EXHIBIT (10)(i)69
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
WPS POWER DEVELOPMENT, INC.,
A WISCONSIN CORPORATION,
AS THE BUYER,
AND
CENTRAL XXXXXX ENERGY SERVICES, INC.
A NEW YORK CORPORATION,
AS THE STOCKHOLDER
DECEMBER 21, 2001
TABLE OF CONTENTS
PAGES
1. DEFINITIONS.1
2. SALE AND PURCHASE OF SHARES..............................................1
2.01 Sale and Purchase of Shares.....................................1
2.02 Purchase Price..................................................1
2.03 Purchase Price Adjustment.......................................2
3. ADDITIONAL UNDERTAKINGS AND COVENANTS....................................3
3.01 Consents and Approvals..........................................3
3.02 Access; Investigations by the Buyer.............................3
3.03 Operation of Business of the Company............................4
3.04 Public Announcements............................................5
3.05 Employees.......................................................5
3.06 Subsequent Events...............................................6
3.07 Access to Records...............................................6
3.08 Intercompany Accounts...........................................6
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER........................6
4.01 Organization and Standing.......................................6
4.02 Subsidiaries....................................................7
4.03 Articles of Incorporation and Bylaws............................7
4.04 Capitalization..................................................7
4.05 Directors, Officers and Employees...............................8
4.06 Financial Statements............................................8
4.07 No Liabilities..................................................9
4.08 Accounts Receivable.............................................9
4.09 Taxes...........................................................9
4.10 Conduct of Business; Absence of Material Adverse Effect........11
4.11 Real Property..................................................12
4.12 Assets.........................................................12
4.13 Insurance......................................................13
4.14 Intellectual Property..........................................13
4.15 Debt Instruments...............................................14
4.16 Leases.........................................................14
4.17 Other Agreements...............................................15
4.18 Books and Records..............................................16
4.19 Litigation; Disputes...........................................16
4.20 Labor Relations................................................16
4.21 Benefit Plans..................................................17
4.22 Environmental..................................................19
4.23 Transactions with Related Parties..............................20
4.24 Restrictions and Consents......................................21
4.25 Authorization..................................................21
4.26 Legal Compliance...............................................22
4.27 Binding Obligation.............................................22
4.28 Title to Capital Stock.........................................22
4.29 Authority and Capacity.........................................22
4.30 Absence of Violation...........................................23
4.31 Transfer of Title..............................................23
4.32 Holding Company Act and EWG Status.............................23
4.33 Market-Based Rates.............................................23
4.34 NYISO..........................................................23
4.35 Generating Facilities Information..............................24
4.36 Emissions Allowances...........................................24
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER.............................24
5.01 Organization and Standing......................................24
5.02 Authorization..................................................24
5.03 Binding Obligation.............................................24
5.04 No Registration Under the Securities Act.......................25
5.05 Acquisition for Investment.....................................25
5.06 Evaluation of Merits and Risks of Investment...................25
5.07 Consents.......................................................25
6. COVENANTS OF THE BUYER..................................................26
6.01 Maintenance of Plans...........................................26
6.02 Environmental Liabilities and Site Assessments.................26
7. COVENANTS OF THE STOCKHOLDER............................................26
7.01 Severance......................................................26
7.02 Environmental Matters..........................................27
7.03 Closing Period Operations......................................27
7.04 Transition Services............................................27
7.05 Employees......................................................28
7.06 Voltage Support Service........................................28
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDER..................28
8.01 Representations and Warranties.................................28
8.02 Performance....................................................29
8.03 Buyer's Certificate............................................29
8.04 Documents at Closing...........................................29
8.05 Legal Opinion..................................................29
8.06 Consents and Approvals.........................................29
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER........................29
9.01 Representations and Warranties.................................29
9.02 Performance....................................................30
9.03 Absence of Adverse Changes.....................................30
9.04 Legal Proceedings..............................................30
9.05 Documents at Closing...........................................30
9.06 Officer Certificate............................................30
9.07 Consents.......................................................30
9.08 Resignation of Directors.......................................30
-ii-
9.09 Legal Opinion..................................................31
9.10 Consents and Approvals.........................................31
9.11 FIRPTA Statement...............................................31
9.12 Real Estate....................................................31
9.13 Reliance Letter................................................31
9.14 Insurance......................................................32
10. CLOSING ................................................................32
10.01 Closing of Sale and Purchase...................................32
10.02 Deliveries by the Stockholder..................................32
10.03 Deliveries by the Buyer........................................34
11. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES..................34
11.01 Survival of Representations....................................34
11.02 Agreement of Stockholder to Indemnify..........................35
11.03 Agreement of the Buyer to Indemnify............................36
11.04 Shared Environmental Costs.....................................36
11.05 Conditions of Indemnification..................................36
11.06 Remedies Cumulative............................................38
12. TAX MATTERS ............................................................38
12.01 Section 338(h)(10) Election....................................38
12.02 Allocation of Purchase Price...................................38
12.03 Tax Returns and Payments.......................................39
12.04 Cooperation on Tax Matters.....................................40
12.05 Certain Taxes..................................................40
12.06 Tax Sharing Agreements.........................................41
12.07 Contests.......................................................41
12.08 Disputes.......................................................42
13. TERMINATION ............................................................42
13.01 Termination....................................................42
13.02 Effect of Termination..........................................43
14. MISCELLANEOUS...........................................................43
14.01 Additional Actions and Documents...............................43
14.02 Brokers........................................................43
14.03 Expenses.......................................................44
14.04 Assignment.....................................................44
14.05 Entire Agreement; Amendment....................................44
14.06 Waiver.........................................................45
14.07 Consent to Jurisdiction........................................45
14.08 Severability...................................................45
14.09 Governing Law..................................................45
14.10 Notices........................................................46
14.11 Headings.......................................................47
14.12 Execution in Counterparts......................................47
14.13 Limitation on Benefits.........................................47
14.14 Binding Effect.................................................48
-iii-
EXHIBITS
EXHIBIT A - Definitions
EXHIBIT B - Guaranty of Stockholder Guarantor
LIST OF SCHEDULES COMPRISING
DISCLOSURE SCHEDULE
--------------------------------- ----------------------------------------------
SCHEDULE: TITLE:
--------------------------------- ----------------------------------------------
2.03(a) Purchase Price Adjustment
--------------------------------- ----------------------------------------------
3.01(b) Consents and Approvals
--------------------------------- ----------------------------------------------
3.03(b)(xii) Operation of Business of the Company
--------------------------------- ----------------------------------------------
4.02 Subsidiaries
--------------------------------- ----------------------------------------------
4.03 Certificates of Incorporation and Bylaws
--------------------------------- ----------------------------------------------
4.04(b) Capitalization
--------------------------------- ----------------------------------------------
4.05 Directors, Officers and Employees
--------------------------------- ----------------------------------------------
4.06 Financial Statements
--------------------------------- ----------------------------------------------
4.07 No Liabilities
--------------------------------- ----------------------------------------------
4.08 Accounts Receivable
--------------------------------- ----------------------------------------------
4.09(a), (c), (e), (f) Taxes
--------------------------------- ----------------------------------------------
Conduct of Business;
4.10(a), (d) Absence of Material Adverse Changes
--------------------------------- ----------------------------------------------
4.11(a), (b) Real Property
--------------------------------- ----------------------------------------------
4.12(a), (c) Assets
--------------------------------- ----------------------------------------------
4.13 Insurance
--------------------------------- ----------------------------------------------
4.14 Intellectual Property
--------------------------------- ----------------------------------------------
4.15 Debt Instruments
--------------------------------- ----------------------------------------------
4.16 Leases
--------------------------------- ----------------------------------------------
4.17(a), (b), (c) Other Agreements
--------------------------------- ----------------------------------------------
4.18 Books and Records
--------------------------------- ----------------------------------------------
4.19(a), (b) Litigation; Disputes
--------------------------------- ----------------------------------------------
4.20 Labor Relations
--------------------------------- ----------------------------------------------
4.21(a), (f), (h) Pension and Benefit Plans
--------------------------------- ----------------------------------------------
4.22(a), (b), (c), (f) Environmental
--------------------------------- ----------------------------------------------
4.23 (a), (b) Transactions with Related Parties
--------------------------------- ----------------------------------------------
4.24 (a), (b), (c) Restrictions and Consents
--------------------------------- ----------------------------------------------
4.25 Authorizations
--------------------------------- ----------------------------------------------
4.30 Absence of Violation
--------------------------------- ----------------------------------------------
4.35 Generating Facility Information
--------------------------------- ----------------------------------------------
5.02 Authorization
--------------------------------- ----------------------------------------------
5.07 Consents
--------------------------------- ----------------------------------------------
7.02 Environmental Matters
--------------------------------- ----------------------------------------------
14.02(a) Brokers
--------------------------------- ----------------------------------------------
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "PURCHASE AGREEMENT") is
entered into as of December 21, 2001, by and between WPS POWER DEVELOPMENT,
INC., a Wisconsin corporation (the "BUYER") and CENTRAL XXXXXX ENERGY SERVICES,
INC., a New York corporation (the "STOCKHOLDER").
WHEREAS, the Stockholder owns all of the issued and outstanding
shares of capital stock (collectively, the "SHARES") of CH Resources, Inc., a
New York corporation (the "COMPANY"); and
WHEREAS, the Stockholder desires to sell and the Buyer desires to
purchase, all of the Shares at the price and upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
1. DEFINITIONS
For all purposes of this Purchase Agreement, certain capitalized terms
specified in EXHIBIT A shall have the meanings in this Purchase Agreement as are
ascribed to them in EXHIBIT A, except as otherwise expressly provided in this
Purchase Agreement.
2. SALE AND PURCHASE OF SHARES
2.01 SALE AND PURCHASE OF SHARES
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof, the
Stockholder agrees to sell to the Buyer, and the Buyer agrees to purchase from
the Stockholder, all of the Shares owned by the Stockholder for the purchase
price specified in SECTION 2.02.
2.02 PURCHASE PRICE
The aggregate purchase price for all of the Shares shall be
Fifty-Seven Million One Hundred Fifty Thousand Dollars $57,150,000 (the
"PURCHASE PRICE") payable to the Stockholder on the Closing Date by wire
transfer of immediately available funds in accordance with written instructions
of the Stockholder provided to the Buyer at least one (1) business day prior to
the Closing Date.
2.03 PURCHASE PRICE ADJUSTMENT
(a) The Purchase Price will be adjusted following Closing to
compensate for (i) any excess or deficiency as of the Closing Date with respect
to (A) the amount reflected on the September 30, 2001 unaudited consolidated
balance sheet of the Company for current assets (less the amount of $1,664,400
attributable to the current portion of the Transmission Congestion Contracts
("TCCS") as of September 30, 2001) less current liabilities (except for the
items treated separately in clause (B) below) and (B) except as set forth in
this Section 2.03(a), the book value of fuels, materials, supplies, and
inventories on site at Closing; (ii) the capital expenditures set forth in the
Disclosure Schedule; (iii) additional capital expenditures not exceeding
$150,000 in the aggregate, and such further additional capital expenditures in
excess of $150,000 as shall be approved in writing by the Buyer; and (iv) any
increase or reduction in the Purchase Price as determined pursuant to the
Closing Date Purchase Price Adjustment set forth in Schedule 2.03(a). The Buyer
shall be responsible (as an addition to the Purchase Price) for the foregoing
capital expenditures, but only to the extent money has been expended or a
liability has been incurred by the Company during the period from September 30,
2001 to the Closing Date. For purposes of this Section 2.03(a), inventory value
subject to adjustment includes (i) fuel and inventory of $1,166,427 as of
September 30, 2001, and (ii) GP Mate inventory of $1,563,907 as of November 21,
2001, and excludes the Siemens spare parts inventory as set forth in the
Disclosure Schedule, as to which no adjustment shall be made.
(b) Stockholder shall provide a preliminary statement of
Purchase Price adjustments at least thirty (30) days prior to the Closing Date.
Stockholder shall provide a final statement of Purchase Price adjustments (the
"ADJUSTMENT STATEMENT") to Buyer within five (5) business days following the
Closing Date.
(c) The values or amounts for each item reflected on the
Adjustment Statement shall be binding upon the Buyer, unless the Buyer gives
written notice within thirty (30) days after receipt thereof, of disagreement
with any of the values or amounts shown on the Adjustment Statement, specifying
as to each such item in reasonable detail, the nature and extent of such
disagreement (the "DISPUTE NOTICE"). Buyer shall have the right to verify
quantities of fuel and inventory based upon a random sampling methodology to be
agreed between Stockholder and Buyer. If the Buyer and the Stockholder are
unable to resolve any such disagreement within thirty (30) days after the date
of the Dispute Notice, then the issues in dispute will be submitted to the
Independent Accounting Firm, for resolution. If the issues in dispute are
submitted to the Accountants for resolution, (i) each party will furnish to the
Accountants such workpapers and other documents and information relating to the
disputed issues as the Accountants may request and are available to that party
(or its independent public accountants) and will be afforded the opportunity to
present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (ii) the determination by the
Accountants, as set forth in a notice delivered to both parties by the
Accountants, will be binding and conclusive on the parties; and (iii) the Buyer
and the Stockholder will each bear 50% of the fees of the Accountants for such
determination. If as a result of the resolution of any disputes pursuant to this
Section 2.03, any amount shown in the
- 2 -
Adjustment Statement is determined to be erroneous, such erroneous amount shall
be deleted from the Adjustment Statement and the correct amount shall be
inserted in lieu thereof.
(d) Immediately upon the expiration of the thirty (30) day
period for giving the Dispute Notice, if a Dispute Notice is not given, or
within five (5) business days after the determination has been completed in
accordance with this Section 2.03, (i) the Buyer shall pay to Stockholder the
amount of any upward Purchase Price adjustment or, (ii) Stockholder shall pay to
the Buyer the amount of any downward Purchase Price adjustment.
3. ADDITIONAL UNDERTAKINGS AND COVENANTS
3.01 CONSENTS AND APPROVALS
(a) The Buyer and the Stockholder shall use their respective
best efforts to take all measures reasonably necessary or advisable to secure
such consents, authorizations and approvals of Governmental Authorities and of
private persons or entities with respect to the transactions contemplated by
this Purchase Agreement, and the performance of all other obligations of such
parties hereunder, as may be required by any applicable Laws or by any Agreement
to which the Buyer or the Stockholder is a party or by which the Buyer or the
Stockholder is bound including those set forth in the Disclosure Schedule
pursuant to Sections 4.24 and 5.07 hereof.
(b) The Buyer and the Stockholder shall (i) cooperate in the
filing of all forms, notifications, reports and information, if any, required
pursuant to applicable statutes, rules, regulations or orders of any
Governmental Authority in connection with the transactions contemplated by this
Purchase Agreement and in any event, each of them shall have made all such
filings set forth in Disclosure Schedule 3.01(b), whether jointly or severally,
not later than January 31, 2002, and (ii) use their respective best efforts to
cause any applicable waiting periods thereunder to expire and any objections to
the transactions contemplated hereby to be withdrawn before the Closing.
3.02 ACCESS; INVESTIGATIONS BY THE BUYER
At all times through the Closing Date, the Stockholder shall, upon
reasonable prior notice and during normal business hours, provide to
representatives of the Buyer access to the Generating Facilities and the
offices, books, Agreements, records (including, without limitation, tax returns
and correspondence with accountants), officers, directors and employees of the
Company and the Real Property Affiliates (provided such access shall not cause
any unreasonable disruption in the conduct of the Company's business), and will
furnish representatives of the Buyer such financial and operating data and other
information with respect to the business and Assets of the Company as the Buyer
may reasonably request, including, without limitation, Agreements with clients,
customers, vendors, lessors, licensors and suppliers of the Company and the Real
Property Affiliates. The Buyer agrees at all times through the Closing Date to
(i) keep confidential all such information that is identified by the Stockholder
as being of a confidential nature, (ii) not use such confidential information on
its own behalf, except
- 3 -
in connection with the transactions contemplated hereby, or on behalf of any
other person, firm or entity, and (iii) not disclose such confidential
information to any third party (other than to the Buyer's counsel, accountants
and other consultants in connection with the transactions contemplated hereby)
without the Stockholder's advance written authorization; PROVIDED, HOWEVER, that
the Buyer shall have no such obligations with respect to confidential
information that (A) was lawfully obtained by it not subject to restrictions of
confidentiality; (B) is a matter of public knowledge; or (C) has been or is
hereafter publicly disclosed other than by or through the Buyer. In the event
this Purchase Agreement is terminated, the Buyer will return to the Stockholder
or destroy, as the Stockholder may direct, all documents, workpapers and other
materials containing or developed with confidential information furnished to the
Buyer relating to the transactions contemplated hereunder whether obtained
before or after the execution of this Purchase Agreement.
3.03 OPERATION OF BUSINESS OF THE COMPANY
(a) At all times through the Closing Date, the Stockholder
shall cause each of the Company and the Real Property Affiliates to use its
reasonable best efforts to (i) preserve its business organization and its
present relationships with customers, suppliers, consultants, employees and any
other persons having business relations with the Company in the Ordinary Course
of Business; and (ii) maintain all of its Assets in good operating condition and
repair (normal wear and tear excepted) in the Ordinary Course of Business.
(b) Except as set forth in the Disclosure Schedule, at all
times through the Closing Date, the Stockholder shall cause each of the Company
and the Real Property Affiliates to conduct its respective business
substantially in the manner heretofore conducted and only in the Ordinary Course
of Business and shall not, without the prior written consent of the Buyer: (i)
issue any capital stock, bonds or other corporate securities or debt
instruments, grant any options, warrants or other rights calling for the
issuance thereof, or borrow any funds; (ii) declare, set aside or pay any
dividends or distributions of any Assets; (iii) directly or indirectly redeem,
purchase or otherwise acquire any of its capital stock, any securities
convertible into capital stock, or any other securities; (iv) effect a split,
reclassification or other change in or of any of its capital stock; (v) amend
its certificate of incorporation or bylaws; (vi) except in furtherance of
Stockholder's undertaking in Section 3.05, grant any increase in the
compensation or benefits payable, or to become payable, by the Company to any of
its directors, officers, employees or consultants, or make any accrual or
arrangement for or payment of bonuses or special compensation of any kind to any
director, officer or employee; (vii) directly or indirectly guarantee or agree
to guarantee the obligations of others; (viii) enter into or make or permit any
amendment or termination of any Agreement which the Stockholder reasonably
believes is likely to have a Material Adverse Effect; (ix) mortgage, pledge or
subject to any Encumbrance any of its Assets; (x) except with respect to debt
owing from Affiliates of the Stockholder, cancel any indebtedness owing to the
Company or the Real Property Affiliates or any claims which the Company or the
Real Property Affiliates may possess (other than the resolution of claims under
any Agreement in the Ordinary Course of Business which would not have a Material
Adverse Effect), or waive any rights of substantial value; (xi) sell, assign or
transfer any Intellectual Property; (xii) except for the TCCs, sell, exchange,
transfer or otherwise
- 4 -
dispose of any interest in any Asset (other than in the Ordinary Course of
Business); (xiii) violate any Laws which have or could reasonably be expected to
have a Material Adverse Effect; (xiv) commit any act or omit to do any act, or
engage in any activity or transaction or incur any obligation (by conduct or
otherwise), which the Stockholder reasonably expects to have a Material Adverse
Effect; or (xv) make any loan or advance to any stockholder, officer or director
of the Company or any other person, other than payment of inter-company
indebtedness owed to Affiliates of the Company. Prior to the Closing Date, the
Stockholder on behalf of the Company (i) will not do or agree to do any of the
things listed in clauses (b) through (s) of SECTION 4.10 and (ii) will maintain
all insurance, which shall meet the requirements of SECTION 4.13.
