Exhibit B-1
PRIVILEGED AND CONFIDENTIAL
[Seneca Station]
EXECUTION COPY
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
Pennsylvania electric Company, as SELLER,
and FE ACQUISITION CORP., as BUYER
Dated as of October 30, 1998
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C [reserved]
Exhibit D Form of FIRPTA Affidavit
Exhibit E Form of Interconnection Agreement
SCHEDULES
1.1(65) Permitted Encumbrances
1.1(94) Transferable Permits (both environmental and non-environmental)
2.1 Schedule of Purchased Assets
2.1(b) Schedule of Tangible Personal Property to be Conveyed to Buyer
2.1(j) Intellectual Property
2.2(a) Description of Transmission and other Assets not included in Conveyance
3.3(a)(i)Schedule of Inventory
4.3(a) Third Party Consents
4.3(b) Seller's Required Regulatory Approvals
4.4 Insurance Exceptions
4.5 Exceptions to Title
4.6 Real Property Interests
4.7 Schedule of Environmental Matters
4.8 Schedule of Noncompliance with Employment Laws
4.9(a) Schedule of Benefit Plans
4.9(b) Benefit Plan Exceptions
4.10 Real Property
4.11 Notices of Condemnation
4.12(a) List of Contracts
4.12(b) List of Non-assignable Contracts
4.12(c) List of Defaults under the Contracts
4.13 List of Litigation
4.14(a) List of Permit Violations
4.14(b) List of material Permits (other than Transferable Permits)
4.15 Tax Matters
4.16 Intellectual Property Exceptions
5.3(a) Third Party Consents
5.3(b) Buyer's Required Regulatory Approvals
6.1 Schedule of Permitted Activities prior to Closing
6.8 Tax Appeals
6.10(a)(i)Plant and Support Staff (Union)
6.10(b) Schedule of Non-Union Employees
6.10(d) Collective Bargaining Agreements
6.10(h) Schedule of Severance Benefits
10.13 Zoning
10.14 Sewage Matters
TABLE OF CONTENTS
Page No.
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definition . . . . . . . . . . . . . . . . . . . 2
1.2 Certain Interpretive Matters . . . . . . . . . . 13
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . 13
2.1 Transfer of Assets . . . . . . . . . . . . . . . 13
2.2 Excluded Assets . . . . . . . . . . . . . . . . . 14
2.3 Assumed Liabilities . . . . . . . . . . . . . . . 16
2.4 Excluded Liabilities . . . . . . . . . . . . . . 17
2.5 Control of Litigation . . . . . . . . . . . . . . 19
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Closing . . . . . . . . . . . . . . . . . . . . . 20
3.2 Payment of Purchase Price . . . . . . . . . . . . 20
3.3 Adjustment to Purchase Price . . . . . . . . . . 21
3.4 Allocation of Purchase Price . . . . . . . . . . 22
3.5 Prorations . . . . . . . . . . . . . . . . . . . 23
3.6 Deliveries by Seller . . . . . . . . . . . . . . 24
3.7 Deliveries by Buyer . . . . . . . . . . . . . . . 25
3.8 Ancillary Agreements . . . . . . . . . . . . . . 25
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Incorporation; Qualification . . . . . . . . . . 26
4.2 Authority Relative to this Agreement . . . . . . 26
4.3 Consetns and Approvals; No Violation . . . . . . 26
4.4 Insurance . . . . . . . . . . . . . . . . . . . . 27
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4.5 Title and Related Matters . . . . . . . . . . . . 28
4.6 Real Property Leases . . . . . . . . . . . . . . 28
4.7 Environmental Matters . . . . . . . . . . . . . . 28
4.8 Labor Matters . . . . . . . . . . . . . . . . . . 29
4.9 Benefit Plans: ERISA . . . . . . . . . . . . . . 30
4.10 Real Property . . . . . . . . . . . . . . . . . . 30
4.11 Condemnation . . . . . . . . . . . . . . . . . . 30
4.12 Contracts and Leases . . . . . . . . . . . . . . 31
4.13 Legal Proceedings . . . . . . . . . . . . . . . . 31
4.14 Permits . . . . . . . . . . . . . . . . . . . . . 32
4.15 Taxes . . . . . . . . . . . . . . . . . . . . . . 32
4.16 Intellectual Property . . . . . . . . . . . . . . 33
4.17 Capital Expenditures . . . . . . . . . . . . . . 33
4.18 Compliance With Laws . . . . . . . . . . . . . . 33
4.19 PUHCA . . . . . . . . . . . . . . . . . . . . . . 33
4.20 Disclaimers Regarding Purchased Assets . . . . . 33
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . 34
5.1 Organization . . . . . . . . . . . . . . . . . . 34
5.2 Authority Relative to this Agreement . . . . . . 34
5.3 Consents and Approvals; No Violation . . . . . . 35
5.4 Availability of Funds . . . . . . . . . . . . . . 35
5.5 Financial Representations . . . . . . . . . . . . 36
5.6 Legal Proceedigs . . . . . . . . . . . . . . . . 36
5.7 No Knowledge of Seller's Breach . . . . . . . . . 36
5.8 Qualified Buyer . . . . . . . . . . . . . . . . . 36
5.9 Inspections . . . . . . . . . . . . . . . . . . . 36
5.10 WARN Act . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Conduct of Business Relating to the Purchased
Assets . . . . . . . . . . . . . . . . . . . . . 37
6.2 Access to Information . . . . . . . . . . . . . 39
6.3 Public Statements . . . . . . . . . . . . . . . 42
6.4 Expenses . . . . . . . . . . . . . . . . . . . . 42
6.5 Further Assurances . . . . . . . . . . . . . . . 43
6.6 Consents and Approvals . . . . . . . . . . . . . 45
6.7 Fees and Commisions . . . . . . . . . . . . . . 47
6.8 Tax Matters . . . . . . . . . . . . . . . . . . 47
6.9 Advice of Changes . . . . . . . . . . . . . . . 49
6.10 Employees . . . . . . . . . . . . . . . . . . . 49
6.11 Risk of Loss . . . . . . . . . . . . . . . . . . 54
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . 54
7.1 Conditions to Obligations of Buyer . . . . . . . 54
7.2 Conditions to Obligations of Seller . . . . . . 57
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . 59
8.1 Indemnification . . . . . . . . . . . . . . . . 59
8.2 Defense of Claims . . . . . . . . . . . . . . . 62
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . 63
9.1` Termination . . . . . . . . . . . . . . . . . . 63
9.2 Procedure and Effect of No-Default Termination . 65
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . 65
10.1 Amendment and Modification . . . . . . . . . . . 65
10.2 Waiver of Compliance; Consents . . . . . . . . . 65
10.3 No Survival . . . . . . . . . . . . . . . . . . 66
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10.4 Notices . . . . . . . . . . . . . . . . . . . . 66
10.5 Assignment . . . . . . . . . . . . . . . . . . . 67
10.6 Governing Law . . . . . . . . . . . . . . . . . 68
10.7 Counterparts . . . . . . . . . . . . . . . . . . 68
10.8 Interpretation . . . . . . . . . . . . . . . . . 68
10.9 Schedules and Exhibits . . . . . . . . . . . . . 68
10.10 Entire Agreement . . . . . . . . . . . . . . . . 68
10.11 Bulk Sales Laws . . . . . . . . . . . . . . . . 69
10.12 U.S. Dollars . . . . . . . . . . . . . . . . . . 69
10.13 Zoning Classifications . . . . . . . . . . . . . 69
10.14 Sewage Facilities . . . . . . . . . . . . . . . 69
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PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of October 30, 1998, by and
between Pennsylvania Electric Company, a Pennsylvania corporation ("Penelec" or
"Seller"), and FE Acquisition Corp., an Ohio corporation ("Buyer"). Seller and
Buyer are referred to individually as a "Party," and collectively as the
"Parties."
W I T N E S S E T H
WHEREAS, Buyer desires to purchase, and Seller desires to sell, its 20%
undivided interest in the Seneca Pumped Storage Generation Station and the other
Purchased Assets (as defined herein) upon the terms and conditions hereinafter
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following
terms have the meanings specified in this Section 1.1.
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934.
(2) "Agreement" means this Purchase and Sale Agreement together with
the Schedules and Exhibits hereto, as the same may be from time to time amended.
(3) "Ancillary Agreements" means the Interconnection Agreement and
Sublicense Agreements, as the same may be from time to time amended.
(4) "Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement between Seller and Buyer substantially in the form of
Exhibit A hereto, by which Seller shall, subject to the terms and conditions
hereof, assign Seller's Agreements, the Real Property Interests, certain
intangible assets and other Purchased Assets to Buyer and whereby Buyer shall
assume the Assumed Liabilities.
(5) "Assumed Liabilities" has the meaning set forth in Section 2.3.
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(6) "Benefit Plans" has the meaning set forth in Section 4.9.
(7) "Xxxx of Sale" means the Xxxx of Sale, substantially in the form of
Exhibit B hereto, to be delivered at the Closing, with respect to the Tangible
Personal Property included in the Purchased Assets transferred to Buyer at the
Closing.
(8) "Business Day" shall mean any day other than Saturday, Sunday and
any day on which banking institutions in the Commonwealth of Pennsylvania are
authorized by law or other governmental action to close.
(9) "Buyer Benefit Plans" has the meaning set forth in Section 6.10(f).
(10)"Buyer Indemnitee" has the meaning set forth in Section 8.1(b).
(11)"Buyer Material Adverse Effect" has the meaning set forth in
Section 5.3(a).
(12)"Buyer Required Regulatory Approvals" has the meaning set forth in
Section 5.3(b).
(13)"Capital Expenditures" has the meaning set forth in Section
3.3(a).
(14)"CERCLA" means the Federal Comprehensive Environmental Response,
Compensation, and Liability Act, as amended.
(15)"Closing" has the meaning set forth in Section 3.1.
(16)"Closing Adjustment" has the meaning set forth in Section 3.3(b).
(17)"Closing Date" has the meaning set forth in Section 3.1.
(18)"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
(19)"Code" means the Internal Revenue Code of 1986, as amended.
(20)"Collective Bargaining Agreement" has the meaning set forth in
Section 6.10(d).
(21)"Commercially Reasonable Efforts" means efforts which are
reasonably within the contemplation of the Parties at the time of executing this
Agreement and which do not require the performing Party to expend any funds
other than expenditures which are customary and reasonable in transactions of
the kind
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and nature contemplated by this Agreement in order for the performing Party to
satisfy its obligations hereunder.
(22)"Computer Systems" has the meaning set forth in Section 4.21.
(23)"Confidentiality Agreement" means the Confidentiality Agreement,
dated March 11, 1998, by and among Seller and Buyer.
(24)"Direct Claim" has the meaning set forth in Section 8.2(c).
(25)"Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and charges
of any kind.
(26)"Environmental Claim" means any and all pending and/or threatened
administrative or judicial actions, suits, orders, claims, liens, notices,
notices of violations, investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or civil, pursuant
to or relating to any applicable Environmental Law by any person (including, but
not limited to, any Governmental Authority, private person and citizens' group)
based upon, alleging, asserting, or claiming any actual or potential (a)
violation of, or liability under any Environmental Law, (b) violation of any
Environmental Permit, or (c) liability for investigatory costs, cleanup costs,
removal costs, remedial costs, response costs, natural resource damages,
property damage, personal injury, fines, or penalties arising out of, based on,
resulting from, or related to the presence, Release, or threatened Release into
the environment of any Hazardous Substances at any location related to the
Purchased Assets, including, but not limited to, any off-Site location to which
Hazardous Substances, or materials containing Hazardous Substances, were sent
for handling, storage, treatment, or disposal.
(27)"Environmental Condition" means the presence or Release to the
environment, whether at the Site or at an off-Site location, of Hazardous
Substances, including any migration of those Hazardous Substances through air,
soil or groundwater to or from the Site or any off-Site location regardless of
when such presence or Release occurred or is discovered.
(28)"Environmental Laws" means all Federal, state and local,
provincial and foreign, civil and criminal laws, regulations, rules, ordinances,
codes, decrees, judgments, directives, or judicial or administrative orders
relating to pollution or protection of the environment, natural resources or
human health and safety, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Substances (including, without
limitation, Releases to ambient
4
air, surface water, groundwater, land, surface and subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, Release, transport, disposal or handling of Hazardous Substances.
"Environmental Laws" include, without limitation, CERCLA, the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Oil Pollution Act (33 U.S.C. Section 2701 et seq.),
the Emergency Planning and Community Right-to-Know Act (42 U.S.C. Section 11001
et seq.), the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.),the Pennsylvania Hazardous Site Cleanup Act (35 P.S. ss. 6020.101 et
seq.), the Pennsylvania Solid Waste Management Act (35 P.S. Section 6018.101 et
seq.), the Pennsylvania Clean Stream Law (35 P.S. Section 691.1 et seq. ), and
all other state laws analogous to any of the above.
(29) "Environmental Permits" has the meaning set forth in Section
4.7(a).
(30) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(31) "ERISA Affiliate" has the meaning set forth in Section 2.4(j).
(32) "ERISA Affiliate Plans" has the meaning set forth in Section
2.4(j).
(33) "Estimated Adjustment" has the meaning set forth in Section
3.3(b).
(34) "Estimated Closing Statement" has the meaning set forth in Section
3.3(b).
(35) "Excluded Assets" has the meaning set forth in Section 2.2.
(36) "Excluded Liabilities" has the meaning set forth in Section 2.4.
(37) "Facilities Act" has the meaning set forth in Section 10.14.
(38) "FERC" means the Federal Energy Regulatory Commission or any
successor agency thereto.
(39) "FERC License" means the FERC License No. 2280, issued December
28, 1965, to Pennsylvania Electric Company and Cleveland Electric Illuminating
Company, as amended and supplemented.
5
(40) "FIRPTA Affidavit" means the Foreign Investment in Real Property
Tax Act Certification and Affidavit, substantially in the form of Exhibit D
hereto.
(41) "Genco" means GPU Generation, Inc., a Pennsylvania corporation and
wholly-owned subsidiary of GPU.
(42) "Good Utility Practices" mean any of the practices, methods and
acts engaged in or approved by a significant portion of the electric utility
industry during the relevant time period, or any of the practices, methods or
acts which, in the exercise of reasonable judgment in light of the facts known
at the time the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practices are not intended to
be limited to the optimum practices, methods or acts to the exclusion of all
others, but rather to be acceptable practices, methods or acts generally
accepted in the industry.
(43) "Governmental Authority" means any federal, state, local or other
governmental, regulatory or administrative agency, commission, department,
board, or other governmental subdivision, court, tribunal, arbitrating body or
other governmental authority.
(44) "GPU" means GPU, Inc., a Pennsylvania corporation and parent
company of Seller.
(45) "GPUN" means GPU Nuclear, Inc., a New Jersey corporation and a
wholly-owned subsidiary of GPU.
(46) "GPUS" means GPU Service, Inc., a Pennsylvania corporation and a
wholly-owned subsidiary of GPU.
(47) "Hazardous Substances" means (a) any petrochemical or petroleum
products, coal ash, oil, radioactive materials, radon gas, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may contain
levels of polychlorinated biphenyls; (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "hazardous constituents," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
(48) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
6
(49) "IBEW 459" means Local 459 of the International Brotherhood
of Electrical Workers.
(50) "Income Tax" means any federal, state, local or foreign Tax (a)
based upon, measured by or calculated with respect to net income, profits or
receipts (including, without limitation, capital gains Taxes and minimum Taxes)
or (b) based upon, measured by or calculated with respect to multiple bases
(including, without limitation, corporate franchise taxes) if one or more of the
bases on which such Tax may be based, measured by or calculated with respect to,
is described in clause (a), in each case together with any interest, penalties,
or additions to such Tax.
(51) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
(52) "Indemnifying Party" has the meaning set forth in Section 8.1(e).
(53) "Indemnitee" has the meaning set forth in Section 8.1(d).
(54) "Independent Accounting Firm" means such independent accounting
firm of national reputation as is mutually appointed by Seller and Buyer.
(55) "Inspection" means all tests, reviews, examinations, inspections,
investigations, verifications, samplings and similar activities conducted by
Buyer or its agents or Representatives with respect to the Purchased Assets
prior to the Closing.
(56) "Intellectual Property" means all patents and patent rights,
trademarks and trademark and service xxxx rights, service marks, copyrights and
copyright rights owned or licensed by Seller and necessary for the operation and
maintenance of the Purchased Assets, and all pending applications for
registrations of patents, trademarks, and copyrights, including the intellectual
property rights set forth as part of Schedule 2.1(j).
(57) "Interconnection Agreement" means the Interconnection Agreement,
between Seller and Buyer, a copy of which is attached as Exhibit E hereto,
executed on the date hereof, under which Seller will provide Buyer with
interconnection service to Seller's transmission facilities and whereby Buyer
will provide Seller with continuing access to certain of the Purchased Assets
after the Closing Date.
(58) "Inventories" means, fuel oil, materials, spare parts (stock and
non-stock), consumable supplies and chemical and gas inventories relating to the
operation of the Plant located at, or in transit to, the Plant.
7
(59) "Knowledge" means the actual knowledge of the corporate officers
or managerial representatives of the specified Person charged with
responsibility for the particular function as of the date of this Agreement, or,
with respect to any certificate delivered pursuant to this Agreement, the date
of delivery of the certificate after reasonable inquiry by them of selected
employees of such Person whom they believe, in good faith, to be the persons
responsible for the subject matter of the inquiry.
