and the related unaudited consolidated statement of
operations for fiscal years of 1997, 1998 and 1999; and
(ii) the unaudited balance sheet of MPC and the Subsidiaries as of
July 31, 2000 (attached as ANNEX I hereto).
Except as set forth in the notes thereto and as disclosed in SECTION 2.09(a)
OF THE DISCLOSURE SCHEDULE, all such financial statements were prepared in
accordance with GAAP and fairly present in all material respects the
consolidated financial condition and statement of operations of MPC and its
consolidated Subsidiaries as of the respective dates thereof and for the
respective periods covered thereby. Except for those Subsidiaries disclosed
in SECTION 2.09(a) OF THE DISCLOSURE SCHEDULE, the financial condition and
statement of operations of each Subsidiary are, and for all periods referred
to in this SECTION 2.09 have been, consolidated with those of MPC. Except as
disclosed in SECTION 2.09(a) OF THE DISCLOSURE SCHEDULE,
4
and except for matters reflected or reserved against in the financial
statements referred to in clauses (i) and (ii) above (or the notes thereto),
as of the date of this Agreement, neither MPC, the Company, nor any
Subsidiary has any liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) of any
nature that would be required by GAAP to be reflected on a consolidated
balance sheet of MPC or the Company and Subsidiaries (including the notes
thereto), except liabilities or obligations (i) that were incurred in the
ordinary course of business consistent with past practice since July 31,
2000, or (ii) that, individually or in the aggregate, have not had and could
not reasonably be expected to have a material adverse effect on the Business
or Condition of MPC and the Company. At and as of the Closing Date, the total
of Indebtedness of the Company, the Subsidiaries and MPC Natural Gas Funding
Trust and the face amount of the outstanding preferred trust securities of
the Montana Power Capital I (Trust) shall not exceed $488 million.
(b) Except for the execution and delivery of this Agreement and the
transactions to take place pursuant hereto on or prior to the Closing Date
and as disclosed in SECTION 2.09(b) OF THE DISCLOSURE SCHEDULE, since the
Interim Financial Statement Date the business of MPC and the Subsidiaries has
been operated in all material respects in the ordinary course of business
consistent with past practice and there has not been any material adverse
change in the Business or Condition of MPC, other than those occurring as a
result of general economic or financial conditions or other developments
which are not unique to MPC and the Subsidiaries but also affect to a similar
extent other Persons who participate or are engaged in the lines of business
in which MPC and the Subsidiaries participate or are engaged.
2.10 TAXES. (a) Seller, the Company, its Subsidiaries, and all members
of the MPC Affiliated Group, each have filed all material Income Tax Returns
(including, but not limited to, any consolidated federal Tax Return of
Seller, the Company, its Subsidiaries and all members of the MPC Affiliated
Group, and any state or local Income Tax Return that includes Seller, the
Company, the Subsidiaries and all members of the MPC Affiliated Group on a
consolidated, combined or unitary basis) that they were required to file. All
such Income Tax Returns were complete and correct in all material respects.
All Income Taxes owed by Seller, the Company, its Subsidiaries and all
members of the MPC Affiliated Group have been paid. MPC, Seller, the Company
and its Subsidiaries each have filed all material Tax Returns (including, but
not limited to, any federal Tax Return of MPC, Seller, the Company and the
Subsidiaries, and any state or local Tax Return that includes MPC, Seller,
the Company, and the Subsidiaries on a consolidated, combined or unitary
basis) that they were required to file. All such Tax Returns were complete
and correct in all material respects. All Taxes owed by MPC, Seller, the
Company and each Subsidiary have been paid. Except as disclosed in Section
2.10(a) of the Disclosure Schedule, there are no Liens on any of the Assets
or Properties of any of MPC, the Company or the Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
(b) (i) Except as disclosed in Section 2.10(b) of the Disclosure
Schedule, there is no dispute or claim concerning any Income Tax liability of
any of Seller, the Company, any Subsidiary, or any member of the MPC
Affiliated Group either (A) claimed or raised by any Governmental or
Regulatory Authority in writing or (B) as to which any of Seller, the
Company, the Subsidiaries, or any member of the MPC Affiliated Group and the
directors and officers thereof has any Knowledge. Section 2.10(b) of the
Disclosure Schedule lists all Income Tax Returns filed by the Company, its
Subsidiaries or any member of the MPC Affiliated Group for Tax periods ending
on or after December 31, 1990, (and for any prior Tax periods to the extent
that the statute of limitations for that Tax period has not lapsed),
indicates those Income Tax Returns that have been audited, and indicates
those Income Tax Returns that currently are the subject of audit. All Income
Taxes due with respect to such audits (as described in Section 2.10(b) of the
Disclosure Schedule) have been paid or have been reserved for in the
Financial Statements. Furthermore, all such Income Taxes being contested are
being contested in good faith by appropriate proceedings (as described in
Section 2.10(b) of the Disclosure Schedule).
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(ii) Except as disclosed in Section 2.10(b) of the Disclosure Schedule,
there is no dispute or claim concerning any Tax liability of any of MPC,
Seller, the Company, or any Subsidiary either (A) claimed or raised by any
Governmental or Regulatory Authority in writing or (B) as to which any of
MPC, Seller, the Company, or the Subsidiaries, and the directors and officers
thereof has any Knowledge. Section 2.10(b) of the Disclosure Schedule lists
all Tax Returns filed by MPC, the Company and its Subsidiaries for Tax
periods ending on or after December 31, 1990, (and for any prior Tax periods
to the extent that the statute of limitations for that Tax period has not
lapsed), indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. All Taxes due with
respect to such audits (as described in Section 2.10(b) of the Disclosure
Schedule) have been paid or have been reserved for in the Financial
Statements. Furthermore, all such Taxes being contested are being contested
in good faith by appropriate proceedings (as described in SECTION 2.10(b) OF
THE DISCLOSURE SCHEDULE).
(c) Except as disclosed in SECTION 2.10(c) OF THE DISCLOSURE SCHEDULE,
neither MPC, Seller, the Company, any of the Subsidiaries (other than CMPL),
nor any member of the MPC Affiliated Group has waived any statute of
limitations in respect of Income Taxes or agreed to any extension of time
with respect to an Income Tax assessment or deficiency for any Tax period.
Except as disclosed in SECTION 2.10(c) OF THE DISCLOSURE SCHEDULE, CMPL has
not waived any statute of limitations in respect of Income Taxes or agreed to
any extension of time with respect to an Income Tax assessment or deficiency
for any Tax period.
(d) Except as disclosed in SECTION 2.10(d) OF THE DISCLOSURE SCHEDULE,
none of MPC, the Company and its Subsidiaries is or was a party to or liable
under any Income Tax allocation or sharing agreement.
(e) Except as disclosed in SECTION 2.10(e) OF THE DISCLOSURE SCHEDULE,
neither the Company, any of its Subsidiaries, nor any member of the MPC
Affiliated Group has been a member of an Affiliated Group, filing a
consolidated federal Income Tax Return other than a group the common parent
of which is MPC.
(f) Seller, the Company, the Subsidiaries, and the members of MPC
Affiliated Group have withheld and paid all material Taxes required to have
been withheld and paid and complied in all material respects with all
information reporting and backup withholding requirements, including
maintenance of records thereto, in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other Person.
(g) None of Seller, the Company, the Subsidiaries, or any member of the
MPC Affiliated Group have filed a consent under Code section 341(f)
concerning collapsible corporations.
(h) MPC, Seller, the Company, and the Subsidiaries have complied with the
normalization rules of accounting in accordance with Code section 168(i)(9).
(i) For federal Income Tax purposes, the Company is or will be
disregarded as an entity separate from its owners under Treas. Reg. section
301.7701-3(b). No election with respect to the Company has been or will be
made to treat the Company as anything other than a disregarded entity.
2.11 LEGAL PROCEEDINGS.
(a) There are no Actions or Proceedings pending or, to the Knowledge of
Seller and MPC, threatened against, relating to or affecting Seller, MPC, the
Company or any Subsidiary in relation to any of their respective Assets and
Properties which could reasonably be expected (i) to result in the issuance
of an Order restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement or
(ii) except as disclosed in SECTION 2.11(a) OF THE DISCLOSURE SCHEDULE or in
SECTIONS 2.10(b), 2.13(e), 2.20 or 2.21(b), individually or in the aggregate
6
with other such Actions or Proceedings, to have a material adverse effect on
the Business or Condition of MPC and the Company.
(b) There are no Orders outstanding against MPC, the Company or any
Subsidiary which, individually or in the aggregate with other such Orders,
have had, or could have, a material adverse effect on the Business or
Condition of MPC and the Company.
2.12 COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed in SECTION
2.12 OF THE DISCLOSURE SCHEDULE or as described in SECTION 2.21, neither
Seller, MPC, the Company nor any Subsidiary is in violation of or in default
under any Law or Order applicable to Seller, MPC, the Company or any
Subsidiary or any of their respective Assets and Properties the effect of
which, individually or in the aggregate with other such violations and
defaults, could reasonably be expected to be materially adverse to the
Business or Condition of MPC and the Company.
2.13 BENEFIT PLANS; ERISA. (a) SECTION 2.13(a) OF THE DISCLOSURE
SCHEDULE contains a true and complete list and description of each of the
Benefit Plans, and identifies each of the Benefit Plans that is a Qualified
Plan.
(b) Except as disclosed in SECTION 2.13(b) OF THE DISCLOSURE SCHEDULE,
neither MPC, the Company, any Subsidiary, nor any other corporation or
organization controlled by or under common control with any of the foregoing
within the meaning of Section 4001 of ERISA has at any time contributed to
any "multiemployer plan", as that term is defined in Section 4001 of ERISA
and incurred any withdrawal liability, as that term is defined in Section
4201 of ERISA, for any plan of the type described in Sections 4063 and 4064
of ERISA or in Section 413 of the Code (and regulations promulgated
thereunder).
(c) Each of the Benefit Plans is, and its administration is and has been
since inception, in compliance with its terms and, where applicable, with
ERISA and the Code in all respects, except for such failures to comply which,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the Business or Condition of MPC and the Company.
(d) All contributions and other payments required to be made by Seller,
MPC, the Company or any Subsidiary or any ERISA Affiliate as defined in
SECTION 12.01 hereof to any Benefit Plan with respect to any period ending
before or at or including the Closing Date have been or will be made. Except
as disclosed in SECTION 2.13(d) OF THE DISCLOSURE SCHEDULE all benefit
obligations and liabilities under any Benefit Plan have been or will be
reflected in Financial Statements in accordance with GAAP.
(e) Except as disclosed in SECTION 2.13(e) OF THE DISCLOSURE SCHEDULE, to
the Knowledge of Seller and MPC, there are no pending claims by or on behalf
of any Benefit Plan, by any employee, director, contractor or consultant of
MPC (or a beneficiary of such an employee, director, contractor or
consultant), which allege violations of Law which, individually or in the
aggregate, could reasonably be expected to result in liability on the part of
Purchaser, MPC, the Company, any Subsidiary or any ERISA Affiliate as defined
in SECTION 12.01 hereof or any fiduciary of any such Benefit Plan material to
the Business or Condition of MPC and the Company.
(f) Except as set forth in SECTION 2.13(f) OF THE DISCLOSURE SCHEDULE,
complete and correct copies of the following documents have been made
available to the Purchaser prior to the execution of this Agreement:
(i) the Benefit Plans and any related trust agreements and insurance
contracts;
(ii) current summary Plan descriptions of each Benefit Plan subject to
ERISA;
(iii) the most recent Form 5500 and Schedules thereto for each Benefit
Plan subject to ERISA reporting requirements;
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(iv) the most recent determination of the IRS with respect to the
qualified status of each Qualified Plan;
(v) the most recent actuarial report of the qualified actuary of any
Defined Benefit Plan or any other Benefit Plan with respect to which
actuarial valuations are conducted; and
(vi) all Governmental or Regulatory Authority filings with respect to
any reportable event, excise tax, or other extraordinary event that occurred
within the past three years and was related to a Benefit Plan.
(g) Except as set forth in SECTION 2.13(g) OF THE DISCLOSURE SCHEDULE,
(i) neither MPC, the Company nor any Subsidiary is obligated to pay any
benefit under any Benefit Plan solely as a result of a "change in control" as
defined in 280G of the Code, (ii) neither MPC, the Company, nor any
Subsidiary is obligated to make any payment that would be disallowed as a
deduction under 280G or 162(m) of the Code, and (iii) neither this
transaction, the Restructuring or the Divestiture shall increase the
obligation of MPC, the Company or any Subsidiary to fund benefits accrued or
benefits payable under any Benefit Plan.
2.14 PROPERTY. MPC, the Company or a Subsidiary is in possession of and
has good title to, or has valid leasehold interests in or valid rights under
Contract to use, all property used in and individually or in the aggregate
with other such property material to the Business or Condition of MPC and the
Company. All such property is free and clear of all Liens, other than
Permitted Liens and Liens disclosed in SECTION 2.14 OF THE DISCLOSURE
SCHEDULE, and is in all material respects in good working order and
condition, ordinary wear and tear excepted.
2.15 INTELLECTUAL PROPERTY RIGHTS. MPC, the Company and the
Subsidiaries currently own, or have license to use, all Intellectual Property
material to the Business or Condition of MPC and the Company without any
material restrictions as to use or enjoyment. As soon as possible after the
execution hereof, Seller will furnish to Purchaser a list of all such
Intellectual Property. Neither MPC, the Company nor any of the Subsidiaries
has granted, nor is obligated to grant, any material license, sub-license or
assignment in respect of any of the Intellectual Property. Neither MPC, the
Company nor any of the Subsidiaries is in breach of any license, sub-license
or assignment granted to it in respect of any Intellectual Property, and to
the Knowledge of Seller and MPC, the operation of the business of MPC, the
Company and each Subsidiary does not infringe upon the intellectual property
rights of any other Person, except for such breaches or infringements that,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the Business or Condition of MPC and the Company.
2.16 CONTRACTS. (a) SECTION 2.16(a) OF THE DISCLOSURE SCHEDULE (with
paragraph references corresponding to those set forth below) contains a true
and complete list of each of the following Contracts to which MPC, the
Company or any Subsidiary is a party or by which any of their respective
Assets and Properties is bound:
(i) all Contracts (excluding Benefit Plans) providing for a commitment
of employment for a specified or unspecified term or otherwise relating to
employment or the termination of employment;
(ii) all Contracts with any Person containing any provision or covenant
prohibiting or materially limiting the ability of MPC, the Company or any
Subsidiary to engage in any business activity or compete with any Person or
prohibiting or materially limiting the ability of any Person to compete with
MPC, the Company or any Subsidiary;
(iii) all material partnership, joint venture, shareholders' or other
similar Contracts with any Person other than Contracts listed pursuant to
(vii) through (xvi) below;
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(iv) all Contracts relating to Indebtedness of MPC, the Company or any
Subsidiary in excess of $1,000,000 or to preferred stock issued by MPC, the
Company or any Subsidiary (other than Indebtedness owing to or preferred
stock owned by MPC, the Company or any wholly-owned Subsidiary);
(v) all Contracts (other than Contracts listed pursuant to
(vii) through (xvi) below) relating to (A) the future disposition or
acquisition by MPC, the Company or any Subsidiary of any Assets and
Properties individually or in the aggregate in excess of $1,000,000, and
(B) any merger or other business combination;
(vi) all collective bargaining or similar labor Contracts;
(vii) all Contracts active as of June 30, 2000, relating to MPC's
purchase of natural gas in its capacity as the natural gas supplier to MPC's
utility customers calling for annual payments in excess of, or potentially
in excess of $1,000,000 or having a term in excess of one year;
(viii) all Contracts active as of June 30, 2000, relating to MPC's
purchase of electrical power in its capacity as the electrical power
supplier to MPC's utility customers calling for annual payments in excess
of, or potentially in excess of, $1,000,000 or having a term in excess of
one year;
(ix) all Contracts active as of June 30, 2000, relating to MPC's sale of
electric power as a commodity to third party customers calling for annual
payments in excess of, or potentially in excess of, $1,000,000 or having a
term in excess of one year;
(x) all Contracts active as of June 30, 2000, relating to MPC's electric
transmission system or the Colstrip Transmission System calling for annual
payments in excess of, or potentially in excess of, $1,000,000 or having a
term in excess of one year;
(xi) all Contracts active as of June 30, 2000, relating to MPC's natural
gas transmission and storage system calling for annual payments in excess
of, or potentially in excess of, $1,000,000 or having a term in excess of
one year;
(xii) all material Contracts active as of June 30, 2000, relating to
MPC's interest in Milltown Dam;
(xiii) all material Contracts active as of June 30, 2000, relating to
MPC's interest in Colstrip Unit 4;
(xiv) all material Contracts between MPC and PPL Montana, LLC relating to
the generation assets sale transaction between MPC and PPL Montana, LLC
which closed on December 17, 1999;
(xv) all material Contracts active as of June 30, 2000, to which One Call
Locators, Ltd. is a party;
(xvi) all material Contracts active as of June 30, 2000, to which DES is
a party;
(xvii) all Contracts, correspondence and other documents relating to the
buy-out negotiations regarding MPC's contracts to purchase power from QFs,
including, without limitation, signed letters of intent, whether or not
binding on either or both parties thereto, offers and counteroffers;
(xviii) all Contracts relating to MPC's electric and gas transmission and
distribution business, not included in (i) through (xvi) above, under which
MPC made payments to the other party in excess of $1,000,000 in 1999 or
under which, as of the date of this Agreement, MPC expects to make payments
to the other party in excess of $1,000,000 in 2000;
(xix) all Contracts relating to MPC's electric and gas transmission and
distribution business, not included in (i) through (xvi) above, under which
MPC received payments from the other party
9
in excess of $1,000,000 in 1999 or under which, as of the date of this
Agreement, MPC expects to receive payments from the other party in excess of
$1,000,000 in 2000; and
(xx) all Contracts (other than this Agreement) that (A) limit or contain
restrictions on the ability of MPC, the Company or any Subsidiary to declare
or pay dividends on, to make any other distribution in respect of or to
issue or purchase, redeem or otherwise acquire its capital stock, to incur
Indebtedness, to incur or suffer to exist any Lien, to purchase or sell any
Assets and Properties, to change the lines of business in which it
participates or engages or to engage in any merger or other business
combination or (B) require MPC, the Company or any Subsidiary to maintain
specified financial ratios or levels of net worth or other indicia of
financial condition.
