EXHIBIT 2.4
PRIVILEGED AND CONFIDENTIAL
EXECUTION COPY
XXXXX CITY ELECTRIC GENERATING STATION
ASSET PURCHASE AGREEMENT
BY AND AMONG
PENNSYLVANIA ELECTRIC COMPANY, NGE GENERATION, INC., and NEW YORK
STATE ELECTRIC & GAS CORPORATION as SELLERS,
MISSION ENERGY WESTSIDE, INC., as BUYER
Dated as of August 1, 1998
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1 Definitions.......................................................... 1
1.2 Certain Interpretive Matters........................................ 13
ARTICLE II
PURCHASE AND SALE
2.1 Transfer of Assets.................................................. 13
2.2 Excluded Assets .................................................... 15
2.3 Assumed Liabilities................................................. 16
2.4 Excluded Liabilities................................................ 18
2.5 Control of Litigation............................................... 20
ARTICLE III
THE CLOSING
3.1 Closing............................................................... 20
3.2 Payment of Purchase Price............................................. 21
3.3 Adjustment to Purchase Price ......................................... 21
3.4 Allocation of Purchase Price ......................................... 22
3.5 Prorations............................................................ 23
3.6 Deliveries by Sellers................................................. 24
3.7 Deliveries by Buyer................................................... 25
3.8 Ancillary Agreements.................................................. 26
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLERS
4.1 Incorporation; Qualification.......................................... 26
4.2 Authority Relative to this Agreement ................................. 26
4.3 Consents and Approvals; No Violation ................................. 26
4.4 Insurance............................................................. 27
4.5 Title and Related Matters............................................. 28
4.6 Real Property Leases ................................................. 28
4.7 Environmental Matters ............................................... 28
4.8 Labor Matters........................................................ 29
4.9 Benefit Plans: ERISA ................................................ 29
4.10 Real Property ....................................................... 30
4.11 Condemnation ........................................................ 30
4.12 Contracts and Leases ................................................ 30
4.13 Legal Proceedings, etc............................................... 31
4.14 Permits ............................................................. 31
4.15 Taxes................................................................ 31
4.16 Intellectual Property ............................................... 32
4.17 Capital Expenditures................................................. 32
4.18 Compliance with Laws................................................. 32
4.19 Disclaimers Regarding Purchased Assets............................... 33
4.20 Transmission ........................................................ 33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYERS
5.1 Organization......................................................... 34
5.2 Authority Relative to this Agreement ................................ 34
5.3 Consents and Approvals; No Violation ................................ 34
5.4 Availability of Funds................................................ 35
5.5 Financial Representations............................................ 35
5.6 Legal Proceedings ................................................... 35
5.7 No Knowledge of Sellers' Breach...................................... 35
5.8 Qualified Buyer ..................................................... 36
5.9 Inspections ......................................................... 36
5.10 WARN Act............................................................. 36
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Conduct of Business Relating to the Purchased Assets.................. 36
6.2 Access to Information................................................. 38
6.3 Public Statements .................................................... 41
6.4 Expenses ............................................................. 41
6.5 Further Assurances ................................................... 41
6.6 Consents and Approvals ............................................... 43
6.7 Fees and Commissions.................................................. 45
6.8 Tax Matters........................................................... 45
6.9 Advice of Changes..................................................... 46
6.10 Employees............................................................ 47
6.11 Risk of Loss ........................................................ 51
6.12 Additional Covenants of Buyer ....................................... 52
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Buyer ................................... 52
7.2 Conditions to Obligations of Sellers ................................. 54
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification....................................................... 57
8.2 Defense of Claims..................................................... 59
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1 Termination........................................................... 61
9.2 Procedure and Effect of No-Default Termination........................ 63
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Several Liability of Each Seller ................................... 63
10.2 Amendment and Modification.......................................... 63
10.3 Waiver of Compliance; Consents ..................................... 63
10.4 No Survival ........................................................ 63
10.5 Notices............................................................. 64
10.6 Assignment.......................................................... 65
10.7 Governing Law....................................................... 66
10.8 Counterparts........................................................ 66
10.9 Interpretation...................................................... 66
10.10 Schedules and Exhibits ............................................. 66
10.11 Entire Agreement ................................................... 66
10.12 Bulk Sales Laws .................................................... 67
10.13 U.S. Dollars........................................................ 67
10.14 Zoning Classification............................................... 67
10.15 Sewage Facilities................................................... 67
LIST OF EXHIBITS AND SCHEDULES
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EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C Form of Easement and Attachment Agreement
Exhibit D Form of FIRPTA Affidavit
Exhibit E Form of Interconnection Agreement
Exhibit F Form of Special Warranty Deed
Exhibit G Form of Transition Power Purchase Agreement
Exhibit H Guaranty
SCHEDULES
1.1(69) Permitted Encumbrances
1.1(97) Transferable Permits (both environmental and non-environmental)
2.1 Schedule of Purchased Assets
2.1(c) Schedule of Tangible Personal Property to be Conveyed
to Buyer
2.1(h) Schedule of Emission Reduction Credits
2.1(1) Intellectual Property
2.2(a) Description of Transmission and other Assets not
included in Conveyance
3.3(a)(i) Schedule of Inventory
4.3(a) Third Party Consents
4.3(b) Sellers' Required Regulatory Approvals
4.4 Insurance Exceptions
4.5 Exceptions to Title
4.6 Real Property Leases
4.7 Schedule of Environmental Matters
4.8 Schedule of Noncompliance with Employment Laws
4.9(a) Schedule of Benefit Plans
4.9(b) Benefit Plan Exceptions
4.10 Description of Real Property
4.11 Notices of Condemnation
4.12(a) List of Contracts
4.12(b) List of Non-assignable Contracts
4.12(c) List of Defaults under the Contracts
4.13 List of Litigation
4.14(a) List of Permit Violations
4.14(b) List of material Permits (other than Transferable
Permits)
4.15 Tax Matters
4.16 Intellectual Property Exceptions
5.3(a) Third Party Consents
5.3(b) Buyer's Required Regulatory Approvals
6.1 Schedule of Permitted Activities prior to Closing
6.10(b) Schedule of Non-Union Employees
6.10(d) IBEW Collective Bargaining Agreement
6.10(h) Schedule of Severance Benefits
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT, dated as of August 1, 1998, by and among
Pennsylvania Electric Company, a Pennsylvania corporation ("Penelec"), New York
State Electric & Gas Corporation, a New York corporation ("NYSEG"), NGE
Generation, Inc., a New York corporation ("NGE"), (Penelec, NGE and
NYSEG, collectively, "Sellers"), and Mission Energy Westside, Inc., a
California corporation ("Buyer"). Sellers and Buyer are referred to
individually as a "Party," and collectively as the "Parties."
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, each of Penelec and NGE owns as tenant-in-common a 50% undivided
interest in the Xxxxx City Electric Generating Station (the "Facility")
located near Indiana, Pennsylvania, and certain facilities and other assets
associated therewith and ancillary thereto; and
WHEREAS, Penelec and NGE have heretofore agreed jointly to divest
themselves of the Facility;
WHEREAS, Buyer, a wholly owned subsidiary of Edison Mission Energy, a
California corporation ("Buyer Parent", and together with Buyer, "Buyer
Entities") desires to purchase and assume, and Penelec and NGE desire to sell
and assign, the Purchased Assets (as defined in Section 2.1 below) and
certain associated liabilities, upon the terms and conditions hereinafter set
forth in this Agreement;
WHEREAS, to induce Sellers to execute this Agreement, Buyer Parent is
executing and delivering a certain Guaranty dated the date hereof ("Guaranty")
in favor of Sellers.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Definitions. As used in this Agreement, the following terms
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have the meanings specified in this Section 1.1.
(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the General
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Rules and Regulations under the Securities Exchange Act of 1934.
(2) "Agreement" means this Asset Purchase Agreement together with
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the Schedules and Exhibits hereto, as the same may be from time to time amended.
(3) "Ancillary Agreements" means the Interconnection Agreement,
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the Easement and Attachment Agreement and the Transition Power Purchase
Agreements, as the same may be from time to time amended.
(4) "Assignment and Assumption Agreement" means the Assignment
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and Assumption Agreement between Sellers and Buyer substantially in the
form of Exhibit A hereto, by which Sellers shall subject to the terms and
conditions hereof, assign the Sellers' Agreements, the Real Property Leases,
certain intangible assets and other Purchased Assets to Buyer and
whereby Buyer shall assume the Assumed Liabilities.
(5) "Assumed Liabilities" has the meaning set forth in Section 2.3.
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(6) "Benefit Plans" has the meaning set forth in Section 4.9.
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(7) "Xxxx of Sale" means the Xxxx of Sale, substantially in the form of
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Exhibit B hereto, to be delivered at the Closing, with respect to the Tangible
Personal Property included in the Purchased Assets transferred to Buyer at the
Closing.
(8) "Buyer Material Adverse Effect" has the meaning set forth in
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Section 5.3(a).
(9) "Business Day" shall mean any day other than Saturday,
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Sunday and any day on which banking institutions in New York State or the
Commonwealth of Pennsylvania are authorized by law or other governmental action
to close.
(10) "Buyer Benefit Plans" has the meaning set forth in Section 6.10(f).
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(11) "Buyer Indemnitee" has the meaning set forth in Section 8.1(b).
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(12) "Buyer Required Regulatory Approvals" has the meaning set forth in
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Section 5.3(b).
(13) "Capital Expenditures" has the meaning set forth in Section 3.3(a).
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(14) "CERCLA" means the Federal Comprehensive Environmental
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Response, Compensation, and Liability Act, as amended.
(15) "Closing" has the meaning set forth in Section 3.1.
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(16) "Closing Adjustment" has the meaning set forth in Section 3.3(b).
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(17) "Closing Date" has the meaning set forth in Section
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3.1.
(18) "COBRA" means the Consolidated Omnibus Budget
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Reconciliation Act of 1985, as amended.
(19) "Code" means the Internal Revenue Code of 1986, as amended.
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(20) "Commercially Reasonable Efforts" means efforts which are reasonably
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within the contemplation of the Parties at the time of executing this Agreement
and which do not require the performing Party to expend any funds other
than expenditures which are customary and reasonable in transactions of the
kind and nature contemplated by this Agreement in order for the
performing Party to satisfy its obligations hereunder.
(21) "Confidentiality Agreement" means the Confidentiality Agreement,
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dated April 1, 1998, by and among Sellers and Buyer Parent.
(22) "Direct Claim" has the meaning set forth in Section 8.2(c).
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(23) "Easements" means, with respect to the Purchased Assets, the
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easements and access rights to be granted by Buyer to Penelec and NYSEG
pursuant to the Easement and Attachment Agreement, including, without
limitation, easements authorizing access, use, maintenance, construction,
repair, replacement and other activities by Penelec and NYSEG, as further
described in the Easement and Attachment Agreement.
(24) "Easement and Attachment Agreement" means the Easement,
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License and Attachment Agreement between Buyer, Penelec and NYSEG, in the form
of Exhibit C hereto, executed on the date hereof, whereby Buyer will provide
Penelec and NYSEG with Easements with respect to the Real Property
transferred to Buyer and whereby Penelec and NYSEG will provide Buyer with
certain attachment rights with respect to certain real property owned by Penelec
and NYSEG.
(25) "Emission Allowance" means all present and future
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authorizations to emit specified units of pollutants or Hazardous Substances,
which units are established by the Governmental Authority with
jurisdiction over the Plant under (i) an air pollution control and
emission reduction program designed to mitigate global warming, interstate
or intra-state transport of air pollutants; (ii) a program designed to mitigate
impairment of surface waters, watersheds, or groundwater; or (iii) any
pollution reduction program with a similar purpose. Allowances include
allowances, as described above, regardless as to whether the Governmental
Authority establishing such Allowances designates such allowances by a
name other than "allowances."
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(26) "Emission Reduction Credits" means credits, in units that are
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established by the Governmental Authority with jurisdiction over the
Plant that has obtained the credits, resulting from reductions in the
emissions of air pollutants from an emitting source or facility (including,
without limitation, and to the extent allowable under applicable law, reductions
from shut-downs or control of emissions beyond that required by
applicable law) that: (i) have been identified by the PaDEP as complying with
applicable Pennsylvania law governing the establishment of such
credits (including, without limitation, that such emissions reductions
are enforceable, permanent, quantifiable and surplus) and listed in the
Emissions Reduction Credit Registry maintained by the PaDEP or with respect to
which such identification and listing are pending; or (ii) have been certified
by any other applicable Governmental Authority as complying with the
law and regulations governing the establishment of such credits
(including, without limitation, certification that such emissions
reductions are enforceable, permanent, quantifiable and surplus). The term
includes Emission Reduction Credits that have been approved by the PaDEP and are
awaiting USEPA approval. The term also includes certified air emissions
reductions, as described above, regardless as to whether the
Governmental Authority certifying such reductions designates such
certified air emissions reductions by a name other than "emission
reduction credits."
(27) "Encumbrances" means any mortgages, pledges, liens, security
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interests, conditional and installment sale agreements, activity and use
limitations, conservation easements, deed restrictions, encumbrances and
charges of any kind.
(28) "Environmental Claim" means any and all pending and/or
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threatened administrative or judicial actions, suits, orders, claims,
liens, notices, notices of violations, investigations, complaints,
requests for information, proceedings, or other written communication,
whether criminal or civil, pursuant to or relating to any applicable
Environmental Law by any person (including, but not limited to, any
Governmental Authority, private person and citizens' group) based upon,
alleging, asserting, or claiming any actual or potential (a) violation of, or
liability under any Environmental Law, (b) violation of any Environmental
Permit, or (c) liability for investigatory costs, cleanup costs, removal
costs, remedial costs, response costs, natural resource damages, property
damage, personal injury, fines, or penalties arising out of, based on, resulting
from, or related to the presence, Release, or threatened Release into
the environment of any Hazardous Substances at any location related to
the Purchased Assets, including, but not limited to, any off-Site location to
which Hazardous Substances, or materials containing Hazardous
Substances, were sent for handling, storage, treatment, or disposal.
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(29) "Environmental Condition" means the presence or Release to the
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environment, whether at the Site or at an off-Site location, of Hazardous
Substances, including any migration of those Hazardous Substances through
air, soil or groundwater to or from the Site or any off-Site location regardless
of when such presence or Release occurred or is discovered.
(30) "Environmental Laws" means all Federal, state and local,
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provincial and foreign, civil and criminal laws, regulations, rules, ordinances,
codes, decrees, judgments, directives, or judicial or administrative orders
relating to pollution or protection of the environment, natural resources or
human health and safety, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Substances (including, without
limitation, Releases to ambient air, surface water, groundwater, land, surface
and subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport, disposal or handling
of Hazardous Substances. "Environmental Laws" include, without limitation,
CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. Sections 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et
seq.), the Clean Air Act (42 U.S.C. Sections 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Sections 2601 et seq.), the Oil Pollution Act (33 U.S.C.
Sections 2701 et seq.), the Emergency Planning and Community Right-to-Know Act
(42 U.S.C. Sections 11001 et seq.), the Occupational Safety and Health Act (29
U.S.C. Sections 651 et seq.),the Pennsylvania Hazardous Sites Cleanup Act (35
P.S. g 6020.101 et seq.), the Pennsylvania Solid Waste Management Act (35 P.S.
Section 6018.101 et seq.), the Pennsylvania Clean Stream Law (35 P.S. Section
691.1 et seq.) and all other state laws analogous to any of the above.
(31) "Environmental Permits" has the meaning set forth in Section
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4.7(a).
(32) "ERISA" means the Employee Retirement Income Security Act of 1974,
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as amended.
(33) "ERISA Affiliate" has the meaning set forth in Section 2.4(j).
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(34) "ERISA Affiliate Plans" has the meaning set forth in Section
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2.4(j).
(35) "Estimated Adjustment" has the meaning set forth in Section 3.3(b).
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(36) "Estimated Closing Statement" has the meaning set forth in Section
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3.3(b).
(37) "Excluded Assets" has the meaning set forth in Section 2.2.
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(38) "Excluded Liabilities" has the meaning set forth in Section 2.4.
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(39) "Facilities Act" has the meaning set forth in Section 10.15.
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(40) "FERC" means the Federal Energy Regulatory Commission or any
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successor agency thereto.
(41) "FIRPTA Affidavit" means the Foreign Investment in Real
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Property Tax Act Certification and Affidavit, substantially in the form of
Exhibit D hereto.
(42) "Genco" means GPU Generation, Inc., a Pennsylvania
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corporation and wholly-owned subsidiary of GPU.
(43) "Good Utility Practices" mean any of the practices, methods and
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acts engaged in or approved by a significant portion of the electric utility
industry during the relevant time period, or any of the practices, methods or
acts which, in the exercise of reasonable judgment in light of the facts known
at the time the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practices are not
intended to be limited to the optimum practices, methods or acts to the
exclusion of all others, but rather to be acceptable practices, methods or
acts generally accepted in the industry.
(44) "Governmental Authority" means any federal, state, local or
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other governmental, regulatory or administrative agency, commission, department,
board, or other governmental subdivision, court, tribunal, arbitrating
body or other governmental authority.
(45) "GPU" means GPU, Inc., a Pennsylvania corporation and parent
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company of Penelec.
(46) "Hazardous Substances" means (a) any petrochemical or petroleum
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products, oil or coal ash, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may
contain levels of polychlorinated biphenyls; (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "hazardous
constituents," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants," "pollutants," "toxic
pollutants" or words of similar meaning and regulatory effect under any
applicable Environmental Law; and (c) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
applicable Environmental Law.
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(47) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
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1976, as amended.
(48) "IBEW" means Local 459 of the International Brotherhood of
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Electrical Workers.
(49) "IBEW Collective Bargaining Agreement" has the meaning set forth in
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Section 6.10(d).
(50) "Income Tax" means any federal, state, local or foreign Tax
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(a) based upon, measured by or calculated with respect to net income,
profits or receipts (including, without limitation, capital gains Taxes and
minimum Taxes) or (b) based upon, measured by or calculated with respect to
multiple bases (including, without limitation, corporate franchise taxes) if one
or more of the bases on which such Tax may be based, measured by or calculated
with respect to, is described in clause (a), in each case together with any
interest, penalties, or additions to such Tax.
(51) "Indemnifiable Loss" has the meaning set forth in Section 8.1(a).
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(52) "Indemnifying Party" has the meaning set forth in Section 8.1(e).
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(53) "Indemnitee" has the meaning set forth in Section 8.1(d).
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(54) "Independent Accounting Firm" means such independent accounting firm
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of national reputation as is mutually appointed by Sellers and Buyer.
(55) "Inspection" means all tests, reviews, examinations, inspections,
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investigations, verifications, samplings and similar activities conducted by
Buyer or its agents or Representatives with respect to the Purchased Assets
prior to the Closing.