(60) "Material Adverse Effect" means any change in, or effect on the
Purchased Assets that is or in the aggregate are materially adverse to the
operations or condition (financial or otherwise) of the Purchased Assets, taken
as a whole, other than: (a) any change affecting the international, national,
regional or local electric industry as a whole and not Seller specifically and
exclusively; (b) any change or effect resulting from changes in the
international, national, regional or local wholesale or retail markets for
electric power; (c) any change or effect resulting from changes in the
international, national, regional or local markets for any fuel used in
connection with the Purchased Assets; (d) any change or effect resulting from,
changes in the North American, national, regional or local electric transmission
systems or operations thereof; (e) any materially adverse change in or effect on
the Purchased Assets which is cured (including by the payment of money) by
Seller before the Termination Date; (f) any order of any court or Governmental
Authority or legislature applicable to providers of generation, transmission or
distribution of electricity generally that imposes restrictions, regulations or
other requirements thereon; and (g) any change or effect resulting from action
or inaction by a Governmental Authority with respect to an independent system
operator or retail access in Pennsylvania.
(61) "Non-Union Employees" has the meaning as set forth in Sections
6.10(b) and (m).
(62) "PaPUC" means the Pennsylvania Public Utility Commission and any
successor agency thereto.
(63) "PaDEP" means the Pennsylvania Department of Environmental
Protection and any successor agency thereto.
(64) "Permits" has the meaning set forth in Section 4.14.
(65) "Permitted Encumbrances" means: (i) the FERC License, the
Sublicenses and those Encumbrances set forth in Schedule 1.1(65); (iii)
statutory liens for Taxes or other governmental charges or assessments not yet
due or delinquent or the validity of which is being contested in good
faith by appropriate proceedings provided that the aggregate amount being
so contested does not exceed $500,000; (iv) mechanics', carriers',
workers', repairers' and other similar liens arising or incurred in the
ordinary course of business relating to obligations as to which
8
there is no default on the part of Seller or the validity of which are being
contested in good faith, and which do not, individually or in the aggregate,
exceed $500,000; (v) zoning, entitlement, conservation restriction and other
land use and environmental regulations by Governmental Authorities; and (vi)
such other liens, imperfections in or failure of title, charges, easements,
restrictions and Encumbrances which do not materially, individually or in the
aggregate, detract from the value of the Purchased Assets as currently used or
materially interfere with the present use of the Purchased Assets and do not
secure indebtedness.
(66) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, or
governmental entity or any department or agency thereof.
(67) "Plant" means the generating station and related assets as more
fully identified on Schedule 2.1 attached hereto.
(68) "Post-Closing Adjustment" has the meaning set forth in Section
3.3(c).
(69) "Post-Closing Statement" has the meaning set forth in Section
3.3(c).
(70) "Proprietary Information" of a Party means all information about
the Party or its Affiliates, including their respective properties or
operations, furnished to the other Party or its Representatives by the Party or
its Representatives, after the date hereof, regardless of the manner or medium
in which it is furnished. Proprietary Information does not include information
that: (a) is or becomes generally available to the public, other than as a
result of a disclosure by the other Party or its Representatives; (b) was known
by or available to the other Party on a nonconfidential basis prior to its
disclosure by the Party or its Representatives; (c) becomes available to the
other Party on a nonconfidential basis from a person, other than the Party or
its Representatives, who is not otherwise bound by a confidentiality agreement
with the Party or its Representatives, or is not otherwise under any obligation
to the Party or any of its Representatives not to transmit the information to
the other Party or its Representatives; (d) is independently developed by the
other Party; or (e) was disclosed pursuant to the Confidentiality Agreement and
remains subject to the terms and conditions of the Confidentiality Agreement.
(71) "Purchased Assets" has the meaning set forth in Section 2.1.
(72) "Purchase Price" has the meaning set forth in Section 3.2.
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(73) "Qualifying Offer" has the meaning set forth in Section 6.10(b).
(74) "Real Property" means those certain parcels of real property
(including all buildings, facilities and other improvements thereon and all
appurtenances thereto) described in Schedule 4.10.
(75) "Real Property Agreements" has the meaning set forth in Section
4.6.
(76) "Real Property Interests" has the meaning set forth in Section
4.6.
(77) "Release" means release, spill, leak, discharge, dispose of, pump,
pour, emit, empty, inject, xxxxx, dump or allow to escape into or through the
environment.
(78) "Remediation" means action of any kind to address a Release or the
presence of Hazardous Substances at the Site or an off-Site location including,
without limitation, any or all of the following activities to the extent they
relate to or arise from the presence of a Hazardous Substance at the Site or an
off-Site location: (a) monitoring, investigation, assessment, treatment,
cleanup, containment, removal, mitigation, response or restoration work; (b)
obtaining any permits, consents, approvals or authorizations of any Governmental
Authority necessary to conduct any such activity; (c) preparing and implementing
any plans or studies for any such activity; (d) obtaining a written notice from
a Governmental Authority with jurisdiction over the Site or an off-Site location
under Environmental Laws that no material additional work is required by such
Governmental Authority; (e) the use, implementation, application, installation,
operation or maintenance of removal actions on the Site or an off-Site location,
remedial technologies applied to the surface or subsurface soils, excavation and
off-Site treatment or disposal of soils, systems for long term treatment of
surface water or ground water, engineering controls or institutional controls;
and (f) any other activities reasonably determined by a Party to be necessary or
appropriate or required under Environmental Laws to address the presence or
Release of Hazardous Substances at the Site or an off-Site location.
(79) "Replacement Welfare Plans" has the meaning set forth in Section
6.10(e)
(80) "Representatives" of a Party means the Party's Affiliates and
their directors, officers, employees, agents, partners, advisors (including,
without limitation, accountants, counsel, environmental consultants, financial
advisors and other authorized representatives) and parents and other controlling
persons.
10
(81) "SEC" means the Securities and Exchange Commission and any
successor agency thereto.
(82) "Seller's Agreements" means those contracts, agreements, licenses
and leases relating to the ownership, operation and maintenance of the Plant and
being assigned to Buyer as part of the Purchased Assets, including without
limitation the Collective Bargaining Agreement.
(83)"Seller's Indemnitee" has the meaning set forth in Section 8.1 (a).
(84) "Seller's Required Regulatory Approvals" has the meaning set forth
in Section 4.3(b).
(85) "Site" means, the portion of the Real Property (including
improvements) forming a part of, or used or usable in connection with the
operation of, the Plant. Any reference to the Site shall include, by definition,
the surface and subsurface elements, including the soils and groundwater present
at the Site, and any reference to items "at the Site" shall include all items
"at, on, in, upon, over, across, under and within" the Site.
(86) "Sublicenses" means the licenses and access rights to be granted
pursuant to the Sublicense Agreements, including, without limitation, easements
authorizing access, use, maintenance, construction, repair, replacement and
other activities by Seller or Buyer, as further described in the Sublicense
Agreement.
(87) "Sublicense Agreements" means Sublicense Agreements to be agreed
upon between Buyer and Seller, whereby Buyer will provide Seller with certain
rights with respect to the Plant that will enable the Seller to continue to own
certain utility lines, meters and other incidental equipment necessary to
provide electric service to and measure the consumption of such electric service
by Seneca Generating Station and whereby Seller will provide Buyer with certain
rights with respect to Seller's substation for the jointly operated equipment
necessary to provide for operation of the Seneca 230 XX Xxxxx transmission line
and the Seneca Station.
(88) "Subsidiary" when used in reference to any Person means any entity
of which outstanding securities having ordinary voting power to elect a majority
of the Board of Directors or other Persons performing similar functions of such
entity are owned directly or indirectly by such Person.
(89) "Tangible Personal Property" has the meaning set forth in Section
2.1(b).
(90) "Taxes" means all taxes, charges, fees, levies, penalties or other
assessments imposed by any federal, state or
11
local or foreign taxing authority, including, but not limited to, income,
excise, property, sales, transfer, franchise, payroll, withholding, social
security, gross receipts, license, stamp, occupation, employment or other taxes,
including any interest, penalties or additions attributable thereto.
(91) "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any schedule or
related or supporting information) required to be supplied to any taxing
authority with respect to Taxes including amendments thereto.
(92) "Termination Date" has the meaning set forth in Section 9.1(b).
(93) "Third Party Claim" has the meaning set forth in Section 8.2(a).
(94) "Transferable Permits" means those Permits and Environmental
Permits which may be transferred to Buyer without a filing with, notice to,
consent or approval of any Governmental Authority, and are set forth in Schedule
1.1 (94).
(95) "Transferred Employees" means Transferred Non-Union Employees and
Transferred Union Employees.
(96) "Transferred Non-Union Employees" has the meaning set forth in
Section 6.10(b).
(97) "Transferred Union Employees" has the meaning set forth in Section
6.10(b).
(98) "Transferring Employee Records" means records related to personnel
of Seller, Genco, GPUN or GPUS who will become employees of Buyer only to the
extent such records pertain to: (i) skill and development training and
biographies, (ii) seniority histories, (iii) salary and benefit information,
(iv) Occupational, Safety and Health Administration reports, and (v) active
medical restriction forms, and (vi) disciplinary actions.
(99) "Transmission Assets" has the meaning set forth in Section 2.2(a).
(100) "Union" means IBEW 459.
(101) "Union Employees" has the meaning set forth in Section 6.10(a)
and (m).
(102) "USEPA" means the United States Environmental Protection Agency
and any successor agency thereto.
(103) "Year 2000 Compliant" has the meaning set forth in Section
4.21. "Year 2000 Compliance" has a meaning correlative to the foregoing.
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(104) "WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.
1.2 Certain Interpretive Matters. In this Agreement, unless the context
otherwise requires, the singular shall include the plural, the masculine shall
include the feminine and neuter, and vice versa. The term "includes" or
"including" shall mean "including without limitation." References to a Section,
Article, Exhibit or Schedule shall mean a Section, Article, Exhibit or Schedule
of this Agreement, and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended, supplemented and
restated through the date as of which such reference is made.
ARTICLE II
PURCHASE AND SALE
2.1. Transfer of Assets. Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, at the Closing Seller will sell,
assign, convey, transfer and deliver to Buyer, and Buyer will purchase, assume
and acquire from Seller, free and clear of all Encumbrances (except for
Permitted Encumbrances), and subject to Section 2.2, all of Seller's right,
title and interest in and to all assets constituting, or used in and necessary
for generation purposes to the operation of, the Plant identified in Schedule
2.1 including without limitation those assets described below (but excluding the
Excluded Assets), each as in existence on the Closing Date (collectively,
"Purchased Assets"):
(a) All Inventories;
(b) All machinery, mobile or otherwise, equipment
(including communications equipment), vehicles,
tools, furniture and furnishings and other personal property located on the Real
Property on the Closing Date, including, without limitation, the items of
personal property included in Schedule 2.1(b), together with all the personal
property of Seller used principally in the operation of the Plant and listed in
Schedule 2.1(b), other than property used or primarily usable as part of the
Transmission Assets or otherwise constituting part of the Excluded Assets
(collectively, "Tangible Personal Property");
(c) Subject to the provisions of Section 6.5(d), all
Seller's Agreements;
(d) Subject to the provisions of Section 6.5(d), all Real
Property Interests;
(e) All Transferable Permits;
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(f) All books, operating records, operating, safety and
maintenance manuals, engineering design plans,
documents, blueprints and as built plans, specifications, procedures and similar
items of Seller relating specifically to the aforementioned assets and necessary
for the operation of the Plant (subject to the right of Seller to retain copies
of same for its use) other than such items which are proprietary to third
parties and accounting records;
(g) All unexpired, transferable warranties and guarantees
from third parties with respect to any item
constituting part of the Purchased Assets, as of the Closing Date;
(h) The name of the Plant. It is expressly understood that
Seller is not assigning or transferring to Buyer any right to use the names
"Jersey Central Power & Light Company", "JCP&L", Metropolitan Edison
Company", "Met-Ed", "Pennsylvania Electric Company", "Penelec", "GPU",
"GPU Energy", "GPU Generation", "GPU Nuclear", "GPU Service" and "GPU Genco",
or any related or similar trade names, trademarks, service marks, corporate
names and logos or any part, derivative or combination thereof;
(i) All drafts, memoranda, reports, information,
technology, and specifications relating to Seller's plans
for Year 2000 Compliance with respect to the Plant;
(j) The Intellectual Property; and
(k) The substation equipment set forth in Schedule A to the
Interconnection Agreement and designated therein as being transferred to Buyer.
2.2 Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement will constitute or be construed as
conferring on Buyer, and Buyer is not acquiring, any right, title or interest in
or to the following specific assets which are associated with the Purchased
Assets, but which are hereby specifically excluded from the sale and the
definition of Purchased Assets herein (the "Excluded Assets"):
(a) Except as expressly identified in Schedule 2.1(b),
the electrical transmission or distribution facilities (as opposed to
generation facilities) of Seller or any of its Affiliates located at the
Site or forming part of the Plant (whether or not regarded as a "transmission"
or "generation" asset for regulatory or accounting purposes), including all
switchyard facilities, substation facilities and support equipment, as well
as all permits, contracts and warranties, to the extent they relate to such
transmission and distribution assets (collectively, the "Transmission Assets"),
and those certain assets, facilities and agreements all as identified on
Schedule 2.2(a) attached hereto;
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(b) Certain switches and meters in the Plant, revenue
meters and remote testing units, as identified in the
Sublicense Agreement;
(c) Certificates of deposit, shares of stock, securities,
bonds, debentures, evidences of indebtedness, and
interests in joint ventures, partnerships, limited liability companies and other
entities;
(d) All cash, cash equivalents, bank deposits, accounts
and notes receivable (trade or otherwise), and any
income, sales, payroll or other tax receivables;
(e) The rights of Seller and its Affiliates to the names
"Jersey Central Power & Light Company","JCP&L", "Metropolitan Edison Company",
"Met-Ed", "Pennsylvania Electric Company", "Penelec", "GPU", "GPU Energy",
"GPU Generation", "GPU Nuclear", "GPU Service" and "GPU Genco" or any related
or similar trade names, trademarks, service marks, corporate names or logos,
or any part, derivative or combination thereof;
(f) All tariffs, agreements and arrangements to which
Seller is a party for the purchase or sale of electric capacity and/or energy or
for the purchase of transmission or ancillary services;
(g) The rights of Seller in and to any causes of action
against third parties (including indemnification and contribution) relating to
any Real Property or personal property, Permits, Environmental Permits, Taxes,
Real Property Interests, Real Property Agreements, or Seller's Agreements, if
any, including any claims for refunds, prepayments, offsets, recoupment,
insurance proceeds, condemnation awards, judgments and the like, whether
received as payment or credit against future liabilities, relating specifically
to the Plant or the Site and relating to any period prior to the Closing Date;
(h) All personnel records of Seller or its Affiliates
relating to the Transferred Employees other than Transferring Employee Records
or other records, the disclosure of which is required by law, or legal or
regulatory process or subpoena; and
(i) Any and all of Seller's rights in any contract
representing an intercompany transaction between Seller
and an Affiliate of Seller, whether or not such transaction relates to the
provision of goods and services, payment arrangements, intercompany charges or
balances, or the like.
2.3 Assumed Liabilities. On the Closing Date, Buyer shall deliver to
Seller the Assignment and Assumption Agreement pursuant to which Buyer shall
assume and agree to discharge when due, without recourse to Seller, all of the
following liabilities and obligations of Seller, direct or indirect, known or
unknown, absolute or contingent, which relate to the Purchased Assets, other
than Excluded Liabilities, in accordance with the
15
respective terms and subject to the respective conditions thereof (collectively,
"Assumed Liabilities"):
(a) All liabilities and obligations of Seller arising on or
after the Closing Date under Seller's Agreements, the Real Property Agreements,
and the Transferable Permits conveyed to Buyer in accordance with the terms
thereof, including, without limitation, (i) the contracts, licenses, agreements
and personal property leases entered into by Seller with respect to the
Purchased Assets, whether or not disclosed on Schedule 4.12(a) and (ii) the
contracts, licenses, agreements and personal property leases entered into by
Seller with respect to the Purchased Assets after the date hereof consistent
with the terms of this Agreement, except in each case to the extent such
liabilities and obligations, but for a breach or default by Seller, would have
been paid, performed or otherwise discharged on or prior to the Closing Date or
to the extent the same arise out of any such breach or default or out of any
event which after the giving of notice would constitute a default by Seller;
(b) All liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which Buyer is liable pursuant to
Sections 3.5 or 6.8(a) hereof;
(c) All liabilities and obligations with respect to the
Transferred Employees arising on or after the Closing Date for which (i) Buyer
is responsible pursuant to Section 6.10 and (ii) the grievances and arbitration
proceedings arising out of or under the Collective Bargaining Agreement prior
to, on or after the Closing Date;
(d) Any liability, obligation or responsibility under or
related to Environmental Laws or the common law, whether such liability or
obligation or responsibility is known or unknown, contingent or accrued, arising
as a result of or in connection with (i) any violation or alleged violation of
Environmental Laws, whether prior to, on or after the Closing Date, with respect
to the ownership or operation of any of the Purchased Assets; (ii) loss of life,
injury to persons or property or damage to natural resources (whether or not
such loss, injury or damage arose or was made manifest before the Closing Date
or arises or becomes manifest on or after the Closing Date) caused (or allegedly
caused) by the presence or Release of Hazardous Substances at, on, in, under,
adjacent to or migrating from the Purchased Assets prior to, on or after the
Closing Date, including, but not limited to, Hazardous Substances contained in
building materials at or adjacent to the Purchased Assets or in the soil,
surface water, sediments, groundwater, landfill cells, or in other environmental
media at or near the Purchased Assets; and (iii) the Remediation (whether or not
such Remediation commenced before the Closing Date or commences on or after the
Closing Date) of Hazardous Substances that are present or have been Released
prior to, on or after the Closing Date at, on, in, under, adjacent to or
migrating from, the Purchased Assets or in the soil, surface water, sediments,
16
groundwater, landfill cells or in other environmental media at or adjacent to
the Purchased Assets; provided, that nothing set forth in this subsection
2.3(d) shall require Buyer to assume any liabilities or obligations that are
expressly excluded in Section 2.4.
