ASSET PURCHASE AGREEMENT
BY AND AMONG
NEW ENGLAND POWER COMPANY,
THE NARRAGANSETT ELECTRIC COMPANY
AND
USGEN ACQUISITION CORPORATION
Dated As Of August 5, 1997
ASSET PURCHASE AGREEMENT
-------------------------
ASSET PURCHASE AGREEMENT, dated as of August 5,
1997, by and among New England Power Company, a
Massachusetts corporation ("NEP"), The Narragansett
Electric Company, a Rhode Island corporation
("Narragansett," and together with NEP, the "Sellers"),
and USGen Acquisition Corporation, a Delaware corpoation
(the "Buyer").
WHEREAS, the Buyer desires to purchase, and the
Sellers desire to sell, the Fossil Assets and the
Hydroelectric Assets (each as defined herein and
together, the "Purchased Assets") 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 hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. (a) As used in this Agreement,
the following terms have the meanings specified in this
Section 1.1(a).
(1) "Affiliate" has the meaning set forth in Rule
12b-2 of the General Rules and Regulations under the
Exchange Act.
(2) "Allowance" means (i) an authorization by the
Administrator of the United States Environmental
Protection Agency under the Acid Rain Program to emit up
to one ton of sulfur dioxide during or after a specified
calendar year; or (ii) an authorization by the
Massachusetts Department of Environmental Protection or
the Rhode Island Department of Environmental Management
under the respective state Nitrogen Oxides ("NOx") Budget
Program authorizing the emission of up to one ton of NOx
during the ozone season, May 1 through September 1 of
each year.
(3) "Ancillary Agreements" means the Continuing
Site Agreement, the PPA Transfer Agreement and the PSA
Performance Support Agreements.
(4) "Xxxx of Sale" means the Xxxx of Sale to be
delivered at the Closing, as the case may be, with
respect to the Purchased Assets which constitute personal
property and which are to be transferred at such Closing,
both substantially in the form of Exhibit A hereto.
(5) "Xxxxxxx Point" means the electric generation
facilities known as the Xxxxxxx Point Station and located
in Somerset, Massachusetts.
(6) "Business Day" shall mean any day other than
Saturday, Sunday and any day which is a legal holiday or
a day on which banking institutions in Boston are
authorized by law or other governmental action to close.
(7) "Buyer Representatives" means the Buyer's
accountants, employees, counsel, environmental
consultants, financial advisors and other authorized
representatives.
(8) "Capital Expenditures" means those capital
expenditures which are identified as capital expenditures
with respect to the projects identified on Schedule 7.1.
(9) "CERCLA" means the Federal Comprehensive
Environmental Response, Compensation and Liability Act.
(10) [Intentionally omitted.]
(11) [Intentionally omitted.]
(12) "COBRA" means the Consolidated Omnibus
Reconciliation Act of 1985, as amended.
(13) "Code" means the Internal Revenue Code of 1986,
as amended.
(14) "Confidentiality Agreement" means the
Confidentiality Agreement, dated December 13, 1996,
between XXXX and U.S. Generating Company.
(15) "Continuing Site Agreement" means the
Continuing Site/Interconnection Agreement, dated on the
date of this Agreement, between NEP and the Buyer.
(16) "Easements" means, with respect to the
Purchased Assets, the reservations of easements to be
included in the deeds of conveyance with respect to such
assets, substantially as set forth in Schedule 5.14
hereto.
(17) "Emission Reduction Credits" means credits, in
units that are established by the environmental
regulatory agency with jurisdiction over the facility
that has obtained the credits, resulting from a reduction
in the emissions of air pollutants from an emitting
source or facility (including, without limitation, and to
the extent allowable under applicable law, reductions
from shut-downs, control of emissions beyond that
required by applicable law, and fuel switching), that:
(i) have been certified by the Massachusetts Department
of Environmental Protection as complying with the law and
regulations of the Commonwealth of Massachusetts
governing the establishment of such credits (including,
without limitation, that such emissions reductions are
enforceable, permanent, quantifiable, real and surplus);
or (ii) have been certified by any other applicable
regulatory authority as complying with the law and
regulations governing the establishment of such credits
(including, without limitation, that such emissions
reductions are enforceable, permanent, quantifiable, real
and surplus). Emission Reduction Credits include
certified air emissions reductions, as described above,
regardless as to whether the regulatory agency certifying
such reductions designates such certified air emissions
reductions by a name other than "emissions reduction
credits."
(18) "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.
(19) "Environmental Laws" means all Federal, state
and local 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, ambient air, surface
water, groundwater, land, surface and subsurface strata)
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport
or handling of Hazardous Substances.
(20) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(21) "Estimated Adjustment Amount" means the
Sellers' good faith reasonable estimate of an Adjustment
Amount for the Closing, which estimate shall be provided
to the Buyer no later than five Business Days before the
Closing.
(22) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(23) "Federal Power Act" means the Federal Power Act
of 1935.
(24) "FERC" means the Federal Energy Regulatory
Commission.
(25) "FIRPTA Affidavit" means the Foreign Investment
in Real Property Tax Act Certification and Affidavit
substantially in the form of Exhibit C hereto.
(26) "Fossil Assets" means the Fossil Facilities,
the NERC Stock and the NEPGen Support Operation Assets.
(27) "Fossil Facilities" means, subject to the
Easements and Section 2.2, all of the right, title and
interest in, to and under the real and personal property,
tangible or intangible, owned by the Sellers and
constituting Xxxxxxx Point, Manchester Street and Salem
Harbor or used principally for generation purposes in
connection with Xxxxxxx Point, Manchester Street and
Salem Harbor including, but not limited to, the following
assets owned by the Sellers:
(i) the Real Estate (including all buildings,
structures and other improvements thereon) described
on Schedule 5.14 as associated with Xxxxxxx Point,
Manchester Street and Salem Harbor (the "Fossil
Facilities Real Property");
(ii) all inventories of fuels, supplies, materials
and critical spares located on or in transit to the
Fossil Facilities Real Property on the Closing Date;
(iii) the machinery, equipment, vehicles, furniture
and other personal property located on the Fossil
Facilities Real Property on the Closing Date,
including, without limitation, the items of personal
property included in Schedule 1.1(a)(27)(iii) as being
associated with any of Xxxxxxx Point, Manchester
Street and Salem Harbor, and all warranties against
manufacturers or vendors relating thereto, to the
extent that such warranties are freely transferable;
(iv) the contracts, agreements and personal
property leases listed on Schedules 5.16(a) and
7.10(b) and (c) as being associated with any of
Xxxxxxx Point, Manchester Street and Salem Harbor and
which are assignable;
(v) the Transferable Permits listed on Schedule
1.1(a)(70) as being associated with any of Xxxxxxx
Point, Manchester Street and Salem Harbor;
(vi) all books, operating records, operating,
safety and maintenance manuals, engineering design
plans, blueprints and as-built plans, specifications,
procedures and similar items of the Sellers relating
specifically to the aforementioned assets other than
books of account;
(vii) Allowances, Emission Reduction Credits and
greenhouse gas reductions associated with (i) Xxxxxxx
Point, (ii) Manchester Street, (iii) Salem Harbor, or
(iv) the former electric generation facility known as
South Street Station and located in Providence, Rhode
Island that have accrued prior to, or that accrue on
or after, the date of this Agreement, including those
set forth on Schedule 1.1(a)(27)(vii); but excluding
any Allowances, Emission Reduction Credits and
greenhouse gas reductions associated with the diesel
generators owned by Nantucket Electric;
(viii) any assets purchased or to be purchased by
the Sellers pursuant to Section 7.4(e).
(28) [Intentionally omitted]
(29) "Hazardous Substances" means (a) any
petrochemical or petroleum products, oil or coal ash,
radioactive materials, radon gas, asbestos in any form
that is or could become friable, urea formaldehyde foam
insulation and transformers or other equipment that
contain dielectric fluid which may contain levels of
polychlorinated biphenyls; (b) any chemicals, materials
or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely
hazardous substances," "toxic substances," "contaminants"
or "pollutants" or words of similar meaning and
regulatory effect; or (c) any other chemical, material or
substance, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law.
(30) "Holding Company Act" means the Public Utility
Holding Company Act of 1935, as amended.
(31) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
(32) "Hydroelectric Assets" means, subject to the
Easements and Section 2.2, all of the right, title and
interest in, to and under the real and personal property,
tangible or intangible, owned by NEP and constituting the
Bear Swamp Pumped Storage Station and the fourteen other
hydroelectric generating stations and associated dams and
reservoirs listed on Schedule 1.1(a)(32) as part of the
Hydroelectric Assets or used principally for generation
purposes in connection with such dams and reservoirs and
which are located within the applicable FERC project
license boundary, including, but not limited to, the
following assets owned by NEP:
(i) the Real Estate (including all buildings,
structures and other improvements thereon) described
on Schedule 5.14 as associated with the Hydroelectric
Assets (the "Hydroelectric Real Property");
(ii) inventories of supplies, materials and
critical spares located on or in transit to the
Hydroelectric Real Property on the Hydroelectric
Assets Closing Date;
(iii) the machinery, equipment, vehicles, furniture
and other personal property located on the
Hydroelectric Real Property on the Closing Date,
including, without limitation, the items of personal
property included in Schedule 1.1(a)(32) as being
associated with the Hydroelectric Assets, and all
warranties against manufacturers or vendors relating
thereto, to the extent that such warranties are freely
transferable;
(iv) the contracts, agreements and personal
property leases listed on Schedules 5.16(a) and
7.10(b) and (c) as being associated with the
Hydroelectric Assets and which are assignable;
(v) the Transferable Permits listed on Schedule
1.1(a)(70) as being associated with the Hydroelectric
Assets;
(vi) all books, operating records, operating,
safety and maintenance manuals, engineering design
plans, blueprints and as-built plans, specifications,
procedures and similar items of NEP relating
specifically to the aforementioned assets other than
books of account;
(vii) all other Purchased Assets, if any, not
conveyed to the Buyer at the Closing; and
(viii) any assets purchased or to be purchased by
the Sellers pursuant to Section 7.4(e).
(33) [Intentionally omitted]
(34) "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.
(35) "Indentures" means (i) the General and
Refunding Mortgage Indenture and Deed of Trust, dated as
of January 1, 1977, as amended and supplemented, between
NEP and State Street Bank and Trust Company, as successor
trustee to Bank of New England, National Association
(formerly New England Merchants National Bank) and (ii)
the First Mortgage Indenture and Deed of Trust, dated as
of September 1, 1944, as amended and supplemented,
between Narragansett and Rhode Island Hospital Trust
Company.
(36) "Independent Accounting Firm" means Coopers &
Xxxxxxx LLP or such other independent accounting firm of
national reputation mutually appointed by the Sellers and
the Buyer.
(37) "Instruments of Assumption" means the
Instrument of Assumption substantially in the form of
Exhibit D-1 hereto relating to the assumption by the
Buyer of the liabilities and obligations of the Sellers
described therein and the Instrument of Assumption
substantially in the form of Exhibit D-2 hereto relating
to the assumption by the Buyer of the liabilities and
obligations of the Sellers and NEPSCO under the Main
Table Agreements in each case, to be delivered at the
Closing.
(38) [Intentionally omitted]
(39) "Maintenance Expenditures" means those
maintenance expenditures which are identified as
maintenance expenditures with respect to the projects
identified on Schedule 7.1.
(40) "Maintenance and Capital Expenditures Amount"
means the aggregate amount of all funds actually expended
on, or for which liabilities were accrued in accordance
with generally accepted accounting principles applied on
a consistent basis with respect to, Maintenance
Expenditures and Capital Expenditures by the Sellers, if
any, during the period beginning on the date hereof and
ending on the Closing Date.
(41) "Manchester Street" means the electric
generation facilities known as the Manchester Street
Station and located in Providence, Rhode Island.
(42) "Material Adverse Effect" means any change or
changes in, or effect on, the Purchased Assets after the
date of this Agreement that is, or in the aggregate are,
materially adverse to the business, assets, operations or
condition (financial or otherwise) of the Purchased
Assets, taken as a whole, other than (i) any change or
effect resulting from changes in the international,
national, regional or local wholesale or retail markets
for electric power, (ii) any change or effect resulting
from changes in the international, national, regional or
local markets for any fuel used at the Purchased Assets,
(iii) any change or effect resulting from changes in the
North American, national, regional or local electric
transmission systems and (iv) any materially adverse
change in or effect on the Purchased Assets which is
cured (including by the payment of money) by the Sellers
before the Termination Date; provided, however,
notwithstanding the foregoing, any change or effect
resulting from action by a legislative, governmental or
regulatory authority, other than any change or effect
resulting from the occurrence, non-occurrence,
acceleration or delay of Retail Access (as defined in
Section 3.4 hereof) which the Parties agree is fully
addressed by the Additional Payment Amount mechanism
provided in Section 3.4 hereof, shall be included in this
definition of Material Adverse Effect. The parties
hereto also agree that for purposes of measuring any
Material Adverse Effect (i) with respect to the Xxxxxxx
Point NPDES permit, the change or effect shall be
compared to the permit conditions prevailing under the
current NPDES permit and the Memorandum of Agreement II,
dated April 3, 1997, between and among the Xxx Xxxxxxx
Xxxxxx xx xxx Xxxxxx Xxxxxx Environmental Protection
Agency, the Massachusetts Department of Environmental
Protection, the Massachusetts Executive Office of
Environmental Affairs, the Rhode Island Department of
Environmental Management and NEP relating to Xxxxxxx
Point whether or not the current NPDES permit is extended
or expires and (ii) any fact, circumstance or event which
the Sellers are required to disclose with respect to the
representations and warranties herein which are not
disclosed within this Agreement or the disclosure
schedules attached hereto shall be treated as if such
facts constituted a change or effect after the date of
this Agreement.
(43) "MDPU" means the Massachusetts Department of
Public Utilities.
(44) "XXXX" means New England Electric System. The
name "New England Electric System" means the trustee or
trustees for the time being (as trustee or trustees but
not personally) under an Agreement and Declaration of
Trust dated January 2, 1926, as amended, which is hereby
referred to, and a copy of which, as amended, has been
filed with the Secretary of The Commonwealth of
Massachusetts. Any agreement, obligation, or liability
made, entered into, or incurred by or on behalf of New
England Electric System binds only its trust estate, and
no shareholder, director, trustee, officer, or agent
thereof assumes or shall be held to any liability
therefor.
(45) "NEPGen Support Operation Assets" means (i) the
machinery, personal property, software and other
equipment listed or referred to in Schedule 1.1(a)(45),
and all warranties against manufacturers or vendors
relating thereto, to the extent that such warranties are
freely transferable, (ii) the contracts, agreements and
personal property leases listed on Schedule 5.16(a) as
being associated with the NEPGen Support Operation Assets
and which are assignable, (iii) all books, operating
records, operating, safety and maintenance manuals,
engineering and design plans, specifications, procedures
and similar items of the Sellers relating specifically to
the aforementioned assets or, to the extent required by
law, to personnel employed at the aforementioned assets
who will become employees of the Buyer other than, in all
cases, books of account, (iv) any assets purchased or to
be purchased by the Sellers pursuant to Section 7.4(e)
and (v) the Transferring Employee Records.
(46) "NERC" means Narragansett Energy Resources
Company, a Rhode Island corporation.
(47) "NERC Note Agreements" means the Note
Agreements, dated as of November 30, 1995, between (i)
NERC and Connecticut General Life Insurance Company, (ii)
NERC and Cigna Property and Casualty Insurance Company,
(iii) NERC and Insurance Company of North America and
(iv) NERC and Life Insurance Company of North America.
(48) "NERC Stock" means all of the issued and
outstanding common stock, par value $1.00 per share, of
NERC.
(49) "NHPUC" means the New Hampshire Public Utility
Commission.
(50) "NPDES" means the National Pollutant Discharge
Elimination System.
(51) "Permitted Encumbrances" means (i) those
Encumbrances set forth in Schedule 1.1(a)(51); (ii) the
Easements; (iii) those exceptions to title to the
Purchased Assets listed in Schedule 5.8; (iv) all
exceptions, restrictions, easements, charges, rights of
way and monetary and non-monetary encumbrances which are
set forth in an applicable FERC project license, except
for such encumbrances which secure indebtedness; (v) with
respect to any date before the Closing Date, Encumbrances
created by the Indentures or in connection with the NERC
Note Agreements; (vi) statutory liens for current taxes
or assessments not yet due or delinquent or the validity
of which is being contested in good faith by appropriate
proceedings; (vii) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in
the ordinary course of business relating to obligations
as to which there is no default on the part of the
Sellers or the validity of which are being contested in
good faith by appropriate proceedings; (viii) zoning,
entitlement, conservation restriction and other land use
and environmental regulations by governmental
authorities; and (ix) such other liens, imperfections in
or failure of title, charges, easements, restrictions and
encumbrances which do not materially detract from the
value of the Purchased Assets as currently used or
materially interfere with the present use of the
Purchased Assets and neither secure indebtedness, nor
individually or in the aggregate create a Material
Adverse Effect.
(52) "Person" means any individual, a partnership, a
limited liability company, a joint venture, a
corporation, a trust, an unincorporated organization and
a governmental entity or any department or agency
thereof.
(53) "PPAs" means the Power Purchase Agreements
described in the PPA Transfer Agreement.
(54) "PPA Transfer Agreement" means the PPA Transfer
Agreement, dated on the date of this Agreement, between
NEP and the Buyer.
(55) "PSA Performance Support Agreements" mean the
PSA Performance Support Agreements, dated on the date of
this Agreement, each between NEP and the Buyer.
(56) "Release" means release, spill, leak,
discharge, dispose of, pump, pour, emit, empty, inject,
xxxxx, dump or allow to escape into or through the
environment.
(57) "RIPUC" means the Rhode Island Public Utilities
Commission.
(58) "Salem Harbor" means the electric generation
facilities known as the Salem Harbor Station and located
in Salem, Massachusetts.
(59) "SEC" means the Securities and Exchange
Commission.
(60) "Securities Act" means the Securities Act of
1933, as amended.
(61) "Sellers' Agreements" means those agreements
listed on Schedule 5.16(a) and the Main Table Agreements
and BUW/CBAs (as defined in Schedule 7.10(c)).
(62) "Settlement Agreements" means any agreement or
agreements that have been approved by the MDPU in Docket
No. 96-25 and by the FERC in Docket Nos. ER97-678-000 and
ER97-680-000, together with all conditions, terms or
modifications imposed by those agencies. Settlement
Agreements shall also include all agreements and orders
between NEP and Granite State Electric Company or other
non-Affiliate customers whether or not served under NEP's
FERC Electric Tariff No. 1 for all requirements service.
(63) "Specimen Title Policy" means for each of the
Purchased Assets constituting Real Estate, an ALTA 1987
form of owner's and/or mortgagee title insurance policy
jointly issued by Lawyers Title Insurance Corporation and
Fidelity National Title Insurance Company of New York
containing endorsements (including the standard co-
insurance endorsement substantially in the form of CLTA
114.2) and other coverages and exceptions, as more
particularly set forth in the pro forma title policies
attached hereto in Schedule 5.14.
(64) "Standard Offer Bid" means a bid submitted by
or on behalf of NEP into any request for proposals issued
by certain wholesale purchasers of electricity to supply
their customers with Standard Offer Service.
(65) "Standard Offer Service" means the electric
service, if any, required to be provided by a retail
electric distribution company to its retail customers who
do not elect to purchase electricity from an alternative
supplier in the market.
(66) "Subsidiary" when used in reference to any
other 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 other Person.
(67) "Tax Affiliate" means any entity that is a
member of an affiliated group of corporations (within the
meaning of Section 1504(a) of the Code) filing a
consolidated U.S. federal Income Tax Return, and a group
of corporations filing a consolidated or combined Tax
Return for state, local or foreign purposes (each a
"Consolidated Group"), if NERC could be held liable for
the Taxes of such entity or Consolidated Group.
(68) "Taxes" means all taxes, charges, fees, levies,
penalties or other assessments imposed by any United
States federal, state or local or foreign taxing
authority, including, but not limited to, income, excise,
property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including
any interest, penalties or additions attributable
thereto.
(69) "Tax Return" means any return, report,
information return or other document (including any
related or supporting information) required to be
supplied to any authority with respect to Taxes.
(70) "Transferable Permits" means those Permits and
Environmental Permits which are transferable by the
Sellers to the Buyer and are set forth in Schedule
1.1(a)(70).
(71) "Transferring Employee Records" means all
personnel files related to the Sellers' personnel who
will become employees of the Buyer to the extent such
files pertain to (i) skill and development training and
resumes, (ii) seniority histories, (iii) salary and
benefit information, (iv) Occupational, Safety and Health
Administration medical reports, and (v) active medical
restriction forms.