(56) "Intellectual Property" means all patents and patent rights,
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trademarks and trademark rights, inventions, copyrights and copyright rights
owned by the Sellers and necessary for the operation and maintenance of the
Purchased Assets, and all pending applications for registrations of
patents, trademarks, and copyrights, as set forth as part of Schedule 2.1(1)
(57) "Interconnection Agreement" means the Interconnection Agreement,
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between Penelec, NYSEG and Buyer, in the form of Exhibit E hereto,
executed on the date hereof, under which Penelec and NYSEG will provide
Buyer with interconnection service to certain of their respective
transmission facilities and whereby Buyer will provide Penelec and NYSEG
with continuing access to certain of the Purchased Assets after the Closing
Date.
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(58) "Inventories" means coal, fuel oil or alternative fuel
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inventories, limestone, materials, spare parts, consumable supplies and
chemical and gas inventories relating to the operation of the Plant
located at, or in transit to, the Plant.
(59) "Knowledge" means the actual knowledge of the corporate
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officers or managerial representatives of the specified Person charged with
responsibility for the particular function as of the date of the this
Agreement, or, with respect to any certificate delivered pursuant to this
Agreement, the date of delivery of the certificate.
(60) "Material Adverse Effect" means any change in, or effect on
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the Purchased Assets that is materially adverse to the operations or condition
(financial or otherwise) of the Purchased Assets, taken as a whole, other than:
(a) any change affecting the international, national, regional or local electric
industry as a whole and not Sellers specifically and exclusively; (b) any change
or effect resulting from changes in the international, national,
regional or local wholesale or retail markets for electric power; (c) any
change or effect resulting from changes in the international, national, regional
or local markets for any fuel used in connection with the Purchased Assets; (d)
any change or effect resulting from, changes in the North American,
national, regional or local electric transmission systems or operations
thereof; (e) any materially adverse change in or effect on the Purchased
Assets which is cured (including by the payment of money) by the Sellers before
the Termination Date; (f) any order of any court or Governmental Authority or
legislature applicable to providers of generation, transmission or
distribution of electricity generally that imposes restrictions, regulations or
other requirements thereon; and (g) any change or effect resulting from
action or inaction by a Governmental Authority with respect to an
independent system operator or retail access in Pennsylvania or New York.
(61) "Mine Indemnities" means the indemnification agreements
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included in (x) the Termination Agreement, dated as of February 11, 1993,
among NYSEG, Penelec, The Xxxxx Mining Company, The Valley Camp Coal
Company and Quaker State Corporation and (y) Amendment No. 5 to the Coal
Sales Agreement, dated November 22, 1994, among NYSEG, Penelec, Helvetia
Coal Company and Rochester & Pittsburgh Coal Company.
(62) "Mines" means the Xxxxx and Helvetia coal mines and associated
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facilities which are located on the Real Property.
(63) "Non-Union Employees" has the meaning as set forth in Section
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6.10(b).
(64) "NYDEC" means the New York Department of Environmental
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Conservation and any successor agency thereto.
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(65) "NYPSC" means the Public Service Commission of the State of New York
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and any successor agency thereto.
(66) "PaPUC" means the Pennsylvania Public Utility Commission
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and any successor agency thereto.
(67) "PaDEP" means the Pennsylvania Department of Environmental
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Protection and any successor agency thereto.
(68) "Permits" has the meaning set forth in Section 4.14.
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(69) "Permitted Encumbrances" means: (i) the Easements; (ii) those
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exceptions to title to the Purchased Assets listed in Schedule 4.5 and those
Encumbrances set forth in Schedule 1.1(69); (iii) statutory liens for Taxes
or other governmental charges or assessments not yet due or delinquent or the
validity of which is being contested in good faith by appropriate
proceedings provided that the aggregate amount being so contested does not
exceed $500,000; (iv) mechanics', carriers', workers', repairers' and other
similar liens arising or incurred in the ordinary course of business relating
to obligations as to which there is no default on the part of the Sellers or the
validity of which are being contested in good faith, and which do not,
individually or in the aggregate, exceed $500,000; (v) zoning, entitlement,
conservation restriction and other land use and environmental regulations
by Governmental Authorities; and (vi) such other liens, imperfections in or
failure of title, charges, easements, restrictions and Encumbrances which do not
materially, individually or in the aggregate, detract from the value of the
Purchased Assets as currently used or materially interfere with the present
use of the Purchased Assets and neither secure indebtedness, nor
individually or in the aggregate create a Material Adverse Effect.
(70) "Person" means any individual, partnership, limited liability
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company, joint venture, corporation, trust, unincorporated
organization, or governmental entity or any department or agency thereof.
(71) "Plant" means the three-unit coal-fired generating station and
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related assets as more fully identified on Schedule 2.1 attached hereto.
(72) "Post-Closing Adjustment" has the meaning set forth in Section
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3.3(c).
(73) "Post-Closing Statement" has the meaning set forth in Section
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3.3(c).
(74) "Proposed Post-Closing Adjustment" has the meaning set forth in
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Section 3.3(c).
(75) "Proprietary Information" of a Party means all information
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about the Party or its Affiliates, including their
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respective properties or operations, furnished to the other Party or its
Representatives by the Party or its Representatives, after the date hereof,
regardless of the manner or medium in which it is furnished. Proprietary
Information does not include information that: (a) is or becomes generally
available to the public, other than as a result of a disclosure by the other
Party or its Representatives; (b) was available to the other Party on a
nonconfidential basis prior to its disclosure by the Party or its
Representatives; (c) becomes available to the other Party on a nonconfidential
basis from a person, other than the Party or its Representatives, who is not
otherwise bound by a confidentiality agreement with the Party or its
Representatives, or is not otherwise under any obligation to the Party
or any of its Representatives not to transmit the information to the
other Party or its Representatives; (d) is independently developed by the other
Party; or (e) was disclosed pursuant to the Confidentiality Agreement and
remains subject to the terms and conditions of the Confidentiality Agreement.
(76) "Purchased Assets" has the meaning set forth in Section 2.1.
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(77) "Purchase Price" has the meaning set forth in Section 3.2.
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(78) "Qualifying Offer" has the meaning set forth in Section 6.10(b).
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(79) "Real Property" has the meaning set forth in Section 2.1(a).
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(80) "Real Property Leases" has the meaning set forth in Section 4.6.
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(81) "Release" means release, spill, leak, discharge, dispose of, pump,
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pour, emit, empty, inject, xxxxx, dump or allow to escape into or through the
environment.
(82) "Remediation" means action of any kind to address a Release or the
------------
presence of Hazardous Substances at the Site or an off-Site location including,
without limitation, any or all of the following activities to the extent they
relate to or arise from the presence of a Hazardous Substance at the Site or an
off-Site location: (a) monitoring, investigation, assessment,
treatment, cleanup, containment, removal, mitigation, response or restoration
work; (b) obtaining any permits, consents, approvals or authorizations of any
Governmental Authority necessary to conduct any such activity; (c)
preparing and implementing any plans or studies for any such activity; (d)
obtaining a written notice from a Governmental Authority with jurisdiction over
the Site or an off-Site location under Environmental Laws that no material
additional work is required by such Governmental Authority; (e) the
use, implementation, application, installation, operation or maintenance
of removal actions on the
10
Site or an off-Site location, remedial technologies applied to the surface or
subsurface soils, excavation and off-Site treatment or disposal of soils,
systems for long term treatment of surface water or ground water,
engineering controls or institutional controls; and (f) any other activities
reasonably determined by a Party to be necessary or appropriate or required
under Environmental Laws to address the presence or Release of Hazardous
Substances at the Site or an off-Site location.
(83) "Replacement Welfare Plans" has the meaning set forth in Section
--------------------------
6.10(e)
(84) "Representatives" of a Party means the Party's Affiliates and
----------------
their directors, officers, employees, agents, partners, advisors (including,
without limitation, accountants, counsel, environmental consultants, financial
advisors and other authorized representatives) and parents and other
controlling persons.
(85) "SEC" means the Securities and Exchange Commission and any
----
successor agency thereto.
(86) "Sellers' Agreements" means those contracts, agreements,
----------------------
licenses and leases relating to the ownership, operation and maintenance
of the Plant and being assigned to Buyer as part of the Purchased
Assets, including without limitation the IBEW Collective Bargaining Agreement.
(87) "Sellers' Indemnitee" has the meaning set forth in Section 8.1 (a).
--------------------
(88) "Sellers' Required Regulatory Approvals" has the meaning set forth in
---------------------------------------
Section 4.3(b).
(89) "Site" means the Real Property (including improvements)
-----
forming a part of, or used or usable in connection with the operation of, the
Plant, including any disposal sites included in Real Property. Any
reference to the Site shall include, by definition, the surface and
subsurface elements, including the soils and groundwater present at the Site,
and any reference to items "at the Site" shall include all items "at, on, in,
upon, over, across, under and within" the Site.
(90) "Subsidiary" when used in reference to any Person means any
-----------
entity of which outstanding securities having ordinary voting power to elect a
majority of the Board of Directors or other Persons performing similar
functions of such entity are owned directly or indirectly by such Person.
(91) Reserved.
(92) "Tangible Personal Property" has the meaning set forth in Section
---------------------------
2.1(c).
11
(93) "Taxes" means all taxes, charges, fees, levies, penalties or
------
other assessments imposed by any federal, state or local or foreign taxing
authority, including, but not limited to, income, excise, property, sales,
transfer, franchise, payroll, withholding, social security, gross
receipts, license, stamp, occupation, employment or other taxes, including
any interest, penalties or additions attributable thereto.
(94) "Tax Return" means any return, report, information return,
------------
declaration, claim for refund or other document (including any
schedule or related or supporting information) required to be supplied to
any taxing authority with respect to Taxes including amendments thereto.
(95) "Termination Date" has the meaning set forth in Section
------------------
9.1(b).
(96) "Third Party Claim" has the meaning set forth in Section
--------------------
8.2(a).
(97) "Transferable Permits" means those Permits and Environmental
----------------------
Permits which may be transferred to Buyer without a filing with, notice to,
consent or approval of any Governmental Authority, and are set forth in Schedule
1.1 (97).
(98) "Transferred Employees" means Transferred Non-Union Employees and
-----------------------
Transferred Union Employees.
(99) "Transferred Non-Union Employees" has the meaning set forth in
--------------------------------
Section 6.10(b).
(100) "Transferred Union Employees" has the meaning set forth in
------------------------------
Section 6.10(b).
(101) "Transferring Employee Records" means records related to Sellers'
------------------------------
personnel who will become employees of Buyer only to the extent such files
pertain to: (i) skill and development training and biographies, (ii)
seniority histories, (iii) salary and benefit information, (iv)
Occupational, Safety and Health Administration reports, and (v) active
medical restriction forms.
(102) "Transition Power Purchase Agreements" means the agreements
----------------------------------------
between Penelec and Buyer and NYSEG and Buyer, respectively, in the form
of Exhibit G hereto, executed on the date hereof, relating to the sale of
installed capacity to Penelec and NYSEG, respectively, for a specified period
of time following the Closing Date.
(103) "Transmission Assets" has the meaning set forth in Section 2.2(a).
--------------------
(104) "USEPA" means the United States Environmental Protection
------
Agency and any successor agency thereto.
12
(105) "Year 2000 Compliant" has the meaning set forth in Section 4.19.
--------------------
"Year 2000 Compliance" has a meaning correlative to the foregoing.
---------------------
(106) "WARN Act" means the Federal Worker Adjustment Retraining and
----------
Notification Act of 1988, as amended.
1.2 Certain Interpretive Matters. In this Agreement, unless the
------------------------------
context otherwise required, the singular shall include the plural, the masculine
shall include the feminine and neuter, and vice versa. The term "includes" or
"including" shall mean "including without limitation." References to a
Section, Article, Exhibit or Schedule shall mean a Section, Article,
Exhibit or Schedule of this Agreement, and reference to a given agreement or
instrument shall be a reference to that agreement or instrument as modified,
amended, supplemented and restated through the date as of which such
reference is made.
ARTICLE II
PURCHASE AND SALE
-------- --- ----
2.1 Transfer of Assets. Upon the terms and subject to the satisfaction
-------- -- ------
of the conditions contained in this Agreement, at the Closing each of Penelec
and NGE will sell, assign, convey, transfer and deliver to Buyer, and Buyer will
purchase, assume and acquire from each such Seller, free and clear of
all Encumbrances (except for Permitted Encumbrances), and subject to Section
2.2, all of such Seller's right, title and interest in and to all of the assets
constituting, or used in and necessary for generation purposes to the operation
of, the Plant, including without limitation those assets identified in Schedule
2.1 and those assets described below (but excluding the Excluded Assets), each
as in existence on the Closing Date (collectively, "Purchased Assets"):
-------------------
(a) Those certain parcels of real property (including all buildings,
facilities and other improvements thereon and all appurtenances thereto)
described in Schedule 4.10 (the "Real Property"), but subject to the
----------------
Permitted Encumbrances and those exceptions listed in Schedule 4.5 and
except as otherwise constituting part of the Excluded Assets;
(b) All Inventories and Emission Allowances;
(c) All machinery, mobile or otherwise, equipment (including
communications equipment), vehicles, tools, furniture and furnishings and
other personal property located on the Real Property on the Closing Date,
including, without limitation, the items of personal property included in
Schedule 2.1(c), together with all the personal property of Sellers used
principally in the operation of the Plant and listed in Schedule 2.1(c),
other than
13
property used or primarily usable as part of the Transmission Assets or
otherwise constituting part of the Excluded Assets (collectively,
"Tangible Personal Property");
----------------------------
(d) Subject to the provisions of Section 6.5(c), all Sellers'
Agreements;
(e) Subject to the provisions of Section 6.5(c), all Real Property
Leases;
(f) All Transferable Permits;
(g) All books, operating records, operating, safety and
maintenance manuals, engineering design plans, documents, blueprints and
as built plans, specifications, procedures and similar items of
Sellers relating specifically to the aforementioned assets and
necessary for the operation of the Plant (subject to the right of Sellers
to retain copies of same for their use) other than such items which are
proprietary to third parties and accounting records;
(h) All Emission Reduction Credits associated with the Plant and
identified in Schedule 2.1(h) that have accrued prior to, or that accrue on or
after, the date of this Agreement but prior to the Closing Date;
(i) All unexpired, transferable warranties and guarantees
from third parties with respect to any item of Real Property or personal
property constituting part of the Purchased Assets, as of the Closing Date;
(j) The name of the Plant. It is expressly understood that Sellers
are not assigning or transferring to Buyer any right to use the name
"Pennsylvania Electric Company", "Penelec", "GPU", "GPU Energy", "GPU
Generation", "GPU Genco", "New York State Electric & Gas Corporation",
"NYSEG", "NGE" or "NGE Generation" or any related or similar trade names,
trademarks, service marks, corporate names and logos or any part, derivative or
combination thereof;
(k) All drafts, memoranda, reports, information, technology,
and specifications relating to the Sellers' plans for Year 2000 Compliance;
(l) The Intellectual Property described on Schedule 2.1(1); and
(m) The substation equipment set forth in Schedule A to the
Interconnection Agreement and designated therein as being transferred to Buyer.
2.2 Excluded Assets. Notwithstanding anything to the contrary in
----------------
this Agreement, nothing in this Agreement will constitute or be construed
as conferring on Buyer, and Buyer is
14
not acquiring, any right, title or interest in or to the following
specific assets which are associated with the Purchased Assets, but which are
hereby specifically excluded from the sale and the definition of Purchased
Assets herein (the "Excluded Assets"):
-----------------
(a) Except as expressly identified in Schedule 2.1(c), the
electrical transmission or distribution facilities (as opposed to
generation facilities) of Sellers or any of their Affiliates located at
the Site or forming part of the Plant (whether or not regarded as a
"transmission" or "generation" asset for regulatory or accounting
purposes), including all switchyard facilities, substation facilities
and support equipment, as well as all permits, contracts and warranties, to
the extent they relate to such transmission and distribution assets
(collectively, the "Transmission Assets"), and those certain assets,
----------------------
facilities and agreements all as identified on Schedule 2.2(a) attached hereto;
(b) Certain switches and meters in the Plant, gas facilities,
revenue meters and remote testing units, drainage pipes and systems, as
identified in the Easement and Attachment Agreement;
(c) Certificates of deposit, shares of stock, securities,
bonds, debentures, evidences of indebtedness, and interests in joint
ventures, partnerships, limited liability companies and other entities;
(d) All cash, cash equivalents, bank deposits, accounts
and notes receivable (trade or otherwise), and any income, sales, payroll
or other tax receivables;
(e) The rights of Sellers and their Affiliates to the names
"Pennsylvania Electric Company", "Penelec", "GPU", "GPU Energy", "GPU
Generation", "GPU Genco", "New York State Electric & Gas Corporation", "NYSEG",
"NGE" and "NGE Generation" or any related or similar trade names,
trademarks, service marks, corporate names or logos, or any part, derivative
or combination thereof;
(f) All tariffs, agreements and arrangements to which Sellers are a
party for the purchase or sale of electric capacity and/or energy or for the
purchase of transmission or ancillary services;
(g) The rights of Sellers in and to any causes of action against
third parties (including indemnification and contribution) relating to any Real
Property or personal property, Permits, Environmental Permits, Taxes, Real
Property Leases or Sellers' Agreements, if any, including any claims for
refunds, prepayments, offsets, recoupment, insurance proceeds, condemnation
awards, judgments and the like, whether received as payment or credit against
future liabilities, relating
15
specifically to the Plant or the Site and relating to any period prior to the
Closing Date except that Buyer shall be deemed to be a third party beneficiary
of the Mine Indemnitees to the extent permitted by such agreements;
(h) All personnel records of Sellers or their Affiliates
relating to the Transferred Employees other than Transferring Employee
Records or other records, the disclosure of which is required by law, or
legal or regulatory process or subpoena; and
(i) Any and all of Sellers' rights in any contract representing
an intercompany transaction between Sellers and an Affiliate of Sellers, whether
or not such transaction relates to the provision of goods and services,
payment arrangements, intercompany charges or balances, or the like.