(e) All liabilities and obligations of Seller with respect to
the Purchased Assets under the agreements or consent orders set forth on
Schedule 4.7(a) arising on or after the Closing; and
(f) With respect to the Purchased Assets, any Tax that may be
imposed by any federal, state or local government on the ownership, sale,
operation or use of the Purchased Assets on or after the Closing Date, except
for any Income Taxes attributable to income received by Seller.
(g) Buyer shall assume only the Assumed Liabilities as
expressly identified above in Section 2.3 (a) - (f) and shall not assume or be
obligated to satisfy or perform any other liability, obligation or commitment of
Seller of whatever nature whether currently existing or arising hereafter.
2.4 Excluded Liabilities. Buyer shall not assume or be obligated to
pay, perform or otherwise discharge the following liabilities or obligations
(the "Excluded Liabilities"):
(a) Any liabilities or obligations of Seller in respect of any
Excluded Assets or other assets of Seller which are not Purchased Assets;
(b) Any liabilities or obligations in respect of Taxes
attributable to the ownership, operation or use of Purchased Assets for taxable
periods, or portions thereof, ending before the Closing Date, except for Taxes
for which Buyer is liable pursuant to Sections 3.5 or 6.8(a) hereof;
(c) Any liabilities or obligations of Seller accruing under
any of Seller's Agreements and the Real Property Agreements prior to the Closing
Date;
(d) Any and all asserted or unasserted liabilities or
obligations to third parties (including employees) for personal injury or tort,
or similar causes of action to the extent arising out of the ownership or
operation of the Purchased Assets prior to the Closing Date, other than any
liabilities or obligations which have been assumed by Buyer under Section
2.3(d);
(e) Any criminal fines, penalties or costs imposed by a
Governmental Authority to the extent such obligations arise out of or relate to:
(i) acts or omissions which occurred prior to the Closing Date, or (ii) illegal
acts, willful misconduct or gross negligence of Seller prior to the Closing
Date;
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(f) Any payment obligations of Seller for goods delivered or
services rendered prior to the Closing Date, including, but not limited to,
rental or other payments pursuant to the Real Property Agreements;
(g) Any liability, obligation or responsibility under or
related to Environmental Laws or the common law, whether such liability or
obligation or responsibility is known or unknown, contingent or accrued, arising
as a result of or in connection with loss of life, injury to persons or property
or damage to natural resources (whether or not such loss, injury or damage arose
or was made manifest before the Closing Date or arises or becomes manifest on or
after the Closing Date) to the extent caused (or allegedly caused) by the
off-Site disposal, storage, transportation, discharge, Release, or recycling of
Hazardous Substances, or the arrangement for such activities, of Hazardous
Substances, prior to the Closing Date, in connection with the ownership or
operation of the Purchased Assets, provided that for purposes of this Section
"off-Site" does not include any location to which Hazardous Substances disposed
of or Released at the Purchased Assets have migrated;
(h) Any liability, obligation or responsibility under or
related to Environmental Laws or the common law, whether such liability or
obligation or responsibility is known or unknown, contingent or accrued, arising
as a result of or in connection with the investigation and/or Remediation
(whether or not such investigation or Remediation commenced before the Closing
Date or commences on or after the Closing Date) of Hazardous Substances that are
disposed, stored, transported, discharged, Released, recycled, or the
arrangement of such activities, prior to the Closing Date in connection with the
ownership or operation of the Purchased Assets, at any off-Site location,
provided that for purposes of this Section "off-Site" does not include any
location to which Hazardous Substances disposed of or Released at the Purchased
Assets have migrated;
(i) Third party liability for toxic torts arising as a result
of or in connection with loss of life or injury to persons (whether or not such
loss or injury arose or was made manifest on or after the Closing Date) caused
(or allegedly caused) by the presence or Release of Hazardous Substances at, on,
in, under, adjacent to or migrating from the Purchased Assets prior to the
Closing Date;
(j) Subject to Section 6.10, any liabilities or obligations
relating to any Benefit Plan maintained by Seller or any trade or business
(whether or not incorporated) which is or ever has been under common control, or
which is or ever has been treated as a single employer, with Seller under
Section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") or to which
Seller and any ERISA Affiliate contributed thereunder (the "ERISA Affiliate
Plans"), including but not limited to any liability with respect to any such
plan (i) for benefits payable under such plan; (ii) to the Pension Benefit
18
Guaranty Corporation under Title IV of ERISA; (iii) relating to any such plan
that is a multi-employer plan within the meaning of Section 37(A) of ERISA; (iv)
for non-compliance with the notice and benefit continuation requirements of
COBRA; (v) for noncompliance with ERISA or any other applicable laws; or (vi)
arising out of or in connection with any suit, proceeding or claim which is
brought against Buyer, any Benefit Plan, ERISA Affiliate Plan, or any fiduciary
or former fiduciary of any such Benefit Plan or ERISA Affiliate Plan;
(k) Subject to Section 6.10, any liabilities or obligations
relating to the employment or termination of employment, by Seller, or any
Affiliate of Seller, of any individual, that is attributable to any actions or
inactions (including discrimination, wrongful discharge, unfair labor practices
or constructive termination) by Seller prior to the Closing Date other than such
actions or inactions taken at the written direction of Buyer;
(l) Subject to Section 6.10, any obligations for wages,
overtime, employment taxes, severance pay, transition payments in respect of
compensation or similar benefits accruing or arising prior to the Closing under
any term or provision of any contract, plan, instrument or agreement relating to
any of the Purchased Assets; and
(m) Any liability of Seller arising out of a breach by Seller
or any of its Affiliates of any of their respective obligations under this
Agreement or the Ancillary Agreements; and
2.5 Control of Litigation. Subject to Article VIII, the Parties agree
and acknowledge that (i) Seller shall be entitled exclusively to control, defend
and settle any litigation, administrative or regulatory proceeding, and any
investigation or Remediation activities (including without limitation any
environmental mitigation or Remediation activities), arising out of or related
to any Excluded Liabilities, and Buyer agrees to cooperate fully in connection
therewith and (ii) Buyer shall be entitled exclusively to control, defend and
settle any litigation, administrative or regulatory proceeding, and any
investigation or Remediation activities (including without limitation any
environmental mitigation or Remediation activities), arising out of or related
to any Assumed Liabilities, and Seller agrees to cooperate fully in connection
therewith.
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ARTICLE III
THE CLOSING
3.1 Closing. Upon the terms and subject to the satisfaction of the
conditions contained in Article VII of this Agreement, the sale, assignment,
conveyance, transfer and delivery of the Purchased Assets to Buyer, the payment
of the Purchase Price to Seller, and the consummation of the other respective
obligations of the Parties contemplated by this Agreement shall take place at a
closing (the "Closing"), to be held at the offices of Berlack, Israels &
Xxxxxxxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m. local time,
or another mutually acceptable time and location, on the date that is fifteen
(15) Business Days following the date on which the last of the conditions
precedent to Closing set forth in Article VII of this Agreement have been either
satisfied or waived by the Party for whose benefit such conditions precedent
exist or such other date as the Parties may mutually agree. The date of Closing
is hereinafter called the "Closing Date." The Closing shall be effective for all
purposes as of 12:01 a.m. on the Closing Date.
3.2 Payment of Purchase Price. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Assets, Buyer will pay or cause to be paid to Seller at the Closing an
aggregate amount of Forty-Three Million United States Dollars(U.S.
$43,000,000.00) (the "Purchase Price") plus or minus any adjustments pursuant to
the provisions of this Agreement, by wire transfer of immediately available
funds denominated in U.S. dollars or by such other means as are agreed upon by
Seller and Buyer.
3.3 Adjustment to Purchase Price (a) Subject to Section 3.3(b), at the
Closing, the Purchase Price shall be adjusted, without duplication, to account
for the items set forth in this Section 3.3(a):
(i) The Purchase Price shall be increased or
decreased, as applicable, to reflect the difference between the book
value of all Inventories as of the Closing Date and the book value of
all Inventories as of June 30, 1998 reflected on Schedule 3.3(a)(i).
(ii) The Purchase Price shall be adjusted to account
for the items prorated as of the Closing Date pursuant to Section 3.5.
(iii) The Purchase Price shall be increased by the
amount expended, or for which liabilities are incurred, by Seller
between the date hereof and the Closing Date for capital additions to
or replacements of property, plant and equipment included in the d
20
Purchase Assets and other expenditures or repairs on property, plant
and equipment included in the Purchased Assets that would be capitalized by
Seller in accordance with normal accounting policies of Seller and its
Affiliates (together, "Capital Expenditures"), which are not described on
Schedule 6.1 and which either (A) are mandated after the date of this
Agreement by any Governmental Authority (subject to Buyer's right
reasonably to direct Seller to contest such mandates by appropriate
proceedings at Buyer's expense and provided there is no adverse impact on
the Purchased Assets); or (B) do not fall within category (A) above but do
not exceed in the aggregate $2 million; or (C) are approved in writing by
Buyer.
(b) At least ten (10) Business Days prior to the Closing Date,
Seller shall prepare and deliver to Buyer an estimated closing statement (the
"Estimated Closing Statement") that shall set forth Seller's best estimate of
all estimated adjustments to the Purchase Price required by Section 3.3(a) (the
"Estimated Adjustment"). Within five (5) Business Days following the delivery of
the Estimated Closing Statement by Seller to Buyer, Buyer may object in good
faith to the Estimated Adjustment in writing. If Buyer objects to the Estimated
Adjustment, the Parties shall attempt to resolve their differences by
negotiation. If the Parties are unable to do so within three (3) Business Days
prior to the Closing Date (or if Buyer does not object to the Estimated
Adjustment), the Purchase Price shall be adjusted (the "Closing Adjustment") for
the Closing by the amount of the Estimated Adjustment not in dispute. The
disputed portion shall be paid as a Post-Closing Adjustment to the extent
required by Section 3.3(c).
(c) Within sixty (60) days following the Closing Date, Seller
shall prepare and deliver to Buyer a final closing statement (the "Post-Closing
Statement") that shall set forth Seller's best estimate of all adjustments to
the Purchase Price required by Section 3.3(a) (the "Post-Closing Adjustment").
The Post-Closing Statement shall be prepared using the same accounting
principles, policies and methods as Seller has historically used in connection
with the calculation of the items reflected on such Post-Closing Statement.
Without limiting the foregoing, the Closing Date Inventory shall be calculated
using the same accounting policies and practices which were used in preparing
Schedule 3.3(a)(i). Within thirty (30) days following the delivery of the
Post-Closing Statement by Seller to Buyer, Buyer may object to the Post-Closing
Adjustment in writing. Seller agrees to cooperate with Buyer to provide Buyer
and Buyer's Representatives information used to prepare the Post-Closing
Statement and information relating thereto. If Buyer objects to the Post-Closing
Adjustment, the Parties shall attempt to resolve such dispute by negotiation. If
the Parties are unable to resolve such dispute within thirty (30) days of any
objection by Buyer, the Parties shall appoint the Independent
21
Accounting Firm, which shall, at Seller's and Buyer's joint expense, review the
Post-Closing Adjustment and determine the appropriate adjustment to the Purchase
Price, if any, within thirty (30) days of such appointment. The Parties agree to
cooperate with the Independent Accounting Firm and provide it with such
information as it reasonably requests to enable it to make such determination.
The finding of such Independent Accounting Firm shall be binding on the Parties
hereto. Upon determination of the appropriate adjustment by agreement of the
Parties or by binding determination of the Independent Accounting Firm, if the
Post-Closing Adjustment is more or less than the Closing Adjustment, the Party
owing the difference shall deliver such difference to the other Party no later
than two (2) Business Days after such determination, in immediately available
funds or in any other manner as reasonably requested by the payee.
3.4 Allocation of Purchase Price. Buyer and Seller shall endeavor to
agree upon an allocation among the Purchased Assets of the sum of the Purchase
Price and the Assumed Liabilities in a manner consistent with the provisions of
Section 1060 of the Code and the Treasury Regulations thereunder within sixty
(60) days of the date of this Agreement. Each of Buyer and Seller agrees to file
Internal Revenue Service Form 8594, and all federal, state, local and foreign
Tax Returns, in accordance with any such agreed to allocation. Each of Buyer and
Seller shall report the transactions contemplated by this Agreement for federal
Tax and all other Tax purposes in a manner consistent with any such agreed to
allocation determined pursuant to this Section 3.4. Each of Buyer and Seller
agrees to provide the other promptly with any information required to complete
Form 8594. Buyer and Seller shall notify and provide the other with reasonable
assistance in the event of an examination, audit or other proceeding regarding
any allocation of the Purchase Price agreed to pursuant to this Section 3.4.
3.5 Prorations. (a) Buyer and Seller agree that all of the items
normally prorated, including those listed below (but not including Income
Taxes), relating to the business and operation of the Purchased Assets shall be
prorated as of the Closing Date, with Seller liable to the extent such items
relate to any time period prior to the Closing Date, and Buyer liable to the
extent such items relate to periods commencing with the Closing Date (measured
in the same units used to compute the item in question, otherwise measured by
calendar days):
(i) Personal property, real estate and occupancy
Taxes, assessments and other charges, if any, on or with respect to the
business and operation of the Purchased Assets;
(ii) Rent, Taxes and all other items (including
prepaid services or goods not included in Inventory) payable by or to
Seller under any of Seller's Agreements;
22
(iii) Any permit, license, registration, compliance
assurance fees or other fees with respect to any Transferable Permit;
(iv) Sewer rents and charges for water, telephone,
electricity and other utilities; and
(v) Rent and Taxes and other items payable by Seller
under the Real Property Interests assigned to Buyer.
(b) In connection with the prorations referred
to in (a) above, in the event that actual figures are not available at the
Closing Date, the proration shall be based upon the actual Taxes or other
amounts accrued through the Closing Date or paid for the most recent year (or
other appropriate period) for which actual Taxes or other amounts paid are
available. Such prorated Taxes or other amounts shall be re-prorated and paid to
the appropriate Party within sixty (60) days of the date that the previously
unavailable actual figures become available. The prorations shall be based on
the number of days in a year or other appropriate period (i) before the Closing
Date and (ii) including and after the Closing Date. Seller and Buyer agree to
furnish each other with such documents and other records as may be reasonably
requested in order to confirm all adjustment and proration calculations made
pursuant to this Section 3.5.
(c) Notwithstanding anything to the contrary herein, no
proration shall be made under this Section 3.5 with respect to Taxes payable
under the Pennsylvania Public Utility Realty Tax Act ("XXXXX"). Buyer shall be
fully responsible for all Taxes payable under XXXXX for the year in which the
Closing occurs.
3.6 Deliveries by Seller. At the Closing, Seller will deliver, or
cause to be delivered, the following to Buyer:
(a) The Xxxx of Sale, duly executed by and acknowledged by
Seller;
(b) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Seller with respect to the transfer
of the Purchased Assets, or the consummation of the transactions contemplated by
this Agreement;
(c) The opinions of counsel and officer's certificates
contemplated by Section 7.1;
(d) The Assignment and Assumption Agreement, duly executed by
Seller;
(e) A FIRPTA Affidavit, duly executed by Seller;
(f) Copies, certified by the Secretary or Assistant Secretary
of Seller, of corporate resolutions authorizing the execution and delivery of
this Agreement and all of the agreements and instruments to be executed and
delivered by Seller
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in connection herewith, and the consummation of the transactions contemplated
hereby;
(g) A certificate of the Secretary or Assistant Secretary of
Seller identifying the name and title and bearing the signatures of the officers
of Seller authorized to execute and deliver this Agreement and the other
agreements and instruments contemplated hereby;
(h) Certificates of Good Standing with respect to Seller,
issued by the Secretary of the State of Seller's state of incorporation;
(i) To the extent available, originals of all Seller's
Agreements, Real Property Agreements and Transferable Permits and, if not
available, true and correct copies thereof;
(j) All such other instruments of assignment, transfer or
conveyance as shall, in the reasonable opinion of Buyer and its counsel, be
necessary or desirable to transfer to Buyer the Purchased Assets, in accordance
with this Agreement and where necessary or desirable in recordable form; and
(k) Such other agreements, documents, instruments and writings
as are required to be delivered by Seller at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
3.7. Deliveries by Buyer. At the Closing, Buyer will deliver, or cause
to be delivered, the following to Seller:
(a) The Purchase Price, as adjusted pursuant to Section 3.3,
by wire transfer of immediately available funds in accordance with Seller's
instructions or by such other means as may be agreed to by Seller and Buyer;
(b) The opinions of counsel and officer's certificates
contemplated by Section 7.2;
(c) The Assignment and Assumption Agreement, duly executed and
acknowledged by Buyer;
(d) Copies, certified by the Secretary or Assistant Secretary
of Buyer, of resolutions authorizing the execution and delivery of this
Agreement, the Guaranty and all of the agreements and instruments to be executed
and delivered by Buyer in connection herewith, and the consummation of the
transactions contemplated hereby;
(e) A certificate of the Secretary or Assistant Secretary of
Buyer, identifying the name and title and bearing the signatures of the officers
of Buyer authorized to execute and deliver this Agreement, the Guaranty and the
other agreements contemplated hereby;
(f) All such other instruments of assumption as shall, in the
reasonable opinion of Seller and its counsel, be necessary for Buyer to assume
the Assumed Liabilities in accordance with this Agreement;
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(g) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Buyer with respect to the transfer of
the Purchased Assets, or the consummation of the transactions contemplated by
this Agreement and where necessary or desirable in recordable forms;
(h) Certificates of Insurance relating to the insurance
policies required pursuant to Article 10 of the Interconnection Agreement; and
(i) Such other agreements, documents, instruments and writings
as are required to be delivered by Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise reasonably required in connection
herewith.
3.8 Ancillary Agreements. (a) The Parties acknowledge that
the Ancillary Agreements other than the Sublicense Agreements have been executed
on the date hereof.