(c) The Stockholder shall notify the Buyer promptly of any
material adverse change in the business, operations, prospects, condition
(financial or otherwise), Assets or liabilities of the Company or the Real
Property Affiliates, including, without limitation, information (including,
without limitation, copies of all Documents relating thereto) concerning all
claims instituted, threatened or asserted against or affecting any of the
Company or the Real Property Affiliates or its respective business or Assets at
law or in equity, before or by any court or Governmental Authority.
(d) The Stockholder shall cause the Company and the Real
Property Affiliates to keep proper books of record and account in which true and
complete entries will be made of all transactions in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods,
and shall supply to the Buyer such Documents (financial or otherwise) with
respect thereto as the Buyer shall reasonably request.
3.04 PUBLIC ANNOUNCEMENTS
The Stockholder on the one hand, and the Buyer on the other hand,
agree that neither they nor the Company nor their respective Affiliates will
issue any press release or otherwise make any public statements concerning this
Purchase Agreement or the transactions contemplated hereby at any time prior to
the Closing Date without the prior written consent of the Buyer or the
Stockholder, as the case may be, which consent may not be unreasonably withheld,
PROVIDED that the Buyer, the Stockholder or their respective Affiliates may
announce the execution of this Purchase Agreement and the transactions
contemplated hereby on or after the date hereof.
3.05 EMPLOYEES
The Stockholder shall use its reasonable best efforts to encourage
the current employees of the Company to continue their employment with the
Company prior to and following the Closing Date; PROVIDED, HOWEVER, that the
Stockholder shall not be deemed to guarantee the continued employment of any of
the Company's employees.
- 5 -
3.06 SUBSEQUENT EVENTS
The Stockholder shall notify the Buyer promptly in writing of the
occurrence of any event, or the failure of any event to occur, prior to the
Closing that results in a material omission from, or material breach of, any of
the covenants, representations or warranties made by or on behalf of the Company
or the Stockholder in this Purchase Agreement or the Disclosure Schedule. Prior
to the Closing, the Stockholder promptly will supplement or amend the Disclosure
Schedule delivered pursuant hereto with respect to any material matter hereafter
arising which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedule or which is necessary to correct any information in such Disclosure
Schedule which has been rendered materially inaccurate thereby.
3.07 ACCESS TO RECORDS
For a period of five (5) years after the Closing Date, the Buyer
shall, upon reasonable prior notice and during normal business hours, provide to
the Stockholder access to the financial and accounting books and records of the
Company for periods prior to the Closing Date and which are in the Company's
possession as of Closing, solely for purposes of assisting the Stockholder in
connection with any tax audit or other governmental investigation of the
Stockholder relating to the business of the Company for the period prior to
Closing or for purposes of defending or investigating any Losses for which
indemnification is sought by the Buyer pursuant to SECTION 11.02 hereof;
PROVIDED, HOWEVER, such access shall not cause any unreasonable disruption in
the conduct of the Buyer's business. The Buyer shall not dispose of such books
and records during the five (5) year period after the Closing Date.
3.08 INTERCOMPANY ACCOUNTS
The Stockholder shall cause all liabilities and obligations of the
Company or the Real Property Affiliates to the Stockholder or any of its
Affiliates to be paid or otherwise settled on or prior to the Closing.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder represents and warrants to the Buyer as follows:
4.01 ORGANIZATION AND STANDING
The Stockholder, the Company and each of the Real Property
Affiliates is a corporation duly organized and validly existing under the laws
of the State of New York, and has the corporate power and authority to own,
operate and lease its Assets, and to carry on its respective business as
currently conducted.
- 6 -
4.02 SUBSIDIARIES
Except for the Real Property Affiliates, the Company has no
Subsidiaries and, except as set forth in the Disclosure Schedule or the
Financial Statements, no equity investment or other interest in, nor has the
Company made advances or loans to, any corporation, association, partnership,
joint venture or other entity or person. The Real Property Affiliates have no
Subsidiaries and, except as set forth in the Disclosure Schedule, no equity
investment or other interest in, nor have the Real Property Affiliates made
advances or loans to, any corporation, association, partnership, joint venture
or other entity or person. Except as set forth on the Disclosure Statement,
neither the Company nor any Real Property Affiliate is subject to any
obligation, or requirement to provide funds or to make any investment (in the
form of loan, capital contributions, guaranty or otherwise) to or in any person
or entity.
4.03 ARTICLES OF INCORPORATION AND BYLAWS
The Stockholder has furnished to the Buyer a true and complete
copy of the certificate of incorporation of each of the Stockholder, the Company
and the Real Property Affiliates, as currently in effect, certified as of a
recent date by the Secretary of State of the State of New York, and a true and
complete copy of the bylaws of each of the Stockholder, the Company and the Real
Property Affiliates, as currently in effect, certified by each such company's
corporate secretary. Such certified copies are attached as exhibits to, and part
of, the Disclosure Schedule.
4.04 CAPITALIZATION
(a) The authorized capital stock of the Company consists of one
million (1,000,000) shares of capital stock, with a par value of one dollar
($1.00) per share, of which five hundred sixty-six thousand (566,000) shares are
duly authorized and validly issued and outstanding, fully paid and
non-assessable and not subject to preemptive rights. All of the issued and
outstanding shares of capital stock of the Company are beneficially and of
record owned by the Stockholder, free and clear of all Encumbrances, except such
restrictions on the transfer of such shares as may be applicable under federal
and state securities laws. The Shares constitute all of the issued and
outstanding shares of capital stock of the Company as of the Closing Date.
(b) No shares of capital stock of the Company have been
reserved for any purpose. There are no outstanding securities convertible into
or exchangeable for capital stock of the Company and no outstanding options,
rights (preemptive or otherwise), or warrants to purchase or to subscribe for
any shares of such stock or other securities of the Company. Except as set forth
in the Disclosure Schedule, there are no outstanding Agreements affecting or
relating to the voting, issuance, purchase, redemption, repurchase or transfer
of the Company's capital stock or any other securities of the Company.
(c) The authorized capital of each of the real Property
Affiliates consists of one hundred (100) shares of capital stock, with a par
value of $0.10 per share, of which ten (10) shares are duly authorized and
validly issued and outstanding, fully paid and non-assessable and
- 7 -
not subject to preemptive rights. All of the issued and outstanding shares of
capital stock of each of the Real Property Affiliates are beneficially and of
record owned by the Company, free and clear of all Encumbrances, except such
restrictions on the transfer of such shares as may be applicable under federal
and state securities laws. Such shares constitute all of the issued and
outstanding shares of capital stock of each of the Real Property Affiliates as
of the Closing Date.
(d) No shares of capital stock of the Real Property Affiliates
have been reserved for any purpose. There are no outstanding securities
convertible into or exchangeable for capital stock of the Real Property
Affiliates and no outstanding options, rights (preemptive or otherwise), or
warrants to purchase or to subscribe for any shares of such stock or other
securities of the Real Property Affiliates. Except as set forth in the
Disclosure Schedule, there are no outstanding Agreements affecting or relating
to the voting, issuance, purchase, redemption, repurchase or transfer of the
Real Property Affiliates' capital stock or any other securities of the Real
Capital Affiliates.
4.05 DIRECTORS, OFFICERS AND EMPLOYEES
The Disclosure Schedule lists all current directors, officers and
employees of the Company and each of the Real Property Affiliates, showing each
such person's name, position, and annual remuneration, bonuses (except bonuses
no portion of which is accrued and payable for the current fiscal year) and
fringe benefits for the current fiscal year and the most recently completed
fiscal year.
4.06 FINANCIAL STATEMENTS
The Company has prepared and furnished to the Buyer (a) the
unaudited consolidated balance sheet of the Company and the Real Property
Affiliates as of the Balance Sheet Date and the unaudited consolidated income
statement and statements of cash flow of the Company and the Real Property
Affiliates for the nine (9) months ended on the Balance Sheet Date, and (b) the
unaudited consolidated balance sheet as of December 31, 2000 and unaudited
consolidated statements of income, stockholder's equity and cash flows for the
twelve (12) month period ended as of December 31, 2000 (such financial
statements, including the notes thereto, collectively, the "FINANCIAL
STATEMENTS"). All of the Financial Statements, including, without limitation,
the notes thereto: (i) have been prepared from the books and records of the
Company and the Real Property Affiliates, (ii) present fairly the financial
position of the Company and the Real Property Affiliates as of the respective
dates and the results of operations and cash flows for the respective periods
indicated, and (iii) have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior accounting
periods (subject to normal audit adjustments in the case of unaudited
statements). The Disclosure Schedule sets forth all changes in accounting
methods (for financial accounting purposes) at any time made, agreed to,
requested or required with respect to the Company or the Real Property
Affiliates for any of the periods covered by the Financial Statements.
- 8 -
4.07 NO LIABILITIES
Except as reflected in the Financial Statements (or disclosed in
the associated footnotes to the Financial Statements) or as described in the
Disclosure Schedule, there exist no material liabilities individually or in the
aggregate (whether contingent or absolute, matured or unmatured, known or
unknown) of the Company or the Real Property Affiliates. Except as described in
the Disclosure Schedule or the Unaudited Financial Statements, since the Balance
Sheet Date, neither the Company nor the Real Property Affiliates has incurred
any material liabilities (whether contingent or absolute, matured or unmatured,
known or unknown) other than in the Ordinary Course of Business.
4.08 ACCOUNTS RECEIVABLE
Except as set forth in the Disclosure Schedule, the accounts
receivable of the Company and the Real Property Affiliates shown on the balance
sheets included in the Financial Statements, or thereafter acquired by any of
them, have arisen only from bona fide transactions in the Ordinary Course of
Business. Neither the Company, the Real Property Affiliates nor the Stockholder
has any knowledge of any facts or circumstances generally (other than general
market and economic conditions) which would result in any material increase in
the uncollectability of such accounts receivable in excess of the reserves
therefore set forth in the Financial Statements.
4.09 TAXES
(a) Except as set forth in the Disclosure Schedule, the Company
and each Subsidiary has (or, in the case of returns becoming due after the date
hereof and on or before the Closing Date, will have prior to the Closing Date)
duly and timely filed (or filed extensions therefor) all Tax Returns required to
be filed by the Company or Subsidiary on or before the Closing Date with respect
to all applicable Taxes, and no penalties or other charges are or will become
due with respect to any of the Tax Returns as the result of the late filing
thereof. All of the Company Tax Returns are (or, in the case of returns becoming
due after the date hereof and on or before the Closing Date, will be) true and
complete in all material respects. Except as set forth in the Disclosure
Schedule, the Company and each Subsidiary has paid all Taxes due or claimed to
be due by any taxing authority (whether or not shown on any Tax Return). No
claim has ever been made by an authority in a jurisdiction where the Company or
a Subsidiary does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. There are no Security Interests on any of the assets of
the Company or any Subsidiary that arose in connection with any failure (or
alleged failure) to pay any Tax.
(b) The Company and each Subsidiary has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party.
(c) There is no action, suit, proceeding, audit, investigation
or claim pending or, to the knowledge of the Company or the Stockholder,
threatened in respect of any Taxes for
- 9 -
which the Company or any Subsidiary is or may become liable, nor has any
deficiency or claim for any such Taxes been proposed, asserted or, to the
knowledge of the Company or the Stockholder, threatened. Except as set forth in
the Disclosure Schedule, the Company and each Subsidiary 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 or consented to any waivers or extensions of
any statute of limitations with respect to any taxable year of the Company or a
Subsidiary. Except as set forth in the Disclosure Schedule, there is no
Agreement, waiver or consent providing for an extension of time with respect to
the assessment or collection of any Taxes against the Company or a Subsidiary,
and no power of attorney granted by the Company or a Subsidiary with respect to
any tax matters is currently in force.
(d) The Company has furnished to the Buyer true and complete
copies of all the Company and Subsidiary Tax Returns for the past three (3)
years and within 30 days of the date hereof the Stockholder shall have furnished
to the Buyer copies of all written communications relating to any such Company
and Subsidiary Tax Returns or to any deficiency or claim proposed and/or
asserted, irrespective of the outcome of such matter, but only to the extent
such items relate to tax years (i) which are subject to an audit, investigation,
examination or other proceeding, or (ii) with respect to which the statute of
limitations has not expired.
(e) The Disclosure Schedule sets forth (i) all federal tax
elections that currently are in effect with respect to the Company or any
Subsidiary, and (ii) all elections for purposes of foreign, state or local Taxes
and all consents or Agreements for purposes of federal, foreign, state or local
Taxes in each case that reasonably could be expected to have a material effect
on the Company or any of its Subsidiaries or any of their respective Assets or
operations after the Closing. The Disclosure Schedule sets forth all changes in
accounting methods for Tax purposes at any time made, agreed to, requested or
required with respect to the Company or any Subsidiary within the past three (3)
years.
(f) The Disclosure Schedule sets forth all state and local
jurisdictions in which the Company and any Subsidiary is required to file Tax
Returns.
(g) Neither the Company nor any Subsidiary has requested or
received a ruling from any taxing authority or signed a closing or other
agreement with any taxing authority which could materially adversely affect any
of them.
(h) Except for the Central Xxxxxx Group Federal Income Tax
Allocation Agreement, the Company and each Subsidiary are not parties to, are
not bound by, and have no obligation under, any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement.
(i) No power of attorney has been granted with respect to the
Company or any Subsidiary as to any matter relating to Taxes.
(j) Neither the Company nor any Subsidiary has filed a consent
pursuant to Section 341(f) of the Code (or any predecessor provision) or agreed
to have Section 341(f)(2) of
- 10 -
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 the Company or any
Subsidiary.
(k) Since its incorporation, neither the Company nor any
Subsidiary has incurred any liability for Taxes other than in the ordinary
course of business.
(l) Neither the Company nor any Subsidiary has 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 Stockholder is the parent.
(m) Neither the Company nor any Subsidiary is a party to any
contract, agreement or other arrangement which could result in the payment by it
of amounts that could be nondeductible by reason of Section 280G or 162(m) of
the Code.
4.10 CONDUCT OF BUSINESS; ABSENCE OF MATERIAL ADVERSE EFFECT
Other than as set forth in the Disclosure Schedule, since the
Balance Sheet Date, there has been no Material Adverse Effect, and no change
except in the Ordinary Course of Business, in the business, operations,
condition (financial or otherwise), Assets or liabilities of the Company or the
Real Property Affiliates. Except as set forth in the Disclosure Schedule, since
the Balance Sheet Date, each of the Company and the Real Property Affiliates has
conducted its business substantially in the manner heretofore conducted and only
in the Ordinary Course of Business, and has not (a) incurred a significant loss
of, or significant injury to, any Assets of the Company or the Real Property
Affiliates as the result of any fire, explosion, flood, windstorm, earthquake,
labor trouble, riot, accident, act of God or public enemy or armed forces, or
other casualty; (b) issued any capital stock, bonds or other corporate
securities or debt instruments, granted any options, warrants or other rights
calling for the issuance thereof, or borrowed any funds; (c) incurred, or become
subject to, any obligation or liability (absolute or contingent, matured or
unmatured, known or unknown), except current liabilities incurred in the
Ordinary Course of Business; (d) discharged or satisfied any Encumbrance or paid
any obligation or liability (absolute or contingent, matured or unmatured, known
or unknown) other than current liabilities shown in the balance sheets included
in the Financial Statements, and current liabilities incurred since the Balance
Sheet Date in the Ordinary Course of Business; (e) declared or made payment of,
or set aside for payment, any dividends or distributions of any Assets, or
purchased, redeemed or otherwise acquired any of its capital stock, any
securities convertible into capital stock, or any other securities; (f)
mortgaged, pledged or subjected to any Encumbrance any of its Assets; (g) sold,
exchanged, transferred or otherwise disposed of any of its Assets, or canceled
any debts or claims, except in each case in the Ordinary Course of Business; (h)
written down the value of any Assets or written off as uncollectible any notes
or accounts receivable, except write-downs and write-offs in the Ordinary Course
of Business, none of which had or would have a Material Adverse Effect; (i)
entered into any transactions other than in the Ordinary Course of Business; (j)
except in furtherance of Stockholder's undertaking under Section 3.05 hereof,
increased the rate of compensation or benefits payable, or to become payable, by
it to any of its directors, officers, employees or consultants except such as
would not have a Material Adverse Effect; (k) made or permitted any amendment or
termination of any Agreement to which it is a party which would have a Material
Adverse Effect; (l) through negotiation or otherwise made any
- 11 -
commitment or incurred any liability to any labor organization; (m) made any
accrual or arrangement for or payment of bonuses or special compensation of any
kind to any director, officer or employee; (n) except in furtherance of
Stockholder's undertaking under Section 3.05 hereof, directly or indirectly paid
any severance or termination pay to any officer or employee in excess of two (2)
months' salary; (o) except as otherwise provided in Section 2.03 above, made
capital expenditures, or entered into commitments therefor, aggregating more
than Fifty Thousand Dollars ($50,000); (p) made any change in any method of
accounting or accounting practice; (q) entered into any transaction of the type
described in SECTION 4.23; (r) made any charitable contributions or pledges; or
(s) made an Agreement to do any of the foregoing.
4.11 REAL PROPERTY
(a) The Disclosure Schedule lists and sets forth a description
of all the Real Property. Such Real Property constitutes all Real Property which
is necessary for the Company and the Real Property Affiliates to conduct their
business as presently conducted and is suitable and adequate for uses for which
it is currently devoted. The Real Property is subject to no Encumbrances other
than those disclosed on Disclosure Schedule 4.11 (a) and other Encumbrances
which would not have a Material Adverse Effect (collectively, "Permitted
Liens").
(b) There are now in full force and effect duly issued
certificates of occupancy permitting the Real Property and improvements located
thereon (including but not limited to the Generating Facilities) to be legally
used and occupied as the same are now constituted. The Company has access to the
Real Property as shown on the surveys described in Disclosure Schedule 4.11(b)
(the "Surveys"). Seller has not received written notice of any pending or
threatened restriction or denial, governmental or otherwise, upon the ingress
and egress to the Real Property. Except as shown on the Surveys, there is not
(i) any structure located on any of the Real Property which encroaches on or
over the boundaries of neighboring or adjacent properties or (ii) any structure
of any other party which encroaches on or over the boundaries of any of such
Real Property except, in each such instance, in a manner which would not have a
Material Adverse Effect. To Seller's knowledge, except as set forth on the
Surveys, the Real Property is not located in a flood plain, flood hazard area,
wetland or lakeshore erosion area within the meaning of any law.