2.3 Assumed Liabilities. On the Closing Date, Buyer shall deliver to
-------------------
Sellers the Assignment and Assumption Agreement pursuant to which Buyer
shall assume and agree to discharge when due, without recourse to Sellers,
all of the following liabilities and obligations of Sellers, direct or
indirect, known or unknown, absolute or contingent, which relate to the
Purchased Assets, other than Excluded Liabilities, in accordance with the
respective terms and subject to the respective conditions thereof (collectively,
"Assumed Liabilities"):
--------------------
(a) All liabilities and obligations of Sellers arising on or after
the Closing Date under the Sellers' Agreements, the Real Property Leases, and
the Transferable Permits in accordance with the terms thereof, including,
without limitation, (i) the contracts, licenses, agreements and personal
property leases entered into by Sellers with respect to the Purchased Assets,
whether or not disclosed on Schedule 4.12(a) and (ii) the contracts,
licenses, agreements and personal property leases entered into by
Sellers with respect to the Purchased Assets after the date hereof
consistent with the terms of this Agreement, except in each case to the
extent such liabilities and obligations, but for a breach or default by Sellers,
would have been paid, performed or otherwise discharged on or prior to the
Closing Date or to the extent the same arise out of any such breach or default
or out of any event which after the giving of notice would constitute a default
by Sellers;
(b) All liabilities and obligations associated with the
Purchased Assets in respect of Taxes for which Buyer is liable pursuant
to Sections 3.5 or 6.8(a) hereof;
(c) All liabilities and obligations with respect to the
Transferred Employees on and after the Closing Date for which (i) Buyer is
responsible pursuant to Section 6.10 and (ii) the grievances and arbitration
proceedings arising out of or under the Collective Bargaining Agreement prior to
(as set forth in Schedule 4.8), on or after the Closing Date;
16
(d) Any liability, obligation or responsibility under or related to
Environmental Laws or the common law, whether such liability or obligation or
responsibility is known or unknown, contingent or accrued, arising as a result
of or in connection with (i) any violation or alleged violation of
Environmental Laws, whether prior to, on or after the Closing Date,
with respect to the ownership or operation of any of the Purchased Assets,
including, but not limited to, the Mines (except to the extent Sellers receive
indemnity payments under the Mine Indemnities); (ii) loss of life, injury to
persons or property or damage to natural resources (whether or not such loss,
injury or damage arose or was made manifest before the Closing Date or
arises or becomes manifest on or after the Closing Date) caused (or allegedly
caused) by the presence or Release of Hazardous Substances at, on, in, under,
adjacent to or migrating from the Purchased Assets prior to, on or after
the Closing Date, including, but not limited to, Hazardous Substances
contained in building materials at or adjacent to the Purchased Assets or in the
soil, surface water, sediments, groundwater, landfill cells, or in other
environmental media at or near the Purchased Assets; and (iii) the
Remediation (whether or not such Remediation commenced before the Closing
Date or commences on or after the Closing Date) of Hazardous Substances that are
present or have been Released prior to, on or after the Closing Date at, on, in,
under, adjacent to or migrating from, the Purchased Assets or in the soil,
surface water, sediments, groundwater, landfill cells or in other environmental
media at or adjacent to the Purchased Assets; provided, that nothing set
forth in this subsection 2.3(d) shall require Buyer to assume any
liabilities or obligations that are expressly excluded in Section 2.4 including
without limitation liability for toxic torts as set forth in Section
2.4(i); provided, further, however, that nothing set forth in this
subsection 2.3(d) or otherwise herein shall require Buyer to assume any
obligation for payment of fines, penalties or costs imposed by a
Governmental Authority to the extent such obligations arise out of or
relate to acts or omissions of the Sellers prior to the Closing that constitute
violations of the New Source Performance Standards, Prevention of
Significant Deterioration or New Source Review regulations under the Clean Air
Act.
(e) All liabilities and obligations of Sellers with respect to
the Purchased Assets under the agreements or consent orders set forth on
Schedule 4.7 arising on or after the Closing; and
(f) With respect to the Purchased Assets, any Tax that may be imposed
by any federal, state or local government on the ownership, sale, operation or
use of the Purchased Assets on or after the Closing Date, except for any Income
Taxes attributable to income received by Sellers.
17
2.4 Excluded Liabilities. Buyer shall not assume or be obligated to
---------------------
pay, perform or otherwise discharge the following liabilities or obligations
(the "Excluded Liabilities"):
-----------------------
(a) Any liabilities or obligations of Sellers in respect of any
Excluded Assets or other assets of Sellers which are not Purchased Assets;
(b) Any liabilities or obligations in respect of Taxes attributable
to the ownership, operation or use of Purchased Assets for taxable
periods, or portions thereof, ending before the Closing Date, except for
Taxes for which Buyer is liable pursuant to Sections 3.5 or 6.8(a) hereof;
(c) Any liabilities or obligations of Sellers accruing under any of
the Sellers' Agreements prior to the Closing Date;
(d) Any and all asserted or unasserted liabilities or obligations to
third parties (including employees) for personal injury or tort, or similar
causes of action arising solely out of the ownership or operation of the
Purchased Assets prior to the Closing Date, other than any liabilities or
obligations which have been assumed by Buyer under Section 2.3(d);
(e) Any fines, penalties or costs imposed by a Governmental
Authority resulting from (i) an investigation, proceeding, request for
information or inspection before or by a Governmental Authority pending prior to
the Closing Date but only regarding acts which occurred prior to the Closing
Date, or (ii) illegal acts, willful misconduct or gross negligence of Sellers
prior to the Closing Date, other than, any such fines, penalties or costs which
have been assumed by Buyer under Section 2.3(d);
(f) Any payment obligations of Sellers for goods delivered or
services rendered prior to the Closing Date, including, but not limited
to, rental payments pursuant to the Real Property Leases and Personal Property
Leases;
(g) Any liability, obligation or responsibility under or related to
Environmental Laws or the common law, whether such liability or obligation or
responsibility is known or unknown, contingent or accrued, arising as a result
of or in connection with loss of life, injury to persons or property or damage
to natural resources (whether or not such loss, injury or damage arose or was
made manifest before the Closing Date or arises or becomes manifest on or
after the Closing Date) to the extent caused (or allegedly caused) by the
off-Site disposal, storage, transportation, discharge, Release, or recycling
of Hazardous Substances, or the arrangement for such activities, of Hazardous
Substances, prior to the Closing Date, in connection with the ownership or
operation of the Purchased Assets, provided that for purposes of this Section
"off-Site" does not include any location to which Hazardous Substances
disposed of or Released at the Purchased Assets have migrated;
18
(h) Any liability, obligation or responsibility under or related to
Environmental Laws or the common law, whether such liability or obligation or
responsibility is known or unknown, contingent or accrued, arising as a result
of or in connection with the investigation and/or Remediation (whether or not
such investigation or Remediation commenced before the Closing Date or commences
on or after the Closing Date) of Hazardous Substances that are disposed,
stored, transported, discharged, Released, recycled, or the arrangement of
such activities, prior to the Closing Date, in connection with the ownership
or operation of the Purchased Assets, at any off-Site location, provided that
for purposes of this Section "off-Site" does not include any location to which
Hazardous Substances disposed of or Released at the Purchased Assets have
migrated;
(i) Third party liability for toxic torts arising as a result of or
in connection with loss of life or injury to persons (whether or not such loss
or injury arose or was made manifest on or after the Closing Date) caused (or
allegedly caused) by the presence or Release of Hazardous Substances at, on,
in, under, adjacent to or migrating from the Purchased Assets prior to the
Closing Date;
(j) Subject to Section 6.10, any liabilities or obligations
relating to any Benefit Plan maintained by the Sellers or any trade or
business (whether or not incorporated) which is or ever has been under common
control, or which is or ever has been treated as a single employer, with a
Seller under Section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") or
--------------------
to which a Seller and any ERISA Affiliate contributed thereunder (the
"ERISA Affiliate Plans"), including any multi-employer plan, maintained by,
------------------------
contributed to, or obligated to contribute to, at any time, by a Seller or
any ERISA Affiliate, including but not limited to any liability (i)
relating to benefits payable under any Benefit Plans (ii) relating to the
Pension Benefit Guaranty Corporation under Title IV of ERISA; (iii) relating to
a multi-employer plan; (iv) with respect to non-compliance with the notice and
benefit continuation requirements of COBRA; (v) with respect to any
noncompliance with ERISA or any other applicable laws; or (vi) with respect to
any suit, proceeding or claim which is brought against Buyer, any Benefit Plan,
ERISA Affiliate Plan, any fiduciary or former fiduciary of any such Benefit Plan
or ERISA Affiliate Plan;
(k) Subject to Section 6.10, any liabilities or obligations
relating to the employment or termination of employment, including
discrimination, wrongful discharge, unfair labor practices, or constructive
termination by a Seller of any individual, attributable to any actions or
inactions by the Sellers prior to the Closing Date other than such
actions or inactions taken at the written direction of Buyer;
19
(l) Subject to Section 6.10, any obligations for wages,
overtime, employment taxes, severance pay, transition payments in respect
of compensation or similar benefits accruing or arising prior to the Closing
under any term or provision of any contract, plan, instrument or agreement
relating to any of the Purchased Assets; and
(m) Any liability of a Seller arising out of a breach by a Seller or
any of its Affiliates of any of their respective obligations under this
Agreement or the Ancillary Agreements.
2.5 Control of Litigation. The Parties agree and acknowledge
-----------------------
that Sellers shall be entitled exclusively to control, defend and
settle any litigation, administrative or regulatory proceeding, and any
investigation or Remediation activities (including without limitation any
environmental mitigation or Remediation activities), arising out of or related
to any Excluded Liabilities, and Buyer agrees to cooperate fully in connection
therewith.
ARTICLE III
THE CLOSING
-----------
3.1 Closing. Upon the terms and subject to the satisfaction
-------
of the conditions contained in Article VII of this Agreement, the sale,
assignment, conveyance, transfer and delivery of the Purchased Assets to
Buyer, the payment of the Purchase Price to Sellers, and the consummation
of the other respective obligations of the Parties contemplated by this
Agreement shall take place at a closing (the "Closing"), to be held at the
---------
offices of Berlack, Israels & Xxxxxxxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx at 10:00 a.m. local time, or another mutually acceptable time and
location, on the date that is fifteen (15) Business Days following the date on
which the last of the conditions precedent to Closing set forth in Article VII
of this Agreement have been either satisfied or waived by the Party for whose
benefit such conditions precedent exist or such other date as the Parties
may mutually agree. The date of Closing is hereinafter called the "Closing
--------
Date." The Closing shall be effective for all purposes as of 12:01
----
a.m. on the Closing Date.
3.2 Payment of Purchase Price. Upon the terms and subject to the
-------------------------
satisfaction of the conditions contained in this Agreement, in
consideration of the aforesaid sale, assignment, conveyance, transfer and
delivery of the Purchased Assets, Buyer will pay or cause to be paid to
Sellers at the Closing an aggregate amount of one billion, eight hundred and
one million United States Dollars(U.S. $1,801,000,000.00) (the "Purchase
---------
Price") plus or minus any adjustments pursuant to the provisions
------
20
of this Agreement, by wire transfer of immediately available funds
denominated in U.S. dollars or by such other means as are agreed upon by Sellers
and Buyer.
3.3 Adjustment to Purchase Price. (a) Subject to Section 3.3(b), at the
----------------------------
Closing, the Purchase Price shall be adjusted, without duplication, to account
for the items set forth in this Section 3.3(a):
(i) The Purchase Price shall be increased or decreased, as
applicable, to reflect the difference between the book value of all
Inventories as of the Closing Date and the value of all Inventories as
of December 31, 1997 reflected on Schedule 3.3(a)(i).
(ii) The Purchase Price shall be adjusted to account for
the items prorated as of the Closing Date pursuant to Section 3.5.
(iii) The Purchase Price shall be increased by the amount
expended, or for which liabilities are incurred, by Sellers between the
date hereof and the Closing Date for capital additions to or replacements
of property, plant and equipment included in the Purchased Assets and
other expenditures or repairs on property, plant and equipment
included in the Purchased Assets that would be capitalized by Sellers in
accordance with normal accounting policies of Sellers and their
Affiliates (together, "Capital Expenditures"), which are not described
----------------------
on Schedule 6.1 and which either (A) are mandated after the date of
this Agreement by any Governmental Authority (subject to Buyer's right to
direct Sellers to contest such mandates by appropriate proceedings
at Buyer's expense and provided there is no adverse impact on the
Purchased Assets); or (B) do not fall within category (A) above but do not
exceed in the aggregate $500,000; or (C) are approved in writing by Buyer.
(b) At least ten (10) Business Days prior to the Closing Date,
Sellers shall prepare and deliver to Buyer an estimated closing statement
(the "Estimated Closing Statement") that shall set forth Sellers' best
estimate of all estimated adjustments to the Purchase Price required by
Section 3.3(a) (the "Estimated Adjustment"). Within five (5) Business Days
----------------------
following the delivery of the Estimated Closing Statement by Sellers to Buyer,
Buyer may object in good faith to the Estimated Adjustment in writing. If
Buyer objects to the Estimated Adjustment, the Parties shall attempt to
resolve their differences by negotiation. If the Parties are unable to do
so within three (3) Business Days prior to the Closing Date (or if Buyer does
not object to the Estimated Adjustment), the Purchase Price shall be adjusted
(the "Closing Adjustment") for the Closing by the amount of the Estimated
--------------------
Adjustment not in dispute. The disputed portion
21
shall be paid as a Post-Closing Adjustment to the extent required by Section
3.3(c).
(c) Within sixty (60) days following the Closing Date, Sellers shall
prepare and deliver to Buyer a final closing statement (the "Post-Closing
-------------
Statement") that shall set forth all adjustments to the Purchase Price required
----------
by Section 3.3(a) (the "Proposed Post-Closing Adjustment"). The Post-Closing
----------------------------------
Statement shall be prepared using the same accounting principles, policies and
methods as Sellers have historically used in connection with the calculation
of the items reflected on such Post-Closing Statement. Within thirty (30)
days following the delivery of the Post-Closing Statement by Sellers to Buyer,
Buyer may object to the Proposed Post-Closing Adjustment in writing. Sellers
agree to cooperate with Buyer to provide Buyer and Buyer's Representatives
information used to prepare the Post-Closing Statement and information
relating thereto. If Buyer objects to the Proposed Post-Closing Adjustment,
the Parties shall attempt to resolve such dispute by negotiation. If
the Parties are unable to resolve such dispute within thirty (30) days of
any objection by Buyer, the Parties shall appoint the Independent Accounting
Firm, which shall, at Sellers' and Buyer's joint expense, review the Proposed
Post-Closing Adjustment and determine the appropriate adjustment to the
Purchase Price, if any, within thirty (30) days of such appointment. The
Parties agree to cooperate with the Independent Accounting Firm and provide it
with such information as it reasonably requests to enable it to
make such determination. The finding of such Independent Accounting Firm
shall be binding on the Parties hereto. Upon determination of the appropriate
adjustment (the "Post-Closing Adjustment") by agreement of the Parties or
-------------------------
by binding determination of the Independent Accounting Firm, if the Post-
Closing Adjustment is more or less than the Closing Adjustment, the Party owing
the difference shall deliver such difference to the other Party no later than
two (2) Business Days after such determination, in immediately available funds
or in any other manner as reasonably requested by the payee.
3.4 Allocation of Purchase Price. Buyer and Sellers shall endeavor to
---------- -- -------- -----
agree upon an allocation among the Purchased Assets of the sum of the
Purchase Price and the Assumed Liabilities consistent with Section 1060 of
the Code and the Treasury Regulations thereunder within sixty (60) days of
the date of this Agreement. Each of Buyer and Sellers agree to file
Internal Revenue Service Form 8594, and all federal, state, local and
foreign Tax Returns, in accordance with any such agreed to allocation.
Each of Buyer and Sellers shall report the transactions contemplated by
this Agreement for federal Tax and all other Tax purposes in a manner
consistent with any such agreed to allocation determined pursuant to this
Section 3.4. Each of Buyer and Sellers agree to provide the other promptly with
any information required to complete Form 8594. Buyer and Sellers shall notify
and provide the other with reasonable assistance in the event of an
examination, audit or other
22
proceeding regarding any allocation of the Purchase Price agreed to pursuant to
this Section 3.4.
3.5 Prorations. (a) Buyer and Sellers agree that all of the items normally
----------
prorated, including those listed below (but not including Income Taxes),
relating to the business and operation of the Purchased Assets shall be prorated
as of the Closing Date, with Sellers liable to the extent such items relate to
any time period prior to the Closing Date, and Buyer liable to the extent such
items relate to periods commencing with the Closing Date (measured in the same
units used to compute the item in question, otherwise measured by calendar
days):
(i) Personal property, real estate and occupancy Taxes,
assessments and other charges, if any, on or with respect to the
business and operation of the Purchased Assets;
(ii) Rent, Taxes and all other items (including prepaid
services or goods not included in Inventory) payable by or to Sellers under
any of the Sellers' Agreements;
(iii) Any permit, license, registration, compliance
assurance fees or other fees with respect to any Transferable Permit;
(iv) Sewer rents and charges for water, telephone, electricity
and other utilities; and
(v) Rent and Taxes and other items payable by Sellers
under the Real Property Leases assigned to Buyer.
(b) In connection with the prorations referred to in (a) above, in
the event that actual figures are not available at the Closing Date, the
proration shall be based upon the actual Taxes or other amounts accrued through
the Closing Date or paid for the most recent year (or other appropriate period)
for which actual Taxes or other amounts paid are available. Such prorated Taxes
or other amounts shall be re-prorated and paid to the appropriate Party
within sixty (60) days of the date that the previously unavailable actual
figures become available. The prorations shall be based on the number of days
in a year or other appropriate period (i) before the Closing Date and (ii)
including and after the Closing Date. Sellers and Buyer agree to furnish each
other with such documents and other records as may be reasonably requested in
order to confirm all adjustment and proration calculations made pursuant to this
Section 3.5.
Notwithstanding anything to the contrary herein, no proration
shall be made under this Section 3.5 with respect to Taxes payable under the
Pennsylvania Public Utility Realty Tax Act ("XXXXX"). Buyer shall be fully
responsible for all Taxes payable under XXXXX for the year in which the Closing
occurs.
23
3.6 Deliveries by Sellers. At the Closing, each of Sellers as to
---------------------
itself will deliver, or cause to be delivered, the following to Buyer:
(a) The Xxxx of Sale, duly executed by Penelec and NGE;
(b) Copies of any and all governmental and other third party
consents, waiver or approvals obtained by Sellers with respect to the transfer
of the Purchased Assets, or the consummation of the transactions contemplated by
this Agreement;
(c) The opinions of counsel and officer's certificates
contemplated by Section 7.1;
(d) One or more special warranty deeds conveying the Real Property
to Buyer, in substantially the form of Exhibit F hereto, duly executed and
acknowledged by Penelec and NGE and in recordable form;
(e) The Assignment and Assumption Agreement, duly executed by
Penelec and NGE;
(f) A FIRPTA Affidavit, duly executed by Sellers;
(g) Copies, certified by the Secretary or Assistant Secretary of
each Seller, of corporate resolutions authorizing the execution and delivery of
this Agreement and all of the agreements and instruments to be executed and
delivered by Sellers in connection herewith; and the consummation of the
transactions contemplated hereby;
(h) A certificate of the Secretary or Assistant Secretary of each
Seller identifying the name and title and bearing the signatures of the
officers of such Seller authorized to execute and deliver this Agreement and the
other agreements and instruments contemplated hereby;
(i) Certificates of Good Standing with respect to the Sellers,
issued by the Secretary of State of each Sellers' state of incorporation, as
applicable;
(j) To the extent available, originals of all Sellers' Agreements,
Real Property Leases and Transferable Permits and, if not available, true and
correct copies thereof;
(k) All such other instruments of assignment, transfer or
conveyance as shall, in the reasonable opinion of Buyer and its counsel, be
necessary or desirable to transfer to Buyer the Purchased Assets, in accordance
with this Agreement and where necessary or desirable in recordable form; and
24
(l) Such other agreements, documents, instruments and writings as are
required to be delivered by Sellers at or prior to the Closing Date pursuant
to this Agreement or otherwise reasonably required in connection herewith.