(b) The Parties agree to engage in Commercially Reasonable
Efforts to negotiate and enter into the Sublicense Agreements in forms
reasonably acceptable to them as promptly as practicable after the date hereof
and in any case by the Closing, such agreements to become effective as of the
Closing, and to use all Commercially Reasonable Efforts to obtain all necessary
consents, approvals and authorizations of all other parties to the grant of the
Sublicenses.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER
Seller represents and warrants to Buyer as follows:
4.1 Incorporation; Qualification. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation and has all requisite corporate power and authority to own,
lease, and operate its material properties and assets and to carry on its
business as is now being conducted. Seller is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each jurisdiction
in which its business as now being conducted shall require it to be so
qualified, except where the failure to be so qualified would not have a Material
Adverse Effect. Seller has heretofore delivered to Buyer true, complete and
correct copies of its Certificate of Incorporation and Bylaws as currently in
effect.
4.2 Authority Relative to this Agreement. Seller has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by it hereby. The execution and delivery of this
Agreement by Seller and the consummation of the transactions contemplated by
Seller hereby have been duly and validly authorized by all necessary corporate
25
action required on the part of Seller and this Agreement has been duly and
validly executed and delivered by Seller. Subject to the receipt of Seller's
Required Regulatory Approvals, this Agreement constitutes the legal, valid and
binding agreement of Seller, enforceable against Seller in accordance with its
terms, except that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity).
4.3 Consents and Approvals; No Violation. (a) Except as set forth in
Schedule 4.3(a), and subject to obtaining Seller's Required Regulatory
Approvals, neither the execution and delivery of this Agreement by Seller nor
the consummation by Seller of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of Seller, (ii) result in a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, material
agreement or other instrument or obligation to which Seller is a party or by
which it, or any of the Purchased Assets may be bound, except for such defaults
(or rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained or which, would not, individually or in
the aggregate, create a Material Adverse Effect; or (iii) constitute violations
of any law, regulation, order, judgment or decree applicable to Seller, which
violations, individually or in the aggregate, would create a Material Adverse
Effect.
(b) Except as set forth in Schedule 4.3(b), (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to as the
"Seller's Required Regulatory Approvals"), no declaration, authorization,
consent or approval of, filing or registration with, or notice to, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by Seller, or the consummation by Seller of the transactions
contemplated hereby, other than (i) such consents, approvals, filings or notices
which, if not obtained or made, will not prevent Seller from lawfully performing
its material obligations hereunder and (ii) such consents, approvals, filings or
notices which become applicable to Seller or the Purchased Assets as a result of
the specific regulatory status of Buyer (or any of its Affiliates) or as a
result of any other facts that specifically relate to the business or activities
in which Buyer (or any of its Affiliates) is or proposes to be engaged.
4.4 Insurance. Except as set forth in Schedule 4.4, all policies of
fire, liability, workers' compensation and other forms of insurance owned or
held by, or on behalf of, Seller with respect to the business, operations or
employees at the Plant or the Purchased Assets are in full force and effect, all
premiums with respect thereto covering all periods up to and including the
26
date hereof has been paid (other than retroactive premiums which may be payable
with respect to comprehensive general liability and workers' compensation
insurance policies), and no notice of cancellation or termination has been
received with respect to any such policy which was not replaced on substantially
similar terms prior to the date of such cancellation. Except as described in
Schedule 4.4, within the 36 months preceding the date of this Agreement, Seller
has not been refused any insurance with respect to the Purchased Assets nor has
coverage been limited by any insurance carrier to which Seller has applied for
any such insurance or with which Seller has carried insurance during the last 12
months.
4.5 Title and Related Matters. Except as set forth in Schedule 4.5 and
subject to Permitted Encumbrances, Seller holds a twenty percent (20%) undivided
interest in a good and valid license to occupy and use the Real Property
pursuant to the terms of the FERC License and has a twenty percent (20%)
undivided interest in good and valid title to the other Purchased Assets, in
each case free and clear of all Encumbrances.
4.6 Real Property Interests. Schedule 4.6 lists, as of the date of this
Agreement, all material instruments of conveyance or agreements ("Real Property
Agreements") under which Seller is a grantor or grantee of a leasehold, license,
easement or other interest in the Real Property ("Real Property Interests").
Except as set forth in Schedule 4.6, all such Real Property Agreements are
valid, binding and enforceable against and in full force and effect as against
Seller in accordance with their terms and, to Seller's knowledge the other
parties thereto; there are no existing material defaults by Seller or, to
Seller's Knowledge, any other party thereunder; and no event has occurred which
(whether with or without notice, lapse of time or both) would constitute a
material default by Seller or, to Seller's Knowledge, any other party thereunder
or to Seller's knowledge, give rise to any right of termination, cancellation or
acceleration or result in the creation or imposition of any lien, security
interest or Encumbrance on the Real Property Interests. Seller has delivered to
Buyer true, correct and complete copies of each of the material Real Property
Agreements.
4.7 Environmental Matters. Except as disclosed in Schedule 4.7 or in
the "Phase I" environmental site assessment prepared by Seller's outside
environmental consultants ("Environmental Reports") and made available for
inspection by Buyer:
(a) Seller holds, and is in substantial compliance with, all
permits, certificates, certifications, licenses and governmental authorizations
under Environmental Laws ("Environmental Permits") that are required for Seller
to conduct the business and operations of the Purchased Assets, and Seller is
otherwise in compliance with applicable Environmental Laws with respect to the
business and operations of such Purchased Assets except for such failures to
hold or comply with required Environmental Permits, or such failures to be in
27
compliance with applicable Environmental Laws, as would not, individually or in
the aggregate, create a Material Adverse Effect;
(b) Seller has not received any written request for
information, or been notified that it is a potentially responsible party, under
CERCLA or any similar state law with respect to the Site;
(c) Seller has not entered into or agreed to any consent
decree or order relating to the Purchased Assets, or is subject to any
outstanding judgment, decree, or judicial order relating to compliance with any
Environmental Law or to investigation or cleanup of Hazardous Substances under
any Environmental Law relating to the Purchased Assets.
(d) To Seller's Knowledge, no Releases of Hazardous Substances
have occurred at, from, in, on, or under the Site, and no Hazardous Substances
are present in, on, about or migrating from the Site that could give rise to an
Environmental Claim related to the Purchased Assets for which Remediation
reasonably could be required, except in any such case to the extent that any
such Releases would not, individually or in the aggregate, create a Material
Adverse Effect.
The representations and warranties made in this Section 4.7
are Seller's exclusive representations and warranties relating to environmental
matters.
4.8 Labor Matters. Seller has previously delivered to Buyer true and
correct copies of all collective bargaining agreements to which it is a party or
is subject and which relates to the business and operations of the Purchased
Assets. With respect to the business or operations of such Purchased Assets,
except to the extent set forth in Schedule 4.8 and except for such matters as
will not, individually or in the aggregate, create a Material Adverse Effect,
Seller (a) is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours;
(b) has not received written notice of any unfair labor practice complaint
against it pending before the National Labor Relations Board; (c) no arbitration
proceeding arising out of or under any collective bargaining agreements is
pending against Seller; and (d) Seller has not experienced any work stoppage
within the three-year period prior to the date hereof and to Seller's Knowledge
none is currently threatened.
4.9 Benefit Plans: ERISA. (a) Schedule 4.9(a) lists all deferred
compensation, profit-sharing, retirement and pension plans, including
multiemployer plans, and all material bonus, fringe benefit and other employee
benefit plans maintained or with respect to which contributions are made by
Seller, Genco, GPUN or GPUS in respect of the current employees of Seller,
Genco, GPUN or GPUS connected with the Purchased Assets ("Benefit Plans"). True
and complete copies of all Benefit Plans have been made available to Buyer.
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(b) Except as set forth in Schedule 4.9(b), Seller and the ERISA
Affiliates have fulfilled their respective obligations under the minimum funding
requirements of Section 302 of ERISA, and Section 412 of the Code, with respect
to each Benefit Plan which is an "employee pension benefit plan" as defined in
Section 3(2) of ERISA and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code. Except
as set forth in Schedule 4.9(b), neither Seller nor any ERISA Affiliate has
incurred any liability under Section 4062(b) of ERISA to the Pension Benefit
Guaranty Corporation in connection with any Benefit Plan which is subject to
Title IV of ERISA or any withdrawal liability with respect to any Benefit Plan,
within the meaning of Section 4021 of ERISA, nor is there any reportable event
(as defined in Section 4043 of ERISA) with respect to any Benefit Plan. Except
as set forth in Schedule 4.9(b), the Internal Revenue Service has issued a
letter for each Benefit Plan which is intended to be qualified under Section
401(a) of the Code, which letter determines that such plan is qualified and
exempt from United States Federal Income Tax under Section 401(a) and 501(a) of
the Code, and Seller is not aware of any occurrence since the date of any such
determination letter which would affect adversely such qualification or tax
exemption.
(c) Neither Seller nor any ERISA Affiliate has engaged in any
transaction described in Section 4069(a) or Section 4212(c) of ERISA. No Benefit
Plan is a multiemployer plan.
(d) Seller and Seller's Affiliates have materially complied in good
faith with the notice and continuation requirements of Section 4980B of the
Code, and Part 6 of Subtitle B of Title I of ERISA with respect to any Benefit
Plan.
4.10 Real Property Schedule 4.10 contains a description of the real
property which is subject to the FERC License and there is no other real
property necessary to own or operate the Plant.
4.11 Condemnation. Except as set forth in Schedule 4.11, Seller has not
received any written notices of and otherwise has no Knowledge of any pending or
threatened proceedings or governmental actions to condemn or take by power of
eminent domain all or any part of the Purchased Assets which could reasonably be
anticipated to result in a Material Adverse Effect.
4.12 Contracts and Leases. (a) Schedule 4.12(a) lists each written
contract, license, agreement, or personal property lease which is material to
the business or operations of the Purchased Assets, other than any contract,
license, agreement or personal property lease which is listed or described on
another Schedule, or which is expected to expire or terminate prior to the
Closing Date, or which provides for annual payments by Seller after the date
hereof of less than $250,000 or payments by Seller after the date hereof of less
than $1,000,000 in the aggregate.
29
(b) Except as disclosed in Schedule 4.12(b), each Seller's
Agreement (i) constitutes a legal, valid and binding obligation of Seller and,
to Seller's Knowledge, constitutes a valid and binding obligation of the other
parties thereto, and (ii) may be transferred to Buyer pursuant to this Agreement
without the consent of the other parties thereto and will continue in full force
and effect thereafter, unless in any such case the impact of such lack of
legality, validity or binding nature, or inability to transfer, would not,
individually or in the aggregate, create a Material Adverse Effect.
(c) Except as set forth in Schedule 4.12(c), there is not,
under Seller's Agreements, any default or event which, with notice or lapse of
time or both, would constitute a default on the part of Seller or to Seller's
Knowledge, any of the other parties thereto, except such events of default and
other events which would not, individually or in the aggregate, create a
Material Adverse Effect.
4.13 Legal Proceedings, etc. Except as set forth in Schedule 4.13,
there are no actions or proceedings pending or to Seller's knowledge overtly
threatened against Seller before any court, arbitrator or Governmental
Authority, which could, individually or in the aggregate, reasonably be expected
to create a Material Adverse Effect. Except as set forth in Schedule 4.13,
Seller is not subject to any outstanding judgments, rules, orders, writs,
injunctions or decrees of any court, arbitrator or Governmental Authority which
would, individually or in the aggregate, create a Material Adverse Effect.
4.14 Permits. (a) Seller has all permits, licenses, franchises and
other governmental authorizations, consents and approvals, (other than
Environmental Permits, which are addressed in Section 4.7 hereof) (collectively,
"Permits") necessary to permit Seller to own and operate the Purchased Assets as
presently owned and operated except where the failure to have such Permits would
not, individually or in the aggregate, create a Material Adverse Effect. Except
as disclosed on Schedule 4.14(a), Seller has not received any notification that
it is in violation of any such Permits, except notifications of violations which
would not, individually or in the aggregate, create a Material Adverse Effect.
Seller is in compliance with all such Permits except where non-compliance would
not, individually or in the aggregate, create a Material Adverse Effect.
(b) Schedule 4.14(b) sets forth all material Permits and
Environmental Permits, other than Transferable Permits (which are set forth on
Schedule 1.1(94)) related to the Purchased Assets.
4.15 Taxes Seller has filed all returns required to be filed by it with
respect to any Tax relating to the Purchased Assets, and Seller has paid all
Taxes that have become due as indicated thereon, except where such Tax is
30
being contested in good faith by appropriate proceedings, or where the failure
to so file or pay would not reasonably be expected to create a Material Adverse
Effect. Seller has complied in all material respects with all applicable laws,
rules and regulations relating to withholding Taxes relating to Transferred
Employees. All Tax Returns relating to the Purchased Assets are true, correct
and complete in all material respects. Except as set forth in Schedule 4.15, no
notice of deficiency or assessment has been received from any taxing authority
with respect to liabilities for Taxes of Seller in respect of the Purchased
Assets, which have not been fully paid or finally settled, and any such
deficiency shown in Schedule 4.15 is being contested in good faith through
appropriate proceedings. Except as set forth in Schedule 4.15, there are no
outstanding agreements or waivers extending the applicable statutory periods of
limitation for Taxes associated with the Purchased Assets that will be binding
upon Buyer after the Closing. None of the Purchased Assets is property that is
required to be treated as being owned by any other person pursuant to the
so-called safe harbor lease provisions of former Section 168(f) of the Code, and
none of the Purchased Assets is "tax-exempt use" property within the meaning of
Section 168(h) of the Code. Schedule 4.15 sets forth the taxing jurisdictions in
which Seller owns assets or conducts business that require a notification to a
taxing authority of the transactions contemplated by this Agreement, if the
failure to make such notification, or obtain Tax clearance certificates in
connection therewith, would either require Buyer to withhold any portion of the
Purchase Price or subject Buyer to any liability for any Taxes of Seller.
4.16 Intellectual Property Schedule 2.1(j) sets forth all Intellectual
Property used in and, individually or in the aggregate with other Intellectual
Property, which is material to the operation or business of the Purchased
Assets, each of which Seller or its Affiliates either has all right, title and
interest in or valid and binding rights under contract to use. Except as
disclosed in Schedule 4.16, (i) Seller is not, nor has it received any notice
that it is, in default (or with the giving of notice or lapse of time or both,
would be in default), under any contract to use such Intellectual Property, and
(ii) to Seller's Knowledge, such Intellectual Property is not being infringed by
any other Person. Seller has not received notice that it is infringing any
Intellectual Property of any other Person in connection with the operation or
business of the Purchased Assets, and Seller, to its Knowledge, is not
infringing any Intellectual Property of any other Person the effect of which,
individually or in the aggregate, would have a Material Adverse Effect.
4.17 Capital Expenditures. Except as set forth in Schedule 6.1, there
are no capital expenditures associated with the Purchased Assets that are
planned by Seller through December 31, 1999.
31
4.18 Compliance With Laws. Seller is in compliance with all applicable
laws, rules and regulations with respect to the ownership or operation of the
Purchased Assets except where the failure to be in compliance would not,
individually or in the aggregate, create a Material Adverse Effect.
4.19 PUHCA. Seller is a wholly owned subsidiary of GPU, Inc., which is
a holding company registered under the Public Utility Holding Company Act of
1935.
4.20 DISCLAIMERS REGARDING PURCHASED ASSETS. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV, THE PURCHASED
ASSETS ARE SOLD "AS IS, WHERE IS", AND SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
LIABILITIES, OPERATIONS OF THE PLANT, THE TITLE, CONDITION, VALUE OR QUALITY OF
THE PURCHASED ASSETS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER
INCIDENTS OF THE PURCHASED ASSETS AND SELLER SPECIFICALLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE WITH RESPECT TO THE PURCHASED ASSETS, OR ANY PART
THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS
THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS, OR THE APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENTS, INCLUDING
BUT NOT LIMITED TO ANY ENVIRONMENTAL LAWS, OR WHETHER SELLER POSSESSES
SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE PURCHASED ASSETS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, SELLER FURTHER SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS
SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS
WITH RESPECT TO THE PURCHASED ASSETS. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE CONDITION OF
THE PURCHASED ASSETS OR THE SUITABILITY OF THE PURCHASED ASSETS FOR OPERATION AS
A POWER PLANT AND NO SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER
MATERIAL OR INFORMATION PROVIDED BY OR COMMUNICATIONS MADE BY SELLER OR ITS
REPRESENTATIVES, OR BY ANY BROKER OR INVESTMENT BANKER, WILL CAUSE OR CREATE ANY
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, CONDITION, VALUE OR QUALITY OF
THE PURCHASED ASSETS.
Seller makes no warranties and representations of any kind, whether
direct or implied, that any of the hardware, software, and firmware product
(including embedded microcontrollers in non-computer equipment) which may be
included in the Purchased Assets to be transferred under this Agreement (the
"Computer Systems") is Year 2000 Compliant. For purposes hereof, "Year 2000
Compliant" shall mean that the Computer Systems will correctly differentiate
between years, in different centuries, that end in the same two digits, and will
accurately process date/time data (including, but not limited to, calculating,
comparing, and sequencing) from, into, and between the twentieth and
twenty-first centuries, including leap year calculations.
32
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1. Organization. Buyer is a corporation, duly organized, validly
existing and in good standing under the laws of the state of its organization
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as is now being conducted. Buyer is,
or by the Closing will be, qualified to do business in the Commonwealth of
Pennsylvania. Buyer has heretofore delivered to Seller complete and correct
copies of its Articles of Incorporation and Code of Regulations(or other similar
governing documents) as currently in effect.