(b) Each Contract required to be disclosed in SECTION 2.16(a) OF THE
DISCLOSURE SCHEDULE is in full force and effect and constitutes a legal,
valid and binding agreement, enforceable in accordance with its terms, of
MPC, the Company or a Subsidiary and, to the Knowledge of Seller and MPC, of
each other party thereto; and except as disclosed in SECTION 2.16(b) OF THE
DISCLOSURE SCHEDULE neither MPC, the Company, any Subsidiary nor, to the
Knowledge of Seller and MPC, any other party to such Contract is in violation
or breach of or default under any such Contract (or with notice or lapse of
time or both, would be in violation or breach of or default under any such
Contract), the effect of which, individually or in the aggregate, could
reasonably be expected to be materially adverse to the Business or Condition
of MPC and the Company.
(c) Prior to the Closing Date, Seller and MPC have furnished or made
available to Purchaser a copy of each Contract or other document required to
be disclosed in SECTION 2.16(a) OF THE DISCLOSURE SCHEDULE.
2.17 LICENSES. Each of MPC, the Company and the Subsidiaries has
obtained all Licenses used in and, individually or in the aggregate, with
other such Licenses material to the Business or Condition of MPC and the
Company. Except as disclosed in SECTION 2.17 OF THE DISCLOSURE SCHEDULE:
(i) MPC or the Company and each Subsidiary owns or validly holds all
such Licenses;
(ii) each such License is valid, binding and in full force and effect;
and
(iii) to the Knowledge of Seller and MPC neither MPC, the Company nor any
Subsidiary is in default (or with the giving of notice or lapse of time or
both, would be in default) under any such License in any material respect.
2.18 INSURANCE. SECTION 2.18 OF THE DISCLOSURE SCHEDULE contains a true
and complete list of all material insurance policies currently in effect that
insure the business, operations or employees of MPC, the Company or any
Subsidiary or affect or relate to the ownership, use or operation of any of
the Assets and Properties of MPC, the Company or any Subsidiary. Except as
set forth in SECTION 2.18 OF THE DISCLOSURE SCHEDULE and except for failures
to maintain insurance that, individually or in the aggregate, have not had
and could not reasonably be expected to have a material adverse effect on the
Business or Condition of MPC and the Company, each of MPC, the Company, and
the Subsidiaries has been continuously insured with financially responsible
insurers, in each case in such amounts and with respect to such risks and
losses as are customary for companies in the United States conducting the
business conducted by MPC, the Company, and the Subsidiaries. Except as set
forth in SECTION 2.18 OF THE DISCLOSURE SCHEDULE, neither Seller, MPC, the
Company nor any of the Subsidiaries has received any notice of cancellation,
termination or suspension with respect to any of their respective insurance
policies, except with respect to any cancellation, termination or suspension
that, individually or in the aggregate, has not had and could not reasonably
be expected to have a material adverse effect on the Business or Condition of
MPC and the Company.
10
2.19 AFFILIATE TRANSACTIONS. Except as disclosed in SECTION 2.19 OF THE
DISCLOSURE SCHEDULE, as of Closing, neither MPC, the Company nor the
Subsidiaries will have any Contractual obligations with respect to Seller or
its Affiliates (other than MPC, the Company or the Subsidiaries).
2.20 LABOR AND EMPLOYMENT MATTERS. Except as disclosed in SECTION 2.20
OF THE DISCLOSURE SCHEDULE, no employee of MPC, the Company or any Subsidiary
is presently a member of a collective bargaining unit and, to the Knowledge
of Seller and MPC, there are no threatened or contemplated attempts to
organize for collective bargaining purposes any of the employees of MPC, the
Company or any Subsidiary, and, to the Knowledge of Seller and MPC, there are
no threatened or pending actions or proceedings before any Governmental or
Regulatory Authority relating to such attempts to organize. Since January 1,
1998, there has been no work stoppage, strike or other concerted action by
employees of MPC, the Company or any Subsidiary which materially adversely
affected the Business or Condition of MPC and the Company. Except as
disclosed in SECTION 2.20 OF THE DISCLOSURE SCHEDULE, there are no unfair
labor practice charges or other matters pending before the National Labor
Relations Board to which either MPC or any of the Subsidiaries is a party.
2.21 ENVIRONMENTAL MATTERS. (a) Each of MPC, the Company and the
Subsidiaries has obtained all Licenses which are required under applicable
Environmental Laws in connection with the conduct of the business or
operations of MPC, the Company or such Subsidiary, except where the failure
to obtain any such License could not reasonably be expected to be,
individually or in the aggregate with other such failures, materially adverse
to the Business or Condition of MPC and the Company. Each of such Licenses is
in full force and effect and each of MPC, the Company and the Subsidiaries is
in compliance with the terms and conditions of all such Licenses and with any
applicable Environmental Law, except where the failure to be in compliance
could not reasonably be expected to be, individually or in the aggregate with
other such failures, materially adverse to the Business or Condition of MPC
and the Company.
(b) Except as noted in the Pilko Environmental Reports and as set forth
in SECTION 2.21 OF THE DISCLOSURE SCHEDULE, (i) neither MPC, the Company, nor
any Subsidiary has received written notice of violation of an Environmental
Law with respect to any of the Assets and Properties of MPC, the Company, or
any Subsidiary, which individually, or in the aggregate with other violations
of Environmental Laws, would materially adversely affect the Business or
Condition of MPC and the Company; (ii) no site or facility now or previously
owned, operated, or leased by MPC, the Company, or any Subsidiary is listed
or proposed for listing on the NPL, CERCLIS or any similar state or local
list of sites requiring investigation or clean-up, or would require
remediation or response under applicable Environmental Laws that would result
in expenditures in excess of $500,000 individually, or $1,000,000 in the
aggregate; and (iii) to the Knowledge of MPC and Seller, no facts, events or
conditions relating to the past or present facilities, properties or
operations of MPC, the Company, or any of the Subsidiaries will prevent
continued compliance with Environmental Laws or can reasonably be expected to
give rise to any investigatory, remedial or corrective obligations pursuant
to Environmental Laws, including without limitation any such liabilities or
noncompliance relating to onsite or offsite releases or threatened releases
of hazardous materials, substances or wastes, which individually or in the
aggregate with other such facts, events or conditions, would materially
adversely affect the Business or Condition of MPC and the Company.
2.22 INFORMATION SUPPLIED. The proxy statement relating to the MPC
Stockholders' Meeting (as defined in SECTION 4.11), as amended or
supplemented from time to time (as so amended and supplemented, the "PROXY
STATEMENT"), and any other documents to be filed by MPC with the SEC or any
other Governmental or Regulatory Authority in connection with the
Restructuring and the other transactions contemplated hereby will (in the
case of the Proxy Statement and any such other documents filed with the SEC
under the Exchange Act or the Securities Act) comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act, respectively, and will not, on the date of its filing or, in
the case of the Proxy Statement, at the date it is mailed to
11
stockholders of MPC and at the time of the MPC Stockholders' meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
2.23 VOTE REQUIRED. Assuming the accuracy of the representation and
warranty contained in SECTION 3.09, the affirmative vote of the holders of
record of at least two-thirds of the issued and outstanding common stock of
MPC with respect to the adoption of this Agreement and the Restructuring is
the only vote of the holders of any class or series of the capital stock of
MPC required to adopt this Agreement and approve the Restructuring and the
other transactions contemplated hereby.
2.24 BROKERS. Except for Xxxxxxx, Xxxxx & Co., whose fees, commissions
and expenses are the sole responsibility of Seller, all negotiations relative
to this Agreement and the transactions contemplated hereby have been carried
out by Seller and MPC directly with Purchaser without the intervention of any
Person on behalf of Seller and MPC in such manner as to give rise to any
valid claim by any Person against Purchaser, MPC, the Company or any
Subsidiary for a finder's fee, brokerage commission or similar payment.
2.25 PUBLIC UTILITY HOLDING COMPANY ACT. As of the date of this
Agreement, none of the Subsidiaries is a "public utility company," a "holding
company," a "subsidiary company" or an "affiliate" of any public utility
company within the meaning of SECTION 2(a)(5), 2(a)(8) or 2(a)(11) of the
Public Utility Holding Company Act of 1935, as amended (the "1935 ACT"),
respectively. Neither MPC, the Company nor any Subsidiary is currently
regulated under the 0000 Xxx.
2.26 REGULATORY FILINGS. All filings (other than immaterial filings)
required to be made by MPC or any of the Subsidiaries since January 1, 1997
under the 1935 Act, the Federal Power Act, the Federal Communications Act of
1934 and applicable state Laws, have been timely filed with the SEC, the
FERC, the Department of Energy, the FCC or any applicable state public
utility commissions (including, to the extent required, the Montana Public
Service Commission), as the case may be, including all forms, statements,
reports, agreements (oral or written) and all documents, exhibits, amendments
and supplements appertaining thereto, including all rates, tariffs,
franchises, service agreements and related documents and all such filings
complied in all material respects, as of their respective dates, with all
applicable requirements of the applicable statute and the rules and
regulations thereunder, except for filings the failure of which to make,
individually or in the aggregate, have not had and could not reasonably be
expected to have a material adverse effect on the Business or Condition of
MPC and the Company.
2.27 RIGHTS AGREEMENT. As of the date of this Agreement, MPC, or the
Board of Directors of MPC, as the case may be, has taken all necessary
actions so as to render the Rights Agreement dated March 2, 1999, as amended,
inapplicable to the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, the Restructuring, the
Divestiture and any other transactions contemplated hereby.
2.28 EFFECT OF RESTRUCTURING. Except as disclosed in Section 2.28 of
the Disclosure Schedule, as a consequence of the Restructuring, as of the
Closing Date, by operation of law pursuant to Section 35-1-817 and 35-8-1203
of the Montana Code Annotated (1999), the Company will have succeeded to all
of MPC's right, title and interest in the Assets and Properties of MPC and
constituting the utility business of MPC (the "UTILITY BUSINESS"), as
described in that certain Confidential Offering Memorandum dated May 2000
prepared by Xxxxxxx, Xxxxx & Co., except for Assets or Properties acquired or
disposed of in compliance with this Agreement, including SECTION 4.07.
12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller and MPC as follows:
3.01 CORPORATE EXISTENCE. Purchaser is a corporation duly incorporated,
validly existing and in good standing under the Laws of the state of its
incorporation. Purchaser has full corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
3.02 AUTHORITY. The execution and delivery by Purchaser of this
Agreement, and the performance by Purchaser of its obligations hereunder,
have been duly and validly authorized by the Board of Directors of Purchaser,
no other corporate action on the part of Purchaser or its stockholders being
necessary. This Agreement has been duly and validly executed and delivered by
Purchaser and constitutes a legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.
3.03 NO CONFLICTS. The execution and delivery by Purchaser of this
Agreement do not, the performance by Purchaser of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will
not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the certificate of incorporation or by-laws of
Purchaser;
(b) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in SCHEDULE 3.04 hereto, conflict
with or result in a violation or breach of any term or provision of any Law
or Order applicable to Purchaser or any of its Assets and Properties (other
than such conflicts, violations or breaches which could not in the aggregate
reasonably be expected to adversely affect the validity or enforceability of
this Agreement); or
(c) except as disclosed in SCHEDULE 3.03 hereto or as could not,
individually or in the aggregate, reasonably be expected to adversely affect
the ability of Purchaser to consummate the transactions contemplated hereby
or to perform its obligations hereunder, (i) conflict with or result in a
violation or breach of, (ii) constitute (with or without notice or lapse of
time or both) a default under, (iii) require Purchaser to obtain any consent,
approval or action of, make any filing with or give any notice to any Person
as a result or under the terms of, or (iv) result in the creation or
imposition of any Lien upon Purchaser or any of its Assets or Properties
under, any Contract or License to which Purchaser is a party or by which any
of its Assets and Properties is bound.
3.04 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in
SCHEDULE 3.04 hereto, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority on the part of Purchaser
is required in connection with the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby,
except where the failure to obtain any such consent, approval or action, to
make any such filing or to give any such notice could not reasonably be
expected to adversely affect the ability of Purchaser to consummate the
transactions contemplated by this Agreement or to perform its obligations
hereunder.
3.05 LEGAL PROCEEDINGS. There are no Actions or Proceedings pending or,
to the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Assets and Properties which could reasonably be
expected to result in the issuance of any Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement.
3.06 PURCHASE FOR INVESTMENT. The Units will be acquired by Purchaser
(or, if applicable, its assignee pursuant to SECTION 13.09(b)) for its own
account for the purpose of investment, it being understood that the right to
dispose of such Units shall be entirely within the discretion of Purchaser
13
(or such assignee, as the case may be). Purchaser (or such assignee, as the
case may be) will refrain from transferring or otherwise disposing of any of
the Units, or any interest therein, in such manner as to cause Seller to be
in violation of the registration requirements of the Securities Act or
applicable state securities or blue sky laws.
3.07 BROKERS. Except for Credit Suisse First Boston, whose fees,
commissions and expenses are the sole responsibility of Purchaser, all
negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by Purchaser directly with Seller without the
intervention of any Person on behalf of Purchaser in such manner as to give
rise to any valid claim by any Person against Seller, the Company or any
Subsidiary for a finder's fee, brokerage commission or similar payment.
3.08 FINANCING. Purchaser has sufficient cash and/or available credit
facilities or written commitments for credit facilities (and has provided
Seller and MPC with evidence thereof) to pay the Purchase Price and to make
all other necessary payments of fees and expenses in connection with the
transactions contemplated by this Agreement.
3.09 OWNERSHIP OF THE CAPITAL STOCK. Purchaser does not beneficially
own any of the capital stock of MPC.
3.10 EXON-XXXXXX. Purchaser is not a "foreign person" for purposes of
the Exon-Xxxxxx Amendment.