(c) Neither the whole nor any portion of the Real Property or
any other assets of the Company and/or Real Property Affiliates are subject to
any order to be sold or are being condemned, expropriated or otherwise taken by
any government entity with or without payment of compensation therefor, nor has
Stockholder received written notices of any such condemnation, expropriation or
taking.
4.12 ASSETS
(a) Except as set forth in the Disclosure Schedule (and
excluding the Real Property), each of the Company and the Real Property
Affiliates has good, valid and marketable title to all of its Assets, including,
without limitation, all Assets reflected in the balance sheets included in the
Financial Statements and all Assets purchased by the Company or the Real
- 12 -
Property Affiliates since the Balance Sheet Date (except for (i) Assets
reflected in such balance sheets or acquired since the Balance Sheet Date which
have been sold or otherwise disposed of in the Ordinary Course of Business, (ii)
the TCCs, and (iii) Assets and associated liabilities to be retained by
Stockholder as set forth in the Disclosure Schedule), free and clear of all
Encumbrances.
(b) All Real Property and other Assets owned or leased by the
Company or Real Property Affiliates are in good operating condition and repair
(excepting ordinary wear and tear), have been maintained consistent with the
standards generally followed in the industry and are sufficient to carry on the
business of the Company as conducted during the preceding twelve (12) months
except such as would not reasonably have a Material Adverse Effect. All
Buildings, plants and other structures owned or otherwise utilized by the
Company or Real Property Affiliates (including but not limited to the Generating
Facilities) are in good condition and repair except such as would not reasonably
have a Material Adverse Effect.
(c) The Disclosure Schedule shows the quantities of (i) fuel
and inventory as of September 30, 2001 included in the amount of $1,166,427
referred to in Section 2.03(a), and (ii) GP Mate inventory as of November 21,
2001 included in the amount of $1,563,907 referred to in Section 2.03(a).
4.13 INSURANCE
The Disclosure Schedule lists all policies of title, Asset, fire,
hazard, casualty, liability, life, worker's compensation and other forms of
insurance of any kind owned or held by or maintained for the benefit of the
Company or the Real Property Affiliates. All such insurance is owned or held by
the Company except as otherwise indicated on the Disclosure Schedule. All such
policies: (a) are with insurance companies financially sound and reputable; (b)
are in full force and effect; (c) are sufficient for compliance in all material
respects by the Company or the Real Property Affiliates with all requirements of
Law and of all Agreements to which the Company or a Real Property Affiliate is a
party; (d) are valid and outstanding policies enforceable against the insurer;
(e) insure against risks of the kind customarily insured against and in amounts
customarily carried by companies similarly situated and by companies engaged in
similar businesses and owning similar properties and provide adequate insurance
coverage for the business and Assets of the Company and (f) provide that they
will remain in full force and effect through the respective dates set forth in
the Disclosure Schedule.
4.14 INTELLECTUAL PROPERTY
The Disclosure Schedule lists all Intellectual Property and
applications therefor owned or licensed by or registered in the name of the
Company or the Real Property Affiliates. Except as otherwise specifically stated
in the Disclosure Schedule, the Company owns or a Real Property Affiliate owns
all of the Intellectual Property listed in the Disclosure Schedule purported to
be owned by it and has the right to bring action for the infringement of such
Intellectual Property purported to be owned by the Company or a Real Property
Affiliate. Each of the Company or a Real Property Affiliate owns or possesses
adequate rights to use all
- 13 -
Intellectual Property necessary to the conduct of its present business. Except
as otherwise set forth in the Disclosure Schedule, neither the Company or a Real
Property Affiliate nor the Stockholder has any knowledge, and has not received
any notice to the effect, that any product the Company or a Real Property
Affiliate sells or that any service the Company or a Real Property Affiliate
renders, or that the marketing or use by the Company or a Real Property
Affiliate or another of any such product or service, may or is claimed to
infringe any Intellectual Property or legally protectable right of another.
4.15 DEBT INSTRUMENTS
The Disclosure Schedule sets forth all material mortgages,
indentures, notes, guarantees and other Agreements for or relating to borrowed
money (including, without limitation, conditional sales agreements and capital
leases) to which the Company or a Real Property Affiliate is a party or which
have been assumed by the Company or a Real Property Affiliate or to which any
Assets of the Company or a Real Property Affiliate are subject. The Company or a
Real Property Affiliate, as the case may be, has performed all the material
obligations required to be performed by it to date and is not in default in any
material respect under any of the foregoing, and, to the Company's and the
Stockholder's knowledge, there has not occurred any event which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute such a default.
4.16 LEASES
The Disclosure Schedule lists all leases and other Agreements
under which the Company or a Real Property Affiliate is lessee or lessor of any
Asset, or holds, manages or operates any Asset owned by any third party, or
under which any Asset owned by the Company or a Real Property Affiliate is held,
operated or managed by a third party. Each such lease and other Agreement is in
full force and effect and constitutes a legal, valid and binding obligation of,
and is legally enforceable against, the Company or a Real Property Affiliate, as
the case may be, and, to the knowledge of the Stockholder, the other parties
thereto. All governmental approvals required under applicable Laws to have been
obtained by the Company with respect to such leases and other Agreements, if
any, have been obtained, all filings or registrations required under applicable
Laws to have been made by the Company or a Real Property Affiliate therefor, if
any, have been made, and, to the knowledge of the Stockholder, there have been
no threatened cancellations thereof and are no outstanding material disputes
thereunder. The Company has in all material respects performed all obligations
thereunder required to be performed by the Company to date. The Company is not
and, to the knowledge of the Stockholder, no other party is in default in any
material respect under any of the foregoing, and, except as set forth in the
Disclosure Schedule, there has not, to the knowledge of the Stockholder,
occurred any event which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute such a default. The
Stockholder has provided to the Buyer copies of each such lease and other
Agreement listed on the Disclosure Schedule.
- 14 -
4.17 OTHER AGREEMENTS
(a) The Disclosure Schedule lists all material Agreements to
which the Company or a Real Property Affiliate is a party or by which it is
bound at the date hereof. Each such Agreement is in full force and effect and
constitutes a legal, valid and binding obligation of, and is legally enforceable
against, the Company or a Real Property Affiliate, as the case may be, and, to
the knowledge of the Stockholder, the other parties thereto. All governmental
approvals required under applicable Laws to have been obtained by the Company or
a Real Property Affiliate with respect to such Agreements, if any, have been
obtained, all filings or registrations required under applicable Laws to have
been made by it therefor, if any, have been made, and, to the knowledge of the
Stockholder, there have been no threatened cancellations thereof and there are
no outstanding material disputes thereunder known to the Company or the
Stockholder. The Company or a Real Property Affiliate, as the case may be, has
in all material respects performed all the obligations thereunder required to be
performed by it to date. Neither the Company nor a Real Property Affiliate is
and, to the knowledge of the Stockholder, no other party is in default in any
material respect under any of the Agreements described in the Disclosure
Schedule, and there has not, to the knowledge of the Stockholder, occurred any
event which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute such a default. Except as
otherwise indicated on the Disclosure Schedule, all Agreements have been
completed, executed and delivered by the parties thereto. None of the Agreements
entered into after the date hereof for the purchase of materials, supplies,
services, merchandise or equipment shall obligate the Company for a period of
more than one year. The Stockholder has provided to the Buyer copies of all
material Agreements listed on the Disclosure Schedule.
(b) Except as set forth in the Disclosure Schedule, neither the
Company nor a Real Property Affiliate is a party to any oral or written: (i)
Agreement for the employment of any officer, employee, consultant, independent
contractor or advisor; (ii) license agreement or distributor, dealer,
manufacturer's representative, sales agency, advertising, property management or
brokerage agreement; (iii) Agreement with any labor organization or other
collective bargaining unit; (iv) Agreement for the future purchase of materials,
supplies, services, merchandise or equipment involving payments of more than
Twenty-Five Thousand Dollars ($25,000) over its remaining term (including,
without limitation, periods covered by any option to renew by either party); (v)
Agreement for the purchase, sale or lease of any real estate; (vi) except in
furtherance of Stockholder's obligations under Section 3.05 hereof,
profit-sharing, bonus, incentive compensation, deferred compensation, stock
option, severance pay, stock purchase, employee benefit, insurance,
hospitalization, pension, retirement or other similar plan or Agreement; (vii)
Agreement for the purchase, sale or lease of any of its Assets other than in the
Ordinary Course of Business or the grant of any preferential rights to purchase
any of its Assets or rights; (viii) Agreement which contains any provisions
requiring the Company or a Real Property Affiliate to indemnify any other party
thereto; (ix) joint venture agreement or other Agreement involving the sharing
of profits; (x) outstanding loan to any person or entity or receivable due from
the Stockholder or any Affiliate of the Company; or (xi) Agreement (including,
without limitation, Agreements not to compete and exclusivity Agreements) that
imposes any restriction on any business operations of the Company or a Real
Property Affiliate which, either individually or in the aggregate, would have a
Material Adverse Effect.
- 15 -
(c) The Disclosure Schedule sets forth those Agreements as to
which Stockholder shall retain certain liabilities as described in the
Disclosure Schedule.
4.18 BOOKS AND RECORDS
Except as set forth in the Disclosure Schedule, the books of
account, stock records, minute books and other records of the Company and the
Real Property Affiliates are true and complete in all material respects, and the
matters contained therein are appropriately and accurately reflected in the
Financial Statements to the extent required to be reflected therein under
generally accepted accounting principles consistently applied.
4.19 LITIGATION; DISPUTES
(a) Except as set forth in the Disclosure Schedule and except
such as are to be retained by or assigned to the Stockholder, as set forth in
the Disclosure Schedule, there are no actions, suits, claims, arbitrations,
proceedings or investigations pending, or, to the knowledge of the Stockholder,
threatened against, affecting or involving any of the Company or a Real Property
Affiliate or its respective business or Assets, or the transactions contemplated
by this Purchase Agreement, at Law or in equity or admiralty, or before or by
any court, arbitrator or Governmental Authority, domestic or foreign. Except as
set forth in the Disclosure Schedule, neither the Company nor a Real Property
Affiliate is operating under, subject to or in default with respect to any
order, award, writ, injunction, decree or judgment of any court, arbitrator or
Governmental Authority.
(b) Except as set forth in the Disclosure Schedule, neither the
Company nor a Real Property Affiliate is currently involved in and, to the
knowledge of the Company and the Stockholder, there are no threatened disputes
with any of its current or former employees, agents, brokers, distributors,
vendors, customers, business consultants, franchisees, franchisors,
representatives or independent contractors which, if adversely determined, would
have a Material Adverse Effect.
4.20 LABOR RELATIONS
There are no strikes, work stoppages, grievance proceedings, union
organization efforts or other material controversies pending, or, to the
Company's and the Stockholder's knowledge, threatened between the Company and
(i) any current or former employees of the Company or (ii) any union or other
collective bargaining unit representing such employees. Except as set forth in
the Disclosure Schedule, the Company has complied with and is in compliance in
all material respects with all Laws relating to employment or the workplace,
including, without limitation, provisions relating to wages, hours, collective
bargaining, safety and health, work authorization, equal employment opportunity,
immigration, withholding, unemployment compensation, worker's compensation,
employee privacy and right to know. Except as set forth in the Disclosure
Schedule, there are no collective bargaining agreements or employment agreements
between the Company and any of its employees not terminable at will.
- 16 -
The consummation of the transactions contemplated hereby will not cause the
Buyer or the Company to incur or suffer any liability relating to, or obligation
to pay, severance, termination or other payments to any person or entity.
4.21 BENEFIT PLANS
(a) Except as set forth in the Disclosure Schedule, the Company
(i) does not maintain and has not during the past six (6) years maintained any
Plan or Other Arrangement, (ii) is not and has not during the past six (6) years
been a party to any Plan or Other Arrangement and (iii) has no obligations under
any Plan or Other Arrangement.
(b) The Company has furnished to the Buyer true and complete
copies of each of the following Documents: (i) the Documents setting forth the
terms of each Plan; (ii) all related trust agreements or annuity agreements (and
any other funding Document) for each Plan; (iii) for the two (2) most recent
plan years, all annual reports ("Form 5500 Series") on each Plan that have been
filed with any governmental agency; (iv) the current summary plan description
and subsequent summaries of material modifications for each Title I Plan; (v)
all DOL opinions on any Plan and all correspondence relating to the request for
and receipt of each opinion; (vi) all Internal Revenue Service rulings, opinions
or technical advice relating to any Plan and all correspondence relating to the
request for and receipt of each ruling, opinion or technical advice; and (vii)
all Agreements with service providers or fiduciaries for providing services on
behalf of any Plan. For each Other Arrangement, the Company has furnished to the
Buyer true and complete copies of each policy, Agreement or other Document
setting forth or explaining the terms of the Other Arrangement, all related
trust agreements or other funding Documents (including, without limitation,
insurance contracts, certificates of deposit, money market accounts, etc.),
other submissions with any governmental agency within the last three (3) years,
and all Agreements with service providers or fiduciaries for providing services
on behalf of any material Other Arrangement.
(c) None of the Plans is an ESOP, or a funded Welfare Plan.
Further, neither the Company nor any ERISA Affiliate maintains or contributes
to, or during the last six (6) years maintained or contributed to, a
Multiemployer Plan.
(d) None of the Plans is a Pension Plan subject to Title IV of
ERISA. Further, as of September 30, 2001, no Pension Plan subject to Title IV of
ERISA maintained by an ERISA Affiliate has an accumulated funding deficiency
under Title IV of ERISA.
(e) The Company has made all contributions and other payments
required by and required to have been paid under the terms of each Plan and
Other Arrangement and has taken no action (including, without limitation,
actions required by Law) relating to any Plan or Other Arrangement that will
increase any obligation of the Buyer or the Company under any Plan or Other
Arrangement other than increases in employee compensation in the Ordinary Course
of Business.
- 17 -
(f) The Disclosure Schedule sets forth a list of all Qualified
Plans. All Qualified Plans and any related trust agreements or annuity
agreements (or any other funding Document) comply and have complied with ERISA,
the Code (including, without limitation, the requirements for Tax qualification
described in Section 401 thereof), and all other Laws. The trusts established
under such Qualified Plans are exempt from federal income taxes under Section
501(a) of the Code. The Company has received determination letters issued by the
Internal Revenue Service with respect to each Qualified Plan or the remedial
amendment period under Code Section 401(b) within which to request a favorable
determination letter has not yet expired, and the Company has furnished to the
Buyer true and complete copies of all such determination letters and all
correspondence relating to the applications therefor. All material statements
made by or on behalf of the Company to the Internal Revenue Service in
connection with applications for determinations with respect to each Qualified
Plan were true and complete when made and continue to be true and complete
except that demographic data and composition of controlled group may have
changed. To the knowledge of the Company, nothing has occurred since the date of
the most recent applicable determination letter that would adversely affect the
tax-qualified status of any Qualified Plan or, if it has occurred, it can be
corrected under an IRS correction program.
(g) The Company has complied in all material respects with all
applicable provisions of the Code, ERISA, the National Labor Relations Act,
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act, the Fair Labor Standards Act, the Securities Act, the Exchange Act, and all
other Laws pertaining to the Plans, Other Arrangements and other employee or
employment related benefits, and all premiums and assessments relating to all
Plans or Other Arrangements. The Company has no liability for any delinquent
contributions within the meaning of Section 515 of ERISA (including, without
limitation, related attorneys' fees, costs, liquidated damages and interest) or
for any arrearages of wages. The Company has no pending unfair labor practice
charges, contract grievances under any collective bargaining agreement, other
administrative charges, claims, grievances or lawsuits before any court,
governmental agency, regulatory body, or arbiter arising under any Law governing
any Plan, and, to the knowledge of the Company and the Stockholder, there exist
no facts that could give rise to such a claim.
(h) The Disclosure Schedule describes all transactions in which
the Company or any of the Plans has engaged in violation of Section 406(a) or
406(b) of ERISA for which no exemption exists under Section 408 of ERISA and all
"prohibited transactions" (as such term is defined in Section 4975(c)(1) of the
Code), for which no exemption exists under Section 4975(c)(2) or 4975(d) of the
Code and for which the liability could be material (e.g., no representation that
elective deferrals were remitted to trustee as soon as they were reasonably
segregable from corporate assets).
(i) Except for payments under the dependent care and health
care reimbursement plans no Plan or Other Arrangement, individually or
collectively, provides for any payment by the Company to any employee or
independent contractor that is not deductible under Section 162(a)(1) or 404 of
the Code or that is an "excess parachute payment" pursuant to Section 280G of
the Code.
- 18 -
(j) The Company has not filed, and has had no obligation to
file, any Form 5330 (Return of Excise Taxes Related to Employee Benefit Plans)
on any Plan for which the liability would be material. The Company has no
liability for Taxes required to be reported on Form 5330.
(k) Except as required under Code Section 4980B(f) of the Code
or pursuant to the terms of a tax-qualified plan, no Plan promises or provides
post-retirement medical, life insurance or other benefits due now or in the
future to current, former or retired employees of the Company.
(l) The Company has (i) filed or caused to be filed all returns
and reports on the Plans that they are required to file and (ii) paid or made
adequate provision for all fees, interest, penalties, assessments or
deficiencies that have become due pursuant to those returns or reports or
pursuant to any assessment or adjustment that has been made relating to those
returns or reports. All other fees, interest, penalties and assessments that are
payable by or for the Company have been timely reported, fully paid and
discharged. There are no unpaid fees, penalties, interest or assessments due
from the Company or from any other person that are or could become a lien on any
Asset of the Company or could otherwise adversely affect the business or Assets
of the Company. The Company has collected or withheld all amounts that are
required to be collected or withheld by them to discharge their obligations, and
all of those amounts have been paid to the appropriate governmental agencies or
set aside in appropriate accounts for future payment when due.
4.22 ENVIRONMENTAL
Except as set forth in the Disclosure Schedule:
(a) The Company and the Real Property Affiliates are in
compliance with, and the Company's use of the Real Property and all improvements
thereon are in compliance with, all Environmental Laws, except for any
noncompliance which has not had, and would not reasonably be expected to have, a
Material Adverse Effect.