5.2 Authority Relative to this Agreement. Buyer has full corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated by it hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements by Buyer and the consummation of the transactions contemplated hereby
and thereby by Buyer have been duly and validly authorized by all necessary
corporate action required on the part of Buyer. This Agreement and the Ancillary
Agreements have been duly and validly executed and delivered by Buyer. Subject
to the receipt of Buyer Required Regulatory Approvals, this Agreement and the
Ancillary Agreements constitute legal, valid and binding agreements of Buyer,
enforceable against Buyer in accordance with their terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
5.3. Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 5.3(a), and subject to
obtaining Buyer Required Regulatory Approvals, neither the execution and
delivery of this Agreement and the Ancillary Agreements by Buyer nor the
consummation by Buyer of the transactions contemplated hereby and thereby will
(i) conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws (or other similar governing documents) of Buyer, or (ii)
result in a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, material agreement or other instrument or obligation
to which Buyer or any of its Subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
33
consents have been obtained or which would not, individually or in the
aggregate, have a material adverse effects on the business, assets, operations
or condition (financial or otherwise) of Buyer ("Buyer Material Adverse Effect")
or (iii) violate any law, regulation, order, judgment or decree applicable to
Buyer, which violations, individually or in the aggregate, would create a Buyer
Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) (the filings and approvals
referred to in such Schedule are collectively referred to as the "Buyer Required
Regulatory Approvals"), no consent or approval of, filing with, or notice to,
any Governmental Authority is necessary for Buyer's execution and delivery of
this Agreement and the Ancillary Agreements, or the consummation by Buyer of the
transactions contemplated hereby and thereby, other than such consents,
approvals, filings or notices, which, if not obtained or made, will not prevent
Buyer from performing its obligations under this Agreement and the Ancillary
Agreements.
5.4 Availability of Funds. Buyer Parent (as defined below) has
sufficient funds and lines of credit available to it or has received binding
written commitments from creditworthy financial institutions, copies of which
have been provided to Seller, to provide sufficient funds on the Closing Date to
pay the Purchase Price and to permit Buyer to timely perform all of its
obligations under this Agreement and the Ancillary Agreements.
5.5 Financial Representations. Buyer has provided Seller with the
balance sheet, income statement and statement of changes in cash flows of
FirstEnergy Corp. ("Buyer Parent") for each of the preceding three fiscal years
and most recent interim period. Such financial statements have been prepared in
accordance with generally accepted accounting principles and fairly reflect the
financial posture and results of operations of Buyer Parent as at and for the
periods therein.
5.6 Legal Proceedings. There are no actions or proceedings pending
against Buyer before any court or arbitrator or Governmental Authority, which,
individually or in the aggregate, could reasonably be expected to create a Buyer
Material Adverse Effect. Buyer is not subject to any outstanding judgments,
rules, orders, writs, injunctions or decrees of any court, arbitrator or
Governmental Authority which would, individually or in the aggregate, create a
Buyer Material Adverse Effect.
5.7 No Knowledge of Seller's Breach. Buyer has no Knowledge of any
breach by Seller of any representation or warranty of Seller, or of any other
condition or circumstance that would excuse Buyer from its timely performance of
its obligations hereunder. Buyer shall notify Seller promptly if any such
information comes to its attention prior to the Closing.
34
5.8 Qualified Buyer. Buyer is qualified to obtain any Permits and
Environmental Permits necessary for Buyer to own and operate the Purchased
Assets as of the Closing. Without limiting the foregoing, Buyer is not aware of
any reason or circumstance that would prevent Buyer from procuring Buyer
Required Regulatory Approvals associated with Exempt Wholesale Generator (as
defined in the Public Utility Holding Company Act of 1935) status and
market-based rate authorization specified in items 3 and 2 of Schedule 5.3(b).
5.9 Inspections. Subject to the restrictions set forth in Section
6.2(a), Buyer acknowledges and agrees that it has, prior to its execution of
this Agreement, (i) reviewed the Environmental Reports, (ii) had full
opportunity to conduct to its satisfaction Inspections of the Purchased Assets,
including the Site, and (iii) fully completed and approved the results of all
Inspections of the Purchased Assets. Subject to the restrictions set forth in
Section 6.2(a), Buyer acknowledges that it is satisfied through such review and
Inspections that no further investigation and study on or of the Site is
necessary for the purposes of acquiring the Purchased Assets for Buyer's
intended use. Buyer acknowledges and agrees that it hereby assumes the risk that
adverse past, present, and future physical characteristics and Environmental
Conditions may not have been revealed by its Inspections and the investigations
of the Purchased Assets contained in the Environmental Reports. In making its
decision to execute this Agreement, and to purchase the Purchased Assets, Buyer
has relied on and will rely upon, among other things, the results of its
Inspections and the Environmental Reports.
5.10 WARN Act. Buyer does not intend to engage in a Plant Closing or
Mass Layoff as such terms are defined in the WARN Act within sixty days of the
Closing Date.
ARTICLE VI
COVENANTS OF THE PARTIES
(a) 6.1 Conduct of Business Relating to the Purchased Assets. (a)
Except as described in Schedule 6.1 or as expressly contemplated by this
Agreement or to the extent Buyer otherwise consents in writing, during the
period from the date of this Agreement to the Closing Date, Seller (i) will
operate the Purchased Assets in the ordinary course of business consistent with
the past practices of Seller or its Affiliates or with Good Utility Practices,
(ii) shall use all Commercially Reasonable Efforts to preserve intact such
Purchased Assets, and endeavor to preserve the goodwill and relationships with
customers, suppliers and others having business dealings with it, (iii)
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shall maintain the insurance coverage described in Section 4.4 consistent with
past practice or Good Utility Practice, (iv) shall comply with all applicable
laws relating to the Purchased Assets, including without limitation, all
Environmental Laws, except where the failure to so comply would not result in a
Material Adverse Effect, and (v) shall continue with Seller's program, or (at
Buyer's expense) as Buyer may direct, to install such equipment or software with
respect to Year 2000 Compliance in accordance with Seller's plans referred to in
Section 2.1(i). Without limiting the generality of the foregoing, and, except as
(x) contemplated in this Agreement, (y) described in Schedule 6.1, or (z)
required under applicable law or by any Governmental Authority, prior to the
Closing Date, without the prior written consent of Buyer, Seller shall not with
respect to the Purchased Assets:
(i) Make any material change in the levels of
Inventories customarily maintained by Seller or its Affiliates with
respect to the Purchased Assets, other than changes which are
consistent with Good Utility Practices;
(ii) Sell, lease (as lessor), encumber, pledge,
transfer or otherwise dispose of, any material Purchased Assets
individually or in the aggregate (except for Purchased Assets used,
consumed or replaced in the ordinary course of business consistent with
past practices of Seller or its Affiliates or with Good Utility
Practices) other than to encumber Purchased Assets with Permitted
Encumbrances;
(iii) Modify, amend or voluntarily terminate prior to
the expiration date any of Seller's Agreements or Real Property
Interests or any of the Permits or Environmental Permits associated
with such Purchased Assets in any material respect, other than (a) in
the ordinary course of business, to the extent consistent with the past
practices of Seller or its Affiliates or with Good Utility Practices,
(b) with cause, to the extent consistent with past practices of Seller
or its Affiliates or with Good Utility Practices, or (c) as may be
required in connection with transferring Seller's rights or obligations
thereunder to Buyer pursuant to this Agreement;
(iv) Except as otherwise provided herein, enter into
any contract, agreement, commitment or arrangement relating to the
Purchased Assets that individually exceeds $250,000 or in the aggregate
exceeds $1,000,000 unless it is terminable by Seller (or, after the
Closing, by Buyer) without penalty or premium upon no more than sixty
(60) days notice;
(v) Except as otherwise required by the terms of the
Collective Bargaining Agreement, (a) hire at, or transfer to the
Purchased Assets, any new employees prior to the Closing, other than
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to fill vacancies in existing positions in the reasonable discretion
of Seller, (b) materially increase salaries or wages of employees
employed in connection with the Purchased Assets prior to the Closing,
(c) take any action prior to the Closing to effect a material change
in the Collective Bargaining Agreement, or (d) take any action prior
to the Closing to materially increase the aggregate benefits payable
to the employees employed in connection with the Purchased Assets;
(vi) Make any Capital Expenditures except as
permitted by Section 3.3(a)(iii) or for Seller's account; and
(vii) Except as otherwise provided herein, enter into
any written or oral contract, agreement, commitment or arrangement with
respect to any of the proscribed transactions set forth in the
foregoing paragraphs (i) through (vi).
6.2 Access to Information.
(a) Between the date of this Agreement and the Closing Date,
Seller will, at reasonable times and upon reasonable notice: (i) give Buyer and
its Representatives reasonable access to its managerial personnel and to all
books, records, plans, equipment, offices and other facilities and properties
constituting the Purchased Assets; (ii) furnish Buyer with such financial and
operating data and other information with respect to the Purchased Assets as
Buyer may from time to time reasonably request, and permit Buyer to make such
reasonable Inspections thereof as Buyer may request; (iii) furnish Buyer at its
request a copy of each material report, schedule or other document filed by
Seller or any of its Affiliates with respect to the Purchased Assets with the
SEC, FERC, PaPUC, PaDEP or any other Governmental Authority; and (iv) furnish
Buyer with all such other information as shall be reasonably necessary to enable
Buyer to verify the accuracy of the representations and warranties of Seller
contained in this Agreement; provided, however, that (A) any such inspections
and investigations shall be conducted in such a manner as not to interfere
unreasonably with the operation of the Purchased Assets, (B) Seller shall not be
required to take any action which would constitute a waiver of the
attorney-client privilege, and (C) Seller need not supply Buyer with any
information which Seller is under a legal or contractual obligation not to
supply. Notwithstanding anything in this Section 6.2 to the contrary, Seller
will only furnish or provide such access to Transferring Employee Records and
will not furnish or provide access to other employee personnel records or
medical information unless required by law or specifically authorized by the
affected employee, nor shall Buyer have the right prior to the Closing to
administer to any of Seller's employees any skills, aptitudes, psychological
37
profile, or other employment related test. Buyer shall not have the right to
perform or conduct any environmental sampling or testing at, in, on, or
underneath the Purchased Assets.
(b) Each Party shall, and shall use its best efforts to cause
its Representatives to, (i) keep all Proprietary Information of the other Party
confidential and not to disclose or reveal any such Proprietary Information to
any person other than such Party's Representatives and (ii) not use such
Proprietary Information other than in connection with the consummation of the
transactions contemplated hereby. After the Closing Date, any Proprietary
Information to the extent related to the Purchased Assets shall no longer be
subject to the restrictions set forth herein. The obligations of the Parties
under this Section 6.2(b) shall be in full force and effect for three (3) years
from the date hereof and will survive the termination of this Agreement, the
discharge of all other obligations owed by the Parties to each other and the
closing of the transactions contemplated by this Agreement.
(c) For a period of seven (7) years after the Closing Date (or
such longer period as may be required by applicable law or Section 6.8(e)), each
Party and its Representatives shall have reasonable access to all of the books
and records of the Purchased Assets, including all Transferring Employee Records
in the possession of the other Party to the extent that such access may
reasonably be required by such Party in connection with the Assumed Liabilities
or the Excluded Liabilities, or other matters relating to or affected by the
operation of the Purchased Assets. Such access shall be afforded by the Party in
possession of any such books and records upon receipt of reasonable advance
written notice and during normal business hours. The Party exercising this right
of access shall be solely responsible for any costs or expenses incurred by it
or the other Party with respect to such access pursuant to this Section 6.2(c).
If the Party in possession of such books and records shall desire to dispose of
any books and records upon or prior to the expiration of such seven-year period
(or any such longer period), such Party shall, prior to such disposition, give
the other Party a reasonable opportunity at such other Party's reasonable
expense, to segregate and remove such books and records as such other Party may
select.
(d) Notwithstanding the terms of Section 6.2(b) above, the
Parties agree that prior to the Closing Buyer may reveal or disclose Proprietary
Information to any other Persons in connection with Buyer's financing or risk
management if reasonably necessary of its purchase of the Purchased Assets or
any equity participation in Buyer's purchase of the Purchased Assets (provided
that such Persons agree in writing to maintain the confidentiality of the
Proprietary Information in accordance with this Agreement).
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(e) Upon the other Party's prior written approval (which will
not be unreasonably withheld or delayed), either Party may provide Proprietary
Information of the other Party to the PaPUC, the SEC, the FERC or any other
Governmental Authority with jurisdiction or any stock exchange, as may be
necessary to obtain Seller's Required Regulatory Approvals, or Buyer Required
Regulatory Approvals, respectively, or to comply generally with any relevant law
or regulation. The disclosing Party will seek confidential treatment for the
Proprietary Information provided to any Governmental Authority and the
disclosing Party will notify the other Party as far in advance as is practicable
of its intention to release to any Governmental Authority any Proprietary
Information.
(f) Except as specifically provided herein or in the
Confidentiality Agreement, nothing in this Section shall impair or modify any of
the rights or obligations of Buyer or its Affiliates under the Confidentiality
Agreement, all of which remain in effect until termination of such agreement in
accordance with its terms.
(g) Except as may be permitted in the Confidentiality
Agreement, Buyer agrees that, prior to the Closing Date, it will not contact any
vendors, suppliers, employees, or other contracting parties of Seller or its
Affiliates with respect to any aspect of the Purchased Assets or the
transactions contemplated hereby, without the prior written consent of Seller,
which consent shall not be unreasonably withheld.
(h) Except as required by law, negotiation or legal process,
unless otherwise agreed to in writing by the Buyer, which shall not be
unreasonably withheld, for a period commencing on the Closing Date and
terminating three years after such date the Seller shall keep (i) all
Proprietary Information confidential and not disclose or reveal any Proprietary
Information to any Person other than its Representatives who are actively and
directly participating in the transactions contemplated hereby or who otherwise
need to know the Proprietary Information for such purpose and to cause those
Persons to observe the terms of this Section 6.2(h) and, (ii) not to use
Proprietary Information for any purpose other than consistent with the terms of
this Agreement. The Seller shall continue to hold all Proprietary Information
according to the same internal security procedures and with the same degree of
care regarding its secrecy and confidentiality as currently applicable thereto.
The Seller shall notify the Buyer of any unauthorized disclosure to third
parties that it discovers, and shall endeavor to prevent any further such
disclosures. The Seller shall be responsible for any breach of the terms of this
Section 6.2(h) by the Seller or its Representatives.
After the Closing Date, in the event that the Seller is
requested pursuant to, or required by, applicable law or regulation or by legal
process to disclose any Proprietary Information, or any other information
concerning the Purchased Assets, or the transactions contemplated hereby, the
39
Seller shall provide the Buyer with prompt notice of such request or requirement
in order to enable the Buyer to seek an appropriate protective order or other
remedy, to consult with the Seller with respect to taking steps to resist or
narrow the scope of such request or legal process, or to waive compliance, in
whole or in part, with the terms of this Section 6.2(h). The Seller agrees not
to oppose any action by the Buyer to obtain a protective order or other
appropriate remedy after the Closing Date. In the event that no such protective
order or other remedy is obtained, or that the Buyer waives compliance with the
terms of this Section 6.2(h), the Seller shall furnish only that portion of the
Proprietary Information which the Seller is advised by counsel is legally
required. In any such event the Seller shall use its reasonable best efforts to
ensure that all Proprietary Information and other information that is so
disclosed will be accorded confidential treatment.
(i) Buyer shall be entitled to inspect, in accordance with
this Section 6.2(i), all of the Purchased Assets located adjacent to any Point
of Interconnection (as defined in the Interconnection Agreement), as shown in
Schedule A to the Interconnection Agreement, to verify and/or determine the
accuracy of the data, drawings, and records described in such Schedule. The
Parties shall cooperate to schedule Buyer's inspection at the Plant so that any
interference with the operation of the Plant is minimized, to the extent
reasonably feasible, and so that Buyer may complete its inspections of the Plant
within thirty (30) working days of commencement of inspections and within two
(2) months after the execution of this Agreement.
(ii) Seller shall provide, or shall cause to be provided, to
Buyer, access to the Plant at the times scheduled for the inspections. Seller
shall provide qualified engineering, operations, and maintenance personnel to
escort Buyer's personnel and to assist Buyer's personnel in conducting the
inspections. Seller and Buyer shall each bear their own costs of participating
in the inspections. At a mutually convenient time not more than one (1) month
after Buyer has completed its inspections, the Parties shall meet to discuss
whether, as a result of the inspections, it is appropriate to modify Schedule A
to the Interconnection Agreement to portray more accurately the Points of
Interconnection. Any modification to any portion of Schedule A of the
Interconnection Agreement to which the Parties agree shall thereafter be deemed
part of Schedule A of the Interconnection Agreement for all purposes under the
Interconnection Agreement.
6.3. Public Statements. Subject to the requirements imposed by any
applicable law or any Governmental Authority or stock exchange, prior to the
Closing Date, no press release or other public announcement or public statement
or comment in response to any inquiry relating to the transactions contemplated
by this Agreement shall be issued or made by any Party without the prior
40
approval of the other Parties (which approval shall not be unreasonably
withheld). The Parties agree to cooperate in preparing such announcements.
6.4. Expenses. Except to the extent specifically provided herein,
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the Party incurring such costs and
expenses. Notwithstanding anything to the contrary herein, Buyer will be
responsible for (a) all costs and expenses associated with the obtaining of any
title insurance policy and all endorsements thereto that Buyer elects to obtain
and (b) all filing fees under the HSR Act.
6.5. Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each
of the Parties hereto shall use its best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the purchase and sale of the Purchased Assets pursuant to this Agreement and the
assumption of the Assumed Liabilities, including without limitation using its
best efforts to ensure satisfaction of the conditions precedent to each Party's
obligations hereunder, including obtaining all necessary consents, approvals,
and authorizations of third parties and Governmental Authorities required to be
obtained in order to consummate the transactions hereunder, and to effectuate a
transfer of the Transferable Permits to Buyer. Buyer agrees to use Commercially
Reasonable Effort to perform all conditions required of Buyer in connection with
Seller's Required Regulatory Approvals. Neither of the Parties hereto shall,
without prior written consent of the other Party, take or fail to take any
action, which might reasonably be expected to prevent or materially impede,
interfere with or delay the transactions contemplated by this Agreement. From
time to time after the date of Closing, without further consideration, Seller
will, at Buyer's expense, execute and deliver such documents to Buyer as Buyer
may reasonably request in order to more effectively vest in Buyer the Seller's
title to the Purchased Assets subject to Permitted Encumbrances. From time to
time after the date of Closing, Buyer will, at Seller's expense, execute and
deliver such documents to the Seller as Seller may reasonably request in order
to more effectively consummate the transfer to Seller of rights in the Purchased
Assets pursuant to this Agreement and the Sublicense Agreements.