(72) "Transition Agreements" means the Wholesale
Standard Offer Service Agreements, dated on the date of
this Agreement, between the Buyer, on the one hand, and
Narragansett, Massachusetts Electric Company and
Nantucket Electric Company on the other hand.
(73) "VTPSB" means the Vermont Public Service Board.
(74) "WARN Act" means the Federal Worker Adjustment
Retraining and Notification Act of 1988.
(75) "Wholesale Sales Agreement" means the Wholesale
Sales Agreement, dated on the date of this Agreement,
between the Buyer and NEP.
(b) Each of the following terms has the
meaning specified in the Section set forth opposite such
term:
Term Section
---- -------
Additional Payment Amount 3.4(a)
Adjustment Amount 3.2(a)
Adjustment Statement 3.2(a)
Applicable Contracts 8.2(g)(3)
Assumed Obligations 2.3(c)
Audits 5.20(b)(v)
Benefit Plans 5.13(a)
BUW 7.10(a)
BUW CBAs 7.10(c)
BUW Employees 7.10(c)
BUW MOU 7.10(c)
Buyer Benefit Plans 7.10(f)
Buyer Required Regulatory Approvals 6.3(b)
Buyer Window 7.10(a)
Closing 4.1
Closing Date 4.1
Direct Claim 10.2(c)
Election 7.8(d)(1)(i)
Environmental Permits 5.11(a)
ERISA Affiliate 5.13(a)
ERISA Affiliate Plans 5.13(a)
Estimated Purchase Price 4.2(a)
Excluded Assets 2.2
Excluded Liabilities 2.4
Final Order 8.1(c)
Fossil Assets Conditions 4.1(a)
Fossil Employees 7.10(a)
Hydroelectric Assets Conditions 4.1(b)
Hydroelectric Employees 7.10(a)
IBEW 7.10(a)
IBEW/UWUA Employees 7.10(b)
IBEW/UWUA MOU 7.10(b)
Indemnifiable Loss 10.1(a)
Local Working Conditions 7.10(b)
Indemnifying Party 10.1(d)
Indemnitee 10.1(c)
Independent Appraiser 3.3(a)
Inventory Adjustment Amount 3.2(a)
Inventory Survey 3.2(a)
Local Working Conditions 7.10(b)
Main Table Agreements 7.10(b)
Modified ADSP 7.8(d)(1)(ii)
XXXX Intercompany Tax Allocation
Agreement 7.8(d)(2)(ii)
NEPGen Employee 7.10(a)
NEPSCO 8.2(f)
NEPGen Non-Union Employees 7.10(d)
NRC 5.3(b)
Observers 7.1(d)(i)
OSP 5.1(a)
OSP II 5.1(a)
Permits 5.18
Plans 7.10(a)
Prior Welfare Plans 7.10(e)
Purchased Assets Recitals
Purchase Price 3.1
Real Estate 5.14
Replacement Welfare Plans 7.10(e)
Sellers Balance Sheets 5.5
Sellers Required Regulatory
Approvals 5.3(b)
Sellers' Tax Returns 7.8(d)(2)(ii)
Severance Amount 3.1
Straddle Period 7.8(d)(2)(i)
Tax Contest 7.8(d)(4)(i)
Termination Date 11.1(b)(i)
Third Party Claim 10.2(a)
Transition Committee 7.1(c)
UWUA 7.10(a)
ARTICLE II
PURCHASE AND SALE
------------------
2.1. The Sale. Upon the terms and subject to the
satisfaction of the conditions contained in this
Agreement, at the Closing the Sellers will sell, assign,
convey, transfer and deliver to the Buyer, and the Buyer
will purchase and acquire from Seller, free and clear of
all Encumbrances (except for Permitted Encumbrances) all
of the Sellers' right, title and interest in, to and
under the real and personal property, tangible or
intangible, owned by the Sellers and constituting the
Purchased Assets.
2.2. Excluded Assets. Notwithstanding any provision
herein to the contrary, the Purchased Assets shall not
include the following assets of the Sellers (herein
referred to as the "Excluded Assets"):
(a) all cash, cash equivalents, bank deposits,
accounts receivable, and any income, sales, payroll or
other tax receivables;
(b) certificates of deposit, shares of stock (other
than the NERC Stock), securities, bonds, debentures,
evidences of indebtedness, interests in joint ventures,
partnerships, limited liability companies and other
entities;
(c) the names "New England Electric System," "New
England Power Company," "New England Power," "XXXX,"
"NEP," the "XXXX companies," "The Narragansett Electric
Company" or any related or similar trade names,
trademarks, service marks or logos;
(d) the transmission, distribution, substation and
communication facilities and related support equipment
described or referred to in Schedule 2.2(d) or described
or referred to as an "Excluded Asset" or an asset of
"TCo" or "Seller" in the "Separation Document" (as
defined in the Continuing Site Agreement) or any document
or exhibit referred to or incorporated by reference in
the Separation Document or which are otherwise indicated
in any such document as remaining with the Sellers or any
of their Affiliates after the Closing;
(e) any refund or credit (i) related to real or
personal property Taxes paid prior to the Closing Date in
respect of the Purchased Assets, whether such refund is
received as a payment or as a credit against future real
or personal property Taxes payable, or (ii) arising under
any PPA that is subject to cost of service regulation or
Sellers' Agreement and relating to a period before the
Closing Date;
(f) all personnel records other than Transferring
Employee Records or other records, the disclosure of
which is required by law, legal process or subpoena; and
(g) the Allowances and/or Emission Reduction
Credits listed on Schedule 2.2(g).
2.3. Assumed Obligations. (a) On the Closing Date,
the Buyer shall deliver to the Sellers the Instruments of
Assumption pursuant to which the Buyer shall assume and
agree to discharge all of the liabilities and obligations
of the Sellers, direct or indirect, known or unknown,
absolute or contingent, which relate to the Purchased
Assets, other than Excluded Liabilities, in accordance
with the respective terms and subject to the respective
conditions thereof, including, without limitation, the
following liabilities and obligations:
(i) all liabilities and obligations of the
Sellers under (a) the Sellers' Agreements, the real
property leases, and the Transferable Permits
associated with the Purchased Assets in accordance
with the terms thereof, (b) the contracts, leases and
other agreements entered into by the Sellers with
respect to the Purchased Assets which would be
required to be disclosed on Schedule 5.16(a) but for
the exception provided in clause (iii) of Section
5.16(a) of this Agreement, in accordance with the
terms thereof, and (c) the contracts, leases and other
agreements entered into by the Sellers with respect to
the Purchased Assets after the date hereof consistent
with the terms of this Agreement (including, without
limitation, agreements with respect to liabilities for
real or personal property Taxes on any of the
Purchased Assets or, to the extent such agreements do
not allocate such Tax liability between the Purchased
Assets and the Excluded Assets, all Tax liability
under such agreements, subject to the covenants of
Seller pursuant to Section 7.8(f) hereof, entered into
by the Sellers and any local government); except in
each case, to the extent such liabilities and
obligations, but for a breach or default by the
Sellers, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the
extent the same arise out of any such breach or
default or out of any event which after the giving of
notice would constitute a default;
(ii) all liabilities and obligations associated
with the Purchased Assets in respect of Taxes for
which the Buyer is liable pursuant to Section 3.5 or
7.8(a);
(iii) any liabilities and obligations associated
with the Purchased Assets for which the Buyer has
indemnified the Sellers pursuant to Section 10.1;
(iv) all liabilities and obligations with respect
to the NEPGen Employees to be employed at the
Purchased Assets after the Closing Date for which the
Buyer is responsible pursuant to Section 7.10;
(v) any liability, obligation or responsibility
under or related to former, current or future
Environmental Laws or the common law, whether such
liability or obligation or responsibility is known or
unknown, contingent or accrued, arising as a result of
or in connection with (a) any violation or alleged
violation of Environmental Law, prior to the Closing
Date, with respect to the ownership or operation of
the Purchased Assets; (b) loss of life, injury to
persons or property or damage to natural resources
(whether or not such loss, injury or damage arose or
was made manifest before the Closing Date or arises or
becomes manifest after the Closing Date), caused (or
allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to or
migrating from the Purchased Assets prior to the
Closing Date, including, but not limited to, Hazardous
Substances contained in building materials at the
Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other
environmental media at or adjacent to the Purchased
Assets; and (c) the investigation and/or remediation
(whether or not such investigation or remediation
commenced before the Closing Date or commences after
the Closing Date) of Hazardous Substances that are
present or have been Released prior to the Closing
Date at, on, in, under, adjacent to or migrating from
the Purchased Assets, including, but not limited to,
Hazardous Substances contained in building materials
at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other
environmental media at or adjacent to the Purchased
Assets; provided, as to all of the above, that nothing
set forth in this subsection 2.3(a) shall require the
Buyer to assume any liabilities that are expressly
excluded in Section 2.4; provided further, however
that nothing set forth in this subsection 2.3(a) shall
require the Buyer to assume any obligation for payment
of any fines or penalties imposed by a governmental
agency to the extent such obligations arise out of or
relate to acts or omissions of the Sellers that
constitute criminal violations;
(vi) any liability, obligation or responsibility
under or related to former, current or future
Environmental Laws or the common law, whether such
liability or obligation or responsibility is known or
unknown, contingent or accrued, arising as a result of
or in connection with (a) any violation or alleged
violation of Environmental Law, on or after the
Closing Date, with respect to the ownership or
operation of the Purchased Assets; (b) compliance with
applicable Environmental Laws on or after the Closing
Date with respect to the ownership or operation of the
Purchased Assets; (c) loss of life, injury to persons
or property or damage to natural resources caused (or
allegedly caused) by the presence or Release of
Hazardous Substances at, on, in, under, adjacent to or
migrating from the Purchased Assets 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 the Purchased
Assets; (d) loss of life, injury to persons or
property or damage to natural resources caused (or
allegedly caused) by the off-site disposal, storage,
transportation, discharge, Release, recycling, or the
arrangement for such activities, of Hazardous
Substances, on or after the Closing Date, in
connection with the ownership or operation of the
Purchased Assets; (e) the investigation and/or
remediation of Hazardous Substances that are present
or have been released on or after the Closing Date at,
on, in, under, adjacent to or migrating from the
Purchased Assets, including, but not limited to,
Hazardous Substances contained in building materials
at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells or in other
environmental media at or adjacent to the Purchased
Assets; and (f) the investigation and/or remediation
of Hazardous Substances that are disposed, stored,
transported, discharged, Released, recycled, or the
arrangement of such activities, on or after the
Closing Date, in connection with the ownership or
operation of the Purchased Assets, at any off-site
location; provided, that nothing set forth in this
subsection shall require the Buyer to assume any
liabilities that are expressly excluded in Section
2.4;
(vii) all liabilities and obligations of the
Sellers, including, but not limited to air emissions
commitments, associated with the Purchased Assets
under the Settlement Agreements;
(viii) all liabilities and obligations of the
Sellers with respect to the Purchased Assets under the
agreements or consent orders set forth on Schedule
5.11;
(ix) all liabilities incurred by the Sellers with
respect to Maintenance Expenditures and Capital
Expenditures associated with the Purchased Assets but
only to the extent such liabilities were not included
in the Maintenance and Capital Expenditures Amount;
and with respect to the Purchased Assets, (a) any Tax
that may be imposed by any 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 (including
proceeds representing the Purchase Price or proceeds
of other asset sales) received by the Sellers and (b)
real or personal property Taxes to the extent assumed
by the Buyer pursuant to Section 3.5.
(b) All of the foregoing liabilities and
obligations to be assumed by the Buyer under Section
2.3(a) (excluding any Excluded Liabilities) are referred
to herein as the "Assumed Obligations." It is understood
and agreed that nothing in this Section 2.3 shall
constitute a waiver or release of any claims arising out
of the contractual relationships between the Sellers and
the Buyer.
2.4. Excluded Liabilities. The Buyer shall not
assume or be obligated to pay, perform or otherwise
discharge the following liabilities or obligations:
(i) any liabilities or obligations of the Sellers
in respect of any Excluded Assets or other assets of
the Sellers which are not Purchased Assets;
(ii) any liabilities or obligations in respect of
Taxes attributable to the Purchased Assets for taxable
periods ending on or before the Closing Date, except
for Taxes for which the Buyer is liable pursuant to
Section 3.5 or Section 7.8(a);
(iii) any liabilities, obligations, or
responsibilities relating to the disposal, storage,
transportation, discharge, Release, recycling, or the
arrangement for such activities, by the Sellers, of
Hazardous Substances that were generated at the Fossil
Assets, at any off-site location, where the disposal,
storage, transportation, discharge, Release, recycling
or the arrangement for such activities at said off-
site location occurred prior to the Closing Date,
provided that for purposes of this Section, "off-site
location" does not include any location to which
Hazardous Substances disposed of or Released at the
Fossil Assets have migrated;
(iv) any liabilities, obligations, or
responsibilities relating to the disposal, storage,
transportation, discharge, Release, recycling, or the
arrangement for such activities, by the Sellers, of
Hazardous Substances that were generated at the
Hydroelectric Assets, at any off-site location, where
the disposal, storage, transportation, discharge,
Release, recycling or the arrangement for such
activities at said off-site location occurred prior to
the Closing Date, provided that for purposes of this
Section, "off-site location" does not include any
location to which Hazardous Substances disposed of or
Released at the Hydroelectric Assets have migrated;
(v) any liabilities, obligations or
responsibilities relating to (a) the property,
equipment or machinery within the switchyards for
which the Sellers will retain an Easement, (b) the
Xxxxxxx Point step-up transformers, including, without
limitation, liabilities related to the disposal,
discharge or Release of Hazardous Substances, whether
such liabilities, obligations or responsibilities
arose from the ownership or operation of said
property, equipment or machinery or the Xxxxxxx Point
step-up transformers prior to or after the Closing
Date unless caused by the Buyer's operations or
equipment, (c) the transmission lines delineated in
the Easements or (d) any Seller's operations on, or
usage of, the Easements, including, without
limitation, liabilities, obligations or
responsibilities arising as a result of or in
connection with (1) any violation or alleged violation
of Environmental Law and (2) loss of life, injury to
persons or property or damage to natural resources,
except to the extent caused by Buyer;
(vi) any liabilities or obligations required to be
accrued by the Sellers in accordance with generally
accepted accounting principles and the FERC Uniform
System of Accounts (A) on or before the Closing Date
with respect to liabilities related to the Purchased
Assets other than any liability assumed by Buyer under
Section 2.3(a)(v) or (vi);
(vii) any liabilities or obligations relating to
any personal injury, discrimination, wrongful
discharge, unfair labor practice or similar claim or
cause of action filed with or pending before any court
or administrative agency on the Closing Date, with
respect to liabilities principally relating to the
Fossil Assets or with respect to liabilities
principally relating to the Hydroelectric Assets, or
any such potential claim or incident set forth in
Schedule 2.4;
(viii) any fines or penalties imposed by a
governmental agency resulting from (A) an
investigation or proceeding pending on or prior to the
Closing Date or (B) illegal acts, willful misconduct
or gross negligence of the Sellers prior to the
Closing Date;
(ix) any payment obligations of the Sellers for
goods delivered or services rendered prior to the
Closing;
(x) any liabilities or obligations resulting from
the Sellers' gross negligence or willful misconduct
other than any liability assumed by the Buyer under
Section 2.3(a)(v) or (vi) hereof;
(xi) any liabilities or obligations imposed upon,
assumed or retained by the Sellers or any of their
Affiliates pursuant to the Continuing Site Agreement
or any other Ancillary Agreement;
(xii) any liabilities, obligations or
responsibilities relating to any Benefit Plan or any
"employee pension benefit plan" (as defined in Section
3(2) of ERISA) maintained by any of the Sellers and
any trade or business (whether or not incorporated)
which are or have ever been under common control, or
which are or have ever been treated as a single
employer, with any of the Sellers under Section
414(b), (c), (m) or (o) of the Code ("ERISA
Affiliate") or to which any of the Sellers and any
ERISA Affiliate contributed thereunder (the "ERISA
Affiliate Plans"), including any multiemployer plan,
maintained by, contributed to, or obligated to
contribute to, at any time, by the Sellers or any
ERISA Affiliate, including any liability (A) to the
Pension Benefit Guaranty Corporation under Title IV of
ERISA; (B) relating to a multiemployer plan; (C) with
respect to non-compliance with the notice and benefit
continuation requirements of COBRA; (D) with respect
to any non-compliance with ERISA or any other
applicable laws; or (E) with respect to any suit,
proceeding or claim which is brought against the
Buyer, any Benefit Plan, ERISA Affiliate Plan, any
fiduciary or former fiduciary of any such Benefit Plan
or ERISA Affiliate Plan; and
(xiii) any liabilities, obligations or
responsibilities relating to the employment or
termination of employment, including a constructive
termination, by the Sellers of any individual
(including, but not limited to, any employee of the
Sellers) attributable to any actions or inactions by
the Sellers prior to the Closing Date other than such
actions or inactions taken at the direction of the
Buyer.
All such liabilities and obligations not being
assumed pursuant to Section 2.4 are herein called the
"Excluded Liabilities."
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the
Purchased Assets shall be an amount equal to the sum of
(a) $1,365,000,000, (b) the Adjustment Amount, (c) an
amount (the "Severance Amount") equal to $85,000,000
relating to the costs of the Sellers for voluntary early
retirements and pre-Closing employee severance packages,
(d) any amounts paid pursuant to Section 7.4(e) hereof
and (e) any amount payable at the Closing pursuant to
Section 4.2(c)(i) or thereafter pursuant to Section
4.2(c)(ii) hereof (the "Purchase Price").
3.2. Purchase Price Adjustment. (a) Within 30 days
after the Closing, the Sellers shall prepare and deliver
to the Buyer a statement (each, an "Adjustment
Statement") which reflects (i) the net book value, as
reflected on the books of the Sellers as of the Closing
Date of all fuel inventory (FERC account no. 151) (less,
in the case of fuel inventory, any amount carried on
NEP's books in respect of losses incurred by New England
Energy Incorporated) and stores inventory (FERC account
no. 154) used at or in connection with either the Fossil
Assets or the Hydroelectric Assets, as the case may be
(the "Inventory Adjustment Amount"), and (ii) the
Maintenance and Capital Expenditures Amount applicable to
the Fossil Assets or the Hydroelectric Assets, as the
case may be. The Inventory Adjustment Amount and the
Maintenance and Capital Expenditures Amount for the
Closing is referred to collectively as the "Adjustment
Amount." The Inventory Adjustment Amount will be based
on an inventory survey conducted within five days prior
to the Closing Date consistent with current NEP inventory
procedures (the "Inventory Survey"). The Sellers will
permit an employee, or representative, of the Buyer to
observe the Inventory Survey. Each Adjustment Statement
shall be prepared using the same generally accepted
accounting principles, policies and methods as the
Sellers have historically used in connection with the
calculation of the items reflected on such Adjustment
Statement. The Buyer agrees to cooperate with the
Sellers in connection with the preparation of each
Adjustment Statement and related information, and shall
provide to the Sellers such books, records and
information as may be reasonably requested from time to
time.
(b) The Buyer may dispute an Inventory Adjustment
Amount or a Maintenance and Capital Expenditures Amount;
provided, however, that the Buyer shall notify the
Sellers in writing of the disputed amount, and the basis
of such dispute, within ten (10) Business Days of the
Buyer's receipt of the applicable Adjustment Statement.
In the event of a dispute with respect to any part of an
Adjustment Amount, the Buyer and the Sellers shall
attempt to reconcile their differences and any resolution
by them as to any disputed amounts shall be final,
binding and conclusive on the parties. If the Buyer and
the Sellers are unable to reach a resolution of such
differences within 30 days of receipt of the Buyers'
written notice of dispute to the Sellers, the Buyer and
the Sellers shall submit the amounts remaining in dispute
for determination and resolution to the Independent
Accounting Firm, which shall be instructed to determine
and report to the parties, within 30 days after such
submission, upon such remaining disputed amounts, and
such report shall be final, binding and conclusive on the
parties hereto with respect to the amounts disputed. The
fees and disbursements of the Independent Accounting Firm
shall be allocated between the Buyer and the Sellers so
that the Buyer's share of such fees and disbursements
shall be in the same proportion that the aggregate amount
of such remaining disputed amounts so submitted by the
Buyer to the Independent Accounting Firm that is
unsuccessfully disputed by the Buyer (as finally
determined by the Independent Accounting Firm) bears to
the total amount of such remaining disputed amounts so
submitted by the Buyer to the Independent Accounting
Firm.