3.7 Deliveries by Buyer. At the Closing, Buyer will deliver, or
---------------------
cause to be delivered, the following to Sellers:
(a) The Purchase Price, as adjusted pursuant to Section 3.3, by
wire transfer of immediately available funds in accordance with Sellers'
instructions or by such other means as may be agreed to by Sellers and Buyer;
(b) The opinions of counsel and officer's certificates contemplated
by Section 7.2;
(c) The Assignment and Assumption Agreement, duly executed by
Buyer;
(d) Copies, certified by the Secretary or Assistant Secretary of
Buyer and Buyer Parent, respectively, of resolutions authorizing the execution
and delivery of this Agreement, the Guaranty and all of the agreements and
instruments to be executed and delivered by Buyer in connection herewith,
and the consummation of the transactions contemplated hereby;
(e) A certificate of the Secretary or Assistant Secretary of
Buyer and Buyer Parent, respectively, identifying the name and title and
bearing the signatures of the officers of Buyer authorized to execute and
deliver this Agreement, the Guaranty and the other agreements contemplated
hereby;
(f) All such other instruments of assumption as shall, in the
reasonable opinion of Sellers and their counsel, be necessary for Buyer
to assume the Assumed Liabilities in accordance with this Agreement;
(g) Copies of any and all governmental and other third party
consents, waivers or approvals obtained by Buyer with respect to the
transfer of the Purchased Assets, or the consummation of the transactions
contemplated by this Agreement;
(h) Certificates of Insurance relating to the insurance
policies required pursuant to Article 10 of the Interconnection
Agreement; and
(i) Such other agreements, documents, instruments and writings as are
required to be delivered by Buyer at or prior to the Closing Date pursuant
to this Agreement or otherwise reasonably required in connection herewith.
3.8 Ancillary Agreements. The Parties acknowledge that the Ancillary
--------------------
Agreements have been executed on the date hereof.
25
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLERS
Each of Sellers severally as to itself, in the case of Sections
4.1, 4.2, 4.3, 4.5 and 4.15, and, subject to Section 10.1, jointly and
severally, as to all other representations and warranties, represents and
warrants to Buyer as follows:
4.1 Incorporation: Qualification. Such Seller is a corporation
------------------------------
duly incorporated, validly existing and in good standing under the laws of
the state of its incorporation and has all requisite corporate power and
authority to own, lease, and operate its material properties and assets and to
carry on its business as is now being conducted. Such Seller is duly qualified
to do business as a foreign corporation and is in good standing under the laws
of each jurisdiction in which its business as now being conducted shall require
it to be so qualified, except where the failure to be so qualified would not
have a Material Adverse Effect. Such Seller has heretofore delivered to
Buyer true, complete and correct copies of its Certificate of Incorporation and
Bylaws as currently in effect.
4.2 Authority Relative to this Agreement. Such Seller has full corporate
------------------------------------
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by it hereby. The execution and delivery of this
Agreement by such Seller and the consummation of the transactions contemplated
by such Seller hereby have been duly and validly authorized by all necessary
corporate action required on the part of such Seller and this Agreement has
been duly and validly executed and delivered by such Seller. Subject to
the receipt of Sellers' Required Regulatory Approvals, this Agreement
constitutes the legal, valid and binding agreement of such Seller, enforceable
against such Seller in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity).
4.3 Consents and Approvals: No Violation. (a) Except as set forth in
------------------------------------
Schedule 4.3(a), and subject to obtaining Sellers' Required Regulatory
Approvals, neither the execution and delivery of this Agreement by such Seller
nor the consummation by such Seller of the transactions contemplated hereby vill
(i) conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of such Seller, (ii) result in a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, material agreement or other instrument or obligation to which such
Seller is a party or
26
by which it, or any of the Purchased Assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which, would not,
individually or in the aggregate, create a Material Adverse Effect; or (iii)
constitute violations of any law, regulation, order, judgment or decree
applicable to such Seller, which violations, individually or in the aggregate,
would create a Material Adverse Effect.
(b) Except as set forth in Schedule 4.3(b), (the filings and
approvals referred to in Schedule 4.3(b) are collectively referred to
as the "Sellers' Required Regulatory Approvals"), no consent or approval of,
-------------------------------------------
filing with, or notice to, any Governmental Authority is necessary for the
execution and delivery of this Agreement by such Seller, or the consummation by
such Seller of the transactions contemplated hereby, other than (i) such
consents, approvals, filings or notices which, if not obtained or made, will not
prevent such Seller from performing its material obligations hereunder and
(ii) such consents, approvals, filings or notices which become applicable
to such Seller or the Purchased Assets as a result of the specific
regulatory status of Buyer (or any of its Affiliates) or as a result of any
other facts that specifically relate to the business or activities in
which Buyer (or any of its Affiliates) is or proposes to be engaged.
4.4 Insurance. Except as set forth in Schedule 4.4, all material
---------
policies of fire, liability, workers' compensation and other forms of
insurance owned or held by, or on behalf of, Sellers with respect to the
business, operations or employees at the Plant or the Purchased Assets are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date hereof has been paid (other than retroactive premiums
which may be payable with respect to comprehensive general liability and
workers' compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy which was
not replaced on substantially similar terms prior to the date of
such cancellation. Except as described in Schedule 4.4, within the 36 months
preceding the date of this Agreement, the Sellers have not been refused any
insurance with respect to the Purchased Assets nor has their coverage been
limited by any insurance carrier to which they have applied for any such
insurance or with which they have carried insurance during the last twelve (12)
months.
4.5 Title and Related Matters. Except as set forth in Schedule
----------------------------
4.5 and subject to Permitted Encumbrances, (i) each of Penelec and NGE is the
owner of record title to a 50% undivided interest in the Real Property and has
good and valid title to the other Purchased Assets which it purports to own,
free and clear of all Encumbrances and (ii) each such Seller shall convey to
Buyer such title with respect to the Real Property as a reputable title company
doing business in the Commonwealth of Pennsylvania would insure.
27
4.6 Real Property Leases. Schedule 4.6 lists, as of the date of this
---------------------
Agreement, all real property leases under which each Seller is a lessee or
lessor and which relate to the Purchased Assets ("Real Property Leases").
----------------------
Except as set forth in Schedule 4.6, all such leases are valid, binding and
enforceable against Sellers in accordance with their terms; there are no
existing material defaults by Sellers or, to such Sellers' Knowledge, any other
party thereunder; and no event has occurred which (whether with or without
notice, lapse of time or both) would constitute a material default by Sellers
or, to Sellers' Knowledge, any other party thereunder. Sellers have delivered
to Buyer true, correct and complete copies of each of the Real Property Leases.
4.7 Environmental Matters. Except as disclosed in Schedule 4.7 or in
---------------------
the "Phase I" and "Phase II" environmental site assessments prepared
by Sellers' outside environmental consultants ("Environmental Reports")
------------------------
and made available for inspection by Buyer:
(a) The Sellers hold, and are in substantial compliance
with, all permits, certificates, certifications, licenses and governmental
authorizations under Environmental Laws ("Environmental Permits") that are
------------------------
required for Sellers to conduct the business and operations of the Purchased
Assets, and Sellers are otherwise in compliance with applicable Environmental
Laws with respect to the business and operations of the Purchased Assets except
for such failures to hold or comply with required Environmental Permits, or such
failures to be in compliance with applicable Environmental Laws, as would not,
individually or in the aggregate, create a Material Adverse Effect;
(b) None of Sellers has received any written request for
information, or been notified that it is a potentially responsible
party, under CERCLA or any similar state law with respect to the Real
Property;
(c) None of the Sellers has entered into or agreed to any consent
decree or order relating to the Purchased Assets, or is subject to any
outstanding judgment, decree, or judicial order relating to compliance with
any Environmental Law or to investigation or cleanup of Hazardous
Substances under any Environmental Law relating to the Purchased Assets.
(d) To Sellers' Knowledge, no Releases of Hazardous Substances
have occurred at, from, in, on, or under the Site, and no Hazardous Substances
are present in, on, about or migrating from the Site that could give rise to
an Environmental Claim related to the Purchased Assets for which Remediation
reasonably could be required, except in any such case to the extent that any
such Releases would not, individually or in the aggregate, create a Material
Adverse Effect.
28
The representations and warranties made in this Section 4.7 are the
Sellers' exclusive representations and warranties relating to environmental
matters.
4.8 Labor Matters. Sellers have previously delivered to Buyer true
--------------
and correct copies of all collective bargaining agreements to which
Sellers are a party or are subject and which relate to the business and
operations of the Purchased Assets. With respect to the business or
operations of the Purchased Assets, except to the extent set forth in
Schedule 4.8 and except for such matters as will not, individually or in the
aggregate, create a Material Adverse Effect, (a) Sellers are in compliance with
all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours; (b) neither Seller
has received written notice of any unfair labor practice complaint
against such Seller pending before the National Labor Relations Board;
(c) no arbitration proceeding arising out of or under any collective
bargaining agreements is pending against either Seller; and (d) Sellers have not
experienced any work stoppage within the three-year period prior to the date
hereof and to Sellers' Knowledge none is currently threatened.
4.9 Benefit Plans: ERISA. (a)Schedule 4.9(a) lists all deferred
----------------------
compensation, profit-sharing, retirement and pension plans, including multi-
employer plans (of which none exist), and all material bonus, fringe benefit
and other employee benefit plans maintained or with respect to which
contributions are made by Penelec or Genco in respect of the current
employees of Penelec or Genco connected with the Purchased Assets ("Benefit
--------
Plans"). True and complete copies of all such Benefit Plans have been made
------
available to Buyer.
(b) Except as set forth in Schedule 4.9(b), Sellers and the ERISA
Affiliates have fulfilled their respective obligations under the minimum
funding requirements of Section 302 of ERISA, and Section 412 of the Code, with
respect to each Benefit Plan which is an "employee pension benefit plan" as
defined in Section 3(2) of ERISA and each such plan is in compliance in all
material respects with the presently applicable provisions of ERSA and the
Code. Except as set forth in Schedule 4.9(b), neither the Sellers nor any
ERISA Affiliate has incurred any liability under Section 4062(b) of ERISA to
the Pension Benefit Guaranty Corporation in connection with any Benefit Plan
which is subject to Title IV of ERISA or any withdrawal liability, nor is there
any reportable event (as defined in Section 4043 of ERISA), except as
set forth in Schedule 4.9(b). Except as set forth in Schedule 4.9(b), the
Internal Revenue Service has issued a letter for each Benefit Plan which is
intended to be qualified under Section 401(a) of the Code, which letter
determines that such plan is exempt from United States Federal Income
Tax under Section 401(a) and 501(a) of the Code, and there has been no
occurrence since the date of any such determination letter which has affected
adversely such qualification.
29
(c) Neither the Sellers nor any ERISA Affiliate has engaged in any
transaction within the meaning of Section 4069(b) or Section 4212(c) of
ERISA. No Benefit Plan is a multi-employer plan.
(d) To the extent the Sellers maintain a "group health plan"
within the meaning of Section 5000(b) (1) of the Code, Sellers have
materially complied in good faith with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle
B of Title I of ERISA and the regulations thereunder.
4.10 Real Property Schedule 4.10 contains a description of the Real
-------------
Property owned by Penelec and NGE and included in the Purchased Assets. True
and correct copies of any current surveys, abstracts or title opinions in
Sellers' possession and any policies of title insurance currently in force and
in the possession of Sellers with respect to the Real Property have
heretofore been made available to Buyer.
4.11 Condemnation. Except as set forth in Schedule 4.11, Sellers have not
------------
received any written notices of and otherwise have no Knowledge of any pending
or threatened proceedings or governmental actions to condemn or take by
power of eminent domain all or any part of the Purchased Assets.
4.12 Contracts and Leases. (a) Schedule 4.12(a) lists each written
--------------------
contract, license, agreement, or personal property lease which is material to
the business or operations of the Purchased Assets, other than any contract,
license, agreement or personal property lease which is listed or described on
another Schedule, or which is expected to expire or terminate prior to the
Closing Date, or which provides for annual payments by the Sellers after the
date hereof of less than $250,000 or payments by the Sellers after the date
hereof of less than $1,000,000 in the aggregate.
(b) Except as disclosed in Schedule 4.12(b), each Sellers'
Agreement (i) constitutes a legal, valid and binding obligation of the
applicable Seller and, to each Seller's Knowledge, constitutes a valid
and binding obligation of the other parties thereto, and (ii) may be
transferred to Buyer pursuant to this Agreement without the consent of
the other parties thereto and will continue in full force and effect
thereafter, unless in any such case the impact of such lack of legality,
validity or binding nature, or inability to transfer, would not, individually or
in the aggregate, create a Material Adverse Effect.
(c) Except as set forth in Schedule 4.12(c), there is not, under the
Sellers' Agreements, any default or event which, with notice or lapse of time or
both, would constitute a default on the part of the Sellers or to each Seller's
Knowledge, any of the other parties thereto, except such events of
default and
30
other events which would not, individually or in the aggregate, create a
Material Adverse Effect.
4.13 Legal Proceedings etc. Except as set forth in Schedule 4.13, there
---------------------
are no actions or proceedings pending against Sellers before any court,
arbitrator or Governmental Authority, which could, individually or in the
aggregate, reasonably be expected to create a Material Adverse Effect. Except
as set forth in Schedule 4.13, neither Seller is subject to any
outstanding judgments, rules, orders, writs, injunctions or decrees of any
court, arbitrator or Governmental Authority which would, individually
or in the aggregate, create a Material Adverse Effect.
4.14 Permits. (a) The Sellers have all permits, licenses, franchises and
-------
other governmental authorizations, consents and approvals, (other than
Environmental Permits, which are addressed in Section 4.7 hereof) (collectively,
"Permits") necessary to own and operate the Purchased Assets except where the
---------
failure to have such Permits would not, individually or in the aggregate, create
a Material Adverse Effect. Except as disclosed on Schedule 4.14(a),
Sellers have not received any notification that any Seller is in
violation of any such Permits, except notifications of violations which would
not, individually or in the aggregate, create a Material Adverse Effect. Sellers
are in compliance with all such Permits except where non-compliance would
not, individually or in the aggregate, create a Material Adverse Effect.
(b) Schedule 4.14(b) sets forth all material Permits and
Environmental Permits, other than Transferable Permits (which are set forth
on Schedule 1.1(96)) related to the Purchased Assets.
4.15 Taxes. Penelec and NGE have filed all returns that are required to be
-----
filed by it with respect to any Tax relating to the Purchased Assets, and
Penelec and NGE have each paid all Taxes that have become due as indicated
thereon, except where such Tax is being contested in good faith by
appropriate proceedings, or where the failure to so file or pay would not
reasonably be expected to create a Material Adverse Effect. Penelec and
NGE have complied in all material respects with all applicable laws, rules and
regulations relating to withholding Taxes relating to Transferred Employees. All
Tax Returns relating to the Purchased Assets are true, correct and complete in
all material respects. Except as set forth in Schedule 4.15, no notice
of deficiency or assessment has been received from any taxing authority with
respect to liabilities for Taxes of such Sellers in respect of the Purchased
Assets, which have not been fully paid or finally settled, and any such
deficiency shown in Schedule 4.15 is being contested in good faith
through appropriate proceedings. Except as set forth in Schedule 4.15, there
are no outstanding agreements or waivers extending the applicable
statutory periods of limitation for Taxes associated
31
with the Purchased Assets that will be binding upon Buyer after the Closing.
None of the Purchased Assets is property that is required to be treated as
being owned by any other person pursuant to the so-called safe harbor lease
provisions of former Section 168(f) of the Code, and none of the Purchased
Assets is "tax-exempt use" property within the meaning of Section 168(h) of the
Code. Schedule 4.15 sets forth the taxing jurisdictions in which either Penelec
or NGE own assets or conduct business that require a notification to a taxing
authority of the transactions contemplated by this Agreement, if the
failure to make such notification, or obtain Tax clearance certificates in
connection therewith, would either require Buyer to withhold any portion of the
Purchase Price or subject Buyer to any liability for any Taxes of Penelec
or NGE.
4.16 Intellectual Property. Schedule 2.1(1) sets forth all Intellectual
---------------------
Property used in and, individually or in the aggregate with other
Intellectual Property, is material to the operation or business of the Purchased
Assets, each of which a Seller or its Affiliates either has all right, title and
interest in or valid and binding rights under contract to use. Except as
disclosed in Schedule 4.16, (i) the Sellers are not, nor have they received any
notice that they are, in default (or with the giving of notice or lapse of time
or both, would be in default), under any contract to use such Intellectual
Property, and (ii), to Sellers' Knowledge, such Intellectual Property is not
being infringed by any other Person. Sellers have not received notice that they
are infringing any Intellectual Property of any other Person in connection
with the operation or business of the Purchased Assets, and Sellers,
to their Knowledge, are not infringing any Intellectual Property of any
other Person the effect of which, individually or in the aggregate, would have
a Material Adverse Effect.
4.17 Capital Expenditures. Except as set forth in Schedule 6.1, there are
---------------------
no capital expenditures associated with the Purchased Assets that are
planned by Sellers through December 31, 1999.
4.18 Compliance With Laws. The Sellers are in compliance with all
--------------------
applicable laws, rules and regulations with respect to the ownership or
operation of the Purchased Assets except where the failure to be in compliance
would not, individually or in the aggregate, create a Material Adverse Effect.