(b) Buyer agrees that prior to the Closing Date, neither Buyer nor any
of its Affiliates will enter into any other contract to acquire, nor acquire,
electric generation facilities or uncommitted generation capacity located in the
41
control area recognized by the North American Electric Reliability Council as
the PJM Control Area if the proposed acquisition of such additional electric
generation facilities or uncommitted generation capacity might reasonably be
expected to prevent or materially impede, interfere with or delay the
transactions contemplated by this Agreement. Buyer shall give Seller reasonable
advance notice (and in any event not less than 30 days) before the entering into
of contracts to acquire or acquires any electric generation facility or
uncommitted generation capacity located in the said PJM Control Area.
(c) In the event that any Purchased Asset shall not have been
conveyed to Buyer at the Closing, Seller shall, subject to Section 6.5(d), use
Commercially Reasonable Efforts to convey such asset to Buyer as promptly as is
practicable after the Closing. In the event that any Real Property Interests
shall not have been granted by Buyer to Seller at the Closing, Buyer shall use
Commercially Reasonable Efforts to grant such Real Property Interests to Seller
as promptly as is practicable after the Closing.
(d) To the extent that Seller's rights under any Seller's
Agreement or Real Property Agreement may not be assigned without the consent of
another Person which consent has not been obtained by the Closing Date, this
Agreement shall not constitute an agreement to assign or deliver the same, if an
attempted assignment or delivery would constitute a breach thereof or be
unlawful. Seller and Buyer agree that if any consent to an assignment or
delivery of any material Seller's Agreement or Real Property Agreement shall not
be obtained or if any attempted assignment would be ineffective or would impair
Buyer's rights and obligations under the material Seller's Agreement or Real
Property Interest in question, so that Buyer would not in effect acquire the
benefit of all such rights and obligations, Seller, at Buyer's option and to the
maximum extent permitted by law and such material Seller's Agreement or Real
Property Agreement, shall, after the Closing Date, appoint Buyer to be Seller's
agent with respect to such material Seller's Agreement or Real Property
Agreement, or, to the maximum extent permitted by law and such material Seller's
Agreement or Real Property Agreement, enter into such reasonable arrangements
with Buyer or take such other actions as are necessary to provide Buyer with the
same or substantially similar rights and obligations of such material Seller's
Agreement or Real Property Agreement as Buyer may reasonably request. Seller and
Buyer shall cooperate and shall each use Commercially Reasonable Efforts prior
to and after the Closing Date to obtain an assignment of such material Seller's
Agreement or Real Property Agreements to Buyer.
(e) To the extent that Seller's rights under any warranty or
guaranty described in Section 2.1(g) may not be assigned without the consent of
another Person, which consent has not been obtained by the Closing Date, this
Agreement shall not constitute an agreement to assign same, if an attempted
42
assignment would constitute a breach thereof, or be unlawful. Seller and Buyer
agree that if any consent to an assignment of any such warranty or guaranty
shall not be obtained, or if any attempted assignment would be ineffective or
would impair Buyer's rights and obligations under the warranty or guaranty in
question, so that Buyer would not in effect acquire the benefit of all such
rights and obligations, Seller, at Buyer's expense, shall use Commercially
Reasonable Efforts, to the extent permitted by law and such warranty or
guaranty, to enforce such warranty or guaranty for the benefit of Buyer so as to
provide Buyer to the maximum extent possible with the benefits and obligations
of such warranty or guaranty.
6.6 Consents and Approvals.
(a) As promptly as possible after the date of this Agreement,
Seller and Buyer, as applicable, shall each file or cause to be filed with the
Federal Trade Commission and the United States Department of Justice any
notifications required to be filed under the HSR Act and the rules and
regulations promulgated thereunder with respect to the transactions contemplated
hereby. The Parties shall use their respective best efforts to respond promptly
to any requests for additional information made by either of such agencies, and
to cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing. Buyer will pay all filing fees
under the HSR Act but each Party will bear its own costs of the preparation of
any filing.
(b) As promptly as possible after the date of this Agreement,
Buyer shall file with the FERC an application requesting Exempt Wholesale
Generator status for Buyer, which filing may be made individually by Buyer or
jointly with Seller in conjunction with other filings to be made with the FERC
under this Agreement, as reasonably determined by the Parties. Prior to Buyer's
submission of that application with the FERC, Buyer shall submit such
application to Seller for review and comment and Buyer shall incorporate into
the application any revisions reasonably requested by Seller. Buyer shall be
solely responsible for the cost of preparing and filing this application, any
petition(s) for rehearing, or any re-application. If Buyer's initial application
for Exempt Wholesale Generator status is rejected by the FERC, Buyer agrees to
petition the FERC for rehearing and/or to re-submit an application with the
FERC, as reasonably required by Seller, provided that in either case the action
directed by Seller does not create a Buyer Material Adverse Effect.
(c) As promptly as possible after the date of this Agreement,
Buyer shall file with the FERC an application requesting authorization under
Section 205 of the Federal Power Act to sell electric generating capacity and
energy, but not other services, including, without limitation, ancillary
43
services, at wholesale at market-based rates, which filing may be made
individually by Buyer or jointly with Seller in conjunction with other filings
to be made with the FERC under this Agreement, as reasonably determined by the
Parties. Prior to the filing of that application with the FERC, Buyer shall
submit such application to Seller for review and comment and Buyer shall
incorporate into the application any revisions reasonably requested by Seller.
Buyer shall be solely responsible for the cost of preparing and filing this
application, any petition(s) for rehearing, or any reapplication. If Buyer's
initial application for market-based rate authorization results in a FERC
request for additional information or is rejected by the FERC, Buyer shall
provide that information promptly, to petition the FERC for rehearing and/or to
re-submit an application with the FERC, as reasonably required by Seller,
provided that Seller shall have a reasonable opportunity to make changes to such
a petition or re-submission application and, provided further, that the action
directed by Seller does not create a Buyer Material Adverse Effect.
(d) As promptly as possible, and in any case within sixty (60)
days, after the date of this Agreement, Seller and Buyer, as applicable, shall
file with the PaPUC, the FERC and any other Governmental Authority, and make any
other filings required to be made with respect to the transactions contemplated
hereby. The Parties shall respond promptly to any requests for additional
information made by such agencies, and use their respective best efforts to
cause regulatory approval to be obtained at the earliest possible date after the
date of filing. Each Party will bear its own costs of the preparation of any
such filing.
(e) Without limitation of Section 10.11, Seller and Buyer
shall cooperate with each other and promptly prepare and file notifications
with, and request Tax clearances from, state and local taxing authorities in
jurisdictions in which a portion of the Purchase Price may be required to be
withheld or in which Buyer would otherwise be liable for any Tax liabilities of
Seller pursuant to such state and local Tax law.
(f) Buyer shall have the primary responsibility for securing
the transfer, reissuance or procurement of the Permits and Environmental Permits
(other than Transferable Permits) effective as of the Closing Date. Seller shall
cooperate with Buyer's efforts in this regard and assist in any transfer or
reissuance of a Permit or Environmental Permit held by Seller or the procurement
of any other Permit or Environmental Permit when so requested by Buyer. Without
limiting the foregoing, each Party will, as appropriate (i) promptly prepare and
file all necessary documentation, (ii) effect all necessary applications,
notices, petitions and filings and execute all agreements and documents, (iii)
use all Commercially Reasonable Efforts to obtain the transfer or reissuance to
the Buyer of all necessary Permits, Environmental Permits, consents, approvals
and authorizations of all Governmental Authorities and (iv) use all
44
Commercially Reasonable Efforts to obtain all necessary consents, approvals and
authorizations of all other parties, in the case of each of the foregoing
clauses (i), (ii), (iii) and (iv), necessary or advisable to consummate the
transactions contemplated by this Agreement (including, without limitation, the
Seller's Required Regulatory Approvals and the Buyer Required Regulatory
Approvals) or required by the terms of any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, concession, contract, lease or other
instrument to which the Seller is a party or by which Seller is bound. Each of
the Seller and the Buyer shall have the right to review in advance all
characterizations of the information relating to the transactions contemplated
by this Agreement which appear in any material filing made in connection with
the transactions contemplated hereby.
6.7 Fees and Commissions. Seller, on the one hand, and Buyer, on the
other hand, represent and warrant to the other that, except for Xxxxxxx, Xxxxx &
Co., which are acting for and at the expense of Seller, no broker, finder or
other Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the Party making such representation. Seller, on the one hand, and
Buyer, on the other hand, will pay to the other or otherwise discharge, and will
indemnify and hold the other harmless from and against, any and all claims or
liabilities for all brokerage fees, commissions and finder's fees (other than
the fees, commissions and finder's fees payable to the parties listed above)
incurred by reason of any action taken by the indemnifying party.
6.8 Tax Matters.
(a) All transfer and sales taxes incurred in connection with
this Agreement and the transactions contemplated hereby (including, without
limitation, (a) Pennsylvania sales tax; and (b) the Pennsylvania realty transfer
taxes on conveyances of interests in real property (including such taxes
assessed by Pennsylvania municipalities as well as by the Commonwealth of
Pennsylvania itself) shall be borne by Buyer. Except for the Pennsylvania Realty
Transfer Tax Statement of Value, which shall be filed by Buyer, Seller shall
file, to the extent required by, or permissible under, applicable law, all
necessary Tax Returns and other documentation with respect to all such transfer
and sales taxes, and, if required by applicable law, Buyer shall join in the
execution of any such Tax Returns and other documentation. Prior to the Closing
Date, to the extent applicable, Buyer shall provide to Seller appropriate
certificates of Tax exemption from each applicable taxing authority.
45
(b) With respect to Taxes to be prorated in accordance with
Section 3.5 of this Agreement, Buyer shall prepare and timely file all Tax
Returns required to be filed after the Closing Date with respect to the
Purchased Assets, if any, and shall duly and timely pay all such Taxes shown to
be due on such Tax Returns. Buyer's preparation of any such Tax Returns shall be
subject to Seller's approval, which approval shall not be unreasonably withheld.
Buyer shall make such Tax Returns available for Seller's review and approval no
later than fifteen (15) Business Days prior to the due date for filing each such
Tax Return.
(c) Buyer and Seller shall provide the other with such
assistance as may reasonably be requested by the other Party in connection with
the preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each shall retain and provide the requesting party with any
records or information which may be relevant to such return, audit, examination
or proceedings. Any information obtained pursuant to this Section 6.8(c) or
pursuant to any other Section hereof providing for the sharing of information or
review of any Tax Return or other instrument relating to Taxes shall be kept
confidential by the parties hereto. Schedule 6.8 sets forth procedures to be
followed with respect to the tax appeals and audits referred to therein.
(d) Disputes. In the event that a dispute arises between
Seller and Buyer as to the amount of Taxes, or indemnification, or the amount of
any allocation of Purchase Price under Section 3.4, the parties shall attempt in
good faith to resolve such dispute, and any agreed upon amount shall be paid to
the appropriate party. If such dispute is not resolved 30 days thereafter, the
parties shall submit the dispute to the Independent Accounting firm for
resolution, which resolution shall be final, conclusive and binding on the
parties. Notwithstanding anything in this Agreement to the contrary, the fees
and expenses of the Independent Accounting Firm in resolving the dispute shall
be borne equally by Seller and Buyer. Any payment required to be made as a
result of the resolution of the dispute by the Independent Accounting firm shall
be made within ten days after such resolution, together with any interest
determined by the Independent Accounting Firm to be appropriate.
(e) Cooperation. Buyer and Seller shall cooperate fully, as
and to the extent reasonably requested by the other Party, in connection with
the filing of Tax Returns pursuant to this Agreement and any audit, litigation
or other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other Party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees (to the extent such employees were responsible
for the preparation, maintenance or interpretation of information and documents
relevant to Tax matters or to the extent required as witnesses in
46
any Tax proceedings), available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. The
Parties agree to give the other Party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other Party so requests, Buyer or Seller, as the case may be, shall allow the
other Party to take possession of such books and records.
(f) Buyer and Seller further agree, upon request, to use their
best efforts to obtain any certificate or other document from any governmental
authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
6.9 Advice of Changes. Prior to the Closing, each Party will promptly
advise the other in writing with respect to any matter arising after execution
of this Agreement of which that Party obtains Knowledge and which, if existing
or occurring at the date of this Agreement, would have been required to be set
forth in this Agreement, including any of the Schedules hereto. Seller may at
any time notify Buyer of any development causing a breach of any of its
representations and warranties in Article IV. Unless Buyer has the right to
terminate this Agreement pursuant to Section 9.1(e) below by reason of the
developments (considered individually or in the aggregate with any such prior
developments) and exercises that right within the period of thirty (30) days
after such right accrues, the written notice pursuant to this Section 6.9 will
be deemed to have amended this Agreement, including the appropriate Schedule, to
have qualified the representations and warranties contained in Article IV above,
and to have cured any misrepresentation or breach of warranty that otherwise
might have existed hereunder by reason of the development.
6.10 Employees.
(a) At least 90 days prior to the Closing Date, Buyer shall
provide Seller with its staffing level requirements listed by classification and
operation and shall make reasonable efforts to offer employment, effective on
the Closing Date, to those employees of Seller who are covered by a Collective
Bargaining Agreement as defined in Section 6.10(d) below ("Union Employees") and
who are listed in, or whose employment responsibilities are listed in, Schedule
6.10(a)(i) as "Plant Employees" or "Dedicated Support Staff" as associated with
the Plant purchased by Buyer, provided, that Buyer shall be required to offer
employment only to that number of Union Employees necessary to satisfy such
staffing level requirements. In each classification, Union Employees shall be so
offered employment in order of their seniority.
(b) At least 90 days prior to the Closing Date, Buyer is also
required to make reasonable efforts to make a Qualifying Offer of employment
with Buyer or any of its Affiliates,
47
effective on the Closing Date, to those salaried employees of Seller, Genco, or
GPUS ("Non-Union Employees") who are listed in, or whose employment
responsibilities are listed in, Schedule 6.10(b) as "Plant Employees" or
"Dedicated Support Staff" as associated with the Plant purchased by Buyer. Each
person who becomes employed by Buyer or any of its Affiliates pursuant to
Section 6.10(a) or (b) (whether pursuant to a Qualifying Offer or otherwise)
shall be referred to herein as a "Transferred Union Employee" or "Transferred
Non-Union Employee", respectively. As used herein, the term "Qualifying Offer"
means an offer of employment at an annual level of compensation that is at least
85% of the employee's current total annual cash compensation (consisting of base
salary and target incentive bonus) at the time the offer is made. Schedule
6.10(b) sets forth, for each of the Non-Union Employees listed therein, his or
her current base salaries and target incentive bonuses.
(c) All offers of employment made pursuant to Sections 6.10(a)
or (b) shall be made in accordance with all applicable laws and regulations, and
in addition, for Union Employees, in accordance with seniority and all other
applicable provisions of the Collective Bargaining Agreement.
(d) Schedule 6.10(d) sets forth the collective bargaining
agreement, and amendments thereto, to which Seller is a party with the Union in
connection with the Purchased Assets ("Collective Bargaining Agreement").
Transferred Union Employees shall retain their seniority and receive full credit
for service with Seller in connection with entitlement to vacation and all other
benefits and rights under the Collective Bargaining Agreement and under each
compensation, retirement or other employee benefit plan or program Buyer is
required to maintain for Transferred Union Employees pursuant to the Collective
Bargaining Agreement. With respect to Transferred Union Employees, on the
Closing Date, Buyer shall assume the Collective Bargaining Agreement for the
duration of its term as it relates to Transferred Union Employees to be employed
at the Plant in positions covered by the Collective Bargaining Agreement and
shall comply with all applicable obligations under the Collective Bargaining
Agreement. Consistent with its obligations under the Collective Bargaining
Agreement and applicable laws, Buyer shall be required to establish and maintain
a pension plan and other employee benefit programs for the Transferred Union
Employees for the duration of the term of the Collective Bargaining Agreement
which are substantially equivalent to Seller's plans and programs in effect for
the Transferred Union Employees immediately prior to the Closing Date (the
"Seller's Plans"), and which provide at least the same level of benefits or
coverage as do Seller's Plans for the duration of the Collective Bargaining
Agreement. Buyer further agrees to recognize the Union as the collective
bargaining agent for the applicable Transferred Union Employees.
(e) As of the Closing Date, all Transferred Non-Union
Employees shall commence participation in welfare benefit plans of Buyer or its
Affiliates (the "Replacement Welfare Plans").
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Buyer shall (i) waive all limitations as to pre-existing condition exclusions
and waiting periods with respect to the Transferred Non-Union Employees under
the Replacement Welfare Plans, other than, but only to the extent of,
limitations or waiting periods that were in effect with respect to such
employees under the welfare plans maintained by Seller, Genco, GPUN or GPUS or
their Affiliates and that have not been satisfied as of the Closing Date, and
(ii) provide each Transferred Non-Union Employee with credit for any copayments
and deductibles paid prior to the Closing Date in satisfying any deductible or
out-of-pocket requirements under the Replacement Welfare Plans (on a pro-rata
basis in the event of a difference in plan years).
(f) Transferred Non-Union Employees shall be given credit for
all service with Seller, Genco, GPUN, GPUS and their Affiliates under all
deferred compensation, profit-sharing, 401(k), retirement pension, incentive
compensation, bonus, fringe benefit and other employee benefit plans, programs
and arrangements of Buyer ("Buyer Benefit Plans") in which they may become
participants. The service credit so given shall be for purposes of eligibility
and vesting, but shall not be for purposes of level of benefits and benefit
accrual except to the extent that the Buyer Benefit Plans otherwise provide.