(c) Within ten (10) Business Days after the
Buyer's receipt of an Adjustment Statement, the Buyer
shall pay all undisputed amounts, or if there is a
dispute with respect to any amount on such Adjustment
Statement within five (5) Business Days after the final
determination of any amounts on such Adjustment
Statement, the Buyer shall pay to NEP on behalf of the
Sellers an amount equal to the disputed Adjustment Amount
as finally determined to be payable with respect to such
Adjustment Statement. All Adjustment Statement payments
shall be less the Estimated Adjustment Amount; provided,
however, that if such amount shall be less than zero then
the Sellers will pay to the Buyer the amount by which
such amount is less than zero. Any amount paid under
this Section 3.2(c) shall be paid with interest for the
period commencing on the Closing Date through the date of
payment, calculated at the prime rate of the Bank of
Boston in effect on the Closing Date, and in cash by
federal or other wire transfer of immediately available
funds.
3.3. Allocation of Purchase Price. (a) The Buyer
and the Sellers shall use their good faith best efforts
to agree upon an allocation among the Purchased Assets of
the sum of the Purchase Price and the Assumed Obligations
consistent with Section 1060 of the Code and the Treasury
Regulations thereunder within 180 days of the date of
this Agreement but in no event less than 30 days prior to
the Closing. The Buyer and the Sellers may jointly agree
to obtain the services of an independent engineer or
appraiser (the "Independent Appraiser") to assist the
parties in determining the fair value of the Purchased
Assets for purposes of such allocation. If such an
appraisal is made, both the Buyer and the Sellers agree
to accept the Independent Appraiser's determination of
the fair value of the Purchased Assets. The parties
shall jointly select the Independent Appraiser. The cost
of the appraisal shall be borne equally by the Buyer and
the Sellers. Each of the Buyer and the Sellers agree to
file Internal Revenue Service Form 8594, and all federal,
state, local and foreign Tax Returns, in accordance with
such agreed allocation. Each of the Buyer and the
Sellers shall report the transactions contemplated by the
Agreement for federal Income Tax and all other tax
purposes in a manner consistent with the allocation
determined pursuant to this Section 3.3. Each of the
Buyer and the Sellers agrees to provide the other
promptly with any other information required to complete
Form 8594. Each of the Buyer and the Sellers shall
notify and provide the other with reasonable assistance
in the event of an examination, audit or other proceeding
regarding the agreed upon allocation of the Purchase
Price.
(b) With respect to the sale of the NERC Stock,
the Buyer and the Sellers shall allocate that portion of
the Purchase Price which is attributable to the NERC
Stock in accordance with the Election.
3.4. Additional Payment Amount.
(a) The Buyer shall pay the Seller an additional
purchase price of $225,000,000 (the "Additional Payment
Amount") as adjusted in the manner described below:
(i) if the Retail Choice Date (as defined below)
occurs after the later of the Closing or January 1,
1999 and prior to January 1, 2000, the Additional
Payment Amount shall be reduced by $75,000,000
multiplied by (x) the number of days in the calendar
year 1999 before the Retail Choice Date divided by (y)
365;
(ii) if the Retail Choice Date occurs on or after
January 1, 2000 and prior to January 1, 2003, the
Additional Payment Amount shall be reduced by (A)
$75,000,000 plus (B) $50,000,000 multiplied by (x) the
number of days from January 1, 2000 to the Retail
Choice Date divided by (y) 365.
(iii) if the Retail Choice Date occurs on or after
January 1, 2003, the Additional Payment Amount shall
be zero.
(b) The "Retail Choice Date" shall be defined as
the date on which Retail Access (as defined below) is
first available to either (i) customers representing 89%
of the 1995 kilowatthour sales of investor-owned
utilities in Massachusetts or (ii) customers (including
those of Massachusetts Electric Company) representing 50%
of the 1995 kilowatthour sales of utilities in New
England. "Retail Access" shall mean the ability of
retail electric customers to purchase electric power
directly from power generators, power marketers, or any
other entities at prices not subject to regulation.
3.5. Proration. (a) The Buyer and the Sellers
agree that all of the items normally prorated, including
those listed below, relating to the business and
operation of the Purchased Assets will be prorated as of
the Closing Date, with the Sellers liable to the extent
such items relate to any time period through the Closing
Date, and the Buyer liable to the extent such items
relate to periods subsequent to the Closing Date:
(i) personal property, real estate,
occupancy, sewerage and water 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 payable
by or to the Sellers under any of the PPAs that are
subject to cost of service regulation and under any of
the Sellers' Agreements assigned to and assumed by the
Buyer hereunder which are associated with the
Purchased Assets;
(iii) any permit, license, registration,
compliance assurance fees or other fees with respect
to any Transferable Permit associated with the
Purchased Assets;
(iv) sewer rents and charges for water,
telephone, electricity and other utilities; and
(v) rent under any leases of real or
personal property included in the Purchased Assets,
including the leases described in Schedule 5.9.
(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 fees for the preceding
year (or appropriate period) for which actual Taxes or
fees are available and such Taxes or fees shall be
reprorated upon request of either the Sellers, on the one
hand, or the Buyer, on the other hand, made within sixty
(60) days of the date that the actual amounts become
available. The Sellers and the 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.
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing. (a) Upon the terms
and subject to the satisfaction of the conditions
contained in Article VIII of this Agreement (the "Fossil
Assets Conditions") and the conditions contained in
Article IX of this Agreement (the "Hydroelectric Assets
Conditions"), the closing of the sale of the Purchased
Assets contemplated by this Agreement (the "Closing")
will take place at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 A.M. (local time) on such date as the
parties may agree which date is as soon as practicable,
but no later than fifteen Business Days, following the
date on which all of the Hydroelectric Assets Conditions
and the Fossil Assets Conditions have been satisfied or
waived; or at such other place or time as the parties may
agree. The date and time at which the Closing actually
occurs is hereinafter referred to as the "Closing Date."
4.2. Payment of Purchase Price. (a) 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, the Buyer will pay or
cause to be paid to NEP on behalf of the Sellers at the
Closing an amount (the "Estimated Purchase Price") in
United States dollars equal to the sum of (i)
$1,365,000,000, (ii) the Estimated Adjustment Amount for
the Closing, (iii) the Severance Amount, (iv) any amounts
expended by the Sellers pursuant to Section 7.4(e) hereof
and (vi) any amounts payable under Section 4.2(c) hereof,
by wire transfer of immediately available funds or by
such other means as are agreed upon by the Sellers and
the Buyer; and
(b) [intentionally left blank]
(c) 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, the Buyer will pay or cause to be paid to NEP on
behalf of the Sellers, the Additional Payment Amount, as
set forth in Section 3.4 hereof:
(i) if, prior to the Closing Date, either (A) the
Retail Choice Date shall have occurred and legislation
authorizing Retail Access shall have been enacted in
Massachusetts or (B) legislation has been enacted in
Massachusetts which provides for the Retail Choice
Date to occur on or prior to January 1, 1999, then the
Additional Payment Amount shall be paid on the Closing
Date; and
(ii) if the conditions required in subsection 4.2
(c) (i) for the payment of the Additional Payment
Amount were not met on the Closing Date, then such
payment will be made in United States dollars by wire
transfer of immediately available funds or by such
other means are agreed upon by the Sellers and the
Buyer, within five (5) Business Days of the delivery
of a certificate executed by duly authorized officers
of the Sellers, certifying that the Retail Choice Date
has occurred and either (A) legislation authorizing
Retail Access has been enacted in Massachusetts and
the requirements for the Retail Choice Date shall have
been met continuously from such date through the date
of enactment of such legislation or (B) the
requirements for the Retail Choice Date have been in
continuous effect for at least two years from the
Retail Choice Date and a material portion of the
customers enjoying Retail Access are not participants
in pilot programs. If payment of the Additional
Payment Amount is made after the later of the Retail
Choice Date or the Closing Date, the Buyer will also
pay the Seller, concurrent with the payment of the
Additional Payment Amount, an interest payment for the
period elapsed since the later of the Retail Choice
Date and the Closing, on the amount of the Additional
Payment Amount, at an annual interest rate equal to
the sum of the yield (i) reported on page PX1 of the
Bloomberg Financial Market Services Screen (or, if not
available, any other nationally recognized trading
screen reporting on-line intraday trading in the
United States government Securities) at 4:00 p.m. (New
York time) three business days prior to the date on
which payment of the Additional Payment Amount is
made, for the off the run Treasury Xxxx or Note with a
maturity equivalent to the length of time since the
later of the Retail Choice Date and the Closing plus
(ii) 0.40%. If no maturity exactly corresponds to
such period, the yields for the two published
maturities most closely corresponding to such period
shall be interpolated or extrapolated from such yields
on a straight line basis.
4.3. Deliveries by the Sellers. At the Closing,
the Sellers will deliver the following to the Buyer:
(a) A Xxxx of Sale, duly executed by the Sellers
for the personal property included in the Purchased
Assets;
(b) All consents, waivers or approvals obtained by
the Seller with respect to the Purchased Assets, the
transfer of any Transferable Permit related to the
Purchased Assets, or the consummation of the transactions
connected to the sale of the Purchased Assets,
contemplated by this Agreement, to the extent
specifically required hereunder;
(c) An opinion of counsel and certificate (as
contemplated by Section 8.2 and 9.2) with respect to the
Purchased Assets;
(d) One or more deeds of conveyance of the Real
Estate (substantially as set forth in Schedule 5.14
hereto) related to the Purchased Assets, to the Buyer,
reserving the applicable Easements, duly executed and
acknowledged by the Sellers and in recordable form;
(e) A FIRPTA Affidavit executed by each of the
Sellers;
(f) All such other instruments of assignment or
conveyance as shall, in the reasonable opinion of the
Buyer and its counsel, be necessary to transfer to the
Buyer the Purchased Assets, in accordance with this
Agreement and where necessary or desirable, in recordable
form; and
(g) Such other agreements, documents, instruments
and writings as are required to be delivered by the
Sellers at or prior to the Closing Date pursuant to this
Agreement or otherwise required in connection herewith.
4.4. Deliveries by the Buyer. At the Closing, the
Buyer will deliver the following to the Sellers:
(a) The Estimated Purchase Price by wire transfer
of immediately available funds or such other means as are
agreed upon by the Sellers and the Buyer;
(b) Opinions of counsel and certificates (as
contemplated by Section 8.3 and 9.3) with respect to the
Purchased Assets;
(c) The Instruments of Assumption with respect to
the Assumed Obligations, duly executed by the Buyer;
(d) All such other instruments of assumption as
shall, in the reasonable opinion of the Sellers and its
counsel, be necessary for the Buyer to assume the Assumed
Obligations related to the Purchased Assets in accordance
with this Agreement; and
(e) Such other agreements, documents, instruments
and writings as are required to be delivered by the Buyer
at or prior to the Closing Date pursuant to this
Agreement or otherwise required in connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer as
follows (all such representations and warranties, except
those regarding the Sellers, being made to the best
knowledge of the Sellers after reasonable inquiry or
investigation). Notwithstanding anything in this
Agreement to the contrary, Narragansett makes no
representations other than as to itself and as relates to
Manchester Street.
5.1. Organization; Qualification; Matters Regarding
NERC. (a) NEP is a corporation duly organized, validly
existing and in good standing under the laws of the
Commonwealth of Massachusetts 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. Narragansett and NERC are corporations
duly organized, validly existing and in good standing
under the laws of the State of Rhode Island and have all
requisite corporate power and authority to own, lease,
and operate their properties and to carry on their
businesses as are now being conducted. The Sellers are
duly qualified or licensed to do business as foreign
corporations and are in good standing in each
jurisdiction in which the property owned, leased or
operated by them or the nature of the business conducted
by them makes such qualification necessary, except in
each case in those jurisdictions where the failure to be
so duly qualified or licensed and in good standing would
not create a Material Adverse Effect. The Sellers and
NERC have heretofore delivered to the Buyer complete and
correct copies of their Certificates of Incorporation and
Bylaws as currently in effect.
(b) The authorized capital stock of NERC consists
of one (1) share of common stock, par value $1.00 per
share, one share of which is issued and outstanding.
Such share of NERC Stock has been duly authorized and
validly issued, is fully paid and non-assessable, and has
not been issued in violation of the preemptive rights of
any stockholder of NERC. At the Closing, NEP will be the
record and beneficial owner of full right and title to
such share of NERC Stock, free and clear of all
Encumbrances, options, warrants, rights, calls, pledges,
trusts, voting trusts and other stockholder agreements,
assessments, covenants, restrictions, reservations,
commitments, obligations, liabilities, and other burdens.
Assuming issuance by the SEC of an appropriate order
under the Holding Company Act, as of the Closing NEP will
have the absolute and unrestricted right, power,
authority and capacity to sell the NERC Stock to the
Buyer.
(c) NERC owns general partnership interests
representing 20% of the aggregate partnership interests
in each of Ocean State Power, a Rhode Island general
partnership ("OSP"), and Ocean State Power II, a Rhode
Island general partnership ("OSP II"), free and clear of
all Encumbrances except for Permitted Encumbrances. NERC
(i) was organized solely for purposes of acting as a
general partner in OSP, owns no other assets and has no
liabilities of any kind, except as attributable to
(A) such general partnership interests, other than those
arising in the ordinary course of business that are not
material, and (B) occasional liabilities to NEPSCO, tax
liabilities to XXXX under the XXXX Intercompany Tax
Allocation Agreement, and the NERC Note Agreements, all
of which will be discharged on or prior to the Closing
(ii) does not engage, and has never engaged in, any
business other than holding such general partnership
interests, and (iii) does not have, and has never had,
any employees.
5.2. Authority Relative to this Agreement. The
Sellers have full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and
validly authorized by the Boards of Directors of the
Sellers and will, prior to the Closing, be duly and
validly authorized by the stockholders of NEP with
general voting rights and, assuming defeasance of the
General and Refunding Mortgage Indenture and Deed of
Trust, dated as of January 1, 1977, as amended and
supplemented, between NEP and State Street Bank and Trust
Company, as successor trustee to Bank of New England,
National Association (formerly New England Merchants
National Bank) and the issuance by the SEC of an order
authorizing the transaction contemplated hereby, no other
corporate proceedings on the part of the Sellers are
necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the
Sellers, and assuming that this Agreement constitutes a
valid and binding agreement of the Buyer, subject to the
receipt of the Sellers Required Regulatory Approvals and
the Buyer Required Regulatory Approvals, constitutes a
valid and binding agreement of the Sellers, enforceable
against the Sellers in accordance with its terms, except
that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights
generally or general principles of equity.
5.3. Consents and Approvals; No Violation. (a)
Except as set forth in Schedule 5.3, and other than
obtaining the Sellers Required Regulatory Approvals and
the Buyer Required Regulatory Approvals, neither the
execution and delivery of this Agreement by the Sellers
nor the sale by the Sellers of the Purchased Assets
pursuant to this Agreement will (i) conflict with or
result in any breach of any provision of the Certificates
of Incorporation or Bylaws of the Sellers, (ii) require
any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or
regulatory authority, except (x) where the failure to
obtain such consent, approval, authorization or permit,
or to make such filing or notification, would not,
individually or in the aggregate, create a Material
Adverse Effect or (y) for those requirements which become
applicable to the Sellers as a result of the specific
regulatory status of the Buyer (or any of its Affiliates)
or as a result of any other facts that specifically
relate to the business or activities in which the Buyer
(or any of its Affiliates) is or proposes to be engaged;
(iii) 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, license, agreement or other
instrument or obligation to which the Sellers are a party
or by which the Sellers, 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, in the aggregate, would not, individually or in
the aggregate, create a Material Adverse Effect; or (iv)
violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Sellers, or any of
their assets, which violation, individually or in the
aggregate, would create a Material Adverse Effect.
(b) Except as set forth in Schedule 5.3 and except
for (i) any required approvals under the Federal Power
Act, (ii) (A) notice by NEP to, and an order by, the MDPU
approving the transactions contemplated by this
Agreement, (B) the approval by the RIPUC of the market
valuation "implementation methodology" filed in RIPUC
Docket 2540, pursuant to section 39-1-27.4(g) of the
Rhode Island General Laws, (C) the approval by the RIPUC
of the "Transfer Plan" filed in RIPUC Docket 2515,
pursuant to section 39-1-27(a) of the Rhode Island
General Laws, (D) the approval, if required, of the Rhode
Island Division of Public Utilities and Carriers of the
transfer of Manchester Street to Buyer, (E) the approval,
if required, of the Rhode Island Energy Facilities Siting
Board of the transfer of Manchester Street to the Buyer,
(F) if required, notice by NEP to, and an order by, each
of the NHPUC and the VTPSB approving the sale of the
Hydroelectric Assets, (iii) the approval, if required, of
the SEC pursuant to the Holding Company Act, (iv) the
filings by the Sellers and the Buyer required by the HSR
Act and the expiration or earlier termination of all
waiting periods under the HSR Act, and (v) the approval,
if required, of the Nuclear Regulatory Commission (the
"NRC") (the filings and approvals referred to in clauses
(i) through (v) are collectively referred to as the
"Sellers Required Regulatory Approvals"), no declaration,
filing or registration with, or notice to, or
authorization, consent or approval of any governmental or
regulatory body or authority is necessary for the
consummation by the Sellers of the transactions
contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents
or approvals which, if not obtained or made, will not,
individually or in the aggregate, create a Material
Adverse Effect.
5.4. Reports. Since January 1, 1994, the Sellers
have filed or caused to be filed with the SEC, the
applicable state or local utility commissions or
regulatory bodies, the NRC or the FERC, as the case may
be, all material forms, statements, reports and documents
(including all exhibits, amendments and supplements
thereto) required to be filed by them with respect to the
business and operations of the Sellers as it relates to
the Purchased Assets under each of the Securities Act,
the Exchange Act, the applicable State public utility
laws, the Federal Power Act, the Holding Company Act, and
the Xxxxx-Xxxxxxxx Act and the respective rules and
regulations thereunder, all of which complied in all
material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder
in effect on the date each such report was filed, and
there are no material misstatements or omissions in
respect of such reports.
5.5. Financial Statements. Sellers have made
available to the Buyer their balance sheets, as of June
30, 1997. Such balance sheets (including the related
notes thereto) are referred to herein as the "Sellers
Balance Sheets." Each of the Sellers Balance Sheets
presents fairly, as of June 30, 1997, the financial
position of such Seller in conformity with generally
accepted accounting principles applied on a consistent
basis, except as otherwise noted therein.
5.6. Undisclosed Liabilities. Except as set forth
in Schedule 5.6, the Sellers have no liability or
obligation relating to the business or operations of the
Purchased Assets, secured or unsecured (whether absolute,
accrued, contingent or otherwise, and whether due or to
become due), of a nature required by generally accepted
accounting principles as they have been consistently
applied by the Sellers to be reflected in a corporate
balance sheet or disclosed in the notes thereto, which
are not accrued or reserved against in the Sellers
Balance Sheets or disclosed in the notes thereto in
accordance with generally accepted accounting principles,
except those which either were incurred in the ordinary
course of business, whether before or after the date of
the Sellers Balance Sheets.
5.7. Absence of Certain Changes or Events. Except
(i) as set forth in Schedule 5.7, or in the reports,
schedules, registration statements and definitive proxy
statements filed by any of the Sellers or XXXX with the
SEC and (ii) as otherwise contemplated by this Agreement,
since the date of the Sellers Balance Sheets there has
not been: (a) any Material Adverse Effect; (b) any
damage, destruction or casualty loss, whether covered by
insurance or not, which, individually or in the
aggregate, created a Material Adverse Effect; (c) any
entry into any agreement, commitment or transaction
(including, without limitation, any borrowing, capital
expenditure or capital financing) by the Sellers or NERC,
which is material to the business or operations of the
Purchased Assets, except agreements, commitments or
transactions in the ordinary course of business that in
the aggregate are not material to the Purchased Assets or
as contemplated herein; or (d) any change by the Sellers,
with respect to the Purchased Assets or NERC, in
accounting methods, principles or practices except as
required or permitted by generally accepted accounting
principles.
5.8. Title and Related Matters. Except as set
forth in Schedule 5.8 and except for Permitted
Encumbrances, the Sellers have marketable title to the
Real Estate as specified in the Specimen Title Policy for
each of the Purchased Assets constituting Real Estate.
Except as set forth in Schedule 5.8 and except for
Permitted Encumbrances, the Sellers have good and valid
title to the other Purchased Assets which they purport to
own that are reflected in the Sellers Balance Sheets
(other than those which have been disposed of since the
date thereof in the ordinary course of business), free
and clear of all Encumbrances.
5.9. Leases. Schedule 5.9 lists, as of the date of
this Agreement, all real property leases under which the
Sellers are a lessee or lessor and which (x) are to be
transferred and assigned to the Buyer on the Closing Date
and (y) (i) provide for annual payments of more than
$500,000 or (ii) are material to the business, operations
or financial condition of the Purchased Assets. Except
as set forth in Schedule 5.9, all such leases are valid,
binding and enforceable in accordance with their terms,
and are in full force and effect; there are no existing
material defaults by the Sellers or, to the Sellers'
knowledge, any other party thereunder; and no event has
occurred which (whether with or without notice, lapse of
time or both) would constitute a material default by the
Sellers or, to the Sellers' knowledge, any other party
thereunder.