4.19 DISCLAIMERS REGARDING PURCHASED ASSETS. EXCEPT FOR THE
--------------------------------------
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV, THE PURCHASED
ASSETS ARE SOLD "AS IS, WHERE IS", AND EACH SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
LIABILITIES, OPERATIONS OF THE PLANT, THE TITLE, CONDITION, VALUE OR
QUALITY OF THE PURCHASED ASSETS OR THE PROSPECTS (FINANCIAL AND
OTHERWISE), RISKS AND OTHER INCIDENTS OF THE PURCHASED ASSETS AND EACH SELLER
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF
32
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO THE PURCHASED ASSETS, OR ANY PART THEREOF, OR AS TO THE
WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR
PATENT, OR COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS, OR THE
APPLICABILITY OF ANY GOVERNMENTAL REQUIREMENTS, INCLUDING BUT NOT
LIMITED TO ANY ENVIRONMENTAL LAWS, OR WHETHER EACH SELLER POSSESSES SUFFICIENT
REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE PURCHASED ASSETS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, EACH SELLER FURTHER
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE
OF HAZARDOUS SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER
ENVIRONMENTAL LAWS WITH RESPECT TO THE PURCHASED ASSETS. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREIN, EACH SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY OF ANY KIND REGARDING THE CONDITION OF THE PURCHASED ASSETS OR THE
SUITABILITY OF THE PURCHASED ASSETS FOR OPERATION AS A POWER PLANT AND NO
SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER MATERIAL OR INFORMATION
PROVIDED BY OR COMMUNICATIONS MADE BY EACH SELLER OR THEIR REPRESENTATIVES, OR
BY ANY BROKER OR INVESTMENT BANKER, WILL CAUSE OR CREATE ANY WARRANTY, EXPRESS
OR IMPLIED, AS TO THE TITLE, CONDITION, VALUE OR QUALITY OF THE PURCHASED
ASSETS.
The Sellers make no warranties and representations of any kind, whether
direct or implied, that any of the hardware, software, and firmware
product (including embedded microcontrollers in non-computer equipment)
which may be included in the Purchased Assets to be transferred under this
Agreement (the "Computer Systems") is Year 2000 Compliant. For purposes
-------------------
hereof, "Year 2000 Compliant" shall mean that the Computer Systems will
----------------------
correctly differentiate between years, in different centuries, that end in the
same two digits, and will accurately process date/time data (including,
but not limited to, calculating, comparing, and sequencing) from, into,
and between the twentieth and twenty-first centuries, including leap year
calculations.
4.20 Transmission. NYSEG represents and warrants that Buyer shall not be
------------
obligated to pay a NYSEG transmission charge in connection with any NYPP
Economy Energy transaction as defined in the NYPP Agreement as effective and on
file with FERC without waiving NYSEG's right to NYPP Economy Energy
Transaction Transmission Fund payments.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
33
5.1 Organization. Buyer is a California corporation, duly organized,
------------
validly existing and in good standing under the laws of the state of its
organization and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as is now being
conducted. Buyer is, or by the Closing will be, qualified to do business
in the Commonwealth of Pennsylvania. Buyer has heretofore delivered to Sellers
complete and correct copies of its Certificate of Incorporation and
Bylaws (or other similar governing documents) as currently in effect.
5.2 Authority Relative to this Agreement. Buyer has full corporate power
------------------------------------
and authority to execute and deliver this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated by it hereby
and thereby. The execution and delivery of this Agreement and the
Ancillary Agreements by Buyer and the consummation of the transactions
contemplated hereby and thereby by Buyer have been duly and validly
authorized by all necessary corporate action required on the part of Buyer.
This Agreement and the Ancillary Agreements have been duly and validly
executed and delivered by Buyer. Subject to the receipt of Buyer Required
Regulatory Approvals, this Agreement and the Ancillary Agreements
constitute legal, valid and binding agreements of Buyer, enforceable against
Buyer in accordance with their terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity).
5.3 Consents and Approvals: No Violation.
------------------------------------
(a) Except as set forth in Schedule 5.3(a), and subject to
obtaining Buyer Required Regulatory Approvals, neither the execution and
delivery of this Agreement and the Ancillary Agreements by Buyer nor the
consummation by Buyer of the transactions contemplated hereby and thereby
will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws (or other similar governing documents) of
Buyer, or (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, material agreement or
other instrument or obligation to which Buyer or any of its Subsidiaries is a
party or by which any of their respective assets may be bound, except for
such defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which would not,
individually or in the aggregate, have a material adverse effects on the
business, assets, operations or condition (financial or otherwise) of Buyer
Entities ("Buyer Material Adverse Effect") or (iii) violate any law,
------------------------------
regulation, order, judgment or decree applicable to Buyer, which violations,
34
individually or in the aggregate, would create a Buyer Material Adverse Effect.
(b) Except as set forth in Schedule 5.3(b) (the filings and
approvals referred to in such Schedule are collectively referred to as
the "Buyer Required Regulatory Approvals"), no consent or approval of, filing
----------------------------------------
with, or notice to, any Governmental Authority is necessary for Buyer's
execution and delivery of this Agreement and the Ancillary Agreements, or the
consummation by Buyer of the transactions contemplated hereby and thereby,
other than such consents, approvals, filings or notices, which, if not
obtained or made, will not prevent Buyer from performing its obligations
under this Agreement and the Ancillary Agreements.
5.4 Availability of Funds. Buyer has sufficient funds and lines of credit
---------------------
available to it or has received binding written commitments from creditworthy
financial institutions, copies of which have been provided to Sellers, to
provide sufficient funds on the Closing Date to pay the Purchase Price and to
permit Buyer to timely perform all of its obligations under this Agreement and
the Ancillary Agreements.
5.5 Financial Representations. Buyer Parent has provided Sellers with
-------------------------
its balance sheet, income statement and statement of changes in cash flows
for each of the preceding three fiscal years and most recent interim period.
Such financial statements have been prepared in accordance with generally
accepted accounting principles and fairly reflect the financial posture and
results of operations of Buyer Parent as at and for the periods
therein.
5.6 Legal Proceedings. There are no actions or proceedings pending
-----------------
against Buyer Entities before any court or arbitrator or Governmental Authority,
which, individually or in the aggregate, could reasonably be expected to create
a Buyer Material Adverse Effect. Buyer Entities are not subject to any
outstanding judgments, rules, orders, writs, injunctions or decrees of any
court, arbitrator or Governmental Authority which would, individually
or in the aggregate, create a Buyer Material Adverse Effect.
5.7 No Knowledge of Sellers' Breach. Buyer Entities have no Knowledge of
-------------------------------
any breach by Sellers of any representation or warranty of Sellers, or of any
other condition or circumstance that would excuse Buyer from its timely
performance of its obligations hereunder. Buyer Entities shall notify
Sellers promptly if any such information comes to their attention prior to the
Closing.
5.8 Qualified Buyer. Buyer is qualified to obtain any Permits and
----------------
Environmental Permits necessary for Buyer to own and operate the Purchased
Assets as of the Closing. Without limiting the foregoing, Buyer is not aware of
any reason or circumstance
35
that would prevent Buyer from procuring Buyer Required Regulatory Approvals
associated with Exempt Wholesale Generator (as defined in the Public Utility
Holding Company Act of 1935) status and market-based rate authorization
specified in items 3 and 2 of Schedule 5.3(b).
5.9 Inspections. Subject to the restrictions set forth in Section
-----------
6.2(a), Buyer acknowledges and agrees that it has, prior to its execution
of this Agreement, (i) reviewed the Environmental Reports, (ii) had
full opportunity to conduct to its satisfaction Inspections of the Purchased
Assets, including the Site, and (iii) fully completed and approved the results
of all Inspections of the Purchased Assets. Subject to the
restrictions set forth in Section 6.2(a), Buyer acknowledges that it is
satisfied through such review and Inspections that no further investigation and
study on or of the Site is necessary for the purposes of acquiring the Purchased
Assets for Buyer's intended use. Buyer acknowledges and agrees that it
hereby assumes the risk that adverse past, present, and future physical
characteristics and Environmental Conditions may not have been revealed by its
Inspections and the investigations of the Purchased Assets contained in
the Environmental Reports. In making its decision to execute this Agreement,
and to purchase the Purchased Assets, Buyer has relied on and will rely upon,
among other things, the results of its Inspections and the
Environmental Reports.
5.10 WARN Act. Buyer does not intend to engage in a Plant Closing or
--------
Mass Layoff as such terms are defined in the WARN Act within sixty days of the
Closing Date.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Conduct of Business Relating to the Purchased Assets. (a) Except
----------------------------------------------------
as described in Schedule 6.1 or as expressly contemplated by this
Agreement or to the extent Buyer otherwise consents in writing, during the
period from the date of this Agreement to the Closing Date, Sellers (i)
will operate the Purchased Assets in the ordinary course of business
consistent with the past practices of Sellers or their Affiliates or with Good
Utility Practices, (ii) shall use all Commercially Reasonable Efforts to
preserve intact the Purchased Assets, and endeavor to preserve the goodwill
and relationships with customers, suppliers and others having business
dealings with it, (iii) shall maintain the insurance coverage described in
Section 4.4, (iv) shall comply with all applicable laws relating to the
Purchased Assets, including without limitation, all Environmental Laws, except
where the failure to so comply would not result in a Material Adverse Effect,
and (v) shall continue with Sellers' program, or (at Buyer's expense) as
Buyer may direct, to install such equipment or software with respect to Year
2000 Compliance
36
in accordance with Sellers' plans referred to in Section 2.1(k). Without
limiting the generality of the foregoing, and, except as contemplated in this
Agreement or as described in Schedule 6.1, or as required under applicable
law or by any Governmental Authority, prior to the Closing Date, without the
prior written consent of Buyer, Sellers shall not with respect to the Purchased
Assets:
(i) Make any material change in the levels of Inventories
customarily maintained by Sellers or their Affiliates with respect to
the Purchased Assets, other than changes which are consistent with Good
Utility Practices;
(ii) Sell, lease (as lessor), encumber, pledge, transfer or
otherwise dispose of, any material Purchased Assets individually or
in the aggregate (except for Purchased Assets used, consumed or
replaced in the ordinary course of business consistent with past practices
of Sellers or their Affiliates or with Good Utility Practices) other than
to encumber Purchased Assets with Permitted Encumbrances;
(iii) Modify, amend or voluntarily terminate prior to the
expiration date any of the Sellers' Agreements or Real Property Leases
or any of the Permits or Environmental Permits in any material
respect, other than (a) in the ordinary course of business, to
the extent consistent with the past practices of Sellers or their
Affiliates or with Good Utility Practices, (b) with cause, to the extent
consistent with past practices of Sellers or their Affiliates or with Good
Utility Practices, or (c) as may be required in connection with
transferring Sellers' rights or obligations thereunder to Buyer pursuant
to this Agreement;
(iv) Except as otherwise provided herein, enter into any
commitment for the purchase, sale, or transportation of fuel
having a term greater than six months and not terminable on or before the
Closing Date either (i) automatically, or (ii) by option of Sellers (or,
after the Closing, by Buyer) in its sole discretion, if the aggregate
payment under such commitment for fuel and all other outstanding
commitments for fuel not previously approved by Buyer would exceed
$1,000,000;
(v) Sell, lease or otherwise dispose of Emission
Allowances, or Emission Reduction Credits identified in Schedule
2.1(h), except to the extent necessary to operate the Purchased Assets
in accordance with this Section 6.1;
37
(vi) Except as otherwise provided herein, enter into any
contract, agreement, commitment or arrangement relating to the
Purchased Assets that individually exceeds $250,000 or in the aggregate
exceeds $1,000,000 unless it is terminable by Sellers (or, after the
Closing, by Buyer) without penalty or premium upon no more than sixty
(60) days notice;
(vii) Except as otherwise required by the terms of the IBEW
Collective Bargaining Agreement (as defined in Section 6.10(d)), (a) hire
at, or transfer to the Purchased Assets, any new employees prior to the
Closing, other than to fill vacancies in existing positions in the
reasonable discretion of Sellers, (b) materially increase salaries or wages
of employees employed in connection with the Purchased Assets prior to the
Closing, (c) take any action prior to the Closing to effect a material
change in the Collective Bargaining Agreement, or (d) take any action prior
to the Closing to materially increase the aggregate benefits payable
to the employees employed in connection with the Purchased Assets;
(viii) Make any Capital Expenditures except as permitted by
Section 3.3(a)(iii) or for Sellers' account; and
(ix) Except as otherwise provided herein, enter into any
written or oral contract, agreement, commitment or arrangement with
respect to any of the proscribed transactions set forth in
the foregoing paragraphs (i) through (viii).
6.2 Access to Information.
---------------------
(a) Between the date of this Agreement and the Closing Date, Sellers
will, at reasonable times and upon reasonable notice: (i) give Buyer and
its Representatives reasonable access to its managerial personnel and to all
books, records, plans, equipment, offices and other facilities and
properties constituting the Purchased Assets; (ii) furnish Buyer with such
financial and operating data and other information with respect to the Purchased
Assets as Buyer may from time to time reasonably request, and permit Buyer to
make such reasonable Inspections thereof as Buyer may request; (iii) furnish
Buyer at its request a copy of each material report, schedule or other document
filed by Sellers or any of their Affiliates with respect to the
Purchased Assets with the SEC, FERC, NYPSC, NYDEC, PaPUC, PaDEP or any other
Governmental Authority; and (iv) furnish Buyer with all such other information
as shall be reasonably necessary to enable Buyer to verify the accuracy of the
representations and warranties of Sellers contained in this Agreement;
provided, however, that (A) any such inspections and investigations shall be
conducted in such a manner as not to interfere unreasonably
38
with the operation of the Purchased Assets, (B) Sellers shall not be required to
take any action which would constitute a waiver of the attorney-client
privilege, and (C) Sellers need not supply Buyer with any information which
Sellers are under a legal or contractual obligation not to supply.
Notwithstanding anything in this Section 6.2 to the contrary, Sellers will only
furnish or provide such access to Transferring Employee Records and will not
furnish or provide access to other employee personnel records or medical
information unless required by law or specifically authorized by the
affected employee and Buyer shall not have the right to perform or conduct any
environmental sampling or testing at, in, on, or underneath the Purchased
Assets.
(b) Each Party shall, and shall use its best efforts to cause its
Representatives to, (i) keep all Proprietary Information of the other Party
confidential and not to disclose or reveal any such Proprietary Information to
any person other than such Party's Representatives and (ii) not use such
Proprietary Information other than in connection with the consummation of
the transactions contemplated hereby. After the Closing Date, any Proprietary
Information to the extent related to the Purchased Assets shall no longer
be subject to the restrictions set forth herein. The obligations of the
Parties under this Section 6.2(b) shall be in full force and effect for three
(3) years from the date hereof and vill survive the termination of
this Agreement, the discharge of all other obligations owed by the Parties
to each other and the closing of the transactions contemplated by this
Agreement.
(c) For a period of seven (7) years after the Closing Date (or such
longer period as may be required by applicable law), each Party and its
Representatives shall have reasonable access to all of the books and records of
the Purchased Assets, including all Transferring Employee Records in the
possession of the other Party to the extent that such access may reasonably be
required by such Party in connection with the Assumed Liabilities or the
Excluded Liabilities, or other matters relating to or affected by the
operation of the Purchased Assets. Such access shall be afforded by the Party
in possession of any such books and records upon receipt of reasonable advance
written notice and during normal business hours. The Party exercising this
right of access shall be solely responsible for any costs or expenses
incurred by it or the other Party with respect to such access pursuant to this
Section 6.2(c). If the Party in possession of such books and records shall
desire to dispose of any books and records upon or prior to the expiration of
such seven-year period (or any such longer period), such Party shall,
prior to such disposition, give the other Party a reasonable opportunity
at such other Party's reasonable expense, to segregate and remove such books and
records as such other Party may select.
(d) Notwithstanding the terms of Section 6.2(b) above, the Parties
agree that prior to the Closing Buyer may reveal or disclose Proprietary
Information to any other Persons in
39
connection with Buyer's financing of its purchase of the Purchased
Assets or any equity participation in Buyer's purchase of the Purchased Assets
(provided that such Persons agree in writing to maintain the
confidentiality of the Proprietary Information in accordance with this
Agreement).
(e) Upon the other Party's prior written approval (which will
not be unreasonably withheld), either Party may provide Proprietary
Information of the other Party to the NYPSC, the PaPUC, the SEC, the FERC or any
other Governmental Authority with jurisdiction or any stock exchange, as may be
necessary to obtain Sellers' Required Regulatory Approvals, or Buyer Required
Regulatory Approvals, respectively, or to comply generally with any relevant law
or regulation. The disclosing Party will seek confidential treatment for the
Proprietary Information provided to any Governmental Authority and the
disclosing Party will notify the other Party as far in advance as is
practicable of its intention to release to any Governmental
Authority any Proprietary Information.
(f) Except as specifically provided herein or in the Confidentiality
Agreement, nothing in this Section shall impair or modify any of the rights
or obligations of Buyer or its Affiliates under the Confidentiality
Agreement, all of which remain in effect until termination of such
agreement in accordance with its terms.
(g) Except as may be permitted in the Confidentiality Agreement,
Buyer agrees that, prior to the Closing Date, it will not contact any
vendors, suppliers, employees, or other contracting parties of Sellers or
their Affiliates with respect to any aspect of the Purchased Assets or
the transactions contemplated hereby, without the prior written consent
of Sellers, which consent shall not be unreasonably withheld.
(h) (i) Buyer shall be entitled to inspect, in accordance with
this Section 6.2(h), all of the Purchased Assets located adjacent to any Point
of Interconnection (as defined in the Interconnection Agreement), as shown in
Schedule A to the Interconnection Agreement, to verify and/or determine
the accuracy of the data, drawings, and records described in such Schedule.
The Parties shall cooperate to schedule Buyer's inspection at the
Facility so that any interference with the operation of the Facility is
minimized, to the extent reasonably feasible, and so that Buyer may complete its
inspections of the Facility within thirty (30) working days of
commencement of inspections and within two (2) months after the execution of
this Agreement.
(ii) Sellers shall provide, or shall cause to be provided, to Buyer, access
to the Facility at the times scheduled for the inspections. Buyer shall provide
qualified engineering,
40
operations, and maintenance personnel to escort Buyer's personnel and to assist
Buyer's personnel in conducting the inspections. Sellers and Buyer shall
each bear their own costs of participating in the inspections. At a
mutually convenient time not more than one (1) month after Buyer has
completed its inspections, the Parties shall meet to discuss whether,
as a result of the inspections, it is appropriate to modify Schedule A to the
Interconnection Agreement to portray more accurately the Points of
Interconnection. Any modification to any portion of Schedule A of the
Interconnection Agreement to which the Parties agree shall thereafter be
deemed part of Schedule A of the Interconnection Agreement for all
purposes under the Interconnection Agreement.
6.3 Public Statements. Subject to the requirements imposed by any
-----------------
applicable law or any Governmental Authority or stock exchange, prior to
the Closing Date, no press release or other public announcement or public
statement or comment in response to any inquiry relating to the transactions
contemplated by this Agreement shall be issued or made by any Party without
the prior approval of the other Parties (which approval shall not be
unreasonably withheld). The Parties agree to cooperate in preparing
such announcements.