(b) There are no pending or to the Stockholder's knowledge,
threatened actions, suits, claims, legal proceedings or other proceedings
("ENVIRONMENTAL CLAIMS") based on, and neither the Company or the Real Property
Affiliates nor the Stockholder has directly or indirectly received any notice of
any complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental Authority
or any other person or entity or knows any fact(s) which the Stockholder
reasonably believes form(s) the basis for any such actions or notices arising
out of or attributable to: (i) the current or past presence, Release or
threatened Release at or from any part of the Real Property related to the
operations of the Company or the Real Property Affiliates; (ii) the off-site
disposal or treatment of Hazardous Materials originating on or from the Real
Property with respect to the business or Assets of the Company or the Real
Property Affiliates; (iii) any facility operations, procedures or designs of the
Company or the Real Property Affiliates which do not conform to
- 19 -
requirements of the Environmental Laws; or (iv) any violation of Environmental
Laws at any part of the Real Property or arising from the activities of the
Company of the Real Property Affiliates (or to the Stockholder's knowledge, the
activities of the Company's predecessors in title) involving Hazardous
Materials; and with respect to each of the foregoing (i)-(iv) except for any
such Environmental Claims which would not reasonably be expected to have a
Material Adverse Effect.
(c) The Company or a Real Property Affiliate, as the case may
be, has been duly issued, and currently has and will maintain through the
Closing Date, all permits, licenses, certificates and approvals required to be
obtained by the Company under any Environmental Laws. The Company is in material
compliance with the terms and conditions of all permits, licenses and
certificates required to be obtained by the Company under any Environmental
Laws. A true and complete list of such permits, licenses, certificates and
approvals, all of which are valid and in full force and effect, is set out in
the Disclosure Schedule.
(d) The Company has furnished to the Buyer accurate and
complete copies of any environmental reports, assessments or other records, if
any, relating to the environmental condition of the Real Property of which the
Company, the Real Property Affiliates or the Stockholder is in possession.
(e) The Company will promptly furnish to the Buyer written
notice of any Release or of any actions or notices described in SECTION 4.22(B)
that are received prior to Closing.
(f) None of the Stockholder, the Company, or the Real Property
Affiliates (i) is a party to or has agreed to any consent decree or order under
any Environmental Laws relating to the Assets or the Generating Facilities, nor
(ii) to the Stockholder's knowledge, is subject to any outstanding
investigation, judgment, decree or order relating to compliance with any
Environmental Laws or to the investigation or cleanup of Hazardous Materials
under any Environmental Laws.
4.23 TRANSACTIONS WITH RELATED PARTIES
(a) Except as set forth in the Disclosure Schedule, neither any
present or former officer, director, stockholder or person known by the Company
or the Stockholder to be an Affiliate of the Company, nor any person known by
the Company or the Stockholder to be an Affiliate of any such person, is
currently a party to any transaction or Agreement with the Company, including,
without limitation, any Agreement providing for the employment of, furnishing of
services by, rental of Assets from or to, or otherwise requiring payments to,
any such officer, director, stockholder or Affiliate.
(b) The Disclosure Schedule sets forth a list of Agreements
between Affiliates of the Company and third parties which are for the benefit of
the Company and which shall be assigned to the Company on or before the Closing
Date.
- 20 -
4.24 RESTRICTIONS AND CONSENTS
(a) Except as set forth in the Disclosure Schedule, there are
no Agreements, or other restrictions to which the Company or the Stockholder is
a party or subject that would prevent or restrict the execution, delivery or
performance of this Purchase Agreement by the Stockholder or result in any
penalty, forfeiture, Agreement termination, or restriction on business
operations of the Company as a result of the execution, delivery or performance
of this Purchase Agreement by the Stockholder. The Disclosure Schedule lists all
such Agreements that require the consent or acquiescence of any person or entity
which is not party to this Purchase Agreement with respect to the execution,
delivery or performance of this Purchase Agreement by the Stockholder.
(b) Except as set forth in the Disclosure Schedule, no
declaration, filing, or registration with, or notice to, or authorization,
consent or approval of any Governmental Authority or any other Person is
necessary for the consummation by the Stockholder of the transactions
contemplated hereby.
(c) The Disclosure Schedule lists all non-environmental
permits, consents, certificates of occupancy, approvals and licenses necessary
for operation of the Generating Facilities as currently conducted. The Company
is in material compliance with the terms and conditions of all such
non-environmental permits, consents, certificates of occupancy, approvals and
licenses listed in the Disclosure Schedule.
4.25 AUTHORIZATION
The execution, delivery and performance by the Stockholder of this
Purchase Agreement and all other Documents executed by the Stockholder in
connection with the transactions contemplated hereby, the fulfillment of and
compliance with the respective terms and provisions hereof and thereby, and the
consummation by the Stockholder of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action (which
authorization has not been modified or rescinded and is in full force and
effect), and do not and will not, subject to such consents, approvals and
filings as are set forth in the Disclosure Schedule: (a) conflict with, or
violate any provision of, any Law having applicability to the Stockholder, the
Company or any Real Property Affiliate, or any provision of the certificate of
incorporation or bylaws of the Stockholder, the Company or the Real Property
Affiliates; (b) conflict with, or result in any breach of, or constitute a
default under any Agreement to which the Stockholder, the Company or any Real
Property Affiliate is a party or by which it or any of its Assets may be bound;
or (c) result in or require the creation or imposition of or result in the
acceleration of any indebtedness (other than intercompany indebtedness to
Affiliates of the Company), or of any Encumbrance of any nature upon, or with
respect to, the Company or the Real Property Affiliates or any of the Assets now
owned or hereafter acquired by the Company or the Real Property Affiliates.
- 21 -
4.26 LEGAL COMPLIANCE
None of the Company or the Real Property Affiliates is in
violation of or default under, nor has it breached, any term or provision of its
certificate of incorporation or bylaws or any Agreement to which it is a party
or by which it or any Asset thereof is bound or affected, except for any
violations, breaches or defaults under Agreements which do not, individually or
in the aggregate with any other such violations, breaches and defaults, have a
Material Adverse Effect. Except as set forth in Disclosure Schedule 4.22, each
of the Company and the Real Property Affiliates is in compliance with all Laws,
the failure to comply with which could have a Material Adverse Effect.
4.27 BINDING OBLIGATION
This Purchase Agreement constitutes, and each Document to be
executed by the Stockholder pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall constitute, a valid and binding
obligation of the Stockholder, enforceable in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
4.28 TITLE TO CAPITAL STOCK
The Stockholder is and on the Closing Date will be, the sole
legal, beneficial and record owner of all of the issued and outstanding shares
of capital stock of the Company as set forth in Section 4.04 above hereto, with
good, valid and marketable title thereto, free and clear of all Encumbrances,
except such restrictions on the transfer of such shares as may be applicable
under federal and state securities laws, with full right and lawful authority to
sell and transfer the shares to the Buyer pursuant to this Purchase Agreement.
The Company is and on the Closing Date will be, the sole legal, beneficial and
record owner of all of the issued and outstanding shares of capital stock of the
Real Property Affiliates as set forth in Section 4.04 above hereto, with good,
valid and marketable title thereto, free and clear of all Encumbrances, except
such restrictions on the transfer of such shares as may be applicable under
federal and state securities laws.
4.29 AUTHORITY AND CAPACITY
The Stockholder has full legal right, capacity, power and
authority to execute and deliver this Purchase Agreement and all other Documents
executed or to be executed by the Stockholder pursuant hereto, and to consummate
the transactions contemplated hereby and thereby.
- 22 -
4.30 ABSENCE OF VIOLATION
The execution, delivery and performance by the Stockholder of this
Purchase Agreement and all other Documents contemplated hereby to which such
Stockholder is a party, the fulfillment of and the compliance with the
respective terms and provisions hereof and thereof, and the consummation of the
transactions contemplated hereby and thereby, do not and will not, except as
otherwise set forth in the Disclosure Schedule: (a) conflict with, or violate
any provision of, any Laws having applicability to such Stockholder; or (b)
conflict with, or result in any breach of, or constitute a default under, any
Agreement to which the Stockholder is a party.
4.31 TRANSFER OF TITLE
Upon payment at Closing for the Shares to be purchased from the
Stockholder pursuant to the terms of this Purchase Agreement, the Buyer will
acquire good, valid and marketable title thereto, free and clear of all
Encumbrances, except such restrictions on the transfer of such shares as may be
applicable under federal and state securities laws.
4.32 HOLDING COMPANY ACT AND EWG STATUS
The Company is not an "electric utility company" or a "holding
company" as defined in the Public Utility Holding Company Act of 1935, as
amended ("PUHCA"). The Company has been determined to be an "exempt wholesale
generator" under Section 32 of PUHCA. The execution and delivery of this
Agreement by the Stockholder does not violate any provision of PUHCA or any rule
or regulation thereunder.
4.33 MARKET-BASED RATES
On or before the Closing Date, the Company will have authority to
sell wholesale electric power at market-based rates.
4.34 NYISO
The Generating Facilities are all currently owned and operated in
full compliance with all applicable NYISO rules and regulations.
4.35 GENERATING FACILITIES INFORMATION
The information provided by Stockholder at Section 4.35 of the
Disclosure Schedule regarding the Generating Facilities contains no material
misstatement with respect to the subject matter thereof as of the date hereof
which would result in a Material Adverse Effect.
- 23 -
4.36 EMISSIONS ALLOWANCES
All Emission Allowances of vintage years 2003 and 2004, as set
forth in Disclosure Schedule 7.02, are held by the Company free and clear of all
Encumbrances.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Stockholder as
follows:
5.01 ORGANIZATION AND STANDING
The Buyer is a corporation duly organized, validly existing and in
active status under the laws of the State of Wisconsin and has the corporate
power and authority to enter into this Purchase Agreement and to carry out the
transactions contemplated hereby.
5.02 AUTHORIZATION
The execution, delivery and performance by the Buyer of this
Purchase Agreement and all other Documents executed or to be executed by the
Buyer in connection with the transactions contemplated hereby, the fulfillment
of and the compliance with the respective terms and provisions hereof and
thereof, and the consummation by the Buyer of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
(which authorization has not been modified or rescinded and is in full force and
effect), and do not and will not except as set forth in the Disclosure Schedule:
(a) conflict with, or violate any provision of, any Law having applicability to
the Buyer or any provision of the articles of incorporation or bylaws of the
Buyer; or (b) conflict with, or result in any breach of, or constitute a default
under, any Agreement to which the Buyer is a party or by which the Buyer is
bound. No other corporate action is necessary for the Buyer to enter into this
Purchase Agreement and all other Documents contemplated hereby and to consummate
the transactions contemplated hereby and thereby.
5.03 BINDING OBLIGATION
This Purchase Agreement constitutes, and each Document to be
executed by the Buyer pursuant hereto, when executed and delivered in accordance
with the provisions hereof, shall constitute a valid and binding obligation of
the Buyer, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
5.04 NO REGISTRATION UNDER THE SECURITIES ACT
The Buyer understands that the capital stock to be purchased by it
under this Purchase Agreement has not been registered under the Securities Act
or any state securities laws,
- 24 -
in reliance upon exemptions contained in the Securities Act and such state
securities laws or interpretations thereof, and cannot be offered for sale, sold
or otherwise transferred unless such capital stock being acquired hereunder
subsequently is so registered or qualifies for exemption from registration under
the Securities Act and such state securities laws.
5.05 ACQUISITION FOR INVESTMENT
The capital stock is being acquired under this Purchase Agreement
by the Buyer in good faith solely for its own account, for investment and not
with a view toward resale or other distribution within the meaning of the
Securities Act. Such capital stock will not be offered for sale, sold or
otherwise transferred by the Buyer without either registration or exemption from
registration under the Securities Act and applicable state securities laws.
5.06 EVALUATION OF MERITS AND RISKS OF INVESTMENT
The Buyer has such knowledge and experience in financial and
business matters that the Buyer is capable of evaluating the merits and risks of
the Buyer's investment in such capital stock being acquired hereunder. The Buyer
understands and is able to bear any economic risks associated with such
investment (including, without limitation, the necessity of holding such capital
stock for an indefinite period of time, inasmuch as such capital stock has not
been registered under the Securities Act or any state securities laws).
5.07 CONSENTS
Except as set forth in the Disclosure Schedule, no declarations,
filings or registrations with, or notice to, or authorization, consent or
approval of any Governmental Authority or any other Person is necessary for the
consummation by the Buyer of the transaction contemplated by this Purchase
Agreement.
6. COVENANTS OF THE BUYER
6.01 MAINTENANCE OF PLANS
(a) The Buyer shall maintain either (i) each of the benefit
plans currently maintained by the Company (as set forth on Schedule 4.21(a),
other than items 1 and 10) and, with respect to a defined contribution plan,
provide for participation by the Company's employees in a similar defined
contribution plan of the Buyer, which plan may be an existing plan of the Buyer
or one established specifically for purposes of this transaction (the "BUYER
DEFINED CONTRIBUTION PLAN") or (ii) benefit plans which in the aggregate are
substantially comparable in value to the benefit plans in which the Company's
employees participate as of the Closing Date, on behalf of the Company's
employees from the Closing Date through the end of calendar year 2005.
- 25 -
(b) As soon as practicable after the Closing Date, the
Stockholder shall cause the trustee of the Xxxxxxxx Savings Incentive Plan
(currently known as the CH Resources, Inc. Savings Incentive Plan), as in effect
from time to time (the "SIP"), to effectuate, and the Buyer shall cause the
trustee of the Buyer Defined Contribution Plan to accept, a transfer, in cash,
of the entire account balances attributable to the Company's employees under the
SIP (including appropriate earnings adjustments attributable to the period from
the Closing Date to the date of transfer). The Buyer Defined Contribution Plan
and the trust therefor, and the SIP and the trust therefor, shall be qualified
and exempt from taxation under Sections 401(a) and 501(a) of the Code,
respectively, and each shall have a favorable determination letter or such other
evidence of qualifications or exemption as is reasonably acceptable to the
parties.
6.02 ENVIRONMENTAL LIABILITIES AND SITE ASSESSMENTS
(a) At Closing, and except as set forth in Sections 6.02(b) and
11.04 below, the Buyer covenants to assume all past, present and future on-site
and off-site liability, legally binding obligation or responsibility or
Environmental Claim under or related to Environmental Law or common law arising
from the pre-Closing and post-Closing ownership and operation of the Assets, and
the pre-Closing AND POST-CLOSING environmental condition of the Assets
(collectively, "Environmental Costs"). The Buyer further covenants to indemnify
the Stockholder and hold the Stockholder harmless for all such liabilities,
obligations and responsibilities as of Closing.
(b) Except as provided in Section 11.04 below, the Stockholder
shall retain potential off-site liability arising from waste shipments prior to
Closing from the Generating Facilities to facilities owned and operated by
non-related companies; provided such liabilities arose solely from the Company's
operation of the Generating Facilities. The Buyer covenants that any other
off-site liabilities relating to waste shipments from the Generating Facilities
will become the obligation of the Buyer at Closing.
(c) The Generating Facilities operate under environmental
permits, licenses, registration, certificates, and other provisions administered
by federal, state, county, and municipal agencies. At Closing, the Buyer
covenants to assume and become responsible for compliance with Environmental
Laws, environmental permits, requirements, and obligations applicable to the
Generating Facilities. The Stockholder shall use its reasonable efforts to
assist the Buyer in obtaining the transfer or re-issuance of the applicable
environmental permits, licenses, registration, and certificates as necessary.
7. COVENANTS OF THE STOCKHOLDER
7.01 SEVERANCE
(a) The Stockholder shall assume severance obligations as set
forth in ss. 7.01(b) below to all current employees to whom Buyer does not offer
continued employment in accordance with the following terms: (i) each employee's
offer must be made in writing, (ii) salaries must be equal to or greater than,
current base salaries, (iii) employees must receive
- 26 -
equivalent benefits in the aggregate (as determined by the Stockholder), (iv)
employees must continue to be employed at the location where they are currently
assigned; (v) service time accrued with the Company will be fully credited in
the Buyer's vacation plan, (vi) there will be no waiting period for eligibility
in the Buyer's 401(k) plan; and (vii) there will be no lapse in health care
coverage and the Buyer's benefit plan will assume liability for pre-existing
medical conditions.
(b) In the event that Buyer does not offer continued employment
to any employee upon the foregoing terms, Stockholder shall be liable for such
employee's severance.
7.02 ENVIRONMENTAL MATTERS
(a) The Stockholder covenants that subject to applicable legal
and regulatory provisions, the Stockholder will transfer to the Buyer any and
all post-Closing environmental entitlements or credits associated with the
Generating Facilities; PROVIDED that Stockholder shall retain Emission
Allowances for 2001-2002 and Buyer shall receive the Emission Allowances for the
years 2003 through 2004 in the manner set forth in the Disclosure Schedule.
(b) The Stockholder covenants that all other future Emission
Allowances and/or environmental entitlements or credits issued after the date
hereof by any Governmental Authority for the Generating Facilities shall, at
Closing, become the sole property of, and be for the sole benefit of, the Buyer.
Without limitation, this covenant pertains to any federal or New York State
Emission Allowance program or similar program administered by the U.S. EPA or
NYSDEC or similar Governmental Authority and by which the U.S. EPA or the State
of New York administers a NOx or SO2 Emission Allowance program.
7.03 CLOSING PERIOD OPERATIONS
The Stockholder covenants to cause the Company to continue to own
and operate the Generating Facilities during the period between execution of the
Purchase Agreement and Closing. The Company shall operate the Generating
Facilities and administer activities in the Ordinary Course of Business during
this period but will consult with the Buyer on significant operating decisions,
major capital expenditures and material contract executions. Material decisions
will be subject to joint approval by the Stockholder and the Buyer.
7.04 TRANSITION SERVICES
The Stockholder covenants to provide the Buyer with reasonable
post-Closing transition services as requested by the Buyer to assist in
effectuating the transition of operating, administrative and other support
services. Such services shall be provided at arms-length commercial rates.
- 27 -
7.05 EMPLOYEES
Stockholder covenants and agrees to not offer employment to any
employee of the Company or the Real Property Affiliates, or allow its Affiliates
to offer employment to any employee of the Company or the Real Property
Affiliates, without the prior written consent of the Buyer. Stockholder shall
provide all commercially reasonable assistance and cooperation to Buyer as
requested by Buyer in connection with the retention of the Company's employees.
7.06 VOLTAGE SUPPORT SERVICE
(a) Stockholder covenants that each of the Generating
Facilities will have an automatic voltage regulator prior to Closing.
(b) Stockholder covenants that prior to Closing it shall use
Commercially Reasonable Efforts to have each Generating Facility become a
Supplier of Voltage Support Service, as those terms are defined in the NYISO
tariffs. Such actions shall include all testing and other steps necessary to
qualify for payments as described in Section 1.1 of Rate Schedule 2 of the NYISO
ISO Market Administration and Control Area Services Tariff.
(c) In the event that Stockholder fails to complete all
necessary testing and other steps contemplated in Section 7.06(b), then
Stockholder shall compensate Buyer for all costs directly and reasonably
incurred in completing all such testing and other steps, but excluding costs
incurred in the Ordinary Course of Business in connection with the operation of
the Generating Facilities and excluding any revenues foregone by reason of the
failure to complete such testing and other steps.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDER
The obligations of the Stockholder under this Purchase Agreement are
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of the Stockholder to carry out the provisions of this Purchase
Agreement, unless such failure is agreed to in writing by the Stockholder:
8.01 REPRESENTATIONS AND WARRANTIES
The representations and warranties made by the Buyer in this
Purchase Agreement or in any Document furnished by the Buyer pursuant to this
Purchase Agreement shall be true and correct in all material respects when made
and on and as of the Closing Date as though such representations and warranties
were made on and as of the Closing Date.