5.10. Insurance. Except as set forth in Schedule
5.10, all material policies of fire, liability, worker's
compensation and other forms of insurance owned or held
by the Sellers and insuring the Purchased Assets are in
full force and effect, all premiums with respect thereto
covering all periods up to and including the date as of
which this representation is being made have been paid
(other than retroactive premiums which may be payable
with respect to comprehensive general liability and
worker's 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 5.10, as
of the date of this Agreement, the Sellers have not been
refused any insurance with respect to the Purchased
Assets nor has their coverage been limited by any
insurance carrier to which they have applied for any such
insurance or with which they have carried insurance
during the last twelve months.
5.11. Environmental Matters. Except as disclosed
in Schedule 5.11 or in any public filing by any of the
Sellers or XXXX pursuant to the Securities Act or the
Exchange Act:
(a) The Sellers hold, and are in substantial
compliance with, all material permits, licenses and
governmental authorizations ("Environmental Permits")
required for the Sellers to conduct the business and
operations of the Purchased Assets under applicable
Environmental Laws, and the Sellers are otherwise in
compliance with applicable Environmental Laws with
respect to the business and operations of the Purchased
Assets except for such failures to hold or comply with
required Environmental Permits, or such failures to be in
compliance with applicable Environmental Laws, which,
individually or in the aggregate, are not reasonably
likely to create a Material Adverse Effect;
(b) The Sellers have not received any written
request for information, or been notified that they are a
potentially responsible party, under CERCLA or any
similar State law with respect to any on-site location,
except for such liability under such laws as would not be
reasonably likely to, individually or in the aggregate,
create a Material Adverse Effect; and
(c) The Sellers have not entered into or agreed to
any consent decree or order, and are not 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, except for such consent decree or
order, judgment, decree or judicial order that would not
be reasonably likely to, individually or in the
aggregate, create a Material Adverse Effect.
The representations and warranties made in this Section
5.11 are the Sellers' exclusive representations and
warranties relating to environmental matters.
5.12. Labor Matters. The Sellers have previously
delivered to the Buyer copies of all collective
bargaining agreements to which the Sellers are a party or
are subject and which relate to the business or
operations of the Purchased Assets. Solely (in each of
the following clauses (a) through (f)) with respect to
the business or operations of the Purchased Assets,
except to the extent set forth in Schedule 5.12 and
except for such matters as will not, individually or in
the aggregate, create a Material Adverse Effect (a) the
Sellers are in compliance with all applicable laws
respecting employment and employment practices, terms and
conditions of employment and wages and hours; (b) the
Sellers have not received written notice of any unfair
labor practice complaint against the Sellers pending
before the National Labor Relations Board; (c) there is
no labor strike, slowdown or stoppage actually pending or
threatened against or affecting the Sellers; (d) the
Sellers have not received notice that any representation
petition respecting the employees of the Sellers has been
filed with the National Labor Relations Board; (e) no
arbitration proceeding arising out of or under collective
bargaining agreements is pending against the Sellers and
(f) the Sellers have not experienced any primary work
stoppage since at least December 31, 1994.
5.13. ERISA; Benefit Plans. (a) Schedule 5.13(a)
lists all deferred compensation, profit-sharing,
retirement and pension plans, including multiemployer
plans (of which none exist), and all material bonus and
other employee benefit or fringe benefit plans maintained
or with respect to which contributions are made by the
Sellers in respect to current or former employees
employed at the Purchased Assets ("Benefit Plans").
Accurate and complete copies of all such Benefit Plans
have been made available to the Buyer.
(b) Except as set forth in Schedule 5.13(b), the
Sellers and the ERISA Affiliates have fulfilled their
respective obligations under the minimum funding
requirements of Section 302 of ERISA, and Section 412 of
the Code, with respect to each Benefit Plan which is an
"employee pension benefit plan" as defined in Section
3(2) of ERISA and each such plan is in compliance in all
material respects with the presently applicable
provisions of ERISA and the Code. Except as set forth in
Schedule 5.13(b), neither the Sellers nor any ERISA
Affiliate has incurred any liability under Section
4062(b) of ERISA to the Pension Benefit Guaranty
Corporation in connection with any Benefit Plan which is
subject to Title IV of ERISA, nor any withdrawal
liability nor is there any reportable event (as defined
in Section 4043 of ERISA) except as set forth in Schedule
5.13(b). Except as set forth in Schedule 5.13(b), the
Internal Revenue Service has issued a letter for each
Benefit Plan which is intended to be qualified
determining that such plan is exempt from United States
Federal Income Tax under Sections 401(a) and 501(a) of
the Code, and there has been no occurrence since the date
of any such determination letter which has adversely
affected such qualification.
(c) None of the Sellers nor any ERISA Affiliate or
parent corporation, within the meaning of Section 4069(b)
or Section 4212(c) of ERISA, has engaged in any
transaction, within the meaning of Section 4069(b) or
Section 4212(c) of ERISA. No Benefit Plan and no ERISA
Affiliate Plan is a multiemployer plan.
(d) Each of the Sellers that maintains a "group
health plan" within the meaning of Section 5000(b)(1) of
the Code has materially complied in good faith with the
notice and continuation requirements of Section 4980B of
the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA
and the regulations thereunder.
5.14. Real Estate. Schedule 5.14 contains a
description of, and exhibits indicating the location of,
the real property owned by the Sellers and included in
the Purchased Assets (the "Real Estate"). Schedule 5.14
also describes any indebtedness secured by a mortgage or
other Encumbrance on the Real Estate. Complete and
correct copies of any current surveys in the Sellers'
possession or any policies of title insurance currently
in force and in the possession of the Sellers with
respect to such real property have heretofore been
delivered by the Sellers to the Buyer.
5.15. Condemnation. Except as set forth in
Schedule 5.15, neither the whole nor any part of the Real
Estate or any other real property or rights leased, used
or occupied by the Sellers in connection with the
ownership or operation of the Purchased Assets is subject
to any pending suit for condemnation or other taking by
any public authority, and, no such condemnation or other
taking has been threatened.
5.16. Certain Contracts and Arrangements. (a)
Except (i) as listed in Schedule 5.16(a) or any other
Schedule to this Agreement, (ii) for contracts,
agreements, personal property leases, commitments,
understandings or instruments which will expire prior to
the Closing Date, and (iii) for agreements with suppliers
entered into in the ordinary course of business that are
not material to the Purchased Assets, the Sellers are not
a party to any written contract, agreement, personal
property lease, commitment, understanding or instrument
which is material to the business or operations of the
Purchased Assets, and NERC is not a party to any such
contract which is material to the business or operations
of OSP and OSP II.
(b) Except as disclosed in Schedule 5.16(b), each
of the PPAs and each material Sellers' Agreement (i)
constitutes a valid and binding obligation of NEP or
Narragansett, as the case may be, and to the best
knowledge of the Sellers constitutes a valid and binding
obligation of the other parties thereto, (ii) is in full
force and effect, and (iii) may be transferred to the
Buyer pursuant to this Agreement and will continue in
full force and effect thereafter, in each case without
breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder.
(c) Except as set forth in Schedule 5.16(c), there
is not, under any of the PPAs or the Sellers' Agreements,
any default or event which, with notice or lapse of time
or both, would constitute a default on the part of any of
the parties thereto, except, with respect to the Sellers'
Agreements only, such events of default and other events
as to which requisite waivers or consents have been
obtained or which would not, individually or in the
aggregate, create a Material Adverse Effect.
(d) If the Continuing Site Agreement were in full
force and effect between Sellers' generation business and
Sellers' transmission business on the date of this
Agreement, (i) the Sellers' generation business would be
in material compliance with the terms thereof, and (ii)
there is no event or condition that would enable or
require the Seller's transmission business to (x) notify
the Sellers' generation business of the necessity of an
addition to or modification of the Interconnection
Facilities, as defined in Section 3.1.4 of the Continuing
Site Agreement, (y) operate and/or purchase from the
Sellers' generation business any of the equipment or
facilities specified in section 3.2.8(d) of the
Continuing Site Agreement, or (z) discontinue
Interconnection Service under Section 3.13.1 of the
Continuing Site Agreement, as defined therein.
5.17. Legal Proceedings, etc. Except as set forth
in Schedule 5.17 or in any filing made by XXXX or the
Sellers pursuant to the Securities Act or the Exchange
Act, there are no claims, actions, proceedings or
investigations pending or threatened against or relating
to the Sellers before any court, governmental or
regulatory authority or body acting in an adjudicative
capacity, which, if adversely determined, individually or
in the aggregate, would create a Material Adverse Effect.
Except as set forth in Schedule 5.17 or in any filing
made by XXXX or the Sellers pursuant to the Securities
Act or the Exchange Act, the Sellers are not subject to
any outstanding judgment, rule, order, writ, injunction
or decree of any court, governmental or regulatory
authority which, individually or in the aggregate, would
create a Material Adverse Effect.
5.18. Permits. (b) The Sellers have all permits,
licenses, franchises and other governmental
authorizations, consents and approvals, other than with
respect to Environmental Laws (collectively, "Permits")
necessary to operate the business of the Purchased Assets
as presently conducted, except where the failure to have
such Permits would not, individually or in the aggregate,
create a Material Adverse Effect. Except as set forth in
Schedule 5.18(a), the Sellers have not received any
written notification that they are in violation of any of
such Permits, or any law, statute, order, rule,
regulation, ordinance or judgment of any governmental or
regulatory body or authority applicable to it, except for
notifications of violations which would not, individually
or in the aggregate, create a Material Adverse Effect.
The Sellers are in compliance with all Permits, laws,
statutes, orders, rules, regulations, ordinances, or
judgments of any governmental or regulatory body or
authority applicable to it, except for violations which,
individually or in the aggregate, do not create a
Material Adverse Effect.
(b) Schedule 5.18(b) sets forth all material
Permits and Environmental Permits other than Transferable
Permits (which are set forth on Schedule 1.1(a)(70)).
5.19. Regulation as a Utility. Each of the Sellers
is a public utility company within the meaning of the
Holding Company Act. Except as set forth on Schedule
5.19, the Sellers are not subject to regulation as a
public utility or public service company (or similar
designation) by the United States, any state of the
United States, any foreign country or any municipality or
any political subdivision of the foregoing.
5.20. Taxes. (a) With respect to the Purchased
Assets and trades or businesses associated with the
Purchased Assets other than the NERC Stock, (i) all Tax
Returns required to be filed other than those Tax Returns
the failure of which to file would not create a Material
Adverse Effect have been filed, and (ii) all material
Taxes shown to be due on such Tax Returns have been paid
in full. Except as set forth in Schedule 5.20, no notice
of deficiency or assessment has been received from any
taxing authority with respect to liabilities for Taxes of
the Sellers in respect of the Purchased Assets, which
have not been fully paid or finally settled, and any such
deficiency shown in such Schedule 5.20 is being contested
in good faith through appropriate proceedings. Except as
set forth in Schedule 5.20, there are no outstanding
agreements or waivers extending the applicable statutory
periods of limitation for Taxes associated with the
Purchased Assets for any period. Schedule 5.20 sets
forth the taxing jurisdictions in which the Sellers own
assets or conduct business that require a notification to
a taxing authority of the transactions contemplated by
this Agreement, if the failure to make such notification,
or obtain Tax clearances in connection therewith, would
either require the Buyer to withhold any portion of the
Purchase Price or would subject Buyer to any liability
for any Taxes of the Sellers.
(b) With respect to the sale of the NERC Stock,
except as set forth on Schedule 5.20:
(i) NERC has (x) duly and timely filed (or there
has been filed on its behalf) with the appropriate
taxing authorities all Tax Returns required to be
filed by it, and all such Tax Returns are true,
correct and complete and (y) timely paid or there has
been paid on its behalf all Taxes due or claimed to be
due from it by any taxing authority;
(ii) NERC has, within the time and manner
prescribed by law, withheld and paid over to the
proper governmental authorities all amounts required
to be withheld and paid over under all applicable
laws;
(iii) There are no Encumbrances for Taxes upon the
assets or properties of NERC, except for statutory
Encumbrances for current Taxes not yet due;
(iv) NERC has not requested any extension of time
within which to file any Tax Return in respect of any
taxable year which has not since been filed and no
outstanding waivers or comparable consents regarding
the application of the statute of limitations with
respect to any Taxes or Tax Returns has been given by
or on behalf of NERC;
(v) No federal, state, local or foreign audits or
other administrative proceedings or court proceedings
("Audits") exist or have been initiated with regard to
any Taxes or Tax Returns of NERC and NERC has not
received any written notice that such an audit is
pending or threatened with respect to any Taxes due
from or with respect to NERC or any Tax Return filed
by or with respect to NERC;
(vi) NERC has not requested or received a ruling
from any taxing authority or signed a closing or other
agreement with any taxing authority which could have a
material adverse effect on NERC;
(vii) The Tax Returns of NERC have been examined by
the appropriate taxing authorities (or the applicable
statute of limitations for the assessment of Taxes for
such periods have expired) for all periods through and
including the date of this Agreement and a list of all
Audits commenced or completed with respect to NERC for
all taxable periods not yet closed by the statute of
limitations are set forth on Schedule 5.20;
(viii) All Tax deficiencies which have been claimed,
proposed or asserted against NERC have been fully paid
or finally settled, and no issue has been raised in
any examination which, by application of similar
principles, could be expected to result in the
proposal or assertion of a Tax deficiency for any
other year not so examined;
(ix) Except for the XXXX Intercompany Tax
Allocation Agreement, NERC is not a party to, is not
bound by, and has no obligation under, any Tax sharing
agreement, Tax indemnification agreement or similar
contract or arrangement;
(x) No power of attorney has been granted with
respect to NERC as to any matter relating to Taxes;
(xi) NERC has not filed a consent pursuant to
Section 341(f) of the Code (or any predecessor
provision) or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a subsection (f)
asset, as such term is defined in Section 341(f)(4) of
the Code, owned by NERC;
(xii) No property owned by NERC (A) is property
required to be treated as being owned by another
Person pursuant to the provisions of Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended and
in effect immediately prior to the enactment of the
Tax Reform Act of 1986, (B) constitutes "tax-exempt
use property" within the meaning of Section 168(h)(1)
of the Code or (C) is tax-exempt bond financed
property within the meaning of Section 168(g) of the
Code;
(xiii) Since December 31, 1996, NERC has not
incurred any liability for Taxes other than in the
ordinary course of business;
(xiv) NERC has no liability for Taxes of any person
pursuant to Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law)
other than for the consolidated return group of which
XXXX is the parent;
(xv) NERC has not participated, or cooperated
with, an international boycott within the meaning of
Section 999 of the Code; and
(xvi) NERC is not a party to any contract,
agreement or other arrangement which could result in
the payment of amounts that could be nondeductible by
reason of Sections 280G or 162(m) of the Code.
5.21. NERC Holdings. NERC does not own fifty
percent or any greater percentage of the value of the
voting power of the capital stock of any other
corporation.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
EXPRESSLY SET FORTH IN THIS ARTICLE V, THE PURCHASED
ASSETS ARE BEING SOLD AND TRANSFERRED "AS IS, WHERE IS,"
AND THE SELLERS ARE NOT MAKING ANY OTHER REPRESENTATIONS
OR WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR
IMPLIED, CONCERNING SUCH PURCHASED ASSETS, INCLUDING, IN
PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY
EXPRESSLY EXCLUDED AND DISCLAIMED.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers as
follows (all such representations and warranties, except
those regarding the Buyer, being made to the best
knowledge of the Buyer after reasonable inquiry or
investigation):
6.1. Organization. The Buyer is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware 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. The Buyer has heretofore delivered to
the Sellers complete and correct copies of its
Certificate of Incorporation and By-laws (or other
similar governing documents), as currently in effect.
6.2. Authority Relative to this Agreement. The
Buyer has full corporate power and authority to execute
and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of the Buyer
and no other corporate proceedings on the part of the
Buyer are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and
delivered by the Buyer, and assuming that this Agreement
constitutes a valid and binding agreement of the Sellers,
subject to the receipt of the Buyer Required Regulatory
Approvals and the Sellers Required Regulatory Approvals,
constitutes a valid and binding agreement of the Buyer,
enforceable against the Buyer in accordance with its
terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to enforcement of
creditors' rights generally or general principles of
equity.
6.3. Consents and Approvals; No Violation.
(a) Except as set forth in Schedule 6.3, and other
than obtaining the Buyer Required Regulatory Approvals
and the Sellers Required Regulatory Approvals, neither
the execution and delivery of this Agreement by the Buyer
nor the purchase by the Buyer of the Purchased Assets
pursuant to this Agreement will (i) conflict with or
result in any breach of any provision of the Certificate
of Incorporation or By-Laws (or other similar governing
documents) of the Buyer, (ii) require any consent,
approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory
authority, (iii) 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, agreement, lease or other
instrument or obligation to which the 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 consents have been
obtained.
(b) Except as set forth in Schedule 6.3 and except
for (i) qualification of the Buyer as an exempt wholesale
generator under the Energy Policy Act of 1992, without
restriction, including no restriction on sales to
Affiliates, (ii) authorization to sell power under
Section 205 of the FPA, including (A) authorizations
required to implement sales under the Ancillary
Agreements, and (B) market-based rate approval, (iii)
approval under Section 203 of the FPA to transfer
contracts and other jurisdictional assets, (iv) approval
by FERC, under Part I of the FPA, of the transfer of FERC
project licenses related to, and necessary to operate,
the Hydroelectric Assets as currently operated, (v) any
state public utility approval necessary for the Sellers
to transfer any Purchased Assets in such state and for
the Buyer to purchase the Purchased Assets in any such
state, (vi) the filings by the Buyer and the Sellers
required by the HSR Act and (vii) approval of the
Continuing Site Agreement, the Transition Agreements and
the Wholesale Sales Agreement by FERC (the filings and
approvals referred to in clauses (i) through (vii) are
collectively referred to as the "Buyer Required
Regulatory Approvals"), no declaration, filing or
registration with, or notice to, or authorization,
consent or approval of any governmental or regulatory
body or authority is necessary for the consummation by
the Buyer of the transactions contemplated hereby.
6.4. Regulation as a Utility. The Buyer is not
subject to regulation as a public utility or public
service company (or similar designation other than as an
Exempt Wholesale Generator within the meaning of the
Holding Company Act) by the United States, any State of
the United States, any foreign country or any
municipality or any political subdivision of the
foregoing.
6.5. Availability of Funds. The Buyer has
sufficient funds available to it or has received binding
written commitments from responsible financial
institutions to provide sufficient funds on the Closing
Date to pay the Purchase Price.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased
Assets. (a) Except as described in Schedule 7.1, during
the period from the date of this Agreement to the Closing
Date, the Sellers will operate the Purchased Assets and
related businesses in the usual, regular and ordinary
course consistent with good industry practice and shall
use all commercially reasonable efforts to preserve
intact the Purchased Assets and the businesses related
thereto, and endeavor to preserve the goodwill and
relationships with customers, suppliers and others having
business dealings with them. Without limiting the
generality of the foregoing, and, except as contemplated
in this Agreement or as described in Schedule 7.1, prior
to the Closing Date, without the prior written consent of
the Buyer, the Sellers will not with respect to the
Purchased Assets and related businesses:
(i) (x) except for (1) Permitted Encumbrances and
(2) indebtedness constituting Excluded Liabilities
that does not create an Encumbrance on the Purchased
Assets, create, incur, assume or suffer to exist any
indebtedness for borrowed money (including obligations
in respect of capital leases); or (y) assume,
guarantee, endorse or otherwise become directly liable
or responsible (whether directly or indirectly,
contingently or otherwise) for the obligations of any
Person;
(ii) make any material change in the levels of
fuel inventory and stores inventory customarily
maintained by the Sellers with respect to the
Purchased Assets, other than consistent with good
industry practice;
(iii) sell, lease (as lessor), transfer or
otherwise dispose of, any of the Purchased Assets,
other than assets used, consumed or replaced in the
ordinary course of business consistent with good
industry practice;
(iv) terminate, extend or otherwise amend any of
the Sellers' Agreements, the PPAs, any leases listed
in Schedule 5.9 or any other lease to the extent any
such extension or amendment would require the lease to
be disclosed on Schedule 5.9, or waive any default by,
or release, settle or compromise any claim against,
any other party thereto;
(v) enter into, terminate, extend or otherwise
amend any real or personal property Tax agreement,
treaty or settlement other than entering into any such
agreement, treaty or settlement with Hinsdale, NH,
Lebanon, NH, and Monroe, NH; on substantially the same
terms as reflected in the drafts heretofore delivered
to the Buyer;
(vi) execute, enter into, terminate or otherwise
amend (x) any of the Permits, other than routine
renewals or non-material modifications or amendments,
(y) the MOA I or the MOA II or (z) any other
agreement, order, decree or judgment relating to the
current or any new NPDES permit for Xxxxxxx Point;
(vii) enter into any commitment for the purchase or
sale of fuel (whether commodity or transportation)
having a term that extends beyond March 31, 1998 or
such other date that the parties mutually agree to be
the date on which the Closing is expected to occur;
(viii) enter into any power purchase commitment,
having a term that extends beyond March 31, 1998 or
such other date that the parties mutually agree to be
the date on which the Closing is expected to occur;
(ix) enter into any power sales commitments having
a term that extends beyond March 31, 1998 or such
other date that the parties mutually agree to be the
date on which the Closing is expected to occur;
(x) [Intentionally omitted]
(xi) with respect to the Purchased Assets and
related businesses, (x) amend or cancel any liability
or casualty insurance policies related thereto, (y)
compromise, settle, withdraw, release or xxxxx any
claims made or accruing thereunder or (z) fail to
maintain by self insurance or with financially
responsible insurance companies insurance in such
amounts and against such risks and losses as are
customary for such assets and businesses;
(xii) with respect to NERC, permit or cause NERC to
change its capital structure; amend its charter,
by-laws or other governing documents; issue new
securities; merge, consolidate or combine with any
other entity; hire any employees; purchase or sell any
assets; create or suffer to exist; any liabilities,
contingent or otherwise, not directly attributable to
its general partnership interests in OSP and OSP II;
or change its business as presently conducted;
(xiii) enter into any commitment or contract for
goods or services not addressed in clauses (i) through
(xii) above that will be delivered or provided after
March 31, 1998 or such other date that the parties
mutually agree to be the date on which the Closing is
expected to occur, in an amount greater than
$1,000,000;
(xiv) enter into any written or oral contract,
agreement, commitment or arrangement with respect to
any of the transactions set forth in the foregoing
paragraphs (i) through (xiii).