3.11 INDEPENDENT EVALUATION. Purchaser is experienced and knowledgeable
in the utility business, and is aware of its risks. Purchaser has been
afforded the opportunity to examine the materials made available to it by
Seller in Seller's offices in Butte, Montana (the "Data Room") with respect
to MPC, the Company, its Subsidiaries and their business (the "Background
Materials"). The Background Materials include files, or copies thereof, that
MPC, the Company and its Subsidiaries have used in their normal course of
business and other information about MPC, the Company and its Subsidiaries
and their business that MPC, the Company and its Subsidiaries have compiled
or generated; however, Purchaser acknowledges and agrees that neither MPC,
the Seller nor the Company, the Subsidiaries or other Person has made any
representations or warranties, express or implied, written or oral, as to the
accuracy or completeness of the Background Materials or, except for the
representations and warranties of Seller contained in this Agreement, as to
any other information relating to MPC, the Company, the Subsidiaries or their
business furnished or to be furnished to Purchaser or its representatives by
or on behalf of Seller. In entering into this Agreement, Purchaser
acknowledges and affirms that it has relied and will rely solely on the terms
of this Agreement and upon its independent analysis, evaluation and
investigation of, and judgment with respect to, the business, economic,
legal, tax or other consequences of this transaction including its own
estimate and appraisal of the extent and value of and the risks associated
with the utility business. Purchaser's representatives have visited the
offices of Seller and have been given opportunities to examine the Books and
Records Seller has made available relating to MPC, the Company, the
Subsidiaries and their business. Except as expressly provided in this
Agreement, neither Seller nor MPC, the Company nor the Subsidiaries shall
have any liability to Purchaser or its Affiliates, agents, representatives or
employees resulting from any use, authorized or unauthorized, by Purchaser or
its Affiliates, agents, representatives or employees of the Background
Materials or other information relating to MPC, the Company, the Subsidiaries
or their business provided by or on behalf of MPC, any Seller, the Company or
its Subsidiaries.
ARTICLE IV
COVENANTS OF SELLER AND MPC
Each of Seller and MPC covenants and agrees with Purchaser that, at all
times from and after the date hereof until the Closing, Seller and MPC will
comply with all covenants and provisions of this ARTICLE IV, except to the
extent Purchaser may otherwise consent in writing.
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4.01 REGULATORY AND OTHER APPROVALS. Seller and MPC will, and will
cause the Company and the Subsidiaries to, as promptly as practicable (a)
take all commercially reasonable steps necessary or desirable to obtain all
consents, approvals or actions of, make all filings with and give all notices
to Governmental or Regulatory Authorities or any other Person required of
Seller, MPC, the Company or any Subsidiary to consummate the transactions
contemplated hereby, including without limitation those described in SECTIONS
2.06 AND 2.07 OF THE DISCLOSURE SCHEDULE, (b) provide such other information
and communications to such Governmental or Regulatory Authorities or other
Persons as such Governmental or Regulatory Authorities or other Persons may
reasonably request in connection therewith and (c) provide reasonable
cooperation to Purchaser in connection with the performance of its
obligations under SECTIONS 5.01 and 5.02. Seller and MPC will provide prompt
notification to Purchaser when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Purchaser of any communications (and, unless
precluded by Law, provide copies of any such communications that are in
writing) with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this Agreement.
4.02 HSR FILINGS. In addition to and not in limitation of Seller's and
MPC's covenants contained in SECTION 4.01, Seller and MPC will (a) take
promptly all actions necessary to make the filings required of Seller, MPC or
their Affiliates under the HSR Act, (b) comply at the earliest practicable
date with any request for additional information received by Seller, MPC or
their Affiliates from the Federal Trade Commission or the Antitrust Division
of the Department of Justice pursuant to the HSR Act and (c) cooperate with
Purchaser in connection with Purchaser's filing under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department of Justice or
state attorneys general. In the event that a suit or objection is instituted
by any Person challenging this Agreement and the transactions contemplated
hereby as violative of applicable competition and antitrust laws, each of
Purchaser and Seller, MPC and the Company shall use commercially reasonable
efforts to resist or resolve such suit or objection.
4.03 INVESTIGATION BY PURCHASER. Seller and MPC will, and will cause
the Company and the Subsidiaries to, (a) provide Purchaser and its officers,
employees, counsel, accountants, financial advisors, consultants and other
representatives (together, "REPRESENTATIVES") with full access, upon
reasonable prior notice and during normal business hours, to all officers,
employees, agents and accountants of MPC, the Company and the Subsidiaries
and their Assets and Properties and Books and Records, but only to the extent
that such access does not unreasonably interfere with the business and
operations of MPC, the Company and the Subsidiaries, and (b) furnish
Purchaser and such other Persons with all such information and data
(including without limitation copies of Contracts, Benefit Plans and other
Books and Records) concerning the business and operations of MPC, the Company
and the Subsidiaries as Purchaser or any of such other Persons reasonably may
request in connection with such investigation (and permit the copying
thereof), except to the extent that furnishing any such information or data
would violate any Law, Order, Contract or License applicable to Seller, MPC,
the Company or any Subsidiary or by which any of their respective Assets and
Properties is bound.
4.04 NO SOLICITATIONS. Seller and MPC will not take, nor will they
permit the Company, the Subsidiaries or any Affiliate of Seller or MPC (or
authorize or permit any investment banker, financial advisor, attorney,
accountant or other Person retained by or acting for or on behalf of Seller,
MPC, the Company, the Subsidiaries or any such Affiliate) to take, directly
or indirectly, any action to solicit, encourage, receive, negotiate, assist
or otherwise facilitate (including by furnishing confidential information
with respect to MPC, the Company or any Subsidiary or permitting access to
the Assets and Properties and Books and Records of MPC, the Company or any
Subsidiary) or accept any offer or inquiry from any Person concerning an
Acquisition Proposal. Notwithstanding the foregoing, MPC or its Board of
Directors shall be permitted to (A) to the extent applicable, comply with
Rule 14e-2(a)
15
promulgated under the Exchange Act with regard to an Acquisition Proposal, or
(B) engage in any discussions or negotiations with, or provide any
information to any Person in response to an unsolicited bona fide written
Acquisition Proposal, by any such Person, if and only to the extent that, in
the case of the actions referred to in clause (B), (i) the MPC Stockholders'
Meeting shall not have occurred, (ii) the Board of Directors of MPC,
concludes in good faith after consultation with its financial advisors and
legal advisors, that such Acquisition Proposal would reasonably be expected
to constitute a Superior Proposal, (iii) prior to providing any information
or data to any Person in connection with an Acquisition Proposal by any such
Person, the Board of Directors of MPC receives from such Person an executed
confidentiality agreement on terms no less favorable to the Company than
those contained in the Confidentiality Agreement between MPC and Purchaser
regarding the sale of the Utility Business and (iv) prior to providing any
information or data to any Person or entering into discussions or
negotiations with any Person, the Board of Directors of MPC notifies
Purchaser immediately of such inquiries, proposals or offers received by, any
such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, any of its representatives
indicating, in connection with such notice, the name of such Person and the
material terms and conditions of any proposals or offers. Seller and MPC
agree immediately to cease and cause to be terminated any existing
activities, discussions, or negotiations with any parties heretofore
conducted with respect to any Acquisition Proposal. Seller and MPC agree to
take the necessary steps promptly to inform all such Persons of its
obligations hereunder. Nothing in this Section 4.04 shall (x) permit Seller
or MPC to terminate this Agreement (except as specifically provided in
Article XI), or (y) affect any other obligation of Seller or MPC under this
Agreement.
4.05 CONDUCT OF BUSINESS. MPC will, and will cause the Company and the
Subsidiaries to, conduct business only in the ordinary course consistent with
past practice and in compliance with applicable Law and will timely seek
renewal of all Licenses and permits required or necessary for the operation
of the Utility Business. Without limiting the generality of the foregoing,
and other than with respect to, and in connection with, the Restructuring and
the Divestiture, MPC will, and will cause the Company and the Subsidiaries
to, use commercially reasonable efforts, to the extent the officers of MPC
believe such action to be in the best interests of MPC and the Subsidiaries,
to (a) preserve intact the present business organization, reputation and
franchises of MPC, the Company and the Subsidiaries in all material respects,
(b) keep available (subject to dismissals and retirements (including
retirements pursuant to MPC's "Special Retirement Program") in the ordinary
course of business and consistent with past practice and transfers to any
Affiliate of MPC) the services of the key officers and employees of MPC and
the Subsidiaries, (c) maintain the Assets and Properties of MPC, the Company
and the Subsidiaries in good working order and condition, ordinary wear and
tear excepted, and (d) maintain the good will of key customers, suppliers and
lenders and other Persons with whom MPC or any Subsidiary otherwise has
significant business relationships.
4.06 FINANCIAL STATEMENTS AND REPORTS. (a) As promptly as practicable
and in any event no later than forty five (45) days after the end of each
fiscal quarter ending after the date hereof and before the Closing Date
(other than the fourth quarter) or ninety (90) days after the end of each
fiscal year ending after the date hereof and before the Closing Date, as the
case may be, MPC will deliver to Purchaser true and complete copies of the
unaudited consolidated balance sheet and the related unaudited consolidated
statement of operations of MPC and the Subsidiaries, in each case as of and
for the fiscal year then ended or as of and for each such fiscal quarter and
the portion of the fiscal year then ended, as the case may be, together with
the notes, if any, relating thereto, which financial statements shall be
prepared on a basis consistent with the Financial Statements.
(b) As promptly as practicable, MPC will deliver to Purchaser true and
complete copies of such other regularly-prepared financial statements,
reports and analyses as may be prepared or received by MPC, the Company or
any Subsidiary relating to the business or operations of MPC, the Company or
any Subsidiary.
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4.07 CERTAIN RESTRICTIONS. MPC will, and will cause the Subsidiaries to
refrain from:
(a) except as disclosed in SECTION 4.07(a) OF THE DISCLOSURE SCHEDULE,
and except as may be necessary or desirable in connection with the
Restructuring, amending their certificates or articles of incorporation or
by-laws (or other comparable corporate charter documents) in any material
respect or taking any action with respect to any such amendment or any
recapitalization, reorganization, liquidation or dissolution of any such
corporation;
(b) except as disclosed in SECTION 4.07(b) OF THE DISCLOSURE SCHEDULE,
and except as may be necessary or desirable in connection with the
Restructuring, authorizing, issuing, selling or otherwise disposing of any
shares of capital stock of or any Option with respect to MPC, the Company or
any Subsidiary, or modifying or amending any right of any holder of
outstanding shares of capital stock of or Option with respect to MPC, the
Company or any Subsidiary;
(c) except for (i) the declaration of regular quarterly cash dividends on
the MPC common stock not to exceed twenty (20) cents per share, and (ii) the
payment of dividends required to be paid in respect of MPC outstanding
preferred stock, declaring, setting aside or paying any dividend or other
distribution in respect of the capital stock of MPC, the Company or any
Subsidiary or directly or indirectly redeeming, purchasing or otherwise
acquiring any capital stock of or any Option with respect to MPC, the Company
or any Subsidiary;
(d) except as disclosed in SECTION 4.07(d) OF THE DISCLOSURE SCHEDULE and
as specified in the Budget, acquiring or disposing of, or incurring any Lien
(other than a Permitted Lien) on, any Assets and Properties individually or
in the aggregate material to the Business or Condition of MPC and the Company;
(e) except (i) as disclosed in SECTION 4.07(e) OF THE DISCLOSURE
SCHEDULE, and (ii) in the ordinary course of business consistent with past
practices, the Budget and the terms and provisions of this Agreement,
entering into, or in any material respect amending, modifying, terminating
(partially or completely), granting any waiver under or giving any consent
with respect to any Contract to which MPC, the Company or any Subsidiary is a
party which is material to the Business or Condition of MPC and the Company;
(f) other than as specified in the Budget, (i) voluntarily incurring
Indebtedness in an aggregate principal amount exceeding $5,000,000 (other
than refinancings where the principal amount refinanced is no greater than
the amount repaid), or (ii) purchasing, canceling, prepaying or otherwise
providing for a complete or partial discharge in advance of a scheduled
payment date with respect to, or waiving any right under, any Indebtedness in
an aggregate principal amount exceeding $1,000,000 (in either case other than
Indebtedness of MPC, the Company or a Subsidiary owing to MPC, the Company or
a wholly-owned Subsidiary); PROVIDED, HOWEVER, that MPC, Seller, the Company
and the Subsidiaries may take any and all actions necessary or appropriate to
terminate the Employee Stock Ownership Plan portion of the MPC 401(k) Plan,
and to prepay any outstanding Indebtedness of MPC, the Company and the
Subsidiaries attributable to such Employee Stock Ownership Plan;
(g) other than in connection with the Restructuring, engaging with any
Person in any merger or other business combination;
(h) except as set forth in the Budget, making (1) capital expenditures or
commitments for additions to property, plant or equipment constituting
capital assets or (2) making expenditures with respect to operations and
maintenance or incurring general and administrative expenses, in each case in
an aggregate amount exceeding $1,000,000;
17
(i) except to the extent required by applicable Law or reasonably and in
good faith believed by the officers of MPC or the Company to be in the best
interests of MPC, the Company and the Subsidiaries (and subject in each case
to prior written notice to, and consultation with, Purchaser), making any
material change in (A) any pricing, investment, accounting, financial
reporting, inventory, credit, allowance or Tax practice or policy, or (B) any
method of calculating any bad debt, contingency or other reserve for
accounting, financial reporting or Tax purposes;
(j) other than in the ordinary course of business or to the extent
required by applicable Law (including without limitation, the duty to bargain
in good faith under any collective bargaining agreement) (and subject in each
case to prior written notice to, and consultation with, Purchaser), adopting,
entering into or becoming bound by any material Benefit Plan,
employment-related Contract or collective bargaining agreement, or amending,
modifying or terminating (partially or completely) any such Benefit Plan
(other than the Employee Stock Ownership Plan portion of the MPC 401(k)
Plan), employment-related Contract or collective bargaining agreement if such
action will result in material additional cost to MPC;
(k) making any change in its fiscal year;
(l) except as set forth in the Budget, making any loans or advances by it
to, or guarantee, endorse or otherwise be or become contingently liable,
directly or indirectly, in connection with the obligations, stocks or
dividends of, or owning, purchasing or acquiring stock, obligations or
securities of, or any other interest in, or make any capital contributions
to, any Person;
(m) effectuating a "plant closing" or "mass layoff", as those terms are
defined in the Worker Adjustment and Retraining Act, affecting in whole or in
part any site of employment, facility, operating unit or employee of MPC, the
Company or any Subsidiary;
(n) paying, discharging or satisfying any claims, liabilities or
obligations (obsolete, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected
or reserved against in the balance sheet comprising the Interim Financial
Statements;
(o) making or changing any Tax election, filing any amended Tax Return,
settling or compromising any federal, state, local or foreign Tax liability,
changing any annual Tax accounting period, changing any method of Tax
accounting, entering into any closing agreement relating to any Tax,
surrendering any right to claim a Tax refund, or consenting to any extension
or waiver of the limitations period applicable to any Tax claim or
assessment, in each case in a manner which could reasonably be expected to
have material adverse effect on Purchaser, the Company or the Subsidiaries
for any post Closing period; or
(p) selling any cushion gas other than sales in accordance with prudent
utility practices, the proceeds of which will remain with, or be used for the
benefit of, MPC; or
(q) entering into any Contract to do or engage in any of the foregoing.
Notwithstanding any provision to the contrary, nothing in this SECTION
4.07 or SECTION 4.05 shall require MPC, Seller or the Company to revise,
dishonor or delay performance of any obligation under agreements in existence
prior to the date hereof.
4.08 AFFILIATE TRANSACTIONS. Except as disclosed in SECTION 4.08 OF THE
DISCLOSURE SCHEDULE, immediately prior to the Closing, all Indebtedness and
other amounts owing under Contracts between Seller, any officer, director or
Affiliate (other than MPC, the Company or any Subsidiary) of Seller, on the
one hand, and MPC, the Company or any of the Subsidiaries, on the other (each
an "AFFILIATE CONTRACT"), including the policy among the members of the MPC
Affiliated Group as described in SECTION 2.10(d) OF THE DISCLOSURE SCHEDULE,
will be paid in full. With respect to any Affiliate Contract disclosed in
SECTION 4.08 OF THE DISCLOSURE SCHEDULE or entered into after the date
hereof, which provides
18
for the provision of services to MPC, the Company or any Subsidiary, Seller
and MPC will, at Purchaser's election prior to the Closing Date, either (i)
terminate such Contract or cause it to be terminated, effective as of the
Closing Date, or (ii) cause such Contract to provide, effective as of the
Closing Date, that the same is terminable at the option of MPC, the Company
or the Subsidiary, as applicable, upon not more than 30 days prior notice or
such shorter period as may be provided for under the existing provisions of
such Contract.
4.09 FULFILLMENT OF CONDITIONS. Seller and MPC will take all
commercially reasonable steps necessary or desirable and proceed diligently
and in good faith to satisfy each condition to the obligations of Purchaser
contained in this Agreement and will not, and will not permit the Company or
any Subsidiary to, take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
4.10 COMPLETION OF RESTRUCTURING. Seller and MPC will use their best
efforts to cause the Restructuring to become effective prior to the Closing.