6.4 Expenses. Except to the extent specifically provided herein, whether
--------
or not the transactions contemplated hereby are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the Party incurring such costs
and expenses. Notwithstanding anything to the contrary herein, Buyer will be
responsible for (a) all costs and expenses associated with the obtaining of
any title insurance policy and all endorsements thereto that Buyer elects
to obtain and (b) all filing fees under the HSR Act.
6.5 Further Assurances.
------------------
(a) Subject to the terms and conditions of this Agreement,
each of the Parties hereto shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the purchase and sale of the Purchased Assets pursuant to this
Agreement and the assumption of the Assumed Liabilities, including without
limitation using its best efforts to ensure satisfaction of the conditions
precedent to each Party's obligations hereunder, including obtaining all
necessary consents, approvals, and authorizations of third parties and
Governmental Authorities required to be obtained in order to consummate the
transactions hereunder, and to effectuate a transfer of the Transferable Permits
to Buyer. Buyer agrees to perform all conditions required of Buyer in connection
with the Sellers' Required Regulatory Approvals, other than those conditions
which would create a Buyer Material Adverse Effect.
41
Neither of the Parties hereto shall, without prior written consent of
the other Party, take or fail to take any action, which might reasonably be
expected to prevent or materially impede, interfere with or delay the
transactions contemplated by this Agreement. Buyer further agrees that prior to
the Closing Date, it will neither enter into any other contract to acquire, nor
acquire, electric generation facilities or uncommitted generation capacity
located in New York State if Buyer's proposed acquisition of such additional
electric generation facilities or uncommitted generation capacity might
reasonably be expected to prevent or materially impede, interfere with or
delay the transactions contemplated by this Agreement. Buyer shall give
Sellers reasonable advance notice (and in any event not less than 10 days)
before Buyer contracts to acquire or acquires any electric generation
facility or uncommitted generation capacity located in New York.
(b) In the event that any Purchased Asset shall not have been
conveyed to Buyer at the Closing, each Seller shall, subject to Section 6.5(c)
and (d), use Commercially Reasonable Efforts to convey such asset to Buyer
as promptly as is practicable after the Closing. In the event that any
Easement shall not have been granted by Buyer to Penelec or NYSEG at the
Closing, Buyer shall use Commercially Reasonable Efforts to grant such Easement
to Penelec or NYSEG as promptly as is practicable after the Closing.
(c) To the extent that Sellers' rights under any Sellers' Agreement
or Real Property Lease may not be assigned without the consent of another Person
which consent has not been obtained by the Closing Date, this Agreement shall
not constitute an agreement to assign the same, if an attempted assignment would
constitute a breach thereof or be unlawful. Sellers and Buyer agree that if any
consent to an assignment of any material Sellers' Agreement or Real Property
Lease shall not be obtained or if any attempted assignment would be ineffective
or would impair Buyer's rights and obligations under the material Sellers'
Agreement or Real Property Lease in question, so that Buyer would not in effect
acquire the benefit of all such rights and obligations, Sellers, at Buyer's
option and to the maximum extent permitted by law and such material Sellers'
Agreement or Real Property Lease, shall, after the Closing Date, appoint Buyer
to be Sellers' agent with respect to such material Sellers' Agreement or Real
Property Lease, or, to the maximum extent permitted by law and such material
Sellers' Agreement or Real Property Lease, enter into such reasonable
arrangements with Buyer or take such other actions as are necessary to provide
Buyer with the same or substantially similar rights and obligations of such
material Sellers' Agreement or Real Property Lease as Buyer may reasonably
request. Sellers and Buyer shall cooperate and shall each use Commercially
Reasonable Efforts prior to and after the Closing Date to obtain an assignment
of such material Sellers' Agreement or Real Property Lease to Buyer.
42
For purposes of this Section 6.5(c), all Sellers' Agreements listed on
Schedule 4.12(a) are deemed to be "material."
(d) To the extent that Sellers' rights under any warranty or
guaranty described in Section 2.1(i) may not be assigned without the
consent of another Person, which consent has not been obtained by the Closing
Date, this Agreement shall not constitute an agreement to assign same, if
an attempted assignment would constitute a breach thereof, or be
unlawful. Sellers and Buyer agree that if any consent to an assignment of any
such warranty or guaranty shall not be obtained, or if any attempted assignment
would be ineffective or would impair Buyer's rights and obligations under
the warranty or guaranty in question, so that Buyer would not in effect
acquire the benefit of all such rights and obligations, Sellers, at Buyer's
expense, shall use Commercially Reasonable Efforts, to the extent
permitted by law and such warranty or guaranty, to enforce such warranty or
guaranty for the benefit of Buyer so as to provide Buyer to the maximum
extent possible with the benefits and obligations of such warranty or
guaranty.
6.6 Consents and Approvals.
----------------------
(a) As promptly as possible after the date of this Agreement,
Sellers and Buyer, as applicable, shall each file or cause to be filed with
the Federal Trade Commission and the United States Department of Justice
any notifications required to be filed under the HSR Act and the rules
and regulations promulgated thereunder with respect to the
transactions contemplated hereby. The Parties shall use their respective best
efforts to respond promptly to any requests for additional information
made by either of such agencies, and to cause the waiting periods under the HSR
Act to terminate or expire at the earliest possible date after the date of
filing. Buyer will pay all filing fees under the HSR Act but each Party will
bear its own costs of the preparation of any filing.
(b) As promptly as possible after the date of this Agreement, Buyer
shall file with the FERC an application requesting Exempt Wholesale
Generator status for Buyer, which filing may be made individually by
Buyer or jointly with the Sellers in conjunction with other filings to be
made with the FERC under this Agreement, as reasonably determined by the
Parties. Prior to Buyer's submission of that application with the FERC, Buyer
shall submit such application to the Sellers for review and comment and
Buyer shall incorporate into the application any revisions reasonably
requested by Sellers. Buyer shall be solely responsible for the cost of
preparing and filing this application, any petition(s) for rehearing, or
any reapplication. If Buyer's initial application for Exempt Wholesale
Generator status is rejected by the FERC, Buyer agrees to petition the
FERC for rehearing and/or to re-submit an application with the FERC, as
reasonably required by the Sellers,
43
provided that in either case the action directed by the Sellers does not create
a Buyer Material Adverse Effect.
(c) As promptly as possible after the date of this Agreement,
Buyer shall file with the FERC an application requesting authorization
under Section 205 of the Federal Power Act to sell electric generating
capacity and energy, but not other services, including, without
limitation, ancillary services, at wholesale at market-based rates, which
filing may be made individually by Buyer or jointly with Sellers in conjunction
with other filings to be made with the FERC under this Agreement, as reasonably
determined by the Parties. Prior to the filing of that application with the
FERC, Buyer shall submit such application to the Sellers for review and
comment and Buyer shall incorporate into the application any revisions
reasonably requested by the Sellers. Buyer shall be solely responsible for the
cost of preparing and filing this application, any petition(s) for
rehearing, or any reapplication. If Buyer's initial application for
market-based rate authorization results in a FERC request for additional
information or is rejected by the FERC, Buyer shall provide that
information promptly, to petition the FERC for rehearing and/or to re-
submit an application with the FERC, as reasonably required by the Sellers,
provided that the Sellers shall have a reasonable opportunity to make changes to
such a petition or re-submission application and, provided further, that the
action directed by the Seller does not create a Buyer Material Adverse Effect.
(d) As promptly as possible, and in any case within sixty (60) days,
after the date of this Agreement, Sellers and Buyer, as applicable, shall file
with the NYPSC, the PaPUC, the FERC and any other Governmental Authority, and
make any other filings required to be made with respect to the
transactions contemplated hereby. The Parties shall respond promptly to any
requests for additional information made by such agencies, and use their
respective best efforts to cause regulatory approval to be obtained at the
earliest possible date after the date of filing. Each Party will bear its
own costs of the preparation of any such filing.
(e) Sellers and Buyer shall cooperate with each other and promptly
prepare and file notifications with, and request Tax clearances from, state
and local taxing authorities in jurisdictions in which a portion of the
Purchase Price may be required to be withheld or in which Buyer would
otherwise be liable for any Tax liabilities of Sellers pursuant to such state
and local Tax law.
(f) Buyer shall have the primary responsibility for securing the
transfer, reissuance or procurement of the Permits and Environmental Permits
(other than Transferable Permits) effective as of the Closing Date. Sellers
shall cooperate with Buyer's efforts in this regard and assist in any transfer
or reissuance of a Permit or Environmental Permit held by Sellers or
44
the procurement of any other Permit or Environmental Permit when so requested by
Buyer.
6.7 Fees and Commissions. Each Seller, on the one hand, and Buyer, on
--------------------
the other hand, represent and warrant to the other that, except for Xxxxxxx,
Xxxxx & Co., which are acting for and at the expense of Sellers, and Xxxxxx
Brothers Inc., which is acting for and at the expense of Buyer, no broker,
finder or other Person is entitled to any brokerage fees, commissions or
finder's fees in connection with the transaction contemplated hereby by
reason of any action taken by the Party making such representation. Each
Seller, on the one hand, and Buyer, on the other hand, will pay to the other or
otherwise discharge, and will indemnify and hold the other harmless from and
against, any and all claims or liabilities for all brokerage fees, commissions
and finder's fees (other than the fees, commissions and finder's fees payable to
the parties listed above) incurred by reason of any action taken by the
indemnifying party.
6.8 Tax Matters.
-----------
(a) All transfer and sales taxes incurred in connection
with this Agreement and the transactions contemplated hereby (including,
without limitation, (a) Pennsylvania sales tax; (b) the Pennsylvania
transfer tax on conveyances of interests in real property; and (c)
Pennsylvania sales tax and transfer tax on deeds) shall be borne by Buyer.
Sellers shall file, to the extent required by, or permissible under, applicable
law, all necessary Tax Returns and other documentation with respect to
all such transfer and sales taxes, and, if required by applicable law, Buyer
shall join in the execution of any such Tax Returns and other documentation.
Prior to the Closing Date, to the extent applicable, Buyer shall provide to
Sellers appropriate certificates of Tax exemption from each applicable
taxing authority.
(b) With respect to Taxes to be prorated in accordance with Section
3.5 of this Agreement, Buyer shall prepare and timely file all Tax
Returns required to be filed after the Closing Date with respect to the
Purchased Assets, if any, and shall duly and timely pay all such Taxes shown to
be due on such Tax Returns. Buyer's preparation of any such Tax Returns shall
be subject to Sellers' approval, which approval shall not be
unreasonably withheld. Buyer shall make such Tax Returns available for
Sellers' review and approval no later than fifteen (15) Business Days prior to
the due date for filing each such Tax Return.
(c) Buyer and Sellers shall provide the other with such
assistance as may reasonably be requested by the other Party in connection with
the preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each shall retain and provide the requesting party with any
45
records or information which may be relevant to such return, audit,
examination or proceedings. Any information obtained pursuant to this
Section 6.8(c) or pursuant to any other Section hereof providing for the sharing
of information or review of any Tax Return or other instrument relating to Taxes
shall be kept confidential by the parties hereto.
(d) Disputes. In the event that a dispute arises between
--------
Sellers and Buyer regarding Taxes, or any amount due under this Section
6.8, 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 within 30 days, 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 50% by Sellers and 50% by
Buyer. Any payment required to be made as a result of the resolution of
the dispute by the Independent Accounting Firm shall be made within ten days
after such resolution, together with any interest determined by the
Independent Accounting Firm to be appropriate.
6.9 Advice of Changes. Prior to the Closing, each Party will promptly
-----------------
advise the other in writing with respect to any matter arising after execution
of this Agreement of which that Party obtains Knowledge and which, if existing
or occurring at the date of this Agreement, would have been required to be set
forth in this Agreement, including any of the Schedules hereto. Sellers may at
any time notify Buyer of any development causing a breach of any of its
representations and warranties in Article IV. Unless Buyer has the right
to terminate this Agreement pursuant to Section 9.1(f) below by reason of the
developments and exercises that right within the period of fifteen (15) days
after such right accrues, the written notice pursuant to this Section 6.9 will
be deemed to have amended this Agreement, including the appropriate
Schedule, to have qualified the representations and warranties contained in
Article IV above, and to have cured any misrepresentation or breach of warranty
that otherwise might have existed hereunder by reason of the
development.
6.10 Employees.
---------
(a) At least 90 days prior to the Closing Date, Buyer is required to
offer employment, effective on the Closing Date, to those employees of Penelec
who are covered by the IBEW Collective Bargaining Agreement as defined in
Section 6.10(d) below, and who are employed in positions relating to the
Purchased Assets ("Union Employees"). At least 90 days prior to the Closing
Date, Buyer shall provide Sellers with notice of its staffing level
requirements, listed by classification and operation, and shall be required to
offer employment only to that number of Union Employees necessary to satisfy
such staffing
46
level requirements. In each classification, Union Employees shall be so offered
employment in order of their seniority.
(b) At least 90 days prior to the Closing Date, Buyer is also
required to make reasonable efforts to make a Qualifying Offer of employment,
effective on the Closing Date, to those salaried employees of Penelec or
Genco who are listed in, or are in a function or whose employment
responsibilities are listed in, Schedule 6.10(b) ("Non-Union Employees"). Each
---------------------
person who becomes employed by Buyer pursuant to Section 6.10(a) or (b)
(whether pursuant to a Qualifying Offer or otherwise) shall be referred to
herein as a "Transferred Union Employee" or "Transferred Non-Union
---------------------------- ----------------------
Employee", respectively. As used herein, the term "Qualifying Offer"
-------- -----------------
means an offer of at least 85% of an employee's current total annual
cash compensation at the time the offer was made (consisting of base salary and
target incentive bonus). Schedule 6.10(b) sets forth, for each of the Non-Union
Employees listed therein, their current base salaries and target incentive
bonuses.
(c) All offers of employment made pursuant to Sections 6.10(a) or (b)
shall be made (i) in accordance with seniority and all applicable laws and
regulations, and (ii) for Union Employees, in accordance with the IBEW
Collective Bargaining Agreement.
(d) Schedule 6.10(d) sets forth the collective bargaining agreement,
and amendments thereto, to which Penelec is a party with the IBEW in connection
with the Purchased Assets ("IBEW Collective Bargaining Agreement"). Transferred
------------------------------------
Union Employees shall retain their seniority and receive full credit for service
with Penelec in connection with entitlement to vacation and all other benefits
and rights under the IBEW Collective Bargaining Agreement and under each
compensation, retirement or other employee benefit plan or program Buyer is
required to maintain for Transferred Union Employees pursuant to the IBEW
Collective Bargaining Agreement. With respect to Transferred Union Employees, on
the Closing Date, Buyer shall assume the IBEW Collective Bargaining Agreement
for the duration of its term as it relates to Transferred Union Employees to be
employed at the Plant in positions covered by the IBEW Collective Bargaining
Agreement and shall comply with all applicable obligations under the IBEW
Collective Bargaining Agreement. Consistent with the obligations under the IBEW
Collective Bargaining Agreement and applicable laws, Buyer shall be required to
establish and maintain a pension plan and other employer benefit programs for
the Transferred Union Employees for the duration of the term of the IBEW
Collective Bargaining Agreement which are substantially equivalent to the
Penelec plans and programs in effect for the Transferred Union Employees
immediately prior to the Closing Date (the "Penelec Plans"), and which provide
at least the same level of benefits or coverage as do the Penelec Plans for the
duration of the IBEW Collective Bargaining Agreement. Buyer further agrees to
recognize the IBEW
47
as the collective bargaining agent for the Transferred Union Employees.
(e) As of the Closing Date, all Transferred Non-Union Employees shall
commence participation in welfare benefit plans of Buyer or its Affiliates
(the "Replacement Welfare Plans"). Buyer shall (i) waive all limitations
----------------------------
as to pre-existing condition exclusions and waiting periods with respect
to the Transferred Non-Union Employees under the Replacement Welfare
Plans, other than, but only to the extent of, limitations or waiting
periods that were in effect with respect to such employees under the
welfare plans maintained by Genco, Penelec or their Affiliates and that have
not been satisfied as of the Closing Date, and (ii) provide each
Transferred Non-Union Employee with credit for any copayments and
deductibles paid prior to the Closing Date in satisfying any deductible or out-
of-pocket requirements under the Replacement Welfare Plans (on a pro-rata
basis in the event of a difference in plan years).
(f) Transferred Non-Union Employees shall be given credit for all
service with Genco, Penelec and their Affiliates under all deferred
compensation, profit-sharing, 401(k), retirement and pension plans, incentive
compensation, bonus, fringe benefit and other employee benefit plans, programs
and arrangements of Buyer ("Buyer Benefit Plans") in which they may become
-------------------
participants. The service credit so given shall be for purposes of eligibility
and vesting, but not for level of benefits and benefit accrual.
(g) To the extent allowable by law, Buyer shall take any and all
necessary action to cause the trustee of any defined contribution plan of
Buyer or its Affiliates in which any Transferred Employee becomes a
participant to accept a direct "rollover" of all or a portion of said
employee's "eligible rollover distribution" within the meaning of Section 402
of the Code from the GPU Companies Employee Savings Plan for Non-
Bargaining Employees or the Penelec Employee Savings Plan for Bargaining
Unit Employees (the "Sellers' Savings Plans") if requested to do so by the
Transferred Employee. Buyer agrees that the property so rolled over and the
assets so transferred may include promissory notes evidencing loans from
the Sellers' Savings Plans to Transferred Employees that are outstanding as of
the Closing Date. However, except as otherwise provided in Section
6.10(d), any defined contribution plan of Buyer or its Affiliates accepting such
a rollover or transfer shall not be required to (x) make any further
loans to any Transferred Employee after the Closing Date or (y) permit
any additional investment to be made in GPU common stock on behalf of
any Transferred Employee after the Closing Date.
(h) Buyer shall pay or provide to Transferred Employees the benefits
described in subparagraphs (i), (ii) and (iii) of this Section 6.10(h), and
shall reimburse the Sellers for the benefits they will provide to Union
Employees and Non-
48
Union Employees in accordance with subparagraph (iv) of this Section
6.10(h).
(i) Buyer shall make a transition incentive payment in the
amount of $2,500 to each Transferred Union Employee. Payment shall be
made as soon as practicable after, but in any event no later than 60
days following, the Closing Date.
(ii) In the case of each Transferred Non-Union Employee who
is initially assigned by Buyer to a principal place of work that is at
least 50 miles farther from the employee's principal residence than was his
principal place of work immediately prior to the Closing Date and
who relocates his or her principal residence to the vicinity of his or
her new principal place of work within 12 months following the
Closing Date, Buyer shall reimburse the employee for all "moving
expenses" within the meaning of Section 217(b) of the Code incurred
by the employee and other members of his or her household in
connection with such relocation, up to a maximum aggregate amount of
$5,000. Claims for reimbursement for such expenses shall be filed in
accordance with such procedures, and shall be accompanied by such
substantiation of the expenses for which reimbursement is sought, as Buyer
may reasonably request. All claims for reimbursement shall be processed,
and qualifying expenses shall be reimbursed, as soon as practicable
after, but in any event no later than 60 days following, the date on which
the employee's claim for reimbursement is submitted to Buyer.