(b) Notwithstanding anything in Section 7.1(a) to
the contrary, the Sellers may, in their sole discretion,
make (i) Maintenance Expenditures and Capital
Expenditures, (ii) at the Sellers' expense, such other
maintenance and capital expenditures as the Sellers deem
necessary and (iii) enter into the settlement agreement
with regard to the Fifteen Mile Falls Project,
substantially in the form heretofore delivered to the
Buyer.
(c) A committee comprised of one Person designated
by the Sellers and one Person designated by the Buyer,
and such additional Persons as may be appointed by the
Persons originally appointed to such committee (the
"Transition Committee") will be established as soon after
execution of this Agreement as is practicable to examine
the business issues affecting the Purchased Assets and
related businesses of the Sellers after the date hereof,
giving emphasis to cooperation between the Buyer and the
Sellers after the execution of this Agreement. From time
to time, the Transition Committee shall report its
findings to the senior management of each of NEP and the
Buyer.
(d) Between the date of this Agreement and the
Closing Date, in the interest of cooperation between the
Sellers and the Buyer and to permit informed action by
the Buyer regarding its rights pursuant to Section 7.1(a)
to grant, consent or to waive prohibitions or limitations
under Section 7.1(a), the parties agree as follows:
(i) At the sole responsibility and expense of the
Buyer, the Sellers will permit designated employees
("Observers") of the Buyer to observe all operations
of the Sellers that relate to the Purchased Assets and
related businesses, and such observation will be
permitted on a cooperative basis in the presence of
personnel of the Sellers but not restricted to the
normal business hours of the Sellers; provided,
however, that such observers and their actions shall
not unreasonably interfere with the operation of the
Sellers business. The Buyer's Observers may recommend
or suggest actions be taken or not be taken by the
Sellers; provided, however, that the Sellers will be
under no obligation to follow any such recommendations
or suggestions and the Sellers shall be entitled,
subject to this Agreement, to conduct their business
in accordance with their own judgment and discretion.
The Buyer's Observers shall have no authority to bind
or make agreements on behalf of the Sellers; to
conduct discussions with or make representations to
third parties on behalf of the Sellers; or to issue
instructions to or direct or exercise authority over
the Sellers or any of the Seller's officers,
employees, advisors or agents.
(ii) For certain specific issues, such as the
Xxxxxxx Point NPDES permit negotiations and planning,
the Sellers may assign Observers to the Sellers' teams
working on these specific issues.
(iii) The Buyer shall have the right, to the extent
that it can demonstrate to NEP a legitimate business
purpose, to direct that NEP enter into contracts and
commitments that exceed the limitations imposed by
Sections 7.1(a)(ii) and (vii); provided, however, that
in such event the Buyer will assume for its own
account any obligations and liabilities associated
therewith, all of which shall constitute Assumed
Obligations for purposes of this Agreement; provided,
however, that NEP shall not be required to enter into
such contracts and commitments unless the Buyer has
provided NEP with a reasonable mechanism to hold NEP
harmless for any liabilities incurred in connection
with such contracts and commitments.
(e) The Buyer and Sellers each agree to consult
with each other regarding matters involving the governing
arrangements or procedures of the New England Power Pool.
The Sellers shall take the Buyer's views on such matters
into account, with particular deference to matters
involving predominately the generation business, prior to
exercising Sellers' rights and obligations with respect
to the New England Power Pool.
7.2. Access to Information. (a) Between the date
of this Agreement and the Closing Date, the Sellers will,
during ordinary business hours and upon reasonable notice
(i) give the Buyer and the Buyer Representatives
reasonable access to all books, records, plants, offices
and other facilities and properties constituting the
Purchased Assets to which the Buyer is not denied access
by law; (ii) permit the Buyer to make such reasonable
inspections thereof as the Buyer may reasonably request;
(iii) furnish the Buyer with such financial and operating
data and other information with respect to the Purchased
Assets as the Buyer may from time to time reasonably
request; (iv) furnish the Buyer a copy of each material
report, schedule or other document filed or received by
them with respect to the Purchased Assets with the SEC,
MDPU, RIPUC, NHPUC, VTPSB, NRC or FERC; provided,
however, that (A) any such investigation shall be
conducted in such a manner as not to interfere
unreasonably with the operation of the Purchased Assets,
(B) the Sellers shall not be required to take any action
which would constitute a waiver of the attorney-client
privilege and (C) the Sellers need not supply the Buyer
with any information which the Sellers are under a legal
obligation not to supply. Notwithstanding anything in
this Section 7.2 to the contrary, (i) the Sellers will
only furnish or provide such access to Transferring
Employee Records and personnel and medical records as is
required by law, legal process or subpoena and (ii) the
Buyer shall not have the right to perform or conduct any
environmental sampling or testing at, in, on, or
underneath the Purchased Assets.
(b) The Buyer and Sellers acknowledge that Buyer
is a Representative of U.S. Generating Company under the
terms of the Confidentiality Agreement. All information
furnished to or obtained by the Buyer, U.S. Generating
Company and the Buyer Representatives pursuant to this
Section 7.2 shall be subject to the provisions of the
Confidentiality Agreement and shall be treated as
"Proprietary Information" (as defined in the
Confidentiality Agreement).
(c) For a period of ten years after the Closing
Date, each party and their representatives shall have
reasonable access to all of the books and records of the
Purchased Assets, including all Transferring Employee
Records or other personnel and medical records required
by law, legal process or subpoena, in the possession of
the other party or parties to the extent that such access
may reasonably be required by such party in connection
with the Assumed Obligations 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 or parties in possession of such books and
records upon receipt of reasonable advance notice and
during normal business hours. The party or parties
exercising this right of access shall be solely
responsible for any costs or expenses incurred by it or
them pursuant to this Section 7.2(c). If the party or
parties in possession of such books and records shall
desire to dispose of any such books and records upon or
prior to the expiration of such ten-year period, such
party or parties shall, prior to such disposition, give
the other party or parties a reasonable opportunity at
such other party's or parties' expense, to segregate and
remove such books and records as such other party or
parties may select.
(d) The Sellers agree to use best efforts to cause
XXXX not to release any Person (other than the Buyer)
from any confidentiality agreement now existing with
respect to the Purchased Assets, or waive or amend any
provision thereof.
(e) Notwithstanding the terms of the
Confidentiality Agreement and Section 7.2(b) above, the
parties agree that prior to the Closing the Buyer may
reveal or disclose Proprietary Information to any other
Persons in connection with financing, and risk management
if reasonably necessary, of or with respect to the
Purchased Assets, and to such Persons with whom the Buyer
expects it may have business dealings regarding the
Purchased Assets from and after the Closing Date, and, to
the extent that Sellers consent, which consent shall not
be unreasonably withheld, existing and potential
customers and suppliers. The parties further agree that
clause (c) of the first sentence of the second paragraph
of the Confidentiality Agreement is terminated, and of no
further force or effect.
(f) Except as required by law, unless otherwise
agreed to in writing by the Buyer, for a period
commencing on the Closing Date and terminating three
years after such date the Sellers shall keep (i) all
Proprietary Information confidential and not disclose or
reveal any Proprietary Information to any Person other
than "Sellers' Representatives" (as defined below) 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
7.2(f) and (ii) not to use Proprietary Information for
any purpose other than consistent with the terms of this
Agreement. The Sellers 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 Sellers shall notify the Buyer
of any unauthorized disclosure to third parties that it
discovers, and shall endeavor to prevent any further such
disclosures. The Sellers shall be responsible for any
breach of the terms of this Section 7.2(f) by the Sellers
or the Sellers' Representatives.
After the Closing Date, in the event that the
Sellers are 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 Sellers 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 Sellers 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 7.2(f). The Sellers agree 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 7.2(f), the Sellers shall furnish
only that portion of the Proprietary Information which
the Sellers are advised by counsel is legally required.
In any such event the Sellers shall use their reasonable
best efforts to ensure that all Proprietary Information
and other information that is so disclosed will be
accorded confidential treatment.
(g) The parties agree that the last sentence of
the third paragraph of the Confidentiality Agreement
shall not apply with respect to Proprietary Information
that is included in the Purchased Assets.
(h) The parties agree that the Confidentiality
Agreement will terminate, without further act or evidence
by the parties, upon consummation of the Closing.
(i) The Sellers shall use best efforts to cause
XXXX to execute appropriate written evidence of its
agreement to the terms of this Section 7.2 insofar as the
Confidentiality Agreement is amended or superseded
hereby.
7.3. 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.
7.4. Further Assurances. (a) Subject to the terms
and conditions of this Agreement, each of the parties
hereto will use its best efforts to take, or cause to be
taken, all action, 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
sale of the Purchased Assets pursuant to this Agreement,
including without limitation using its best efforts to
ensure satisfaction of the conditions precedent to each
party's obligations hereunder. Notwithstanding anything
in the previous sentence to the contrary, the Sellers and
the Buyer shall use their commercially reasonable efforts
to obtain all Permits and Environmental Permits necessary
for the Buyer to operate the Purchased Assets. Neither
of the parties hereto will, without prior written consent
of the other party, take or fail to take any action,
which would 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 hereof, without further
consideration, the Sellers will, at their own expense,
execute and deliver such documents to the Buyer as the
Buyer may reasonably request in order to more effectively
vest in the Buyer the Sellers' title to the Purchased
Assets subject to Permitted Encumbrances and Schedule
5.8. Without limiting the foregoing, the Sellers shall
cooperate with the Buyer in the Buyer's efforts to cure
or remove any defects or Encumbrances existing with
respect to the Real Estate that the Buyer reasonably
deems objectionable; provided, however, that in
connection therewith the Sellers shall not be under any
obligation to initiate legal action or to incur expense
other than reasonable administrative and out-of-pocket
expenses. From time to time after the date hereof, the
Buyer will, at its own expense, execute and deliver such
documents to the Sellers as the Sellers may reasonably
request in order to more effectively consummate the sale
of the Purchased Assets pursuant to this Agreement.
(b) In the event that any Purchased Asset shall
not have been conveyed to the Buyer at the Closing, the
Sellers shall, subject to Section 7.4(c), the PPA
Transfer Agreement and the PSA Performance Support
Agreements, use their best efforts to convey such asset
to the Buyer as promptly as is practicable after the
Closing. In the event that any Easement shall not have
been retained by the Sellers after the Closing, the Buyer
shall use its best efforts to grant such Easement to the
Sellers as promptly as is practicable after the Closing.
(c) Subject to the PPA Transfer Agreement and the
PSA Performance Support Agreements, to the extent that
the Sellers' rights under any Sellers' Agreement may not
be assigned without the consent of another Person which
consent has not been obtained, this Agreement shall not
constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or
be unlawful, and the Sellers, at their expense, shall use
their commercially reasonable efforts to obtain any such
required consent(s) as promptly as possible. The Sellers
and the Buyer agree that if any consent to an assignment
of any Sellers' Agreement shall not be obtained or if any
attempted assignment would be ineffective or would impair
the Buyer's rights and obligations under the Sellers'
Agreement in question so that the Buyer would not in
effect acquire the benefit of all such rights and
obligations, the Sellers, to the maximum extent permitted
by law and such Sellers' Agreement, shall after the
Closing, unless the Sellers elect to comply with Section
7.4(e) hereof, appoint the Buyer to be the Sellers'
representative and agent with respect to such Sellers'
Agreement, and the Sellers shall, to the maximum extent
permitted by law and such Sellers' Agreement, enter into
such reasonable arrangements with the Buyer as are
necessary to provide the Buyer with the benefits and
obligations of such Sellers' Agreement. The Sellers and
the Buyer shall cooperate and shall each use their
commercially reasonable efforts after the Closing to
obtain an assignment of such Sellers' Agreement to the
Buyer.
(d) Sellers and Buyer covenant and agree to
negotiate and enter into in good faith such further
agreements for operating the Purchased Assets, after the
Closing Date, including those agreements described on
Schedule 7.4(d).
(e) To the extent that any personal property
lease, relating to any assets which are principally used
by the Sellers for generation purposes at the Purchased
Assets, cannot be assigned to the Buyer or are not
subject to arrangements described in Section 7.4(c), the
Sellers will use their commercially reasonable efforts to
acquire the assets relating to such lease and to include
them in the Purchased Assets before the Closing Date.
7.5. Public Statements. The parties shall consult
with each other prior to issuing any public announcement,
statement or other disclosure with respect to this
Agreement or the transactions contemplated hereby and
shall not issue any such public announcement, statement
or other disclosure prior to such consultation, except as
may be required by law and except that the parties may
make public announcements, statements or other
disclosures with respect to this Agreement and the
transactions contemplated hereby to the extent and under
the circumstances in which the parties are expressly
permitted by the Confidentiality Agreement to make
disclosures of "Proprietary Information" (as defined in
the Confidentiality Agreement).
7.6. Consents and Approvals. (a) The Sellers and
the Buyer shall each file or cause to be filed with the
Federal Trade Commission and the United States Department
of Justice any notifications required to be filed under
the HSR Act and the rules and regulations promulgated
thereunder with respect to the transactions contemplated
hereby. The parties shall consult with each other as to
the appropriate time of filing such notifications and
shall use their best efforts to make such filings at the
agreed upon time, 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.
(b) The Sellers and the Buyer shall cooperate with
each other and (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 Transferable Permits,
consents, approvals and authorizations of all
governmental bodies and (iv) use all 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 Sellers 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 Sellers or the Buyer is a party or by which any of
them is bound. Each of the Sellers 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 filing
made in connection with the transactions contemplated
hereby.
(c) The Sellers and the 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 the Buyer would otherwise be liable for any Tax
liabilities of the Sellers pursuant to such state and
local Tax law.
7.7. Fees and Commissions. The Sellers and the
Buyer each represent and warrant to the other that,
except for Xxxxxxx Xxxxx & Co., which is acting for and
at the expense of the Sellers, and Xxxx Xxxxxx Associates
Incorporated and Societe Generale, which are acting for
and at the expense of the Buyer, no broker, finder or
other Person is entitled to any brokerage fees,
commissions or finder's fees in connection with the
transaction contemplated hereby by reason of any action
taken by the party making such representation. The
Sellers and the Buyer 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 such party.
7.8. Tax Matters. (a) All transfer and sales taxes
incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the
Buyer, and the Buyer, at its own expense, will file, to
the extent required by applicable law, all necessary Tax
Returns and other documentation with respect to all such
transfer or sales taxes, and, if required by applicable
law, the Sellers will join in the execution of any such
Tax Returns or other documentation. Prior to the Closing
Date, the Buyer will provide to the Sellers, to the
extent possible, an appropriate certificate of no Tax
incurred in connection with this Agreement and the
transactions contemplated hereby, due from each
applicable taxing authority.
(b) With respect to Taxes to be prorated in
accordance with Section 3.5 of this Agreement only, the
Buyer shall prepare and timely file all Tax Returns
required to be filed after the Closing with respect to
the Purchased Assets, if any, and shall duly and timely
pay all such Taxes shown to be due on such Tax Returns.
The Buyer's preparation of any such Tax Returns shall be
subject to the Sellers' approval, which approval shall
not be unreasonably withheld. The Buyer shall make such
Tax Returns available for the Sellers' review and
approval no later than fifteen (15) Business Days prior
to the due date for filing such Tax Return. Within ten
(10) Business Days after receipt of such Tax Return, the
Sellers shall pay to the Buyer their proportionate share
of the amount shown as due on such Tax Return determined
in accordance with Section 3.5 of this Agreement.
(c) Each of the Buyer and the Sellers shall
provide the other with such assistance as may reasonably
be requested by the other party in connection with the
preparation of any Tax Return, any audit or other
examination by any taxing authority, or any judicial or
administrative proceedings relating to liability for
Taxes, and each will retain and provide the requesting
party with any records or information which may be
relevant to such return, audit or examination,
proceedings or determination. Any information obtained
pursuant to this Section 7.8(c) or pursuant to any other
Section hereof providing for the sharing of information
or review of any Tax Return or other schedule relating to
Taxes shall be kept confidential by the parties hereto.
(d) NERC Tax Matters.
(1) Section 338(h)(10) Election. (i) With respect
to the sale of the NERC Stock, the Sellers and the
Buyer shall jointly make the election provided for by
Section 338(h)(10) of the Code and Section
1.338(h)(10)-1 of the Treasury Regulations promulgated
under the Code and any comparable election under state
or local tax law (the "Election"). As soon as
practicable after the Closing Date, with respect to
such Election, the Sellers and the Buyer shall
mutually prepare a Form 8023-A, with all attachments,
and the Sellers shall sign such Form 8023-A. The
Buyer and the Sellers shall also cooperate with each
other to take all actions necessary and appropriate
(including filing such additional forms, returns,
elections, schedules and other documents as may be
required) to effect and preserve such Election in
accordance with the provisions of Section 1.338(h)(10)-
1 of the Treasury Regulations (or any comparable
provisions of state and local tax law) or any
successor provisions.
(ii) With respect to the Election the Modified
Aggregate Deemed Sales Price as defined in Section
1.338(h)(10)-1 of the Treasury Regulations (the
"Modified ADSP") shall be allocated among the assets
of NERC pursuant to Treasury Regulation Section
1.338(h)(10)-1. The Buyer and the Sellers shall use
their good faith best efforts to agree upon such
allocation. The Sellers shall provide to the Buyer a
schedule and supporting material reflecting such
allocation for the Buyer's review and consent, such
consent not to be unreasonably withheld. The parties
shall take no action inconsistent with, or fail to
take any action necessary for the validity of, the
Election, and shall adopt and utilize the asset values
determined from such reasonable allocation for the
purpose of all Tax Returns filed by them, and shall
not voluntarily take any action inconsistent therewith
upon examination of any Tax Return, in any refund
claim, in any litigation or otherwise with respect to
such Tax Returns.
(2) Return Filing, Payments, Refunds and Credits.
Notwithstanding anything to the contrary in Section
3.5 of this Agreement,
(i) For purposes of this Agreement, (a) the
amount of Taxes of NERC attributable to the pre-
Closing portion of any taxable period beginning before
and ending after the Closing Date (the "Straddle
Period") shall be determined based upon the cumulative
monthly income statements of NERC for all months
ending prior to the Closing Date and upon the relative
number of days in the pre-Closing and post-Closing
portion of the month in which the Closing Date occurs,
(b) taxable income attributable to NERC's interests in
OSP and OSP II shall be determined by reference to the
relative number of days in the pre-Closing and post-
Closing portions of such Straddle Period; provided,
however, that Taxes imposed on a periodic basis shall
be determined by reference to the relative number of
days in the pre-Closing and post-Closing portions of
such Straddle Period and any extraordinary transaction
shall be allocated to the portion of such Straddle
Period in which it occurred.