(g) To the extent allowable by law, Buyer shall take any and
all necessary action to cause the trustee of any defined contribution plan of
Buyer or its Affiliates in which any Transferred Employee becomes a participant
to accept a direct "rollover" of all or a portion of said employee's "eligible
rollover distribution" within the meaning of Section 402 of the Code from the
GPU Companies Employee Savings Plan for Non-Bargaining Employees or from the
Employee Savings Plan for Bargaining Unit Employees maintained by Seller(the
"Seller's Savings Plans") if requested to do so by the Transferred Employee, or
to accept a direct plan-to-plan transfer from Seller's Savings Plans of the
account balances of any Transferred Employee and the assets of such plans
related thereto, if requested to do so by Seller or by the Transferred Employee.
Buyer agrees that the property so rolled over and the assets so transferred may
include (i) promissory notes evidencing loans from Seller's Savings Plans to
Transferred Employees that are outstanding as of the Closing Date, and (ii)
shares of GPU common stock in which the account balances of Transferred
Employees are invested as of the Closing Date. However, except as otherwise
provided in Section 6.10(d), any defined contribution plan of Buyer or its
Affiliates accepting such a rollover or transfer shall not be required to (x)
make any further loans to any Transferred Employee after the Closing Date or (y)
permit any additional investment to be made in GPU common stock on behalf of any
Transferred Employee after the Closing Date.
(h) Buyer shall pay or provide to Transferred Employees the
benefits described in subparagraphs (i), (ii) and (iii) of this Section 6.10(h),
and shall reimburse Seller for the cost of the benefits Seller or Seller's
Affiliates will provide Seller shall to Union Employees and Non-Union Employees
49
in accordance with subparagraph (iv)of this Section 6.10(h).
(i) Buyer shall make a transition incentive payment
in the amount of $2,500 to each Transferred Union Employee. Payment
shall be made as soon as practicable after, but in any event no later
than 60 days following, the Closing Date.
(ii) In the case of each Transferred Non-Union
Employee who is initially assigned by Buyer to a principal place of
work that is at least 50 miles farther from the employee's principal
residence than was his principal place of work immediately prior to the
Closing Date and who relocates his or her principal residence to the
vicinity of his or her new principal place of work within 12 months
following the Closing Date, Buyer shall reimburse the employee for all
"moving expenses" within the meaning of Section 217(b) of the Code
incurred by the employee and other members of his or her household in
connection with such relocation, up to a maximum aggregate amount of
$5,000. Claims for reimbursement for such expenses shall be filed in
accordance with such procedures, and shall be accompanied by such
substantiation of the expenses for which reimbursement is sought, as
Buyer may reasonably request. All claims for reimbursement shall be
processed, and qualifying expenses shall be reimbursed, as soon as
practicable after, but in any event no later than 60 days following,
the date on which the employee's claim for reimbursement is submitted
to Buyer.
(iii) Buyer shall provide the severance benefits
described in Section 1 of Schedule 6.10(h) to each Transferred Employee
who is "Involuntarily Terminated" (as defined below) (a) within 12
months after the Closing Date or (b), in the case of any Transferred
Non-Union Employee who had attained age 50 and had completed at least
10 Years of Service (as defined in Section 1(c) of Schedule 6.10(h))
prior to the Closing Date, on or any time prior to June 30, 2004. For
purposes of this Section 6.10(h) and Schedule 6.10(h), a Transferred
Employee shall be treated as "Involuntarily Terminated" if his or her
employment with Buyer and all of its Affiliates is terminated by Buyer
or any of its Affiliates for any reason other than for cause or
disability. Buyer shall require any Transferred Employee who is
Involuntarily Terminated, as a condition to receiving the severance
benefits described in Section 1(b), (c), (d), (e) and (f) of Schedule
6.10(h), to execute a release of claims against Seller, Genco, GPUN or
GPUS, as applicable, and all of their Affiliates, and Buyer, in such
form as Buyer and Seller shall agree upon.
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(iv) At the Closing or as soon thereafter as
practicable, but in any event no later than 60 days following the
Closing Date, Buyer shall pay to Seller, in addition to all other
amounts to be paid by Buyer to Seller hereunder, an amount equal to the
aggregate estimated cost that Seller or any of Seller's Affiliates will
or may incur in providing the severance, pension, health care and group
term life insurance benefits described in Section 2 of Schedule 6.10(h)
to the Union Employees and Non-Union Employees therein described
(collectively the "Termination Benefits"). The estimated cost of such
benefits shall be calculated by the actuarial firm regularly engaged to
provide actuarial services to the GPU Companies with respect to their
pension, health care and life insurance plans, and shall be determined
using the same assumptions as to mortality, turnover, interest rate and
other actuarial assumption as used by such firm in determining the cost
of benefits under the GPU Companies' pension, health and group term
life insurance plans for purposes of their most recently issued
financial statements prior to the Closing Date.
(i) Buyer shall not be responsible for any payments required
under any voluntary early retirement plan, program or arrangement offered by
Seller, Genco, GPUN or GPUS in connection with the transfer of the Purchased
Assets. Within thirty (30) days following the last day that any Union Employee
or Non-Union Employee may elect to participate in any such plan offered by
Seller, Genco, GPUN or GPUS, Seller shall provide Buyer with a list of all such
employees who have so elected.
(j) Seller shall be responsible, with respect to the Purchased
Assets, for performing and discharging all requirements under the WARN Act and
under applicable state and local laws and regulations for the notification of
its employees of any "employment loss" within the meaning of the WARN Act which
occurs prior to the Closing Date.
(k) Buyer shall not be responsible for extending COBRA
continuation coverage to any employees and former employees of Seller, Genco,
GPUN or GPUS, or to any qualified beneficiaries of such employees and former
employees, who become or became entitled to COBRA continuation coverage before
the Closing, including those for whom the Closing occurs during their COBRA
election period.
(l) Seller or Seller's Affiliates shall pay to all Transferred
Employees, all compensation, bonus, vacation and holiday compensation, workers'
compensation or other employment benefits to which they are entitled under the
terms of the applicable compensation or benefit programs.
(m) Individuals who are otherwise "Union Employees" as defined
in Section 6.10(a) or "Non-Union Employees" as defined in Section 6.10(b) but
who on any date are not actively at work due to a leave of absence covered by
the Family and Medical Leave Act
51
("FMLA"), or due to any other authorized leave of absence, shall nevertheless be
treated as "Union Employees" or as "Non-Union Employees", as the case may be, on
such date if they are able (i) to return to work within the protected period
under the FMLA or such other leave (which in any event shall not extend more
than twelve (12) weeks after the Closing Date), whichever is applicable, and
(ii) to perform the essential functions of their job, with or without a
reasonable accommodation.
6.11 Risk of Loss.
(a) From the date hereof through the Closing Date, all risk of
loss or damage to the property included in the Purchased Assets shall be borne
by Seller, other than loss or damage caused by the acts or negligence of Buyer
or any Buyer Representative, which loss or damage shall be the responsibility of
Buyer.
(b) If, before the Closing Date, all or any portion of the
Purchased Assets is (i) taken by eminent domain or is the subject of a pending
or (to the Knowledge of Seller) contemplated taking which has not been
consummated, or (ii) damaged or destroyed by fire or other casualty, Seller
shall notify Buyer promptly in writing of such fact, and (x) in the case of a
condemnation, Seller shall assign or pay, as the case may be, any proceeds
thereof to Buyer at the Closing and (y) in the case of a casualty, Seller shall
either restore the damage or assign the insurance proceeds therefor (and pay the
amount of any deductible and/or self-insured amount in respect of such casualty)
to Buyer at the Closing. Notwithstanding the above, if such casualty or loss
results in a Material Adverse Effect, Buyer and Seller shall negotiate to settle
the loss resulting from such taking (and such negotiation shall include, without
limitation, the negotiation of a fair and equitable adjustment to the Purchase
Price). If no such settlement is reached within sixty (60) days after Seller has
notified Buyer of such casualty or loss, then Buyer or Seller may terminate this
Agreement pursuant to Section 9.1(h). In the event of damage or destruction
which Seller elects to restore, Seller will have the right to postpone the
Closing for up to four (4) months. Buyer will have the right to inspect and
observe, or have its Representatives inspect or observe, all repairs
necessitated by any such damage or destruction.
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Buyer. The obligation of Buyer to
effect the purchase of the Purchased Assets and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date (or the waiver by Buyer) of the following conditions:
52
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall have
expired or been terminated.
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court or Governmental Authority which prevents
the consummation of the sale of the Purchased Assets contemplated herein shall
have been issued and remain in effect (each Party agreeing to use its reasonable
best efforts to have any such injunction, order or decree lifted) and no
statute, rule or regulation shall have been enacted by any state or federal
government or Governmental Authority which prohibits the consummation of the
sale of the Purchased Assets;
(c) Buyer shall have received all of Buyer's Required
Regulatory Approvals, containing no conditions or terms which would result in a
Material Adverse Effect;
(d) Seller shall have performed and complied in all material
respects with the covenants and agreements contained in this Agreement which are
required to be performed and complied with by Seller on or prior to the Closing
Date;
(e) The representations and warranties of Seller set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date as though made at and as of the Closing Date;
(f) Buyer shall have received certificates from an authorized
officer of Seller, dated the Closing Date, to the effect that, to such officer's
Knowledge, the conditions set forth in Section 7.1(d) and (e) have been
satisfied by Seller;
(g) Buyer shall have received an opinion from Seller's counsel
reasonably acceptable to Buyer, dated the Closing Date and reasonably
satisfactory in form and substance to Buyer and its counsel, substantially to
the effect that:
(i) Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of state of
incorporation and has the corporate power and authority to own, lease
and operate its material assets and properties and to carry on its
business as is now conducted, and to execute and deliver the Agreement
and each Ancillary Agreement and to consummate the transactions
contemplated by it thereby; and the execution and delivery of the
Agreement by Seller and the consummation of the sale of the Purchased
Assets contemplated thereby have been duly and validly authorized by
all necessary corporate action required on the part of Seller;
(ii) The Agreement and each Ancillary Agreement have
been duly and validly executed and delivered by Seller and contstiute
legal, valid and binding agreements of Seller enforceable against
Seller in accordance with their respective terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
53
fraudulent conveyance, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights
generally and general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity);
(iii) The execution, delivery and performance of the
Agreement and each Ancillary Agreement by Seller do not (A) conflict
with the Certificate of Incorporation or Bylaws of Seller or (B) to the
knowledge of such counsel, constitute a violation of or default under
those agreements or instruments set forth on a Schedule attached to the
opinion and which have been identified to such counsel as all the
agreements and instruments which are material to the business or
financial condition of Seller;
(iv) The Xxxx of Sale, the Assignment and Assumption
Agreement and other transfer instruments described in Section 3.6 are
in proper form to transfer to Buyer such title as was held by Seller to
the Purchased Assets;
(v) No consent or approval of, filing with, or notice
to, any Governmental Authority is necessary for the execution and
delivery of this Agreement and the Ancillary Agreements by Seller or
the consummation by Seller of the transactions contemplated hereby,
other than (i) such consents, approvals, filings or notices set forth
in Schedule 4.3(b) or which, if not obtained or made, will not prevent
Seller from performing their material obligations hereunder and (ii)
such consents, approvals, filings or notices which become applicable to
Seller or the Purchased Assets as a result of the specific regulatory
status of Buyer (or any of its Affiliates) or as a result of any other
facts that specifically relate to the business or activities in which
Buyer (or any of its Affiliates) is or proposes to be engaged.
In rendering the foregoing opinion, Seller's counsel may rely
on opinions of counsel as to local laws reasonably acceptable to Buyer.
(h) Seller shall have delivered, or caused to be delivered, to
Buyer at the Closing, Seller's closing deliveries described in Section 3.6.
(i) Since the date of this Agreement, no Material Adverse
Effect shall have occurred and be continuing.
(j) Each Governmental Authority shall have issued all Permits
and Environmental Permits, to the extent necessary, for Buyer to own and operate
the Plant in accordance with past emissions and operating practices, except for
those Permits and
54
Environmental Permits, of which the failure to obtain would not in the aggregate
have a Material Adverse Effect.
(k) Seller shall have executed and delivered the Sublicense
Agreements and shall have received all necessary consents, approvals and
authorizations of all other parties necessary to the grant of the Sublicenses.
(l) Buyer shall have received a reliance letter from Xxxxxxxx
& Xxxxx with respect to the Environmental Report prepared by such firm
concerning the Purchased Assets. (Buyer agrees to pay the cost of such reliance
letter.)
7.2 Conditions to Obligations of Seller. The obligation of Seller to
effect the sale of the Purchased Assets and the other transactions contemplated
by this Agreement shall be subject to the fulfillment at or prior to the Closing
Date (or the waiver by Seller) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall have
expired or been terminated;
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the sale
of the Purchased Assets contemplated herein shall have been issued and remain in
effect (each Party agreeing to use its reasonable best efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation shall
have been enacted by any state or federal government or Governmental Authority
in the United States which prohibits the consummation of the sale of the
Purchased Assets;
(c) Seller shall have received all of Seller's Required
Regulatory Approvals applicable to them, containing no conditions or terms which
would materially diminish the benefit of this Agreement to Seller or result in a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of Seller ("Seller Material Adverse Effect");
(d) All consents and approvals for the consummation of the
sale of the Purchased Assets contemplated hereby required under the terms of any
note, bond, mortgage, indenture, material agreement or other instrument or
obligation to which Seller is party or by which Seller, or any of the Purchased
Assets, may be bound, shall have been obtained, other than those which if not
obtained, would not, individually and in the aggregate, create a Material
Adverse Effect;
(e) Buyer shall have performed and complied with in all
material respects the covenants and agreements contained in this Agreement which
are required to be performed and complied with by Buyer on or prior to the
Closing Date;
55
(f) The representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date as though made at and as of the Closing Date;
(g) Seller shall have received a certificate from an
authorized officer of Buyer, dated the Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Sections 7.2(e) and (f) have
been satisfied by Buyer;
(h) Effective upon Closing, Buyer shall have assumed, as set
forth in Section 6.10, all of the applicable obligations under the Collective
Bargaining Agreement as they relate to Transferred Union Employees;
(i) Seller shall have received an opinion from Buyer's counsel
reasonably acceptable to Seller, dated the Closing Date and reasonably
satisfactory in form and substance to Seller and its counsel, substantially to
the effect that:
(i) Each of Buyer and Buyer Parent (collectively,
"Buyer Entities") is an Ohio corporation duly organized, validly
existing and in good standing under the laws of the state of its
organization, is (in the case of Buyer) qualified to do business in the
Commonwealth of Pennsylvania, and has the full corporate power and
authority to own, lease and operate its material assets and properties
and to carry on its business as is now conducted, and to execute and
deliver the Agreement and the Ancillary Agreements by Buyer and the
Guaranty dated the date hereof by Buyer Parent (the "Guaranty"), and to
consummate the transactions contemplated thereby; and the execution and
delivery of the Agreement and the Ancillary Agreements by Buyer and the
Guaranty by Buyer Parent and the consummation of the transactions
contemplated thereby have been duly authorized by all necessary
corporate action required on the part of Buyer and Buyer Parent;
(ii) The Agreement, the Ancillary Agreements and the
Guaranty have been duly and validly executed and delivered by Buyer and
Buyer Parent, as applicable, and constitute legal, valid and binding
agreements of Buyer and Buyer Parent, as applicable, enforceable
against Buyer and Buyer Parent, as applicable, in accordance with their
terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting or relating to enforcement
of creditor's rights generally and general principles of equity
(regardless of whether enforcement is considered in a proceeding at law
or in equity);
(iii) The execution, delivery and performance of the
Agreement and the Ancillary Agreements by Buyer and the Guaranty by
Buyer Parent, do not (A) conflict with the Certificate of Incorporation
or Bylaws (or other organizational documents), as currently in effect,
56
of either Buyer Entity or (B) to the knowledge of such counsel,
constitute a violation of or default under those agreements or
instruments set forth on a Schedule attached to the opinion and which
have been identified to such counsel as all the agreements and
instruments which are material to the business or financial condition
of Buyer or Buyer Parent;
(iv) The Assignment and Assumption Agreement and
other transfer instruments described in Section 3.7 are in proper form
for Buyer to assume the Assumed Liabilities; and
(v) No consent or approval of, filing with, or notice
to, any Governmental Authority is necessary for Buyer's execution and
delivery of the Agreement and the Ancillary Agreements and Buyer
Parent's execution and delivery of the Guaranty, or the consummation by
Buyer and Buyer Parent of the transactions contemplated hereby and
thereby, other than such consents, approvals, filings or notices,
which, if not obtained or made, will not prevent Buyer or Buyer Parent
from performing their material respective obligations under the
Agreement, the Ancillary Agreements and Guaranty.
In rendering the foregoing opinion, Buyers' counsel may
rely on opinions of local law reasonably acceptable to Seller.
(j) Buyer shall have delivered, or caused to be delivered, to
Seller at the Closing, Buyer's closing deliveries described in Section 3.7.
(k) Buyer shall have executed and delivered the Sublicense
Agreements and shall have received all necessary consents, approvals and
authorizations of all other parties necessary to the grant of the Sublicenses.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
(a) Buyer shall indemnify, defend and hold harmless Seller, its officers,
directors, employees, shareholders, Affiliates and agents (each, a "Seller's
Indemnitee") from and against any and all claims, demands, suits, losses,
liabilities, damages, obligations, payments, costs and expenses (including,
without limitation, the costs and expenses of any and all actions, suits,
proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) (each, an "Indemnifiable Loss"), asserted against or
suffered by any Seller's Indemnitee relating to, resulting from or arising out
of
57
(i) any breach by Buyer of any covenant or agreement of Buyer contained in this
Agreement or the representations and warranties contained in Sections 5.1, 5.2
and 5.3, (ii) the Assumed Liabilities, (iii) any loss or damages resulting from
or arising out of any Inspection, or (iv) any Third Party Claims against
Seller's Indemnitee arising out of or in connection with Buyer's ownership or
operation of the Plant and other Purchased Assets on or after the Closing Date.