(iii) Buyer shall provide the severance benefits described in
Section 1 of Schedule 6.10(h) to each Transferred Employee who is
"Involuntarily Terminated" (as defined below) (a) within 12 months after
the Closing Date or (b), in the case of any Transferred Non-Union Employee
who had attained age 50 and had completed at least 10 Years of Service (as
defined in Section 1(c) of Schedule 6.10(h)) prior to the Closing Date, on
or any time prior to June 30, 2004. For purposes of this Section 6.10(h)
and Schedule 6.10(h), a Transferred Employee shall be treated as
"Involuntarily Terminated" if his or her employment with Buyer and all of
its Affiliates is terminated by Buyer or any of its Affiliates for any
reason other than for cause, disability or mandatory retirement. A
Transferred Employee who voluntarily leaves employment with Buyer and all
of its Affiliates as a result of a reduction of more than 15% in the rate
of his or her total annual cash compensation (including both base salary
and target incentive award) shall also be treated as having been
Involuntarily Terminated. Buyer shall require any Transferred Employee who
is Involuntarily Terminated, as a condition to receiving the severance
benefits described in Section 1(b), (c), (d), (e) and (g) of Schedule
6.10(h), to execute a release of claims
49
against Penelec or Genco, as applicable, and Buyer, in such form as Buyer
and Sellers shall agree upon.
(iv) At the Closing or as soon thereafter as practicable,
but in any event no later than 60 days following the Closing Date,
Buyer shall pay to Sellers, in addition to all other amounts to be paid by
Buyer to Sellers hereunder, an amount equal to the aggregate estimated cost
that the Sellers will or may incur in providing the severance,
pension, health care and group term life insurance benefits
described in Section 2 of Schedule 6.10(h) to the Union Employees
and Non-Union Employees therein described. The estimated cost of
such benefits shall be calculated by the actuarial firm regularly engaged
to provide actuarial services to the GPU Companies with respect to
their pension, health care and life insurance plans, and shall be
determined using the same assumptions as to mortality, turnover, interest
rate and other actuarial assumption as used by such firm in determining the
cost of benefits under the GPU Companies' pension, health and group term
life insurance plans for purposes of their most recently issued
financial statements prior to the Closing Date.
(i) Sellers shall be responsible for any payments required
under their voluntary early retirement plans offered in connection with the
transfer of the Purchased Assets. Within thirty (30) days following the last
day that any Union Employee or Non-Union Employee may elect to participate in
such plans, Sellers shall provide Buyer with a list of all such employees who
have so elected.
(j) Sellers shall be responsible, with respect to the Purchased
Assets, for performing and discharging all requirements under the WARN Act and
under applicable state and local laws and regulations for the notification
of its employees of any "employment loss" within the meaning of the WARN Act
which occurs prior to the Closing Date.
(k) Sellers are responsible for extending and continuing to
extend COBRA continuation coverage to all employees and former employees, and
qualified beneficiaries of such employees and former employees, who become or
became entitled to such COBRA continuation coverage on or before the Closing
Date, including those for whom the Closing Date occurs during their COBRA
election period.
(l) Sellers shall pay to all Sellers' employees that Buyer offers
employment pursuant to Section 6.10 hereof, all compensation, bonus,
vacation and holiday compensation, workers' compensation or other employment
benefits that are payable in cash which have accrued to such employees through
and including the Closing Date, at such times as provided under the terms of the
applicable compensation or benefit programs.
50
6.11 Risk of Loss.
------------
(a) From the date hereof through the Closing Date, all risk of loss
or damage to the property included in the Purchased Assets shall be borne by
Sellers, other than loss or damage caused by the acts or negligence
of Buyer or any Buyer Representative, which loss or damage shall be the
responsibility of Buyer.
(b) If, before the Closing Date, all or any portion of the Purchased
Assets is (i) taken by eminent domain or is the subject of a pending or (to
the Knowledge of Sellers) contemplated taking which has not been
consummated, or (ii) damaged or destroyed by fire or other casualty, Sellers
shall notify Buyer promptly in writing of such fact, and (x) in the case of a
condemnation, Sellers shall assign or pay, as the case may be, any proceeds
thereof to Buyer at the Closing and (y) in the case of a casualty, Sellers shall
either restore the damage or assign the insurance proceeds therefor (and pay the
amount of any deductible and/or self-insured amount in respect of such
casualty) to Buyer at the Closing. Notwithstanding the above, if such casualty
or loss results in a Material Adverse Effect, Buyer and Sellers shall negotiate
to settle the loss resulting from such taking (and such negotiation shall
include, without limitation, the negotiation of a fair and equitable adjustment
to the Purchase Price). If no such settlement is reached within sixty (60)
days after Sellers have notified Buyer of such casualty or loss, then
Buyer or Sellers may terminate this Agreement pursuant to Section 9.1(i).
In the event of damage or destruction which Sellers elect to restore, Sellers
will have the right to postpone the Closing for up to four (4) months. Buyer
will have the right to inspect and observe, or have its
representatives inspect or observe, all repairs necessitated by any such damage
or destruction.
6.12 Additional Covenants of Buyer. Notwithstanding any other
--------------------------------
provision hereof, Buyer covenants and agrees that, after the Closing Date,
Buyer will not make any modifications to the Purchased Assets or take any action
which would result in a loss of the exclusion of interest on the pollution
control bonds issued on behalf of Penelec or NYSEG in connection with
the Purchased Assets from gross income for federal income purposes under
Section 103 of the Code. Buyer further covenants and agrees that, in
the event that Buyer transfers any of the Purchased Assets, Buyer
shall obtain from its transferee a covenant and agreement that is analogous
to Buyer's covenant and agreement pursuant to the immediately preceding
sentence, as well as a covenant and agreement that is analogous to that of this
sentence. This covenant shall survive Closing and shall continue in effect so
long as the pollution control bonds remain outstanding.
51
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Buyer. The obligation of Buyer to effect
----------------------------------
the purchase of the Purchased Assets and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or
prior to the Closing Date (or the waiver by Buyer) of the following conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall have
expired or been terminated.
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court or Governmental Authority which prevents
the consummation of the sale of the Purchased Assets contemplated herein
shall have been issued and remain in effect (each Party agreeing to use its
reasonable best efforts to have any such injunction, order or decree lifted) and
no statute, rule or regulation shall have been enacted by any state or federal
government or Governmental Authority which prohibits the consummation of the
sale of the Purchased Assets;
(c) Buyer shall have received all of Buyer's Required Regulatory
Approvals, in form and substance reasonably satisfactory (including no
material adverse conditions) to it;
(d) Sellers shall have performed and complied in all material
respects with the covenants and agreements contained in this Agreement which are
required to be performed and complied with by Sellers on or prior to the Closing
Date;
(e) The representations and warranties of Sellers set forth in this
Agreement shall be true and correct in all material respects as of the Closing
Date as though made at and as of the Closing Date;
(f) Buyer shall have received certificates from an authorized
officer of each Seller, dated the Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Section 7.1(d) and (e)
have been satisfied by such Seller;
(g) Buyer shall have received an opinion from each Seller's
counsel reasonably acceptable to Buyer, dated the Closing Date and
reasonably satisfactory in form and substance to Buyer and its counsel,
substantially to the effect that:
(i) Such Seller is a corporation duly incorporated,
validly existing and in good standing under the laws its state of
incorporation and Seller has the corporate power and authority to
own, lease and operate its material assets and properties and to carry
on its business
52
as is now conducted, and to execute and deliver the Agreement and
each Ancillary Agreement and to consummate the transactions contemplated by
it thereby; and the execution and delivery of the Agreement by such
Seller and the consummation of the sale of the Purchased
Assets contemplated thereby have been duly and validly authorized by all
necessary corporate action required on the part of such Seller;
(ii) The Agreement and each Ancillary Agreement has been duly and
validly executed and delivered by such Seller and constitutes a legal,
valid and binding agreement of such Seller, enforceable in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and general principles of equity
(regardless of whether enforcement is considered in a proceeding at
law or in equity);
(iii) The execution, delivery and performance of the Agreement
and each Ancillary Agreement by such Seller does not (A) conflict with the
Certificate of Incorporation or Bylaws of such Seller or (B) to the
knowledge of such counsel, constitute a violation of or default under those
agreements or instruments set forth on a Schedule attached to the opinion
and which have been identified to such counsel as all the
agreements and instruments which are material to the business or
financial condition of such Seller;
(iv) The Xxxx of Sale, the deeds, the Assignment and Assumption
Agreement and other transfer instruments described in Section 3.6 are
in proper form to transfer to Buyer such title as was held by such Seller
to the Purchased Assets;
(v) No consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by such Seller or the consummation by such Seller of the
transactions contemplated hereby, other than (i) such consents,
approvals, filings or notices set forth in Schedule 4.3(b) or which, if
not obtained or made, will not prevent such Seller from performing its
material obligations hereunder and (ii) such consents, approvals, filings
or notices which become applicable to Sellers or the Purchased Assets as a
result of the specific regulatory status of Buyer (or any of its
Affiliates) or as a result of any other facts that specifically
relate to the business or activities in which Buyer (or any of its
Affiliates) is or proposes to be engaged.
53
In rendering the foregoing opinion, each Seller's counsel may rely on
opinions of local law reasonably acceptable to Buyer.
(h) Sellers shall have delivered, or caused to be delivered,
to Buyer at the Closing, Sellers' closing deliveries described in Section 3.6.
(i) Buyer shall have received from a title insurance
company ALTA title owner's insurance policies on the Real Property
insuring title as described in Section 4.5, subject only to Permitted
Encumbrances reasonably acceptable to Buyer and standard printed
exceptions. A Permitted Encumbrance which is not removed prior to Closing
shall be deemed reasonably acceptable to Buyer as aforesaid unless
such Permitted Encumbrance would have a Material Adverse Effect. Buyer shall
provide Sellers with a copy of a preliminary title report and survey for the
Real Property as soon as it is available.
(j) Since the date of this Agreement, no Material Adverse Effect
shall have occurred and be continuing.
7.2 Conditions to Obligations of Sellers. The obligation of Sellers to
------------------------------------
effect the sale of the Purchased Assets and the other transactions
contemplated by this Agreement shall be subject to the fulfillment at or
prior to the Closing Date (or the waiver by Sellers) of the following
conditions:
(a) The waiting period under the HSR Act applicable to the
consummation of the sale of the Purchased Assets contemplated hereby shall have
expired or been terminated;
(b) No preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the
sale of the Purchased Assets contemplated herein shall have been issued and
remain in effect (each Party agreeing to use its reasonable best efforts to
have any such injunction, order or decree lifted) and no statute, rule
or regulation shall have been enacted by any state or federal
government or Governmental Authority in the United States which prohibits the
consummation of the sale of the Purchased Assets;
(c) NGE and NYSEG shall have received all of Sellers' Required
Regulatory Approvals applicable to NGE or NYSEG, in form and substance
reasonably satisfactory (including no material adverse conditions) to it;
(d) Penelec shall have received all of Sellers' Required
Regulatory Approvals applicable to Penelec, in form and substance reasonably
satisfactory (including no material adverse conditions) to it;
(e) All consents and approvals for the consummation of the sale
of the Purchased Assets contemplated hereby required under the terms of any
note, bond, mortgage, indenture, material
54
agreement or other instrument or obligation to which any Seller is party or by
which any Seller, or any of the Purchased Assets, may be bound, shall have been
obtained, other than those which if not obtained, would not, individually
and in the aggregate, create a Material Adverse Effect;
(f) Buyer shall have performed and complied with in all material
respects the covenants and agreements contained in this Agreement which are
required to be performed and complied with by Buyer on or prior to the Closing
Date;
(g) The representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date as though made at and as of the Closing Date;
(h) Sellers shall have received a certificate from an authorized
officer of Buyer, dated the Closing Date, to the effect that, to such
officer's Knowledge, the conditions set forth in Sections 7.2(f) and (g)
have been satisfied by Buyer;
(i) Effective upon Closing, Buyer shall have assumed, as set forth in
Section 6.10, all of the applicable obligations under the IBEW Collective
Bargaining Agreement as they relate to Transferred Union Employees;
(j) Sellers shall have received an opinion from Buyer's
counsel reasonably acceptable to Sellers, dated the Closing Date and
satisfactory in form and substance to Sellers and their counsel, substantially
to the effect that:
(i) Each Buyer Entity is a California corporation duly organized,
validly existing and in good standing under the laws of the state of its
organization and is qualified to do business in the Commonwealth of
Pennsylvania and has the full corporate power and authority to own, lease
and operate its material assets and properties and to carry on its business
as is now conducted, and to execute and deliver the Agreement and the
Ancillary Agreements by Buyer and the Guaranty by Buyer Parent and to
consummate the transactions contemplated thereby; and the execution and
delivery of the Agreement and the Ancillary Agreements by Buyer and the
Guaranty by Buyer Parent, and the consummation of the transactions
contemplated thereby have been duly authorized by all necessary corporate
action required on the part of Buyer and Buyer Parent;
(ii) The Agreement, the Ancillary Agreements and the Guaranty have
been duly and validly executed and delivered by Buyer and Buyer
Parent, as applicable, and constitute legal, valid and binding
agreements of Buyer and Buyer Parent, as applicable, enforceable against
Buyer and Buyer Parent, as applicable, in accordance with their terms,
except that such enforceability may be limited by applicable
55
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws affecting or relating to enforcement of creditor's
rights generally and general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity);
(iii) The execution, delivery and performance of the Agreement and
the Ancillary Agreements by Buyer and the Guaranty by Buyer Parent does not
(A) conflict with the Certificate of Incorporation or Bylaws (or other
organizational documents), as currently in effect, of Buyer and Buyer
Parent or (B) to the knowledge of such counsel, constitute a violation of
or default under those agreements or instruments set forth on a Schedule
attached to the opinion and which have been identified to such counsel as
all the agreements and instruments which are material to the business or
financial condition of Buyer or Buyer Parent;
(iv) The Assignment and Assumption Agreement and other transfer
instruments described in Section 3.7 are in proper form for Buyer to assume
the Assumed Liabilities; and
(v) No consent or approval of, filing with, or notice to, any
Governmental Authority is necessary for Buyer's execution and delivery of
the Agreement and the Ancillary Agreements, Buyer Parent's execution and
delivery of the Guaranty, or the consummation by Buyer and Buyer Parent of
the transactions contemplated hereby and thereby, other than such consents,
approvals, filings or notices, which, if not obtained or made, will not
prevent Buyer or Buyer Parent from performing its respective obligations
under the Agreement, the Ancillary Agreements and Guaranty.
(k) Buyer shall have delivered, or caused to be delivered, to
Sellers at the Closing, Buyer's closing deliveries described in Section 3.7.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
---------------
(a) Buyer shall indemnify, defend and hold harmless Sellers, their
officers, directors, employees, shareholders, Affiliates and agents (each, a
"Sellers' Indemnitee") from and against any and all claims, demands, suits,
----------------------
losses, liabilities, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all
actions, suits, proceedings, assessments, judgments, settlements and compromises
relating thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith) (each, an
56
"Indemnifiable Loss"), asserted against or suffered by any Sellers'
---------------------
Indemnitee relating to, resulting from or arising out of (i) any breach by Buyer
of any covenant or agreement of Buyer contained in this Agreement or the
representations and warranties contained in Sections 5.1, 5.2 and 5.3,
(ii) the Assumed Liabilities, (iii) any loss or damages resulting from or
arising out of any Inspection, or (iv) any Third Party Claims against a Sellers'
Indemnitee arising out of or in connection with Buyer's ownership or operation
of the Plant and other Purchased Assets on or after the Closing Date.
(b) Sellers shall jointly and severally, except as otherwise
specified in Section 10.1, defend and hold harmless Buyer, its
officers, directors, employees, shareholders, Affiliates and agents
(each, a "Buyer Indemnitee") from and against any and all Indemnifiable
-----------------
Losses asserted against or suffered by any Buyer Indemnitee relating to,
resulting from or arising out of (i) any breach by Sellers of any
covenant or agreement of Sellers contained in this Agreement or the
representations and warranties contained in Sections 4.1, 4.2 and 4.3, (ii)
the Excluded Liabilities, (iii) noncompliance by Sellers with any bulk
sales or transfer laws as provided in Section 10.12, or (iv) any Third
Party Claims against a Buyer Indemnitee arising out of or in connection
with Sellers' ownership or operation of the Excluded Assets on or after
the Closing Date.
(c) Buyer, for itself and on behalf of its
Representatives and Affiliates, does hereby release, hold harmless and
forever discharge Sellers, their Representatives and Affiliates, from any and
all Indemnifiable Losses of any kind or character, whether known or unknown,
hidden or concealed, resulting from or arising out of any Environmental
Condition or violation of Environmental Law relating to the Purchased Assets
other than any liabilities or obligations described in Sections 2.4(g), (h) and
(i). Buyer hereby waives any and all rights and benefits with respect to such
Indemnifiable Losses that it now has, or in the future may have conferred upon
it by virtue of any statute or common law principle which provides that a
general release does not extend to claims which a party does not know or suspect
to exist in its favor at the time of executing the release, if
knowledge of such claims would have materially affected such party's
settlement with the obligor. In this connection, Buyer hereby
acknowledges that it is aware that factual matters now unknown to it may
have given or may hereafter give rise to Indemnifiable Losses that are
presently unknown, unanticipated and unsuspected, and it further agrees that
this release has been negotiated and agreed upon in light of that
awareness and they nevertheless hereby intend to release Sellers and their
Representatives and Affiliates from the Indemnifiable Losses described in the
first sentence of this paragraph.
(d) Notwithstanding anything to the contrary contained herein:
57
(i) Any Person entitled to receive indemnification under this
Agreement (an "Indemnitee") shall use Commercially Reasonable Efforts to
mitigate all losses, damages and the like relating to a claim under these
indemnification provisions, including availing itself of any defenses,
limitations, rights of contribution, claims against third Persons and other
rights at law or equity. The Indemnitee's Commercially Reasonable Efforts
shall include the reasonable expenditure of money to mitigate or otherwise
reduce or eliminate any loss or expenses for which indemnification would
otherwise be due, and the Indemnitor shall reimburse the Indemnitee for the
Indemnitee's reasonable expenditures in undertaking the mitigation.