(ii) The Buyer and the Sellers shall cause NERC to
join, for all pre-Closing periods and the Straddle
Period for which NERC is required or eligible to do
so, in all consolidated, combined or unitary federal,
state, or local Income Tax or franchise Tax Returns of
the Sellers (or any Tax Affiliate for all pre-Closing
periods ("Sellers' Tax Returns")), and shall, in each
jurisdiction where this is required or permissible
under applicable law, cause the taxable year of NERC
to terminate as of the Closing Date. The Sellers
shall cause to be prepared and timely filed all such
Sellers' Tax Returns and shall cause to be paid all
Taxes shown to be due on such Sellers' Tax Returns;
provided, however, that in the case of a Sellers' Tax
Return for the Straddle Period, the Buyer shall or
shall cause NERC to pay to the Sellers the portion of
such Taxes shown to be due thereon attributable to
NERC for the post-Closing Date portion of the Straddle
Period determined in accordance with Section
7.8(d)(2)(i) and the XXXX Intercompany Tax Allocation
Agreement in effect on the date of the signing of this
Agreement (the "XXXX Intercompany Tax Allocation
Agreement").
(iii) The Buyer shall or shall cause NERC to
prepare and timely file all Income Tax Returns of NERC
for all pre-Closing periods and the Straddle Period,
other than those referred to in Section 7.8(d)(2)(ii),
which Income Tax Returns have not been filed as of the
Closing Date, and shall cause to be timely paid all
Taxes shown to be due on such Tax Returns. No later
than ten days prior to the due date for the filing of
each Income Tax Return referred to in this Section
7.8(d)(2)(iii), the Sellers shall pay to NERC the
amount of Taxes shown as due thereon less any
estimated Taxes paid by NERC during the pre-Closing
period; provided, however, that in the case of an
Income Tax Return for a Straddle Period, the Sellers
shall only be required to pay NERC the portion of such
Taxes that is attributable to the pre-Closing Date
portion of such Straddle Period, determined in
accordance with Section 7.8(d)(2)(i) and the XXXX
Intercompany Tax Allocation Agreement less any
estimated Taxes paid by NERC during the pre-Closing
period. The Sellers shall fully cooperate with the
Buyer and NERC in accordance with past practice in the
preparation of the Income Tax Returns referred to in
this Section 7.8(d)(2)(iii).
(iv) The Buyer shall or shall cause NERC to
prepare and timely file all Tax Returns of NERC for
all pre-Closing periods and the Straddle Period, other
than those Tax Returns referred to in Section
7.8(d)(2)(ii) and (iii), which Tax Returns have not
been filed as of the Closing Date, and shall cause to
be timely paid all Taxes shown to be due thereon. No
later than ten days prior to the due date for the
filing of each Tax Return referred to in this Section
7.8(d)(2)(iv), the Sellers shall pay to NERC the
amount shown as due thereon attributable to the pre-
Closing Date portion of the Straddle Period less any
estimated Taxes paid by NERC during the pre-Closing
period.
(v) The Tax Returns referred to in Section
7.8(d)(2)(ii), (iii) and (iv) shall be prepared in a
manner consistent with past practice, unless a
contrary treatment is required by an intervening
change in the applicable law. Except for calendar
year 1996 Tax Returns, the Sellers shall cause to be
made available to Buyer a copy of any Tax Return that
is required to be filed by the Sellers or NERC under
7.8(d)(2)(ii) and the Buyer shall cause to be made
available to the Sellers a copy of any Tax Return that
is required to be filed by the Buyer or NERC under
Section 7.8(d)(2)(iii) or (iv), in each case together
with all relevant workpapers and other information.
Each such Tax Return shall be made available for
review and approval no later than 20 Business Days
prior to the due date for the filing of such Tax
Return (taking into account proper extensions), such
approval not to be unreasonably withheld. An exact
copy of any such Tax Return filed by the Buyer shall
be provided to the Sellers and any such Tax Return
filed by the Sellers shall be provided to the Buyer,
in each case, no later than ten days after such Tax
Return is filed.
(vi) Any refunds or credits of the Taxes of NERC
plus any interest received with respect thereto from
the applicable taxing authorities for any Closing
period (including without limitation, refunds or
credits arising from amended returns filed after the
Closing Date) shall be for the account of the Sellers,
except to the extent that such refunds or credits are
attributable to the mandatory carryback of any
deductions or credits for any Tax Period ending after
a Closing Date and, if received by the Buyer or NERC,
shall be paid to the Sellers within ten days after the
Buyer or NERC receives such refund or after the
relevant Tax Return is filed within which the credit
is applied against the Buyer's or NERC's liability for
Taxes for a period which begins after the Closing
Date, net of any Taxes the Buyer or NERC is required
to pay on account of receiving such refund or credit
(including a reasonable estimate of resulting future
Tax costs.) The Sellers, without the consent of the
Buyer, shall not apply for any refund that will create
a material adverse effect on any post-Closing period
Tax Return and shall not apply for any refund for any
Straddle Period Tax Return or any Tax Return for NERC
that is not a consolidated, combined, or unitary Tax
Return. Any refunds or credits of Taxes of NERC for
any Straddle Period shall be apportioned between the
Sellers and the Buyer in the same manner as the
liability for such Taxes is apportioned pursuant to
Section 7.8(d)(2)(i).
(3) Tax Indemnification. (i) Without duplication,
the Sellers shall indemnify, defend and hold the Buyer
harmless from and against any and all Taxes (including
interest and penalties) which may be suffered or
incurred by them in respect of or relating to,
directly or indirectly (x) Taxes of or attributable to
NERC for all pre-Closing periods, (y) Taxes of or
attributable to NERC with respect to the pre-Closing
portion of the Straddle Period, and (z) Taxes payable
by NERC with respect to any pre-Closing period or
Straddle Period by reason of NERC being severally
liable for the Tax of any Tax Affiliate pursuant to
Treasury Regulation Section 1.1502-6 or any analogous
state or local Tax law.
(ii) Without duplication, the Buyer shall
indemnify, defend and hold the Sellers harmless from
and against any and all Taxes (including interest and
penalties) which may be suffered or incurred by them
in respect of or relating to, directly or indirectly
(x) Taxes of or attributable to NERC with respect to
all post-Closing periods, (y) Taxes of or attributable
to NERC with respect to the post-Closing portion of
any Straddle Period.
(4) Tax Contest. (i) Each of the Sellers and the
Buyer shall notify the other party in writing within
30 days of receipt of written notice of any pending or
threatened tax examination, audit or other
administrative or judicial proceeding (a "Tax
Contest") that could reasonably be expected to result
in an indemnification obligation under this Section
7.8(d) of such other party pursuant to this Section
7.8(d). If the recipient of such notice of a Tax
Contest fails to provide such notice to the other
party, it shall not be entitled to indemnification for
any Taxes arising in connection with such Tax Contest,
but only to the extent, if any, that such failure or
delay shall have adversely affected the indemnifying
party's ability to defend against, settle, or satisfy
any action, suit or proceeding against it, or any
damage, loss, claim, or demand for which the
indemnified party is entitled to indemnification
hereunder.
(ii) If a Tax Contest relates to any period ending
on or prior to the Closing Date or to any Taxes for
which the Sellers are liable in full hereunder, the
Sellers shall at their expense control the defense and
settlement of such Tax Contest. If such Tax Contest
relates to any period beginning after the Closing Date
or to any Taxes for which the Buyer is liable in full
hereunder, the Buyer shall at its own expense control
the defense and settlement of such Tax Contest. The
party not in control of the defense shall have the
right to observe the conduct of any Tax Contest at its
expense, including through its own counsel and other
professional experts. The Buyer and the Sellers shall
jointly represent NERC in any Tax Contest relating to
a Straddle Period, and fees and expenses related to
such representation shall be paid equally by the Buyer
and the Sellers.
(iii) Notwithstanding anything to the contrary in
Section 7.8(d)(4)(ii), to the extent that an issue
raised in any Tax Contest controlled by one party or
jointly controlled could materially affect the
liability for Taxes of the other party, the
controlling party shall not, and neither party in the
case of joint control shall, enter into a final
settlement without the consent of the other party,
which consent shall not be unreasonably withheld.
Where a party withholds its consent to any final
settlement, that party may continue or initiate
further proceedings, at its own expense, and the
liability of the party that wished to settle (as
between the consenting and the non-consenting party)
shall not exceed the liability that would have
resulted from the proposed final settlement (including
interest, additions to Tax, and penalties that have
accrued at that time), and the non-consenting party
shall indemnify the consenting party for such Taxes.
(5) Tax Sharing Agreements. Any Tax sharing
agreement to which NERC is a party shall be deemed
terminated with respect to NERC on, and effective as of,
the Closing Date, and no Person shall have any rights or
obligations under such Tax sharing agreement with respect
to NERC after such termination; provided, however, that
the XXXX Intercompany Tax Allocation Agreement shall
remain in effect with respect to NERC in order to
determine the portion of the Sellers' Tax liabilities
attributable to NERC, and to be paid to the Sellers under
Section 7.8(d)(2)(ii) for the post-Closing Date portion
of the Straddle Period.
(e) Disputes. In the event that a dispute arises
between the Sellers and the Buyer as to the amount of
Taxes, or indemnification, whether or not attributable to
NERC, or the amount of any allocation of Purchase Price
under Sections 3.3(a) or 7.8(d)(1)(ii) hereof, 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 the Sellers and the 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.
(f) Sellers will reimburse Buyer for a percentage
of payments with respect to liabilities for real or
personal property Taxes under agreements entered into by
the Sellers and local governments, as set forth in
Schedule 7.8(f) hereof, within 30 days following delivery
to Sellers of evidence of such payments. With respect to
real or personal property Taxes payable in jurisdictions
in which no Tax Agreements are operative and in which
both Buyer and Sellers have property which is or is
potentially subject to property Tax, Buyer and Sellers
will cooperate in the filing of property Tax Returns with
the objective of maximizing Tax and administrative
efficiency to the benefit of both parties.
7.9. Supplements to Schedules. Prior to the
Closing Date, the Sellers and the Buyer shall supplement
or amend the Schedules required by Section 2.4, Article V
and Article VI, as the case may be, with respect to any
matter relating to the Purchased Assets, hereafter
arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth
or described in such Schedules. No supplement or
amendment of any Schedule made pursuant to this Section
shall be deemed to cure any breach of any representation
or warranty made in this Agreement unless the parties
agree thereto in writing.
7.10. Employees. (a) The Buyer may offer employment,
effective as of the Closing Date, to those employees of
the Sellers and their Affiliates whose employment
responsibilities primarily relate to the Fossil Assets
(including employees in the Fuel Services and Risk
management department and employees in the Construction
Services department) (all such employees
hereinafter referred to as "Fossil Employees"), to any
other employees of the Sellers and their Affiliates who
are in a function listed in Schedule 7.10(a) or to any
other employees of the Sellers and their Affiliates whose
employment responsibilities relate to the Fossil Assets.
The Buyer may offer employment, effective as of the
Closing Date, to those employees of the Sellers and their
Affiliates whose employment responsibilities primarily
relate to the Hydroelectric Assets, hereinafter referred
to as "Hydroelectric Employees," to any remaining
employees of the Sellers and their Affiliates who are in
a function listed on Schedule 7.10(a) or to any other
remaining employees whose employment responsibilities
relate to the Purchased Assets.
All such offers of employment shall be made (i) in
accordance with all applicable laws and regulations, and
(ii)(x) for employees represented by Local Nos. 326 and
486 of the International Brotherhood of Electrical
Workers ("IBEW") and Local No. 464 of the Utility Workers
Union of America ("UWUA"), in accordance with the Main
Table Agreements and the IBEW/UWUA MOU, as defined in
Section 7.10(b) below, and (y) for employees represented
by Local Nos. 310 and 345 of the Brotherhood of Utility
Workers of New England, Incorporated ("BUW") in
accordance with the BUW MOU, as defined in Section
7.10(c) below. Each person who becomes employed by the
Buyer pursuant to this Section 7.10 shall be referred to
herein as a "NEPGen Employee."
The Sellers or any Affiliate of the Sellers may at
any time prior to the Closing Date, offer employment to
any Fossil Employees, Hydroelectric Employees, or any
other employees who are in a function listed on Schedule
7.10(a), as long as such employees are not participants
in the New England Electric Companies' Incentive
Compensation Plans I, II, or III (collectively, the
"Plans"). Without the prior consent of the Buyer, the
Sellers will refrain, and will use their best efforts to
cause their Affiliates to refrain, from offering
employment from the date of this Agreement until February
28, 1998 (the "Buyer Window") to Fossil Employees,
Hydroelectric Employees and any other employees whose
functions are listed on Schedule 7.10(a) who are
participants in the Plans. Thereafter, the Sellers or
any Affiliates of the Sellers may offer employment to
said employees who did not accept a position with the
Buyer within the Buyer Window. Buyer may commence
offering employment to said employees 60 days after the
date of this Agreement. For all other employees Seller
and Buyer shall mutually agree upon the hiring process,
transition and timing thereof.
(b) Schedule 7.10(b) sets forth the collective
bargaining agreements, and amendments thereto, to which
the Sellers are a party with the IBEW and the UWUA in
connection with the Purchased Assets (the "Main Table
Agreements"), and the Memorandum of Understanding between
the Sellers and certain of their Affiliates and the IBEW
and the UWUA ("IBEW/UWUA MOU"). With respect to NEPGen
Employees who are included in the collective bargaining
units covered by the Main Table Agreements ("IBEW/UWUA
Employees"), on the Closing Date, the Buyer will assume
the Main Table Agreements as they relate to IBEW/UWUA
Employees to be employed at the Fossil Assets and comply
with all applicable obligations thereunder and will
accept and fulfill all obligations under the IBEW/UWUA
MOU that are designated for the new owner, including but
not limited to the obligation of the new owner to
recognize the respective union as the collective
bargaining agent. On the Closing Date, the Buyer will
assume the applicable Main Table Agreements as they
relate to IBEW/UWUA Employees to be employed at the
Hydroelectric Assets and comply with all applicable
obligations thereunder and will accept and fulfill all
obligations under the IBEW/UWUA MOU that are designated
for the new owner, including but not limited to the
obligation of the new owner to recognize the respective
union as the collective bargaining agent.
The Sellers and certain of their Affiliates have
established local working conditions with the IBEW/UWUA
at each facility which are comprised of local agreements,
copies of which the Buyer hereby acknowledges that it has
had the opportunity to review, and local past practices
("Local Working Conditions"). Pursuant to the IBEW/UWUA
MOU, the Buyer shall not be required to assume any Local
Working Conditions but agrees that it shall fulfill all
of its obligations under the IBEW/UWUA MOU with respect
to the creation of, and bargaining over, new Local
Working Conditions.
(c) Schedule 7.10(c) sets forth the collective
bargaining agreements to which the Sellers are a party
with the BUW in connection with the Purchased Assets (the
"BUW CBAs"), and the Memorandum of Understanding between
the Sellers and certain of their Affiliates and the BUW
("BUW MOU"). With respect to NEPGen Employees who are
represented by the BUW ("BUW Employees") and consistent
with Sellers "best efforts" obligations under the BUW
MOU, the Buyer shall assume the BUW CBA for the duration
of its term. Further, the Buyer will accept and fulfill
all obligations under the BUW MOU designated for the new
owner, including, but not limited to, recognizing the
respective BUW local as the collective bargaining agent
as long as supported by law.
(d) For the period commencing on the Closing Date
and ending 12 months thereafter, the Buyer shall provide
all NEPGen Employees who are not IBEW/UWUA Employees or
BUW Employees ("NEPGen Non-Union Employees") with total
compensation (including, without limitation, base pay,
authorized overtime as set forth in Schedule 7.10(d),
bonuses, and benefits contained in the employee benefit
plans, programs and fringe benefit arrangements
(excluding education reimbursement)) which is, in the
aggregate, at least equivalent in value to the NEPGen Non-
Union Employee's total compensation prior to the Closing.
Such total compensation shall be based upon (x) such
employee's existing individual base pay, (y) authorized
overtime, if applicable, and (z) an average bonus and
benefit component for such employee's salary plan level,
as consistently applied by Seller, apportioned according
to such employee's base pay.
(e) As of the Closing Date, all NEPGen Non-Union
Employees shall cease to participate in the employee
welfare benefit plans (as such term is defined in ERISA)
maintained or sponsored by the Sellers or their
Affiliates (the "Prior Welfare Plans") and shall, if
applicable, commence to participate in welfare benefit
plans of the Buyer or its Affiliates (the "Replacement
Welfare Plans"). The Buyer shall (i) waive all
limitations as to pre-existing condition exclusions and
waiting periods with respect to NEPGen 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 Prior Welfare Plans and that have not
been satisfied as of the Closing Date, and (ii) provide
each NEPGen 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) NEPGen Non-Union Employees shall be given
credit for all service with the Sellers and their
Affiliates under all employee benefit plans, programs,
and fringe benefit plans, programs, and fringe benefit
arrangements of the Buyer ("Buyer Benefit Plans") in
which they become participants. The service credit given
is for purposes of eligibility, vesting and service
related level of benefits, but not benefit accrual. For
purposes of benefit accrual, NEPGen Non-Union Employees
shall be given credit for all service with the Sellers
and their Affiliates under all Buyer Benefit Plans, but
the ultimate benefits provided under the Buyer Benefit
Plans may be offset by those previously provided by the
Sellers or benefit plans of the Sellers, or by the
benefits accrued under the benefit plans of the Sellers
or otherwise committed to be provided by the Sellers in
the future. Nothing in this Agreement shall preclude the
use of a "Defined Contribution Plan" in substitution for
the "Defined Benefit Plans" maintained by the Sellers.
(g) To the extent allowable by law, the Buyer
shall take any and all necessary action to cause the
trustee of a defined contribution plan of the Buyer or
one of its Affiliates, if requested to do so by a NEPGen
Non-Union Employee, to accept a direct "rollover" of all
or a portion of said employee's distribution (excluding
securities) from the New England Electric System
Companies Incentive Thrift Plan.
(h) In addition to the Buyer's obligations with
respect to the Severance Amount set forth in Section 4.2,
other than NEPGen Non-Union Employees who have previously
received a severance or early retirement benefit package
from NEP or its Affiliates, the Buyer shall pay to each
NEPGen Non-Union Employee whose employment is terminated
by the Buyer or one of its Affiliates within eighteen
months of the Closing Date a severance benefit package
equivalent to that which would have been provided to such
individual upon such termination by the Sellers or their
Affiliates under the 1997 XXXX Companies Special
Severance Plan had such individual remained continuously
employed by the Sellers or their Affiliates and had been
eligible under, and covered by, such plan on the date of
such termination.
(i) The Sellers agree to timely perform and
discharge all requirements under the WARN Act and under
applicable state and local laws and regulations for the
notification of their employees arising from the sale of
the Purchased Assets to the Buyer up to and including the
Closing Date for those employees who will become NEPGen
Employees effective as of the Closing Date. After the
Closing Date, the Buyer shall be responsible for
performing and discharging all requirements under the
WARN Act and under applicable state and local laws and
regulations for the notification of its employees with
respect to the Fossil Assets or the Hydroelectric Assets,
as the case may be.
7.11. 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 the Sellers.
(b) If, before the Closing Date all or any portion
of the Purchased Assets are taken by eminent domain or is
the subject of a pending or (to the knowledge of the
Sellers) contemplated taking which has not been
consummated, the Sellers shall notify the Buyer promptly
in writing of such fact. If such taking would create a
Material Adverse Effect, the Buyer and the Sellers shall
negotiate in good faith to settle the loss resulting from
such taking (including, without limitation, by making a
fair and equitable adjustment to the Purchase Price) and,
upon such settlement, consummate the transaction
contemplated by this Agreement pursuant to the terms of
this Agreement. If no such settlement is reached within
sixty (60) days after the Sellers have notified the Buyer
of such taking, then the Buyer or the Sellers may
terminate this Agreement pursuant to Section 11.1(f).
(c) If, before the Closing Date all or any
material portion of the Purchased Assets are damaged or
destroyed by fire or other casualty, the Sellers shall
notify the Buyer promptly in writing of such fact. If
such damage or destruction would create a Material
Adverse Effect and the Sellers have not notified the
Buyer of their intention to cure such damage or
destruction within fifteen (15) days after its
occurrence, the Buyer and the Sellers shall negotiate in
good faith to settle the loss resulting from such
casualty (including, without limitation, by making a fair
and equitable adjustment to the Purchase Price) and, upon
such settlement, consummate the transactions contemplated
by this Agreement pursuant to the terms of this
Agreement. If no such settlement is reached within sixty
(60) days after the Sellers have notified the Buyer of
such casualty, then the Buyer or the Sellers may
terminate this Agreement pursuant to Section 11.1(f).
7.12. Transfer of the NERC Stock. NEP shall use
its reasonable best efforts to cause the transfer of the
NERC Stock to NEP by no later than the day on which all
conditions to the Closing set forth in Sections 8.1, 8.2
and 8.3 have been satisfied, other than the condition set
forth in Section 8.2(e).