4.11 PREPARATION AND MAILING OF PROXY STATEMENT. As soon as practicable
after the date of this Agreement, MPC shall prepare and mail the Proxy
Statement to the holders of MPC capital stock entitled to vote at the meeting
of the stockholders of MPC to be called by MPC for the purpose of obtaining
the MPC Stockholders Approval (the "MPC STOCKHOLDERS' MEETING") at the
earliest practicable time following the date hereof.
4.12 APPROVAL OF MPC STOCKHOLDERS. MPC shall, through its Board of
Directors, duly call, give notice of, convene and hold the MPC Stockholders
Meeting for the purpose of voting on the approval and adoption of this
Agreement and the Restructuring (the "MPC STOCKHOLDERS' APPROVAL") as soon as
reasonably practicable after the date hereof. Subject to the following
sentence MPC shall, through its Board of Directors, include in the Proxy
Statement the recommendation of the Board of Directors of MPC that the
stockholders of MPC approve and adopt this Agreement and the Restructuring,
and shall use its best efforts to obtain such approval and adoption. The
Board of Directors of MPC shall not withdraw, amend or modify in a manner
adverse to Purchaser its recommendation referred to in the preceding sentence
(or announce publicly its intention to do so), except that such Board of
Directors shall be permitted to withdraw, amend or modify its recommendation
(or publicly announce its intention to do so) if: (i) Seller and MPC have
complied with SECTION 4.04; (ii) an unsolicited Superior Proposal shall have
been proposed by any Person other than Purchaser and such proposal is pending
at the time of such withdrawal, amendment or modification; and (iii) MPC
shall have notified Purchaser in writing of such Superior Proposal at least
three (3) Business Days in advance of such withdrawal, amendment or
modification.
4.13 COMPLETION OF THE DIVESTITURE. Seller and MPC will use their
commercially reasonable efforts to cause the Divestiture to be completed
prior to the Closing.
4.14 REGULATORY PROCEEDINGS. Seller, MPC and the Company will take
commercially reasonable steps to enable Purchaser to participate as a party
in interest in all current and future FERC proceedings and PSC proceedings,
including but not limited to, stranded costs, default supplier rules,
regional transmission organizations and electric and gas rate increase
requests. In the event that applicable rules will not allow Purchaser to so
participate in such proceedings, Seller, MPC and the Company agree to furnish
Purchaser with all documentation filed in connection therewith and to consult
and cooperate with Purchaser on an ongoing basis regarding the conduct
thereof.
4.15 SALE OF COLSTRIP 1, 2, AND 3 TRANSMISSION SYSTEM. Seller and MPC
will use their commercially reasonable efforts to consummate the sale of the
interest in the Colstrip 1, 2, and 3 Transmission System to PPL Montana LLC
for the agreed consideration of $97 million cash and the proceeds of which
will remain with, or be used for the benefit of, MPC.
19
4.16 QF CONTRACTS. Seller and MPC agree to advise, consult and
cooperate with Purchaser regarding all negotiations for the buyout or buydown
of QF contracts and promptly furnish copies to Purchaser of all new letters
of intent and definitive agreement for the buyout or buydown of QF contracts.
4.17 MPC BENEFIT RESTORATION PLANS. Seller and MPC agree that, from and
after the date of this Agreement, Seller and MPC will not allow any new
participant in the MPC Benefit Restoration Plan for Senior Executives or the
MPC Benefit Restoration Plan for Directors nor amend or modify the terms of
such plans other than to transfer participants or obligations out of such
plans to Seller or its Affiliates in a manner that results in no liability to
Purchaser.
4.18 POWER SUPPLY. Seller and MPC agree to advise, consult and
cooperate with Purchaser regarding steps to be taken to manage power supply
risks, including (i) securing power to replace that currently supplied under
the wholesale buyback agreement with PPL Montana LLC that expires on June 30,
2001, (ii) supplying MPC's residual customer load in full in the event the
PSC proceeding on default supplier rules is not resolved by June 30, 2001, or
if MPC's default supplier role is extended beyond July 1, 2002, and (iii)
securing power to serve MPC's power supply obligations to Advanced Silicon
Materials, Inc. Seller and MPC agree to take reasonable and prudent steps to
mitigate such risk, including contracting for additional power supply, and to
consult and cooperate with Purchaser in the taking of such steps.
4.19 GENERATION SALE PROCEEDS. Seller and MPC agree to maintain the net
after tax cash proceeds from the sale of generation and related assets to PPL
Montana LLC, after reduction for unrecovered regulatory assets, as cash
reserves (which as of the date hereof, shall not be less than $55,000,000)
and not to apply the same except as mandated by the PSC or FERC final order
(or if such order is appealed by the final non-appealable order of the
applicable court with jurisdiction over such appeal) on stranded cost
recovery or as otherwise consented to by Purchaser.
4.20 REGIONAL TRANSMISSION ORGANIZATION AND INDEPENDENT TRANSMISSION
COMPANY. Seller and MPC agree to advise, consult and cooperate with
Purchaser regarding all negotiations and agreements for the potential
inclusion of MPC or the Company in any Independent Transmission Company or
Regional Transmission Company or Regional Transmission Organization. Seller
and MPC agree to promptly furnish Purchaser copies of all agreements
regarding the Independent Transmission Company or Regional Transmission
Organization.
4.21 NOTIFICATION OF CERTAIN MATTERS. Seller and MPC shall give prompt
notice to Purchaser, and Purchaser shall give prompt notice to Seller and
MPC, of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate and (ii) any
failure of Seller, MPC, the Company, or any Subsidiary or Purchaser, as the
case may be, to comply with or satisfy any covenant, condition or agreement
to be completed with or satisfied by it hereunder; PROVIDED, HOWEVER, that
the delivery of any notice pursuant to this SECTION 4.21 shall not limit or
otherwise affect the remedies available hereunder to the party entitled to
receive such notice.
4.22 CONFIDENTIALITY AND STANDSTILL AGREEMENTS. From the date hereof to
the Closing Date, neither Seller, MPC, nor the Company shall terminate,
amend, modify or waive any provisions of any confidentiality or standstill
agreement relating to the Utility Business to which it is a party or by which
it is bound. During such period, Seller, MPC and the Company each shall
enforce, to the fullest extent permitted under applicable law, the provisions
of any such agreement, including but not limited to, by obtaining injunctive
relief to prevent any breaches of such agreements and to enforce specifically
the terms and provisions thereof in any court having jurisdiction.
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ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller and MPC that, at all times
from and after the date hereof until the Closing and, in the case of SECTION
5.04 and SECTION 5.07, thereafter, Purchaser will comply with all covenants
and provisions of this ARTICLE V, except to the extent Seller and MPC may
otherwise consent in writing.
5.01 REGULATORY AND OTHER APPROVALS. Purchaser will as promptly as
practicable (a) take all commercially reasonable steps necessary or desirable
to obtain all consents, approvals or actions of, make all filings with and
give all notices to Governmental or Regulatory Authorities or any other
Person required of Purchaser to consummate the transactions contemplated
hereby, including without limitation those disclosed in SCHEDULES 3.03 and
3.04 hereto, and those that may be required in connection with the
transaction structure contemplated by SECTION 5.08, (b) provide such other
information and communications to such Governmental or Regulatory Authorities
or other Persons as such Governmental or Regulatory Authorities or other
Persons may reasonably request in connection therewith and (c) provide
reasonable cooperation to Seller, the Company and the Subsidiaries in
connection with the performance of their obligations under SECTIONS 4.01 and
4.02. Purchaser will provide prompt notification to Seller when any such
consent, approval, action, filing or notice referred to in clause (a) above
is obtained, taken, made or given, as applicable, and will advise Seller of
any communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by
this Agreement.
5.02 HSR. In addition to and without limiting Purchaser's covenants
contained in SECTION 5.01, Purchaser will (i) take promptly all actions
necessary to make the filings required of Purchaser or its Affiliates under
the HSR Act, (ii) comply at the earliest practicable date with any request
for additional information received by Purchaser or its Affiliates from the
Federal Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act and (iii) cooperate with Seller in connection
with Seller's filing under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by
this Agreement commenced by either the Federal Trade Commission or the
Antitrust Division of the Department of Justice or state attorneys general.
5.03 [INTENTIONALLY OMITTED.]
5.04 EMPLOYEE MATTERS.
(a) CONTINUATION OF COMPENSATION AND BENEFITS. Except as otherwise
provided in this SECTION 5.04, during the period from the Closing Date until
twenty-four months following the Closing Date, the Purchaser will maintain,
or shall cause the Company and the Subsidiaries to maintain, base salary,
wages, compensation levels (including, without limitation, incentive
compensation or comparable cash equivalent plan) and employee pension and
welfare benefit plans and programs for the benefit of the employees of MPC,
the Company and the Subsidiaries, which, in the aggregate, are at least equal
to, or equivalent in value to, the base salary, wages, compensation levels,
and Benefit Plans listed in SECTION 2.13(a) OF THE DISCLOSURE SCHEDULE
provided to the employees of MPC, the Company and the Subsidiaries on the
date of this Agreement, plus any base salary and wage adjustments made in the
ordinary course of business between the date of this Agreement and the
Closing Date.
(b) SERVICE CREDIT. The Purchaser shall provide, or shall cause the
Company and the Subsidiaries to provide, each employee of MPC, the Company
and the Subsidiaries with credit for all service with MPC, the Company and
the Subsidiaries for all purposes under each employee benefit plan, program,
or arrangement of the Purchaser or its Affiliates in which such employee is
eligible to participate,
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except to the extent that such service credit would result in a duplication
of benefits with respect to the same period of service.
(c) BONUSES; INCENTIVE COMPENSATION. The Purchaser shall maintain, or
shall cause the Company and the Subsidiaries to maintain, the bonus plans and
other incentive compensation plans and programs maintained by Seller and/or
any of its Affiliates or comparable cash equivalent plans in which the
employees of MPC, the Company and the Subsidiaries are eligible to
participate (including terminated or retired employees) who remain eligible
to participate under the terms of such plans, as in effect on the date of
this Agreement, through the end of the calendar year in which the Closing
Date occurs, with the bonuses and incentive compensation to be paid
thereunder by Purchaser and/or its Affiliates determined (i) in accordance
with calculation methods directed by Seller, such methods to be consistent
with the terms of such incentive compensation plans in effect on the date of
this Agreement and MPC's, the Company's and the Subsidiaries' past practices,
as appropriate, and (ii) in such a manner so that the effects of the
transaction contemplated by this Agreement will not unduly burden or benefit
the employees of MPC, the Company and the Subsidiaries.
(d) SEVERANCE POLICY; OTHER AGREEMENTS. Except as disclosed in SECTION
5.04(d) OF THE DISCLOSURE SCHEDULE, if the employment of any employee of the
Company or a Subsidiary, is terminated within twenty-four months after the
Closing Date by (i) action of the Purchaser or any of its Affiliates other
than for Cause or (ii) action of an employee following (A) a reduction in
such employee's base salary equal to or greater than fifteen percent (15%) or
(B) such employee's decision not to relocate more than fifty (50) miles from
his or her then current job location, then Purchaser shall pay, or shall
cause the Company or the affected Subsidiary to pay, each such employee a
lump sum severance benefit (less required tax withholding and other
withholding obligations required by Law) in an amount equal to the sum of (x)
ten percent (10%) of such employee's base salary multiplied by such
employee's "years of service" up to a maximum of one hundred percent (100%)
of such base salary, plus (y) six thousand dollars ($6,000). For purposes of
the foregoing, "years of service" shall mean the employee's aggregate total
years of service (pro-rated to the date of termination) with MPC, the
Purchaser and any of their respective Affiliates. Notwithstanding the
foregoing, for those employees disclosed in SECTION 5.04(d) OF THE DISCLOSURE
SCHEDULE who are parties to an individual change in control severance
agreement with MPC, the terms of such agreement shall apply with respect to
any termination of such employee, and the consummation of the transaction
contemplated by this Agreement will be deemed to constitute a "Change in
Control" for purposes of each such agreement. The Purchaser shall honor, or
shall cause the Company and the Subsidiaries to honor, all such individual
change in control severance agreements with such employees, and the Purchaser
shall be liable for any amount(s) or benefit(s) due thereunder.
(e) BENEFIT PLAN OBLIGATIONS. The Purchaser shall be, or shall cause
the Company and the Subsidiaries to be, responsible for all obligations
existing on the Closing Date (including, without limitation, any such
obligations that have been incurred but not yet paid) under any Benefit Plan
(including, without limitation, all health and welfare, life insurance and
disability plans and programs) applicable to the employees and former
employees of MPC, the Company and the Subsidiaries and to certain former
employees of Affiliates of MPC, as disclosed in SECTION 5.04(e) OF THE
DISCLOSURE SCHEDULE (collectively, the "COVERED PARTICIPANTS") and their
covered dependents. Effective as of the Closing Date, Seller and its
Affiliates (other than MPC, the Company or any Subsidiary) shall have no
liability or responsibility for any obligation under any Benefit Plan
applicable to the Covered Participants and their covered dependents with
respect to claims incurred by the Covered Participants or their covered
dependents prior to the Closing Date under each Benefit Plan. Expenses and
benefits with respect to claims incurred by the Covered Participants or their
covered dependents on or after the Closing Date shall be the responsibility
of Purchaser. For purposes of this paragraph, a claim is deemed incurred when
the services that are the subject of the claim are performed; in the case of
life insurance, when the death occurs, and, in the case of short-term or
long-term disability benefits, when the disability occurs. The Purchaser
shall, or shall cause the Company and the Subsidiaries to (i) waive all
limitations
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as to preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Covered
Participants and their covered dependents under any Benefit Plan, in which
such Covered Participants and their covered dependents may be eligible to
participate after the Closing Date and (ii) provide each Covered Participant
and their covered dependents with credit for any co-payments and deductibles
paid prior to the Closing Date in satisfying any applicable deductible or
out-of-pocket requirements under any Benefit Plan in which such Covered
Participants and their covered dependents are eligible to participate after
the Closing Date.
(f) MPC 401(k) PLAN. Effective as of the Closing Date, Purchaser shall
sponsor and maintain, or shall cause the Company to sponsor and maintain, the
MPC 401(k) Plan, or a comparable Qualified Plan (with the employer
contribution being made in cash not shares), for the eligible participants
and beneficiaries (including continuing the Seller stock investment fund for
the exclusive benefit of the eligible participants and beneficiaries who had
balances in such fund on the Closing Date) for at least twenty-four months
after the Closing Date. Effective as of the Closing Date, employees of the
Seller and its Affiliates (other than MPC, the Company and the Subsidiaries)
shall cease to accrue benefits and service credits under the MPC 401(k) Plan.
To the extent Purchaser sponsors or maintains a comparable plan rather than
the MPC 401(k) Plan, such comparable plan shall provide for the acceptance of
a trust to trust transfer and rollover distributions from MPC Qualified Plans
and/or conduit individual retirement accounts established by such
participants and beneficiaries.
(g) MPC PENSION PLAN. Effective as of the Closing Date, Purchaser shall
sponsor and maintain, or shall cause the Company to sponsor and maintain, the
Montana Power Company Pension Plan (the "MPC PENSION PLAN"), or a comparable
plan, for eligible participants and beneficiaries for at least twenty-four
months after the Closing Date. Effective as of the Closing Date, employees of
the Seller and its Affiliates (other than MPC, the Company and the
Subsidiaries) shall cease to accrue benefits under the MPC Pension Plan.
(h) SUPPLEMENTAL RETIREMENT PLANS. Except as disclosed in SECTION
5.04(h) OF THE DISCLOSURE SCHEDULE, effective as of the Closing Date the
Purchaser shall maintain and shall be responsible for, or shall cause the
Company and the Subsidiaries to maintain and be responsible for, all current
and future obligations of MPC, the Company and the Subsidiaries under any
supplemental pension benefit or benefit replacement or restoration plan,
program or individual arrangement maintained by MPC, the Company and the
Subsidiaries as in effect on the Closing Date.