(ii) Any Indemnifiable Loss shall be net of (i) the dollar
amount of any insurance or other proceeds actually receivable by
the Indemnitee or any of its Affiliates with respect to the
Indemnifiable Loss, and (ii) income tax benefits to the Indemnitee,
to the extent realized by the Indemnitee. Any party seeking
indemnity hereunder shall use Commercially Reasonable Efforts to seek
coverage (including both costs of defense and indemnity) under
applicable insurance policies with respect to any such Indemnifiable Loss.
(e) The expiration or termination of any covenant or agreement shall
not affect the Parties' obligations under this Section 8.1 if the Indemnitee
provided the Person required to provide indemnification under this Agreement
(the "Indemnifying Party") with proper notice of the claim or event for
------------------
which indemnification is sought prior to such expiration, termination or
extinguishment.
(f) Except to the extent otherwise provided in Article IX, the rights
and remedies of Sellers and Buyer under this Article VIII are exclusive
and in lieu of any and all other rights and remedies which Sellers and
Buyer may have under this Agreement or otherwise for monetary relief, with
respect to (i) any breach of or failure to perform any covenant, agreement, or
representation or warranty set forth in this Agreement, after the occurrence of
the Closing, or (ii) the Assumed Liabilities or the Excluded Liabilities, as
the case may be. The indemnification obligations of the Parties set forth in
this Article VIII apply only to matters arising out of this Agreement,
excluding the Ancillary Agreements. Any Indemnifiable Loss arising under or
pursuant to an Ancillary Agreement shall be governed by the
indemnification obligations, if any, contained in the Ancillary Agreement under
which the Indemnifiable Loss arises.
(g) Notwithstanding anything to the contrary herein, no party
(including an Indemnitee) shall be entitled to recover from any other party
(including an Indemnifying Party) for any liabilities, damages, obligations,
payments losses, costs, or
58
expenses under this Agreement any amount in excess of the actual compensatory
damages, court costs and reasonable attorney's and other advisor fees suffered
by such party. Buyer and Sellers waive any right to recover punitive,
incidental, special, exemplary and consequential damages arising in connection
with or with respect to this Agreement. The provisions of this Section 8.1(g)
shall not apply to indemnification for a Third Party Claim.
8.2 Defense of Claims.
-----------------
(a) If any Indemnitee receives notice of the assertion of any claim or
of the commencement of any claim, action, or proceeding made or brought by any
Person who is not a party to this Agreement or any Affiliate of a Party to this
Agreement (a "Third Party Claim") with respect to which indemnification is to be
-----------------
sought from an Indemnifying Party, the Indemnitee shall give such Indemnifying
Party reasonably prompt written notice thereof, but in any event such notice
shall not be given later than ten (10) calendar days after the Indemnitee's
receipt of notice of such Third Party Claim. Such notice shall describe the
nature of the Third Party Claim in reasonable detail and shall indicate the
estimated amount, if practicable, of the Indemnifiable Loss that has been or may
be sustained by the Indemnitee. The Indemnifying Party will have the right to
participate in or, by giving written notice to the Indemnitee, to elect to
assume the defense of any Third Party Claim at such Indemnifying Party's expense
and by such Indemnifying Party's own counsel, provided that the counsel for the
Indemnifying Party who shall conduct the defense of such Third Party Claim
shall be reasonably satisfactory to the Indemnitee. The Indemnitee shall
cooperate in good faith in such defense at such Indemnitee's own expense.
If an Indemnifying Party elects not to assume the defense of any Third Party
Claim, the Indemnitee may compromise or settle such Third Party Claim over the
objection of the Indemnifying Party, which settlement or compromise shall
conclusively establish the Indemnifying Party's liability pursuant to this
Agreement.
(b) (i) If, within ten (10) calendar days after an Indemnitee
provides written notice to the Indemnifying Party of any Third Party Claims, the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in Section 8.2(a), the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that if the Indemnifying Party shall fail to
take reasonable steps necessary to defend diligently such Third Party Claim
within twenty (20) calendar days after receiving notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense and the Indemnifying Party shall be
liable for all reasonable expenses thereof. (ii) Without the prior written
consent of the Indemnitee, the Indemnifying Party shall not enter
59
into any settlement of any Third Party Claim which would lead to liability or
create any financial or other obligation on the part of the Indemnitee for which
the Indemnitee is not entitled to indemnification hereunder. If a firm offer is
made to settle a Third Party Claim without leading to liability or the creation
of a financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party shall
give written notice to the Indemnitee to that effect. If the Indemnitee fails
to consent to such firm offer within ten (10) calendar days after its receipt of
such notice, the Indemnifying Party shall be relieved of its obligations to
defend such Third Party Claim and the Indemnitee may contest or defend such
Third Party Claim. In such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will be the amount of such
settlement offer plus reasonable costs and expenses paid or incurred by
Indemnitee up to the date of said notice.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim") shall be
------------
asserted by giving the indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event such notice
shall not be given later than ten (10) calendar days after the Indemnitee
becomes aware of such Direct Claim, and the Indemnifying Party shall have
a period of thirty (30) calendar days within which to respond to such
Direct Claim. If the Indemnifying Party does not respond within such
thirty (30) calendar day period, the Indemnifying Party shall be deemed to have
accepted such claim. If the Indemnifying Party rejects such claim, the
Indemnitee will be free to seek enforcement of its right to indemnification
under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time subsequent
to the making of an indemnity payment in respect thereof, is reduced by
recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement or payment by, from or against
any other entity, the amount of such reduction, less any costs, expenses or
premiums incurred in connection therewith (together with interest thereon from
the date of payment thereof at the publicly announced prime rate then
in effect of Chase Manhattan Bank) shall promptly be repaid by the
Indemnitee to the Indemnifying Party.
(e) A failure to give timely notice as provided in this Section
8.2 shall not affect the rights or obligations of any Party hereunder except if,
and only to the extent that, as a result of such failure, the Party which was
entitled to receive such notice was actually prejudiced as a result of such
failure.
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ARTICLE IX
TERMINATION
9.1 Termination. (a) This Agreement may be terminated at any time prior
-----------
to the Closing Date by mutual written consent of Sellers and Buyer.
(b) This Agreement may be terminated by Sellers or Buyer if
(i) any Federal or state court of competent jurisdiction shall have issued an
order, judgment or decree permanently restraining, enjoining or otherwise
prohibiting the Closing, and such order, judgment or decree shall have
become final and nonappeallable or (ii) any statute, rule, order or
regulation shall have been enacted or issued by any Governmental Authority
which, directly or indirectly, prohibits the consummation of the Closing; or
(iii) the Closing contemplated hereby shall have not occurred on or before the
day which is 12 months from the date of this Agreement (the "Termination Date");
----------------
provided that the right to terminate this Agreement under this Section 9.1(b)
(iii) shall not be available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in,
the failure of the Closing to occur on or before such date; and provided,
further, that if on the day which is 12 months from the date of this
Agreement the conditions to the Closing set forth in Section 7.1(b) or
7.2(c) or (d) shall not have been fulfilled but all other conditions to the
Closing shall be fulfilled or shall be capable of being fulfilled, then the
Termination Date shall be the day which is 18 months from the date of this
Agreement.
(c) Except as otherwise provided in this Agreement, this
Agreement may be terminated by Buyer if any of Buyer Required
Regulatory Approvals, the receipt of which is a condition to the
obligation of Buyer to consummate the Closing as set forth in Section
7.1(b), shall have been denied (and a petition for rehearing or refiling
of an application initially denied without prejudice shall also have been
denied) or shall have been granted but are not in form and substance reasonably
satisfactory to Buyer.
(d) This Agreement may be terminated by Sellers, if any of the
Sellers' Required Regulatory Approvals applicable to Penelec, the receipt of
which is a condition to the obligation of Penelec to consummate the Closing as
set forth in Section 7.2(d), shall have been denied (and a petition for
rehearing or refiling of an application initially denied without prejudice shall
also have been denied) or shall have been granted but are not in form and
substance reasonably satisfactory to Penelec.
(e) This Agreement may be terminated by Sellers, if any of Sellers'
Required Regulatory Approvals applicable to NGE or NYSEG, the receipt of which
is a condition to the obligations
61
of NGE or NYSEG to consummate the Closing as set forth in Section 7.2(c) have
been denied (and a petition for rehearing or refiling of an application
initially denied without prejudice shall also have been denied), or shall have
been granted but are not in form and substance reasonably satisfactory to NGE
and NYSEG.
(f) This Agreement may be terminated by Buyer if there has been a
violation or breach by Sellers of any covenant, representation or
warranty contained in this Agreement which has resulted in a Material
Adverse Effect and such violation or breach is not cured by the earlier of
the Closing Date or the date thirty (30) days after receipt by Sellers
of notice specifying particularly such violation or breach, and such
violation or breach has not been waived by Buyer.
(g) This Agreement may be terminated by Sellers, if there has been a
material violation or breach by Buyer of any covenant, representation or
warranty contained in this Agreement and such violation or breach is not cured
by the earlier of the Closing Date or the date thirty (30) days after receipt by
Buyer of notice specifying particularly such violation or breach, and such
violation or breach has not been waived by Sellers.
(h) This Agreement may be terminated by Sellers if there shall
have occurred any change that is materially adverse to the business,
operations or conditions (financial or otherwise) of Buyer.
(i) This Agreement may be terminated by either of Sellers or
Buyer in accordance with the provisions of Section 6.11(b).
9.2 Procedure and Effect of No-Default Termination. In the event of
----------------------------------------------
termination of this Agreement by either or both of the Parties pursuant to
Section 9, written notice thereof shall forthwith be given by the
terminating Party to the other Party, whereupon, if this Agreement is terminated
pursuant to any of Sections 9.1(a) through (e) and 9.1(h) and (i), the
liabilities of the Parties hereunder will terminate, except as otherwise
expressly provided in this Agreement, and thereafter neither Party shall
have any recourse against the other by reason of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Several Liability of each Seller. Notwithstanding anything to
------------------------------------
the contrary contained herein, but subject to Section 10.4, it is expressly
understood and agreed that (i) the obligations and covenants of the Sellers
in Section 3.6 and the representations and warranties of Sellers in Sections
4.1, 4.2, 4.3, 4.5, 4.15 and 6.7 (and any indemnity under Article VIII
62
relating thereto) are made severally as to itself in the case of Penelec, and
jointly and severally in the case of NYSEG and NCE as to themselves; and (ii)
all other obligations and covenants of the Sellers and all other representations
and warranties of the Sellers hereunder (except for Section 4.20 which is made
solely by NYSEG) are made severally by Penelec on the one hand, and jointly
and severally by NYSEG and NGE on the other, such that Penelec on the one hand,
and NYSEG and NGE on the other, shall in no event be liable to Buyer hereunder
for more than 50% of any Indemnifiable Loss incurred by Buyer under the
indemnity agreement in Article VIII or otherwise under this Agreement for a
breach of such representation, warranty, obligation or covenant.
10.2 Amendment and Modification. Subject to applicable law, this Agreement
--------------------------
may be amended, modified or supplemented only by written agreement of Sellers
and Buyer.
10.3 Waiver of Compliance; Consents. Except as otherwise provided
-------------------------------------
in this Agreement, any failure of any of the Parties to comply with any
obligation, covenant, agreement or condition herein may be waived by
the Party entitled to the benefits thereof only by a written instrument
signed by the Party granting such waiver, but such waiver of such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent failure to comply therewith
10.4 No Survival. Each and every representation, warranty and covenant
-- --------
contained in this Agreement (other than the covenants contained in
Sections 3.3(c), 3.4, 3.5(b), 6.2, 6.4, 6.5, 6.6(f), 6.7, 6.8, 6.10, 6.12, 9.4,
and in Articles VIII and X, which provisions shall survive the delivery of the
deed(s) and the Closing in accordance with their terms and the
representations and warranties set forth in Sections 4.1, 4.2, 4.3, 5.1, 5.2 and
5.3, and claims arising under Sections 6.1 and 6.6(e), which representations
and warranties and such claims shall survive the Closing for eighteen
(18) months from the Closing Date) shall expire with, and be
terminated and extinguished by the consummation of the sale of the Purchased
Assets and shall merge into the deed(s) pursuant hereto and the transfer of the
Assumed Liabilities pursuant to this Agreement and such representations,
warranties and covenants shall not survive the Closing Date; and none
of Sellers, Buyer or any officer, director, trustee or Affiliate of any of
them shall be under any liability whatsoever with respect to any such
representation, warranty or covenant.
10.5 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or by facsimile
transmission, or mailed by overnight courier or registered or certified
mail (return receipt requested), postage prepaid, to the recipient Party
at its address (or at such other address or facsimile number for a Party as
shall be specified by like notice; provided, however. that
--------
63
notices of a change of address shall be effective only upon receipt
thereof):
(a) If to Sellers, to:
(Penelec)
c/o GPU Service, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxx
Vice President
(NGE or NYSEG)
0000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Vice President and Secretary
with a copy to:
(if to Penelec)
Berlack, Israels & Xxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
(if to NGE or NYSEG)
Xxxxx Xxxxxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Xxxxx X. Xxxxxxxxx, Esq.
(b) if to Buyer, to:
Mission Energy Westside, Inc.
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx
President
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
64
10.6 Assignment. This Agreement and all of the provisions hereof shall
----------
be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
by any Party hereto, including by operation of law, without the prior written
consent of each other Party, nor is this Agreement intended to confer upon any
other Person except the Parties hereto any rights, interests,
obligations or remedies hereunder. No provision of this Agreement
shall create any third party beneficiary rights in any employee or former
employee of Sellers (including any beneficiary or dependent thereof) in respect
of continued employment or resumed employment, and no provision of this
Agreement shall create any rights in any such Persons in respect of any
benefits that may be provided, directly or indirectly, under any employee
benefit plan or arrangement except as expressly provided for thereunder.
Notwithstanding the foregoing, (i) Buyer may assign all of its rights and
obligations hereunder to any majority owned Subsidiary (direct or indirect) and
upon Sellers' receipt of notice from Buyer of any such assignment,
such assignee will be deemed to have assumed, ratified, agreed to be
bound by and perform all such obligations, and all references herein to "Buyer"
shall thereafter be deemed to be references to such assignee, in each
case without the necessity for further act or evidence by the Parties hereto
or such assignee, and (ii) Buyer or its permitted assignee may assign,
transfer, pledge or otherwise dispose of (absolutely or as security) its rights
and interests hereunder to a trustee, lending institutions or other party for
the purposes of leasing, financing or refinancing the Purchased Assets,
including such an assignment, transfer or other disposition upon or pursuant to
the exercise of remedies with respect to such leasing, financing or refinancing,
or by way of assignments, transfers, pledges, or other dispositions in
lieu thereof; provided, however, that no such assignment in clause (i) or (ii)
shall relieve or discharge Buyer from any of its obligations hereunder. The
Sellers agree, at Buyer's expense, to execute and deliver such documents as may
be reasonably necessary to accomplish any such assignment, transfer,
pledge or other disposition of rights and interests hereunder so long as
the Sellers' rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
10.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the law of the State of New York (without giving effect to
conflict of law principles) as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies. THE
PARTIES HERETO AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED
TO THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL
COURTS IN AND FOR NEW YORK COUNTY, NEW YORK, WHICH COURTS SHALL HAVE EXCLUSIVE
JURISDICTION FOR SUCH PURPOSE, AND THE PARTIES HERETO IRREVOCABLY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVE THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
65
PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY MANNER RECOGNIZED
BY SUCH COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
10.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Interpretation. The articles, section and schedule headings
--------------
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.
10.10 Schedules and Exhibits. Except as otherwise provided in this
----------------------
Agreement, all Exhibits and Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
10.11 Entire Agreement. This Agreement, the Confidentiality Agreement, and
----------------
the Ancillary Agreements including the Exhibits, Schedules, documents,
certificates and instruments referred to herein or therein, embody the
entire agreement and understanding of the Parties hereto in respect of the
transactions contemplated by this Agreement. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other
than those expressly set forth or referred to herein or therein. It is
expressly acknowledged and agreed that there are no restrictions,
promises, representations, warranties, covenants or undertakings contained in
any material made available to Buyer pursuant to the terms of the
Confidentiality Agreement (including the Offering Memorandum dated April 1998,
previously delivered to Buyer by Sellers and Xxxxxxx, Xxxxx & Co.). This
Agreement supersedes all prior agreements and understandings between the Parties
other than the Confidentiality Agreement with respect to such transactions.
10.12 Bulk Sales Laws. Buyer acknowledges that, notwithstanding
-------------------
anything in this Agreement to the contrary, Sellers will not comply with
the provision of the bulk sales laws of any jurisdiction in connection with
the transactions contemplated by this Agreement. Buyer hereby waives
compliance by Sellers with the provisions of the bulk sales laws of all
applicable jurisdictions.
10.13 U.S. Dollars. Unless otherwise stated, all dollar amounts set
-------------
forth herein are United States (U.S.) dollars.
10.14 Zoning Classification. Buyer acknowledges that the Real Property
---------------------
is not zoned.
66
10.15 Sewage Facilities. Buyer acknowledges that there is no community
-----------------
(municipal) sewage system available to serve the Real Property. Accordingly,
any additional sewage disposal planned by Buyer will require an individual (on-
site) sewage system and all necessary permits as required by the
Pennsylvania Sewage Facilities Act (the "Facilities Act"). Buyer
---------------
recognizes that certain of the existing individual sewage systems on the Real
Property may have been installed pursuant to exemptions from the requirements of
the Facilities Act or prior to the enactment of the Facilities Act and that
soils and site testing may not have been performed in connection therewith.
The owner of the property or properties served by such a system, at the time
of any malfunction, may be held liable for any contamination, pollution,
public health hazard or nuisance which occurs as the result of such malfunction.
67
IN WITNESS WHEREOF, Sellers and Buyer have caused this Agreement to
be signed by their respective duly authorized officers as of the date
first above written.
PENNSYLVANIA ELECTRIC COMPANY NGE GENERATION, INC.
By: By:/s/ Xxxxxxx X. Xxxxxxxx
------------------------------ ------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President and Title: Executive Vice President
Chief Financial Officer
MISSION ENERGY WESTSIDE, INC. NEW YORK STATE ELECTRIC &
GAS CORPORATION
By: /s/ Xxxxx X. Xxxx By:/s/ Xxxxxxx X. Xxxxxxxx
------------------------------ ------------------------------
Name: Xxxxx X. Xxxx Name: Xxxxxxx X. Xxxxxxxx
Title: President Title: Executive Vice President
68
IN WITNESS WHEREOF, Sellers and Buyer have caused this Agreement
to be signed by their respective duly authorized officers as of the
date first above written.
PENNSYLVANIA ELECTRIC COMPANY NGE GENERATION, INC.
By: /s/ Xxxx X. Xxxxxx By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
NEW YORK STATE ELECTRIC & GAS
CORPORATION
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
69