7.13. Standard Offer. Prior to the Closing, the
Buyer shall, upon consultation with NEP, have the right
to submit a Standard Offer Bid on behalf of NEP;
provided, however, that the Buyer shall not submit a
Standard Offer Bid on NEP's behalf for Standard Offer
Service to an Affiliate of the Sellers without the
consent of NEP, which consent shall not unreasonably be
withheld. The Buyer shall not submit a Standard Offer
Bid on NEP's behalf for Standard Offer Service to any
Person who is not an Affiliate of NEP without the consent
of NEP. A successful Standard Offer Bid submitted on
behalf of the Seller shall not relieve the Buyer of its
obligations under each Transition Agreement to provide
"Wholesale Standard Offer Service" (as defined in each
such Transition Agreement). NEP shall not submit a
Standard Offer Bid without the consent of the Buyer.
7.14. Cooperation Relating to Insurance. The
Sellers shall cooperate with the Buyer's efforts to
obtain "sunrise insurance" with regard to the Purchased
Assets. In addition, the Sellers agree to use reasonable
efforts to assist the Buyer in making any claims against
pre-Closing insurance policies of the Sellers that may
provide coverage related to Assumed Obligations. The
Buyer agrees that it will indemnify Sellers for their
reasonable out of pocket expenses incurred in providing
such assistance and cooperation. Notwithstanding the
foregoing, the Buyer acknowledges that Sellers and their
Affiliates are entitled, in their sole discretion, to
reach settlement agreements with their insurance carriers
regarding claims of the Sellers and their Affiliates with
respect to manufactured gas waste liabilities of the
Sellers and their Affiliates, and that any such
settlement agreements may limit or eliminate any coverage
that may otherwise be available to the Buyer with respect
to Assumed Liabilities described in Sections 2.3(a)(v)
and (vi) hereof. The Buyer further agrees that it will
not interfere with any efforts of the Sellers and their
Affiliates with the aforementioned settlement efforts.
7.15. Granite State Transition Agreement. On or
prior to the Closing Date, Buyer and Granite State
Electric Company shall at the request of Granite State
Electric Company enter into a Wholesale Standard Offer
Service Agreement, in substantially the same form as the
Wholesale Standard Offer Service Agreement dated on the
date of this Agreement, between the Buyer and
Massachusetts Electric Company.
7.16. Tax Clearance Certificates. The Sellers and
Buyer shall cooperate and use their best efforts to cause
the tax clearance certificates described in Schedule 5.20
of this Agreement to be issued by the appropriate taxing
authorities prior to the Closing Date or as soon as
practicable thereafter.
ARTICLE VIII
FOSSIL ASSETS CONDITIONS
8.1. Conditions to Each Party's Obligations to
Effect the Fossil Assets Transaction. The respective
obligations of each party to effect the sale of the
Fossil Assets shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions:
(a) The waiting period under the HSR Act
applicable to the consummation of the sale of the Fossil
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 Fossil
Assets contemplated hereby 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 agency in the United
States which prohibits the consummation of the sale of
the Fossil Assets;
(c) All Federal, State and local government
consents and approvals required for the consummation of
the sale of the Fossil Assets and the Sellers Required
Regulatory Approvals applicable to the Fossil Assets and
the Buyer Required Regulatory Approvals applicable to the
Fossil Assets, shall have been obtained or become Final
Orders (a "Final Order" for all purposes of this
Agreement means a final order after all opportunities for
rehearing are exhausted (whether or not any appeal
thereof is pending) that has not been revised, stayed,
enjoined, set aside, annulled or suspended, with respect
to which any required waiting period has expired; and as
to which all conditions to effectiveness prescribed
therein or otherwise by law, regulation or order have
been satisfied) and such Final Orders shall not impose
materially adverse terms or conditions;
(d) All consents and approvals for the
consummation of the sale of the Fossil Assets
contemplated hereby required under the terms of any note,
bond, mortgage, indenture, contract or other agreement to
which the Sellers or the Buyer, or any of their
subsidiaries, are a party shall have been obtained, other
than those (i) which if not obtained, would not, in the
aggregate, create a Material Adverse Effect, or (ii)
which are governed by the PPA Transfer Agreement, the PSA
Performance Support Agreements or Section 7.4(c); and
(e) All conditions to the obligations of the
Parties to effect the sale of the Hydroelectric Assets
shall be satisfied or waived.
8.2. Conditions to Obligations of the Buyer. The
obligation of the Buyer to effect the sale of the Fossil
Assets contemplated by this Agreement shall be subject to
the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) There shall not have occurred and be
continuing a Material Adverse Effect;
(b) The Sellers shall have performed and complied
with in all material respects the covenants and
agreements contained in this Agreement which relate to
the Fossil Assets and are required to be performed and
complied with by the Sellers on or prior to the Closing
Date, and the representations and warranties of the
Sellers which relate to the Sellers or the Fossil Assets
and are set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing
Date;
(c) There shall be no Encumbrances on the Fossil
Assets by virtue of the Indentures or the NERC Note
Agreements;
(d) The Buyer shall have received certificates
from authorized officers of the Sellers, dated the
Closing Date, to the effect that, to the best of such
officers' knowledge, the conditions set forth in Sections
8.2(a), (b) and (c) have been satisfied;
(e) XXXX shall have transferred the NERC Stock to
NEP;
(f) New England Power Service Company, a
Massachusetts corporation ("NEPSCO"), shall have assigned
to the Buyer all of its rights and obligations in (i) the
Main Table Agreements as they relate to the IBEW/UWUA
Employees and (ii) the BUW CBAs as they relate to the BUW
Employees, to be employed at or in conjunction with the
Fossil Assets after the Closing Date;
(g) The Buyer shall have received an opinion from
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, or other
counsel reasonably acceptable to Buyer, dated the Closing
Date and satisfactory in form and substance to the Buyer
and its counsel, substantially to the effect that:
(1) The Sellers and NERC are each
corporations duly organized, existing and in good
standing under the laws of their respective states
of incorporation and the Sellers have the corporate
power and authority to execute and deliver this
Agreement and those Ancillary Agreements which
relate to the Fossil Assets and to consummate the
transactions contemplated hereby; and the execution
and delivery of this Agreement and such Ancillary
Agreements and the consummation of the sale of the
Fossil Assets contemplated hereby have been duly
authorized by all requisite corporate action taken
on the part of the Sellers;
(2) this Agreement and those Ancillary
Agreements which relate to the Fossil Assets have
been duly executed and delivered by the Sellers and
(assuming that the Sellers Required Regulatory
Approvals and the Buyer Required Regulatory
Approvals are obtained) are valid and binding
obligations of the Sellers, enforceable against the
Sellers in accordance with their terms, except (A)
that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to
creditors' rights, and (B) that the remedy of
specific performance and injunctive and other forms
of equitable relief may be subject to certain
equitable defenses and to the discretion of the
court before which any proceeding therefor may be
brought;
(3) the execution and delivery and
performance of this Agreement and the Ancillary
Agreements by the Sellers do not (i) conflict with
the Certificates of Incorporation or Bylaws, as
currently in effect, of the Sellers or (ii) to our
knowledge constitute a violation of or default under
the Applicable Contracts (except that we express no
opinion as to any covenant, restriction or provision
of any such agreement or instrument with respect to
financial covenants, ratios or tests or any aspect
of the financial condition or results of operations
of the Sellers). "Applicable Contracts" mean those
agreements or instruments set forth on an attached
Schedule and which have been identified to us as all
the agreements and instruments which are material to
the business or financial condition of the Sellers;
(4) the Xxxx of Sale and other documents
described in Section 4.3 are in proper form to
transfer to the Buyer title to the Fossil Assets;
(5) no declaration, filing or registration
with, or notice to, or authorization, consent or
approval of any governmental authority is necessary
for the consummation by the Sellers of the Closing
other than (i) the Sellers Required Regulatory
Approvals, all of such Sellers Required Regulatory
Approvals which are applicable to the sale of the
Fossil Assets hereunder having been obtained and
being in full force and effect with such terms and
conditions as shall have been imposed by any
applicable governmental authority, and (ii) such
declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not
obtained or made, would not, in the aggregate create
a Material Adverse Effect; and
(6) The Share has been duly and validly
authorized and validly issued, is fully paid and non-
assessable, and was not issued in violation of the
preemptive rights of any stockholder of NERC. NEP
is the owner of such share of NERC Stock, free and
clear of any perfected security interest and, to our
knowledge, any other security interests, claims,
liens or encumbrances. Assuming issuance by the SEC
of an appropriate order under the Holding Company
Act, NEP has the absolute and unrestricted right,
power, authority and capacity to sell the NERC Stock
to the Buyer.
As to any matter contained in such opinion which
involves the laws of any jurisdiction other than the
Federal laws of the United States or the laws of the
Commonwealth of Massachusetts, such counsel may rely upon
opinions of counsel admitted in such other jurisdictions.
Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such
counsel. Such opinion may expressly rely as to matters
of fact upon certificates furnished by the Sellers and
appropriate officers and directors of the Sellers and by
public officials;
(h) The Buyer shall have received the
qualifications or approvals set forth in Section
6.3(b)(i) and (ii) hereof; and
(i) The Buyer shall be reasonably satisfied that
all material Environmental Permits and material Permits
will be transferred to the Buyer or obtained by the Buyer
on or before the Closing Date.
8.3. Conditions to Obligations of the Sellers.
The obligation of the Sellers to effect the sale of the
Fossil Assets contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing
Date of the following additional conditions:
(a) The Buyer shall have performed in all
material respects its covenants and agreements contained
in this Agreement which relate to the Fossil Assets and
are required to be performed on or prior to the Closing
Date;
(b) The representations and warranties of the
Buyer which relate to the Buyer of Fossil Assets and are
set forth in this Agreement shall be true and correct as
of the date of this Agreement and as of the Closing Date
as though made at and as of the Closing Date;
(c) The Sellers shall have received a certificate
from an authorized officer of the Buyer, dated the
Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Sections
8.3(a) and (b) have been satisfied;
(d) The Buyer shall have assumed, as set forth in
Section 7.10, all of the applicable obligations under the
Main Table Agreements and the BUW CBAs as they relate to
union employees to be employed at or in conjunction with
the Fossil Assets after the Closing Date;
(e) The FERC shall have approved the Stipulation
and Agreement filed in FERC Docket No. ER-97-678-000 for
Massachusetts Electric Company dated May 28, 1997 and the
Stipulation and Agreement filed in FERC Docket No. ER-97-
680-000 for Narragansett Electric Company dated May 30,
1997; and said Stipulation and Agreements shall be and
shall continue to be in full force and effect; and
(f) The Sellers shall have received an opinion
from Weil, Gotshal & Xxxxxx LLP, counsel for the Buyer,
dated the Closing Date and satisfactory in form and
substance to the Sellers and their counsel, substantially
to the effect that:
(1) The Buyer is a corporation duly
organized, existing and in good standing under the
laws of the State of Delaware and has the corporate
power and authority to execute and deliver this
Agreement and those Ancillary Agreements which relate
to the Fossil Assets and to consummate the
transactions contemplated hereby; and the execution
and delivery of this Agreement and such Ancillary
Agreements and the consummation of the sale of the
Fossil Assets contemplated hereby have been duly
authorized by all requisite corporate action taken on
the part of the Buyer;
(2) this Agreement and those Ancillary
Agreements which relate to the Fossil Assets have been
duly executed and delivered by the Buyer and (assuming
that the Sellers Required Regulatory Approvals and the
Buyer Required Regulatory Approvals are obtained) are
valid and binding obligations of the Buyer,
enforceable against the Buyer in accordance with their
terms, except (A) that such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect
relating to creditors' rights and (B) that the remedy
of specific performance and injunctive and other forms
of equitable relief may be subject to certain
equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;
(3) the execution and delivery and
performance of this Agreement and the Ancillary
Agreements by the Buyer does not (i) conflict with the
Certificate of Incorporation or Bylaws, as currently
in effect, of the Buyer or (ii) to our knowledge
constitute a violation of or default under the
Applicable Contracts (except that we express no
opinion as to any covenant, restriction or provision
of any such agreement or instrument with respect to
financial covenants, ratios or tests or any aspect of
the financial condition or results of operations of
the Buyer). "Applicable Contracts" mean those
agreements or instruments set forth on an attached
Schedule and which have been identified to us as all
the agreements and instruments which are material to
the business or financial condition of the Buyer;
(4) the Instruments of Assumption and other
instruments described in Section 4.4 are in proper
form for the Buyer to assume the Assumed Fossil
Obligations; and
(5) no declaration, filing or registration
with, or notice to, or authorization, consent or
approval of any governmental authority is necessary
for the consummation by the Buyer of the Closing other
than the Buyer Required Regulatory Approvals, all of
such Buyer Required Regulatory Approvals which are
applicable to the sale of the Fossil Assets hereunder
having been obtained and being in full force and
effect with such terms and conditions as shall have
been imposed by any applicable governmental authority.
As to any matter contained in such opinion which
involves the laws of any jurisdiction other than the
federal laws of the United States and the Commonwealth of
Massachusetts, such counsel may rely upon opinions of
counsel admitted in such other jurisdictions. Any
opinions relied upon by such counsel as aforesaid shall
be delivered together with the opinion of such counsel.
Such opinion may expressly rely as to matters of facts
upon certificates furnished by appropriate officers and
directors of the Buyer and its subsidiaries and by public
officials.
ARTICLE IX
HYDROELECTRIC ASSETS CONDITIONS
9.1. Conditions to Each Party's Obligations to
Effect the Hydroelectric Assets Transactions. The
respective obligations of each party to effect the sale
of the Hydroelectric Assets shall be subject to the
fulfillment at or prior to the Closing Date of the
following conditions:
(a) The waiting period under the HSR Act
applicable to the sale of the Hydroelectric 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
Hydroelectric Assets contemplated hereby 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 agency in the United
States which prohibits the consummation of the sale of
the Hydroelectric Assets;
(c) All Federal, State and local government
consents and approvals required for the consummation of
the sale of the Hydroelectric Assets and the Sellers
Required Regulatory Approvals applicable to the
Hydroelectric Assets and the Buyer Required Regulatory
Approvals applicable to the Hydroelectric Assets, shall
have been obtained or become Final Orders and such Final
Orders shall not impose materially adverse terms or
conditions;
(d) All consents and approvals for the
consummation of the sale of the Hydroelectric Assets
contemplated hereby required under the terms of any note,
bond, mortgage, indenture, contract or other agreement to
which the Sellers or the Buyer, or any of their
Subsidiaries, are a party shall have been obtained, other
than those (i) which if not obtained, would not, in the
aggregate, create a Material Adverse Effect, or (ii)
which are governed by the PSA Performance Support
Agreements or Section 7.4(c); and
(e) All conditions to the obligations of the
Parties to effect the sale of the Fossil Assets shall be
satisfied or waived.
9.2. Conditions to Obligations of the Buyer. The
obligation of the Buyer to effect the sale of the
Hydroelectric Assets contemplated by this Agreement shall
be subject to the fulfillment at or prior to the Closing
Date of the following additional conditions:
(a) There shall not have occurred and be
continuing a Material Adverse Effect;
(b) The Sellers shall have performed and complied
with in all material respects the covenants and
agreements contained in this Agreement which relate to
the Hydroelectric Assets and are required to be performed
and complied with by the Sellers on or prior to the
Closing Date, and the representations and warranties of
the Sellers which relate to the Sellers or the
Hydroelectric Assets and are set forth in this Agreement
shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made at
and as of the Closing Date;
(c) There shall be no Encumbrances on the
Hydroelectric Assets by virtue of the Indentures;
(d) The Buyer shall have received certificates
from authorized officers of the Sellers, dated the
Closing Date, to the effect that, to the best of such
officers' knowledge, the conditions set forth in Sections
8.2(a), (b) and (c) have been satisfied;
(e) NEPSCO shall have assigned to the Buyer all
of its rights and obligations in the Main Table
Agreements as they relate to the IBEW/UWUA Employees to
be employed at or in conjunction with the Hydroelectric
Assets after the Closing Date;
(f) The Buyer shall have received an opinion from
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, dated the
Closing Date and satisfactory in form and substance to
the Buyer and its counsel, substantially to the effect
that:
(1) NEP and Narragansett are corporations
duly organized, existing and in good standing under
the laws of the Commonwealth of Massachusetts and the
State of Rhode Island, respectively, and have the
corporate power and authority to execute and deliver
this Agreement and those Ancillary Agreements which
relate to the Hydroelectric Assets and to consummate
the transactions contemplated hereby; and the
execution and delivery of this Agreement and such
Ancillary Agreements and the consummation of the sale
of the Hydroelectric Assets contemplated hereby have
been duly authorized by all requisite corporate action
taken on the part of the Sellers;
(2) this Agreement and those Ancillary
Agreements which relate to the Hydroelectric Assets
have been duly executed and delivered by the Sellers
and (assuming that the Sellers Required Regulatory
Approvals and the Buyer Required Regulatory Approvals
are obtained) are valid and binding obligations of the
Sellers, enforceable against the Sellers in accordance
with their terms, except (A) that such enforcement may
be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in
effect relating to creditors' rights, and (B) that the
remedy of specific performance and injunctive and
other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of
the court before which any proceeding therefor may be
brought;
(3) the execution and delivery and
performance of this Agreement and the Ancillary
Agreements by the Sellers do not (i) conflict with the
Certificates of Incorporation or Bylaws, as currently
in effect, of the Sellers or (ii) to our knowledge
constitute a violation of or default under the
Applicable Contracts (except that we express no
opinion as to any covenant, restriction or provision
of any such agreement or instrument with respect to
financial covenants, ratios or tests or any aspect of
the financial condition or results of operations of
the Sellers). "Applicable Contracts" mean those
agreements or instruments set forth on an attached
Schedule and which have been identified to us as all
the agreements and instruments which are material to
the business or financial condition of the Sellers;
(4) the applicable Xxxx of Sale and other
documents described in Section 4.3, are in proper form
to transfer to the Buyer title to the Hydroelectric
Assets; and
(5) no declaration, filing or registration
with, or notice to, or authorization, consent or
approval of any governmental authority is necessary
for the consummation by NEP of the Closing other than
(i) the Sellers Required Regulatory Approvals, all of
such Sellers Required Regulatory Approvals which are
applicable to the sale of the Hydroelectric Assets
hereunder having been obtained and being in full force
and effect with such terms and conditions as shall
have been imposed by any applicable governmental
authority, and (ii) such declarations, filings,
registrations, notices, authorizations, consents or
approvals which, if not obtained or made, would not,
in the aggregate create a Material Adverse Effect.
As to any matter contained in such opinion which
involves the laws of any jurisdiction other than the
Federal laws of the United States or the laws of the
Commonwealth of Massachusetts, such counsel may rely upon
opinions of counsel admitted in such other jurisdictions.
Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such
counsel. Such opinion may expressly rely as to matters
of fact upon certificates furnished by the Sellers and
appropriate officers and directors of the Sellers and by
public officials; and
(g) The Buyer shall have received the
qualifications or approvals set forth in Section
6.3(b)(i) and (ii) hereof.