- 28 -
8.02 PERFORMANCE
The Buyer shall have performed and complied in all material
respects with all Agreements and conditions required by this Purchase Agreement
to be performed or complied with by the Buyer prior to the Closing Date.
8.03 BUYER'S CERTIFICATE
The Buyer shall have delivered to the Stockholder a certificate,
dated as of the Closing Date and executed by a senior officer of the Buyer,
certifying to the fulfillment of the conditions set forth in SECTION 8.01 and
SECTION 8.02.
8.04 DOCUMENTS AT CLOSING
All Documents required to be furnished by the Buyer to the
Stockholder prior to or at the Closing shall have been so furnished.
8.05 LEGAL OPINION
The Stockholder shall have received an opinion from Xxxxx &
Xxxxxxx, counsel to the Buyer, in form and substance reasonably satisfactory to
the Stockholder.
8.06 CONSENTS AND APPROVALS
The Stockholder shall have obtained all of the waivers, permits,
consents, approvals or other authorizations set forth in Disclosure Schedule
4.24(b), in form and substance reasonably satisfactory to Stockholder (including
expiration of any applicable appeal periods), all of which are in full force and
effect on the Closing Date.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Purchase Agreement are subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of the Buyer to carry out the provisions of this Agreement,
unless such failure is agreed to in writing by the Buyer:
9.01 REPRESENTATIONS AND WARRANTIES
The representations and warranties made by the Stockholder in this
Purchase Agreement and the statements contained in the Disclosure Schedule and
Exhibits attached hereto or in any Document furnished by the Company or the
Stockholder pursuant to this Purchase Agreement shall be true and correct in all
material respects when made, and on and as of the Closing Date as though such
representations and warranties were made on and as of the Closing Date.
- 29 -
9.02 PERFORMANCE
The Stockholder shall have performed and complied in all material
respects with all Agreements and conditions required by this Purchase Agreement
to be performed or complied with prior to the Closing Date.
9.03 ABSENCE OF ADVERSE CHANGES
There shall have been no Material Adverse Effect since the Balance
Sheet Date in the business, operations, condition (financial or otherwise),
Assets or liabilities of the Company or the Real Property Affiliates.
9.04 LEGAL PROCEEDINGS
No action or proceeding by or before any Governmental Authority
shall have been instituted or threatened (and not subsequently settled,
dismissed or otherwise terminated) which is reasonably expected to restrain,
prohibit or invalidate the transactions contemplated by this Purchase Agreement.
9.05 DOCUMENTS AT CLOSING
All Documents required to be furnished by the Stockholder to the
Buyer prior to or at the Closing shall have been so furnished.
9.06 OFFICER CERTIFICATE
The Stockholder shall have delivered to the Buyer a certificate,
dated as of the Closing Date and executed by an authorized officer of the
Stockholder, certifying to the fulfillment of the conditions specified in
SECTIONS 9.01 THROUGH 9.05.
9.07 CONSENTS
All consents, authorizations, approvals and notifications required
to be obtained or made by the Stockholder in connection with the consummation of
the transactions contemplated by this Purchase Agreement shall have been duly
obtained or made in form and substance reasonably satisfactory to Buyer
(including expiration of all applicable appeal periods) and shall be in full
force and effect as of the Closing Date.
9.08 RESIGNATION OF DIRECTORS
The Buyer shall have received the written resignations of all of
the members of the Board of Directors and to the extent requested by the Buyer,
the officers of the Company (effective as of the Closing Date).
- 30 -
9.09 LEGAL OPINION
The Buyer shall have received an opinion from Winston & Xxxxxx,
counsel to the Stockholder, in form and substance reasonably satisfactory to the
Buyer.
9.10 CONSENTS AND APPROVALS
The Buyer shall have obtained all of the waivers, permits,
consents, approvals or other authorizations set forth in Disclosure Schedule
5.07, in form and substance reasonably satisfactory to Buyer (including
expiration of all applicable appeal periods), all of which are in full force and
effect on the Closing Date.
9.11 FIRPTA STATEMENT
Stockholder shall have furnished to Buyer on or before the Closing
Date a certification of Stockholder's non-foreign status as set forth in
Treasury Regulation Section 1.445-2(b). If Stockholder shall not have furnished
such a statement at or prior to the Closing, Buyer may close and withhold such
amounts from the Purchase Price as Buyer and Stockholder reasonably deem
appropriate under Section 1445 of the Code.
9.12 REAL ESTATE
Buyer shall have received: (1) a "non-imputation" endorsement
(protecting the Company and/or Real Property Affiliates against matters that
might have been known to Stockholder or the Company's prior management and/or
employees) in a form reasonably acceptable to Buyer; (2) new owner's title
policies insuring the full value of all Real Property owned, leased or used as
of the date of Closing; (3) estoppel certificates from Niagara County Industrial
Development Authority, Onandaga County Industrial Development Authority and
Xxxxx County Industrial Development Authority, in a form reasonably acceptable
to Buyer; and (4) current ALTA surveys of all Real Property owned, leased or
used by the Company and/or Real Property Affiliates (including appurtenant
easements) all of which items (1) through (4) above disclose no matters which
would have a Material Adverse Effect except insofar as such matters shall have
been cured to Buyer's reasonable satisfaction. Such title commitments and
policies and ALTA surveys shall be at Buyer's expense. If Buyer elects to obtain
updates of the Surveys, or new surveys, Buyer shall order same within fifteen
(15) days of this Purchase Agreement. Buyer shall receive such items for review,
if ordered, not later than thirty (30) days prior to Closing.
9.13 RELIANCE LETTER
Buyer shall have received a letter report addressed to Buyer from
the applicable environmental consultant, dated within thirty (30) days prior to
the Closing Date, (a) updating the environmental site assessments concerning the
Generating Facilities and (b) permitting Buyer
- 31 -
to rely on the environmental site assessments, as updated, as though such
assessment(s) had originally been performed on behalf of, addressed and
delivered to Buyer.
9.14 INSURANCE
Buyer shall have obtained all insurance coverages that are usual,
customary and reasonably necessary for operation of the Generating Facilities in
accordance with prevailing industry standards; PROVIDED that if such insurance
coverages are not available at any cost on or after April 30, 2002, Buyer may
elect to delay the Closing until such coverages become available, PROVIDED
FURTHER that no Closing Date Purchase Price Adjustment shall be made if Buyer so
elects and all other conditions to Buyer's obligation to close shall have been
met or waived.
10. CLOSING
10.01 CLOSING OF SALE AND PURCHASE
Subject to the terms and conditions of this Purchase Agreement,
the Closing shall be initially scheduled for April 15, 2002 to take place on the
Closing Date at the offices of Winston & Xxxxxx, 1400 L St., N.W., Washington,
D.C. or at such other date, time and place acceptable to the Buyer and the
Stockholder. The Closing shall be effective for all purposes as of 11:59 p.m.
Eastern time, on the Closing Date.
10.02 DELIVERIES BY THE STOCKHOLDER
At the Closing, the Stockholder shall deliver to the Buyer the
following:
(a) certificates representing the shares of capital stock being
sold to the Buyer pursuant to SECTION 2.01, duly endorsed in blank or with duly
executed stock powers attached;
(b) a copy of the resolutions adopted by the Board of Directors
of the Stockholder, the Company and the Real Property Affiliates authorizing the
transactions contemplated by this Purchase Agreement certified by the Secretary
or other duly authorized officer of the Stockholder, the Company or the Real
Property Affiliates, as applicable;
(c) the written resignations of all of the current members of
the Board of Directors of the Company and the Real Property Affiliates and to
the extent requested by the Buyer, the officers of the Company and the Real
Property Affiliates (effective as of the Closing Date);
(d) the certificate required by SECTION 9.06;
(e) certificates of incumbency and specimen signatures of the
signatory officers of the Stockholder, the Company and the Real Property
Affiliates;
- 32 -
(f) a certificate of good standing of the Stockholder, the
Company and the Real Property Affiliates issued by the state of New York, each
such certificate to be dated as of a date not more than seven (7) days prior to
the Closing Date;
(g) the certificate of incorporation, bylaws, minute books and
stock books of the Company and the Real Property Affiliates and all other books
and records reasonably requested by the Buyer;
(h) the legal opinion described in SECTION 9.09;
(i) the Guaranty, duly executed by Stockholder Guarantor;
(j) (A) all books and records of the Company and the Real
Property Affiliates held by the Stockholder and any of its Affiliates,
including, without limitation, minute books, or other registers, books of
account, Company Agreements, all data, information, books, operating records,
operating, safety and maintenance manuals, engineering and design plans,
blueprints and as-built plans, specifications, drawings, reports, procedures,
facility compliance plans, test records and results (including tests performed
in accordance with NYISO and NYSRC rules), other records and filings made with
regulatory agencies regarding operations at the Generating Facilities,
environmental procedures and similar records of Stockholder necessary for the
operation of the Generating Facilities, to the extent in the Stockholder's
possession or readily available, other than such items that are proprietary to
third parties and accounting records (collectively, the "OPERATING RECORDS"),
and (B) all personnel files relating to the employees, to the extent in the
Stockholder's possession and including files pertaining to (1) skill and
development training and resumes, (2) seniority histories, (3) salary and
benefit information, (4) Occupational Safety and Health Act medical reports, (5)
medical records and restriction forms, (6) performance evaluations, and (7)
disciplinary records (collectively, the "TRANSFERRED EMPLOYEE RECORDS");
PROVIDED, HOWEVER, that (x) the Stockholder shall be permitted to retain copies,
or originals to the extent it provides Buyer with copies of same, of all
Operating Records and Transferred Employee Records, and (y) the Stockholder
shall cooperate with Buyer to transfer all electronic Operating Records and
Transferred Employee Records in a format that is reasonably acceptable to and
useable by Buyer;
(k) (i) the monthly UCAP determinations for each of the
Generating Facilities from NYISO from and including November 2001 to Closing,
and (ii) the monthly Generator Availability Data System event logs for the
14-month period prior to Closing;
(l) executed instruments of assignment with respect to the
Agreements listed on Disclosure Schedule 4.23 (b);
(m) an instrument of assignment and assumption as shall, in the
reasonable opinion of the Buyer, be necessary for the Stockholder to obtain the
right and claims and assume the liabilities and obligations set forth in
Schedule 4.19(b) of the Disclosure Schedule; and
- 33 -
(n) all such other documents, instruments and certificates as
may be reasonably requested by Buyer to effectuate the transactions contemplated
hereby.
10.03 DELIVERIES BY THE BUYER
At the Closing, the Buyer shall deliver the following:
(a) the Purchase Price as set forth in SECTION 2.02;
(b) a certified copy (i) of the resolutions adopted by the
Board of Directors of the Buyer authorizing the transactions contemplated by
this Purchase Agreement and (ii) the articles of incorporation and the bylaws of
the Buyer;
(c) certificates of incumbency and specimen signatures of the
signatory officers of the Buyer;
(d) a certificate of active status of the Buyer issued by the
state of Wisconsin dated as of a date not more than seven (7) days prior to the
Closing Date;
(e) the certificate required by SECTION 8.03; and
(f) the legal opinion described in SECTION 8.05.
11. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES
11.01 SURVIVAL OF REPRESENTATIONS
All representations, warranties, covenants, indemnities and other
Agreements made by any party to this Purchase Agreement herein or pursuant
hereto, or made pursuant to any Disclosure Schedule, shall be deemed made on and
as of the Closing Date as though such representations, warranties, covenants,
indemnities and other Agreements were made on and as of such date, and all such
representations, warranties, covenants, indemnities and other Agreements shall
survive the Closing and any investigation, audit or inspection at any time made
by or on behalf of any party hereto, as follows: (a) unless otherwise specified
herein below, representations and warranties shall survive for a period of
twelve (12) months after the Closing Date; (b) representations and warranties
with respect to Taxes shall survive until the expiration of the applicable
statute of limitations; (c) representations, warranties and covenants for
matters relating to title to the capital stock of the Company shall continue in
full force and effect in perpetuity; (d) representations, warranties and
covenants for matters relating to title to the Company's Assets shall continue
in full force and effect for a period of two (2) years after the Closing Date;
(e) representations, warranties and covenants with respect to the Environmental
Laws shall survive for a period of four (4) years after the Closing Date;
subject to Section 11.04 below; (f) the representations in Section 4.11 shall
not survive the Closing and (g) the covenants and agreements in this ARTICLE 11
and the covenants and agreements which by their terms survive
- 34 -
Closing shall continue in full force and effect until fully discharged.
Notwithstanding anything herein to the contrary, any representation, warranty,
covenant or Agreement which is the subject of a claim which is asserted in
writing prior to the expiration of the applicable period set forth above shall
survive with respect to such claim or dispute until the final resolution
thereof.
11.02 AGREEMENT OF STOCKHOLDER TO INDEMNIFY
Subject to the conditions and provisions of this ARTICLE 11, the
Stockholder hereby agrees to indemnify, defend and hold harmless the Buyer
Indemnified Persons from and against and in respect of all Losses resulting
from, imposed upon or incurred by the Buyer Indemnified Persons, directly or
indirectly, by reason of or resulting from: (a) any misrepresentation or breach
of any representation or warranty, or noncompliance with any covenants or other
Agreements, given or made by the Stockholder in this Purchase Agreement or in
the Disclosure Schedules or Exhibits attached hereto or in any Document
furnished by or on behalf of any such party pursuant to this Purchase Agreement;
(b) any arrangements between the Company and/or the Stockholder and any broker,
finder, agent or similar advisor in connection with the transactions
contemplated by the Purchase Agreement, and any claim for fees or other amounts
arising out of any such arrangement or alleged arrangement; and (c) any claims
made under any Agreements or arrangements between the Stockholder and/or the
Company and any former officer, director or stockholder of the Company that were
entered into prior to the Closing Date; PROVIDED, HOWEVER, that, except for (x)
Losses arising out of a willful or intentional breach of representations,
warranties or covenants by the Company or the Stockholder, (y) Losses arising
out of any breach of representations or warranties for matters relating to title
to the capital stock of the Company, and (z) any liabilities or obligations in
respect of (i) Taxes of the Company or any Subsidiary for taxable periods (or
portions thereof) beginning before and ending on or before the Closing Date, and
(ii) Taxes payable by the Company or any Subsidiary solely by reason of being
severally liable for the tax of the Stockholder or any Tax Affiliate of the
Stockholder pursuant to Treasury Regulation Section 1.1502-6 or any analogous
state or local tax law, none of which shall be subject to the following
limitations, the Stockholder shall not have any liability under SECTION 11.02(a)
except to the extent that the aggregate amount of claims for Losses asserted
under such Section exceeds One Hundred Thousand Dollars ($100,000); PROVIDED,
FURTHER, HOWEVER, in no event shall the aggregate amount of liability of the
Stockholder for Losses asserted under SECTION 11.02(a) (except for Losses
arising out of a willful or intentional breach of representations, warranties or
covenants by the Company, or the Stockholder, and Losses arising out of any
breach of representations or warranties for matters relating to title to the
capital stock of the Company), exceed Six Million Dollars ($6,000,000). It shall
be a condition to the right of any Buyer Indemnified Person to indemnification
pursuant to this Section that such Buyer Indemnified Person shall assert a claim
for such indemnification within the applicable survival periods set forth in
SECTION 11.01 hereof. Notwithstanding the foregoing, the Stockholder shall
indemnify Buyer from the first dollar of Losses in connection with the OSHA
litigation matter set forth in Disclosure Schedule 4.19(a) even if such Losses
are less than One Hundred Thousand Dollars ($100,000).
- 35 -
11.03 AGREEMENT OF THE BUYER TO INDEMNIFY
Subject to the conditions and provisions of this ARTICLE 11, the Buyer
hereby agrees to indemnify, defend and hold harmless the Stockholder Indemnified
Persons from and against and in respect of all Losses resulting from, imposed
upon or incurred by the Stockholder Indemnified Persons, directly or indirectly,
by reason of or resulting from any misrepresentation or breach of any
representation or warranty, or noncompliance with any covenants or other
Agreements, given or made by the Buyer in this Purchase Agreement or in the
Exhibits or in any Document furnished by or on behalf of the Buyer pursuant to
this Purchase Agreement; PROVIDED, HOWEVER, that, except for Losses arising out
of a willful or intentional breach of representations, warranties or covenants
by the Buyer, none of which shall be subject to the following limitations, the
Buyer shall have no liability under this SECTION 11.03 until the aggregate
amount of claims for Losses asserted under such Section exceeds One Hundred
Thousand Dollars ($100,000); PROVIDED, FURTHER, HOWEVER, in no event shall the
aggregate amount of liability of the Buyer for Losses asserted under this
SECTION 11.03 (except for Losses arising out of a willful or intentional breach
of representations, warranties or covenants by the Buyer), exceed Six Million
Dollars ($6,000,000). It shall be a condition to the rights of the Stockholder
Indemnified Persons to indemnification pursuant to this Section that such
parties shall assert a claim for such indemnification within the applicable
survival periods set forth in SECTION 11.01 hereof.
11.04 SHARED ENVIRONMENTAL COSTS.
Subject to the conditions and provisions of this Article 11 and
the specific aggregate thresholds and limits established in this Section 11.04,
the Buyer and the Stockholder hereby agree to share Environmental Costs arising
as a result of pre-Closing operations of the Assets and arising during the
period of four years after the date of Closing ("SHARED ENVIRONMENTAL COSTS") as
follows: all Environmental Costs arising during (a) year one shall be shared 50%
by Stockholder and 50% by Buyer; (b) year two shall be shared 50% by Stockholder
and 50% by Buyer; (c) year three shall be shared 33% by Stockholder and 67% by
Buyer; (d) year four shall be shared 17% by Stockholder and 83% by Buyer, and
(e) year five and thereafter shall be 100% Buyer's liability. Environmental
Costs shall not be deemed Shared Environmental Costs until the aggregate of all
Environmental Costs shall exceed five hundred thousand dollars ($500,000).
Stockholder's obligation to share Environmental Costs shall accrue for those
Environmental Costs in excess of five hundred thousand dollars ($500,000) and
shall not under any circumstances exceed an aggregate amount of four million
dollars ($4,000,000).
11.05 CONDITIONS OF INDEMNIFICATION
The obligations and liabilities of the Stockholder and the Buyer
hereunder with respect to their respective indemnities pursuant to this ARTICLE
11, resulting from any Third Party Claim shall be subject to the following terms
and conditions:
(a) The party seeking indemnification (the "INDEMNIFIED PARTY")
must give the other party (the "INDEMNIFYING PARTY") notice of any Third Party
Claim which is asserted against, resulting to, imposed upon or incurred by the
Indemnified Party and which may give rise to
- 36 -
liability of the Indemnifying Party pursuant to this ARTICLE 11, stating (to the
extent known or reasonably anticipated) the nature and basis of such Third Party
Claim and the amount thereof; PROVIDED that the failure to give such notice
shall not affect the rights of the Indemnified Party hereunder except to the
extent that the Indemnifying Party shall have suffered actual material damage by
reason of such failure.