(i) STOCK OPTION OBLIGATION. On the Closing Date, each unvested stock
option on MPC common stock issued under any plan or program of MPC or its
Affiliates under which the employees of MPC, the Company and the Subsidiaries
have previously been awarded stock options on MPC common stock (an "MPC STOCK
OPTION") shall be cancelled, and the holder thereof shall be entitled to
receive on the Closing Date or as soon as practicable thereafter, from the
Purchaser as consideration for such cancellation, either (i) stock options of
substantially equivalent value ("SUBSTITUTE STOCK OPTIONS") to such holder's
MPC Stock Options (with Seller reserving reasonable discretion to determine
whether such Substitute Stock Options are of "substantially equivalent
value"), or (ii) an amount in cash (less required tax withholding and other
withholding obligations required by Law) equal to the product of (x) the
number of shares previously subject to such MPC Stock Option and (y) the
excess, if any, of the market price per share (the average of the high and
low prices of the underlying MPC common stock as reported on the
New York
Stock Exchange Composite Tape on the Closing Date) over the exercise price
per share of the cancelled MPC Stock Option; PROVIDED, HOWEVER, that if the
Purchaser provides Substitute Stock Options in accordance with (i) of this
paragraph, then the Purchaser shall pay, or shall cause the Company or the
Subsidiaries to pay, in cash to any employee of MPC, the Company and the
Subsidiaries who receives Substitute Stock Options, but whose employment
terminates before such Substitute Stock Options vest under circumstances that
would entitle the employee to the benefit described in SECTION 5.04(d), the
amount computed under (ii) above as of the Closing Date.
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(j) RETIREE BENEFITS. Except as disclosed in SECTION 5.04(j) OF THE
DISCLOSURE SCHEDULE, effective as of the Closing Date, the Purchaser shall
maintain and shall be responsible for, or shall cause the Company and the
Subsidiaries to maintain and be responsible for, all current and future
obligations of MPC, the Company and the Subsidiaries with respect to (i) any
post-retirement health or welfare benefit plan, program or arrangement
maintained by MPC, the Company and the Subsidiaries as in effect on the
Closing Date and (ii) the utility discount provided to certain retired
employees and certain other employees, as disclosed in SECTION 5.04(j) OF THE
DISCLOSURE SCHEDULE, of MPC, the Company and the Subsidiaries. The post
retirement health and welfare benefits described in (i) above shall be
continued for their full terms as provided in the applicable plan, program or
arrangement as in effect on the Closing Date, and the utility discount
described in (ii) above shall be continued at least until residential
customer choice for electric and natural gas utility service is fully
implemented in Montana.
(k) COLLECTIVE BARGAINING AGREEMENTS. The wages, compensation levels
and employee pension and welfare benefit plans and programs for the benefit
of employees of MPC, the Company and the Subsidiaries who are covered by a
collective bargaining agreement shall be governed by the terms of such
collective bargaining agreement, except (i) to the extent that an employee is
eligible for the benefits provided under SECTION 5.04(c) and/or SECTION
5.04(d)and (ii) SECTION 5.04(b) shall apply with respect to all such
employees. To the extent that the terms or provisions of any such collective
bargaining agreement conflict with any of the terms or provisions of this
Agreement, the terms or provisions of the collective bargaining agreement
shall govern.
(l) CONTINUING OBLIGATION. If the Purchaser sells or otherwise disposes
of all or substantially all of the stock or assets of the Company within
twenty-four months of the Closing Date, or such other longer time period as
may be applicable to any individual change in control severance agreement,
the Purchaser shall, in connection with such disposition cause the transferee
of such stock or assets to honor the provisions of this SECTION 5.04 until
twenty-four months after the Closing Date, or such other longer time period
as may be applicable under any individual change in control severance
agreement.
5.05 FULFILLMENT OF CONDITIONS. Purchaser will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good
faith to satisfy each condition to the obligations of Seller contained in
this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
5.06 COMMUNICATION BETWEEN THE PARTIES. If Purchaser develops
information prior to the Closing Date that leads Purchaser to believe that
Seller has breached a representation or warranty under this Agreement,
Purchaser shall inform Seller of such potential breach as soon as possible,
but in any event, at or prior to Closing.
5.07 CHARITABLE CONTRIBUTIONS. During the period from the Closing Date
until twenty-four months following the Closing Date, Purchaser shall, or
shall cause the Company and the Subsidiaries to, continue to provide
charitable contributions or other financial support for non-profit
organizations and educational institutions as disclosed in SECTION 5.07 OF
THE DISCLOSURE SCHEDULE, in amounts substantially comparable to MPC's past
practices as set forth in SECTION 5.07 OF THE DISCLOSURE SCHEDULE taking into
account the Restructuring and the Divestiture.
5.08 TRANSACTION STRUCTURE. Purchaser may determine, in its discretion,
to obtain the approval of the SEC under the 1935 Act, or to make the
requisite filing within the SEC under Rule 2 of the 1935 Act, to consummate
the transactions contemplated by this Agreement pursuant to an exempt holding
company structure under the 1935 Act.
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ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Units are subject
to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by
Purchaser in its sole discretion):
6.01 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Seller and MPC in this Agreement shall be true and correct on and as
of the Closing Date as though made on and as of the Closing Date or, in the
case of representations and warranties made as of a specified date earlier
than the Closing Date, on and as of such earlier date; except for such
failures of representations and warranties to be true and correct (without
regard to any materiality qualifier therein) that, individually or in the
aggregate, could not result in a material adverse effect to the Business or
Condition of MPC and the Company.
6.02 PERFORMANCE. Seller and MPC shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Seller and
MPC at or before the Closing.
6.03 OFFICERS' CERTIFICATES. Seller shall have delivered to Purchaser a
certificate, dated the Closing Date and executed in the name and on behalf of
Seller by the Chairman of the Board, the President or any Executive or Senior
Vice President of Seller, substantially in the form and to the effect of
EXHIBIT A hereto, and a certificate, dated the Closing Date and executed by
the Secretary or any Assistant Secretary of Seller, substantially in the form
and to the effect of EXHIBIT B hereto.
6.04 ORDERS AND LAWS. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
6.05 REGULATORY CONSENTS AND APPROVALS. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory
Authority set forth in SCHEDULES 3.03 and 3.04 necessary to permit Purchaser
and Seller to perform their obligations under this Agreement and to
consummate the transactions contemplated hereby, other than those referred to
in SECTION 5.08, shall have been duly obtained, made or given and shall be in
full force and effect, and all terminations or expirations of waiting periods
imposed by any Governmental or Regulatory Authority necessary for the
consummation of the transactions contemplated by this Agreement, including
under the HSR Act, shall have occurred.
6.06 THIRD PARTY CONSENTS. The consents (or in lieu thereof waivers)
listed in SECTION 6.06 OF THE DISCLOSURE SCHEDULE shall have been obtained
and shall be in full force and effect.
6.07 COMPLETION OF THE RESTRUCTURING. The Restructuring shall have been
completed.
6.08 ASSIGNMENT OF CONTRACTS. All rights and obligations under those
Contracts listed on SCHEDULE 6.08 hereto shall have been duly and validly
assigned to the Company or the Subsidiaries by MPC and any required third
party consents shall have been obtained.
6.09 BENEFITS PLANS. All Benefits Plans listed on SCHEDULE 6.09 OF THE
DISCLOSURE SCHEDULE hereto shall either have been terminated to the
satisfaction of Purchaser or transferred to Seller in a manner that results
in no liability to Purchaser.
6.10 RESIGNATION OF SELLER AS MANAGER OF THE COMPANY. Immediately prior
to Closing, Seller shall have resigned as manager of the Company.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder to sell the Units are subject to the
fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by Seller in its sole
discretion):
7.01 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Purchaser in this Agreement, taken as a whole, shall be true and
correct in all material respects on and as of the Closing Date as though made
on and as of the Closing Date.
7.02 PERFORMANCE. Purchaser shall have performed and complied with, in
all material respects, the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Purchaser at or before
the Closing.
7.03 OFFICERS' CERTIFICATES. Purchaser shall have delivered to Seller a
certificate, dated the Closing Date and executed in the name and on behalf of
Purchaser by the Chairman of the Board, the President or any Executive or
Senior Vice President of Purchaser, substantially in the form and to the
effect of EXHIBIT C hereto, and a certificate, dated the Closing Date and
executed by the Secretary or any Assistant Secretary of Purchaser,
substantially in the form and to the effect of EXHIBIT D hereto.
7.04 ORDERS AND LAWS. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
7.05 REGULATORY CONSENTS AND APPROVALS. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory
Authority set forth in SECTIONS 2.06 AND 2.07 OF THE DISCLOSURE SCHEDULE
necessary to permit Seller and Purchaser to perform their obligations under
this Agreement and to consummate the transactions contemplated hereby shall
have been duly obtained, made or given and shall be in full force and effect,
and all terminations or expirations of waiting periods imposed by any
Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement, including under the HSR Act,
shall have occurred.
7.06 THIRD PARTY CONSENTS. The consents (or in lieu thereof waivers)
listed in SECTION 7.06 OF THE DISCLOSURE SCHEDULE shall have been obtained
and shall be in full force and effect.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 TAX RETURNS. (a) Seller and MPC will include the income of the
Company and the Subsidiaries (including any deferred income triggered into
income by Treas. Reg. section 1.1502-13 and any excess loss accounts taken
into account under Treas. Reg. section 1.1502-19) on Seller's or MPC's
consolidated, combined or unitary federal or state or local Tax Returns for
all periods through the Closing Date. Seller shall prepare or cause to be
prepared and file or caused to be filed all Tax Returns for MPC, the Company
and the Subsidiaries for all periods ending on or prior to the Closing Date
which are filed after the Closing Date in accordance with past custom and
practice. The Company and the Subsidiaries will furnish Tax information to
Seller for inclusion in the relevant Tax Returns in accordance with the past
custom and practice of MPC, the Company and the Subsidiaries. Seller shall
pay all amounts shown as owing on such Tax Returns, and shall be liable for
all such Taxes for periods ending on or prior to the Closing Date.
(b) Purchaser shall prepare or cause to be prepared and Purchaser shall
file or cause to be filed any Tax Returns of MPC, the Company and the
Subsidiaries for Tax periods which begin before the Closing Date and end
after the Closing Date in accordance with past custom and practice. Purchaser
will allow Seller an opportunity to review and comment upon such Tax Returns
(including any amended
26
returns) to the extent that they relate to MPC, the Company and the
Subsidiaries. Purchaser will take no position on such Tax Returns that relate
to MPC, the Company and the Subsidiaries that would materially adversely
affect Seller after the Closing Date without the prior written consent of
Seller. Seller will furnish Tax information to Purchaser for inclusion in the
relevant Tax Returns in accordance with the past custom and practice of MPC,
the Company and the Subsidiaries. Seller shall pay to Purchaser within
fifteen Business Days after the date on which Taxes are paid with respect to
such periods an amount equal to the portion of the amounts shown as owing on
such Tax Returns which relates to the portion of such Tax period ending on
the Closing Date to the extent such amounts are not reflected in a reserve
(other than any reserve for deferred Taxes established to reflect timing
differences between book and Tax) for tax liability on MPC's, the Company's
or the Subsidiaries' financial statements made available to the Purchaser
pursuant to SECTION 2.09(ii) or SECTION 4.06 hereof. For purposes of this
Section, in the case of any Taxes that are imposed on a periodic basis and
are payable for a Tax period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Tax period
ending on the Closing Date shall (x) in the case of any Taxes other than
Income Taxes, be deemed to be the amount of such Tax for the entire Tax
period multiplied by a fraction, the numerator of which is the number of days
in the Tax period ending on the Closing Date and the denominator of which is
the number of days in the entire Tax period, and (y) in the case of any
Income Tax, be deemed to be equal to the amount which would be payable if the
relevant Tax period ended on the Closing Date. Any credits relating to a Tax
period that begins before and ends after the Closing Date shall be taken into
account as though the relevant Tax period ended on the Closing Date. All
determinations necessary to give effect to the foregoing allocations shall be
made by Purchaser in a manner consistent with prior practice of MPC, the
Company and the Subsidiaries. Seller shall be liable for Taxes of MPC, the
Company and the Subsidiaries which are attributable to periods ending on or
prior to the Closing Date pursuant to this SECTION 8.01(b) to the extent such
Taxes are not reflected in a reserve (other than any reserve for deferred
Taxes established to reflect timing differences between book and Tax) for tax
liability on MPC's, the Company's or the Subsidiaries' financial statements
made available to the Purchaser pursuant to SECTION 2.09(ii) or SECTION 4.06
hereof. Purchaser shall be liable for Taxes of the Company and the
Subsidiaries which are attributable to periods after the Closing Date
pursuant to this SECTION 8.01(b).
(c) As soon as reasonably practicable after the signing of this
Agreement, Seller will deliver to Purchaser true and correct copies of the
federal Income Tax workpapers of the Subsidiaries, Income Tax Returns of the
Subsidiaries filed on a stand alone basis within any State, and the Canadian
Income Tax Returns of CMPL, each with respect to the Tax periods from 1997
through 1999.
8.02 NOTICE OF AUDIT. Seller and Purchaser agree that if any of them
receives any notice of an audit or examination from any Governmental or
Regulatory Authority with respect to Taxes of MPC, the Company, or the
Subsidiaries for any taxable period or portion thereof ending on or prior to
the Closing Date, then the recipient of such notice shall, within ten days of
the receipt thereof, notify and provide copies of such notice to the other
party, as the case may be, in accordance with the notice provisions of
SECTION 13.01.
8.03 TAX ADJUSTMENTS. (a) Any Tax refunds that are received by
Purchaser or MPC, Seller, the Company or any Subsidiary, and any amounts
credited against Tax to which Purchaser or MPC, Seller, the Company or any
Subsidiary become entitled, that relate to Tax periods or portions thereof
ending on or before the Closing Date shall be for the account of Seller, and
Purchaser shall pay over to Seller any such refund or the amount of any such
credit within fifteen days after receipt or entitlement thereto. In addition,
to the extent that a claim for refund or a proceeding results in a payment or
credit against Tax by a taxing authority to Purchaser or MPC, Seller, the
Company or any Subsidiary of any amount accrued on MPC's, Seller's, the
Company's or any Subsidiary's financial statements made available to
Purchaser pursuant to SECTION 2.09(a)(ii) or SECTION 4.06 hereof, Purchaser
shall pay such amount to Seller within fifteen days after receipt or
entitlement thereto.
27
(b) Any increase in Tax liability of MPC, the Company or any Subsidiary
which is the responsibility of Seller under the provisions of SECTION 8.01(a)
or SECTION 8.01(b) shall be paid by Seller to Purchaser or the relevant
Governmental or Regulatory Authority as appropriate. Seller has the right to
control the handling and disposition of the audit and any related
administrative or court proceeding which might give rise to such increase in
Tax liability of MPC, the Company or any Subsidiary; PROVIDED, HOWEVER, that
the Seller will not enter into any compromise or agreement to settle any Tax
claim pursuant to a Tax audit or proceeding which could reasonably be
expected to have a material adverse effect on Purchaser, the Company, MPC, or
the Subsidiaries for any post Closing period without the prior written
consent of Purchaser (which shall not be unreasonably withheld). Purchaser
shall, and shall cause the Company and the Subsidiaries to, cooperate fully
with Seller with respect to the handling and disposition of any such audit or
related administrative or court proceeding.
(c) Any increase or decrease in Taxes of MPC, the Company or any
Subsidiary resulting from adjustments made for periods after the Closing Date
shall be for the account of Purchaser.
8.04 TAX SHARING AGREEMENTS. All tax sharing agreements or similar
agreements with respect to or involving MPC, the Company or the Subsidiaries
shall be terminated as of the Closing Date and, after the Closing Date, MPC,
the Company and the Subsidiaries shall not be bound thereby or have any
liability thereunder.
8.05 TRANSFER TAXES. All transfer, documentary, sales, use, stamp,
registration, and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by
Purchaser when due, and Purchaser will, at its own expense, file all
necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees, and, Seller will, if necessary, join in the execution of any such Tax
Returns and other documentation.
8.06 POST-CLOSING ELECTIONS. At Seller's request, the Purchaser will
cause the Company and its Subsidiaries to make and/or join with Seller in
making any tax election if the making of such election does not have a
material adverse impact on the Purchaser, the Company or the Subsidiaries for
any post-acquisition period.
8.07 POST-CLOSING TRANSACTIONS NOT IN THE ORDINARY COURSE. Purchaser
and Seller agree to report all transactions not in the ordinary course of
business occurring on the Closing Date after Purchaser's purchase of the
Units of the Company on Purchaser's federal income tax return to the extent
permitted by Treas. Reg. section 1.1502-76(b)(1)(B).
8.08 ALLOCATION OF PURCHASE PRICE. (a) To the extent that Purchaser and
Seller make a Code section 338(h)(10) election (and any corresponding
elections under state, local or foreign Tax Law) as provided in SECTION 8.09
of this Agreement, Purchaser and Seller shall cooperate fully with each other
in the making of such election. In particular, and not by way of limitation,
Purchaser shall, within 150 days of the Closing Date, prepare for Seller's
review Internal Revenue Service Form 8023, any attachments to be filed
therewith, and an allocation of the purchase price attributable thereto, all
in accordance with applicable Laws. Upon Seller's approval (which shall not
be unreasonably withheld or delayed), Purchaser and Seller shall jointly
execute such form. Purchaser, Seller, MPC, the Company and the Subsidiaries
will file all Tax Returns (including all amended returns and claims for
refund) and information reports in a manner consistent with such form.