9.3. Conditions to Obligations of the Sellers.
The obligation of the Sellers to effect the sale of the
Hydroelectric Assets contemplated by this Agreement shall
be subject to the fulfillment at or prior to the Closing
Date of the following additional conditions:
(a) The Buyer shall have performed in all
material respects its covenants and agreements contained
in this Agreement and which relate to the Hydroelectric
Assets and are required to be performed on or prior to
the Closing Date;
(b) The representations and warranties of the
Buyer which relate to the Buyer or the Hydroelectric
Assets and are set forth in this Agreement shall be true
and correct as of the date of this Agreement and as of
the Closing Date as though made at and as of the Closing
Date;
(c) The Sellers shall have received a certificate
from an authorized officer of the Buyer, dated the
Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Sections
9.3(a) and (b) have been satisfied;
(d) The Buyer shall have assumed, as set forth in
Section 7.10(b), all of the applicable obligations under
the Main Table Agreements as they relate to IBEW/UWUA
Employees to be employed at or in conjunction with the
Hydroelectric Assets after the Closing Date;
(e) The FERC shall have approved the Stipulation
and Agreement filed in FERC Docket No. ER-97-678-000 for
Massachusetts Electric Company dated May 28, 1997 and the
Stipulation and Agreement filed in FERC Docket No. ER-97-
680-000 for Narragansett Electric Company dated May 30,
1997; and Stipulation and Agreement shall be and shall
continue to be in full force and effect; and
(f) The Sellers shall have received an opinion
from Weil, Gotshal & Xxxxxx LLP, counsel for the Buyer,
dated the Closing Date and satisfactory in form and
substance to the Sellers and their counsel, substantially
to the effect that:
(1) The Buyer is a corporation duly
organized, existing and in good standing under the
laws of the State of Delaware and has the corporate
power and authority to execute and deliver this
Agreement and those Ancillary Agreements which
relate to the Hydroelectric Assets and to consummate
the transactions contemplated hereby; and the
execution and delivery of this Agreement and such
Ancillary Agreements and the consummation of the
sale of the Hydroelectric Assets contemplated hereby
have been duly authorized by all requisite corporate
action taken on the part of the Buyer;
(2) this Agreement and those Ancillary
Agreements which relate to the Hydroelectric Assets
have been duly executed and delivered by the Buyer
and (assuming that the Sellers Required Regulatory
Approvals and the Buyer Required Regulatory
Approvals are obtained) are valid and binding
obligations of the Buyer, enforceable against the
Buyer in accordance with their terms, except (A)
that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to
creditors' rights and (B) that the remedy of
specific performance and injunctive and other forms
of equitable relief may be subject to certain
equitable defenses and to the discretion of the
court before which any proceeding therefor may be
brought;
(3) the execution and delivery and
performance of this Agreement and the Ancillary
Agreements by the Buyer does not (i) conflict with
the Certificate of Incorporation or Bylaws, as
currently in effect, of the Buyer or (ii) to our
knowledge constitute a violation of or default under
the Applicable Contracts (except that we express no
opinion as to any covenant, restriction or provision
of any such agreement or instrument with respect to
financial covenants, ratios or tests or any aspect
of the financial condition or results of operations
of the Buyer). "Applicable Contracts" mean those
agreements or instruments set forth on an attached
Schedule and which have been identified to us as all
the agreements and instruments which are material to
the business or financial condition of the Buyer;
(4) the Instruments of Assumption and other
instruments described in Section 4.4 are in proper
form for the Buyer to assume the Assumed
Hydroelectric Obligations; and
(5) no declaration, filing or registration
with, or notice to, or authorization, consent or
approval of any governmental authority is necessary
for the consummation by the Buyer of the Closing
other than the Buyer Required Regulatory Approvals,
all of such Buyer Required Regulatory Approvals
which are applicable to the sale of the
Hydroelectric Assets hereunder having been obtained
and being in full force and effect with such terms
and conditions as shall have been imposed by any
applicable governmental authority.
As to any matter contained in such opinion which
involves the laws of any jurisdiction other than the
federal laws of the United States and the Commonwealth of
Massachusetts, such counsel may rely upon opinions of
counsel admitted in such other jurisdictions. Any
opinions relied upon by such counsel as aforesaid shall
be delivered together with the opinion of such counsel.
Such opinion may expressly rely as to matters of facts
upon certificates furnished by appropriate officers and
directors of the Buyer and its subsidiaries and by public
officials.
ARTICLE X
INDEMNIFICATION
10.1. Indemnification. The Sellers will
severally, not jointly, and not severally and jointly,
indemnify, defend and hold harmless the Buyer from and
against any and all claims, demands or suits (by any
Person), losses, liabilities, damages (including
consequential or special 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) to the extent the foregoing are not covered by
insurance (each, an "Indemnifiable Loss"), asserted
against or suffered by the Buyer relating to, resulting
from or arising out of (i) any breach by the Sellers of
any covenant or agreement of the Sellers contained in
this Agreement or the representations and warranties
contained in Sections 5.1, 5.2 or 5.3 hereof, (ii) the
Excluded Liabilities, (iii) any relationship or payment
obligation of the Sellers resulting from or contained in
the PSA Performance Support Agreements, or Section 7.4(c)
hereof or, (iv) any obligation imposed on the Buyer to
make payments for the delivery of electric energy from
any of the Fossil Facilities or Hydroelectric Facilities
to the associated Point of Interconnection defined and
identified in the Continuing Site Agreement other than
the Annual Facilities Charge, as specified in the
Continuing Site Agreement (v) or noncompliance by the
Sellers with any bulk sales or transfer laws as provided
in Section 12.11; provided, however, that the Sellers
shall have no liability pursuant to this Section 10.1(a)
for Indemnifiable Losses arising from any breach or
breaches by the Sellers of Section 7.1(a) or any failure
to update Schedule 2.4 as required pursuant to Section
7.9 hereof, unless and until the aggregate Indemnifiable
Losses incurred by the Buyer and attributable thereto
exceeds $5,000,000, in which case the Sellers shall be
liable for all such losses, but only to the extent they
exceed $5,000,000.
(b) The Buyer will indemnify, defend and hold
harmless the Sellers from and against any and all
Indemnifiable Losses asserted against or suffered by the
Sellers relating to, resulting from or arising out of
(i) any breach by the Buyer of any covenant or agreement
of the Buyer contained in this Agreement or the
representations and warranties contained in Sections 6.1,
6.2 and 6.3 hereof, (ii) the Assumed Obligations, (iii)
any relationship or payment obligation of the Buyer
resulting from or contained in the PSA Performance
Support Agreements or Section 7.4(c) or (iv) any
liabilities incurred, directly or indirectly, in
connection with any contracts, agreements or other
arrangements entered into pursuant to Section
7.1(d)(iii).
(c) Any Person entitled to receive
indemnification under this Agreement (an "Indemnitee")
having a claim under these indemnification provisions
shall make a good faith effort to recover all losses,
damages, costs and expenses from insurers of such
Indemnitee under applicable insurance policies so as to
reduce the amount of any Indemnifiable Loss hereunder.
The amount of any Indemnifiable Loss shall be reduced
(i) to the extent that Indemnitee receives any insurance
proceeds with respect to an Indemnifiable Loss and
(ii) to take into account any net Tax benefit recognized
by the Indemnitee arising from the recognition of the
Indemnifiable Loss and any payment actually received with
respect to an Indemnifiable Loss.
(d) The expiration, termination or extinguishment
of any covenant or agreement shall not affect the
parties' obligations under this Section 10.1 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.
(e) Except to the extent provided in Section
7.8(d)(3) hereof, which Section shall govern the matters
covered therein, the rights and remedies of the Sellers
and the Buyer under this Article X are exclusive and in
lieu of any and all other rights and remedies which the
Sellers and the Buyer may have under this Agreement or
otherwise for monetary relief with respect to (i) any
breach or failure to perform any covenant or agreement
set forth in this Agreement or (ii) the Assumed
Obligations or the Excluded Liabilities, as the case may
be and (iii) any relationship or payment obligation
resulting from the PSA Performance Support Agreements or
Section 7.4(c).
(f) Buyer and Sellers each agree that
notwithstanding any provisions in this Agreement to the
contrary, all parties to this Agreement retain their
remedies at law or in equity with respect to willful or
intentional breaches of this Agreement.
10.2. 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 will give such Indemnifying Party
reasonably prompt written notice thereof, but in any
event not 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 will 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 own expense and by such
Indemnifying Party's own counsel, and the Indemnitee will
cooperate in good faith in such defense at such
Indemnitee's own expense.
(b) If within ten (10) calendar days after an
Indemnitee provides written notice to the Indemnifying
Party of any Third Party Claim 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 the last sentence
of Section 10.2(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 fails
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 will be liable for
all reasonable expenses thereof. Without the prior
written consent of the Indemnitee, the Indemnifying Party
will 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 will give written notice to
the Indemnitee to that effect. If the Indemnitee fails
to consent to such firm offer within ten (10) calendar
days after its receipt of such notice, the Indemnitee may
continue to contest or defend such Third Party Claim and,
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 the Indemnitee up to the date of such
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") will 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 not later than ten (10)
calendar days after the Indemnitee becomes aware of such
Direct Claim, and the Indemnifying Party will 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 will be deemed to have
accepted such claim. If the Indemnifying Party rejects
such claim, the Indemnitee will be free to seek
enforcement of its rights 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
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 prime rate then
in effect of the Bank of Boston), will promptly be repaid
by the Indemnitee to the Indemnifying Party. Upon making
any indemnity payment, the Indemnifying Party will, to
the extent of such indemnity payment, be subrogated to
all rights of the Indemnitee against any third party in
respect of the Indemnifiable Loss to which the indemnity
payment relates; provided, however, that (i) the
Indemnifying Party will then be in compliance with its
obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers
full payment of its Indemnifiable Loss, any and all
claims of the Indemnifying Party against any such third
party on account of said indemnity payment is hereby made
expressly subordinated and subjected in right of payment
to the Indemnitee's rights against such third party.
Without limiting the generality or effect of any other
provision hereof, each such Indemnitee and Indemnifying
Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-
described subrogation and subordination rights, and
otherwise cooperate in the prosecution of such claims at
the direction of the Indemnifying Party. Nothing in this
Section 10.2(d) shall be construed to require any party
hereto to obtain or maintain any insurance coverage.
(e) A failure to give timely notice as provided
in this Section 10.2 will 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 XI
TERMINATION AND ABANDONMENT
11.1. Termination. (a) This Agreement may be
terminated at any time prior to the Closing Date by
mutual written consent of the Sellers and the Buyer.
(b) This Agreement may be terminated by the
Sellers or the Buyer if the Closing contemplated hereby
shall have not occurred on or before the first
anniversary of the date of this Agreement (the
"Termination Date"); provided that the right to terminate
this Agreement under this Section 11.1(b)(i) 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 either Closing to occur on or
before such date; and provided, further, that if on the
first anniversary of the date of this Agreement the
conditions to the Closings set forth in either Section
8.1(c) or Section 9.1(c) 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 eighteen
months from the date of this Agreement.
(c) This Agreement may be terminated by either
the Sellers or the Buyer if (i) any governmental or
regulatory body, the consent of which is a condition to
the obligations of the Sellers and the Buyer to
consummate the Closing shall have determined not to grant
its or their consent and all appeals of such
determination shall have been taken and have been
unsuccessful, (ii) one or more courts of competent
jurisdiction in the United States or any State shall have
issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the
Closing, and such order, judgment or decree shall have
become final and nonappealable or (iii) any statute, rule
or regulation shall have been enacted by any State or
Federal government or governmental agency in the United
States which prohibits the consummation of the Closing.
(d) This Agreement may be terminated by the
Buyer, if there has been a material violation or breach
by the Sellers of any agreement, representation or
warranty contained in this Agreement which has rendered
the satisfaction of any condition to the obligations of
the Buyer to effect the Closing impossible and such
violation or breach has not been waived by the Buyer.
(e) This Agreement may be terminated by the
Sellers, if there has been a material violation or breach
by the Buyer of any agreement, representation or warranty
contained in this Agreement which has rendered the
satisfaction of any condition to the obligations of the
Sellers to effect the Closing impossible and such
violation or breach has not been waived by the Sellers.
(f) This Agreement may be terminated by either of
the Sellers or the Buyer in accordance with the
provisions of Section 7.11(b) or (c).
11.2. Procedure and Effect of Termination.
In the event of termination of this Agreement and
abandonment of the transactions contemplated hereby by
either or both of the parties pursuant to Section 11.1,
written notice thereof shall forthwith be given by the
terminating party to the other party and this Agreement
shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by any of the
parties hereto. If this Agreement is terminated as
provided herein:
(a) said termination shall be the sole remedy of
the parties hereto with respect to breaches of any
agreement, representation or warranty contained in this
Agreement and none of the parties hereto nor any of their
respective trustees, directors, officers or Affiliates,
as the case may be, shall have any liability or further
obligation to the other party or any of their respective
trustees, directors, officers or Affiliates, as the case
may be, pursuant to this Agreement, except in each case
as stated in this Section 11.2 and in Sections 7.2(b),
7.3 and 7.7; and
(b) all filings, applications and other
submissions made pursuant to this Agreement, to the
extent practicable, shall be withdrawn from the agency or
other Person to which they were made.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Amendment and Modification. Subject to
applicable law, this Agreement may be amended, modified
or supplemented only by written agreement of the Sellers
and the Buyer.
12.2. 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 or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
Notwithstanding anything in this Agreement to the
contrary, (i) the condition set forth in Section 8.3(d)
cannot be waived by the Sellers without the consent of
each of the BUW, the IBEW and the UWUA and (ii) the
condition set forth in Section 9.3(d) cannot be waived by
the Sellers without the consent of each of the IBEW and
the UWUA.
12.3. No Survival. Subject to the provisions of
Section 11.2, each and every representation, warranty and
covenant contained in this Agreement (other than the
covenants contained in Sections 3.2, 7.2(b), 7.3, 7.4,
7.7, 7.8, 7.10, 7.14 and 7.16 and in Articles X and XI
(which covenants shall survive in accordance with their
terms) and other than the representations and warranties
contained in Sections 5.1, 5.2 and 5.3 (which
representations and warranties shall survive for eighteen
months from the Closing)) shall expire with, and be
terminated and extinguished by the consummation of the
sale of the Purchased Assets and the transfer of the
Assumed Obligations pursuant to this Agreement and such
representations, warranties and covenants shall not
survive the Closing Date; and none of the Sellers, the
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.
12.4. Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed given if delivered personally or by facsimile
transmission, telexed or mailed by overnight courier or
registered or certified mail (return receipt requested),
postage prepaid, to the parties at the following
addresses (or at such other address for a party as shall
be specified by like notice; provided that notices of a
change of address shall be effective only upon receipt
thereof):
(a) If to the Sellers, to:
New England Power Company
The Narragansett Electric Company
c/o New England Power Service Company
00 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
(b) if to the Buyer, to:
USGen Acquisition Corporation
0000 Xxx Xxxxxxxxxx Xxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
General Counsel
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx, Esq.
12.5. 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 the other party, nor is this Agreement
intended to confer upon any other Person except the
parties hereto any rights or remedies hereunder;
provided, however that NEPGen Employees may have claims
under Sections 2.3(a)(iv) and 7.10. Notwithstanding the
foregoing, no provision of this Agreement shall create
any third party beneficiary rights in any employee or
former employee of the Sellers (including any beneficiary
or dependent thereof) in respect of continued employment
or resumed employment, and no provision of this Agreement
shall create any rights in any such Persons in respect of
any benefits that may be provided, directly or
indirectly, under any employee benefit plan or
arrangement except as expressly provided for thereunder.
Notwithstanding the foregoing, (i) the Buyer may assign
all of its rights and obligations hereunder to any wholly
owned Subsidiary (direct or indirect) of PG&E Corporation
and upon the Sellers' receipt of notice from Buyer of any
such assignment, the Buyer will be released from all
liabilities and obligations hereunder, accrued and
unaccrued, such assignee will be deemed to have assumed,
ratified, agreed to be bound by and perform all such
liabilities and obligations, and all references herein to
"Buyer" shall thereafter be deemed references to such
assignee, in each case without the necessity for further
act or evidence by the parties hereto or such assignee;
provided, however, that no such assignment and assumption
shall release the Buyer from its liabilities and
obligations hereunder unless the assignee shall have
acquired all or substantially all of the Buyer's assets;
provided, further, however, that no such assignment and
assumption shall relieve or in any way discharge PG&E
Corporation from the performance of its duties and
obligations under the Guaranty dated as of the date of
this Agreement executed by PG&E Corporation, and (ii) the
Buyer or its permitted assignee may assign, transfer,
pledge or otherwise dispose of its rights and interests
hereunder to a trustee or lending institution(s) for the
purposes of financing or refinancing the Purchased
Assets, including upon or pursuant to the exercise of
remedies under such financing or refinancing, or by way
of assignments, transfers, conveyances or dispositions in
lieu thereof; provided, however, that no such assignment
or disposition shall relieve or in any way discharge the
Buyer or such assignee from the performance of its duties
and obligations under this Agreement. The Sellers agree
to execute and deliver such documents as may be
reasonably necessary to accomplish any such assignment,
transfer, conveyance, pledge or disposition of rights
hereunder so long as the Sellers' rights under this
Agreement are not thereby altered, amended, diminished or
otherwise impaired.
12.6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts (regardless of the laws
that might otherwise govern under applicable
Massachusetts principles of conflicts of law) as to all
matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
12.7. 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.
12.8. Interpretation. The article and section
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.
12.9. Schedules and Exhibits. All Exhibits and
Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
12.10. Entire Agreement. This Agreement, the
Confidentiality Agreement, the Ancillary Agreements, the
Wholesale Sales Agreement and the Transition 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
the Buyer pursuant to the terms of the Confidentiality
Agreement (including the Information Memorandum, dated
January, 1997, or the Request for Proposal, dated May,
1997, previously made available to the Buyer by the
Sellers and Xxxxxxx Xxxxx & Co.). This Agreement
supersedes all prior agreements and understandings
between the parties with respect to such transactions
other than the Confidentiality Agreement.
12.11. Bulk Sales or Transfer Laws. The Buyer
acknowledges that the Sellers will not comply with the
provision of any bulk sales or transfer laws of any
jurisdiction in connection with the transactions
contemplated by this Agreement. The Buyer hereby waives
compliance by the Sellers with the provisions of the bulk
sales or transfer laws of all applicable jurisdictions.
IN WITNESS WHEREOF, the Sellers and the Buyer have
caused this agreement to be signed by their respective
duly authorized officers as of the date first above
written.
NEW ENGLAND POWER COMPANY
/s/
By
Name: Xxxxxxx X. Xxxxxxx
Title:Treasurer
THE NARRAGANSETT ELECTRIC
COMPANY
/s/
By
Name: Xxxxxx X. Xxxxxxx
Title:Vice President and
Treasurer
USGEN ACQUISITION CORPORATION
/s/
By
Name: Xxxxxx X. Xxxxxxx
Title: President
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1. Definitions 1
ARTICLE II
PURCHASE AND SALE
2.1. The Sale 18
2.2. Excluded Assets 18
2.3. Assumed Obligations 19
2.4. Excluded Liabilities 23
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price 26
3.2. Purchase Price Adjustment 26
3.3. Allocation of Purchase Price 28
3.4. Additional Payment Amount 29
3.5. Proration 31
ARTICLE IV
THE CLOSING
4.1. Time and Place of Closing 32
4.2. Payment of Purchase Price 33
4.3. Deliveries by the Sellers 34
4.4. Deliveries by the Buyer 35
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
5.1. Organization; Qualification; Matters
Regarding NERC 36
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5.2. Authority Relative to this Agreement 37
5.3. Consents and Approvals; No Violation 38
5.4. Reports 40
5.5. Financial Statements 40
5.6. Undisclosed Liabilities 40
5.7. Absence of Certain Changes or Events 41
5.8. Title and Related Matters 41
5.9. Leases 41
5.10. Insurance 42
5.11. Environmental Matters 42
5.12. Labor Matters 43
5.13. ERISA; Benefit Plans 44
5.14. Real Estate 45
5.15. Condemnation 45
5.16. Certain Contracts and Arrangements 45
5.17. Legal Proceedings, etc 46
5.18. Permits 47
5.19. Regulation as a Utility 47
5.20. Taxes 48
5.21. NERC Holdings 51
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
6.1. Organization 51
6.2. Authority Relative to this Agreement 51
6.3. Consents and Approvals; No Violation 52
6.4. Regulation as a Utility 53
6.5. Availability of Funds 53
ARTICLE VII
COVENANTS OF THE PARTIES
7.1. Conduct of Business Relating to the Purchased Asse
ts 53
7.2. Access to Information 58
7.3. Expenses 61
7.4. Further Assurances 61
7.5. Public Statements 63
7.6. Consents and Approvals 64
7.7. Fees and Commissions 65
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7.8. Tax Matters 65
7.9. Supplements to Schedules 73
7.10. Employees 73
7.11. Risk of Loss 78
7.12. Transfer of the NERC Stock 79
7.13. Standard Offer 79
7.14. Cooperation Relating to Insurance 79
7.15. Granite State Transition Agreement 80
7.16 Tax Clearance Certificates 80
ARTICLE VIII
FOSSIL ASSETS CONDITIONS
8.1. Conditions to Each Party's Obligations
to Effect the Fossil Assets Transactions. 80
8.2. Conditions to Obligations of the Buyer 82
8.3. Conditions to Obligations of the Sellers 85
ARTICLE IX
HYDROELECTRIC ASSETS CONDITIONS
9.1. Conditions to Each Party's Obligations to
Effect the Hydroelectric Assets Transactions. 88
9.2. Conditions to Obligations of the Buyer 89
9.3. Conditions to Obligations of the Sellers 92
ARTICLE X
INDEMNIFICATION
10.1. Indemnification 94
10.2. Defense of Claims 97
ARTICLE XI
TERMINATION AND ABANDONMENT
11.1. Termination 99
11.2. Procedure and Effect of Termination 101
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ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Amendment and Modification 101
12.2. Waiver of Compliance; Consents 101
12.3. No Survival 102
12.4. Notices 102
12.5. Assignment 103
12.6. Governing Law 105
12.7. Counterparts 105
12.8. Interpretation 105
12.9. Schedules and Exhibits. 105
12.10. Entire Agreement 105
12.11. Bulk Sales or Transfer Laws 106