(b) Subject to SECTION 11.05(C) below, the Indemnifying Party
shall have the right to undertake, by counsel or other representatives of its
own choosing, the defense of such Third Party Claim at the Indemnifying Party's
risk and expense.
(c) In the event that (i) the Indemnifying Party shall elect
not to undertake such defense, (ii) within a reasonable time after notice from
the Indemnified Party of any such Third Party Claim, the Indemnifying Party
shall fail to undertake to defend such Third Party Claim, (iii) there is a
reasonable probability that such Third Party Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages or other
money payments, or (iv) there is a reasonable probability that the amount of
Losses asserted under such Third Party Claim may exceed the Indemnifying Party's
obligations under this ARTICLE 11, then the Indemnified Party (upon further
written notice to the Indemnifying Party) shall have the right to undertake the
defense, compromise or settlement of such Third Party Claim, by counsel or other
representatives of its own choosing, on behalf of and for the account and risk
of the Indemnifying Party; PROVIDED, HOWEVER, that if the Indemnified Party
undertakes defense of such Third Party Claim under clause (iv) above, the
Indemnified Party shall not, without the Indemnifying Party's written consent
(which consent shall not be unreasonably withheld), settle such Third Party
Claim if the Indemnifying Party will be responsible for any amounts under such
settlement. In the event that the Indemnified Party undertakes the defense of a
Third Party Claim under this SECTION 11.05(C), the Indemnifying Party shall pay
to the Indemnified Party, in addition to the other sums required to be paid
hereunder, the reasonable costs and expenses incurred by the Indemnified Party
in connection with such defense, compromise or settlement as and when such costs
and expenses are so incurred.
(d) Anything in this SECTION 11.05 to the contrary
notwithstanding, (i) the Indemnifying Party shall not, without the Indemnified
Party's written consent, settle or compromise such Third Party Claim or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Third Party Claim in form and
substance satisfactory to the Indemnified Party; (ii) in the event that the
Indemnifying Party undertakes defense of such Third Party Claim, the Indemnified
Party, by counsel or other representative of its own choosing and at its sole
cost and expense, shall have the right to participate in the defense, compromise
or settlement thereof and each party and its counsel and other representatives
shall cooperate with the other party and its counsel and representatives in
connection therewith; and (iii) in the event that the Indemnifying Party
undertakes defense of such Third Party Claim, the Indemnifying Party shall have
an obligation to keep the Indemnified Party informed of the status of the
defense of such Third Party Claim and furnish the Indemnified Party with all
documents, instruments and information that the Indemnified Party shall
reasonably request in connection therewith.
- 37 -
(e) With respect to the indemnification obligations set forth
in Section 11.04 regarding Environmental Costs which become Shared Environmental
Costs, the Parties shall cooperate to effectuate the successful completion of
remediation or corrective action in compliance with Environmental Laws. The
Buyer shall control and lead all such remediation or corrective actions which
give rise to Shared Environmental Costs. Upon discovery of any condition it
reasonably believes will require remediation or corrective action giving rise to
Shared Environmental Costs, Buyer shall promptly notify and afford Stockholder
an opportunity to review and approve its proposed remediation or corrective
actions, which Stockholder approval shall not be unreasonably withheld.
11.06 REMEDIES CUMULATIVE
The remedies provided herein shall be cumulative and shall not
preclude the assertion by the Stockholder or the Buyer of any other rights or
the seeking of any other remedies against the other, or their respective
successors or assigns.
12. TAX MATTERS
12.01 SECTION 338(H)(10) ELECTION
At Buyer's request, the Stockholder shall join with Buyer in
making an election under Section 338(h)(10) of the Code (and any corresponding
election under state, local or foreign tax law) with respect to the purchase and
sale of stock of the Company (the "SECTION 338(H)(10) ELECTION") in form and
substance satisfactory to the Buyer. Buyer shall be responsible for the filing
of any Form 8023 or analogous, ancillary or supporting forms, documents and
statements under state, local or foreign law to make the Section 338(h)(10)
Elections (the "SECTION 338 FORMS"). The Stockholder will include any income,
gain, loss, deduction, or other tax item resulting from the Section 338(h)(10)
Election on its Tax Returns to the extent required by applicable Laws. The
Stockholder shall also pay any Tax liability imposed on the Company attributable
to or in any way arising from the making of the Section 338(h)(10) Election,
including, but not limited to, (a) any Tax imposed under Reg. ss.
1.338(h)(10)-1, or (b) any state, local or foreign Tax imposed on the Company's
gain, and the Stockholder shall indemnify Buyer and the Company against any
Losses arising out of any failure to pay the Taxes attributable to the Company.
12.02 ALLOCATION OF PURCHASE PRICE
Buyer, the Company and the Stockholder agree that the Purchase
Price and the liabilities of the Company (plus other relevant items) will be
allocated to the Assets of the Company for all purposes (including Tax and
financial accounting) in accordance with their fair market values as reasonably
determined by Buyer in accordance with the applicable rules of Section 338 of
the Code and the regulations thereunder and consented to by the Stockholder
(which consent shall not be unreasonably withheld), which allocation shall be
binding upon the
- 38 -
parties. Within ninety (90) days following the Closing, Buyer and the
Stockholder shall agree on a list of assets to which the "Aggregate Deemed Sales
Price" (as defined under applicable Treasury Regulations) of the assets of the
Company shall be allocated. All allocations contained in such schedule shall be
used by each party in preparing the Section 338 Forms and all relevant Tax
Returns (including amended returns and claims for refund), subject to adjustment
to reflect (a) Stockholder's selling expenses as a reduction of sales proceeds,
and (b) Buyer's acquisition expenses as an addition to the Purchase Price. In
the event that the parties cannot agree on mutually satisfactory allocations
within said time period, the Independent Accounting Firm shall, at Stockholder's
and Buyer's joint and equal expense, determine the appropriate allocations based
solely on presentations of Buyer and Stockholder (and not by independent review)
within sixty (60) days of its engagement. The allocations determined by the
Independent Accounting Firm shall be binding on the parties. The parties shall
take no action inconsistent with, or fail to take any action necessary for the
validity of the Section 338(h)(10) Election, and shall adopt and utilize the
asset values determined in making such allocations 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. Buyer and Stockholder
shall notify and provide the other with reasonable assistance in the event of an
examination, audit or other proceeding regarding the agreed upon allocations.
12.03 TAX RETURNS AND PAYMENTS
The Stockholder shall prepare or cause to be prepared and/or cause
to be filed all Tax Returns for the Company and each Subsidiary for all Tax
periods ending on or prior to the Closing Date ("PRE-CLOSING PERIODS") which are
due after the Closing Date, including (without limitation) the Tax Returns on
which the deemed assets sales resulting from the Section 338(h)(10) Election are
reported. Such returns shall be prepared in a manner consistent with the
Company's prior practice. The income or loss shall be reported on the Tax Return
to be filed for the Company and the Subsidiaries for the period that begins
January 1, 2002 and ends on the Closing Date, consistent with Treasury
Regulation Section 1.1502-76(b). At least fifteen (15) days prior to the filing
of each such return, the Stockholder shall provide the return to the Buyer for
its review and comment and the Stockholder shall make such revisions to such
return as are reasonably requested by the Buyer. Stockholder shall be
responsible for payment of any Taxes for any Pre-Closing Periods, and shall be
entitled to any refunds or credits shown on such returns necessary to conform
the Tax Return with the preceding sentence or to be consistent with applicable
Law and shall provide the Tax Return, as revised, to the Buyer for filing. The
Buyer shall prepare or cause to be prepared and the Buyer shall timely file or
cause to be filed any Tax Returns of the Company for Tax periods which begin
before the Closing Date and end after the Closing Date (the "STRADDLE PERIODS").
Such Tax Returns shall be prepared in a manner consistent with the Company's
prior practice to the extent consistent with applicable Laws. At least fifteen
(15) days prior to the filing of each such Tax Return with respect to Straddle
Periods, the Buyer shall provide copies of such Tax Return to the Stockholder
for the Stockholder's review and comment and the Buyer shall make such revisions
to such Tax Returns as are reasonably requested by the Stockholder. For returns
relating to the Straddle Periods, the Stockholder shall pay to the Buyer within
fifteen (15) days after the date on which Taxes are paid the portion of such
Taxes which relates to the portion of such Taxable period ending on the
- 39 -
Closing Date in excess of any reserve for such Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) shown on the balance sheet in the Financial Statements
(such excess "STRADDLE PERIOD TAXES"). Such Straddle Period Taxes shall be
calculated as though the taxable year of the Company terminated as of the close
of business on the Closing Date; PROVIDED, HOWEVER, that in the case of a Tax
not based on income, receipts, proceeds, profits or similar items, such Straddle
Period Taxes shall be equal to the amount of Tax for the taxable period
multiplied by a fraction, the numerator of which shall be the number of days
from the beginning of the taxable period through the Closing Date and the
denominator of which shall be the number of days in the taxable period. After
the Closing, Buyer shall not amend any Tax Returns filed before the Closing
without Stockholder's consent.
12.04 COOPERATION ON TAX MATTERS
(a) The Buyer and the Stockholder shall cooperate fully with
each other and with each party's accounting firms and legal counsel, as and to
the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this SECTION 12 and any audit, litigation or
other proceeding with respect to Taxes or pertaining to the transactions
contemplated by this Agreement. Such cooperation shall include the retention and
(upon the other party's request) the provision of records and information which
are reasonably relevant to any such filing, audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Stockholder agrees (i) to retain all books and records with
respect to Tax matters pertinent to each of the Company and each Subsidiary
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by the
Buyer or the Stockholder, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (ii) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so requests the Stockholder shall allow the other party to
take possession of such books and records prior to such transfer, destruction or
discarding.
(b) The Buyer and the Stockholder further agree, upon request,
to use their reasonable best efforts to obtain any certificate or other document
from any Governmental Authority or any other person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
12.05 CERTAIN TAXES
Except as otherwise agreed, all transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Purchase Agreement (including, but
not limited to any real estate transfer tax, sales and use tax, mortgage
recording tax, and any other city transfer tax or any similar tax imposed in
other states or subdivisions), shall be paid by the Buyer when due. Subject to
the preceding sentence, the party required by applicable law shall file all
necessary Tax Returns and
- 40 -
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees, and, if required by applicable
Laws, the other party or its Affiliates will join in the execution of any such
Tax Returns and other documentation.
12.06 TAX SHARING AGREEMENTS
The obligations and liabilities of the Company and any Subsidiary
to the Stockholder and its other Tax Affiliates, and the obligations of
Stockholder and all its other Tax Affiliates to the Company and any Subsidiary,
under the Central Xxxxxx Group Federal Income Tax Allocation Agreement shall be
terminated as of the Closing Date.
12.07 CONTESTS
(a) Stockholder and the Buyer shall notify the other party in
writing within thirty (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 of such other party pursuant to this Agreement. 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.
(b) If a Tax Contest relates to any Taxes for which the
Stockholder is liable in full hereunder, the Stockholder shall, at its expense,
control the defense and settlement of such Tax Contest. If such Tax Contest
relates to any Taxes for which Buyer is liable in full hereunder, 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. Buyer and the Stockholder shall jointly represent the
Company or any Subsidiary in any Tax Contest relating to Taxes for which both
are liable hereunder, and fees and expenses related to such representation shall
be paid by the Buyer and the Stockholder in proportion to their respective
liabilities.
(c) Notwithstanding anything to the contrary in Section
12.06(b), 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 to
initiate further proceedings, at its own expense, and the liability of the party
that wished to settle (as between the consenting and 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.
- 41 -
(d) Notwithstanding any other provision of this Agreement to
the contrary, if a Tax Contest results in an increase in Taxes for which the
Stockholder is liable hereunder, and such increase is attributable to
adjustments based on timing differences which will reverse in taxable periods
ending subsequent to the Closing Date, and, Buyer shall pay to the Stockholder,
upon the Stockholder's request, an amount equal to the present value of the
reduction in Taxes payable by the Buyer and its Affiliates in future taxable
periods by reason of such reversal, determined by using a discount rate of 12%
and an assumed tax rate of 40%, and by assuming that such reduction in Taxes
will occur in the year or years of reversal.
12.08 DISPUTES
In the event that a dispute arises between the Stockholder and the
Buyer as to the amount of Taxes, or indemnification with respect to Taxes
(whether or not attributable to the Company), 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 thirty (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 in proportion to the determination of the Independent Accounting Firm.
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 (10) days after such
resolution (together with any interest determined by the Independent Accounting
Firm to be appropriate).
13. TERMINATION
13.01 TERMINATION
This Purchase Agreement may be terminated at any time before the
Closing Date under any one or more of the following circumstances:
(a) by the mutual written consent of all of the parties hereto;
(b) by the Buyer or the Stockholder, by written notice of
termination delivered to the other parties if the Closing shall not have
occurred prior to June 21, 2003; PROVIDED, HOWEVER, that the right to terminate
this Purchase Agreement under this SECTION 13.01(B) shall not be available to
any party whose breach of representations, warranties, covenants or agreements
contained in this Purchase Agreement has been the cause of, or resulted in, the
failure of the Closing to occur by such date;
(c) by the Buyer if the Stockholder shall have breached, or
failed to comply with, in any material respect any of its material obligations
under this Purchase Agreement or any representation or warranty made by the
Stockholder shall have been incorrect in any material respect when made or shall
have since ceased to be true and correct in any material respect, and such
breach, failure or misrepresentation is not cured within thirty (30) days after
notice thereof;
- 42 -
(d) by the Stockholder if the Buyer shall have breached, or
failed to comply with, in any material respect any of its material obligations
under this Purchase Agreement or any representation or warranty made by the
Buyer shall have been incorrect in any material respect when made or shall have
since ceased to be true and correct in any material respect, and such breach,
failure or misrepresentation is not cured within thirty (30) days after notice
thereof; and
(e) by the Buyer or the Stockholder if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any governmental or regulatory authority preventing or
prohibiting consummation of the transactions under this Purchase Agreement shall
have become final and non-appealable.
13.02 EFFECT OF TERMINATION
In the event this Purchase Agreement is terminated as provided in
this ARTICLE 13, this Purchase Agreement shall forthwith become wholly void and
of no effect, and the parties shall be released from all future obligations
hereunder; PROVIDED, HOWEVER, that the obligations of the parties as to
confidentiality provided in SECTION 3.02 and the provisions of SECTION 14.03
relating to the payment of expenses, shall not be extinguished but shall survive
such termination, and nothing herein shall relieve any party for any breach of
this Agreement. The parties hereto shall have any and all remedies to enforce
such obligations provided at law or in equity (including, without limitation,
specific performance).
14. MISCELLANEOUS
14.01 ADDITIONAL ACTIONS AND DOCUMENTS
Each of the parties hereto hereby agrees to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further Documents as may be necessary or as
may be reasonably requested in order to fully effectuate the purposes, terms and
conditions of this Purchase Agreement.
14.02 BROKERS
(a) The Stockholder represents and warrants to the Buyer that,
except as set forth in the Disclosure Schedule, it has not (i) engaged any
broker, finder or agent in connection with the transactions contemplated by this
Purchase Agreement or (ii) incurred (or will incur) any unpaid liability to any
broker, finder or agent for any brokerage fees, finders' fees or commissions,
with respect to the transactions contemplated by this Purchase Agreement.
(b) The Buyer represents and warrants to the Stockholder that,
except for PricewaterhouseCoopers Securities LLC, which is acting for and at the
expense of the Buyer, the Buyer has not (i) engaged any broker, finder or agent
in connection with the transactions contemplated by this Purchase Agreement or
(ii) incurred (and will not incur) any unpaid liability
- 43 -
to any broker, finder or agent for any brokerage fees, finders' fees or
commissions, with respect to the transactions contemplated by this Purchase
Agreement.
(c) Each party agrees to indemnify, defend and hold harmless
each of the other parties from and against any and all claims asserted against
such parties for any fees or commissions other than those set forth in this
Section by any persons purporting to act or to have acted for or on behalf of
the indemnifying party.
14.03 EXPENSES
All costs, fees and Taxes (except as otherwise provided in Section
12.01 hereof in connection with the Section 338(h)(10) Election) imposed by any
Governmental Authority in connection with the transactions contemplated hereby
shall be borne by the Buyer, including without limitation, transfer and
recording taxes. Subject to the foregoing and to the provisions of ARTICLE 11,
each party hereto shall pay its own expenses incident to this Purchase Agreement
and the transactions contemplated hereby, including all legal and accounting
fees and disbursements.
14.04 ASSIGNMENT
No party shall assign its rights and obligations under this
Purchase Agreement, in whole or in part, whether by operation of law or
otherwise, without the prior written consent of the other parties hereto, and
any such assignment contrary to the terms hereof shall be null and void and of
no force and effect. In no event shall the assignment by any party of its
respective rights or obligations under this Purchase Agreement, whether before
or after the Closing, release such party from its respective liabilities and
obligations hereunder. Notwithstanding the foregoing, (i) Buyer may assign or
otherwise transfer its rights under this Purchase Agreement to any bank,
financial institution or other lender providing financing to Buyer, as
collateral security for such financing and (ii) Buyer may assign all of its
rights and obligations under this Purchase Agreement to any wholly-owned
Subsidiary (direct or indirect) upon written notice to the Stockholder of any
such assignment; provided, however, that no such assignment shall (x) impair or
materially delay the consummation of the transactions contemplated hereby or (y)
relieve or discharge Buyer from any of its obligations hereunder.
14.05 ENTIRE AGREEMENT; AMENDMENT
This Purchase Agreement, including the Disclosure Schedule, the
Exhibits and other Documents referred to herein or furnished pursuant hereto,
constitute the entire Agreement among the parties hereto with respect to the
transactions contemplated herein, and supersede all prior oral or written
Agreements, commitments or understandings with respect to the matters provided
for herein. No amendment, modification or discharge of this Purchase Agreement
shall be valid or binding unless set forth in writing and duly executed and
delivered by the party against whom enforcement of the amendment, modification,
or discharge is sought.
- 44 -
14.06 WAIVER
No delay or failure on the part of any party hereto in exercising
any right, power or privilege under this Purchase Agreement or under any other
Documents furnished in connection with or pursuant to this Purchase Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
14.07 CONSENT TO JURISDICTION
(a) This Purchase Agreement and the duties and obligations of
the parties hereunder and under each of the Documents referred to herein shall
be enforceable against any party in the federal or state courts sitting in the
State of New York. For such purpose, each party hereto hereby irrevocably
submits to the non-exclusive jurisdiction of such courts, and agrees that all
claims in respect of this Purchase Agreement and such other Documents may be
heard and determined in any of such courts. Neither party shall make any
objection to the venue of such courts and each party hereby waives the right to
assert that such courts constitute an inconvenient forum.