(b) Purchaser shall, within 150 days of the Closing Date, prepare for
Seller's review Internal Revenue Service Form 8594, and any attachments to be
filed therewith, in accordance with applicable Laws. Upon Seller's approval
(which shall not be unreasonably withheld), Purchaser and Seller shall each
file such Form 8594 with their Income Tax Returns for the year in which
Closing occurs. Purchaser, Seller, MPC, the Company and the Subsidiaries will
file all Tax Returns (including all
28
amended returns and claims for refund) and information reports in a manner
consistent with the allocation contained on such Form 8594.
8.09 SECTION 338(H)(10) ELECTION. At Purchaser's option (which must be
exercised by written notice to Seller on or before the Closing Date) Seller
will join with Purchaser in making an election under Code Section 338(h)(10)
(and any corresponding elections under state, local, or foreign tax law) with
respect to the purchase and sale of the stock of any of the Subsidiaries
hereunder (other than CMPL).
8.10 SECTION 338(G) ELECTION. At Purchaser's option, Purchaser shall
make an election under Code Section 338(g) (and any corresponding election
under state, local, or foreign tax law) with respect to the purchase of the
stock of CMPL hereunder.
8.11 NONFOREIGN AFFIDAVIT. Seller shall furnish Purchaser an affidavit,
stating under penalty of perjury, the transferor's United States taxpayer
identification number and that the transferor is not a foreign person
pursuant to Code Section 1445(b)(2).
8.12 CODE SECTION 754 ELECTION. At Purchaser's request, with respect to
any interest in a Person that is taxed as a partnership for federal Income
Tax purposes (a "Partnership") that Purchaser acquires hereunder, Seller
agrees to cause any such Partnership (if Seller has control over such
Partnership) to make a Code section 754 election for the Tax period in which
the purchase of the Units occurs.
ARTICLE IX
SURVIVAL; NO OTHER REPRESENTATIONS
9.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Except as otherwise set forth herein, the representations, warranties,
covenants and agreements contained in this Agreement shall not survive
Closing and there shall be no liability in respect thereof, whether such
liability has accrued prior to the Closing Date or after the Closing Date, on
the part of either party or its officers, directors, employees, agents and
Affiliates. This Section shall not limit in any way the survival and
enforceability of any covenant or agreement of the parties hereto which by
its terms contemplates performance after the Closing Date, which shall
survive for the respective periods set forth herein.
9.02 NO OTHER REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the explicit intent of each party hereto
that neither Seller, MPC nor anyone on their behalf, including its advisor
Xxxxxxx, Xxxxx & Co. is making any representation or warranty whatsoever,
express or implied, except any representation or warranty contained in
ARTICLE II and in any certificate delivered pursuant to SECTION 6.03. In
particular, neither Seller nor MPC makes any representation or warranty to
Purchaser with respect to (i) the information set forth in the Confidential
Offering Memorandum dated May 2000 prepared by Xxxxxxx, Sachs & Co. or (ii)
any financial projection or forecast relating to the Business or Condition of
MPC and the Company. With respect to any projection or forecast delivered by
or on behalf of Seller or MPC to Purchaser, Purchaser acknowledges that (i)
there are uncertainties inherent in attempting to make such projections and
forecasts, (ii) it is familiar with such uncertainties, (iii) it is taking
full responsibility for making its own evaluation of the adequacy and
accuracy of all such projections and forecasts furnished to it and (iv) it
shall have no claim against Seller with respect thereto.
ARTICLE X
INDEMNIFICATION
10.01 TAX INDEMNIFICATION.
(a) Seller agrees to indemnify, defend and hold harmless, Purchaser, any
Affiliate of Purchaser and their officers, directors, employees,
stockholders, representatives and agents, including after the
29
Closing Date, the Company, and the Subsidiaries (collectively "PURCHASER
INDEMNITEES") from and against any Adverse Consequences the Purchaser
Indemnitees may suffer resulting from, arising out of, or relating to any
liability of Seller, the Company, MPC, and the Subsidiaries (x) for any Taxes
of the Seller, the Company, MPC and any member of the MPC Affiliated Group
(other than the Subsidiaries) and for any Taxes of the Subsidiaries, with
respect to any Tax year or portion thereof ending on or before the Closing
Date (or for any Tax year beginning before and ending after the Closing Date
to the extent allocable (determined in a manner consistent with SECTION
8.01(b)) to the portion of such period beginning before and ending on the
Closing Date), and (y) for the unpaid Taxes of any Person under Treas. Reg.
Section 1.1502-6.
(b) Purchaser agrees to indemnify Seller, and their officers, directors,
employees, stockholders, representatives and agents (the "SELLER
INDEMNITEES"), from and against any Adverse Consequences Seller Indemnitees
may suffer resulting from, arising out of, or relating to, any liability of
Seller for any Taxes of Purchaser, the Company and the Subsidiaries with
respect to any Tax year or portion thereof after the Closing Date (or for any
Tax year beginning before and ending after the Closing Date to the extent
allocable (determined in a manner consistent with SECTION 8.01(b)), to the
portion of such period ending after the Closing Date.
(c) The obligations of Seller and Purchaser under this SECTION 10.01
shall survive until the expiration of the applicable statute of limitations.
10.02 INDEMNIFICATION FOR RESTRUCTURING; DIVESTITURE; OIL AND GAS SALE.
(a) Seller agrees to indemnify Purchaser Indemnitees in respect of and hold
each of them harmless from and against any Adverse Consequences suffered,
incurred or sustained by any of them and resulting from, arising out of or
relating to (i) the Restructuring and/or the Divestiture, (ii) any aspect of
the business of Seller (other than the Company and the Subsidiaries) or (iii)
regulatory requirements with respect to the use of the proceeds of the Oil
and Gas Sale. Seller's obligations under this SECTION 10.02 shall survive
indefinitely.
(b) To the extent such amount is not paid prior to Closing, Seller agrees
to indemnify Purchaser Indemnitees in respect of and hold each of them
harmless with respect to the amount of $3,894,823 set forth on PP&L Montana,
LLC's Invoice Number 82200, dated September 25, 2000 relating to the
Wholesale Transmission Services Agreement.
10.03 OTHER INDEMNIFICATION. Subject to the other Sections of this
ARTICLE X, Purchaser shall indemnify the Seller and its directors, officers,
employees and agents in respect of, and hold each of them harmless from and
against, any and all Adverse Consequences suffered, incurred or sustained by
any of them or of or relating to MPC, the Company and the Subsidiaries
resulting from or arising out of the operation of the business of MPC, the
Company and the Subsidiaries from and after Closing (including, without
limitation, Adverse Consequences arising out of or relating to any
Environmental Law); PROVIDED, HOWEVER, that such indemnity shall not apply
until the total amount of such Adverse Consequences shall exceed $1,000,000
at which time the entire amount of all such Adverse Consequences shall be
indemnified hereunder.
10.04 SPECIAL ENVIRONMENTAL INDEMNITY. Seller shall indemnify, defend
and hold harmless Purchaser Indemnitees against any Adverse Consequences
which Purchaser Indemnitees may suffer, sustain, or become subject to,
resulting from or arising out of: any claims, damages, liabilities, taxes,
injuries to Persons, property or natural resources, fines, penalties, costs
and expenses, including without limitation, settlement costs and reasonable
legal, accounting or other expert fees and costs, incurred in connection with
investigating or defending any action (an "ENVIRONMENTAL LOSS") sustained or
required to be paid by reason of, or arising out of or caused by any act or
omission occurring, or condition existing, on or prior to the Closing Date
which related directly or indirectly to the business or operations or
facilities (past or present) of MPC, the Company or its Subsidiaries, and
which relate to a violation of or liability to pay costs, penalties, fines or
damages under Environmental Laws; PROVIDED,
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HOWEVER, that such indemnity shall be subject to the following: (i) it shall
not apply until the total amount of such Environmental Loss exceeds
$50,000,000; (ii) after the first $50,000,000 of Environmental Loss, Seller
shall be liable for the next $25,000,000 of Environmental Loss; (iii) Seller
shall be liable for 50% of all Environmental Loss in excess of $75,000,000 in
the aggregate; and (iv) in no event shall Seller's obligations under this
SECTION 10.04 exceed $100,000,000. Seller's obligations under this SECTION
10.04 shall survive for a period of five years from the Closing Date.
10.05 SPECIAL LITIGATION INDEMNITY. Seller shall indemnify, defend and
hold harmless Purchaser Indemnitees against and pay on behalf of or reimburse
Purchaser Indemnitees as and when incurred for any Adverse Consequences which
Purchaser Indemnitees may suffer, sustain or become subject to, resulting
from or arising out of those matters set forth on SCHEDULE 10.05 hereto.
Seller's obligations under this SECTION 10.05 shall survive indefinitely.
Purchaser agrees that it will make any employees of the Company or the
Subsidiaries connected to the matters set forth in SCHEDULE 10.05 reasonably
available to Seller, upon Seller's reasonable request and at Seller's sole
expense, for the purposes of defending the matters set forth in this SECTION
10.05.
10.06 METHOD OF ASSERTING CLAIMS. All claims for indemnification by any
Indemnified Party under this ARTICLE X will be asserted and resolved as
follows:
(a) In the event any claim or demand in respect of which an Indemnified
Party might seek indemnity under this ARTICLE X is asserted against or sought
to be collected from such Indemnified Party by a Person other than Seller or
any Affiliate of Seller or of Purchaser (a "THIRD PARTY CLAIM"), the
Indemnified Party shall deliver a Claim Notice with reasonable promptness to
the Indemnifying Party. The Indemnifying Party will notify the Indemnified
Party as soon as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party under this
ARTICLE X and whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant to this
SECTION 10.06(A), then the Indemnifying Party will have the right to defend,
at the sole cost and expense of the Indemnifying Party, such Third Party
Claim by all appropriate proceedings, which proceedings will be vigorously
and diligently prosecuted by the Indemnifying Party to a final conclusion or
will be settled at the discretion of the Indemnifying Party (but only with
the consent of the Indemnified Party, which consent will not be unreasonably
withheld, in the case of any settlement that provides for any relief other
than the payment of monetary damages as to which the Indemnified Party will
be indemnified in full). The Indemnifying Party will have full control of
such defense and proceedings, including (except as provided in the
immediately preceding sentence) any settlement thereof and shall keep the
Indemnified Party informed of all material developments relating to such
proceedings; PROVIDED, HOWEVER, that if requested by the Indemnifying Party,
the Indemnified Party will, at the sole cost and expense of the Indemnifying
Party, cooperate with the Indemnifying Party and its counsel in contesting
any Third Party Claim that the Indemnifying Party elects to contest, or, if
appropriate and related to the Third Party Claim in question, in making any
counterclaim against the Person asserting the Third Party Claim, or any
cross-complaint against any Person (other than the Indemnified Party or any
of its Affiliates). The Indemnified Party may retain separate counsel to
represent it in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to this
clause (i), and the Indemnified Party will bear its own costs and expenses
with respect to such separate counsel except as provided in the preceding
sentence and except that the Indemnifying Party will pay the costs and
expenses of such separate counsel if (x) in the Indemnified Party's good
faith judgment, it is advisable, based on advice of counsel, for the
Indemnified Party to be represented by separate counsel because a conflict
or potential conflict exists between the Indemnifying Party and the
Indemnified Party or (y) the named parties to such
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Third Party Claim include both the Indemnifying Party and the Indemnified
Party and the Indemnified Party determines in good faith, based on advice of
counsel, that defenses are available to it that are unavailable to the
Indemnifying Party. Notwithstanding the foregoing, the Indemnified Party may
retain or take over the control of the defense or settlement of any Third
Party Claim the defense of which the Indemnifying Party has elected to
control if the Indemnified Party irrevocably waives its right to indemnity
under this ARTICLE X with respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Third Party Claim pursuant to SECTION 10.06(a), then the Indemnified Party
will have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate proceedings,
which proceedings will be vigorously and diligently prosecuted by the
Indemnified Party to a final conclusion or will be settled at the discretion
of the Indemnified Party (with the consent of the Indemnifying Party, which
consent will not be unreasonably withheld). The Indemnified Party will have
full control of such defense and proceedings, including (except as provided
in the immediately preceding sentence) any settlement thereof; PROVIDED,
HOWEVER, that if requested by the Indemnified Party, the Indemnifying Party
will, at the sole cost and expense of the Indemnifying Party, cooperate with
the Indemnified Party and its counsel in contesting any Third Party Claim
which the Indemnified Party is contesting, or, if appropriate and related to
the Third Party Claim in question, in making any counterclaim against the
Person asserting the Third Party Claim, or any cross-complaint against any
Person (other than the Indemnifying Party or any of its Affiliates).
Notwithstanding the foregoing provisions of this clause (ii), if the
Indemnifying Party has notified the Indemnified Party within the Dispute
Period that the Indemnifying Party disputes its liability hereunder to the
Indemnified Party with respect to such Third Party Claim and if such dispute
is resolved in favor of the Indemnifying Party in the manner provided in
clause (iii) below, the Indemnifying Party will not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this
clause (ii) or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party will reimburse the
Indemnifying Party in full for all reasonable costs and expenses incurred by
the Indemnifying Party in connection with such litigation. The Indemnifying
Party may retain separate counsel to represent it in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
clause (ii), and the Indemnifying Party will bear its own costs and expenses
with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its liability to the Indemnified Party with respect to the
Third Party Claim under this ARTICLE X or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes its
liability to the Indemnified Party with respect to such Third Party Claim,
the Adverse Consequences arising from such Third Party Claim will be
conclusively deemed a liability of the Indemnifying Party under this
Article X and the Indemnifying Party shall pay the amount of such Adverse
Consequences to the Indemnified Party on demand following the final
determination thereof. If the Indemnifying Party has timely disputed its
liability with respect to such claim, the Indemnifying Party and the
Indemnified Party will proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through negotiations within the Resolution
Period, such dispute shall be resolved by litigation in a court of competent
jurisdiction.
(iv) Notwithstanding any other provision of this SECTION 10.06(a) to the
contrary, Purchaser shall have the right to defend all Third Party Claims
covered by SECTION 10.04, by all appropriate proceedings, which proceedings
will be vigorously and diligently prosecuted by Purchaser to a final
conclusion or will be settled at the discretion of Purchaser (but only with
the consent of Seller, which consent will not be unreasonably withheld, in
the case of any settlement that provides for any relief involving Seller
other than the payment of monetary damages). Purchaser will have full
32
control of such defense and proceedings, including (except as provided in
the immediately preceding sentence) any settlement thereof, and shall keep
Seller informed of all material developments relating to such proceedings.
Seller may retain separate counsel to represent it in, but not control, any
defense or settlement of any Third Party Claim controlled by Purchaser
pursuant to this SECTION 10.06(a)(iv) and Seller will bear its own costs and
expenses with respect to such counsel.
(b) In the event any Indemnified Party should have a claim under this
ARTICLE X against any Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim described
in such Indemnity Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the claim described in
such Indemnity Notice, the Adverse Consequences arising from the claim
specified in such Indemnity Notice will be conclusively deemed a liability of
the Indemnifying Party under this ARTICLE X and the Indemnifying Party shall
pay the amount of such Adverse Consequences to the Indemnified Party on
demand following the final determination thereof. If the Indemnifying Party
has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute shall be resolved by
litigation in a court of competent jurisdiction.
(c) In the event of any claim for indemnity under this ARTICLE X, each
party agrees to give reasonable access to its Books and Records and employees
in connection with the matters for which indemnification is sought to the
extent a party reasonably deems necessary in connection with its rights and
obligations under this ARTICLE X.
10.07 REQUIREMENTS FOR INDEMNITY. Notwithstanding anything to the
contrary contained in this Agreement, no amounts of indemnity shall be
payable as a result of any claim in respect of any and all Adverse
Consequences arising under this ARTICLE X, (a) unless the Indemnified Party
has given the Indemnifying Party a Claim Notice or Indemnity Notice, as
applicable, with respect to such claim, setting forth in reasonable detail
the specific facts and circumstances pertaining thereto, (i) as soon as
practical following the time at which an officer of the Indemnified Party
discovered or reasonably should have discovered such claim and (ii) in any
event prior to the applicable Cut-off Date, and (b) to the extent that the
Indemnified Party had a reasonable opportunity, but failed, in good faith to
mitigate the Adverse Consequences, including but not limited to the failure
to use commercially reasonable efforts to recover under a policy of insurance
or under a contractual right of set-off or indemnity.