(b) Seller shall indemnify, defend and hold harmless Buyer,
its officers, directors, employees, shareholders, Affiliates and agents (each, a
"Buyer Indemnitee") from and against any and all Indemnifiable Losses asserted
against or suffered by any Buyer Indemnitee relating to, resulting from or
arising out of (i) any breach by Seller of any covenant or agreement of Seller
contained in this Agreement or the representations and warranties contained in
Sections 4.1, 4.2 and 4.3, (ii) the Excluded Liabilities, (iii) noncompliance by
Seller with any bulk sales or transfer laws as provided in Section 10.11, or
(iv) any Third Party Claims against a Buyer Indemnitee arising out of or in
connection with Seller's ownership or operation of the Excluded Assets on or
after the Closing Date.
(c) Buyer, for itself and on behalf of its Representatives and
Affiliates, does hereby release, hold harmless and forever discharge Seller, its
Representatives and Affiliates, from any and all Indemnifiable Losses of any
kind or character, whether known or unknown, visible or not visible, resulting
from or arising out of any Environmental Condition or violation of Environmental
Law relating to the Purchased Assets other than any liabilities or obligations
constituting Excluded Liabilities. Buyer hereby waives any and all rights and
benefits with respect to such Indemnifiable Losses that it now has, or in the
future may have conferred upon it by virtue of any statute or common law
principle which provides that a general release does not extend to claims which
a party does not know or suspect to exist in its favor at the time of executing
the release, if knowledge of such claims would have materially affected such
party's settlement with the obligor. In this connection, Buyer hereby
acknowledges that it is aware that factual matters now unknown to it may have
given or may hereafter give rise to Indemnifiable Losses that are presently
unknown, unanticipated and unsuspected, and it further agrees that this release
has been negotiated and agreed upon in light of that awareness and they
nevertheless hereby intend to release Seller and their Representatives and
Affiliates from the Indemnifiable Losses described in the first sentence of this
paragraph.
(d) Notwithstanding anything to the contrary contained herein:
(i) Any Person entitled to receive indemnification
under this Agreement (an "Indemnitee") shall use Commercially
Reasonable Efforts to mitigate all losses, damages and the like
relating to a claim under these indemnification provisions, including
availing itself of any
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defenses, limitations, rights of contribution, claims against third
Persons and other rights at law or equity. The Indemnitee's
Commercially Reasonable Efforts shall include the reasonable
expenditure of money to mitigate or otherwise reduce or eliminate any
loss or expenses for which indemnification would otherwise be due, and
the Indemnitor shall reimburse the Indemnitee for the Indemnitee's
reasonable expenditures in undertaking the mitigation.
(ii) Any Indemnifiable Loss shall be net of the
dollar amount of any insurance or other proceeds actually receivable by
the Indemnitee or any of its Affiliates with respect to the
Indemnifiable Loss. Any party seeking indemnity hereunder shall use
Commercially Reasonable Efforts to seek coverage (including both costs
of defense and indemnity) under applicable insurance policies with
respect to any such Indemnifiable Loss.
(e) The expiration or termination of any covenant or agreement
shall not affect the Parties' obligations under this Section 8.1 if the
Indemnitee provided the Person required to provide indemnification under this
Agreement (the "Indemnifying Party") with proper notice of the claim or event
for which indemnification is sought prior to such expiration, termination or
extinguishment.
(f) Except to the extent otherwise provided in Article IX, the
rights and remedies of Seller, and Buyer under this Article VIII are exclusive
and in lieu of any and all other rights and remedies which Seller, and Buyer may
have under this Agreement or otherwise for monetary relief, with respect to (i)
any breach of or failure to perform any covenant, agreement, or representation
or warranty set forth in this Agreement, after the occurrence of the Closing, or
(ii) the Assumed Liabilities or the Excluded Liabilities, as the case may be.
The indemnification obligations of the Parties set forth in this Article VIII
apply only to matters arising out of this Agreement, excluding the Ancillary
Agreements. Any Indemnifiable Loss arising under or pursuant to an Ancillary
Agreement shall be governed by the indemnification obligations, if any,
contained in the Ancillary Agreement under which the Indemnifiable Loss arises.
(g) Notwithstanding anything to the contrary herein, no party
(including an Indemnitee) shall be entitled to recover from any other party
(including an Indemnifying Party) for any liabilities, damages, obligations,
payments losses, costs, or expenses under this Agreement any amount in excess of
the actual compensatory damages, court costs and reasonable attorney's and other
advisor fees suffered by such party. Buyer and Seller waive any right to recover
punitive, incidental, special, exemplary and consequential damages arising in
connection with or with respect to this Agreement. The provisions of this
Section 8.1(g) shall not apply to indemnification for a Third Party Claim.
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8.2 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any claim, action, or proceeding made or brought
by any Person who is not a party to this Agreement or any Affiliate of a Party
to this Agreement (a "Third Party Claim") with respect to which indemnification
is to be sought from an Indemnifying Party, the Indemnitee shall give such
Indemnifying Party reasonably prompt written notice thereof, but in any event
such notice shall not be given later than ten (10) calendar days after the
Indemnitee's receipt of notice of such Third Party Claim. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and shall
indicate the estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee. The Indemnifying Party will have
the right to participate in or, by giving written notice to the Indemnitee, to
elect to assume the defense of any Third Party Claim at such Indemnifying
Party's expense and by such Indemnifying Party's own counsel, provided that the
counsel for the Indemnifying Party who shall conduct the defense of such Third
Party Claim shall be reasonably satisfactory to the Indemnitee. The Indemnitee
shall cooperate in good faith in such defense at such Indemnitee's own expense.
If an Indemnifying Party elects not to assume the defense of any Third Party
Claim, the Indemnitee may compromise or settle such Third Party Claim over the
objection of the Indemnifying Party, which settlement or compromise shall
conclusively establish the Indemnifying Party's liability pursuant to this
Agreement.
(b) (i) If, within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claims, the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in Section 8.2(a), the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that if the Indemnifying Party shall fail to
take reasonable steps necessary to defend diligently such Third Party Claim
within twenty (20) calendar days after receiving notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense and the Indemnifying Party shall be
liable for all reasonable expenses thereof. (ii) Without the prior written
consent of the Indemnitee, the Indemnifying Party shall not enter into any
settlement of any Third Party Claim which would lead to liability or create any
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is made
to settle a Third Party Claim without leading to liability or the creation of a
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party shall
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give written notice to theIndemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within ten (10) calendar days after its receipt of
such notice, the Indemnifying Party shall be relieved of its obligations to
defend such Third Party Claim and the Indemnitee may contest or defend such
Third Party Claim. In such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will be the amount of such settlement offer
plus reasonable costs and expenses paid or incurred by Indemnitee up to the date
of said notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") shall be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event such notice shall not be
given later than ten (10) calendar days after the Indemnitee becomes aware of
such Direct Claim, and the Indemnifying Party shall have a period of thirty (30)
calendar days within which to respond to such Direct Claim. If the Indemnifying
Party does not respond within such thirty (30) calendar day period, the
Indemnifying Party shall be deemed to have accepted such claim. If the
Indemnifying Party rejects such claim, the Indemnitee will be free to seek
enforcement of its right to indemnification under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is reduced
by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by, from or
against any other entity, the amount of such reduction, less any costs, expenses
or premiums incurred in connection therewith (together with interest thereon
from the date of payment thereof at the publicly announced prime rate then in
effect of Chase Manhattan Bank) shall promptly be repaid by the Indemnitee to
the Indemnifying Party.
(e) A failure to give timely notice as provided in this
Section 8.2 shall not affect the rights or obligations of any Party hereunder
except if, and only to the extent that, as a result of such failure, the Party
which was entitled to receive such notice was actually prejudiced as a result of
such failure.
ARTICLE IX
TERMINATION
9.1 Termination.(a) This Agreement may be terminated at any time prior
to the Closing Date by mutual written consent of Seller and Buyer.
(b) This Agreement may be terminated by Seller or Buyer if (i)
any Federal or state court of competent jurisdiction shall have issued an order,
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judgment or decree permanently restraining, enjoining or otherwise prohibiting
the Closing, and such order, judgment or decree shall have become final and
nonappeallable or (ii) any statute, rule, order or regulation shall have been
enacted or issued by any Governmental Authority which, directly or indirectly,
prohibits the consummation of the Closing; or (iii) the Closing contemplated
hereby shall have not occurred on or before the day which is 12 months from the
date of this Agreement (the "Termination Date"); provided that the right to
terminate this Agreement under this Section 9.1(b) (iii) shall not be available
to any Party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur on or
before such date; and provided, further, that if on the day which is 12 months
from the date of this Agreement the conditions to the Closing set forth in
Section 7.1(c) or 7.2(c) or (d) shall not have been fulfilled but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Termination Date shall be the day which is 18 months from
the date of this Agreement.
(c) This Agreement may be terminated by Buyer if any of Buyer
Required Regulatory Approvals, the receipt of which is a condition to the
obligation of Buyer to consummate the Closing as set forth in Section 7.1(c),
shall have been denied (and a petition for rehearing or refiling of an
application initially denied without prejudice shall also have been denied) or
shall have been granted but contains terms or conditions which do not satisfy
the closing condition in Section 7.1(c).
(d) This Agreement may be terminated by Seller, if any of
Seller's Required Regulatory Approvals, the receipt of which is a condition to
the obligation of Seller to consummate the Closing as set forth in Section
7.2(c), shall have been denied (and a petition for rehearing or refiling of an
application initially denied without prejudice shall also have been denied) or
shall have been granted but contains terms or conditions which do not satisfy
the closing condition in Section 7.2(c).
(e) This Agreement may be terminated by Buyer if there has
been a violation or breach by Seller of any covenant, representation or warranty
contained in this Agreement which has resulted in a Material Adverse Effect and
such violation or breach is not cured by the earlier of the Closing Date or the
date thirty (30) days after receipt by Seller of notice specifying particularly
such violation or breach, and such violation or breach has not been waived by
Buyer.
(f) This Agreement may be terminated by Seller, if there has
been a material violation or breach by Buyer of any material covenant,
representation or warranty contained in this Agreement and such violation or
breach is not cured by the
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earlier of the Closing Date or the date thirty (30) days after receipt by Buyer
of notice specifying particularly such violation or breach, and such violation
or breach has not been waived by Seller.
(g) This Agreement may be terminated by Seller if there shall
have occurred any change that is materially adverse to the business, operations
or conditions (financial or otherwise) of Buyer Parent and which materially
impairs the ability of Buyer Parent to perform under the Guaranty.
(h) This Agreement may be terminated by either of Seller
or Buyer in accordance with the provisions of Section 6.11(b).
9.2 Procedure and Effect of No-Default Termination. In the event of
termination of this Agreement by either or both of the Parties pursuant to
Section 9, written notice thereof shall forthwith be given by the terminating
Party to the other Party, whereupon, if this Agreement is terminated pursuant to
any of Sections 9.1(a) through (d) and 9.1(g) and (h), the liabilities of the
Parties hereunder will terminate, except as otherwise expressly provided in this
Agreement, and thereafter neither Party shall have any recourse against the
other by reason of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
Seller and Buyer.
10.2 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the Parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the Party entitled to
the benefits thereof only by a written instrument signed by the Party granting
such waiver, but such waiver of such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent failure to comply therewith
10.3 No Survival. Each and every representation, warranty and covenant
contained in this Agreement (other than the covenants contained in Sections 2.5,
3.3(c), 3.4, 3.5(b), 3.5(c), 6.2, 6.4, 6.5, 6.6, 6.7, 6.8, 6.10, and in Articles
VIII and X, which provisions shall survive the Closing in accordance with their
terms and the representations and warranties set forth in Sections 4.1, 4.2,
4.3, 5.1, 5.2 and 5.3, which representations and warranties shall survive the
Closing for eighteen (18) months from the Closing Date) shall expire with, and
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be terminated and extinguished by the consummation of the sale of the Purchased
Assets and the transfer of the Assumed Liabilities pursuant to this Agreement
and such representations, warranties and covenants shall not survive the Closing
Date; and none of Seller, Buyer or any officer, director, trustee or Affiliate
of any of them shall be under any liability whatsoever with respect to any such
representation, warranty or covenant.
10.4 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight courier or registered or certified mail
(return receipt requested), postage prepaid, to the recipient Party at its
address (or at such other address or facsimile number for a Party as shall be
specified by like notice; provided however, that notices of a change of address
shall be effective only upon receipt thereof):
(a) If to Seller to:
c/o GPU Service, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Vice President
with a copy to:
Berlack, Israels & Xxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
(b) if to Buyer, to:
FirstEnergy Corp.
00 Xxxxx Xxxx Xxxxxx
Xxxxx, Xxxx 00000
Attention: Xxx X. Xxxxxxxx
Vice President, Fossil Generation
Telecopier: 000-000-0000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Associate General Counsel
FirstEnergy Corp.
00 Xxxxx Xxxx Xxxxxx
Xxxxx, Xxxx 00000
Telecopier: 000-000-0000
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10.5 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any Party
hereto, including by operation of law, without the prior written consent of each
other Party, nor is this Agreement intended to confer upon any other Person
except the Parties hereto any rights, interests, obligations or remedies
hereunder. No provision of this Agreement shall create any third party
beneficiary rights in any employee or former employee of Seller (including any
beneficiary or dependent thereof) in respect of continued employment or resumed
employment, and no provision of this Agreement shall create any rights in any
such Persons in respect of any benefits that may be provided, directly or
indirectly, under any employee benefit plan or arrangement except as expressly
provided for thereunder. Notwithstanding the foregoing, (i) Buyer may assign all
of its rights and obligations hereunder to any majority owned Subsidiary (direct
or indirect) and upon Seller's receipt of notice from Buyer of any such
assignment, such assignee will be deemed to have assumed, ratified, agreed to be
bound by and perform all such obligations, and all references herein to "Buyer"
shall thereafter be deemed to be references to such assignee, in each case
without the necessity for further act or evidence by the Parties hereto or such
assignee, and (ii) Buyer or its permitted assignee may assign, transfer, pledge
or otherwise dispose of (absolutely or as security) its rights and interests
hereunder to a trustee, lending institutions or other party for the purposes of
leasing, financing or refinancing the Purchased Assets, including such an
assignment, transfer or other disposition upon or pursuant to the exercise of
remedies with respect to such leasing, financing or refinancing, or by way of
assignments, transfers, pledges, or other dispositions in lieu thereof;
provided, however, that no such assignment in clause (i) or (ii) shall relieve
or discharge Buyer from any of its obligations hereunder. Seller agrees, at
Buyer's expense, to execute and deliver such documents as may be reasonably
necessary to accomplish any such assignment, transfer, pledge or other
disposition of rights and interests hereunder so long as Seller's rights under
this Agreement are not thereby altered, amended, diminished or otherwise
impaired.
10.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of New York (without giving effect to
conflict of law principles) as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies. THE PARTIES
HERETO AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE
SUBJECT MATTER OF THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL COURTS IN AND
FOR NEW YORK COUNTY, NEW YORK, WHICH COURTS SHALL HAVE EXCLUSIVE JURISDICTION
FOR SUCH PURPOSE, AND THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVE THE DEFENSE OF
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AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING.
SERVICE OF PROCESS MAY BE MADE IN ANY MANNER RECOGNIZED BY SUCH COURTS. EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.8 Interpretation. The articles, section and schedule headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.
10.9 Schedules and Exhibits. Except as otherwise provided in this
Agreement, all Exhibits and Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
10.10 Entire Agreement. This Agreement, the Confidentiality Agreement,
and the Ancillary Agreements including the Exhibits, Schedules, documents,
certificates and instruments referred to herein or therein, embody the entire
agreement and understanding of the Parties hereto in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. It is expressly
acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or undertakings contained in any material
made available to Buyer pursuant to the terms of the Confidentiality Agreement
(including the Offering Memorandum dated April 1998, previously delivered to
Buyer by Seller and Xxxxxxx, Xxxxx & Co.). This Agreement supersedes all prior
agreements and understandings between the Parties other than the Confidentiality
Agreement with respect to such transactions.
10.11 Bulk Sales Laws. Buyer acknowledges that, notwithstanding
anything in this Agreement to the contrary, Seller may, in its sole discretion,
not comply with the provision of the bulk sales laws of any jurisdiction in
connection with the transactions contemplated by this Agreement. Buyer hereby
waives compliance by Seller with the provisions of the bulk sales laws of all
applicable jurisdictions.
10.12 U.S. Dollars. Unless otherwise stated, all dollar amounts set
forth herein are United States (U.S.) dollars.
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10.13 Zoning Classification. Buyer acknowledges that the Real Property
is zoned as set forth in Schedule 10.13.
10.14 Sewage Facilities. Except as set forth in Schedule 10.14, Buyer
acknowledges that there is no community (municipal) sewage system available to
serve the Real Property. Accordingly, any additional sewage disposal planned by
Buyer will require an individual (on-site) sewage system and all necessary
permits as required by the Pennsylvania Sewage Facilities Act (the "Facilities
Act"). Buyer recognizes that certain of the existing individual sewage systems
on the Real Property may have been installed pursuant to exemptions from the
requirements of the Facilities Act or prior to the enactment of the Facilities
Act and that soils and site testing may not have been performed in connection
therewith. The owner of the property or properties served by such a system, at
the time of any malfunction, may be held liable for any contamination,
pollution, public health hazard or nuisance which occurs as the result of such
malfunction.
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IN WITNESS WHEREOF, Seller and Buyer have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
PENNSYLVANIA ELECTRIC COMPANY
By: ___________________________
Name:
Title:
FE ACQUISITION CORP.
By:_____________________________
Name:
Title:
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