(b) Each party hereto hereby irrevocably agrees that a final
judgment of any of the courts specified above in any action or proceeding
relating to this Purchase Agreement or to any of the other Documents referred to
herein or therein shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law.
14.08 SEVERABILITY
If any part of any provision of this Purchase Agreement or any
other Agreement or document given pursuant to or in connection with this
Purchase Agreement shall be invalid or unenforceable in any respect, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provision or the
remaining provisions of this Purchase Agreement.
14.09 GOVERNING LAW
This Purchase Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of New York (excluding the
choice of law rules thereof).
- 45 -
14.10 NOTICES
All notices, demands, requests, or other communications which may
be or are required to be given, served, or sent by any party to any other party
pursuant to this Purchase Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telegram, telecopy or telex, addressed as follows:
(a) If to the Buyer:
WPS Power Development, Inc.
0000 Xxxxxxxxxxx Xxxxx
Xxxxx Xxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, President
Facsimile No.: 000-000-0000
with a copy (which shall not constitute notice) to:
WPS Power Development, Inc.
0000 Xxxxxxxxxxx Xxxxx
Xxxxx Xxx, XX 00000
Attention: B. Xxxxx Xxxx
Facsimile No.: 000-000-0000
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxx.
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: 414-297-4900
(b) If to the Stockholder:
Central Xxxxxx Energy Services, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Page
Facsimile No.: 000-000-0000
- 46 -
with a copy (which shall not constitute notice) to:
Winston & Xxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be hand delivered,
sent, mailed, telecopied or telexed in the manner described above, or which
shall be delivered to a telegraph company, shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt, or
(with respect to a telecopy or telex) the answerback being deemed conclusive,
but not exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
14.11 HEADINGS
Article and Section headings contained in this Purchase Agreement
are inserted for convenience of reference only, shall not be deemed to be a part
of this Purchase Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
14.12 EXECUTION IN COUNTERPARTS
To facilitate execution, this Purchase Agreement may be executed
in as many counterparts as may be required. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
Agreement. It shall not be necessary in making proof of this Purchase Agreement
to produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
14.13 LIMITATION ON BENEFITS
The covenants, undertakings and agreements set forth in this
Purchase Agreement shall be solely for the benefit of, and shall be enforceable
only by, the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns, except that the
agreements set forth in ARTICLE 10 also shall be for the benefit of, and
enforceable by, the Buyer Indemnified Persons and their respective successors,
heirs, executors, administrators, legal representatives or permitted assigns.
- 47 -
14.14 BINDING EFFECT
Subject to any provisions hereof restricting assignment, this
Purchase Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Stock Purchase Agreement, or have caused this Stock Purchase Agreement to be
duly executed on their behalf, as of the day and year first above written.
BUYER:
WPS POWER DEVELOPMENT, INC.
By:
---------------------------------
Name:
Title:
STOCKHOLDER:
CENTRAL XXXXXX ENERGY SERVICES, INC.
By:
---------------------------------
Name:
Title:
- 48 -
EXHIBIT A TO THE
STOCK PURCHASE AGREEMENT
DEFINITIONS
"ADJUSTMENT STATEMENT" has the meaning set forth in SECTION 2.03
(b) of the Purchase Agreement.
"AFFILIATE" means: (a) with respect to an individual person, any
member of such person's immediate family, consisting of such person's spouse or
children; (b) with respect to an entity, any officer or director of such entity;
and (c) with respect to an individual person or entity, any person or entity
which directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such person or entity.
"AGREEMENT" means any binding agreement (including any and all
exhibits or attachments thereto) between two or more persons (or entities) with
respect to their relative rights and/or obligations or with respect to a thing
done or to be done.
"ALTA" means American Land Title Association.
"ARTICLE" means an Article of this Purchase Agreement.
"ASSETS" means assets of every kind and everything that is or may
be available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, real and personal property. Solely
for purposes of this Purchase Agreement, Assets of the Real Property Affiliates
shall be deemed Assets of the Company.
"BALANCE SHEET DATE" means September 30, 2001
"BUYER" means WPS Power Development, Inc., a Wisconsin
corporation.
"BUYER DEFINED CONTRIBUTION PLAN" has the meaning set forth in
SECTION 6.01(A) of the Purchase Agreement.
"BUYER INDEMNIFIED PERSONS" means the Buyer and its officers,
directors and employees.
"CENTRAL XXXXXX GROUP FEDERAL INCOME TAX ALLOCATION AGREEMENT"
means that certain Central Xxxxxx Group Federal Income Tax Allocation Agreement
dated as of December 31, 1998 by and among Central Xxxxxx Gas & Electric
Corporation and the corporations identified on Exhibit A thereto.
"CLOSING" means the closing of the sale and purchase of shares of
the Company's capital stock pursuant to this Purchase Agreement.
"CLOSING DATE" means 10:00 a.m. local time on the date on which
the satisfaction or, if permissible, waiver of the closing conditions set forth
in ARTICLES 8 AND 9 occurs, or such other time and such date as shall be
mutually agreed upon by the Buyer and the Stockholder.
"CLOSING DATE PURCHASE PRICE ADJUSTMENT" means the Closing Date
price adjustment as set forth in SCHEDULE 2.03(A).
"COMMERCIALLY REASONABLE EFFORTS" means efforts which are
reasonably necessary to cause, or assist in, the consummation of the
transactions contemplated by this Agreement and which do not require the
performing party to expend funds, incur expenses or assume liabilities other
than those which are reasonable in nature and amount within the context of the
transactions contemplated by this Agreement in order for the performing party to
satisfy its obligations hereunder.
"CODE" means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
"COMPANY" means CH Resources, Inc., a New York corporation.
"CONTROL" means possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of voting securities, by Agreement or otherwise).
"DEFINED BENEFIT PLAN" means a Plan that is or was a "defined
benefit plan" as such term is defined in Section 3(35) of ERISA.
"DISCLOSURE SCHEDULE" means the disclosure schedule identified as
the Disclosure Schedule to the Purchase Agreement. The sections of the
Disclosure Schedule shall be numbered to correspond to the applicable Section of
this Purchase Agreement and together with all matters under such heading, shall
be deemed to qualify the applicable Section and any other Section, subsection or
clause hereof to which such disclosure clearly relates.
"DISPUTE NOTICE" has the meaning set forth in SECTION 2.03 (c) of
the Purchase Agreement.
"DOCUMENTS" means any written or similar material (including,
without limitation, computer storage media) on which is recorded (by letters,
numbers or other marks) information, including, without limitation, legal
opinions, mortgages, indentures, notes, instruments, leases, Agreements,
insurance policies, reports, studies, financial statements (including, without
limitation, the notes thereto), other written financial information, schedules,
certificates, charts, maps, plans, letters, memoranda and all similar materials.
"DOL" means the Department of Labor or its successors.
-ii-
"EMISSION ALLOWANCE" means an authorization by any Governmental
Authority to emit a specified amount of nitrogen oxide ("NOx") or sulfur dioxide
("SO2") from a specified source during or after a specified time frame.
"ENCUMBRANCE" means any mortgage, lien, pledge, encumbrance,
security interest, deed of trust, option, encroachment, reservation, order,
decree, judgment, restriction, charge, Agreement, claim or equity of any kind.
"ENVIRONMENTAL CLAIMS" has the meaning set forth in SECTION 4.22
(b) of the Purchase Agreement.
" ENVIRONMENTAL COSTS" has the meaning set forth in the SECTION
6.02 (a) of the Purchase Agreement.
"ENVIRONMENTAL LAWS" means any Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act), including any regulations promulgated pursuant to such Laws, now
in effect relating to the generation, production, installation, use, storage,
treatment, transportation, release, threatened release, or disposal of Hazardous
Materials, noise control, or the protection of human health or the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"ERISA AFFILIATE" means any entity which is required to be
aggregated with the Company in accordance with the terms of Section 414(b), (c),
(m) or (o) of the Code.
"ESOP" means any "employee stock ownership plan" as such term is
defined in Section 407(d)(6) of ERISA or Section 4975(c)(7) of the Code.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and all regulations promulgated thereunder.
"EXHIBIT" means an exhibit attached to the Purchase Agreement.
"FERC" has the meaning set forth in SECTION 8.07 of the Purchase
Agreement.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4.06
of the Purchase Agreement.
"FIRPTA" means Foreign Investor in Real Property Tax Act of 1980,
as amended.
"FORM 5500 SERIES" means Internal Revenue Service Form 5500 Annual
Return/Report of Employee Benefit Plan.
-iii-
"FORM 5330" has the meaning set forth in SECTION 4.21(J) of the
Purchase Agreement.
"GENERATING FACILITIES" means the three generating facilities
owned and operated by the Company as described below:
(a) Beaver Falls Generating Facility - an approximately 95 MW
natural gas and oil-fired generating facility located in
Crogham, New York.
(b) Syracuse Generating Facility - an approximately 109 MW
natural gas and oil-fired generating facility located in
Solvay, New York outside of Syracuse.
(c) Niagara Falls Generating Facility - an approximately 50 MW
generating facility, utilizing bituminous coal, petroleum
coke and potentially other fuels, located in Niagara Falls,
New York.
"GOVERNMENTAL AUTHORITY" means any court, administrative or
regulatory agency or commission or other governmental entity or instrumentality,
domestic, foreign or supranational or any department thereof.
"GP MATE" means the accounting software licensed by General
Physics.
"GUARANTY" means that certain Guaranty by Stockholder Guarantor,
to be dated the Closing Date, in the form attached hereto as Exhibit B.
"HAZARDOUS MATERIALS" means any wastes, substances, radiation or
materials (whether solids, liquids or gases) (i) which are defined as
"pollutants", "contaminants", "hazardous wastes", "hazardous substances", "toxic
substances", "radioactive materials", or other similar designations in, or
otherwise subject to regulation under, any Environmental Laws; (ii) without
limitation, which contain polychlorinated biphenyls (PCBs), asbestos and
asbestos-containing materials, lead-based paints, urea-formaldehyde foam
insulation, and petroleum or petroleum products (including, without limitation,
crude oil or any fraction thereof) or (iii) which are known to the Stockholder
to pose a hazard to human health, safety, natural resources, industrial hygiene,
or the environment.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 11.05(A)
OF THE PURCHASE AGREEMENT.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 11.05(A)
OF THE PURCHASE AGREEMENT.
"INDEPENDENT ACCOUNTING FIRM" means Ernst & Young, LLP.
-iv-
"INDIVIDUAL ACCOUNT PLAN" means a Plan that is or was an
"individual account plan" as such term is defined in Section 3(34) of ERISA.
"INTELLECTUAL PROPERTY" means all franchises, patents, patent
qualifications, trademarks, service marks, trade names, trade styles, brands,
private labels, copyrights, know-how, computer software, industrial designs and
drawings and general intangibles of a like nature, trade secrets, licenses, and
rights and filings with respect to the foregoing, and all reissues, extensions
and renewals thereof.
"IRS" has the meaning set forth in SECTION 4.21 of the Purchase
Agreement.
"LAWS" means all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, and legally-binding resolutions, orders,
determinations, writs, injunctions, awards (including, without limitation,
awards of any arbitrator), judgments and decrees applicable to the specified
persons or entities and to the businesses and Assets thereof (including, without
limitation, Laws relating to securities registration and regulation; the sale,
leasing, ownership or management of real property; employment practices, terms
and conditions, and wages and hours; building standards, land use and zoning;
safety, health and fire prevention; and environmental protection, including
Environmental Laws).
"LOSSES" means all demands, losses, claims, actions or causes of
action, assessments, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties and reasonable attorneys' fees and
disbursements.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon the
business, operations, Assets or condition (financial or otherwise) of the
Company taken as a whole.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA.
"NYISO" means (i) New York Independent System Operator and (ii) if
the New York Independent System Operator is no longer the independent system
operator for the bulk power transmission system, then any successor thereto
performing similar functions in the State of New York, including any regional
transmission organization, independent system operator, transco, and any other
independent system administrator that possesses operational control over the
bulk power transmission system.
"NYSDEC" means New York State Department of Environmental
Conservation and any successor thereto.
"NYPSC" means the New York State Public Service Commission and any
successor thereto.
"NYSRC" means the New York State Reliability Council and any
successor thereto.
-v-
"OPERATING RECORDS" has the meaning set forth in SECTION 10.02 (j)
of the Purchase Agreement.
"ORDINARY COURSE OF BUSINESS" means ordinary course of the
Company's business consistent with past practices.
"OTHER ARRANGEMENT" means a benefit program or practice providing
for bonuses, incentive compensation, vacation pay, severance pay, insurance,
restricted stock, stock options, employee discounts, company cars, tuition
reimbursement or any other perquisite or benefit (including, without limitation,
any fringe benefit under Section 132 of the Code other than a de minimus fringe
under Code Section 132(e)) to employees, officers or independent contractors
that is not a Plan.
"PENSION PLAN" means an "employee pension benefit plan" as such
term is defined in Section 3(2) of ERISA.
"PERMITTED LIENS" has the meaning set forth in SECTION 4.11 of the
Purchase Agreement.
"PERSON" means any individual, corporation (including any
non-profit corporation), general or limited partnerships, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity.
"PLAN" means any written plan, program or arrangement, that is or
was an "employee benefit plan" as such term is defined in Section 3(3) of ERISA
and (a) which was or is established or maintained by the Company; (b) to which
the Company contributed or was obligated to contribute or to fund or provide
benefits; or (c) which provides or promises benefits to any person who performs
or who has performed services for the Company and because of those services is
or has been (i) a participant therein or (ii) entitled to benefits thereunder.
"PUHCA" has the meaning set forth in SECTION 4.32 of the Purchase
Agreement.
"PRE-CLOSING PERIODS" has the meaning set forth in SECTION 12.03
of the Purchase Agreement.
"PURCHASE AGREEMENT" means this Stock Purchase Agreement,
including the Disclosure Schedules and all Exhibits hereto.
"PURCHASE PRICE" has the meaning set forth in SECTION 2.02 of the
Purchase Agreement.
"QUALIFIED PLAN" means a Pension Plan that satisfies or is
intended to satisfy, the requirements for tax qualification described in Section
401 of the Code.
"REAL PROPERTY" means the portions of real property (and all
improvements thereon) leased or used by the Company or Real Property Affiliates
(including appurtenant easements).
-vi-
"REAL PROPERTY AFFILIATES" means CH Syracuse Properties, Inc., a
New York corporation and wholly owned non-regulated subsidiary of the
Stockholder and CH Niagara Properties, Inc. a New York corporation and wholly
owned non-regulated subsidiary of the Stockholder.
"RELEASE" means any emission, spill, seepage, leak, escape,
discharge, leaching, injection, pumping, pouring, emptying, dumping, disposal,
or release of Hazardous Materials from the Real Property into or upon the air,
soil, improvements, surface water, groundwater, the sewer, septic system, storm
drain, publicly owned treatment works, or waste treatment, storage or disposal
systems at, on, above, or under the Real Property.
"SEC" means the Securities and Exchange Commission and any
successor thereto.
" SECTION 338 (H) (10) ELECTION" has the meaning set forth in
SECTION 12.01 of the Purchase Agreement.
"SECTION" means a Section (or a subsection) of the Purchase
Agreement.
"SECTION 338 FORMS" has the meaning set forth in SECTION 12.01 OF
THE PURCHASE AGREEMENT.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
all regulations promulgated thereunder.
"SECURITY INTERESTS" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the ordinary course of business and
not incurred in connection with the borrowing of money.
"SHARED ENVIRONMENTAL COSTS" has the meaning set forth in SECTION
11.04 of the Purchase Agreement.
"SHARES" has the meaning set forth in the Recitals.
"SIEMENS" means Siemens Westinghouse Power Corporation.
"STOCKHOLDER" means Central Xxxxxx Energy Services, Inc., a New
York corporation.
"STOCKHOLDER GUARANTOR" means CH Energy Group, Inc.
"STOCKHOLDER INDEMNIFIED PERSONS" means the Stockholder and its
Affiliates and their respective officers, directors and employees.
-vii-
"STRADDLE PERIODS" has the meaning set forth in SECTION 12.01 of
the Purchase Agreement.
"STRADDLE PERIOD TAXES" has the meaning set forth in SECTION 12.01
of the Purchase Agreement.
"SUBSIDIARY" means any corporation, partnership, joint venture or
other legal entity of which the Company (either alone or through or together
with any other Subsidiary) (i) owns, directly or indirectly, fifty percent (50%)
or more of the stock, partnership interests or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation, partnership, joint
venture or other legal entity; or (ii) possesses, directly or indirectly,
control over the direction of management or policies of such corporation,
partnership, joint venture or other legal entity (whether through ownership of
voting securities, by agreement or otherwise).
"SURVEYS" has the meaning set forth in SECTION 4.11 (B) of the
Purchase Agreement.
"TAX AFFILIATE" means any entity that is a member of an affiliated
group of corporations (within the meaning of Section 1540(a) of the Code) filing
a consolidated U.S. federal income tax return, or a group of corporations filing
a consolidated or combined tax return for state, local or foreign purposes (each
a "Consolidated Group"), if the Company could be held liable for the Taxes of
such entity or Consolidated Group.
"TAX CONTEST" has the meaning set forth in SECTION 12.07 of the
Purchase Agreement.
"TAX RETURNS" means all returns, reports, declarations and
information statements required to be filed by the Company or any Subsidiary
(without regard to extensions of time permitted by law or otherwise) with any
federal, state, local or foreign governmental authority or agency with respect
to Taxes, including amendments thereto.
"TAXES" means all federal, state, local and foreign taxes
(including, without limitation, income, profit, franchise, sales, use, real
property, personal property, ad valorem, excise, employment, social security and
wage withholding taxes) and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, withholdings, or other similar charges
imposed by any governmental or quasi-governmental authorities, and any interest,
penalties or additions to tax imposed thereon or in connection therewith.
"THIRD PARTY CLAIM" means any claim or other assertion of
liability by any third party.
"TITLE I PLAN" means a Plan that is subject to Title I of ERISA.
-viii-
"TRANSFERRED EMPLOYEE RECORDS " has the meaning set forth in
SECTION 10.02 (J) of the Purchase Agreement.
"TRANSMISSION CONGESTION CONTRACTS" or "TCCS" means those certain
transmission congestion contracts (ID Nos. 2645 and 2646) currently held by the
Company.
"UCAP" has the meaning established and promulgated by NYISO, as in
effect from time to time.
"VOLTAGE SUPPORT SERVICE" has the meaning established and
promulgated by NYISO, as in effect from time to time.
"WELFARE PLAN" means an "employee welfare benefit plan" as such
term is defined in SECTION 3(1) of ERISA.
-ix-
EXHIBIT B TO THE
STOCK PURCHASE AGREEMENT
FORM OF GUARANTY
THIS GUARANTY (this "Guaranty") is made as of ________, 2002 by CH
Energy Group, Inc., a New York corporation ("Guarantor"), in favor of WPS Power
Development, Inc., a Wisconsin corporation ("Buyer").