10.08 EXCLUSIVITY. After the Closing, to the extent permitted by Law,
the indemnities set forth in this ARTICLE X shall be the exclusive remedies
of Purchaser and Seller and their respective officers, directors, employees,
agents and Affiliates for any misrepresentation, breach of warranty or
nonfulfillment or failure to be performed of any covenant or agreement
contained in this Agreement, and the parties shall not be entitled to a
rescission of this Agreement or to any further indemnification rights or
claims of any nature whatsoever in respect thereof, all of which the parties
hereto hereby waive.
ARTICLE XI
TERMINATION
11.01 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Closing, whether prior to or after the MPC Stockholders' Approval:
(a) by mutual written agreement of Seller, MPC and Purchaser;
33
(b) by Seller, MPC or Purchaser, in the event that any Order or Law
becomes effective, and is non-appealable, restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement, upon notification of the non-terminating
party by the terminating party;
(c) by Seller, MPC or Purchaser if the MPC Stockholders' Approval shall
not be obtained by reason of the failure to obtain the requisite vote upon a
vote actually held at the MPC Stockholders' Meeting;
(d) by Seller, MPC or Purchaser (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material breach
of any of the representations, warranties, covenants or other agreements
contained in this Agreement on the part of the other party, which breach
either (i) is not cured with fifteen (15) days following written notice by
the terminating party to the party committing such breach, or (ii) by its
nature, cannot be cured prior to March 31, 2002;
(e) at any time after March 31, 2002, by Seller, MPC or Purchaser upon
notification of the non-terminating party by the terminating party if the
Closing shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the terminating
party;
(f) by Purchaser if (i) the Board of Directors of MPC shall have (A)
failed to recommend, or withdrawn, modified or amended in any respect adverse
to Purchaser its approval or recommendation of, this Agreement or the
transactions contemplated herein or resolved to do so, or (B) approved or
recommended a Superior Proposal from a Person (other than Purchaser) or
resolved to do so, or (ii) Seller or MPC breaches any of its agreements in
SECTION 4.04, SECTION 4.11 or SECTION 4.12; or
(g) by Seller or MPC (but only prior to adoption of the MPC Stockholders'
Approval), if the Board of Directors of MPC, by majority vote, shall have
determined that an Acquisition Proposal constitutes a Superior Proposal;
provided that, (i) MPC shall have provided to Purchaser three (3) Business
Days' notice of its intention to terminate this Agreement pursuant to this
SECTION 11.01(g) (which notice shall include the most current version of the
agreement to be entered into in connection with the Superior Proposal (or a
description of all of the material terms and conditions thereof)), (ii) MPC
has complied with the provisions of SECTION 4.04, SECTION 4.11 and SECTION
4.12, (iii) the Superior Proposal is pending at the time of such termination,
(iv) the Board of Directors shall have determined in good faith, after giving
effect to all concessions and modifications which may be offered by Purchaser
pursuant to clause (v) below, and after consultation with its financial
advisors and outside legal counsel, that such proposal is a Superior
Proposal, (v) during the three (3) Business Days' notice referred to in (i)
above, Seller and MPC shall, and shall cause the financial and legal advisors
to, negotiate in good faith with Purchaser with respect to any modifications
to the terms of this Agreement proposed by Purchaser that would enable MPC
and Purchaser to proceed with the transactions contemplated hereby, and (vi)
it shall be a condition precedent to the termination of this Agreement by
Seller or MPC pursuant to this SECTION 11.01(g) that Seller and MPC shall
have made the payment of the Fee and Expenses required by SECTION 11.03.
11.02 EFFECT OF TERMINATION. If this Agreement is validly terminated
pursuant to SECTION 11.01 and subject to the payment of amounts due under
SECTION 11.03 below, this Agreement will forthwith become null and void, and
there will be no liability or obligation on the part of Seller, MPC or
Purchaser (or any of their respective officers, directors, employees, agents
or other representatives or Affiliates), except that (i) the provisions with
respect to expenses in SECTION 13.03 and confidentiality in SECTION 13.05
will continue to apply following any such termination, and (ii) that nothing
contained herein shall relieve any party hereto from liability for willful
breach of its representations, warranties, covenants or agreements contained
in this Agreement.
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11.03 FEES AND EXPENSES.
(a) If this Agreement is terminated (i) pursuant to SECTION 11.01(f)or
(g), then Seller and MPC, jointly and severally, shall pay to Purchaser, (A)
simultaneously with any termination by Seller or MPC pursuant to SECTION
11.01(g), and (B) within one Business Day following any termination by
Purchaser contemplated by SECTION 11.01(f), a fee, in cash, equal to
$50,000,000 (the "FEE"), and (ii) by Purchaser pursuant to SECTION 11.01(d),
and any Person shall have made an Acquisition Proposal prior to such
termination, then MPC and Seller, jointly and severally, shall pay to
Purchaser on the date of execution of a definitive agreement with respect to
an Acquisition Proposal, or, if earlier, consummation of an Acquisition
Proposal, the Fee, PROVIDED, HOWEVER, that no Fee shall be payable pursuant
to clause (ii) of this SECTION 11.03 unless and until, within 12 months of
such termination, MPC or Seller enter into a definitive agreement to
consummate, or consummates, any transaction the proposal of which would have
constituted an Acquisition Proposal, and PROVIDED, FURTHER, that Seller and
MPC shall not in any event be obligated to pay more than one such fee with
respect to all such occurrences and such termination. It is understood and
agreed that the Fee constitutes liquidated damages and not a penalty.
(b) In addition to the Fee payable pursuant to SECTION 11.03(a), (i)
within one Business Day after the termination of this Agreement pursuant to
SECTION 11.01(c), (f) or (g), or (ii) if this Agreement is terminated by
Purchaser pursuant to SECTION 11.01(d) and Purchaser is entitled to receive a
Fee pursuant to SECTION 11.03(a) in connection with such termination, on the
date of the execution of a definitive agreement with respect to an
Acquisition Proposal, or, if earlier, consummation of an Acquisition
Proposal, Seller and MPC, jointly and severally, shall pay all of Purchaser's
Expenses (as defined below) up to a maximum payment pursuant to this SECTION
11.03(b) of $10,000,000. The term "Expenses" shall include all out-of-pocket
expenses and fees (including without limitation fees and expenses payable to
all banks, investment banking firms and other financial institutions and
their respective agents and counsel for arranging or providing financial
advice or financing commitments with respect to this Agreement and the
transactions contemplated hereby and all reasonable fees and expenses of
counsel, accountants, experts and consultants to Purchaser) actually incurred
by Purchaser or on its behalf in connection with the consummation of all
transactions contemplated by this Agreement.
ARTICLE XII
DEFINITIONS
12.01 DEFINITIONS. (a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"1935 ACT" has the meaning ascribed to it in SECTION 2.25.
"ACQUISITION PROPOSAL" means any proposal or offer with respect to (i) a
merger, reorganization, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
(x) prior to the Restructuring MPC or any of its subsidiaries, and (y) from
and after the Restructuring but prior to Closing, Seller or any of its
subsidiaries, or (ii) any direct or indirect acquisition of all or any
substantial portion of the assets or 10% or more of the equity securities of
(x) prior to the Restructuring, MPC or any of its subsidiaries, and (y) from
and after the Restructuring but prior to Closing, Seller or any of its
subsidiaries, other than, in any such case, the transactions contemplated by
this Agreement and the Divestiture.
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding, claims,
demands, complaints, arbitration or Governmental or Regulatory Authority
investigation.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, deficiencies,
costs, liabilities, obligations, taxes, liens, losses, expenses, and fees,
including, without
35
limitation, court costs, interest and reasonable fees of attorneys,
accountants and other experts or other reasonable expenses of litigation or
other proceedings or of any claim, default or assessment.
"AFFILIATE" means any Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a
Person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such Person whether by Contract or
otherwise.
"AFFILIATE CONTRACT" has the meaning ascribed to it in SECTION 4.08.
"AFFILIATED GROUP" means any affiliated group within the meaning of Code
Section 1504(a), or any similar group defined under a similar provision of
state, local or foreign Law.
"AGREEMENT" means this Stock Purchase Agreement and the Disclosure
Schedule and the certificates delivered in accordance with SECTIONS 6.03 and
7.03, as the same shall be amended from time to time.
"ASSETS AND PROPERTIES" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, and wherever situated), including the
goodwill related thereto, operated, owned or leased by such Person.
"BENEFICIALLY" means the beneficial owner of such securities under Rule
13d-3 of the Securities Exchange Act of 1934, as amended, including
securities which such Person has a right to acquire (whether such right is
exercisable immediately or only after the passage of time).
"BENEFIT PLAN" means any Plan established by MPC, the Company or any
Subsidiary, or any predecessor or Affiliate of any of the foregoing, existing
at the Closing Date (or at any time within the five (5) year period prior
thereto for a Plan subject to Title IV of ERISA), to which MPC, the Company
or any Subsidiary contributes or has contributed, or under which any
employee, former employee or director of MPC, the Company or any Subsidiary
or any beneficiary thereof is covered, is eligible for coverage or has
benefit rights.
"BACKGROUND MATERIALS" has the meaning ascribed to it in SECTION 3.11.
"BOOKS AND RECORDS" means all files, documents, instruments, papers,
books and records relating to the Business or Condition of MPC and the
Company, including without limitation financial statements, Tax Returns and
related work papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute books, stock
certificates and books, stock transfer ledgers, Contracts, Licenses, customer
lists, computer files and programs, retrieval programs, operating data and
plans and environmental studies and plans.
"BUDGET" means, with respect to fiscal year 2000, the FY2000 operating
and capital budget of MPC and the Subsidiaries attached as SECTION 12.01 OF
THE DISCLOSURE SCHEDULE hereto, and, with respect to fiscal year 2001, the
FY2001 operating and capital budget of MPC and the Subsidiaries which shall
be delivered to Purchaser not later than December 15, 2000 provided that the
amounts budgeted therein shall be within 5% (plus or minus) of the amounts
set forth in ANNEX II attached hereto for the line items set forth thereon,
unless MPC has previously notified Purchaser and Purchaser has consented to
such other amounts, such consent not to be unreasonably withheld or delayed.
"BUSINESS DAY" means a day other than Saturday, Sunday or any day on
which banks located in the State of Montana are authorized or obligated to
close.
"BUSINESS OR CONDITION OF MPC AND THE COMPANY" means the business,
financial condition or results of operations of MPC, the Company and the
Subsidiaries taken as a whole.
36
"CAUSE" means the failure to satisfactorily perform job duties,
disruption of the employer's operation, or other legitimate business reason;
provided, however, that legitimate business reasons shall not include
reductions in force, reorganizations, nor restructuring.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended and the rules and regulations promulgated
thereunder.
"CERCLIS" means the Comprehensive Environmental Response and Liability
Information System, as provided by 40 C.F.R. Section300.5.
"CLAIM NOTICE" means written notification pursuant to SECTION 10.06(a) of
a Third Party Claim as to which indemnity under ARTICLE X is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and
specifying the nature of and the basis for such Third Party Claim and for the
Indemnified Party's claim against the Indemnifying Party under ARTICLE X,
together with the amount of, or if not then reasonably determinable, the
estimated amount, determined in good faith, of the Adverse Consequences
arising from such Third Party Claim.
"CLOSING" means the closing of the transactions contemplated by SECTION
1.03.
"CLOSING DATE" means (a) the fifth Business Day after the day on which
the last of the consents, approvals, actions, filings, notices or waiting
periods described in or related to the filings described in SECTIONS 6.04
through 6.10 and SECTIONS 7.04 through 7.06 has been obtained, made or given
or has expired, as applicable, or (b) such other date as Purchaser and Seller
mutually agree upon in writing.
"CMPL" means Canadian-Montana Pipe Line Corporation, an Alberta
corporation.
"COAL SALE" means the sale, by Entech, of all the outstanding capital
stock of Basin Resources Inc., a Colorado corporation, Horizon Coal Services
Inc., a Montana corporation, North Central Energy Company, a Colorado
corporation, Northwestern Resources Co., a Montana corporation and Western
Energy Company, a Montana corporation.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
replacement, and the rules and regulations promulgated thereunder.
"COLSTRIP 1, 2 AND 3 TRANSMISSION ASSETS" has the meaning ascribed to it
in that certain Asset Purchase Agreement, dated October 31, 1998, as amended,
by and between PPL Montana LLC and MPC.
"COMMON STOCK" means the common stock, par value $.01 per share, of the
Company.
"COMPANY" has the meaning ascribed to it in the forepart of this
Agreement.
"CONTRACT" means any agreement, lease, license, evidence of Indebtedness,
mortgage, indenture, security agreement or other contract; PROVIDED, HOWEVER,
that Contract shall not mean a transaction under a published tariff approved
by a Governmental or Regulatory Authority.
"COVERED PARTICIPANTS" has the meaning ascribed to it in SECTION 5.04(e).
"CUT-OFF DATE" means, with respect to any representation, warranty,
covenant or agreement contained in this Agreement, the date on which such
representation, warranty, covenant or agreement ceases to survive as provided
in SECTION 9.01 or ARTICLE X.
"DATA ROOM" has the meaning ascribed to it in SECTION 3.11.
"DEFINED BENEFIT PLAN" means each Benefit Plan which is subject to Part 3
of Title I of ERISA, Section 412 of the Code or Title IV of ERISA.
"DES" means Discovery Energy Solutions, Inc., a Montana corporation.
37
"DISCLOSURE SCHEDULE" means the record delivered to Purchaser by Seller
herewith and dated as of the date hereof, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein by Seller pursuant to this Agreement.
"DISPUTE PERIOD" means the period ending thirty (30) days following
receipt by an Indemnifying Party of either a Claim Notice or an Indemnity
Notice.
"DIVESTITURE" means the completion of the IPP Sale, the Oil and Gas Sale
and the Coal Sale.
"DOLLAR" or "$" means a United States dollar, the lawful currency of the
United States, unless otherwise designated.
"ENTECH" means Entech, Inc., a Montana corporation.
"ENVIRONMENTAL LAW" means any Law or Order relating to the regulation or
protection of human health, public health or safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes into the environment (including, without limitation, ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata), or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes.
"ENVIRONMENTAL LOSS" has the meaning ascribed to it in SECTION 10.04.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person who is in the same controlled group of
corporations or who is under common control with Seller or, before the
Closing, the Company or any Subsidiary (within the meaning of Section 414 of
the Code).
"EXCHANGE ACT" means the Exchange Act of 1934, as amended.
"EXON-XXXXXX AMENDMENT" means Section 721 of the Defense Production Act
of 1950, as amended, and any successor thereto and the regulations issued
pursuant thereto or in consequence thereof.
"EXPENSES" shall have the meaning ascribed to it in SECTION 11.03(b).
"FEE" shall have the meaning ascribed to it in SECTION 11.03(a).
"FCC" means the Federal Communications Commission, or any successor
entity thereto.
"FERC" means the Federal Energy Regulatory Commission, or any successor
entity thereto.
"FINANCIAL STATEMENTS" means the consolidated financial statements of MPC
and its consolidated subsidiaries delivered to Purchaser pursuant to SECTION
2.09 or 4.06.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality
of the United States or Canada or any state, county, city or other political
subdivision.
"HSR ACT" means Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and the
rules and regulations promulgated thereunder.
"INCOME TAXES" means any federal, state, local, or foreign income Tax,
including any interest, penalty, or addition thereto, whether disputed or not.
38
"INCOME TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes,
including any schedule or attachment thereto.
"INDEBTEDNESS" means, with respect to any Person, whether recourse is to
all or a portion of the Assets or Properties of such Person and whether or
not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation for such Person evidenced by bonds, debentures, notes or
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses, (iii) every obligation of such
Person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business), (iv) every capital lease obligation of
such Person, (v) the maximum fixed redemption or repurchase price of
mandatorily redeemable stock of such Person at the time of determination,
(vii) every obligation to pay rent or other payment amounts of such Person
with respect to any sale and leaseback transaction to which such Person is a
party, (vii) all obligations under interest rate protection, hedging or
similar agreements, (ix) every obligation of the type referred to in clauses
(i) through (vii) of another Person and all dividends of another Person the
payment of which, in either case, such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor, guarantor or
otherwise, or which is secured by a Lien on any Asset or Property of such
Person.
"INDEMNIFIED PARTY" means any Person claiming indemnification under any
provision of ARTICLE X.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of ARTICLE X.