RECITALS
Concurrently herewith (such date the "Closing Date"), Central
Xxxxxx Energy Services, Inc., a New York corporation and wholly-owned subsidiary
of Guarantor ("Seller"), is consummating the sale to Buyer of all of the capital
stock of CH Resources, Inc., a New York corporation and wholly-owned subsidiary
of Seller ("Company"), pursuant to that certain Stock Purchase Agreement, dated
as of December __, 2001 (the "Purchase Agreement"), between Seller and Buyer
(any capitalized terms used herein and not defined herein having the respective
meanings assigned in the Purchase Agreement).
To induce Buyer to enter into the Purchase Agreement and
consummate the transactions contemplated thereby, Guarantor has agreed to
execute and deliver this Guaranty.
The execution and performance by Buyer of the Purchase Agreement
and the transactions contemplated thereby will benefit Guarantor. Without this
Guaranty, Buyer would not execute and deliver the Purchase Agreement or
consummate the transactions contemplated thereby. Therefore, in consideration of
the execution and delivery by Buyer of the Purchase Agreement and consummation
of the transactions contemplated thereby, Guarantor has agreed to execute and
deliver this Guaranty.
NOW, THEREFORE, in consideration of the premises, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor agrees as follows:
1. GUARANTY. Guarantor guarantees to Buyer and its permitted
successors and assigns the full and prompt payment and performance when due of
all of the obligations of Seller under the Purchase Agreement (such obligations,
the "Guaranteed Obligations").
2. UNCONDITIONAL OBLIGATIONS. This Guaranty is a guaranty of payment
and performance and not of collection and is an absolute, unconditional and
irrevocable guarantee of the full and prompt payment and performance when due of
all of the Guaranteed Obligations, whether or not from time to time reduced or
extinguished or hereafter increased or incurred, and whether or not recovery may
be, or hereafter may become, barred by any statute of limitations or otherwise.
If any payment made by Seller or any other Person and applied to the Guaranteed
Obligations is at any time annulled, set aside, rescinded, invalidated, declared
to be fraudulent or preferential or otherwise required to be repaid or refunded
for any reason, including bankruptcy, insolvency, or reorganization, then, to
the extent of such payment or repayment, the liability of
Guarantor will continue to be in full force and effect (or be reinstated, if
applicable) as fully as if such payment had never been made. Guarantor covenants
that this Guaranty will not be fulfilled or discharged, except by the complete
payment and performance of the Guaranteed Obligations, whether by the primary
obligor or Guarantor under this Guaranty. Without limiting the generality of the
foregoing, Guarantor's obligations hereunder will not be released, discharged or
otherwise affected by the following:
(a) any change in the Purchase Agreement or the obligations of
Seller thereunder, or any insolvency, bankruptcy or similar proceeding affecting
Seller or its assets or any defense that may arise in such insolvency,
bankruptcy or similar proceeding;
(b) the existence of any claim or set-off that seller has or
that Guarantor may have against Buyer, whether in connection with this Guaranty
or any unrelated transaction, provided that nothing in this Guaranty will be
deemed a waiver by Guarantor of any claim or prevent the assertion of any claim
by separate suit;
(c) any law now or hereinafter in effect in any jurisdiction
affecting any of the terms of the Purchase Agreement or the rights of Buyer with
respect thereto;
(d) any change in the corporate existence, structure or
ownership of Guarantor or Seller or any assignment by Seller of its rights or
obligations under the Purchase Agreement;
(e) the existence of any default, breach, or dissolution in
connection with the Purchase Agreement;
(f) the existence of any release or amendment or waiver of or
consent to departure from any other guaranty for all or any of the Guaranteed
Obligations;
(g) any exchange of, release of or non-perfection of any
interest in any collateral, or any release or amendment or waiver of or consent
to departure from any guaranty, for all or any of the obligations of Seller; and
(h) any other act, omission to act, delay of any kind by any
party hereto or any other Person, or any circumstance whatsoever that might, but
for the provisions of this Section, constitute a legal or equitable discharge of
the obligations of Guarantor hereunder.
This Guaranty will in all respects be a continuing, absolute, and
unconditional guaranty irrespective of the genuineness, validity, regularity or
enforceability of the Guaranteed Obligations or any part thereof or any
instrument or agreement evidencing any of the Guaranteed Obligations ore
relating thereto, or the existence, validity, enforceability, perfection, or
extent of any collateral therefor or any other circumstances relating to the
Guaranteed Obligations which might otherwise constitute a defense to the
Guaranteed Obligations or this Guaranty.
3. INDEPENDENT OBLIGATIONS. Guarantor agrees that the Guaranteed
Obligations are independent of the obligations of Seller under the Purchase
Agreement and if any default occurs hereunder, a separate action or actions may
be brought and prosecuted against Guarantor whether
- 2 -
or not Seller is joined therein. Buyer may maintain successive actions for other
defaults of Guarantor. Buyer's rights hereunder will not be exhausted by the
exercise of any of its rights or remedies or by any such action or by any number
of successive actions until and unless all Guaranteed Obligations have been paid
and fully performed.
(a) Guarantor agrees that Buyer may enforce this Guaranty, at
any time and from time to time, without the necessity of resorting to or
exhausting any security or collateral and without the necessity of proceeding
against Seller. Guarantor hereby waives the right to require Buyer to proceed
against Seller, to exercise any right or remedy under the Purchase Agreement, or
to pursue any other remedy or to enforce any other right.
(b) Guarantor will continue to be subject to this Guaranty
notwithstanding: (i) any modification, agreement or stipulation between Buyer
and Seller, or their respective successors and assigns, with respect to the
Purchase Agreement or the Guaranteed Obligations; (ii) any waiver of or failure
to enforce any of the terms, covenants or conditions contained in the Purchase
Agreement or any modification thereof; (iii) any release of Seller from any
liability with respect to the Purchase Agreement; or (iv) any release or
subordination of any collateral then held by Buyer as security for the
performance by Seller of the Guaranteed Obligations.
(c) The Guaranteed Obligations are not conditional or
contingent upon the genuineness, validity, regularity or enforceability of the
Purchase Agreement or the pursuit by Buyer of any remedies which Buyer either
now has or may hereafter have with respect thereto under the Purchase Agreement.
4. LIABILITY OF GUARANTOR.
(a) Buyer may enforce this Guaranty upon the occurrence of a
breach by Seller of any of the Guaranteed Obligations, notwithstanding the
existence of any dispute between Seller and Buyer with respect to the existence
of any such breach.
(b) Guarantor's performance of some, but not all, of the
Guaranteed Obligations will in no way limit, affect, modify or abridge
Guarantor's liability for those Guaranteed Obligations that have not been
performed.
(c) Buyer, upon such terms as it deems appropriate, without
notice or demand and without affecting the validity or enforceability of this
Guaranty or giving rise to any reduction, limitation, impairment, discharge or
termination of Guarantor's liability hereunder, from time to time may (i) with
respect to Seller's financial obligations, renew, extend, accelerate, increase
the rate of interest on, or otherwise change the time, place, manner or terms of
payment of financial obligations that are Guaranteed Obligations, or subordinate
the payment of the same to the payment of any other obligations, or any or all
of the above, (ii) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guaranteed
Obligations or any agreement relating thereto, (iii) request and accept other
guarantees of the Guaranteed Obligations and take and hold security for the
payment of this Guaranty or the Guaranteed Obligations, (iv) release, surrender,
exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or
modify, with or without consideration,
- 3 -
any security for performance of the Guaranteed Obligations, any other guarantees
of the Guaranteed Obligations, or any other obligation of any Person with
respect to the Guaranteed Obligations, (v) enforce and apply any security
hereafter held by or for the benefit of Buyer in respect of this Guaranty or the
Guaranteed Obligations and direct the order or manner of sale thereof or
exercise of any other right or remedy that Buyer may have against any such
security, as Buyer in its discretion may determine, and (vi) exercise any other
rights available to it under the Purchase Agreement.
(d) This Guaranty and the obligations of Guarantor hereunder
will be valid and enforceable and will not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
indefeasible performance in full of the Guaranteed Obligations), including
without limitation the occurrence of any of the following, whether or not
Guarantor will have had notice or knowledge of any of them: (i) any failure or
omission to assert or enforce or agreement or election not to assert or enforce,
or the stay or enjoining, by order of court, by operation of law or otherwise,
of the exercise or enforcement of any claim or demand or any right, power or
remedy (whether arising under the Purchase Agreement, at law, in equity or
otherwise) with respect to the Guaranteed Obligations or any agreement or
instrument relating thereto; (ii) any rescission, waiver, amendment or
modification of, or any consent to departure from, any of the terms or
provisions (including without limitation provisions relating to events of
default) of the Purchase Agreement or any agreement or instrument executed
pursuant thereto; (iii) Buyer's consent to the change, reorganization or
termination of the corporate structure or existence of Seller; (iv) any
defenses, set-offs or counterclaims Seller or Guarantor may allege or assert
against Buyer in respect of the Guaranteed Obligations, including but not
limited to failure of consideration, breach of warranty, payment, statute of
frauds, statute of limitations, accord and satisfaction and usury; and (v) any
other act or thing or omission, or delay to do any other act or thing, which may
or might in any manner or to any extent vary the risk of Guarantor as an obligor
in respect of the Guaranteed Obligations.
5. WAIVERS. To the fullest extent permitted by law, Guarantor hereby
waives and agrees not to assert or take advantage of: (a) any right to require
Buyer to proceed against Seller or any other Person or to proceed against or
exhaust any security held by Buyer at any time or to pursue any right or remedy
under the Purchase Agreement or any other remedy in Buyer's power before
proceeding against Guarantor; (b) any defense that may arise by reason of the
incapacity, lack of authority, death or disability of, or revocation hereby by
Guarantor or Seller or any other Person or the failure of Buyer to file or
enforce a claim against the estate (either in administration, bankruptcy or any
other proceeding) of any such Person; (c) any defense that may arise by reason
of any presentment, demand for payment or performance or otherwise, protest or
notice of any other kind or lack thereof; (d) any right or defense arising out
of an election of remedies by Buyer; (e) all notices to Guarantor, to Seller, or
to any other Person, including, but not limited to, notices of the acceptance of
this Guaranty or the creation, renewal, extension, modification, accrual of any
of Seller's obligations under the Purchase Agreement, or of default in the
payment or performance of any such obligations, enforcement of any right or
remedy with respect thereto or notice of any other matters relating thereto; (f)
any statute of limitations affecting Guarantor's liability hereunder or the
enforcement thereof; (g) any requirements of diligence or promptness on the part
of Buyer; (h) any defense arising out of the lack of validity or the
unenforceability of the Guaranteed Obligations or any agreement or instrument
relating
- 4 -
thereto or by reason of the cessation of the liability of Seller, or any other
Person from any cause other than indefeasible performance in full of the
Guaranteed Obligations; (i) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (j) any
defense based upon any act or omission of Buyer that directly or indirectly
results in or aids the discharge or release of Seller or Guarantor or any
security given or held by Buyer in connection with the Guaranteed Obligations;
and (k) any and all surety ship defenses under applicable law.
6. CUMULATIVE RIGHTS. All rights powers and remedies of Buyer
hereunder are in addition to and not in lieu of all other rights, powers and
remedies given to Buyer, whether at law, in equity or otherwise.
7. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
that:
(a) it is a corporation duly organized, validly existing, and
in good standing under the laws of the State of New York and has all requisite
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to own its properties and carry on its business
as now conducted;
(b) it has all requisite corporate power and authority to
execute, deliver and perform this Guaranty;
(c) the execution, delivery, and performance by Guarantor of
this Guaranty have been duly authorized by all necessary corporate action on the
part of Guarantor;
(d) this Guaranty has been duly executed and delivered and
constitutes the legal, valid and binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms;
(e) neither the execution nor delivery of this Guaranty nor
compliance with or fulfillment of the terms, conditions, and provisions hereof
will conflict with, result in a material breach or violation of the terms,
conditions, or provisions of, or constitute a material default, an event of
default, or an event creating rights of acceleration, termination, or
cancellation, or a loss of rights under, (1) the certificate of incorporation or
by-laws of Guarantor (or equivalent governing instruments), (2) any judgment,
decree, order, contract, agreement, indenture, instrument, note, mortgage,
lease, governmental permit, or other authorization, right, restriction, or
obligation to which Guarantor is a party or any of its property is subject or by
which Guarantor is bound, or (3) any federal, state, or local law, statute,
ordinance, rule or regulation applicable to Guarantor;
(f) it now has and will continue to have full and complete
access to any and all information concerning the transactions contemplated by
the Purchase Agreement and Seller's financial status, and its ability to perform
the Guaranteed Obligations;
(g) it has reviewed and approved a copy of the Purchase
Agreement and is fully informed of the remedies Buyer may pursue, with or
without notice to Seller or any other Person, in the event of default of any of
the Guaranteed Obligations;
- 5 -
(h) it has made and so long as the Guaranteed Obligations (or
any portion thereof) remain unsatisfied, it will make its own credit analysis of
Seller and will keep itself fully informed as to all aspects of the financial
condition of Seller, the performance of the Guaranteed Obligations, and all
circumstances bearing upon the risk of non payment or nonperformance of the
Guaranteed Obligations. Guarantor hereby waives and relinquishes any duty on the
part of Buyer to disclose any matter, fact or thing relating to the business,
operations or conditions of Seller now known or hereafter known by Buyer.
(i) no consent, authorization, approval, order, license,
certificate, or permit or act of or from, or declaration or filing with, any
Governmental Authority or any party to any contract, agreement, instrument,
lease, or license to which Guarantor is a party or by which Guarantor is bound,
is required for the execution, delivery, or compliance with the terms hereof by
Guarantor, except as have been obtained prior to the date hereof; and
(j) there is no pending or, to its knowledge, threatened
action, suit, proceeding, arbitration, litigation, or investigation of or before
any Governmental Authority or any other entity which challenges the validity or
enforceability of this Guaranty.
8. GOVERNING LAW. The validity, interpretation and effect of this
Guaranty are governed by and will be construed in accordance with the laws of
the State of New York applicable to contracts made and performed in such State,
without regard to conflicts of law doctrines.
9. ENTIRE AGREEMENT. This Guaranty contains the entire agreement of
Guarantor with respect to the transactions contemplated hereby, and supersedes
all negotiations, representations, warranties, commitments, offers, contracts
and writings prior to the date hereof, written or oral, with respect to the
subject matter hereof. No waiver, modification or amendment of any provision of
this Guaranty shall be effective unless made in writing and duly signed by Buyer
referring specifically to this Guaranty, and then only to the specific purpose,
extent and interest so provided.
10. SEVERABILITY. If any provision of this Guaranty is determined to
be unenforceable for any reason by a court of competent jurisdiction, this
Guaranty will be adjusted rather than voided, to achieve the intent of the
parties, and all of the provisions not deemed unenforceable will be deemed valid
and enforceable to the greatest extent possible.
11. NOTICES. All notices, requests, demands and other communications
under this Guaranty must be in writing and must be delivered in person or sent
by certified mail, postage prepaid, or by overnight delivery, and properly
addressed as follows:
- 6 -
If to Guarantor:
CH Energy Group, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Page
Facsimile No. (000) 000-0000
With a copies to:
Winston & Xxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Xxxxx & Xxxxxx LLP
One Chase Manhattan Plaza (58th Floor)
Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
If to Buyer:
WPS Power Development, Inc.
0000 Xxxxxxxxxxx Xxxxx
Xxxxx Xxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
With a copies to:
WPS Power Development, Inc.
0000 Xxxxxxxxxxx Xxxxx
Xxxxx Xxx, XX 00000
Attention: B. Xxxxx Xxxx
Facsimile No.: (000) 000-0000
Xxxxx & Lardner
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
- 7 -
Either Guarantor or Buyer may from time to time change its address
for the purpose of notices by a similar notice specifying a new address, but no
such change is effective until actually received by the party sought to be
charged with its contents.
All notices and other communications required or permitted under
this Guaranty which are addressed as provided in this Section 11 shall be
effective upon delivery, if delivered personally or by overnight mail, and shall
be effective five (5) days following deposit in the United States mail, postage
prepaid, if delivered by mail.
12. CAPTIONS. The captions of the various Sections of this Guaranty
have been inserted for convenience of reference only and do not modify, explain,
enlarge or restrict any of the provisions of this Guaranty.
13. ASSIGNABILITY. This Guaranty is binding upon and inures to the
benefit of the successors and assigns of Guarantor and Buyer, but is not
assignable by either Party without the prior written consent of the other Party,
which consent will not be unreasonably withheld, except that Buyer may assign
this Guaranty to an Affiliate without obtaining any further consent from
Guarantor. Any assignment by Guarantor is further conditioned on the assignee's
agreement in writing to assume all of the Guarantor's obligations hereunder;
provided, however, that any assignment by Guarantor effected in accordance with
this Section 13 shall not relieve Guarantor of its obligations and liabilities
under this Guaranty.
14. CONSTRUCTION OF AGREEMENT. Ambiguities or uncertainties in the
wording of this Guaranty will not be construed for or against any party, but
will be construed in the manner that most accurately reflects the parties'
intent as of the date hereof.
15. NO WAIVER. Any forbearance or failure to exercise, and any delay
by Buyer in exercising, any right, power or remedy hereunder will not impair any
such right, power or remedy or be construed to be a waiver thereof, nor will it
preclude the further exercise of any such right, power or remedy. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law, by agreement or otherwise.
16. BANKRUPTCY; POST-PETITION INTEREST.
(a) The obligations of Guarantor under this Guaranty will not
be reduced, limited, impaired, discharged, deferred, suspended or terminated by
any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Seller or by any
defense which Seller may have by reason of the order, decree or decision of any
court or administrative body resulting from any such proceeding. Buyer is not
obligated to file any claim relating to the Guaranteed Obligations if Seller
becomes subject to a bankruptcy, reorganization, or similar proceeding, and the
failure of Buyer so to file will not affect Guarantor's obligations under this
Guaranty.
(b) Guarantor acknowledges and agrees that any interest on any
portion of the Guaranteed Obligations which accrues after the commencement of
any proceeding referred to in clause (a) above (or, if interest on any portion
of the Guaranteed Obligations ceases to accrue by
- 8 -
operation of law by reason of the commencement of said proceeding, such interest
as would have accrued on such portion of the Guaranteed Obligations if said
proceedings had not been commenced) will be included in the Guaranteed
Obligations because it is the intention of Guarantor and Buyer that the
Guaranteed Obligations should be determined without regard to any rule of law or
order that may relieve Seller of any portion of such Guaranteed Obligations.
Guarantor will permit any trustee in bankruptcy, receiver, debtor-in-possession,
assignee for the benefit of creditors or any similar Person to pay Buyer, or
allow the claim of Buyer in respect of any such interest accruing after the date
on which such proceeding is commenced.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the
date first written above.
CH ENERGY GROUP, INC.
By:
------------------------------------
Name:
Title:
- 9 -