"INDEMNITY NOTICE" means written notification pursuant to SECTION
10.06(b) of a claim for indemnity under ARTICLE X by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount
or, if not then reasonably determinable, the estimated amount, determined in
good faith, of the Adverse Consequences arising from such claim.
"INDEPENDENT TRANSMISSION COMPANY" means a for-profit independent
transmission company proposed to be created by MPC, Avista Corp., Portland
General Electric Co., Puget Sound Energy, Inc., Sierra Pacific Power Co., and
Nevada Power Co., pursuant to the Independent Transmission Company Memorandum
of Understanding dated April 26, 2000, or any other independent transmission
company of similar nature that conforms to FERC Order 2000, whether in
existence or proposed to be created, of which MPC, the Company or any
Subsidiary is a member or proposes to be a member.
"INTELLECTUAL PROPERTY" means all patents and patent rights, trademarks
and trademark rights, trade names and trade name rights, service marks and
service xxxx rights, service names and service name rights, brand names,
inventions, copyrights and copyright rights, processes, formulae, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, processes, designs, methodologies, computer programs (including all
source codes but excluding third party commercial software used in the
ordinary course of business) and related documentation, technical
information, manufacturing, engineering and technical drawings, know-how and
all pending applications for and registrations of patents, trademarks,
service marks and copyrights.
"INTERIM FINANCIAL STATEMENT DATE" means July 31, 2000.
"INTERIM FINANCIAL STATEMENTS" means the Financial Statements for the
most recent fiscal period of MPC delivered to Purchaser pursuant to SECTION
2.09(a)(ii).
"IPP SALE" means the sale of the outstanding capital stock of Continental
Energy Services, Inc. a Montana corporation, by Entech.
"IRS" means the United States Internal Revenue Service or any successor
agency.
39
"KNOWLEDGE OF SELLER AND MPC" (including any correlative term) with
respect to a particular fact or other matters, means that any officer of MPC,
the Company or any Subsidiary, or a reasonably prudent individual in the
position of such officer, after due inquiry, knows or is actually aware of
such fact or other matter.
"LAWS" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"LICENSES" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, levy, charge or other encumbrance of any kind, or any
conditional sale Contract, title retention Contract or other Contract to give
any of the foregoing.
"MPC" has the meaning ascribed to it in the forepart of this Agreement.
"MPC AFFILIATED GROUP" means the Affiliated Group of which MPC has been
or is the common parent including MPC.
"MPC 401(k) PLAN" means the Montana Power Company and Subsidiaries
Employee Retirement Savings Plan, as in effect from time to time.
"MPC PENSION PLAN" has the meaning ascribed to it in SECTION 5.04(g).
"MPC STOCK OPTION" has the meaning ascribed to it in SECTION 5.04(i).
"MPC STOCKHOLDERS' APPROVAL" has the meaning ascribed to it in SECTION 4.12.
"MPC STOCKHOLDERS' MEETING" has the meaning ascribed to it in SECTION 4.11.
"NPL" means the National Priorities List under CERCLA.
"OIL AND GAS SALE" means the sale, by Entech, of all the outstanding
capital stock and assets of Altana Exploration Company, a Montana
corporation, and all the outstanding capital stock of Entech Gas Ventures,
Inc., a Montana corporation, Glacier Gas Company, a Montana corporation,
North American Resources Company, a Montana corporation, The Montana Power
Gas Company, a Montana corporation, The Montana Power Trading & Marketing
Company, a Montana corporation, and Altana Exploration Ltd., an Alberta
corporation.
"OPTION" with respect to any Person means any security, convertible
security, right, subscription, call, warrant, option, "phantom" stock right
or other Contract that gives the right to (i) purchase or otherwise receive
or be issued any shares of capital stock of such Person or any security of
any kind convertible into or exchangeable or exercisable for any shares of
capital stock of such Person or (ii) receive or exercise any benefits or
rights similar to any rights enjoyed by or accruing to the holder of shares
of capital stock of such Person, including any rights to participate in the
equity or income of such Person or to participate in or direct the election
of any directors or officers of such Person or the manner in which any shares
of capital stock of such Person are voted.
"ORDER" means any writ, judgment, decree, injunction or other order of
any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"PARTNERSHIP" has the meaning ascribed to it in SECTION 8.12.
"PBGC" means the Pension Benefit Guaranty Corporation established under
ERISA.
"PSC" means the Montana Public Service Commission.
40
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due or delinquent
or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens could not reasonably be expected to
materially adversely affect the Business or Condition of MPC and the Company.
"PENSION BENEFIT PLAN" means each Benefit Plan which is a pension benefit
plan within the meaning of Section 3(2) of ERISA.
"PERSON" means any natural person, corporation, limited liability
company, general partnership, limited partnership, proprietorship, other
business organization, trust, union, association or Governmental or
Regulatory Authority.
"PILKO ENVIRONMENTAL REPORTS" means the reports prepared by Pilko &
Associates, Inc. for MPC, titled as follows: "Environmental Assessment of
Montana Power's Utility Business" (including Attachments A and B thereto)
dated June, 2000; "Phase II Investigation Colstrip Project" dated August,
1998; "Phase II Investigation Xxxxxxx Project" dated August, 1998; "Phase II
Investigation Hydroelectric Project Portfolio (except Milltown)" dated
August, 1998; and "Phase II Investigation Milltown Hydroelectric Project"
dated August, 1998.
"PLAN" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workmen's compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement of any kind, whether written or oral, including, but not limited
to, any "employee benefit plan" within the meaning of Section 3(3) of ERISA.
"PROXY STATEMENT" has the meaning ascribed to it in SECTION 2.22.
"PURCHASE PRICE" has the meaning ascribed to it in SECTION 1.02.
"PURCHASER" has the meaning ascribed to it in the forepart of this
Agreement.
"PURCHASER INDEMNITEES" has the meaning ascribed to it in SECTION 10.01.
"QUALIFIED PLAN" means each Benefit Plan which is intended to qualify
under Section 401 of the Code.
"QF" means Qualified Facilities as defined in the Public Utility
Regulatory Policies Act of 1978 and the regulations promulgated thereunder,
specifically 18 CFR Part 292.
"REGIONAL TRANSMISSION ORGANIZATION" means that not-for-profit
corporation incorporated in the State of Washington on April 27, 2000 in
relation to the creation of a regional transmission organization (having the
characteristics and functions set forth in FERC Order 2000) by and among
Avista, the Bonneville Power Authority, Idaho Power Company, MPC, Nevada
Power Company, PacifiCorp, Portland General Electric Company, Puget Sound
Energy, Inc. and Sierra Pacific Power Company and any other electric energy
transmission system owners willing to participate.
"REPRESENTATIVES" has the meaning ascribed to it in SECTION 4.03.
"RESOLUTION PERIOD" means the period ending thirty (30) days following
receipt by an Indemnified Party of a written notice from an Indemnifying
Party stating that it disputes all or any portion of a claim set forth in a
Claim Notice or an Indemnity Notice.
"RESTRUCTURING" means the reorganization of the corporate structure of
MPC including, but not limited to, (i) the merger of Entech with and into
Entech LLC, a Montana limited liability company wholly owned by MPC,
following which Entech LLC shall be the survivor, (ii) the merger of MPC with
41
and into the Company, a Montana limited liability company wholly owned by
Seller, pursuant to which shareholders of MPC will receive capital stock of
Seller in exchange for capital stock of MPC, and following which the Company
shall be the survivor, and (iii) the distribution of the capital stock of
Entech LLC by the Company to Seller.
"RIGHTS AGREEMENT" has the meaning ascribed to it in SECTION 2.27.
"SEC" means the Securities and Exchange Commission or any successor
entity thereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning ascribed to it in the forepart of this Agreement.
"SELLER INDEMNITEES" has the meaning ascribed to it in SECTION 10.01(b).
"SUBJECT DEFINED BENEFIT PLAN" means each Defined Benefit Plan listed and
described in SECTION 2.13(a) OF THE DISCLOSURE SCHEDULE.
"SUBSIDIARIES" means CMPL, DES, Colstrip Community Services Company, a
Montana corporation, Montana Power Services Company, a Montana corporation,
and One Call Locators, Ltd., a Montana corporation.
"SUBSTITUTE STOCK OPTIONS" has the meaning ascribed to it in SECTION
5.04(i).
"SUPERIOR PROPOSAL" shall mean a bona fide written Acquisition Proposal
which the Board of Directors of MPC (prior to the Restructuring and prior to
Closing) or Seller (after the Restructuring but prior to Closing) concludes
in good faith after consultation with a financial advisor of nationally
recognized reputation, taking into account, all legal, financial, regulatory
and other aspects of the proposal and the Person making the proposal
(including, but not limited to, any break-up fees, expense reimbursement
provisions and conditions to consummation), (i) would, if consummated, result
in a transaction that is more favorable to all of the stockholders (in their
capacities as stockholders) of MPC (prior to the Restructuring) or Seller
(after the Restructuring but prior to Closing), from a financial point of
view than the transactions contemplated by this Agreement and (ii) is
reasonably capable of being consummated; provided, that for purposes of this
definition, the term "Acquisition Proposal" shall have the meaning set forth
in SECTION 12.01 except that (x) the reference to "10%" in the definition of
"Acquisition Proposal" shall be deemed to be a reference to "51%", (y)
"Acquisition Proposal" shall only be deemed to refer to a transaction
involving, prior to the Restructuring MPC, and after the Restructuring, but
prior to Closing, Seller, and (z) the reference to "assets" shall refer to
the assets of, prior to the Restructuring, MPC and its subsidiaries taken as
a whole, and after the Restructuring but prior to Closing to Seller and its
subsidiaries, taken as a whole, and not the assets of any of the Subsidiaries
alone.
"TAX RETURNS" 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.
"TAXES" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, 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.
"THIRD PARTY CLAIM" has the meaning ascribed to it in SECTION 10.06(A).
42
"TREAS REG." means the regulations (including any proposed or temporary
regulations) issued under the Code by the Department of Treasury as they may
be amended from time to time, or any applicable successor regulations.
"UNITS" has the meaning ascribed to it in the recitals to this Agreement.
"UTILITY BUSINESS" has the meaning ascribed to it in SECTION 2.28.
"WHOLESALE TRANSMISSION SERVICES AGREEMENT" means the Wholesale
Transmission Services Agreement dated December 17, 1999, by and between MPC
and PP&L Montana, LLC.
(b) CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the context of this
Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the
plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (iv)
the terms "Article" or "Section" refer to the specified Article or Section of
this Agreement; and (v) the phrase "ordinary course of business" refers to
the business of the Company or a Subsidiary. Whenever this Agreement refers
to a number of days, such number shall refer to calendar days unless Business
Days are specified. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP. Any
representation or warranty contained herein as to the enforceability of a
Contract shall be subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium or other similar law affecting the enforcement of
creditors' rights generally and to general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at Law).
ARTICLE XIII
MISCELLANEOUS
13.01 NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class
postage prepaid) to the parties at the following addresses or facsimile
numbers:
If to Purchaser, to:
NorthWestern Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx
Vice President, General Counsel
with a copy to:
Xxxx, Hastings, Janofsky, & Xxxxxx, LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Patrizia
If to Seller, to:
Touch America Holdings, Inc.
00 Xxxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attn: Vice President and General Counsel
43
If to MPC:
00 Xxxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attn: Vice President and General Counsel
, in each case with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. X'Xxxxxx
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number
as provided in this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section). Any party from time to time may change
its address, facsimile number or other information for the purpose of notices
to that party by giving notice specifying such change to the other party
hereto.
13.02 ENTIRE AGREEMENT. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter hereof,
including without limitation that certain confidentiality agreement between
the parties dated June 1, 2000, and contains the sole and entire agreement
between the parties hereto with respect to the subject matter hereof.
13.03 EXPENSES. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in SECTIONS 11.02 and
11.03), whether or not the transactions contemplated hereby are consummated,
each party will pay its own costs and expenses incurred in connection with
the negotiation, execution and closing of this Agreement and the transactions
contemplated hereby.
13.04 PUBLIC ANNOUNCEMENTS. At all times at or before the Closing, MPC,
Seller and Purchaser will not issue or make any reports, statements or
releases to the public or generally to the employees, customers, suppliers or
other Persons to whom MPC, the Company and the Subsidiaries sell goods or
provide services or with whom the Company and the Subsidiaries otherwise have
significant business relationships with respect to this Agreement or the
transactions contemplated hereby (including transition, integration and
similar plans) without the consent of the other, which consent shall not be
unreasonably withheld. If any party is unable to obtain the approval of its
public report, statement or release from the other party and such report,
statement or release is, in the opinion of legal counsel to such party,
required by Law in order to discharge such party's disclosure obligations,
then such party may make or issue the legally required report, statement or
release and promptly furnish the other party with a copy thereof. MPC, Seller
and Purchaser will also obtain the other party's prior approval which
approval shall not be unreasonably withheld of any press release to be issued
immediately following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
13.05 CONFIDENTIALITY. Each party hereto will hold, and will use its
best efforts to cause its Affiliates, and in the case of Purchaser, any
Person who has provided, or who is considering providing, financing to
Purchaser to finance all or any portion of the Purchase Price, and their
respective Representatives to hold, in strict confidence from any Person
(other than any such Affiliate, Person who has provided, or who is
considering providing, financing or Representative), unless (i) compelled
44
to disclose by judicial or administrative process (including without
limitation in connection with obtaining the necessary approvals of this
Agreement and the transactions contemplated hereby of Governmental or
Regulatory Authorities) or by other requirements of Law or (ii) disclosed in
an Action or Proceeding brought by a party hereto in pursuit of its rights or
in the exercise of its remedies hereunder, all documents and information
concerning the other party or any of its Affiliates furnished to it by the
other party or such other party's Representatives in connection with this
Agreement or the transactions contemplated hereby, except to the extent that
such documents or information can be shown to have been (a) previously known
by the party receiving such documents or information, (b) in the public
domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving party or (c) later
acquired by the receiving party from another source if the receiving party is
not aware that such source is under an obligation to another party hereto to
keep such documents and information confidential; provided that following the
Closing the foregoing restrictions will not apply to Purchaser's use of
documents and information concerning MPC, the Company and the Subsidiaries
furnished by Seller and MPC hereunder. In the event the transactions
contemplated hereby are not consummated, upon the request of the other party,
each party hereto will, and will cause its Affiliates, any Person who has
provided, or who is providing, financing to such party and their respective
Representatives to, promptly (and in no event later than five (5) Business
Days after such request) redeliver or cause to be redelivered all copies of
confidential documents and information furnished by the other party in
connection with this Agreement or the transactions contemplated hereby and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon prepared by
the party which furnished such documents and information or its
Representatives.
13.06 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will
be cumulative and not alternative.
13.07 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
13.08 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person.
13.09 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt
to do so will be void, except (a) for assignments and transfers by operation
of Law and (b) that Purchaser may assign any or all of its rights, interests
and obligations hereunder to a wholly-owned subsidiary, provided that any
such subsidiary agrees in writing to be bound by all of the terms, conditions
and provisions contained herein, but no such assignment referred to in clause
(b) shall relieve Purchaser of its obligations hereunder. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of
and is enforceable by the parties hereto and their respective successors and
assigns.
13.10 HEADINGS. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
13.11 INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not
be materially and adversely affected thereby, (a) such provision will be
45
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part
hereof, and (c) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
13.12 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of
New York applicable to a Contract
executed and performed in such State.
13.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
13.14 INSURANCE COVERAGE AFTER CLOSING. The parties hereto agree and
acknowledge that, except as disclosed in SECTION 13.14 OF THE DISCLOSURE
SCHEDULE, each insurance policy listed in SECTION 2.18 OF THE DISCLOSURE
SCHEDULE maintained by Seller and its Affiliates (including MPC, the Company
and the Subsidiaries) shall be available to or cover MPC, the Company and the
Subsidiaries or their respective assets, properties, operations and
liabilities after the Closing Date, and all benefits and coverage under each
such insurance policy shall continue following the Closing Date.
46
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of each party hereto as of the date first
above written.
NORTHWESTERN CORPORATION
By: /s/ XXXX X. XXXXXXXX
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, General Counsel
TOUCH AMERICA HOLDINGS, INC.
By: /s/ X.X. XXXXXXXX
-----------------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President & Chief Financial
Officer
THE MONTANA POWER COMPANY
By: /s/ X.X. XXXXXXXX
-----------------------------------------
Name: X.X. Xxxxxxxx
Title: Vice President & Chief Financial
Officer
47
